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Mr Justice Floyd : Introduction This is an appeal from a decision of Mr Marchant, Deputy Director acting on behalf of the Comptroller of Patents ("the Hearing Officer"), dated 17th April 2008. By his decision the Hearing Officer rejected two patent applications in the name of Blacklight Power Inc., the Appellant. The first, GB 0521120.6, relates to a plasma reactor which generates power and novel hydrogen species. It is based on a PCT application containing over 300 claims. The second, GB 0608130.1, relates to a laser which operates using the same hydrogen species. It too is based on a PCT application containing nearly 150 claims. The sole inventor of both applications is identified as Dr. Randell L. Mills. Dr Mills is the author of a vast number of publications describing what he has called his "Grand Unifying Theory of Classical Quantum Mechanics" which I shall refer to by the initials GUTCQM. These publications are listed over 9 closely typed pages in each of the applications in suit. The hydrogen species which is used in both applications is supposed to exist in a lower energy state than the lowest possible energy state recognised by standard physical laws. For that purpose the electron would have to orbit at a radius smaller than any ever observed for hydrogen (the Bohr radius). The existence of this hydrogen species, christened "the hydrino" by Dr Mills, is said by both applications to be "disclosed" in the listed Mills publications. The examiners assigned to the applications both objected that the hydrino proposed by Blacklight was contrary to generally accepted physical laws and was therefore not capable of industrial application in the sense required by section 1(1)(c) of the Patents Act 1977. They further objected that, as the claimed inventions relied for their performance on the existence of the hydrino, the specification did not comply with the requirement for sufficiency in section 14(3) of the Act. The Hearing Officer upheld both these objections. From his decision, Blacklight appeals to this court. On the appeal Blacklight was represented by Mr Henry Ward and the Comptroller was represented by Mr Michael Edenborough. Following the oral hearing both counsel supplemented their submissions by further short written submissions on authorities to which reference had been made in the course of the hearing, but of which copies had not been made available. The nature of an appeal from the Office It was common ground for the purposes of this appeal that by virtue of CPR 63.17(1), Part 52, the general appeals provision in the CPR, applies to this appeal. Accordingly, by CPR 52.11, the appeal is limited to a review of the decision below unless the court considers in an individual case that it would be in the interests of justice to hold a rehearing. It was also common ground that, in those circumstances, before this court interferes with the decision of the Hearing Officer, it should be satisfied that he erred in principle or was clearly wrong. The statutory framework Section 1(1) of the Act provides: "1.-(1) A patent may be granted only for an invention in respect of which the following conditions are satisfied, that is to say – (a) …; (b)…; (c) it is capable of industrial application; (d) … and references in this Act to a patentable invention shall be construed accordingly." Section 4(1) explains what is meant by industrial application: "4.-(1) An invention shall be taken to be capable of industrial application if it can be made or used in any kind of industry, including agriculture." Section 14 deals with the requirement for sufficiency of the specification at the application stage: "(2) Every application for a patent shall contain – (a) …; (b) a specification containing a description of the invention, …. (3) The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art." These sections have counterparts in those which the court considers when an application is later made to revoke the granted patent on these grounds before the Comptroller or the court. The steps involved in a substantive examination of a patent application are set out in section 18(2) to 18(4). "(2) On a substantive examination of an application the examiner shall investigate, to such extent as he considers necessary in view of any examination carried out under section 15A above and search carried out under section 17 above, whether the application complies with the requirements of this Act and the rules and shall determine that question and report his determination to the comptroller. (3) If the examiner reports that any of those requirements are not complied with, the comptroller shall give the applicant an opportunity within a specified period to make observations on the report and to amend the application so as to comply with those requirements (subject, however, to section 76 below), and if the applicant fails to satisfy the comptroller that those requirements are complied with, or to amend the application so as to comply with them, the comptroller may refuse the application. (4) If the examiner reports that the application, whether as originally filed or as amended in pursuance of section 15A above, this section or section 19 below, complies with those requirements at any time before the end of the prescribed period, the comptroller shall notify the applicant of that fact and, subject to subsection (5) and sections 19 and 22 below and on payment within the prescribed period of any fee prescribed for the grant, grant him a patent." The Hearing Officer's decision The Hearing Officer identified the question which he had to address as whether the underlying theory of GUTCQM was true. As this was the underlying theory for the existence of the hydrino, which in turn was an essential component of the invention, he was in my judgment right to do so. In paragraph [22] of the Decision, the Hearing Officer identified a number of criteria which he considered came into play when one considered whether a scientific theory was true. He said this: "The main criteria may be as follows: a) the explanation provided by the theory is consistent with existing generally accepted theories. If it is not it should provide a better explanation of physical phenomena than do current theories, and should be consistent with any accepted theories that it does not displace; b) the theory should make testable predictions, and the experimental evidence should show rival theories to be false and should match the predictions of the new theory; c) the theory should be accepted as a valid explanation of physical phenomena by the community of scientists who work in the relevant discipline….. When I refer to the "truth" or validity of a scientific theory in this decision it is in that sense." Having identified these three criteria, The Hearing Officer then asked himself what level of confidence should be demanded in the truth of this theory for patents to be granted on effects which depend on it. He said this at [23]: "If, as in the present case, an applicant proposes a new theory and claims an invention dependent on it, it would be unfair to the applicant if the patent was refused but the theory turned out to be true. If on the other hand patents were allowed to be granted on inventions depending on any theory, however speculative, then in the words of Paez's Application (BL O/176/83) "it would be completely wrong and against the public interest to bestow upon misleading applications the rights and privileges of a granted patent". I consequently take the view that it is appropriate to demand a real but moderate level of confidence in the truth of the theory. I will therefore make the assessment on the basis that it should be more probable than not that the theory is true if I am to allow the applications to proceed." (original emphasis) The Hearing Officer went on to point out (at [24] and [25]) that GUTCQM was clearly inconsistent with existing generally accepted theories. He pointed to two areas where GUTCQM parted company with established theory. Firstly, if the hydrogen atoms can exist in an energy state lower than the lowest state predicted by quantum mechanics, why do the hydrogen atoms with which we are familiar not convert spontaneously to a lower state? Secondly, he pointed to the fact that, in GUTCQM, the hydrogen atoms are said to have smaller radii than the smallest allowed for by applying standard physics. It followed that the Hearing Officer concluded (at [28]) that the new theory did not meet the first part of his criterion (a): it was not consistent with existing generally accepted theories. Of course, as the Hearing Office recognised, that much was common ground between the Comptroller and the applicant. The whole point of Dr Mills' theory was that it was a new theory of matter. The Hearing Officer therefore went on to consider the second part of his criterion (a), namely whether GUTCQM provided a better explanation of physical phenomena than existing theories and whether it is consistent with any remaining theory that it does not displace. He felt unable to assess this himself (see [28]). He considered that it was more important to see how the theory was viewed by the scientific community generally. This is something which he did in connection with criterion (c). The Hearing Officer then went on (at [29] to [34]) to consider his criterion (b), namely whether the new theory produced any testable predictions. As to this, he explained that Dr Mills had produced voluminous material in the form of research papers reporting on experiments. Many of them had been published in peer reviewed journals. He said that they produced results which were at times explained in terms which were consistent with the new theory, or inconsistent with existing theories. The Hearing Officer said at [31] that he was not well placed to assess how convincing the material was. He had however perused the material, consisting of 116 papers. He thought it best to concentrate on papers which did not involve Dr Mills "in order to gain as independent as possible a view". This left 37 papers of which 15 contained experiments. He noted in [33] that even these 15 papers mostly involved some connection with Blacklight or its predecessors. The experiments in question relate to calorimetry of electrolytic cells. The Hearing Officer found at [34] that: "in most cases the experiments produce some level of excess heat that the scientists find hard to explain". The Hearing Officer pointed out (also at [34]) that: "Some accounts consider the possible reasons for excess heat and are unable to suggest anything other than hydrinos". and that: "Although the authors tend to mention the hydrino theory they do not in the main conclude that it explains any excess heat". He concluded: "My impression is that these authors did not find evidence in their work which supported [GUTCQM]." It would appear that this is something of a provisional conclusion as, at [35] the Hearing Officer says: "Criterion (c) takes on greater importance since I am unable to address (a) or (b) directly" Criterion (c) was the extent to which the theory has been accepted as valid in the scientific community. The Hearing Officer pointed out that a serious scientific theory of the importance of GUTCQM would be expected to have attracted discussion in a variety of media, from newspaper to textbooks. He had given Blacklight a specific opportunity to address this concern of his, but Blacklight had not referred him to any further material, beyond the material he had already been provided with. On reviewing the material for this purpose, the Hearing Officer concluded that: "I find them even less convincing in relation to acceptance of the theory by the physics community at large. It seems to me on the evidence supplied to me by Blacklight that there is substantially no acceptance of the theory by the physics community" The Hearing Officer also referred to the fact that the claims for excess heat had been made for some time without, apparently, any conclusive demonstration or commercial product emerging. He concluded at [39]: "In summary, it appears that [GUTCQM] upon which these inventions depend, does not reach the threshold that I set for this assessment, namely that it should be more likely than not that it provides a valid description of atomic systems." The grounds of appeal The principal ground of appeal was that Hearing Officer wrongly directed himself when he held that the appropriate test for claims which relied upon a new theory was whether it was more probable than not that the theory was true. The correct test, so Blacklight argues, is whether the theory is clearly contrary to well established physical laws. As developed in his skeleton argument, Mr Ward contended that the test should be whether the applicant has a reasonable prospect of showing that his theory is a valid one. Mr Ward very fairly accepted at the outset that if it was necessary for the applicant to prove its theory now on the balance of probabilities then the appeal would fail. To put it another way, the Appellant accepts that, on the material available to the Hearing Officer, the theory underlying the hydrino is probably incorrect. To what standard must an applicant establish patentability? This is the first question which needs to be considered. The dispute between the parties was in connection with the correct standard of proof, as opposed to who shouldered the onus. In Fujitsu's Application [1996] RPC 511 at 533 Laddie J, in reaching a conclusion that a patent application related to excluded subject matter, having dealt with the question of who bore the onus, said this: "Furthermore, at the patent office stage, the benefit of the doubt should be given to the applicant. Refusal of the grant on the basis of a faulty appreciation of what is involved cannot thereafter be remedied." That passage relates to section 1(2), but it is clear that what Laddie J said about the benefit of the doubt applies to the positive requirements for patentability, such as lack of industrial applicability. Laddie J there referred to "the benefit of the doubt" being given to the applicant. Mann J considered this further in Macrossan's Application [2006] EWHC 705 (Pat) , another case about the statutory exclusions: "The reference to the benefit of the doubt is probably intended to signify that if there is substantial doubt then the burden has not been fulfilled. I do not consider that it means that if there is any doubt (legal or factual) then the application should succeed. It is not intended to import something like the criminal burden of proof into the proceedings. The tribunal still has to consider whether the exception applies, and it can come to the conclusion that it does without having to find that there is no doubt at all about it." When the case went to the Court of Appeal it was heard together with Aerotel's Application [2007] RPC 7; [2006] EWCA Civ 1371 Jacob LJ, giving the judgment of the Court said at [5]: "…we should record also that we accept [counsel for the Comptroller's] submission that any pure question of law involved should be decided during prosecution. …. Of course if a debatable question of pure fact is or may be involved at the application stage, things are different one cannot then say that the decision at that point must be the last word on the subject. Then the applicant must be given the benefit of any reasonable doubt." Jacob LJ spoke there of "a debatable question of pure fact" which was or might be involved, and as to which the applicant should have the benefit of "any reasonable doubt". Although all these cases are concerned with exclusions to patentability, I cannot think that the same does not apply to objections to patentability such as we are concerned with here. The Office, at the application stage, is necessarily an imperfect tribunal of fact. For example if there is a genuine dispute as to whether a particular technical fact is part of the common general knowledge, the Office may or may not be able to resolve it. There may be substantial doubt about it. It may be critical to whether the application is allowed or refused. In those circumstances an application should not be refused, because an incorrect refusal cannot be remedied at a later stage. I think that the effect of these authorities is as follows. It is not the law that any doubt, however small, on an issue of fact would force the Comptroller to allow the application to proceed to grant. Rather he should examine the material before him and attempt to come to a conclusion on the balance of probabilities. If he considers that there is a substantial doubt about an issue of fact which could lead to patentability at that stage, he should consider whether there is a reasonable prospect that matters will turn out differently if the matter is fully investigated at a trial. If so he should allow the application to proceed. I think this approach to the consideration of objections to patentability is in accordance with the statutory framework. The examiner will first raise an objection and put it to the applicant. The applicant then has an opportunity of persuading the Comptroller that his basis for considering that the objection applies is not sound. If the applicant does not persuade him to withdraw the objection he may refuse the application (section 18(3)). But at that stage he should consider whether, because there is a substantial doubt about an issue of fact, there is a reasonable prospect that matters may turn out differently at a trial, when there will be a full exploration of the matter with the benefit of expert evidence. If there is such a reasonable prospect he should allow the matter to proceed to grant. It goes without saying that mere optimism and a reasonable prospect of matters turning out differently are not the same thing. The reasonable prospect must be based on credible material before the Office. Macawberism, here as elsewhere, does not provide any basis for supposing that anything helpful will turn up. Moreover the greater has been the opportunity for the applicant to produce such material at the application stage, the smaller scope there is for supposing that giving him the benefit of the doubt will lead to a different conclusion. This approach is also consistent with the Office's approach to examining objections of inventive step which is described in its published Work Manual as follows: "Standard of certainty, benefit of the doubt 3.67 When a prima facie objection of lack of inventive step is contested the examiner will determine the matter on the balance of the evidence available, the standard of certainty being the same pre-grant (ex-parte proceedings) as post-grant (inter partes proceedings), ie it is determined on the balance of probabilities. 3.68 An objection of obviousness should not be pursued if there is a genuine possibility that there is an inventive step. The possibility must however be real and it is far from sufficient in rebuttal of an objection that there is merely a case to be answered, or that the applicant asserts that there is doubt. The matter should be decided on the balance of the evidence available. 3.69 If the substantive examiner is unable to reach a conclusion on inventive step because of lack of technical knowledge which he cannot readily rectify and there seems a strong prima facie case that the invention is obvious, it is reasonable for the examiner to put a specific query to the applicant or to object that there is no inventive step and see what reply the applicant makes. If expert evidence would be required for him to judge whether the applicant's reply to an objection establishes that there is invention, only then must the applicant be given the benefit of the doubt." It is on this basis that UKIPO routinely rejects applications for perpetual motion machines. The examiner objects that the invention appears to contravene established physical laws. The applicant is given an opportunity to demonstrate that it does not, or that his invention works. If, or rather when, he fails to do so the application is rejected. It would not be enough for the applicant to say that, given further time, he could produce a working model. In those circumstances there is no reasonable prospect that matters will turn out differently on a fuller investigation. The EPO Guidelines for Examination contain a passage concerned with inventions which operate inconsistently with well established physical laws in the section dealing with capability of industrial application at Part C Chapter IV section 5.1: "One further class of "invention" which would be excluded, however, would be articles or processes alleged to operate in a manner clearly contrary to well-established physical laws, e.g. a perpetual motion machine." A similar passage appears in the UKIPO's Works Manual: "Processes or articles alleged to operate in a manner which is clearly contrary to well-established physical laws, such as perpetual motion machines, are regarded as not having industrial application, as was held in Paez's Application (BL O/176/83) and Webb's Application (BL O/84/88). An alternative or additional objection may be that the specification is not complete enough to allow the invention to be performed under s.14(3) (see 14.79)." I think these passages are consistent with the authorities I have referred to. The word "clearly", which appears in both extracts, merely establishes that where there is a reasonable and substantial factual dispute ("a debatable factual question") about whether the invention does offend against physical laws, then the objection should not be pursued. The arguments on the appeal Mr Ward's principal argument on this appeal for Blacklight was that the Hearing Officer had simply tested the evidence before him on the balance of probabilities. As I have already indicated, it was no part of Blacklight's case on the appeal to argue that, applying that standard of proof, the Hearing Officer was not entitled to arrive at the conclusion which he did. Rather, Blacklight's case was that the Hearing Officer applied the wrong standard. He ought to have considered whether the invention was clearly contrary to established physical laws. The proper test, so Mr Ward submitted, was whether there was no reasonable prospect of Blacklight showing that the GUTCQM was correct. The second limb of Mr Ward's submission, and one which is essential for success overall, is that if the Hearing Officer had applied the correct test, he would have allowed the application to proceed to grant. Mr Edenborough submitted that the Hearing Officer was correct to apply a balance of probabilities test. He said that was the test which would be applied at a full trial of validity, and there was no basis for applying a less rigorous test at the application stage. Mr Edenborough did not argue that, in the event that I came to the decision that the approach was incorrect, I could uphold the Hearing Officer's decision on the basis of the test advanced by Blacklight. I have dealt with what I consider to be the correct test above. I accept the first limb of Mr Ward's submission, namely that the Hearing Officer did fail to consider whether the evidence adduced by Blacklight gave rise to any reasonable prospect that the applicants' theory might turn out to be correct. The Hearing Officer did not, at least on the face of his decision, turn his mind to the question of whether the applicant should be given the benefit of any substantial doubt. I turn to the second limb of Mr Ward's submissions: if the Hearing Officer had applied the correct test he would have been bound to allow the application to proceed to grant. In this connection it should be borne in mind, on the one hand, that the Hearing Officer found that he was not in a position to assess whether GUTCQM was consistent with theories which it did not displace ([28]); that he was not well placed to assess how convincing the experimental material relied upon by the applicant was – he could not do so directly in the way that an expert in the field could ([31]); and that the most important criterion was therefore the extent to which the theory had been accepted by the scientific community. Here he recorded an impression that the authors in question had not found any support for the theory. Had the matter gone no further than the first two of the Hearing officer's criteria, it could be said that he was recognising there was a debatable underlying question of fact on which it could not be said that the applicant had no reasonable prospect of success. But his question concerning acceptance of the theory by the scientific community, was nevertheless a reasonable, and in the circumstances practical question to ask. Certainly, the absence of either widespread discussion or acceptance in the scientific literature or other media was a factor he was entitled to take into account. Such a question is an indirect way of approaching the underlying theory and physical phenomena. Does the absence of any real discussion or acceptance (or indeed practical demonstration) of GUTCQM mean that one can conclude now that there is no reasonable chance that the applicant would be able to establish his position at trial? It is clear that the Hearing Officer was alive to the danger of refusing an application in circumstances where the refusal depends on a disputed theory which may subsequently turn out to be correct: see the passage I have cited from [23] in the decision. In considering criterion (c) he was also alive to the fact that GUTCQM had been around for many years without evidence emerging as to its validity. That fact alone might be thought to make it unreasonable to suppose that the position would be different at a trial, particularly where, as here, the applicant had no reason which the Hearing Officer found plausible for explaining the absence of discussion or acceptance. There was certainly material before him on which he could have gone on to address, and decide, the question of whether there was any reasonable prospect that, on a fuller investigation, evidence would emerge which would support GUTCQM as a valid theory on the balance of probabilities. It would have been entirely fair for him to address and decide that question, given that the applicant had been given every opportunity to provide evidence is support of his theory. I am not therefore persuaded to accept the second limb of Mr Ward's submission, namely that if the Hearing Officer had applied the correct test, he would necessarily have allowed the application to proceed to grant. As I have said, Mr Edenborough did not argue on this appeal that the decision could be upheld even on the correct test. That would involve me in an examination of the evidence to see whether there was indeed a dabatable question of fact on which there was some reasonable prospect of Blacklight succeeding. In any event, the problem with taking that course in the present case is that none of the voluminous material which was placed before the Hearing Officer in support of GUTCQM has been placed before me, let alone analysed in the submissions of counsel. That makes it wholly impracticable for me to carry out such an exercise. Moreover it would be wrong to embark on that course in the absence of a Respondent's Notice. In those circumstances I propose to remit the matter to the Hearing Officer with a view to his reconsideration of the evidence in the light of the test which I have propounded. It is worth pointing out that the need for the matter to be remitted to the Hearing Officer might have been avoided if the Comptroller had thought to serve a Respondent's Notice. I have noticed that it is rare for the Comptroller to serve Respondent's Notices in appeals to the Patents Court. I was told this was a question of timing, by which I understood that consideration of the need for a Respondent's Notice did not take place until too late a stage. The Office cannot rely on the Court to allow it raise grounds on which the decision can be supported if it takes this approach. Moreover a Respondent's Notice served in due time can have the effect of discouraging appeals which have no real merit. It follows that I shall allow the appeal and remit the cases to the Office for consideration of the following question, namely whether there is a reasonable prospect that on a full investigation with the benefit of expert evidence GUTCQM will turn out to be a valid theory.

Order of the Judge designated by the President of the Court of 29 November 1982. - Gilbert Castille v Commission of the European Communities. - Case 173/82 R. European Court reports 1982 Page 04047 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords APPLICATION FOR THE ADOPTION OF INTERIM MEASURES - SUSPENSION OF OPERATION - INTERIM MEASURES - CONDITIONS FOR GRANTING ( RULES OF PROCEDURE , ART . 83 ( 2 )) Summary AN APPLICATION TO SUSPEND THE OPERATION OF A MEASURE AND OTHER INTERIM MEASURES MAY BE GRANTED BY THE JUDGE HEARING THE CASE IF , ON FACTUAL AND LEGAL GROUNDS , A PRIMA FACIE CASE IS ESTABLISHED , IF THEY ARE URGENT IN THE SENSE THAT IT IS NECESSARY , SO AS TO AVOID GRAVE AND IRREPARABLE HARM , FOR THEM TO BE ADOPTED AND TAKE EFFECT PRIOR TO THE DECISION OF THE COURT ON THE SUBSTANTIVE ACTION AND IF THEY ARE PROVISIONAL IN THE SENSE THAT THEY DO NOT PREJUDGE THE SUBSTANTIVE DECISION , THAT IS TO SAY THEY DO NOT DECIDE AT THIS STAGE POINTS OF LAW OR FACT IN ISSUE , OR NULLIFY IN ADVANCE THE EFFECTS OF THE DECISION TO BE DELIVERED SUBSEQUENTLY ON THE SUBSTANTIVE ACTION . Parties IN CASE 173/82 R GILBERT CASTILLE , AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES , RESIDING AT 40 RUE MERTENS , BRUSSELS , ASSISTED AND REPRESENTED BY MARCEL SLUSNY OF THE BRUSSELS BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT , CENTRE LOUVIGNY , 34/B/IV , RUE PHILIPPE-II , APPLICANT , V COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , JOSEPH GRIESMAR , ACTING AS AGENT , ASSISTED BY DANIEL JACOB , OF THE BRUSSELS BAR , 93 AVENUE BRILLAT-SAVARIN , BRUSSELS , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , A MEMBER OF THE COMMISSION ' S LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG , DEFENDANT , Subject of the case APPLICATION TO SUSPEND PROMOTIONS TO GRADE A 4 IN RESPECT OF 1982 , Grounds 1 ARTICLE 185 OF THE TREATY PROVIDES THAT ACTIONS BROUGHT BEFORE THE COURT OF JUSTICE SHALL NOT HAVE SUSPENSORY EFFECT . HOWEVER , THE COURT MAY , IF IT CONSIDERS THAT THE CIRCUMSTANCES SO REQUIRE , ORDER THE OPERATION OF THE CONTESTED DECISION TO BE SUSPENDED . IT MAY ALSO PRESCRIBE ANY OTHER INTERIM MEASURE WHICH IT CONSIDERS NECESSARY . 2 ARTICLE 83 ( 2 ) OF THE RULES OF PROCEDURE OF THE COURT PROVIDES THAT AN APPLICATION FOR SUSPENSION OF OPERATION AND FOR THE ADOPTION OF INTERIM MEASURES MAY BE GRANTED ONLY WHERE THE CIRCUMSTANCES OF THE CASE GIVE RISE TO URGENCY AND THERE ARE GROUNDS ESTABLISHING A PRIMA FACIE CASE FOR THE GRANT OF SUCH MEASURES . 3 IN ACCORDANCE WITH THE WELL-ESTABLISHED CASE-LAW OF THE COURT , AN APPLICATION FOR MEASURES OF THAT KIND MAY BE GRANTED BY THE JUDGE HEARING IT IF , ON FACTUAL AND LEGAL GROUNDS , A PRIMA FACIE CASE IS ESTABLISHED , IF THEY ARE URGENT IN THE SENSE THAT IT IS NECESSARY , SO AS TO AVOID GRAVE AND IRREPARABLE HARM , FOR THEM TO BE ADOPTED AND TAKE EFFECT PRIOR TO THE DECISION OF THE COURT ON THE SUBSTANTIVE ACTION AND IF THEY ARE PROVISIONAL IN THE SENSE THAT THEY DO NOT PREJUDGE THE SUBSTANTIVE DECISION , THAT IS TO SAY THEY DO NOT DECIDE AT THIS STAGE POINTS OF LAW OR FACT IN ISSUE , OR NULLIFY IN ADVANCE THE EFFECTS OF THE DECISION TO BE DELIVERED SUBSEQUENTLY ON THE SUBSTANTIVE ACTION . 4 IT IS CLEAR FROM THE DOCUMENTS IN THE CASE THAT MORE THAN 112 OFFICIALS HAVE BEEN RECOMMENDED BY DEPARTMENTS OF THE COMMISSION FOR PROMOTION TO GRADE A 4 AND THAT OF THOSE 50 MAY BE PROMOTED ACCORDING TO BUDGETARY AVAILABILITY . EXCESSIVE DELAY IN PROCEEDING WITH THOSE PROMOTIONS WOULD PREJUDICE THE INTERESTS OF THE SERVICE AND CONSTITUTE A BREACH OF THE PRINCIPLE OF GOOD ADMINISTRATION . TO OUTWEIGH THOSE EFFECTS IT IS NECESSARY FOR THE APPLICANT ' S CASE TO BE SUPPORTED BY CONVINCING ARGUMENTS . 5 IN THIS CASE THE APPLICANT HAS NOT ADDUCED ANY EVIDENCE TO ESTABLISH PRIMA FACIE THAT HIS APPLICATION IS WELL FOUNDED . IN ANY EVENT THERE IS NOTHING TO PREVENT ANY DAMAGE WHICH MIGHT BE SUFFERED BY THE APPLICANT FROM BEING PROPERLY MADE GOOD . 6 FOR THE REASONS SET OUT ABOVE THE MEASURE APPLIED FOR CANNOT THEREFORE BE GRANTED . Decision on costs COSTS 7 IT IS APPROPRIATE IN THE CIRCUMSTANCES TO RESERVE COSTS . Operative part ON THOSE GROUNDS , THE JUDGE DESIGNATED BY THE PRESIDENT , BY WAY OF INTERIM DECISION , HEREBY ORDERS AS FOLLOWS : 1 . THE APPLICATION IS DISMISSED . 2 . THE COSTS ARE RESERVED .

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 118 of 1959. Appeal by special leave from the judgment and order dated July 2, 1957, of the Calcutta High Court in Criminal Appeal No. 101 of 1956 arising out of the judgment and order dated January 16, 1956, of the Second Court of the Municipal Magistrate, Calcutta, in case No. 208B of 1955. B. Aggarwala, B. B. Tawakley and B. P. Maheshwari, for the appellant. Nalin Chandra Bannerjee, Sunil K. Basu, S. N. Mukherjee for K. Bose, for the respondent No. 2. 1960. November 24. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This is an appeal by special leave against the Order of the Calcutta High Court affirming the companyviction of the appellants Messrs. Madan Mohan Damma Mal Ltd., and Om Prokash Manglik, its Manager, under s. 462 of the Calcutta Municipal Act, 1951 W. B. XXXIII of 1951 hereinafter called the Act. The facts leading to this appeal are that Messrs. Madan Mohan Damma Mal Ltd., hereinafter called appellant No. 1 sent a companysignment of mustard oil, about 499 maunds in weight, from Firozabad, the place of manufacture, to itself, at Calcutta, on December 25, 1954, in tank wagon No. 75612. This wagon was placed at the Pathuriaghat siding at Calcutta at about 8.45 a.m., on January 3, 1955. Dr. Nityananda Bagui, Food Inspector of the Calcutta Corporation, accompanied by certain police officers, went to that siding and took three samples of mustard oil companytained in this wagon, after arranging with Om Prokash Manglik, appellant No. 2, who was found near the wagon, the purchase of 12 ounces of oil for annas eight. He took the sample of oil in three phials. They were properly sealed. One of them was given to appellant No. 2. The other two were kept by Dr. Bagui. He sent one of them to the Public Analyst for examination, the same day. Ashit Ranjan Sen, the Public Analyst, examined the oil companytained in that phial on January 3, 1955, but companyld number companye to any positive opinion about its purity. Dr. Bagui, however, seized the tank wagon that evening, sealed it with the Corporations seal and left it in the custody of appellant No. 2. The oil in the tank was allowed to be removed to the godown of the appellants on January 6, 1955. The lock of the godown was then sealed with the seal of the Corporation. Mr. Sen reported on January 4, 1955, that the oil was adulterated. He sent a detailed report about the result of the examination on January 24, 1955. On receipt of the report about the mustard oil being adulterated, Dr. Bagui filed a companyplaint against the appellants on February 4, 1955, with respect to their. selling and keeping for sale mustard oil, a sample of which was found on analysis to be mustard oil which was adulterated with groundnut oil. During the companyrse of the trial, the trial Court, on an application on behalf of the appellants, ordered the despatch of the third sample phial of the oil in the custody of the Corporations Health Officer, to the Director of Health Services, Government of West Bengal, for analysis and report. This sample was analysed by Dulal Chandra Dey, Court Witness number 1, and found to be adulterated with groundnut oil. The report of the Analyst was, however, sent to the Court under the signature of Dr. S. K. Chatterjee, D. W. 2, Deputy Director of Health Services, Government of West Bengal. The appellants appear to have sent the sample of oil in their possession to Om Prakash, Oil Expert to the U.P. Government, who reported on July 27, 1955, that the sample companyforms to Agmark Specification for Mustard Oil and is companysidered to be free from adulterants such as sesame, groundnut and linseed oil. This report, however, has number been proved. The Deputy Commissioner of Police, Enforcement Branch, Calcutta, sent a sample of mustard oil on January 10, 1955, to the Public Analyst, Food Water, West Bengal Public Health Laboratory. Sri S. N. Mitra, D. W. 7, examined this sample and reported, on the basis of its saponification value to be 173.3, and iodine value to be 105, that the sample approximated to the standards of genuine mustard oil. This report does number establish that the sample was of pure mustard oil. Sri Mitras reply to the query from the Deputy Commissioner of Police for clarification, makes this very clear. It is But, unless companyclusive evidence of the presence of a foreign oil, companyroborated in some instances by the figures of the usual oil companytents, is obtained, the sample is number and cannot be declared adulterated. In the present case the sample of mustard oil has already been examined exhaustively and has been certified as approximating to standards but number as genuine. The legal implication of the expression is that the sample will have the benefit of doubt. Further, there is numbergood evidence on the record to establish that the sample sent to Sri Mitra was a sample from the appellants tank wagon. Dr. Bagui does number depose about the police people taking a sample of oil. He was number questioned about the police taking any sample of the oil. There seems to be numbergood reason for the police taking a sample of oil for the purpose of analysis and finding out whether the mustard oil was pure or number. The case put to Dr. Bagui during his crossexamination, on behalf of the appellants, appears to have been that he himself had taken four samples of the mustard oil in question and that one of those samples was sent to the Enforcement Branch. Dr. Bagui denied that he had taken four samples of the mustard oil, His statement is fully companyroborated by the statement of Kalidas Ganguli, Sub- Inspector, Calcutta Enforcement Branch, Police Department, who had accompanied Dr. Bagui on the occasion. He stated that the Corporation Food Inspector took three samples and the police took the one ,,sample which was sealed with the Corporation seal. We are number satisfied that the police actually took one sample of the oil and had it sealed with the Corporation seal as deposed to by Kalidas Ganguli. The Courts below found on the evidence that the mustard oil in the appellants tank wagon was adulterated with groundnut oil, that the appellants were in possession of that oil and had stored that oil for sale, in view of the presumption arising under subs. 4 of s. 462 of the Act, and which had number been rebutted on behalf of the appellants. Learned companynsel for the appellants has questioned the companyrectness of these findings. We have companysidered the evidence in companynection with the analysis of the samples of mustard oil by the Chemists. Ashit Ranjan Sen, P.W. 2, Public Analyst, who examined the first sample sent by Dr. Bagui on January 3-4, 1955, found it adulterated, on the basis of the data that the B. R. Index at 40 degree C was 60.4 and the Belliers test for groundnut oil was positive inasmuch as it gave turbidity at 28 degree C. Court Witness number 1, Dulal Chand Dey, who actually analysed the sample sent by the Court, also found it adulterated, on the basis of his obtaining the saponification value to be 175.5, iodine value to be 106degree 8 and the appearance of turbidity at 27 degree C. He also found indication of the presence of a small amount of linseed oil. The companyrectness of his opinion on these data is admitted by Sri Mitra, D.W. 7. In these circumstances, the finding of the Courts below that the mustard oil in the appellants tank wagon was adulterated is companyrect. It is number established that the sample of mustard oil sent to Sri Mitra by the Deputy Commissioner of the Enforcement Branch companytained mustard oil from this tank wagon. The opinion of Sri Mitra about the nature of that sample therefore does number go against the opinion of Sri Sen and Sri Dey that the mustard oil analysed by them was adulterated with groundnut oil. The other companytention for the appellants is that they were number in possession of the oil when the sample of mustard oil was taken by Dr. Bagui and that therefore numberpresumption under sub-s. 4 of s. 462 of the Act can be raised against them for holding that the oil was stored for sale. It appears from the judgment of the High Court under appeal that it was number disputed at the hearing before it that the appellants were in possession of the mustard oil whose sample had been taken. On the evidence on the record we are of opinion that they were in possession of the mustard oil. The companysignment of oil was from the manufacturing firm, appellant number 1, to itself at Calcutta. Its manager, appellant number 2, took delivery of the wagon from the railway authorities on January 3, 1955. There is numberdirect evidence to the effect that such delivery was taken prior to Dr. Baguis taking sample of the mustard oil. But the circumstances, in our opinion, companyclusively establish that appellant number 2 had taken delivery of the wagon prior to Dr. Baguis visit and taking samples of oil from the wagon. Appellant number 2 is number expected to and companyld number have got the wagon opened for the purpose of taking samples of oil, if he had number taken delivery of the wagon from the railway authorities. The railway authorities themselves would have seen to it that numberody tampers with the companytents of the wagon in its charge. Appellant number 2 must have therefore paid the freight for the wagon prior to Dr. Baguis visit and thus obtained delivery of the wagon. It was thereafter that he got companytrol over the wagon and was in a position to take out oil from it or to permit anyone else to take out oil. We therefore hold that the appellants were in possession of the oil in the tank wagon when Dr. Bagui took samples of the oil from it. The main companytention, however, for the appellants is that the presumption that the mustard oil was stored for sale by the appellants, under sub-s. 4 of s. 462 of the Act, is rebuttable and has been fully rebutted in view of certain arrangements between the P. Oil Millers Association and the Deputy Commissioner of Police, Enforcement Branch, and the letter of the appellants to the Secretary of the Association Exhibit R on January 3, 1955. We have companysidered the various documents which have been referred to in support of the arrangement between the Association stand the Deputy Commissioner, Enforcement Branch, but do number find therein anything which would restrain legally the appellants from selling the oil even if it is found to be adulterated. The proceedings of the meeting of the U. P. Oil Millers Association held on June 9, 1954, and attended by the Deputy Commissioner and Assistant Commissioner of the Enforcement Branch show that numbersuch agreement has been arrived at. Even the suggestion of the Deputy Commissioner that all the members of the Association should write to their respective mills that all the quantity of oil which would be imported should at first be passed and then made delivery of, was number fully accepted, the members simply stating that they always and invariably imported pure mustard oil. It was, however, decided that the samples of oil be taken from the next morning, i.e., June 10, 1954. We however find that in November 1954 the U. P. Oil Millers Association wrote to appellant number I that according to the decision of the Deputy Commissioner of Police, Enforcement Branch, every application to draw sample and test it should be accompanied by a certificate signed by the Chemist or the Manager or the Proprietor of the Mills to the effect that the mustard oil in the tank wagon was pure mustard oil free from Argemoni, linseed or any other adulteration, and that in February 1955 and April 1955, the Deputy Commissioner of Police, Enforcement Branch had to remind the U. P. Oil Millers Association that it should advise all its members that whenever they indent any mustard oil from outside Bengal, they would see that the railway receipts be accompanied by a clear certificate of examination from the Chemist of the factory who examined the same. Such directions from the Deputy Commissioner of Police, Enforcement Branch, do number appear to have had any great effect, as the companysignment of oil received by the appellants was without any such certificate. Mahendra Kumar Gupta, D.W. 1, Chemist of the appellants mill, deposed however that he had taken the sample of the oil sent in that wagon and found it to be genuine mustard oil, free from any adulteration. Any such certificate about the purity of the mustard oil sent is number proved to have accompanied the railway receipt and to have been shown or made over to Dr. Bagui, or to the Police Officers who had accompanied him at the time. Letter Exhibit R was sent on behalf of appellant number I to the Secretary of the U. P. Oil Millers Association at 10 a.m., on January 3, 1955. The letter said Please arrange for sample and test through the proper authorities companycerned, so that we may take the delivery of oil only if it is found pure on analysis. Any such statement can hardly be sufficient to rebut the presumption that the oil which was companysigned by appellant number I to itself at Calcutta was stored for sale. The letter itself does number say that the oil will number be sold. It simply says that they may take the delivery of the oil only if it is found pure on analysis. What would be done to the oil if it is found to be impure, is number stated. The Association was number in any arrangement with the Corporation which had the sole authority to take action with respect to the adulterated mustard oil. The Enforcement Branch of the Police had numberhing to do with it. In the circumstances, all the socalled arrangement with the Enforcement Branch of the Police and the companysequent letters, similar to letter Exhibit R, seem to be a subtle device to make things difficult for the proper authorities responsible to see that mustard oil fit for sale be pure. It is obvious in this case itself, how this sort of arrangement has provided an occasion for the companying into existence of the alleged fourth sample of mustard oil from the appellants tank wagon and the number-committal report about its purity. We are therefore of opinion that this letter Exhibit R, or the arrangement which led to such companymunication, does number establish that the mustard oil in the wagon which will be otherwise presumed to be stored for sale by the appellants, was number stored for sale. We are therefore of opinion that the companyviction of the appellants of the offence under s. 462 of the Act is companyrect.

The Vice-Chancellor : Introduction The claimant, Redrow plc (“Redrow”), is a substantial public company which carries on the business of housebuilders. It has an annual turnover of £350m and about 1,100 employees. In 1984 Redrow established a pension scheme (“the Scheme”) for the benefit of its employees and those of its subsidiary and associated companies. The Scheme is a final salary scheme, that is to say the benefits of members are computed by reference to their salary during the period immediately before they retire or leave the scheme. The Scheme is approved by the Inland Revenue pursuant to Chapter I of Part XIV Income and Corporation Taxes Act 1988 (“ICTA”). The documents regulating the Scheme have been, successively, an Interim Trust Deed dated 29th March 1984 (“the Interim Deed”), the First Definitive Trust Deed dated 20th July 1989 (“the 1989 Deed”) and a second Definitive Trust Deed dated 23rd March 1995 (“the 1995 Deed”). The first four defendants (“the Trustees”) are the present trustees of the Scheme. The fifth and sixth defendants (“the Employees”) are or were employees of Redrow. They have been joined to represent those presently or contingently entitled to benefit under the Scheme. In relation to both the 1989 Deed (including the Interim Deed as the background to the 1989 Deed) and the 1995 Deed the question has arisen whether the yardstick by which the members’ entitlement to benefits and liability to make contributions, variously described as “total pay”, “total salary”, “total remuneration” and “total earnings”, includes benefits in kind. By deeds dated 30th April 1998 and 26th June 2000 the 1995 Deed was amended so as to exclude benefits in kind in relation to pensionable service of new members joining after 30th April 1998, and then to exclude benefits in kind for all members in relation to their pensionable service after 29th June 2000 If that issue is answered in an affirmative sense then there arise further questions of construction concerning the application of that yardstick. In addition there arises the question whether there is an estoppel by convention such as to preclude either Redrow or any member of the Scheme claiming an entitlement to benefit or liability to contribute on the footing that benefits in kind are included in any of those yardsticks. The benefits in kind provided by Redrow for employees of the requisite type and seniority included cars, fuel for cars, contributions to private telephone bills, permanent health insurance, private medical insurance, mobile telephones, share options and long term share incentive plans. Some explanation of their treatment for tax purposes, the mechanism of PAYE and the conditions to be satisfied if a pension scheme is to obtain the approval of the Inland Revenue is an essential introduction to the basic question of construction and the submissions of the parties. Fiscal Background Income Tax is chargeable under Schedule E on all emoluments arising from an office or employment. ICTA 1988 s.19(1). Emoluments include all “salaries fees wages perquisites and profits whatsoever”. Ibid s.131(1). Such emoluments include all cash payments and all non-cash benefits which are capable of being turned into cash and whether paid by the employer or by a third party. Heaton v Bell 46 TC 211. Benefits which do not have a cash value do not constitute emoluments. Tennant v Smith [1892] AC 150. Thus benefits which did not have a cash value, otherwise known as benefits in kind, were not taxable as emoluments without some further statutory intervention. Such intervention is now contained in s.154 ICTA which charges to tax under schedule E as though they were emoluments the wide range of benefits to which that section applies. The amount charged to tax is the cost of providing the benefit. ICTA s.156. Of the benefits to which I have referred in paragraph 5 above I should make specific reference to cars and motor fuel, permanent health insurance, mobile telephones and share options. In the case of car and associated fuel benefit the amount of the benefit depends on the extent and purpose of the use of the car during the year of assessment in question. Thus the amount chargeable to tax cannot be known until the end of that year. S.157 ICTA From 1991 to 1999 there were similar provisions for mobile telephones. S.159A ICTA. There is no charge to tax on the provision of permanent health insurance, only on any amounts payable in accordance with its terms. Share options granted pursuant to schemes approved by the Inland Revenue pursuant to s.185 ICTA do not attract a charge to tax on either their grant or exercise. Until 1st July 1996 the only options granted by Redrow were in accordance with such a scheme. Subsequently Redrow provided to its employees long term share incentive plans otherwise than under such a scheme. Initially such plans could only give rise to a liability to tax under s.135 ICTA on the exercise of the options. But they later became taxable because of an amendment made in 1998 which brought share options when exercised within the charge for tradeable assets imposed by s.203F ICTA. S.203FB ICTA. Accordingly such benefits did attract liability to tax but only after the execution of the 1995 Deed. PAYE is authorised by s.203 ICTA. It operates by way of deduction from payments of income assessable to tax under Schedule E. It is operated in accordance with regulations, now Income Tax (Employments) Regulations 1993 SI 744. At the commencement of a person’s employment his employer submits an initial return and thereafter at the end of every relevant year giving details of his gross pay and, with some exceptions, other emoluments. On the basis of those returns a code appropriate to that person and his emoluments is determined by the Inspector. The Inspector is required, so far as possible, to ensure that tax for the year is deducted from emoluments paid in that year. The employer is required to deduct tax from payments of emoluments to that employee in accordance with the code. Reg.6. If a pension scheme is to enjoy favourable tax treatment it must have the approval of the Inland Revenue in accordance with the provisions of Chapter I of Part XIV ICTA. If the scheme satisfies the conditions contained in s.590(3) ICTA then the Revenue is obliged to approve it. Paragraphs (a) and (d) of that sub-section impose limits on the amount of the pension payable on retirement and on the amount which may be commuted into a lump sum by reference to the employee’s “final remuneration”. By s.591 the Revenue may also approve schemes not complying with s.590(3) if other conditions exist of which one is that the lump sum death in service benefit does not exceed four times the employee’s final remuneration. Final remuneration is defined by s.612(1), except where the context otherwise requires, as the average annual remuneration for the last three years service. That subsection also provides that “remuneration does not include – (a) anything in respect of which tax is chargeable under Schedule E and which arises from the acquisition or disposal of shares or an interest in shares or from a right to acquire shares; or (b) anything in respect of which tax is chargeable by virtue of section 148;” Tax is payable under s.148 in respect of payments known as “golden handshakes”. Ss.591(5) and 612(3) also authorise the Inland Revenue to make regulations imposing further conditions for discretionary approval. From time to time the Inland Revenue issues Practice Notes known as IR12 followed by the year in which it was made. Succeeding versions of IR12 have made provision for what is or is not to be included in final remuneration for the purpose of the limits on benefits. Thus paragraph 6.12 of IR12 (1979) provided that for the purpose of that paragraph “remuneration means basic pay, eg wage or salary, for the year in question, plus the average....of any fluctuating emoluments such as commission or bonuses.” Paragraph 6.16 provided that benefits in kind might be taken into account when they are assessed to tax as emoluments and will normally be regarded as fluctuating emoluments, but that benefits not so assessable may not be included as final remuneration without the consent of the Superannuation Funds Office. In IR12 (1991) it was pointed out that final remuneration needed to be defined in scheme rules and should not be greater than basic pay for the year in question plus the yearly average of fluctuating emoluments, which include benefits in kind. It was pointed out that final remuneration was defined in the legislation in the form I have quoted. Construction of the Deeds The fiscal background is relevant to the construction of the three deeds to which I have referred. National Grid Co.plc v Mayes [2001] 1 WLR 864, 870 para 18. Similarly earlier documents implementing the scheme or its “archaeology” may be relevant to the construction of later documents. Ibid. paras 22 and 23 and Harwood-Smart v Caws [2000] PLR 101, 105 para 5. The evidence included the Barnett Waddingham Report dated 19th December 2000 and the Combined Code of Principles of Good Governance and Code of Best Practice dated May 2000. They were of some help in explaining terms of art, but were not otherwise either admissible or relevant to the questions of construction. In the end it was not, I think, in dispute that on questions of construction explanatory booklets were not, without more, relevant or admissible on points of construction. This is correct for a number of reasons. First, the booklets in question all point out that they are no more than an attempt to summarise the effect of the operative documents and could not override them. Second, booklets written after the execution of a relevant deed can only reflect the opinion of the writer of the booklet on the meaning of the deed, which is not relevant; and booklets written before the execution of the relevant deed are of little, if any, help if, as in this case, the later deed uses different language. The Interim Deed As I have indicated the Interim Deed is relevant as providing the background against which to consider the 1989 Deed. It recited the intention to establish a retirements benefit scheme for the employees of Redrow and associated and subsidiary companies to be approved by the Inland Revenue and covered by insurance. It provided that the Scheme was established with effect from 1st April 1984 under irrevocable trusts, was to be administered in accordance with a Definitive Deed and Rules to be executed in due course and “In the meantime the Scheme shall be administered on the basis of this Interim Trust Deed and the notice previously given to those employees who are to become Members of the Scheme.” It is common ground that the notice in question is the explanatory booklet issued to members in 1984. The booklet provided that both contributions and benefits were a percentage of “your scheme salary”. Paragraph 3 pointed out that “Your Scheme Salary in a month is your total pay less 1/12th of the Lower Earnings Limit in force from time to time under the National Insurance Scheme.” The booklet also explained the entitlement of a member to commute part of his retirement benefit for a tax free cash lump sum. It said “Normally your lump sum will be worked out as 3/80ths of your salary....... for each year of your actual service with the Company ......or such greater amount as allowed by the Inland Revenue.” The booklet or notice was amended by a Deed dated 14th April 1998 necessitated by the new provisions for contracting out. The liability to contribute and the entitlement to benefit continued to be measured by reference to “your scheme salary” which was not further defined. Likewise entitlement to commute for a tax free cash lump sum depended on “the annual rate of salary”. In my view the amendments to the booklet so effected did not alter the meaning of scheme salary as “your total pay”. In my judgment that phrase in that context denotes cash payments only and so excludes benefits in kind. I base that conclusion on the use of the word “pay”, the absence of any reference to benefits in kind and the omission of any mechanism whereby such a benefit could be valued, particularly those which could only be quantified after the year end. That conclusion, in my judgment provides the starting point from which to analyse the provisions of the 1989 Deed. Before turning to the provisions of the 1989 Deed, for completeness, I should refer to the December 1988 explanatory booklet. It did not purport to do more than give a general outline of the Scheme and pointed out that nothing in it could override the provisions of the formal trust deeds. It introduced the concept of pensionable earnings as the yardstick by which to measure benefits and contributions. “Pensionable earnings” were defined as “...your total salary from the Group (as taken into account for PAYE purposes before deduction of your contributions to the Scheme) less an amount equal to the National Insurance lower earnings limit...” For the reasons I have already given I do not consider that this document can affect the construction of the Interim Deed and 1984 booklet effectively incorporated into it. Nor can it affect the construction of the 1989 Deed which followed it because the latter uses different terminology. The 1989 Deed The 1989 Deed comprises 24 clauses extending over 28 pages. The schedule to the deed, comprising 3 further pages, contains definitions for the purposes of both the Deed and the Rules. The Rules cover a further 40 pages. The Rules themselves have an appendix of 5 pages containing further definitions applicable to the Rules. The verbiage is dense even by the standards of pension schemes. The operative part of the 1989 Deed provided that any deed or agreement hitherto governing the Scheme should cease to have effect from the date thereof. The Rules provided that they should apply from 1st April 1984. Thus, with effect from 20th July 1989, the 1989 Deed governed the Scheme from its inception on 1st April 1984, thereby superseding both the Interim Trust Deed and the 1984 booklet. The provisions of the 1989 Deed material to these proceedings are clauses 6(b) and 16. By the former power was conferred on the Trustees “to determine all questions and matters of doubt arising in connection with the Scheme whether relating to the construction thereof or the benefits thereunder or any segregation of the Scheme Assets or otherwise...” By the latter the trustees were given power with the authority of Redrow to amend the Rules or Deed provided that such alteration did not prejudicially affect “any rights or interests which shall have accrued to each prospective beneficiary in respect of pension or other retirement benefit secured... up to the date on which such alteration or addition takes effect....” The appendix to the Rules contains the following material definitions: ““Earnings” means for each Member at any date the Member’s total remuneration from the Employers during the 12 months immediately preceding that date. For directors the term “earnings” excludes directors’ fees.” ““Pensionable Earnings” means at any date a Member’s earnings at the Scheme Anniversary Date coincident with or, if not coincident with, immediately preceding that date or at the date of his joining the Scheme if later reduced by an amount equal to the lower earnings limit applicable at such Scheme Anniversary Date [being 1st January in each year] under section 1(1) of the [Social Security and Pensions Act 1975]” (“Final Pensionable Earnings” is defined by reference to Pensionable Earnings) “Qualifying Remuneration” means for each Member in each Tax Year his total remuneration from his Employer in such Tax Year, which shall include remuneration from a sick pay or permanent health insurance scheme of the Employer, benefits in kind to the extent that they are assessed or assessable under Schedule E as emoluments....and directors’ fees other than...provided that for the Tax Year ending in 1988 and subsequent Tax Years there shall be excluded from remuneration any amounts chargeable to tax under s.148 [golden handshakes]...and any amounts chargeable to tax under Schedule E which arise from the acquisition or disposal of shares....” Rule 5 provided that the amount of a member’s pension was to be quantified by reference to a member’s final pensionable earnings, that is, ultimately, his “total remuneration from the Employers”. Rule 6 made provision for a life assurance death benefit for a member “of an amount equal to four times his basic remuneration from the employers, excluding any directors’ fees, at the date of his death.” Rule 7 provided for death benefits of “an amount equal to four times his basic remuneration from the Employers, excluding any directors fees...” Rule 7(a) required a member to contribute “during each monthly pay period [6%] of the amount by which his total remuneration from the Employers during that pay period exceeds one-twelfth of the lower earnings limit...” Rule 7(d) imposed a ceiling on the amount of any contribution by reference to the member’s qualifying remuneration, as defined. Rule 11 dealt with the right of a member to commute part of his pension into a tax free cash lump sum. The right so to do was qualified by provisions contained in Rule 17(b) limiting the lump sum, together with other amounts, to a multiple of his “Final Remuneration”. Final Remuneration was defined in Rule 17(k) by reference to a “Member's remuneration” which included “remuneration from a sick pay or permanent health insurance scheme of the Employer...benefits in kind to the extent that they are assessed or assessable under Schedule E as emoluments...and directors fees other than any...” but excluded “any amounts chargeable to tax under s.148 [golden handshakes] and any amount chargeable to tax under Schedule E which arise from [share options] because of events occurring before 17th March 1987” The basic question is what, in that context, is meant by “total remuneration from the Employers”. Does it include all or any benefits in kind? For Redrow it is submitted that it does not. It relies on the contrast with the expression “qualifying remuneration”, which is defined to include benefits in kind so far as assessable to tax. It suggests that basic remuneration, used to quantify the death benefit, is contrasted with total remuneration because the latter does, but the former does not, include fluctuating cash benefits. Redrow points to the absence of any provision in the Deed or the Rules enabling the trustees to value non-cash benefits, particularly on a monthly basis for contribution purposes. Reliance is placed on further problems and anomalies which arise if total remuneration includes benefits in kind in the form of cars or share options. The Employees challenge this interpretation. For them it is submitted that the word remuneration is apt to cover benefits in kind and the adjective “total” means what it says. The force of this submission is undermined by the concession that non-taxable benefits in kind are not included. Their counsel points out that the phrase total remuneration is a constituent element in the definition of “qualifying remuneration”. He contends that a new definition was required because of the change from scheme year to tax year. He suggests that total remuneration is limited to taxable remuneration so that there is no difficulty in ascertaining the amount thereof as the valuation machinery for tax purposes is equally applicable for scheme purposes. I prefer the submissions for Redrow. I start from the proposition that from 1st April 1984 to the execution of the 1989 Deed the yardstick for both contributions and benefits, “total pay”, did not include benefits in kind. The 1989 Deed could change that; but had that been intended some clear indication, whether by way of recital or rule, is to be expected, if only because the amount of the monthly contributions of many employees would have gone up overnight. Not only is there no such indication but, in my judgment, there are indications in the Rules to the opposite effect. First, if total remuneration from the Employers included benefits in kind the definition of qualifying remuneration would not need to include them expressly. The contrast is between “total” and “qualifying”. If the draftsman intended that remuneration should include benefits in kind, which it is capable of doing, then he would not have needed the express inclusions in the case of qualifying remuneration. The express inclusion cannot be accounted for by the change from scheme year to tax year. Similarly if “total remuneration from the Employers” included benefits in kind there would have been no need for their express inclusion in the definition of Member’s remuneration in Rule 17(k). Some confirmation as to the limits of what is and is not included in remuneration is afforded by the reference to basic remuneration in Rule 6(a). That envisages that normally directors’ fees would be included, as would be other fluctuating cash benefits, but such variable amounts may not be easy to accommodate into an insured death benefit. Thus the use of the word “basic” operates to exclude fluctuating cash benefits and can be given sufficient weight without including in the word remuneration non cash benefits in kind. The foregoing points are somewhat literal and may be of limited value in the construction of a document such as the 1989 Deed. But the omission of any express reference to any machinery for the valuation and apportionment of benefits in kind for both benefit and contribution purposes is astonishing if it had been intended to include benefits in kind in the phrase “total remuneration from the Employers”. Clause 6(b) of the 1989 Deed cannot supply this omission. The solution suggested by counsel for the Employees is that a term should be implied to the effect that the provisions of ICTA relating to such matters should be applied by the trustees. But the provisions of ICTA cannot be so applied without amendment; both uncertainty as to the amount until after the year end, the problems of time apportionment when switching from a tax year to a scheme year and the valuation of non-taxable benefits in kind preclude a simple application of ICTA. Nor is it necessary to make such an implication unless and until it is determined that benefits in kind are included in “total remuneration from the Employer”. In my view the intention to be ascribed to the draftsman must be that benefits in kind were not included in total remuneration. On this hypothesis no machinery for valuation or apportionment, whether based on ICTA or not, nor any implied term to that effect is required. I consider that the alternative that the draftsman intended both to include benefits in kind and a machinery for valuation and time apportionment but failed to make express provision for either is most improbable. For all these reasons I conclude that the phrase “total remuneration from the Employers” as used in the definition of “earnings” in the 1989 Deed does not include benefits in kind. It follows that they are not to be taken into account in the computation of either benefits or contributions payable into or out of the Scheme. The 1995 Deed The 1995 Deed is even longer than the 1989 Deed, the index alone runs to 10 pages. Once again it is necessary to appreciate its structure. The Deed comprises 26 clauses extending over 44 pages. There are 18 rules and a schedule divided into 4 parts covering 96 pages. Clause (1)(b) declares, in exercise of the power of amendment contained in clause 16 of the 1989 Deed (see para 22 above), that the provisions of the 1989 Deed and Rules “are hereby deleted with effect from the date of execution of this deed and the following provisions substituted for them EXCEPT THAT [(1)] (2) despite Rule 2, any person who was a member of the Scheme immediately before the deletion of the Existing Rules shall be deemed to be a member in relation to any benefit which he or any other person continues to remain entitled to (contingently or otherwise) under the Scheme, and [(3)] Clause 15, interestingly entitled “Matters of Doubt and Polygamous Marriages", provides in sub-clause (a) that “the Trustees shall decide all questions and matters of doubt arising under this deed or the Rules whether relating to the construction thereof or the benefits thereunder or any segregation of the Fund or otherwise...” There are no other provisions of the 1995 Deed which appear to have any relevance to any of the questions I have to decide. The relevant definitions are contained in Part I of the Schedule to the Rules. Those relevant to the basic issues of construction are ““Basic Salary” means the basic annual salary or wages of a Member (excluding bonuses, commission, overtime and any other fluctuating emoluments) at the date in question.” ““Contribution Salary” means the Member’s total earnings as taken into account for Schedule E income tax purposes.” ““Pensionable Salary” on the date in question means the member’s total earnings from the Employers during the calendar year ending on the Renewal date immediately prior to or coincident, before the deduction of contributions to the Scheme but otherwise as taken into account for Schedule E income tax purposes.” (Final Pensionable Salary is defined by reference to Pensionable Salary.) Part II of the Schedule contains provisions relating to the Inland Revenue limits. It is stated in the opening note that “Part II of the Schedule sets out the Inland Revenue’s limits on contributions and benefits which will not prejudice approval. It does not indicate the contributions which a member is required to pay to the Scheme nor confer any benefits of any kind on any member.” The limits override any contrary provisions in the 1995 Deed or Rules. In that context “Fluctuating Emoluments” are contrasted with the basic wage or salary and specifically include taxable benefits in kind. Similarly “Remuneration” is the aggregate of the total emoluments for the year which are assessable to income tax under Schedule E. Final Remuneration is to be computed by reference to both basic pay and Fluctuating Emoluments. The maximum lump sum benefit is also calculated by reference to basic salary or wages and fluctuating benefits. The only provisions in the 1995 Rules which provide for contributions and benefits are contained in Part III of the Schedule. One of the subsidiary points of construction is to determine how, if at all, they apply to existing members at the time the 1995 Deed became effective. For the purposes of the basic issue I will assume that they do. Part III provides, so far as material, for categories of membership (para.1), Member’s contributions (para 2), Member’s annual rate of pension (para 3), lump sum benefit (para 5). The yardstick for contributions is the member’s “contribution salary”, for pension is the member’s “final pensionable salary” and for the lump sum is the member’s “basic salary”. I have already set out the definition of these terms in Part I of the Schedule in paragraph 36 above. In these circumstances the submissions for the parties follow much the same lines as with the 1989 Deed. For Redrow it is submitted that there is no difference between “total earnings” as used in the definitions of contribution salary and final pensionable salary in the 1995 Deed and “total remuneration” as used in the comparable definitions in the 1989 Deed. In each case the draftsman has cash receipts, not benefits in kind, in mind. Counsel for Redrow suggests that the subsequent words “as taken into account for Schedule E income tax purposes” which replace the former expression “from the Employers” does not enlarge the scope of relevant earnings to benefits in kind. He relies on the fact that if such a change had been intended then it is surprising that it should not have been done clearly. Once again he points to the lack of any provision for valuation or apportionment of benefits in kind to enable the relevant earnings to be taken into account. Counsel for the Employees relies strongly on the use of the words “total” and “as taken into account for Schedule E income tax purposes”. He points out that benefits in kind are taken into account for those purposes. He contends that if they are not taken into account for contribution or benefit purposes then the word total will have been ignored. He submits that any necessary valuation or apportionment provisions may be supplied by an implied term incorporating those to be found in ICTA with or without further resort to the general power contained in Clause 15 of the 1995 Deed. In my judgment the definitions of “contribution salary” and “pensionable salary” which provide the yardstick for contributions and pensions in Part III of the Schedule to the 1995 Rules do not include benefits in kind. First, the background to a consideration of the 1995 Rules is the 1989 Deed. For the reasons I have already given I consider that on the true interpretation of that deed benefits in kind are not included in the yardsticks for the computation of either benefits or contributions. Of course, it is quite possible that one of the purposes of a new definitive trust deed is to change those yardsticks. But if that were intended it is to be expected that there would be some clear indication, whether by recital, in the relevant rules or otherwise. The only indication relied on is the change in wording to be found in the definitions quoted in paragraph 36 above. There are two changes in the relevant wording. The first is the change in the relevant noun from “remuneration” to “earnings”. In my view those words are interchangeable so that the change is of no significance. The second change is in the words which follow the noun. The effect of that change is to bring into the calculation of, at least, Contribution Salary remuneration or earnings not received from the Employers. Such third party cash receipts are taxable under Schedule E but would not have been taken into account under the formulae used in the 1989 Deed. In my judgment there is no reason to give the second change any greater effect than that. As counsel for Redrow points out, the phrase is not “all earnings taken into account for Schedule E income tax purposes” but “total earnings as taken into account...”. The use of the word “as” suggests something more limited. Second, it is remarkable that if the draftsman had intended to achieve the inclusion in “total earnings” of benefits in kind he should have used the definitions he did rather than those to be found in Part II of the Schedule, with or without some further variation. Benefits in kind are expressly included in the definitions of “fluctuating emoluments” and thereby imported into the definitions of “remuneration” and “final remuneration”. But the opening note to Part II makes it clear that nothing in Part II affects the amounts of the contributions or benefits provided for in Part III. Third, there is the remarkable fact that once again there is no express provision for the valuation or apportionment of benefits in kind. It is true that the reference to Schedule E imports at least some of the machinery of valuation but that does not deal with the problems associated with, for example, car benefits the amount of which can only be quantified after the end of the relevant tax year. As in the case of the 1989 Deed I do not think that this omission can be supplied by either clause 15 or an implied term. For all these reasons I conclude that benefits in kind are not included in the yardstick by which contributions and benefits are to be computed pursuant to Part III of the Schedule to the 1995 Rules. It follows that at all times since it was set up in April 1984 the yardstick for calculating both benefits and contributions has remained the same in this respect. It is on that basis that I approach the subsidiary issues. Subsidiary Issues Four such issues were raised in argument before me, namely: (a) whether the 1995 Deed applies to those who were members of the Scheme and not in receipt of benefit on 23rd March 1995; and if so (b) whether they are entitled to the, possibly, enhanced benefits for which Part III provides; but if not (c) how are the contributions and benefits of such members to be ascertained; and in any event (d) how are benefits in kind to be valued. In the light of my decision on the basic issue the question of valuation, ie paragraph (d), does not arise. The issues summarised in (a) to (c) were raised and argued on the assumption that the 1995 Deed did but the 1989 Deed did not require benefits in kind to be taken into account. In the light of my decision on the basic issue the assumption is wrong but it appears to me that these issues may arise anyway and should be decided. To explain these issues it is necessary to refer to further provisions of the 1995 Deed. I have already set out, in paragraph 34 above, the provision in the 1995 Deed by which the Rules are brought into operation. Rule 2, to which reference is made, provides for eligibility for membership by reference to categories of membership set out in paragraph 1 of Part III. There are two such categories of member, restricted and full. The qualifications for eligibility for full membership are similar to, but not the same as, those required under the 1989 Deed. The most noticeable difference is that directors who held a salaried office with Redrow were eligible under the 1989 Deed but are not eligible under the 1995 Deed. Rule 1(c) provides that “Subject to the provisions of the Rules and, in particular subject always to Rule 16, there shall be provided for and in respect of a Member such one or more of the Relevant Benefits permitted by the Rules. Such Relevant Benefits shall be of such amount or at such rate as the Employer with the Trustees consent in its absolute discretion decides and shall be notified to the Member in accordance with Rule 1(b) above. Except where the Member is notified otherwise, in the case of a Specified Member the amount or rate of any such benefit shall be as set out in Parts III and IV of the Schedule.” In Part I of the Schedule there are the following definitions: ““Full Member” means a Member who is not a Restricted Member” ““Members” means people admitted to membership of the Scheme so long as (and only so long as) they remain entitled or prospectively entitled to any benefit under the Scheme” ““Specified Member” means a member who at the date of his admission to the Scheme or, if he has been admitted to membership more than once, the date of his last such admission, was within the membership categories set out in Part III of the Schedule” Redrow contends that the provisions of Part III apply only to those who fall within the description of Specified Member. Reliance is placed on the heading of Part III “Membership, Contributions and Benefits of Specified Members who join the Scheme on or after 1st January 1995”. Redrow contends that existing members at that date, or at 23rd March 1995 when the 1995 Deed became operative, do not fall within the description of Specified Member. Counsel for the Employees disagrees. He contends that an existing member is within the categories set out in Para 1 of Part III. In any event, as he submits, the existing member is entitled to benefits under the 1995 Rules by force of Clause 1(b) of the 1995 Deed. In my view this issue can be simply resolved. It is clear from clause 1(b)(2) of the 1995 Deed that a pre-existing member is deemed to be a member of the Scheme as reconstituted by the 1995 Rules in respect of all the benefits to which he is prospectively entitled at the time the 1995 Deed took effect. As such he is to be treated as a member for the purposes of the definition of member in Part I. As such a person does not fall within the definition of restricted member he must be a full member within the definition of that term in Part I and therefore within the category of full membership set out in Paragraph 1(2)(b) of Part III. In that event such member is within the membership category required to satisfy the definition of specified member contained in Part I of the Schedule. It is true that the heading to Part III suggests that only those who join after 1st January 1995 can be specified members. In my view this cannot be sufficient to require a contrary construction. First, 1st January 1995 preceded the time when the 1995 Deed became effective. Second, no such condition is contained in any of the definitions of member, full member, restricted member or specified member contained in Part I of the Schedule. Third, it would be absurd if such a heading were to give rise to a hiatus between the 1989 Rules and the 1995 Rules when clause 1(b)(2) so clearly shows a contrary intention. For all these reasons I would resolve the issue set out in paragraph 48(a) above in an affirmative sense. This conclusion largely disposes of issue (b) as well. It is not suggested that the 1995 Deed is retrospective in the full sense of that word. But the obvious intention behind clause 1(b)(2) is that the prospective entitlement to benefits under the 1989 Deed should be carried forward so as to merge with entitlement in respect of similar benefits under the 1995 Deed. The phrase “despite Rule 2” appears to me to confirm that such was the intention whether or not the existing member would have been eligible for membership under the 1995 Rules. For these reasons I would determine the issue set out in paragraph 48(b) in an affirmative sense too. It follows from my decisions so far that neither issue (c) or (d) arise. In those circumstances I say not more about them. Estoppel by Convention In the light of my conclusions this question does not arise either. But, in case this matter goes further it may be of assistance if I briefly indicate my views. The principle on which Redrow relies is that formulated by Lord Denning MR in Amalgamated Investment & Property Co.Ltd v Texas-Commerce International Bank Ltd.[1982] 1 QB 84, 121, namely “If parties to a contract, by their course of dealing, put a particular interpretation on the terms of it – on the faith of which each of them – to the knowledge of the other – acts and conducts their mutual affairs – they are bound by that interpretation just as much as if they had written it down as being a variation of the contract. There is no need to inquire whether their particular interpretation is correct or not – or whether they were mistaken or not – or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it.” Eveleigh and Brandon LJJ adopted the statement of principle contained in Spencer Bower and Turner, Estoppel by Representation 3rd Ed.p.157 that “When the parties have acted in their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction each will be estopped against the other from questioning the truth of the statement of facts so assumed.” These principles have been considered in the context of a pension scheme by Aldous J in Icarus (Hertford) Ltd v Driscoll [1990] PLR 1, Laddie J in ITN v Ward [1997] PLR 131 and Rimer J in Lansing Linde v Alber [2000] PLR 15. I do not doubt that the principle is capable of applying to dealings between the trustees of a pension scheme and a member in relation to the contract between them. But, I suggest, the principle must be applied with caution when seeking to establish an estoppel between the trustees and the general body of members so as to bind them all to an interpretation of the trust deed which it does not bear. First, the pension scheme embodies not only the terms of a contract between individual members and the trustees but also a trust applicable to the fund comprising the contributions of members and surpluses derived from the past in which present and future members may be interested. Such trusts cannot be altered by estoppel because there can be no such estoppel binding future members. Second, it is necessary to show that the principle is applicable to all existing members. I agree with Laddie J in ITN v Ward [1997] PLR 131 that it is not necessary for that purpose to call evidence relating to each and every member’s intention. But that will not absolve a claimant from adducing evidence to show that the principle must be applicable to the general body of members as such. Third, as the formulation of the principle shows, what must be proved is that each and every member has by his “course of dealing put a particular interpretation on the terms of” the Rules or “acted upon the agreed assumption that a given state of facts is to be accepted between them as true”. This involves more than merely passive acceptance. The administration of a pension scheme on a particular assumption as to the yardstick by which contributions or benefits are to be calculated may well give rise to a relevant assumption on the part of the trustees. I suggest that it requires clear evidence of intention or positive conduct to bind the general body of members to such an assumption. I doubt whether receipt of the benefit or payment of the contribution, without more, can be enough. It must not be overlooked that if the principle is applicable it may be used to increase the liability or reduce the benefit of a member as well as, in this case, the opposite. The extra ingredients in this case relied on by Redrow are the explanatory booklets and the form of payslip. Had it been necessary to decide the issue I would not have considered that either ingredient was enough. None of the booklets was clear enough and each of them contained passages clearly indicating that nothing contained therein could override the meaning and effect of the deeds and rules. With regard to the payslips it could be deduced from those for a pay period in which the member had enjoyed a benefit in kind that it was not taken into account in computing the amount of that employee’s contribution. The employee paid that contribution by deduction from his gross pay. But a member not receiving a benefit in kind would be none the wiser and there is nothing comparable in relation to the computation of benefits. For all these reasons I would have concluded that, although it is clear enough that Redrow assumed that benefits in kind were not included in the yardstick by which benefits and contributions were to be measured, the evidence was insufficient to establish that the general body of members adhered to the same assumption. Conclusions For all these reasons I conclude that (a) benefits in kind are not to be taken into account in the determination of either benefits or contributions under either the 1989 Deed or the 1995 Deed; (b) a member of the Scheme within clause 1(b)(2) of the 1995 Deed is a specified member for the purposes of Part III of the Schedule to the 1995 Rules; and (c) such a member is entitled under the 1995 Rules to the benefits to which he had become prospectively entitled under the 1989 Rules prior to 23rd March 1995. I will invite counsel for the parties to prepare a minute of order to give effect to those conclusions and consequential matters, such as representation orders.

Lord Justice Rix : Introduction This is the judgment of the court. The appellant, Mrs Elphinstone, is the mother of three children who used to attend Pimlico Community School (the "School") until its recent closure (in the statutory language "discontinuance") by the City of Westminster (the "Council"). The appellant seeks to challenge the decision of the Council dated 17 March 2008 by which it resolved to discontinue the school with effect from 31 August 2008. That decision was subject to the Secretary of State for Children, Schools and Families (the "Secretary of State") and Future Academies ("Future") agreeing to establish a new Academy, the Pimlico Academy (the "Academy"), on the School's site as a replacement for the School. The respondent Council is joined in opposition to the appellant's challenge by the Secretary of State and Future as interested parties ( together the "respondents" ). The application for permission to apply for judicial review was considered on the papers by Cranston J on 24 April 2008. He refused permission. The appellant renewed her application for permission on 25 April 2008 and the matter then came before Mr Kenneth Parker QC, sitting as a deputy judge of the High Court (the "judge"). He again refused permission by his judgment dated 28 May 2008. The appellant then sought and obtained permission to appeal from this court: by his order dated 1 July 2008, Laws LJ granted permission to apply for judicial review and retained the substantive hearing of that application in this court. The matter came on for hearing on 24 July 2008. In the circumstances, and because a decision was required at very short notice, we gave our decision, refusing the application for judicial review, immediately on that day, while reserving our reasons. This judgment now sets out those reasons. The appellant's complaints were essentially twofold. She submitted first, that at the time of its decision the Council lacked the necessary information on which to act, both in terms of the statutory requirement for "details" and in terms of reliability. The same point was made as vitiating the statutory consultation which had taken place. Secondly, she submitted that just before the end of the process which concluded in the Council's decision there had been a volte face in relation to the question of the use of "banding" as part of the admissions policy of the new Academy, and that this vitiated both the consultation exercise and the decision itself. Mr David Wolfe, who has appeared on behalf of the appellant here and before the judge, has emphasised to us that, contrary to the judge's view, this was not a rationality challenge. He did not submit that the Council's decision was irrational, but rather that it was unlawful as a matter of process. In our judgment, this application fails essentially for the reasons given by the judge, [2008] EWHC 1287 (Admin). Indeed, our debt for his careful and lucid judgment will be obvious, and is gratefully recorded here. We would incorporate the sections of his judgment (at paras 3/18) dealing with the relevant legislative and factual backgrounds. This enables us to deal with those aspects more briefly here. The facts In November 2006 the School was inspected by Ofsted, which decided that the School should be put into special measures because it was failing to give its students an acceptable standard of education. In consequence on 1 March 2007 an interim executive board was appointed to replace the governing body of the School. The board was required to consider potential options for the future governance of the School. After the judgment below, and following a further inspection on 10/11 July 2008, Ofsted decided to remove the School from special measures. The acting head teacher, imported from another school on a temporary basis for the purpose of the special measures, reported that Ofsted was impressed with the transformation since its original inspection and that the School was "on a secure footing to embark on the next stage of its journey". By then the decision to replace the School with an Academy had been taken. The history of that decision is briefly as follows. A consultation exercise (not the one with which we are here concerned) between the Council and the interim executive board concluded on 25 May 2007 with a report prepared by the Council's Director of Schools and Learning. At a meeting of the Council's Children and Young People Oversight and Scrutiny Committee on 6 June 2007 that Committee heard oral representations from various stakeholders in the School. The Committee met again on 20 June 2007 and thereafter reported on its recommendations to the Council's cabinet. On 8 July 2007 the cabinet met and resolved to pursue academy status. By a further report dated 15 October 2007 the Director of Schools and Learning proposed that the charity Future be selected as sponsor. Appended to that report was a draft Expression of Interest, an important document in which the prospective sponsor of an academy provides information about its proposals. The cabinet considered that report and on the same day resolved to authorise agreement on a final Expression of Interest and also that a legally binding agreement on a properly "comprehensive" admissions policy be entered into with Future. The nature of that agreement is the subject matter of the appellant's second main ground. The Expression of Interest was accepted by the Secretary of State and signed on 16 October 2007. On 29 October 2007, the consultation with which we are concerned, that is to say the first stage of the statutory process which has to be gone through if a school is to be discontinued, began. This included a public meeting at the School and the distribution of some 55,000 leaflets. The consultation period closed on 7 December 2007. There were 85 written responses, the great majority of them hostile to the idea of an Academy replacing the School. By a report dated 18 December 2007 the Director of Schools and Learning reported on the statutory consultation exercise and asked the responsible cabinet member, Sarah Richardson, to consider the responses to it. The next stage in the statutory process was for the publication of a formal statutory notice under which proposals for discontinuance are made. It is in response to such a notice that representations may be made, which the local education authority concerned must consider. Ms Richardson resolved to publish the notice proposing the discontinuance of the School on 3 January 2008 and it was published on the same day. The period for making representations in relation to the notice ended on 15 February 2008. No complaint is made in relation to the statutory notice. 17 March 2008 was the date of the decision here under challenge. On that day the Director of Schools and Learning presented his report concerning the proposed closure of the School. Among the numerous appendices to it were the final version of the Expression of Interest and a draft memorandum of understanding ("MOU") between the Council and Future relating to admission arrangements. We will need to refer to the details of this further below. Although the Director's report was dated 17 March 2008, it and its appendices were available on the Council's website on 7 March. The cabinet's decision on 17 March 2008 was to approve the proposal to discontinue the School with effect from 31 August 2008 subject to the Secretary of State entering into a funding agreement with Future by that date approving the establishment of the Academy on the same site with effect from 1 September 2008. On 10 April 2008 the Secretary of State signed the funding agreement with Future. Because it was envisaged that Future would sponsor more than one academy, the funding agreement was in the form of a master agreement together with a supplemental agreement relating to the Academy. Those agreements, whether in draft or final form, were not available to consultees until after the decision under challenge was taken. However, there was at all relevant times available on the departmental web-site a "model" funding agreement, i.e. a generic template for funding agreements. This model funding agreement does not appear to have been provided directly to consultees and the Secretary of State, although relying on it in summary grounds of resistance, does not seek to argue that it had particular relevance to this dispute. The statutory framework The Education Act 1996 distinguishes between schools which are "maintained" by a local education authority, such as the School itself, and "independent" schools which are not. Aspects of maintained schools, such as governance and curriculum (the national curriculum), are controlled and are the subject of detailed provision by statute (see also the School Standards and Framework Act 1998 and the Education Act 2002). Academies are a species of independent school dealt with separately: see section 482 of the 1996 Act. They are set up under contract between the Secretary of State and a sponsor, after consultation with the local education authority concerned. Section 482(2) provides however that academies must agree to provide a curriculum "satisfying the requirements of section 78 of the Education Act 2002, but with an emphasis on a particular subject area, or particular subject areas, specified in the agreement" and to provide education "for pupils of different abilities who are wholly or mainly drawn from the area in which the school is situated". Section 78 of the 2002 Act, which states the general requirements for the curriculum of maintained schools, requires a balanced and broadly based curriculum which promotes the spiritual, moral, cultural, mental and physical development of pupils at the school and of society and prepares pupils at the school for the opportunities, responsibilities and experiences of later life. The contract under which an academy is established is called a funding agreement. The discontinuance of schools is governed by the Education and Inspections Act 2006 and the School Organisation (Establishment and Discontinuance of Schools) (England) Regulations 2007 (the "2006 Act" and the "2007 Regulations" respectively). The statutory scheme (see sections 15 and 16 and Schedule 2 of the 2006 Act) is that where a local education authority proposes to discontinue a maintained school, it must (1) consult and in doing so have regard to any guidance given by the Secretary State, (2) publish formal proposals on which representations may be made, (3) consider whether to approve the proposals, at which time it must again have regard to the Secretary of State's guidance. That is what happened in the present case (see above). The issue is whether there was any material flaw in the process. The 2007 Regulations govern the manner in which the statutory proposals must be made. Regulation 14 of the 2007 Regulations provides that discontinuance proposals must contain the information specified in Schedule 4, and regulation 15 makes further provision about how certain details from the proposals, as specified in Part 7 of Schedule 5, must be published. Among the information which the proposals must contain (as set out in Schedule 4) is the following to which Mr Wolfe has drawn particular attention: "Displaced Pupils 11. Details of the schools or further education colleges which pupils at the school for whom provision is to be discontinued will be offered places, including – (a) any interim arrangements; (b) where the school included provision that is recognised by the local education authority as reserved for children with special educational needs, the alternative provision to be made for pupils in the school's reserved provision; and (c) in the case of special schools, alternative provision made by local education authorities other than the authority which maintains the school." At the point of decision, the local education authority is empowered to reject the proposals or to approve them, and in the latter case to do so either without modification or with such modifications as it thinks desirable. Approvals may also be conditional on the happening of other events, in which case a date must be specified for the occurrence of that event (regulation 20 of the 2007 Regulations). Of particular relevance in the present case is regulation 20(m) which allows for the condition of the making of an academy funding agreement under section 482 of the 1996 Act. That is what happened here, when the Council made its approval of the discontinuance of the School conditional on the making of a funding agreement with Future by 31 August 2008. The Secretary of State has published guidance set out in a document called Closing a Maintained Mainstream School, A Guide for Local Authorities and Governing Bodies (the "Guide"). It contains both statutory and non-statutory guidance, the former identified by shading of the relevant passages. The statutory guidance relating to consultation is contained in paras 1.2 to 1.6 of the Guide. For present purposes the following is relevant: "1.2 The Secretary of State considers that those bringing forward proposals should consult all interested parties. In doing so they should: … • provide sufficient information for those being consulted to form a considered view on the matters on which they are being consulted; 1.3 Where, in the course of consultation, a new option emerges which the proposers wish to consider, it will probably be appropriate to consult afresh on the option before proceeding to publish proposals." There is also statutory guidance relating to the later, post statutory notice, decision making process, as follows: "4.16 The following factors should not be taken to be exhaustive. Their importance will vary, depending on the type and circumstances of the proposals. All proposals should be considered on their individual merits… EFFECT ON STANDARDS AND SCHOOL IMPROVEMENT … Standards … 4.20 Decision Makers should be satisfied that proposals for a school closure will contribute to raising local standards of provision, and will lead to improved attainment for children and young people… Academies 4.25 Academies are publicly-funded independent schools established in partnership with business and voluntary sector sponsors. They will normally replace one or more poorly-performing schools…The involvement of business and other non-Government partners will enable Academies to develop and implement new approaches to governance, teaching and learning in order to raise standards… 4.26 Where an Academy is to replace an existing school or schools, the proposals for the closure of those schools should indicate whether pupils currently attending the schools will transfer to the Academy and, if appropriate, what arrangements will be made for pupils who are not expected to transfer. 4.27 If provision for pupils at a school proposed for closure is dependent on the establishment of an Academy, any approval of the closure proposals should be conditional on the Secretary of State making an agreement for an Academy (see paragraph 4.64), but there should be a general presumption in favour of approval." It is also relevant to cite para 4.33, under the headings "NEED FOR PLACES" and "Provision for Displaced Pupils": "4.33 The Decision Maker should be satisfied that there is a sufficient capacity to accommodate displaced pupils in the area, taking into account the overall supply and likely future demand for places. The Decision Maker should consider the quality and popularity with parents of the schools in which spare capacity exists and any evidence of parents' aspirations for those schools." It is convenient here to say something further about the nature and function of the Expression of Interest document ("EOI"), as described in the Secretary of State's Guidance Notes for Sponsors and Local Authorities ("Guidance Notes"). It does not appear, however, to have statutory underpinnings. The Guidance Notes describe how the EOI "forms one part of the process of establishing an Academy, which is laid out in detail in Establishing an Academy: An Overview for Sponsors". The EOI is concluded at a stage prior to the so-called "feasibility" stage, ie the stage when a decision is made about whether the project should proceed. That is the stage at which, where the discontinuance of a school is involved, statutory consultation and the decision of the local education authority are required. The Guidance Notes read in relevant part: "The EOI form is not a contract and signatures are required at the end only to show the agreement of all parties to the information and arguments laid out within it. Equally, the approval of an Academy project to pass into the Feasibility stage does not necessarily mean that the Academy will go ahead. The Feasibility stage provides an opportunity to consult on the Academy proposal and a chance to explore in detail the information and ideas set out in the EOI. Only if and when this process is completed satisfactorily can the Funding Agreement be signed… Section 3: The Proposed Academy This section of the EOI is vital. It lays out the characteristics and vision of the proposed Academy project. It is important that as much information as possible be given about the basic characteristics of the proposed Academy, and in particular the sponsor's vision (Section 3.7). This allows the Department to consider whether this Academy project is likely to help raise attainment and reduce the effects of deprivation in its area. It is not expected that every aspect of the project should already have been worked out in detail at this stage. The approval of an EOI moves a project into the Feasibility Stage (see Introduction above), where the details of the proposed Academy are consulted on and finalised. Aspects of the Academy proposal may change during the feasibility stage as the project develops but the Department expects changes to be limited. Significant changes will need to be agreed locally and by Ministers." It is also convenient here to set out a leading statement of what is required of proper consultation under common law. It is reflected in the statutory guidance contained in the Guide. Thus in R v. North and East Devon Health Authority, Ex parte Coughlan [2001] QB 213 at 258, Lord Woolf MR said: "To be proper, consultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken." The "details" ground In his grounds of appeal Mr Wolfe submitted that the Council lacked the "required" information and the consultees lacked "sufficient" information about the Academy, both in terms of that information's content and reliability, to render either the former's decision or the latter's consultation lawful and effective. In the course of argument this became known as the "details" ground. Mr Wolfe acknowledged that he had no complaint about the adequacy or effectiveness of the statutory notice of proposals, and affirmed that he had no case questioning the rationality of the Council's decision. He criticised the judge for thinking that he did have such a case. In the circumstances there was some difficulty in pinpointing what exactly was missing, which permitted an adequate statutory notice and a decision which was not criticised for its irrationality to involve a defective process and a decision which could not stand. It seems, however, that there were two main strands to this first ground: one was that, in reliance on P v. The Schools Adjudicator [2007] LGR 346 (Admin) (Wilkie J, 26 July 2006, "P"), it was submitted that without at least a draft funding agreement in specific and not merely model form (ie in a form which addressed this particular Academy) together with some assurance that there would be no material change before signature, the information available both to decision-makers and to consultees was inadequate; and the other was that the 2007 Regulations required "details" of the Academy which went beyond what was available. That still left the question, what was missing? Mr Wolfe when pressed on this was willing to test that question by reference to the issues of governance and curriculum. His written submissions went somewhat wider than those two areas, but before this court, as before the judge, Mr Wolfe was willing to test the matter by reference to those matters. In P the issue was whether the Adjudicator (the decision-maker in that case under predecessor legislation including the then equivalent of regulation 20(m)) could lawfully approve the school closure by reference to a draft funding agreement without requiring the final funding agreement to be identical to the draft. In the light of the equivalent of regulation 20(m) it could not be said that the signing of a funding agreement was a condition precedent to the taking of the decision. Wilkie J rejected the submission that the Adjudicator required a binding undertaking that there would be no material change in the draft agreement. As it happened, the decision maker had both a draft agreement and an assurance that, save in respect of a possibility of change expressly adverted to, the draft would not change. Nothing more was required. Mr Wolfe submits, on the basis of P, that nothing less is required, whereas in the present case the Council did not even have a draft funding agreement specifically dealing with the Academy, only information about academies in general. Like the judge, we reject that submission. Wilkie J said this: "34…There is no power to require that the agreement under section 482(1) be anything other than an 'agreement under section 482(1)'. There is no power to insist on an agreement containing particular terms or being in a particular form. The legislator could have included such a power. It might have been thought to be one way of ensuring that the Secretary of State and the promoters did not, after the approval of the discontinuance, change the funding agreement so as adversely to affect the maintenance or enhancement of standards. The legislator did not, however, choose to deal with it in this way. It gave the Adjudicator the function of exercising judgment as to whether the draft agreement would maintain or enhance standards and, no doubt, exercising his judgment as to the likelihood of the draft being changed after approval and before it was formally agreed in such a way as would cut across his judgment in granting approval. 35…In my judgment the Adjudicator was obliged to consider the extent to which he could rely on these assurances and undertakings. He did so and came to a conclusion that he could. This was a conclusion to which, in my judgment, he was entitled to come." We understand Mr Wolfe's submission in the light of the way in which Wilkie J there expressed himself. Nevertheless, ultimately Wilkie J was only dealing with the facts before him: he was asked to decide a narrow issue and he did. That does not mean, however, that a draft funding agreement is a condition precedent. There is nothing in the statutory scheme to say that it is. Regulation 20(m) merely allows the making of a final agreement (by a certain date) to be made itself a condition of the decision. Schedule 4 to the 2007 regulations specifies at some length the information which the statutory notice of proposals must contain, but says nothing about the need for a draft agreement. There is nothing in the Guide to suggest the need for one. If there is no need for one, then there is no need for any assurance that it will not change. The judge rightly said that the court should be slow to introduce any further requirements by way of implication, adding "The court does not make education policy nor does it legislate". This is particularly so where the statutory process is set out at length and in such specificity. We therefore agree with the judge when he concluded thus (at para 29): "In P, the learned judge was not directing himself to, far less purporting to answer, the question whether as a matter of law there was a condition precedent – the existence of a draft funding agreement – to the lawful exercise of the power to decide upon closure of the school with a view to its replacement by an academy. I am confident that, if the learned judge had been required to address and answer that question, he would have analysed the relevant legislative material in its policy context and would have reached the same conclusion that I have reached; namely, that there is no warrant for the implication of any such condition precedent." Therefore this aspect of Mr Wolfe's "details" ground fails. We turn to the second strand in Mr Wolfe's first ground, namely that the Council lacked the "required" information. This was essentially premised on paragraph 11 of Schedule 4 of the 2007 Regulations (set out at para 17 above) and the reference there to "Details of the schools…[sc at] which pupils at the school for whom provision is to be discontinued will be offered places…" In this respect, Mr Wolfe submits that the details there required are details of every aspect of the Academy which one could possibly desire, but certainly including (but not confined to) details of its governance and curriculum. He submits that where the transition would be to another maintained school (or schools), the legislative background defining matters such as the governance and curriculum of such schools would make the provision of such details unnecessary; but not so in the case of an academy. In this respect he relies on an observation of Wilkie J in P on the equivalent provision in the predecessor legislation: "40…On the other hand the word "details" requires information to be placed before the Adjudicator concerning the detailed arrangements for governance and regulation of the school which is to replace that which is to be proposed to be discontinued." Mr Wolfe submits that that remark should also extend to information regarding curriculum (see below). It is not necessary to our decision, but we are doubtful that what Wilkie J said there is correct. We observe first, that the "details" under para 11 are indeed required by the 2007 Regulations to be set out in the statutory notice of proposals; and that they were in the present case set out in the notice, as follows: "If this proposal is approved and subject to the completion of a Funding Agreement, with effect from 1 September 2008 all existing pupils and staff entitled to TUPE will transfer to the proposed Pimlico Academy. There are therefore no provisions for discontinued places. It is proposed that the Academy, which will occupy the same site as Pimlico Community School, will admit 210 pupils in Year 7 and will be established as a school providing secular places for up to 1300 pupils aged 11 to 18 years, 210 in each statutory year group for Years 7 to 11." No complaint is made as to the statutory notice of proposals, and it therefore follows that the details there provided sufficed as an answer to the statutory demands of para 11. That is the answer ad casum. Secondly, however, and in principle we doubt that the "details" of para 11 do require a mass of information about the proposed academy. Para 11 rather requires details of where the displaced pupils are going to go and how any interim arrangements or special needs are going to be catered for. The specified details required at para 11(a), (b) and (c), while admittedly not the only details required, because of the language "including", go nowhere to support Mr Wolfe's submission or Wilkie J's observation. The place for such "details" as Mr Wolfe desires is if anything to be found in the Expression of Interest document, which is based on a form developed by the Secretary of State, but is not a product of the statutory scheme for discontinuance with which we are concerned. Of course, if Parliament had wished such material to be itself subject to that statutory scheme, it could have so legislated, but it has not. There is no specific request for details about governance or curriculum in Schedule 4. It may be noted moreover that the subject-matter of displaced pupils is dealt with in the statutory guidance (see paras 20/21 above) at paras 4.26 (in relation to academies) and 4.33 (generally) in terms which reflect our observations and go nowhere to provide support for Mr Wolfe's submissions based upon P. Even so, we are prepared to assume, for the sake of argument, that Wilkie J was right and that the statutory scheme does require the suggested details of the proposed Academy. The question then arises, how much detail? How much detail is sufficient to enable consultees to consult (or rather to make representations on the proposals, for the statutory consultation is by now over) and the local education authority to make a rational decision? That is the question that the judge posed to himself, when he went on to consider Mr Wolfe's submissions in relation to governance and curriculum. Governance Governance in a maintained school is strictly controlled by statute so as to spread power among the various stakeholders in a school. In academies, however, control is centred in the sponsor. It is submitted, however, that the Council and consultees needed to know the precise composition of the governing body and that this could not be known until the funding agreement was negotiated. But, as the judge pointed out, both Council and consultees knew a great deal about the governance of the Academy. Annexed already to the cabinet report of 9 July 2007 was the department's Prospectus for Sponsors and Local Authorities called 400 Academies. There under the heading of "Governance" the following was to be found: "In order to determine the ethos and leadership of the Academy, and ensure clear responsibility and accountability, the private sector or charitable sponsor always appoints the majority of the governors. This is the case even where the local authority is acting as a co-sponsor for wider purposes. The number of governors on an Academy governing body is not prescribed, but the expectation is for the body to be relatively small. Like other state-funded schools, Academies also have stakeholder governors. They all have a parent governor, a local authority appointed governor, and the Academy Principal in an ex-officio capacity. Academies may also have a teacher governor (either elected or appointed); a staff governor (either elected or appointed); and may include community representatives… There are many similarities between governing bodies of good local authority maintained schools, but there are important differences. As independent schools, Academies are set up as charitable companies to give sponsors and governors scope and responsibility for the ethos, strategic direction and leadership." In an appendix to the report of 6 June 2007 of the Director of Schools and Learning the composition of the governing body of maintained schools with their mandatory and minimum representation of parents, staff, local authority and community, was contrasted with the constitution of academy governing bodies. The draft Expression of Interest annexed to the cabinet report of 15 October 2007 contained this paragraph: "The Academy's governing body will seek to demonstrate the Academy's ethos through its membership and its dynamic governance of the Academy. The Sponsor intends that there will be strong representation secured from the local community and business, as well as parent and staff representation. The Academy will appoint an outstanding Principal who will work with a strong team of staff to develop and implement the Sponsor's vision." That paragraph appeared in a long and important passage (section 3.7) concerned with "Vision" (and appeared again in the signed Expression of Interest dated 17 October 2007). Another citation from section 3.7 is perhaps also relevant to governance: "The introduction of an academy into a community brings a level of change that creates understandable anxiety for many parents and teachers. It is essential to develop an inclusive environment built on trust, openness and strong partnerships. The Sponsor believes that engaging parents is crucial to the success of a school. Parents at the Academy will be treated as partners in their children's learning. The Academy will develop a range of strategies for liaising with parents and seek to encourage parents' engagement with opportunities for access to extra pastoral support, tuition and extra curricular activities for their children." The judge observed: "41. It was therefore clear to the Council that, whatever sponsor was chosen, that sponsor would be entitled to control the governing body of the school and was, for reasons considered valid by some involved in the formulation of education policy, practically certain to do so… 43. In short, the issue of governance did not involve further information. The Council had all the information that was needed. The issue called for an exercise of judgment… 44. Certain consultees disagreed strongly with the Council's assessment, but in my judgment that assessment was in no way legally flawed by the nature and quality of the information regarding the essential character of the future governance of the School as an academy controlled by Future as sponsor." We agree with those observations. Indeed, we think that it was precisely because some at least of the consultees recognised and disliked the change in governance that they expressed their dislike of the proposed closure of the School. As it happens, there were two paragraphs on governance in the model master agreement but nothing in the supplemental agreement. Nothing was changed in this respect in the final signed agreements. However, all that was said was that the Academy Governing Body would be appointed as a committee of Future by its directors in accordance with its articles, a merely technical provision. In substance the information about governance had already been provided. The submission that only the final agreement would disclose the future of governance of the Academy is mistaken. Curriculum It was well understood by the Council and the consultees that academies are not bound rigidly to the national curriculum. 400 Academies explained: "The specialist schools programme has demonstrated the positive effect that specialist centres of excellence can have on a school's performance. All academies have at least one specialism. Each sponsor agrees with the Department which specialism or specialisms their Academy will adopt. Sponsors and their principals are rightly focused on transforming achievement in English and Maths and other core curriculum subjects as their overriding priority. Normal practice is for at least one of an Academy's specialisms to be in a core curriculum area, for example Maths, Science or Modern Foreign Languages. Other common specialisms include Business and Enterprise and Sport. Many Academies have two specialisms, but this decision lies with the sponsors." In the Expression of Interest, Future provided the following additional information: "The principal specialism of the new Academy – which will be either Humanities (History), Maths or Science – will be decided following further consultation early in Feasibility. Visual and Performing arts will be the second specialism of the Academy. The predecessor school has established a tradition of excellence in this field, including a notable reputation for music. Within the Academy, the visual and performing arts will exemplify very high attainment, promote inclusion and generate enthusiasm for learning." Further curriculum details were given in relation to "Key Stage 3", "Key Stage 4" and the Academy Sixth Form. They are set out by the judge at para 54 of his judgment. Mr Wolfe submitted nevertheless that all this merely reflected Future's then intentions and for that reason could not be considered "detail" because they were insufficiently secure. Even if secure, this was insufficient information, a merely generalised overview. However, we disagree and prefer the judge's observations and conclusions, as follows: "54…In my view, these indications and the expressed intention as regards specialisms gave the Council sufficient information regarding a likely future curriculum upon which it could reach a rational decision on closure… 55…it was for the Council to determine how much reliance it could put upon the relevant information and upon Future's stated intentions. The documents to which I have referred showed that the Council took care to assess Future as a prospective sponsor and to evaluate the information that Future provided, including statements about future intentions… 59…All the documents to which I have referred and the relevant information in them were in the public domain and available to consultees. Consultees could have been in no doubt about, first, what was proposed; second, the information upon which the Council relied in respect of governance…and curriculum and, third, the reasons for the decision… 60. In my view, the information not only enabled the Council to take a rational decision on closure but also enabled the consultees to give intelligent consideration of, and an intelligent response to, the proposal to close the school. Consultees knew that Future would control the governing body of the school,…and knew in broad but sufficient terms what kind of curriculum it was likely to adopt, including the specialisms of performance and visual arts and either history, maths or science. It is nearly always possible to have further detail on any subject. Some consultees wished to have more detail on the matters mentioned and even criticised the Council for not giving further detail as part of the consultation. However, the test is not whether further detail could have been given but whether consultees had sufficient information regarding governance…and curriculum to give intelligent consideration of, and intelligent response to, the proposals in those respects. In my judgment, the consultees manifestly had such information." We agree with those observations, and would merely add that, even on the hypothesis that the para 11 "details" embrace both governance and curriculum, which, as we have said, we doubt, the Council (and its consultees) had all that was required. Those proposals had to be made at a time which was necessarily, and statutorily accepted to be, in advance of finality. As the judge said, to the demand for "details", the question is always how much detail? He answered that question by saying: detail enough for a rational decision. Even though Mr Wolfe was not disputing rationality, we think that was a good test. Mr Wolfe does not dispute rationality, and it follows, on top of all that the judge said, that, given the level of detail provided and available, the "details" met the statutory requirement, even on the basis of that requirement assumed. As it happens, details of curriculum were also contained at paras 27/33 of the model master agreement, and were maintained unchanged in the final signed funding agreement. No complaint, however, is made of anything further revealed in this document, either on the basis that it provided what was missing or on the basis that it changed previous expectations. If the previous information was insecure or insufficient, we do not understand the lack of objection to the signed funding agreement. There is no submission of the "Now we see…" variety in relation to curriculum, any more than in relation to governance. It follows that the appellant's first ground for her application for judicial review failed. We would add the following. The process of consultation under the statutory scheme necessarily takes place at an early stage, prior to and as an aid to the development of the statutory notice of proposals. Following that notice, the process of consultation is changed into a process whereby representations are invited in response to the proposals. That stage is again prior to the conclusion of a funding agreement. There is nothing in that timetable to suggest that a funding agreement even in draft form is a necessary element in a satisfactory consultation or decision. Nevertheless, the model agreements, both master and supplemental, were in fact available on the departmental web-site and it appears to us to be a matter of regret that there should have been any uncertainty as to whether those drafts were in fact to have been treated as available in the process. It is true that like any drafts they may be subject to change, but in practice change seems to be very limited. We would also emphasise, as the judge did, both the available background in relation to the department's policy in relation to academies, to be found in its 400 Academies prospectus (see paras 30/33 of the judgment below), and the care with which the Council approached each stage of its decision-making (paras 34/37). Admissions and the banding test We turn next to Mr Wolfe's second main ground, which is a discrete point of a rather different nature. The argument here, as Mr Wolfe has stressed, is not the absence of sufficient information, but the essentially opposite contention that there had been a volte face by the Council on the important issue of admissions policy in respect of the place in it of "banding". That is an over-subscription criterion which grades applicant pupils by ability into bands and then allows a random selection of pupils within each band so as to ensure a cross-section of ability throughout the year. In the absence of banding, a school's admission policy would, subject to special cases, often depend entirely on matters such as the walking distance of an applicant pupil's home from the school: the nearest would be admitted first, the next nearest second, and so on. Banding is described in the School Admissions Code (the "Code") which in its present form came into existence on 28 February 2007 and was issued by the Secretary of State as required by section 84 of the 1998 Act (the School Standards and Framework Act 1998). The Code applies to all maintained schools and also academies. It refers (at para 1.48) to section 39 of the 2006 Act (the Education and Inspection Act 2006) which prohibits the introduction of any new selection by ability other than for banding or sixth forms. It then deals with banding as follows: "2.77 Banding, like other oversubscription criteria, only operates when the number of applications exceeds the number of places. Schools which use banding must not apply another test of ability once applicants are allocated to bands; they must not give priority within bands according to performance in the test. The admission authority must apply its other oversubscription criteria (such as random allocation) to each band to allocate places. 2.78 Banding is permitted by section 101 of the School Standards and Framework Act 1998, as amended by section 54 of the Education and Inspections Act 2006. The Education and Inspections Act 2006 removed the need for approval of statutory proposals before the introduction of banding arrangements, and this can now be done as part of the annual admissions consultation process. 2.79 Pupil ability banding is used by some admission authorities to ensure that their intake includes a proportionate spread of children of different abilities. Banding arrangements are good practice, provided the arrangements are fair, objective and not used as a means of unlawfully admitting a disproportionate number of high ability children." As the judge remarked: "48. Three points emerge from this. First, any community school may lawfully adopt banding. Second, banding is an oversubscription criterion. Third, banding can facilitate the aim of ensuring in an oversubscribed situation a proportionate spread of children of different abilities." It is clear from the documents in this case that the new Academy's admissions policy was a critical issue for the Council and consultees. It was important to both that the chosen sponsor should pursue an admissions policy in line with the School's current policy. It appears that Future expressed itself willing to do so. The judge described the School's admission policy in these terms: "46…it was comprehensive and non-selective by reference to academic ability, subject to ten per cent of the annual intake being reserved to those with special musical aptitude, an intake that on the evidence tended in the event to comprise higher than average achievers. Places were first allocated to children with statements of Special Educational Needs, which named the school with the agreement of Westminster Local Authority. Places were then offered in a ranked order of preference by reference to whether the child was in public care; whether the child had exceptional medical, social or other need that could only be met by placement at the School; whether the child had a sibling at the School; and finally by reference to how closely the child lived to the School. Other than for the ten per cent already mentioned, there was currently no testing of academic or other skills-based ability." Passages in the cabinet report of 15 October 2007 relating to admissions include the following: 2.7 Future has stated its willingness to commit to the key criteria which the Overview and Scrutiny Committee set out and Cabinet affirmed in its July 9th report: • the school will remain a community school in ethos, if not in designation, with a non-denominational and comprehensive admissions policy predicated on the needs of the locality • the school will adopt admissions criteria consistent with Westminster's Community School admissions criteria and abide by the Hard to Place Pupils protocol… 3.3 The Council has a clear agreement of view with the Sponsor on the key matters of non-denominational, secular admissions policy and all-ability intake and will seek to ensure that these important issues are secured in its agreements with both the Sponsor and the DCSF through joint undertakings… Annexed to the report of 15 October 2007 was the draft Expression of Interest, which under the heading of "Admissions" confirmed Future's agreement that the Academy's admissions policy would comply with "admissions law, the School Admissions Code of Practice and the School Admission Appeals Code of Practice as they apply to maintained schools" and that the "the admissions policy will ensure that the Academy meets its statutory requirements (i.e. 'provides education for pupils of different abilities who are wholly or mainly drawn from the area in which the school is situated')". The form then asked for "any further details about the proposed over-subscription criteria and admissions policy. In particular, how the policy will lead to balanced intake and whether fair banding will be considered". The answer to this question started by setting out the criteria for admissions, which duplicated the School's existing criteria set out above, and continued with a passage which is at the heart of the appellant's challenge under this ground: "The proposed policy ensures as far as possible that the Academy's intake would be drawn from the local area, ensuring a mixed and balanced intake regardless of faith or ability. The proposed oversubscription criteria are also similar to those adopted for nearby Paddington and Westminster Academies and follow those traditionally used for community schools nationally. They would also be clearly understood by parents. The Sponsor and Local Authority are of the view that this policy would facilitate a balanced intake without the need for banding. The tests related to banding can add considerable stress for parents and students going through the already complex secondary admissions process in London as well as incurring significant expense for the Academy. It is a condition of the Local Authority support for the Academy proposal that the admissions policy will be agreed with the Local Authority in the Feasibility stage and that the issue of all-ability intake, on which the Council and the Sponsor are entirely agreed, is resolved satisfactorily with the DCSF in the form of long-term agreements during the Feasibility stage, either through conditions of lease or a binding Memorandum of Understanding. The Sponsor has a strong commitment to an all-ability intake for local pupils. The Sponsor intends to keep under review the admissions policy in future years to ensure that, as the school develops its reputation and its achievements, the intake remains firmly all-ability and locally based." Mr Wolfe submitted that this passage and in particular the second and third paragraphs of it amounted to (a) a rejection of banding as an oversubscription criterion, together with a reason for that rejection, and (b) an assurance that the Council would stipulate for a condition of the continued rejection of banding for all time in some binding legal form. The judge did not go that far. He said: "49. On the basis of this contemporary material, it seems to me that at the time of the expression of interest it was not the intention of Future to introduce banding as an oversubscription criteria. However, in evaluating that expression of interest, it is important to bear in mind the background and the stage in the process at which the intention was expressed. The background I have explained. According to the Code, banding was permissible and could in the oversubscription situation positively contribute to securing a balanced intake of pupils of all abilities. The language of the expression of interest made clear that the admissions policy as set out would be subject of future agreement. 50. Against this special background and the prospect of future agreement, it seems to me that an informed reader would appreciate that what was said on banding was not necessarily cast in stone and that the possibility could not be ruled out that, as part of the process leading to future agreement, there might be some modification to what on its face appeared an unqualified position on banding." What is the judge saying here? He is not, as it seems to us, accepting in full the submission that Future has said that for all time it is rejecting the idea of banding and that the Council will set that in legal stone by way of binding agreement. Rather, it was not Future's current intention to introduce banding; and "the issue of all-ability intake" would be covered by long-term agreement. In our judgment, how all-ability intake would be achieved in a balanced way might, however, depend on future developments. At present the joint view was that the current policy would facilitate a balanced intake "without the need for banding". Indeed, there is no evidence before us as to whether and if so, how much, the School was over-subscribed. What the future might hold if the Academy's reputation and achievements prospered, however, is another thing: that would have to be kept under review, but what was fixed was the intention to ensure that "the intake remains firmly all-ability and locally based". What happened next was that the Council and Future did then proceed to negotiate a draft memorandum of agreement ("MOU"). It was annexed to the cabinet report of 17 March 2008. This was available on the internet from 7 March, but the judge accepted that if the MOU amounted to a fundamental change on what had gone before, then even as of 7 March it came too late. The 17 March report introduced the MOU as follows: "2.9 Of critical importance to elected members and parents has been the establishment of a new school which: - • maintains the existing school's comprehensive, secular admissions policy… 2.10 The Expression of Interest set out the local authority's joint agreements and aspirations in these areas and these policies have been affirmed during the Feasibility Stage. Draft written agreement in the form of a Memorandum Agreement are attached to the document at Appendix 2… 3.14 The proposed Academy sponsor Future has committed to retaining the school's specialism in Visual and Performing Arts. The Council determined, after the earlier non-statutory consultation in spring 2007, to adhere to a fully comprehensive admissions policy based on that established for existing community schools, the approach which respondees overwhelmingly favoured. The admissions policy set out within the Expression of Interest has been agreed with the sponsor based on these principles and this implies the ending of the 10% selection by aptitude for music from 2009 which would be the first year of admissions under any academy status. The envisaged admission policies for September 2008 and from September 2009 are annexed to the draft Memorandum of Understanding at Appendix 2. The final text of any admission policy is a matter to be provided for in the Funding Agreement." The MOU was expressed to be between the Council and Future and read in relevant part as follows: "5. The admission policy for the Academy shall be governed by the statutory Admissions Code for the time being in force but subject thereto the principles underlying the admissions policy for the Academy will ensure that places at the academy will not be allocated to pupils: 5.1 in accordance with any faith-based requirements; or 5.2 (except in the event that fair banding should be applied) in accordance with academic ability. 6. The admissions criteria applicable to admissions to Year 7 for the academic year starting in September 2008 will be those set out in Annex 1 to this document. 7. Unless otherwise agreed between the parties and subject to the consent of the Secretary of State for Children, Schools and Families (or his Successor), the admissions criteria applicable to admissions to Year 7 in any subsequent academic year will be those set out in Annex 2 to this document." Annexes 1 and 2 set out the admissions and oversubscription criteria for September 2008 and all subsequent years respectively in a form which reflected then current arrangements and the documents set out above, and did not include a banding criterion. No complaint whatsoever is made about Annexes 1 and 2. Mr Wolfe's complaint is entirely focussed on the words in parentheses in clause 5.2 – "except in the event that fair banding should be applied". Mr Wolfe submits that this is a fundamental change on what had gone before, and represented a volte face whereby the Council had abandoned its expressed concern to ensure that Future was unable to introduce banding for all time. He accepted that banding could not be introduced without the consent of the Secretary of State (clause 7), but that was of no consolation when it could be introduced, with the consent of the Secretary of State, over the head of the Council. In our judgment this submission is misconceived. In the first place, clause 7 also provides that the admissions criteria for 2008 and all subsequent years "will" be those set out in Annexes 1 and 2 respectively "Unless otherwise agreed between the parties". Therefore Future could do nothing to change Annexes 1 and 2 without the agreement not only of the Secretary of State but also of the Council. Mr Wolfe submitted in effect that the clause 5.1 exception relating to banding fell outside clause 7, but also accepted during the hearing that if that was not the case, then the ground under discussion could not be made good. In our judgment, this ground must fail, because clause 7 does achieve the situation where banding could only be introduced with the agreement of the Council. And of course, if the School had remained in place, that would always have been the position, namely that the Council could have lawfully introduced banding as an aid towards the achievement of a balanced all-ability admissions policy. Secondly, although the judge regarded the language of the MOU as representing a "shift" in position which he regarded as "significant", he declined to find that it was "fundamental". He adopted that test, of a "fundamental" change, for whether a later modification vitiates a prior consultation as one which Silber J had used in R (Smith) v. East Kent National Health Service Trust [2002] EWHC 2640 (Admin) after a consideration of the authorities. No complaint of its use has been made by Mr Wolfe. We agree that on any view this change could not be described as fundamental, or as such a change as should properly vitiate a consultation process, and we do so even if the change should properly be regarded as "significant". Banding still remained something which was not on the agenda, as Annexes 1 and 2 demonstrated; it could not be introduced without the consent of the Secretary of State or the Council, it would not only be lawful and recognised by the Code as "good practice", but it could be needed to ensure the essential goal of a balanced all-ability intake. It would be wrong to rule it out for ever, and in our view it never had been. Thirdly, however, we are very doubtful that we would even describe the MOU exception in issue as a "significant" change. In truth, it is only a drafting matter. In drafting an agreement to enshrine an all-ability admissions policy in which selection on the basis of ability is not to be permitted, the draftsman has asked himself: but what if banding (as a prelude to random selection within the bands) is needed to assist in the achievement of such a comprehensive all-ability policy? He and the parties have realised that such a possibility has to be acknowledged, even if the present and foreseeable policy is to do without it (as reflected in annexes 1 and 2). So, the possibility is acknowledged: for otherwise the drafting might suggest that a future attempt to ensure a balanced all-ability intake with the help of fair banding would be forbidden. In truth, nothing could prevent a change in admissions policy by agreement (even if the consent of the Secretary of State were also needed), even without the exception in clause 5.1. That is recognised in clause 8, which states that Future "may at any time propose to the Council a change in the admissions criteria applicable to the Academy and the Council will not withhold or delay its decision in respect of such a change". Mr Wolfe does not object to clause 8. And even in the absence of clause 8, the parties could agree on a change. All this shows that the challenged wording in clause 5.1 is not a matter of substance but a mere drafting point. Fourthly, we return to our understanding of what the Expression of Interest document was saying about admissions policy and banding. What was contemplated was a contract to formalise an all-ability admissions policy and at most its current detail, but not to set the complete detail in stone for ever. Above all, it was not all about banding, which was but a detail in the overall picture. We therefore consider that, whether or not we are right to describe the challenged wording as a matter of mere drafting, the MOU accurately reflects the essence of what the Council and Future had reached agreement on as described in the Expression of Interest document and in the report of 17 March 2008. If it were not so, it would have been impossible for that report to have annexed the MOU as an accurate expression of the agreed admissions policy. The writer of that report and the Council plainly did not see any incompatibility between the MOU on the one hand and the report and the Expression of Interest on the other. We agree. It follows that this second ground of challenge failed as well. We would observe that the provisions of Annexes 1 and 2 of the MOU were subsequently contained in Annex 1 to the supplemental agreement to the master funding agreement. Annex 1 also contained provisions for the need for consultation each year for determining admission arrangements: among the named consultees were the Council and the admission forum for the Council. Delay The judge also had to consider an argument made by the Council and the interested parties to the effect that permission to apply for judicial review should in any event be refused on the ground that the appellant had delayed in her application, on the ground that in substance the challenge amounted to an attack on the publication of the statutory closure notice on 3 January 2008. The judge said that it was not strictly necessary for him to deal with this issue, and that he approached it with caution, especially as there were considerable merits in the points made by both sides. In the end, he said that, if he had to decide the issue, he would not have ruled the application out of time, because he would have been most influenced by the desirability of curtailing premature challenges and of encouraging negotiation rather than litigation. The point of delay has been raised again by the respondents in this court, who have developed the argument further by reference to the pressing time constraints of the 31 August 2008 closure of the School and of the 1 September 2008 opening of the Academy, the need for so much to be done and committed in the run-up to those dead-lines, and the principle of good administration. Like the judge, we have decided this application on the substance of it, and have not had to decide the procedural point of delay. We would merely say that, if we had had to consider the question of delay, there was apparently much to be said for the respondents' submissions. Conclusion In sum, this application for judicial review was refused for the reasons contained herein.

Judgment of the Court of 9 April 1987. - G. Basset v Société des auteurs, compositeurs et éditeurs de musique (SACEM). - Reference for a preliminary ruling: Cour d'appel de Versailles - France. - Copyright management - Disparities between national laws. - Case 402/85. European Court reports 1987 Page 01747 Summary Parties Grounds Decision on costs Operative part Keywords ++++ 1 . FREE MOVEMENT OF GOODS - INDUSTRIAL AND COMMERCIAL PROPERTY - COPYRIGHT - NATIONAL LEGISLATION PERMITTING THE CHARGING, ON THE PUBLIC USE OF IMPORTED SOUND RECORDINGS, IN ADDITION TO THE PERFORMANCE ROYALTY, OF A SUPPLEMENTARY REPRODUCTION ROYALTY NOT PROVIDED FOR IN THE MEMBER STATE OF ORIGIN - PERMISSIBILITY ( EEC TREATY, ARTS . 30 AND 36 ) 2 . COMPETITION - DOMINANT POSITION - COPYRIGHT MANAGEMENT SOCIETY ENJOYING A DE FACTO MONOPOLY - CHARGING, ON THE PUBLIC USE OF IMPORTED SOUND RECORDINGS, IN ADDITION TO THE PERFORMANCE ROYALTY, OF A SUPPLEMENTARY REPRODUCTION ROYALTY NOT PROVIDED FOR IN THE MEMBER STATE OF ORIGIN - NO ABUSE . ( EEC TREATY, ART . 86 ) Summary 1 . ARTICLES 30 AND 36 OF THE EEC TREATY, ON A TRUE CONSTRUCTION, DO NOT PRECLUDE THE APPLICATION OF NATIONAL LEGISLATION ALLOWING A NATIONAL COPYRIGHT-MANAGEMENT SOCIETY TO CHARGE A ROYALTY CALLED A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE", IN ADDITION TO A PERFORMANCE ROYALTY, ON THE PUBLIC PERFORMANCE OF SOUND RECORDINGS, EVEN WHERE SUCH A SUPPLEMENTARY FEE IS NOT PROVIDED FOR IN THE MEMBER STATE WHERE THOSE SOUND RECORDINGS WERE LAWFULLY PLACED ON THE MARKET . 2 . THE PROHIBITIONS LAID DOWN IN ARTICLE 86 OF THE EEC TREATY, PROPERLY CONSTRUED, DO NOT APPLY TO THE CONDUCT OF A NATIONAL COPYRIGHT-MANAGEMENT SOCIETY SIMPLY BECAUSE IT CHARGES A ROYALTY CALLED A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE", IN ADDITION TO A PERFORMANCE ROYALTY, ON THE PUBLIC PERFORMANCE OF SOUND RECORDINGS, EVEN WHERE SUCH A SUPPLEMENTARY FEE IS NOT PROVIDED FOR IN THE MEMBER STATE WHERE THOSE SOUND RECORDINGS WERE LAWFULLY PLACED ON THE MARKET . Parties IN CASE 402/85 REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE COUR D' APPEL ( COURT OF APPEAL ), VERSAILLES, FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN G . BASSET, RESIDING AT FREJUS ( FRANCE ), AND SOCIETE DES AUTEURS, COMPOSITEURS ET EDITEURS DE MUSIQUE ( SACEM ), PARIS, ON THE INTERPRETATION OF ARTICLES 30, 36 AND 86 OF THE EEC TREATY, THE COURT COMPOSED OF : LORD MACKENZIE STUART, PRESIDENT, T.*F . O' HIGGINS AND F . SCHOCKWEILER ( PRESIDENTS OF CHAMBERS ), G . BOSCO, T . KOOPMANS, O . DUE, K . BAHLMANN, R . JOLIET AND G.*C . RODRIGUEZ IGLESIAS, JUDGES, ADVOCATE GENERAL : C.*O . LENZ REGISTRAR : B . PASTOR, ADMINISTRATOR AFTER CONSIDERING THE OBSERVATIONS SUBMITTED ON BEHALF OF : G . BASSET, THE APPELLANT IN THE MAIN PROCEEDINGS, REPRESENTED BY P . MONTIER, OF THE PARIS BAR, SACEM, THE RESPONDENT IN THE MAIN PROCEEDINGS, REPRESENTED BY O . CARMET AND G . KIEJMAN, OF THE PARIS BAR, THE GOVERNMENT OF THE FRENCH REPUBLIC, REPRESENTED BY E . BELLIARD AND J . MYARD, ACTING AS AGENTS, THE GOVERNMENT OF THE ITALIAN REPUBLIC, REPRESENTED BY L . FERRARI BRAVO, HEAD OF THE SERVIZIO DEL CONTENZIOSO DIPLOMATICO, ACTING AS AGENT, ASSISTED BY O . FIUMARA, AVVOCATO DELLO STATO, THE COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY G . MARENCO, A MEMBER OF ITS LEGAL DEPARTMENT, ACTING AS AGENT, HAVING REGARD TO THE REPORT FOR THE HEARING AND FURTHER TO THE HEARING ON 17 DECEMBER 1986, AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 24 FEBRUARY 1987, GIVES THE FOLLOWING JUDGMENT Grounds 1 BY A JUDGMENT OF 20 NOVEMBER 1985, WHICH WAS RECEIVED AT THE COURT ON 5 DECEMBER 1985, THE COUR D' APPEL ( COURT OF APPEAL ), VERSAILLES, REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE INTERPRETATION OF ARTICLES 30, 36 AND 86 OF THE TREATY WITH A VIEW TO DETERMINING THE COMPATIBILITY WITH THOSE PROVISIONS OF THE CHARGING OF A ROYALTY KNOWN AS A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE" ON THE PUBLIC PERFORMANCE, BY MEANS OF SOUND RECORDINGS, OF WORKS PROTECTED BY COPYRIGHT . 2 THOSE QUESTIONS WERE RAISED IN THE COURSE OF PROCEEDINGS BETWEEN MR BASSET, WHO OPERATES A DISCOTHEQUE IN FREJUS, AND THE SOCIETE DES AUTEURS, COMPOSITEURS ET EDITEURS DE MUSIQUE ( SACEM ). ASSERTING THAT WORKS FROM ITS REPERTOIRE HAD BEEN PLAYED IN MR BASSET' S DISCOTHEQUE WITHOUT PAYMENT OF THE AGREED ROYALTIES, SACEM BROUGHT PROCEEDINGS AGAINST MR BASSET BEFORE THE TRIBUNAL DE GRANDE INSTANCE ( REGIONAL COURT ), DRAGUIGNAN, WHICH ORDERED MR BASSET TO PAY THE ROYALTIES IN QUESTION . MR BASSET APPEALED ON THE GROUND THAT THE CONTRACTS ON WHICH THE CLAIM FOR ROYALTIES WAS BASED WERE VOID AS CONTRARY TO NATIONAL AND COMMUNITY LAW ON COMPETITION . 3 THE COUR D' APPEL, VERSAILLES, TO WHICH THE MATTER WAS REMITTED AFTER A JUDGMENT OF THE COUR D' APPEL, AIX-EN-PROVENCE, WAS QUASHED, HELD THAT MR BASSET' S SUBMISSIONS WERE BASED PRIMARILY ON THE CONCEPTS OF "ABUSE OF A DOMINANT POSITION" AND "UNLAWFUL AGREEMENT" AND THAT IT WAS NECESSARY TO CONSIDER THOSE SUBMISSIONS IN THE LIGHT NOT ONLY OF FRENCH LAW BUT ALSO OF COMMUNITY LAW, IN PARTICULAR ARTICLES 85 AND 86 OF THE TREATY . 4 WITH REGARD TO THE APPLICATION OF ARTICLE 85, THE COUR D' APPEL POINTS OUT THAT SACEM HAS CONCLUDED RECIPROCAL REPRESENTATION CONTRACTS WITH MOST FOREIGN COPYRIGHT-MANAGEMENT SOCIETIES UNDER WHICH EACH SOCIETY AUTHORIZES THE OTHER TO COLLECT ROYALTIES ON WORKS FROM THE REPERTOIRE OF THE FOREIGN SOCIETY, SUCH ROYALTIES TO BE COLLECTED IN EACH COUNTRY IN ACCORDANCE WITH THE NORMAL CONDITIONS IN THAT COUNTRY . ALTHOUGH SUCH CONTRACTS MAY BE CONSIDERED "AGREEMENTS BETWEEN UNDERTAKINGS" FOR THE PURPOSES OF ARTICLE 85, THEY DO NOT HAVE AS THEIR OBJECT OR EFFECT THE DISTORTION OF COMPETITION WITHIN THE COMMON MARKET . THE SYSTEM OF RECIPROCAL AUTHORITY CANNOT AFFECT THE AMOUNT OF COPYRIGHT ROYALTIES IN EACH COUNTRY AND IS LIKELY, BY ITS NATURE, TO REDUCE THE COST OF COLLECTING AND MONITORING ROYALTIES, TO THE BENEFIT OF AUTHORS AND OF USERS OF PROTECTED WORKS . 5 WITH REGARD TO ARTICLE 86, THE COUR D' APPEL CONSIDERS THAT SACEM HAS A DE FACTO MONOPOLY AND THUS OCCUPIES A DOMINANT POSITION ON THE MARKET . MR BASSET CLAIMS THAT SACEM HAS ABUSED THAT DOMINANT POSITION IN TWO RESPECTS : FIRST OF ALL, THE RATE OF THE ROYALTY, 8.25% OF THE DISCOTHEQUE' S GROSS TURNOVER, IS EXCESSIVE IN RELATION TO THE BENEFIT PROVIDED; SECONDLY, THAT RATE OF 8.25% INCLUDES A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE" OF 1.65%, CHARGED ON THE SAME BASIS AS THE REST OF THE ROYALTY, THAT IS TO SAY THE PUBLIC USE OF SOUND RECORDINGS . 6 ON THE FIRST POINT, THE COUR D' APPEL REJECTS THE CLAIM THAT THE RATE OF 8.25% IS AN UNFAIR PRICE . IT TAKES THE VIEW THAT THAT CHARGE, ALTHOUGH HIGH IN COMPARISON WITH THAT APPLIED IN OTHER COUNTRIES, IS NOT EXCESSIVE IN VIEW OF THE FACT THAT DISCOTHEQUES USE A PARTICULARLY LARGE AMOUNT OF MUSIC AND IF THEY COULD NOT USE SUCH MUSIC WOULD BE OBLIGED TO CLOSE IMMEDIATELY . 7 ON THE SECOND POINT, THE COUR D' APPEL STATES FIRST OF ALL THAT UNDER FRENCH LEGISLATION AN AUTHOR' S RIGHTS TO THE EXPLOITATION OF HIS WORK INCLUDE THE RIGHT OF PERFORMANCE AND THE RIGHT OF REPRODUCTION . PERFORMANCE IS DEFINED AS THE COMMUNICATION OF THE WORK TO THE PUBLIC, IN PARTICULAR ITS DISSEMINATION, BY ANY MEANS; REPRODUCTION IS THE FIXATION OF A WORK IN MATERIAL FORM BY ANY METHOD WHICH PERMITS ITS COMMUNICATION TO THE PUBLIC IN AN INDIRECT MANNER, IN PARTICULAR BY MECHANICAL RECORDING . IN THE CASE OF MUSIC, THE RIGHT OF REPRODUCTION IS NORMALLY ASSIGNED TO THE MANUFACTURER OF SOUND RECORDINGS, AND THE ROYALTY IS PAID WHEN THE RECORDINGS ARE PLACED ON THE MARKET . HOWEVER, THE ROYALTY OF 8.25% CHARGED TO DISCOTHEQUES BY SACEM COMPRISES THE PRICE OF THE PERFORMANCE RIGHT, IN THE AMOUNT OF 6.60%, AND A "SUPPLEMENTARY" REPRODUCTION ROYALTY, IN THE AMOUNT OF 1.65 %. 8 THE COUR D' APPEL HOLDS IN THAT REGARD THAT THE CHARGING OF BOTH A PERFORMANCE ROYALTY AND A SUPPLEMENTARY REPRODUCTION ROYALTY IS JUSTIFIED IN FRENCH LAW, WHICH ALLOWS AN AUTHOR TO GRANT A MANUFACTURER OF SOUND RECORDINGS A RIGHT OF REPRODUCTION RELATING ONLY TO THE MARKETING OF RECORDINGS FOR PRIVATE USE AND TO CHARGE A SUPPLEMENTARY MECHANICAL REPRODUCTION FEE TO A PERSON WHO, HAVING ACQUIRED THE RECORDING, MAKES A PUBLIC USE OF IT WHICH IS NOT COVERED BY THE REPRODUCTION FEE INITIALLY PAID . HOWEVER, THE COUR D' APPEL IS UNCERTAIN WHETHER THE CHARGING OF THE SUPPLEMENTARY MECHANICAL REPRODUCTION FEE IS COMPATIBLE WITH COMMUNITY LAW, IN PARTICULAR WHERE SOUND RECORDINGS HAVE BEEN IMPORTED FROM ANOTHER MEMBER STATE WHERE THEY WERE LAWFULLY MARKETED AND WHERE THE PUBLIC DISSEMINATION OF PROTECTED WORK GIVES RISE ONLY TO A SINGLE ROYALTY CORRESPONDING TO THE PERFORMANCE FEE; IN SUCH CIRCUMSTANCES THE CHARGING OF COMBINED ROYALTIES IN FRANCE MIGHT HAVE THE EFFECT OF INTERFERING WITH THE FREE MOVEMENT OF GOODS . 9 WITH A VIEW TO RESOLVING THOSE PROBLEMS THE COUR D' APPEL REFERRED TWO QUESTIONS TO THE COURT FOR A PRELIMINARY RULING IN ORDER TO DETERMINE WHETHER ARTICLES 30 AND 36 OR ARTICLE 86 OF THE TREATY MUST BE INTERPRETED AS MEANING THAT "A NATIONAL COPYRIGHT MANAGEMENT SOCIETY, WHICH ENJOYS A DE FACTO MONOPOLY FOR THE PROTECTION OF ITS REPERTOIRE AND IS CONNECTED BY RECIPROCAL REPRESENTATION CONTRACTS WITH FOREIGN COPYRIGHT-MANAGEMENT SOCIETIES ESTABLISHED INTER ALIA IN MEMBER STATES OF THE COMMUNITY, MAY NOT CHARGE USERS A ROYALTY ( CALLED A SUPPLEMENTARY MECHANICAL REPRODUCTION FEE ) ON THE PUBLIC PERFORMANCE OF WORKS FROM THE REPERTOIRES OF THOSE FOREIGN SOCIETIES BY MEANS OF SOUND RECORDINGS IN FREE CIRCULATION ON THE TERRITORY OF THOSE MEMBER STATES, THE CHARGING OF WHICH IS PROVIDED FOR AND AUTHORIZED BY THE LAW OF THE STATE WHERE THE SOUND RECORDINGS ARE USED BUT NOT IN THE MEMBER STATES FROM WHICH THEY ARE IMPORTED ". 10 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR THE SUBSTANCE OF THE FRENCH LEGISLATION ON LITERARY AND ARTISTIC PROPERTY AND A SUMMARY OF THE WRITTEN OBSERVATIONS SUBMITTED TO THE COURT, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT . 11 IT SHOULD BE RECALLED FIRST OF ALL THAT SOUND RECORDINGS ARE PRODUCTS TO WHICH THE FREE MOVEMENT OF GOODS APPLIES AND THAT ARTICLE 30 OF THE TREATY THEREFORE PROHIBITS THE APPLICATION OF NATIONAL LEGISLATION ALLOWING A COPYRIGHT-MANAGEMENT SOCIETY, ON THE BASIS OF THE EXCLUSIVE EXPLOITATION RIGHT WHICH IT EXERCISES ON BEHALF OF THE COPYRIGHT HOLDER, TO PREVENT THE DISTRIBUTION OF SOUND RECORDINGS IMPORTED FROM ANOTHER MEMBER STATE . HOWEVER, ARTICLE 36 OF THE TREATY PROVIDES THAT ARTICLE 30 DOES NOT PRECLUDE RESTRICTIONS ON IMPORTS JUSTIFIED ON GROUNDS OF THE PROTECTION OF INDUSTRIAL AND COMMERCIAL PROPERTY, AN EXPRESSION WHICH INCLUDES COPYRIGHT PROTECTION, IN PARTICULAR IN SO FAR AS IT IS EXPLOITED COMMERCIALLY BY MEANS OF LICENCES . ACCORDING TO THE SECOND SENTENCE OF ARTICLE 36, SUCH RESTRICTIONS MUST NOT CONSTITUTE A MEANS OF ARBITRARY DISCRIMINATION OR A DISGUISED RESTRICTION ON TRADE BETWEEN MEMBER STATES . 12 IT APPEARS FROM THE JUDGMENT OF THE NATIONAL COURT THAT THE "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE" WITH WHICH THE PRELIMINARY QUESTIONS ARE CONCERNED IS CHARGED NOT ON THE IMPORTATION OR MARKETING OF RECORDS OR OTHER SOUND RECORDINGS BUT BY REASON OF THEIR PUBLIC USE, FOR EXAMPLE BY A RADIO STATION, IN A DISCOTHEQUE OR IN A DEVICE SUCH AS A JUKE-BOX INSTALLED IN A PUBLIC PLACE . THE PROBLEM RAISED BY THE NATIONAL COURT LIES IN THE FACT THAT IN SUCH CIRCUMSTANCES THAT ROYALTY IS CHARGED IN ADDITION TO A PERFORMANCE ROYALTY . 13 THE NATIONAL COURT ASKS WHETHER ARTICLES 30 AND 36 OR ARTICLE 86 OF THE TREATY PROHIBITS THE CHARGING OF SUCH AN AGGREGATE FEE WHERE THE SOUND RECORDINGS WERE MANUFACTURED AND MARKETED IN A MEMBER STATE WHERE THERE IS NO SUCH AGGREGATION OF FEES AND ONLY A PERFORMANCE ROYALTY IS CHARGED ON THE PUBLIC USE OF A RECORDED WORK . THAT IS THE HYPOTHESIS THAT MUST BE EXAMINED . 14 IT IS UNDISPUTED THAT, AS IS NORMALLY THE CASE WITH REGARD TO COPYRIGHT MANAGEMENT, ON THE BASIS OF THE APPLICABLE INTERNATIONAL CONVENTIONS, THE AGGREGATION OF A PERFORMANCE FEE AND A SUPPLEMENTARY MECHANICAL REPRODUCTION FEE CHARGED ON THE PUBLIC USE IN FRANCE OF A RECORDED MUSICAL WORK TAKES PLACE WHETHER THE RECORDS ARE OF FRENCH ORIGIN OR ARE MANUFACTURED OR MARKETED IN ANOTHER MEMBER STATE . IT IS TRUE THAT PUBLIC USE IN ANOTHER MEMBER STATE MAY GIVE RISE ONLY TO THE COLLECTION OF A PERFORMANCE ROYALTY IN FAVOUR OF THE AUTHOR AND THE RECORD MANUFACTURER, BUT THAT CIRCUMSTANCE DOES NOT IMPLY THAT THE AMOUNT OF THE ROYALTY CHARGED OR ITS FUNCTION ARE DIFFERENT FROM THOSE OF THE ROYALTIES CHARGED IN FRANCE ON SUCH USE . 15 IN OTHER WORDS, DISREGARDING THE CONCEPTS USED BY FRENCH LEGISLATION AND PRACTICE, THE SUPPLEMENTARY MECHANICAL REPRODUCTION FEE MAY THUS BE ANALYSED AS CONSTITUTING PART OF THE PAYMENT FOR AN AUTHOR' S RIGHTS OVER THE PUBLIC PERFORMANCE OF A RECORDED MUSICAL WORK . MOREOVER, THE AMOUNT OF THAT ROYALTY, LIKE THAT OF THE PERFORMANCE FEE STRICTLY SO CALLED, IS CALCULATED ON THE BASIS OF THE DISCOTHEQUE' S TURNOVER AND NOT THE NUMBER OF RECORDS BOUGHT OR PLAYED . 16 IT FOLLOWS THAT, EVEN IF THE CHARGING OF THE FEE IN QUESTION WERE TO BE CAPABLE OF HAVING A RESTRICTIVE EFFECT ON IMPORTS, IT DOES NOT CONSTITUTE A MEASURE HAVING EQUIVALENT EFFECT PROHIBITED UNDER ARTICLE 30 OF THE TREATY INASMUCH AS IT MUST BE REGARDED AS A NORMAL EXPLOITATION OF COPYRIGHT AND DOES NOT CONSTITUTE A MEANS OF ARBITRARY DISCRIMINATION OR A DISGUISED RESTRICTION ON TRADE BETWEEN MEMBER STATES FOR THE PURPOSES OF ARTICLE 36 OF THE TREATY . 17 THE ANSWER TO THE FIRST QUESTION MUST THEREFORE BE THAT ARTICLES 30 AND 36 OF THE EEC TREATY, ON A TRUE CONSTRUCTION, DO NOT PRECLUDE THE APPLICATION OF NATIONAL LEGISLATION ALLOWING A NATIONAL COPYRIGHT-MANAGEMENT SOCIETY TO CHARGE A ROYALTY CALLED A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE", IN ADDITION TO A PERFORMANCE ROYALTY, ON THE PUBLIC PERFORMANCE OF SOUND RECORDINGS, EVEN WHERE SUCH A SUPPLEMENTARY FEE IS NOT PROVIDED FOR IN THE MEMBER STATE WHERE THOSE SOUND RECORDINGS WERE LAWFULLY PLACED ON THE MARKET . 18 WITH REGARD TO THE SECOND QUESTION, IT FOLLOWS FROM THE FOREGOING CONSIDERATIONS CONCERNING THE APPLICATION OF ARTICLE 36 OF THE TREATY THAT THE FACT THAT A COPYRIGHT-MANAGEMENT SOCIETY UTILIZES THE POSSIBILITIES MADE AVAILABLE TO IT BY NATIONAL LEGISLATION IN THAT REGARD DOES NOT IN ITSELF CONSTITUTE ABUSIVE CONDUCT FOR THE PURPOSES OF ARTICLE 86 OF THE TREATY . 19 IT IS NOT IMPOSSIBLE, HOWEVER, THAT THE AMOUNT OF THE ROYALTY, OR OF THE COMBINED ROYALTIES, CHARGED BY THE COPYRIGHT-MANAGEMENT SOCIETY MAY BE SUCH THAT ARTICLE 86 APPLIES . THE NATIONAL COURT, WHICH HAS EXCLUSIVE JURISDICTION TO ESTABLISH THE FACTS OF THE CASE UNDER THE PROCEDURE FOR INTERPRETATIVE RULINGS UNDER ARTICLE 17 OF THE TREATY, HELD THAT SACEM MUST BE REGARDED AS AN UNDERTAKING OCCUPYING A DOMINANT POSITION WITHIN THE COMMON MARKET . IT FOLLOWS THAT IF THAT UNDERTAKING WERE TO ENGAGE IN ABUSIVE PRACTICES, IN PARTICULAR BY IMPOSING UNFAIR CONDITIONS, ITS CONDUCT WOULD BE CONTRARY TO ARTICLE 86 . 20 IN THE EVENT, HOWEVER, THE NATIONAL COURT CONSIDERED THAT THE AMOUNT OF THE ROYALTIES CHARGED BY SACEM TO DISCOTHEQUES IN FRANCE WAS NOT UNFAIR . IN ITS WRITTEN OBSERVATIONS THE COMMISSION INDICATED THAT IT WAS CARRYING OUT A GENERAL INQUIRY INTO THE ROYALTIES CHARGED BY SACEM TO FRENCH DISCOTHEQUES, COVERING BOTH THE RATE OF THOSE ROYALTIES AND THE BASIS ON WHICH THEY ARE ASSESSED . HOWEVER, THE AMOUNT OF THE ROYALTIES IS NOT ONE OF THE ISSUES REFERRED BY THE NATIONAL COURT TO THIS COURT . 21 THE ANSWER TO THE SECOND QUESTION MUST THEREFORE BE THAT THE PROHIBITIONS LAID DOWN IN ARTICLE 86 OF THE EEC TREATY, PROPERLY CONSTRUED, DO NOT APPLY TO THE CONDUCT OF A NATIONAL COPYRIGHT-MANAGEMENT SOCIETY SIMPLY BECAUSE IT CHARGES A ROYALTY CALLED A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE", IN ADDITION TO A PERFORMANCE ROYALTY, ON THE PUBLIC PERFORMANCE OF SOUND RECORDINGS, EVEN WHERE SUCH A SUPPLEMENTARY FEE IS NOT PROVIDED FOR IN THE MEMBER STATE WHERE THOSE SOUND RECORDINGS WERE LAWFULLY PLACED ON THE MARKET . Decision on costs COSTS 22 THE COSTS INCURRED BY THE GOVERNMENT OF THE FRENCH REPUBLIC, THE GOVERNMENT OF THE ITALIAN REPUBLIC AND THE COMMISSION, WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED, IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT, THE DECISION ON COSTS IS A MATTER FOR THAT COURT . Operative part ON THOSE GROUNDS, THE COURT, IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE COUR D' APPEL, VERSAILLES, BY JUDGMENT OF 20 NOVEMBER 1985, HEREBY RULES : ( 1 ) ARTICLES 30 AND 36 OF THE EEC TREATY, ON A TRUE CONSTRUCTION, DO NOT PRECLUDE THE APPLICATION OF NATIONAL LEGISLATION ALLOWING A NATIONAL COPYRIGHT-MANAGEMENT SOCIETY TO CHARGE A ROYALTY CALLED A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE", IN ADDITION TO A PERFORMANCE ROYALTY, ON THE PUBLIC PERFORMANCE OF SOUND RECORDINGS, EVEN WHERE SUCH A SUPPLEMENTARY FEE IS NOT PROVIDED FOR IN THE MEMBER STATE WHERE THOSE SOUND RECORDINGS WERE LAWFULLY PLACED ON THE MARKET . ( 2 ) THE PROHIBITIONS LAID DOWN IN ARTICLE 86 OF THE EEC TREATY, PROPERLY CONSTRUED, DO NOT APPLY TO THE CONDUCT OF A NATIONAL COPYRIGHT-MANAGEMENT SOCIETY SIMPLY BECAUSE IT CHARGES A ROYALTY CALLED A "SUPPLEMENTARY MECHANICAL REPRODUCTION FEE", IN ADDITION TO A PERFORMANCE ROYALTY, ON THE PUBLIC PERFORMANCE OF SOUND RECORDINGS, EVEN WHERE SUCH A SUPPLEMENTARY FEE IS NOT PROVIDED FOR IN THE MEMBER STATE WHERE THOSE SOUND RECORDINGS WERE LAWFULLY PLACED ON THE MARKET .

Lord Justice Waller : The appellant is only 20 years old and already has a record of committing a series of criminal offences, including wounding with intent. He has a mental disorder which would come within the diagnosis of Dissocial Personality Disorder. His last sentence was one of 30 months for robbery, which was due to end on 12th September 2008. Consideration had been given from time to time during the period of that sentence to seeking from the Secretary of State a warrant directing his transfer to a hospital under section 47 of the Mental Health Act 1983 but, until the very last moment of his sentence, that did not happen. It is the circumstances under which a warrant was sought and obtained at the last moment of his sentence that is under scrutiny in the proceedings. On the morning of the 12th September 2008, the day he was due to be released, the appellant was under the impression that he would be released into the community, albeit under supervision. A notice of supervision relating to the appellant's release plan was handed to the appellant on that day. It informed him that his sentence expired on 12th September and that after his release he would be under the supervision of a probation officer or local authority social worker for three months until 11th December. Unbeknownst to the appellant, a direction had been sought from the Secretary of State for a transfer to a hospital and a warrant had been issued and signed on 11th September, transferring the appellant to a Medium Secure Hospital, Kneesworth House in Hertfordshire. Thus, when the appellant, who had prepared for and was expecting his release, reached the reception area having changed into his civilian clothes, he was served with the order for transfer and escorted by hospital staff to Kneesworth. By section 47 of the Mental Health Act the Secretary of State must be satisfied of certain matters. The warrant stated that he was so satisfied, and it is convenient at this stage to quote the warrant issued in this case, which stated that the Secretary of State was satisfied "by the reports of two medical practitioners, of whom one at least is a practitioner approved for the purposes of section 12 of the said Act, that the [appellant] is suffering from psychopathic disorder within the meaning of the said Act and that the mental order is of a nature or degree which makes it appropriate for the patient to be detained in a hospital for medical treatment and that such treatment is likely to alleviate or prevent a deterioration of his condition." By a judgment handed down on 18th November 2008 Mrs Justice Cox held that, on the evidence before her, the Secretary of State "could not have been satisfied by reports from at least two medical practitioners that hospital treatment was likely to alleviate or prevent a deterioration of the [appellant's] condition." On that basis she held that "if that had been the end of the matter" she would have felt constrained to make an order quashing the decision to transfer. But she also held that it was not the end of the matter. She went on to consider evidence from two practitioners brought into existence after the transfer had been made and, in reliance on that evidence, she found that if the Secretary of State had made further inquiries he would have been so satisfied and would have made the order for transfer, so that in the exercise of her discretion she would not grant relief. The appellant appealed that part of the judge's judgment whereby she had, in her discretion, refused relief. Buxton LJ granted permission to appeal on 10th December and directed that the appeal should be expedited. The appeal was listed to be heard on 16th December. The respondent put in a respondent's notice challenging that part of the judgment by which the judge indicated that but for the exercise of her discretion she would have quashed the transfer decision. On the hearing of the appeal we indicated that we would like to hear argument on the respondent's notice first because if the judge's decision on that aspect were reversed that would make the appellant's argument academic. Having heard argument on the respondent's notice and having retired for a short while we indicated that we needed further time to consider that aspect and would like to hear argument on the judge's exercise of discretion on the basis that the judge's view on quashing the order to transfer might be right. Miss Olley at this stage indicated very properly that she would find it impossible to uphold the judge's exercise of discretion if the order to transfer and thus the warrant were quashed. With the greatest respect to the judge, who had clearly taken the greatest care in considering every aspect of a troublesome case, and, who quite understandably was concerned about the ramifications of quashing the order to transfer with its obvious consequences, the judge went wrong in seeking to keep an invalid order in place by the exercise of a discretion to refuse relief. It seems probable that she was misled by the decision in R v Secretary of State for the Home Department ex p Gilkes [1999] 1 MHLR 6 where Dyson J (as he then was) held in relation to a decision to transfer under section 47 that it had not been reasonable for the Secretary of State to rely on one of the two medical reports she relied on and held that, in the light of the fact that if the Secretary of State had made further inquiries at the time of the decision to transfer, the decision would have been the same, that he would exercise his discretion against granting relief. There does not seem to have been argument in that case as to whether, by virtue of unreasonably relying on a report, the warrant issued was unlawful. It may be that that case fell a different side of the line. Lord Donaldson MR in R v Secretary of State ex p Cheblak [1991] 1 WLR 890 explained the difference between an application for judicial review and habeas corpus in these words:- "Although, as I have said, the 2 forms of relief which the applicant seeks are interrelated on the facts of his case, they are essentially different. A writ of habeas corpus will issue where someone is detained without any authority or the purported authority is beyond the powers of the person authorising the detention and so is unlawful. The remedy of judicial review is available where the decision or action sought to be impugned is within the powers of the person taking it but, due to procedural error, a misappreciation of the law, a failure to take account of relevant matters, a taking account of irrelevant matters or the fundamental unreasonableness of the decision or action, it should never have been taken. In such a case the decision or action is lawful, unless and until it is set aside by a court of competent jurisdiction. In the case of detention, if the warrant, or the underlying decision to deport, were set aside but the detention continued, a writ of habeas corpus would issue." If the judge's decision in this case was right the Secretary of State simply did not have the power under section 47 to direct a transfer. If that was right the detention was unlawful. The court simply cannot render a detention lawful that which was unlawful simply by refusing to grant relief. I should perhaps add that, so far as the future is concerned, as Mr Knafler has explained in his skeleton there are provisions of the Mental Health Act sections 5 and 3 which would allow for the detention of the appellant in a hospital, if the criteria under those sections apply. That could be the only way in which the appellant's detention in a hospital could become lawful once the order for transfer and the warrant were quashed. Accordingly the question is – was the judge right in her view that the Secretary of State did not have the power to direct a transfer under section 47? It is important in considering that question to have in mind the context. The decision under section 47 was being taken right at the end of the appellant's sentence and it was thus a decision that involved depriving him of his liberty. That may often not be the position when section 47 is used because the transfer is in the course of a sentence of imprisonment and the patient's detention in hospital is in exchange for lawful detention in prison. That, as it seems to me, heightens the scrutiny which should be applied both by the Secretary of State as to the evidence on which that decision should be taken, and heightens the scrutiny which the court must apply to the decision of the Secretary of State. Mr Knafler reminded us of the words of Brooke LJ in D v Home Office [2006] 1 WLR citing the words of Lord Atkin and Lord Griffiths in paragraph 69:- "no member of the executive can interfere with the liberty or property of a British subject except on the condition that he can support the legality of his action before a court of justice. And it is the tradition of British justice that judges should not shrink from deciding such issues in the face of the executive" (Eshugbayi Eleko v Office Administering the Government of Nigeria [1931] AC 662, 670, per Lord Atkin.) "in English law every imprisonment is prima facie unlawful and . . . it is for a person directing imprisonment to justify his act. The only exception is in respect of imprisonment ordered by a judge, who from the nature of his office cannot be sued, and the validity of whose judicial decisions cannot in such proceedings as the present be questioned. (Liversidge v Anderson [1942] AC 206, 245-246, per Lord Atkin.) 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. (Murray v Ministry of Defence [1988] 1 WLR 692, 703, per Lord Griffiths.)" In particular Mr Knafler emphasised that the onus lies on the Secretary of State to support the legality of his action where the liberty of the subject is concerned. He further submitted that, in the mental health context, if someone is to be taken out of the community and detained in a hospital there must be clear evidence that the medical condition of a patient justifies such action; [see Sir Thomas Bingham MR in S-C (Mental Patient : Habeas Corpus) [1996] QB 599 at 603 F-H]. He further relied on a dictum in Regina (Rogers) v Swindon NHS Primary Care Trust [2006] 1 WLR 2649 para 56 to the effect that where fundamental rights are involved the court must subject the decision to rigorous scrutiny. Indeed, for the same reasons, he would add that there was an obligation on the Secretary of State to scrutinise the evidence with rigorous scrutiny before making a direction. Section 47 provides as follows:- "Removal to hospital of persons serving sentences of imprisonment, etc. 47. (1) If in the case of a person serving a sentence of imprisonment the Secretary of State is satisfied, by reports from at least two registered medical practitioners – (a) that the said person is suffering from mental illness, psychopathic disorder, severe mental impairment or mental impairment; and (b) that the mental disorder from which that person is suffering is of a nature or degree which makes it appropriate for him to be detained in a hospital for medical treatment and, in the case of psychopathic disorder or mental impairment, that such treatment is likely to alleviate or prevent a deterioration of his condition; the Secretary of State may, if he is of the opinion having regard to the public interest and all the circumstances that it is expedient so to do, by warrant direct that that person be removed to and detained in such hospital [ . . . ] as may be specified in the direction; and a direction under this section shall be known as "a transfer direction." (2) A transfer shall cease to have effect at the expiration of the period of 14 days beginning with the date on which it is given unless within that period the person with respect to whom it was given has been received into the hospital specified in the direction. (3) A transfer direction with respect to any person shall have the same effect as a hospital order made in his case. (4) A transfer direction shall specify the form or forms of mental disorder referred to in paragraph (a) subsection (1) above from which, upon the reports taken into account under that subsection, the patient is found by the Secretary of State to be suffering; and no such direction shall be given unless the patient is described in each of those reports as suffering from the same form of disorder, whether or not he is also described in either of them as suffering from another form." Thus, whenever a decision under section 47 is taken the Secretary of State must be satisfied by reports from two medical practitioners of the matters set out in subsection (1) (a) and (b). Dyson J in R v Secretary of State for the Home Department ex p Gaynor Gilkes said this about such reports:- " If the reports are manifestly unreliable, then the Secretary of State cannot reasonably be satisfied that the 2 conditions are met on the basis of the reports, and a decision to rely on them in such circumstances will be capable of successful challenge by judicial review. A medical report may be unreliable for a number of reasons. It may on its face not address the relevant statutory criteria. It may be based on an assessment which is so out of date that the mere fact of a lapse of time will be sufficient to render it unreliable. It may be unreasonable to rely on a report based on an assessment conducted an appreciable, but not inordinate, time before the decision to transfer where the mental disorder is a fluctuating and unstable condition and/or where there has been a change of circumstances since the assessment was made. In each case, it will be for the Secretary of State to consider whether in his judgment the medical report is one on which he can safely and properly rely so as to be satisfied that the conditions set out in paras (a) and (b) of s.47 are met. One of the considerations that will be uppermost in his mind is whether the assessment on which the report is based is sufficiently recent to provide reliable evidence of the patient's current mental condition." If the decision is being taken as in this case right at the end of the sentence what must also be in the Secretary of State's mind I suggest is that a decision to direct a transfer cannot simply be taken on the grounds that a convicted person will be a danger to the public if released (as understandable as that concern must be) but can only be taken on the grounds that his medical condition and its treatability (to use a shorthand) justify the decision. On what material was the decision taken and who took the decision? The ultimate decision appears to have been taken by Kalpna Verma, a Casework Team Leader/Higher Executive Officer in the Ministry of Justice. Her statement so far as relevant is in the following terms:- "2. Shortly before 14 August, John Hughes of the Hertfordshire Probation Service and Chairman of the Multi Agency Public Protection Agency, Hertfordshire spoke by telephone to Mary Robinson, Caseworker/Executive Officer in the Unit indicating that a transfer of the Claimant to hospital under section 47 was requested. Ms Robinson advised him that for this purpose two medical reports would be required. On 14 August a file of documents relating to the Claimant was received from Hertfordshire Probation Service and between 8 and 10 September medical documents were received consisting of the reports of Dr Isweran of 2 May 2007 and Dr Ijomah of 29 August 2008 and the report forms F1305 completed by Dr Isweran on 8 September 2008 and Dr Morris on 10 September 2008. On 12 September Ms Robinson referred the file to me under cover of a risk assessment form ("VK1 page 1) with a view to consideration of a transfer under s47 of the Act to Kneesworth House Hospital. 3. I analysed t he file and took into consideration numerous factors when considering a section 47 transfer and these were: 1) The nature of the index offence: robbery involving a threat of violence. (See Offender Assessment System Analysis of Offences "VK1" pages 2-5). 2) The very large number of previous convictions. (See PNC printout "VK1" pages 6-14). 3) The medical reports of Drs Isweran, Ijomah and Morris. As Dr Isweran's report on interview was dated May 2007 and that of Dr Ijomah was not by a doctor who had completed a form F1305, the advice of the Casework Manager, Chris Kemp, was sought as to their validity and he advised that as attempts had been made by the doctors to see the Claimant and he had refused to see them, coupled with the fact the reports indicated that he was suffering from a psychopathic disorder, being an enduring condition, that the medical evidence was sufficient. 4) The level of security of the proposed hospital (Kneesworth House, medium security). 5) The Risk Assessment form. ("VK1" page 1) 6) Sentence expiry date 12 September 2008. 7) The prison transfer form information ("VK1" pages 15-16). 4. I then considered the criteria under s47 of the Act and satisfied myself that: 1) The detainee was suffering from a mental disorder. 2) The level (of) security of the hospital proposed for the transfer was adequate. 3) The medical reports were valid." The report forms F1305 completed by Dr Morris and Dr Isweran were as to the front pages pro forma, allowing for the crossing out of certain points and leaving in others. That process meant that on the front pages each doctor "Declared I am of the opinion that (a) this patient is suffering from ….(ii) psychopathic disorder …within the meaning of the Mental Health Act 1983,and (b) that the mental disorder from which the patient is suffering is of a nature and a degree which makes it appropriate for him to be detained in a hospital for treatment" Then follows an instruction in italics "where the patient is suffering from a psychopathic disorder or mental impairment" and the form continues "(c) that such treatment is likely to alleviate or prevent a deterioration of his condition. My full medical report is given on the reverse." (my underlining) "The full medical reports on the reverse" were completed under two pro forma headings. The first is "Information to establish mental disorder, including reference to type of disorder and description of symptoms". Both doctors gave the required description. The next heading is "Reasons for conclusion that the medical disorder is of a nature or degree which makes detention in a hospital for medical treatment appropriate". There is nothing in the heading that directs the attention of the doctor to giving reasons as to why he or she considers that treatment is likely to alleviate or prevent deterioration of the prisoner's condition. In this instance neither doctor gave any reasons or provided any grounds in support of the view that they were of the opinion that the treatment would alleviate or prevent deterioration. Indeed the point each seems to make is that the appellant's condition makes him likely to commit further offences if he is released into the community. Kalpna Verma also had a lengthy report from Dr Ijomah, dated 19th August 2008. That undoubtedly did deal with treatability in these terms which seem to be somewhat guarded:- "Treatability – TF I would consider is treatable. TF is motivated for treatment and has engaged in previous treatment though these treatments have been brief in nature. T here will be a number of treatment barriers to overcome, especially the features of his personality disorder which may trigger reactions of rejection from his carers. As would be expected TF's motivation will fluctuate with external circumstances and adverse events. Treatments TF seems most likely to benefit from treatment targeting his emotional regulation and impulsivity. This would be best through cognitive behavioural modality. TF tells me has had undergone these in the past but the more effective treatments are of longer duration, up to one year. This would involve primarily either anger management or dialectical behaviour therapy (DBT). The general aspects of these treatments would be involving group work and individual treatment work. There would be an educational element to aid his understanding of emotions, behaviour and cognitions. This would be coupled with a means of obtaining self control over his emotions and cognition either through relaxation techniques, meditation etc. After practice, testing out the effect of treatment either through provocation or role playing problematic situations would give an indication of the treatment effectiveness. It was unclear if this type of treatment could be provided in the community as an alternative to receiving such treatment within a secure setting. TF could be considered to meet the legal criteria of psychopathic disorder and his condition I would consider would be amenable to treatment. TF states t hat he is willing to undergo treatment though his motivation will fluctuate over time." The risk assessment form prepared by Miss Robinson set out details of the appellant's offence and refers to his extensive previous convictions. It confirms that the two medical reports had been obtained and then says this under the heading "Symptoms & Reasons for treatment":- "It is believed that Mr F is treatable and this can only be carried out within a secure setting." [This conforms with Dr Ijomah's view]. Her comments at the end were as follows:- "Rampton hospital have assessed him and have recommended a MSU. As can be seen the medical reports are out of date. I have however, discussed this with both RMOs who have informed me that Mr F has refused to see them making threats to kill them" It is not in dispute that there was before the Secretary of State one report, that of Dr Ijomah, which dealt with treatability. Miss Olley submitted that, because of the declarations on the first pages of the F1305s, the right conclusion is that these reports also demonstrated to the Secretary of State that it was these doctors' opinions that the appellant was treatable. It seems to me that it would have been very difficult for Kalpna Verma, applying a rigorous scrutiny as she was obliged to do, to be satisfied that these doctors had applied their minds to treatability. More important perhaps is that it does not seem to me from Kalpna Verma's statement that she applied her mind to the question whether she had opinions from two doctors on treatability. As appears from her statement and Miss Robinson's risk report the concern was that the F1305 medical reports were out of date in that neither doctor had interviewed the appellant recently. That concern would seem to relate to diagnosis and the possibility that the appellant's condition might be fluctuating. The advice to Miss Verma from Miss Robinson and Mr Kemp was that, since the appellant would not see either doctor in recent times but the appellant's condition was "enduring", she could rely on those reports. That, as it seems to me, is appropriate advice but does not engage with the question whether treatment would alleviate or prevent deterioration in the condition. In her statement Kalpna Verma never addressed "treatability" at all. Her comment in paragraph 4 that the "medical reports were valid" goes simply to the fact that although any interview on which diagnosis had been made by the doctors who signed the F1305s was many months before, the views of the doctors on diagnosis were still valid. Where section 47 is proposed to be used at the very end of the sentence, and hopefully that will only be in very exceptional cases, the onus must be on the Secretary of State to show that the mind of the decision maker has focused on each of the criteria which it is necessary to satisfy if there is to be power to issue a warrant directing transfer to a hospital. In my view the Secretary of State has failed to establish that she had a report from a second doctor on treatability or indeed that Kalpna Verma was herself satisfied on the evidence of the doctors before her that treatment would alleviate or prevent a deterioration in the appellant's condition. In my view the judge's conclusion on this aspect was correct and in the result the appeal must be allowed. Lord Justice Thomas : I agree. Lord Justice Aikens : I also agree.

Mr. Andrew Edis, Q.C.: This is an action for damages following an alleged road traffic accident which is said to have occurred on 7th February 2006. It is a claim for a very modest sum of general damages only. The Claimant told his doctor that he took 1 week off work, but there is no claim for any loss of earnings or any other financial loss. In evidence he said that he took a couple of weeks off and that he was working at that time "now and again" as a bricklayer but that he had decided not to bother claiming any damages for loss of earnings. He did not explain this generosity on his part to the insurers of the First Defendant. I assess general damages in the sum of £1,500 on the basis of the medical report of Dr. Arthur at page 119 of the Claimant's Trial Bundle (which I shall call Trial Bundle 1). The hearing has occupied 3 days not including the day when this judgment is delivered, and the court has been provided with 2,911 pages of written material in 8 lever arch files as follows:- i) Trial Bundle 1, prepared by the Claimant's Solicitors. ii) The Second Defendant's Supplementary Bundle of Documents, which I shall call Trial Bundle 2. iii) Three Lever Arch Files of exhibits to the statements of Mr. Stuart Smith, the solicitor for the Second Defendant. Those statements are in Trial Bundle 2 at pages 282-352. The exhibits comprise the documents relating to the investigation into 9 accidents, including the one with which I am concerned. They are designated Accidents A-I on an A3 chart prepared by Mr. Smith which is designed to illustrate the Second Defendant's case. The accident with which I am concerned is Accident G on that list. The 3 files are arranged so that the sets of documents appear in alphabetical order by the letter assigned to the relevant accident. I have only looked at the documents in these files to which I have been referred, which is a very small proportion of the total. iv) 3 lever arch files of Facebook searches carried out by the solicitors or agents of the Second Defendant to determine what links between people may be shown by their lists of friends on their publicly available Facebook pages. These searches were done in respect of 28 people in November 2008, April 2009, January 2010, February 2010, and September 2010 (Facebook Bundles 1 and 2) and repeated more recently in respect of a small selection of those individuals (Facebook Bundle 3). I shall call these FB/1, FB/2 and FB/3. Those searches could not be repeated recently in respect of some of the key characters in this case because the privacy settings on Facebook had been changed. Jaimes Locke, the Claimant's brother, told me that he had done this because of a problem with a girlfriend, and not to avoid further scrutiny by the Second Defendant. v) In addition, I have lengthy skeleton arguments and further documents attached to that of the Claimant. On the face of it, a disproportionate amount of time has been used on this claim. As will appear below, I do not think that this appearance reflects the reality. Although I will conclude this judgment with some observations about the volume of paper which has been provided and some case management suggestions prompted by my experience of trying this case, the substantive issues involved are of some importance. The present claim is in fact the sole survivor of a series of 9 claims which were investigated as a group by the Second Defendant and which the Second Defendant proposed should be managed and heard together. Some orders were made designed to give effect to this aim, but in the result one claim was settled by Equity Red Star (Accident I), and all the others were withdrawn save this one. Some claimants involved in some accidents were paid out "before the penny dropped" as Mr. Higgins put it in submissions, but after the Second Defendant took its hard line in defending this claim (among the others) by alleging a substantial fraudulent conspiracy, only this Claimant has persisted in his attempt to recover his damages. Summary of Claim The claim is brought by Mr. Daniel Locke who alleges that he sustained minor injuries when he was the front seat passenger in the car of his brother, Jaimes Locke, when it was involved in a road traffic accident in Station Road, Wallasey, at about 8.00pm on Thursday the 7th December 2006. He alleges that the accident was entirely the fault of the driver of the other car involved, James Stuart. He says that his brother was driving his Vauxhall Astra along Station Road, when James Stuart drove a vehicle from Willoughby Road into collision with it. Willoughby Road is clearly the minor road, and there are road markings indicating as much. Therefore, if what Mr. Locke says is true he is plainly right and entitled to recover his damages. The First Defendant has not appeared at the trial. The Second Defendant is the insurer of the First Defendant and has become a party in order to protect its interests. It alleges that the Claimant has lied about the accident. It claims that this is one of a number of similarly contrived accidents in which two cars are brought into collision deliberately so that claims for damages for personal injury can be made against the driver of one of them by the passengers of both cars (or by those who claim to have been passengers) and by the driver of the allegedly innocent vehicle. It points to a number of common features to these accidents, and also to a number of respects in which the evidence given by the Claimant is demonstrably untrue. The Claimant was supported in evidence by his brother, Jaimes Locke the "innocent" driver, and his mother who dealt with an alleged telephone call and who was also a passenger in one of the other impugned road traffic accidents said to be a further example of a fraudulent claim involving some personnel common to the fraudulent series of claims represented by Accidents A-I. The Second Defendant says that they too have told lies. It is because of the elaborate nature of the Second Defendant's case that the quantity of paper is so large. I think that steps could have been taken to reduce the amount of paper when the other claims were withdrawn or settled, because this single claim has required a far narrower focus than the initially contemplated trial would have done. However, the Second Defendant still wished to demonstrate the system of which this particular accident is said to be part. It is because of the potential consequences of a finding against the Claimant in this case, as well as because of its complexity, that District Judge Henthorn, a very experienced District Judge, transferred this case with others to the High Court by his Order of the 24th May 2010. Clearly, the Second Defendant has expended considerable investigative resources on its attempt to uncover and prove a fraudulent scheme and if that effort succeeds in avoiding liability in this case, it may be expected that there will be ramifications for other cases both within this allegedly fraudulent series of claims and beyond. Moreover, the evidence in this case has revealed publicly the scale of the inducement offered by the practice of referral fees to the promotion of false claims. I heard from Gina Simpson, the solicitor acting for the claimant in this case, that her firm paid a fee of £450 in respect of every Claimant whose case was referred to her, and which she decided to accept on a Conditional Fee Agreement. One of the accidents which I have been asked to look at, not that alleged by the Claimant, involved a minibus and a total of 19 people were to claim damages as a result of the accident (Accident A). This may therefore have earned the referrer £8,550. I make it clear at once that no-one has alleged any impropriety against Ms. Simpson. She gave impressive and sensible evidence before me about her practice which is lawful and so far as I am aware properly conducted according to professional standards. There is a degree of regulation of the practice of referral fees by the Ministry of Justice and by the Solicitors Regulatory Authority. I understand that there has been more guidance published since the period with which I have to deal, namely 2005-2007 and December 2006 in particular. Ms. Simpson told me that this has made it easier for solicitors to spot problems at an early stage. The way this works in practice is a matter of importance and it is appropriate that my findings should be recorded in a judgment of the High Court. I do not comment on the situation either then or now, but simply record these findings as revealed by the evidence in this case. It will be for others to take any action which appears to them to be necessary. The Law At the outset of the trial, it appeared that there might be two issues of law which required consideration. In the result they have not arisen. These were:- i) The Claimant relies upon a judgment given after a trial in the action brought by Jaimes Locke as a result of the same accident with which I am concerned. Mr. Jaimes Locke succeeded in proving that the accident occurred as he alleged, and he recovered damages which have been paid to him. It is argued that this creates either a bar of res judicata or at least issue estoppel to prevent the Second Defendant from re-opening the question of negligence, and the factual issue of whether the accident occurred. Mr. Kidd has, however, accepted that if the Second Defendant can show in these proceedings that the earlier judgment was obtained by fraud, and that it is therefore liable to be set aside, then he cannot rely on it. At one stage, the Second Defendant was inclined to rely on the result of an unsuccessful attempt by the Claimant within these proceedings to strike the Defence out as an abuse of the process of the court because of the res judicata or issue estoppel defence as determining that issue against the Claimant. The result of that argument, if it succeeded would only be to open up a possibility that I might reject the claim, without finding fraud, on the basis simply that the Claimant has failed to discharge the burden of proof in showing that he sustained injuries in a road traffic accident for which the First Defendant was liable. On one view of the facts of this case that is not a likely outcome. Either the Claimant has proved his case, because I believe him and his witnesses, or the Second Defendant has shown that his evidence, and that of his witnesses, is dishonest and that therefore the allegation that this was a contrived accident is proved. It was therefore agreed that this issue would only be argued if I made factual findings which meant that it arose. As will appear below, my findings render that legal argument unnecessary and I have not heard it, or resolved it. Mr. Kidd did seek to place some reliance on the decision of District Judge Wallace on 18th September 2008 (Trial Bundle 1 page 125) in his closing submissions. This was essentially an attempt to seek evidential support from it for his case rather than to ascribe any legal status to it. It was suggested that since District Judge Wallace had believed Jaimes Locke and Anthony Fogg I should attach greater weight to the evidence of Jaimes Locke from whom I have heard in this case. I have not heard from Anthony Fogg, although it emerged in the evidence of Jaimes Locke that he is still in touch with him and he had recently asked him to be a witness. He told me that Mr. Fogg was not available on the Wednesday of the Trial but might be available later in the week. He did not appear. Given that I do not know what evidence was before District Judge Wallace or what challenges to the evidence of Jaimes Locke and Anthony Fogg he was asked to assess, I derive no assistance from his conclusions. I do not actually have a transcript of his judgment on liability, although I do have one of his findings on quantum. ii) The second issue was one which troubled only me, namely the extent of the Second Defendant's liability to meet the Claimant's claim if the First Defendant did not contest his own liability. No Defence has been filed by James Stuart who has not appeared at this trial. However, no judgment has been entered against him in default, and it is agreed that if the Second Defendant's factual case succeeds then there should be no judgment against the First Defendant in these proceedings and the Second Defendant will not be liable to the Claimant. This, therefore, is simply an issue of fact. The Accident The Claimant and his brother give evidence of the happening of an accident on 7th December 2006 when they say that Jaimes Locke was driving his Vauxhall Astra along Station Road. He was intending to turn right into Willoughby Road in order to drop off Tony Fogg, a rear seat passenger, who lived there. The Claimant told me that he had been drinking and was not really taking much notice of what was happening, and that the first he knew of the accident was when a car struck the Astra in the side, coming from the left, or nearside, of the Astra. He was unable to identify the point of impact, or to tell me anything else about the accident except (eventually) that he was flung forward, restrained by the seat belt but struck his hand on the windscreen. Jaimes Locke said that he had not been drinking, and was looking for Willoughby Road, but failed to recognise it, so that he drove slightly past the point where he should have started to turn. Willoughby Road runs across Station Road to the left and to the right at this 4 way junction, and is the minor road. He was going slowly, he thought 10-15mph, when the other vehicle came from Willoughby Road on his left and into collision with his Astra, striking it at the pillar between the front and rear doors on the nearside. The dent at that point was the only damage which he recalled. The vehicles came almost immediately to a stop (within about 1 metre of the point of impact) and he alone got out of the car, having quickly satisfied himself that none of his 4 passengers was injured. He did not recognise the other driver, they quickly exchanged details and he then drove back to 19 Harvey Road, his family home, from which they had just come. If that evidence is true, the claim succeeds. The Second Defendant mounts essentially a two pronged attack on it. i) A series of points is made about the factual account of the accident itself which, it is said, render the evidence highly implausible. ii) The Second Defendant then relies upon a series of connections between the people involved in this accident and those involved in other suspiciously similar accidents occurring in the Wirral area in 2005-2007. It is said that these connections cannot plausibly be the result of the chance happening of accidents, and can only be explained by a conspiracy to manufacture accidents for financial gain. I include in this category of evidence, the suggestion that Jaimes Locke gave some false evidence designed to enhance his claim for damages in his own action, because if true that would tend to support the suggestion that the claim itself was manufactured. It would clearly not prove it, because dishonest exaggeration is a fact encountered in genuine claims as well as manufactured ones. It would, however, lend support to the Second Defendant's other evidence on this issue. It was for this reason that I rejected a submission made in the course of evidence that this issue was a collateral one, and that the evidence went to credit only. It was suggested by Mr. Kidd that the answers given by Jaimes Locke were therefore final, and evidence to disprove them was inadmissible and evidence to support them unnecessary. The distinction between an issue which is collateral for these purposes and one which has to do with the facts of the case is a flexible one to be judged according to the particular facts and issues. On the facts of this case, I considered that this evidence was capable to going to the central issue of the motivation of the claims made after the alleged accident of 7th December 2006: was it to make a financial gain, or to recover compensation for a loss genuinely suffered? I gave an ex tempore ruling on the subject in essentially these terms. The Burden and Standard of Proof In approaching these questions of fact, I do so on the basis that because the reality of this case is that the Second Defendant has pleaded dishonesty against the Claimant, the burden is on it to prove it. The standard of proof is the civil one, the balance of probabilities, and I have reminded myself of the decision of the Court of Appeal in R (N) v. Mental Health Review Tribunal (Northern Region) and others [2006] QB 468, and the authorities cited in Markel International Insurance Company Limited v. Higgins [2009] EWCA Civ 790, at paragraph 50. I therefore approach this case on the basis that the allegations made by the Second Defendant are serious, as are the consequences of those allegations, and therefore strong and cogent evidence is required to prove them on the balance of probabilities. The Scope of the Findings I also bear in mind the fact that this is not an action for damages for fraud against, in particular, Will Jenkins, Adrian Brown, James Stuart or Rebecca Locke. James Stuart is a party to these proceedings but has not attended. That was his choice and any findings I make bind him. Mr. Jenkins and the others I have just named are not parties to these proceedings. Mr. Jenkins and Mr. Brown (trading as "AW Claims") were the referrers of the claims who introduced the claims arising out of this accident to Gina Simpson or Aegis Law who now acts for the Claimant. They also referred Accidents A, B, C, D, E, F, and H and Mr. Brown was the "guilty driver" in Accident I. I have not heard from them in evidence. Ms. Simpson told me that she has not heard from Mr. Jenkins since the Summer of 2007 and that she now does not trust Mr. Brown because of his behaviour as the tenant of a property which she owns. I am restricted to making findings on the evidence before me for the purposes of this action. Messrs. Jenkins and Brown have not answered the allegation that they were the orchestrators of this criminal conspiracy and I can and do make no finding which is binding against them. Those who read this judgment must understand that limitation. This applies to other named parties as well including Rebecca Locke who claimed to be a passenger in the present accident and recovered damages as such. She has not been called as a witness, and I was told by Daniel and Jaimes Locke that this is because she is estranged from the family because she now lives in Liverpool with a controlling boyfriend with whom they do not get on. I was told by Jaimes Locke that her Christmas presents were still in the back room of the family home in Wallasey and that that should tell me all I need to know about the state of that relationship. However, witness statements were exchanged in this case in November 2009. In January 2010 after Jaimes's 30th birthday party Rebecca posted in Facebook that she wished to extend her thanks to her family for a great night, and she also describes her mother as the "best mum in the world." I reject that explanation of her absence as untrue. I do not rule out the possibility that there may be some difficulties in the relationship, and I know that she was living in Liverpool on 24th August 2007 because she gave an address in Liverpool when she claimed to have been injured as one of 16 passengers in a minibus on that day. However, it is beyond belief that the relationship is so fractured, and has been since before November 2009, that no witness statement supporting her brothers (and herself) has ever been obtained from her. Daniel Locke said in his witness statement at Trial Bundle 1 page 59, paragraph 14 that he had no knowledge of Rebecca being involved in a crash on 24th August 2007. He did not say that communication was impossible because of the breakdown of their relationship. He said "I do not see Rebecca very often nowadays as she lives in Liverpool, and does not come over to see us much. I have not therefore had an opportunity yet to ask her about this accident, but I will ask her when I see her." He told me in evidence that he had seen her since, but had not asked her about that collision because it is not the kind of thing you discuss when you do not see each other very often. Some level of optimism about the relationship must have prompted the purchase of the Christmas presents which now apparently languish unwanted in Wallasey. I am therefore satisfied that Rebecca Locke has not appeared as a witness in these proceedings because she does not want to, or because a decision has been made that she would not assist. I do not speculate about what she might have said if here, but do conclude that I have been deliberately misled by Daniel and Jaimes Locke about the reason for her absence. The Second Defendant's Case About the Evidence of the Accident Itself The points made by the Second Defendant arising from the account of the accident itself are as follows:- i) Both Daniel and Jaimes Locke are very vague on detail. There is a good deal that they cannot remember. Each witness answered this attack by saying that the accident occurred over 5 years ago. In fact it was just over 4 years, but it is still a long time ago. They have both been in other accidents before or since. This is a valid point, but I was struck by the failure of the Claimant to give me any impression of any real memory of the event at all. I would not expect him to remember everything, but I would expect him to remember something. The only detail which he gave me was the account of his hand striking the windscreen as he was thrown forward. Even this, however, was prompted from him by the putting of his witness statement. The medical report of Dr. Arthur on which he relies in these proceedings does not mention any complaint of a hand injury, except that it records the note made by the Triage Nurse that there was such a complaint when the Claimant attended his GP on 11th December 2006. This note said that his "right hand hit window and smashed glass during impact." This did appear in his witness statement made at some date prior to November 2009 (Trial Bundle 1 page 58 paragraph 6), but he failed to recollect it when asked open questions about the accident by Mr. Higgins in cross-examination, and, as I have mentioned, when he spoke to Dr. Arthur for his medico-legal report on 20th March 2007 (Trial Bundle 1 page 119). This seems to me to be something which is memorable and, if true, likely to be accurately and consistently recalled even after a long period of time. I therefore find that it is not true and therefore conclude that Mr. Daniel Locke was misstating the consequences of the alleged accident as early as 11th December 2006 when he first sought medical assistance. He did that at the same place, and on the same day as his brother Jaimes Locke, who also misled the doctor as I find below. This concerted dishonesty at an early stage is highly significant. There has been good reason to think about this accident throughout this period, because the claims were first intimated in December 2006 and have been hotly disputed since these proceedings were issued in October 2008. The lack of anything which appeared to be a genuine memory together with false claims as to the consequences prompts real doubt about the event itself. ii) The reason why the car was travelling in that direction on that night containing those 5 passengers is said to be very unclear. The passengers are a somewhat disparate group in some respects. In addition to the two brothers in the front seat, there was Anthony Fogg, a friend of Jaimes Locke, Lynne Gregory the girlfriend of the father of Jaimes and Daniel Locke, and Rebecca Locke, their younger sister. There might be very good reasons why this group of 5 people might wish to travel together, but such reasons are not obvious from the evidence, and inconsistent accounts have been given. It is now said that there had been a get together at 19 Harvey Road at which there had been some drink, and at the end of it the group in car were going to get some food from Captain Tony's, a pizza restaurant nearby where one can get a takeaway pizza or where one can stay and eat one's pizza on site. It was quite unclear to me who wanted to eat, and who wanted to be dropped off without eating. I was told by Jaimes Locke that it was only Fogg who was to be dropped off before the pizza (he after all was the reason why the Astra was at the junction where the accident occurred, since he lives in Willoughby Road). Everyone else wanted a pizza. The Claimant told me that Rebecca was just coming along for the ride and it was only he who wanted the pizza, although Jaimes might have decided that he wanted one after the journey had started. The oral evidence was inconsistent with some of the contents of a letter written by the solicitors to the Claimant on this topic on 13th February 2007 which is in Trial Bundle 1 at page 257. It was there stated on behalf of Jaimes Locke that "...he was dropping off Ms. Gregory and Mr. Fogg at their home addresses following a social gathering at his home. Ms. Locke was being dropped off at her boyfriend's home and Jaimes Locke and Daniel Locke then went to Captain Tony's takeaway pizza for a pizza." No-one was able to tell me who Rebecca's boyfriend was at this time or where he lived. iii) The details of the get together prior to the accident were also very sparse, and not supplemented by any evidence from Dianne Locke who was called to give evidence, or by Rebecca Locke, Lynne Gregory, or Anthony Fogg who were not. It appears to have been spontaneous gathering, at which according to Daniel Locke food was available. Jaimes thought that there would have been food in the cupboard of the house, but could not say whether anyone ate any. After 4 years the details of all this might be expected to have become vague, but the desire for a pizza at 8.00pm is a little inconsistent with a social gathering with food ending at that time. More importantly, because young men do eat a lot, is the fact that the Locke brothers can remember that there was a plan to eat pizza that night, involving some at least of the group, but they are quite unclear about what type of party it was from which they had just come. In this context Daniel told me that Lynne Gregory (his father's girlfriend) got on well with his mother and would commonly go to her house without their father being present (he was not there that night). This must be so if she was present at a spontaneous gathering of family and friends, as was alleged. When pressed he could not remember any other occasion when this had happened, either before or after the night of the accident. Her presence in the car remains therefore inadequately explained. His demeanour while giving this evidence was particularly illustrative. He was plainly struggling to contrive answers to questions about something which must have been easy to deal with if he was trying to tell the truth. The general nature of his mother's relationship with her former husband's new partner is not something which is likely to be difficult to remember. iv) I was told by both the Locke brothers that Tony Fogg was a close friend and that he lived quite close to them. It is a strange feature of the evidence therefore, that Jaimes Locke was unable to identify the road where Fogg lived in order to turn into it. He had, so it is said, driven past the point where he would have turn and was still proceeding directly ahead when struck from his left. If his purpose was really to drop Fogg off at his house, he should have been struck at the rear or the rear nearside as he was executing a turn, or perhaps not even been at a point where he was liable to be struck at all. This is common ground, and explained by Jaimes Locke as being due to his overshooting the junction (travelling at only 10-15mph) because he was not able to identify the road where his friend lived, although he was looking for it. This is an explanation which I find hard to accept. I should now record my impression of the demeanour of the two principal witnesses for the Claimant, namely the Claimant himself and his brother Jaimes. The Claimant appeared to be rather less sophisticated and composed than his brother, and he appeared to me to be evasive and somewhat combative when asked a question which was problematic for him. His vagueness was the principal striking feature of his evidence. The manner of its presentation did not inspire confidence in the reliability of his evidence. Jaimes has served in the army and now operates as a self-employed insurance agent. He has been a very good footballer and played for several non-league semi-professional clubs. He was polite and well-presented. His demeanour did not affect my view of his evidence adversely, but there were certain objectively demonstrated problems in it, as I have mentioned above and as I will consider further below. Conclusion So Far These points, taken together, would cause me to doubt the account given of the accident but in the absence of other evidence I would not feel able to find as a positive fact that the accident had been entirely manufactured for financial gain. I find the account given of the events of that evening to explain the presence of these 5 occupants of the Astra and of the presence and position of the Astra at the accident location implausible and inconsistent. In the absence of any other explanation, I would feel bound to attribute some of that to the passage of time, and to the fact that Daniel had taken drink before the accident, perhaps in some quantity. I would, however, have taken into account the findings of dishonesty I have already made and held that, on the balance of probability, the Claimant had failed to prove his case. I would not have made the further positive finding sought by the Second Defendant that this was because he had been put up to participating in a fraud. The issue therefore is whether that further evidence enables me to make that further positive finding, namely fraud. In that context the findings I have made so far represent a sound platform on which the further evidence can build to support that further finding. The Evidence of Systematic Fraud The Second Defendant points to features of a series of accidents shown on an A3 chart as accidents A-I. I have listed the documentation which I have seen above. The accident which founds the present action is referred to on that chart as accident G. The common features are:- i) The referral of the claims by either Mr. Will Jenkins or Mr. Adrian Brown (who also used other names), or both. I heard from Ms. Gina Simpson that at the material time they were trading together as "AW Claims" and made referrals to several panel solicitors including her firm, and Matrix. It also appears from the documents that the Price Partnership and Canter Levin & Berg also received instructions through them. No allegations of impropriety have been made against any of these solicitors before me, and the reason for mentioning them is that their use tends to support the proposition that AW Claims was the source of some of these referrals, and perhaps also of a considerable amount of other business. ii) A pattern whereby the "guilty vehicle" has recently been taken on short term hire. It is then involved in an accident which is clearly 100% its fault. In the present case, the "guilty vehicle" was hired by James Stuart at about noon on the day of the accident and was due for return on 9th December. He had paid an additional premium for collision damage waiver so that he was not liable to pay anything in the event of a crash. The total cost was very modest. Mr. Higgins put it graphically as a means of turning £50 into £50,000. This involves assumptions about the numbers involved in the accidents and the size of their claims. One of those assumptions is that no claim is likely to be of such a size that it justifies substantial investigation. It appears to be a happy fact, if true, that no-one was seriously injured in any of these accidents. The total cost to the insurers of meeting these claims, and the costs of the solicitors (on Conditional Fee Agreements with success fees) would be very substantial indeed. iii) At the time of the accident both it and the other "innocent vehicle" should be full of people. Accident A involved a total of 20 people between the two vehicles, Accident B 9, Accident C 11, Accident D 10, Accident E 13, Accident F 10, Accident G 10, Accident H 11, and Accident I 8. This is a total of 106 people, of whom 9 were "guilty drivers", leaving 97 claimants worth a total of £40,500 in referral fees at £450 each. The overheads would be limited to the cost of short term hire of the guilty vehicle. This selection of claims contains two where the guilty vehicle was insured by Equity Red Star and 7 where it was insured by the Second Defendant. If the allegations are well founded, it is likely that there were other claims addressed to other insurers which I have not been told about. The size of the alleged fraud is very considerable. Mr. Smith told me in evidence that the cost of motor insurance fraud was estimated at £2 billion a year which he thought was probably an underestimate. This fraud was a small part (but not an insignificant part) of a much larger problem. iv) These 9 accidents occurred in the Birkenhead area between 20th October 2006 and 8th April 2007. By the Birkenhead area I mean the conurbation which includes Birkenhead, Bebington, Tranmere, Rockferry, Moreton and Wallasey together with other places. It has a sizeable population, as Mr. Kidd has demonstrated by his researches, but it is not, geographically, very big. v) There are links between persons who feature as drivers or passengers, sometimes because there are known relationships, common addresses, and sometimes because of Facebook research. This suggests a strikingly high level of accidental injury among a limited population of predominantly young people in the same geographical area. In this judgment I shall examine with some care the evidence suggesting links between Accident G and other accidents within the same pattern, and I will not burden it by setting out all of this class of evidence. The evidence of Mr. Stuart Smith, a partner of Weightmans LLP was comprised in his witness statements at pages 282, 315, and 334 of the Second Defendant's Supplementary Bundle of documents and was confirmed by him in evidence. He also produced very voluminous exhibits and some newly printed documents relating to Jaimes Locke's football career at Runcorn Football Club. He was the author of the A3 chart which summarises the Second Defendant's case to which I have referred above. He was careful in his evidence not to become involved in making submissions from the witness box, as was appropriate. Mr. Kidd criticised him for his suggestions in his witness statement that various people or events were "linked", without accurately stating the limits of those links. I am not prepared to go so far as to accept that criticism, although I do consider that a professional witness, not unlike an expert, should draw attention to the weaknesses of his conclusions as well as their strengths in clear terms. This likely to lead to his evidence being agreed and to a great saving of costs and time. Many of those weaknesses are actually obvious and have been illustrated by Mr. Kidd forcefully in this trial, so no question arises of the court having been at any stage under any illusion. I accept the evidence of Mr. Smith. It was given with care and he made sensible concessions about the limits of his knowledge. This means that I accept the evidence contained in his witness statements. I shall not set it all out. It is simply not possible to do so without rendering this judgment far too long (as perhaps it already is). I have read them twice with care and the material set out therein, properly understood, provides powerful support for the view that in 2005-2007 AW Claims were contriving accidents in the Wirral and referring the subsequent false claims to solicitors in return for referral fees. I make this finding without hesitation despite Mr. Kidd's able assault on the evidence. He pointed out that a self-selected group of claims with common features said to be suspicious is of doubtful statistical validity when the total number of claims referred by AW Claims is unknown and it is not known how common it was for them to refer accidents caused by the negligence of hirers of vehicles. Ms. Simpson's evidence was that they had contacts in the car hire trade, and that they would consequently pick up a high level of claims involving hire cars without any dishonesty at all. This approach is entirely proper but ultimately unpersuasive. Leaving Accident I aside, because it is atypical, and Accident G aside because it is the case I am to decide, I have evidence of 7 accidents involving the common features listed above. When challenged all claimants have withdrawn their claims. There is evidence of clear links in a number of cases between occupants of the two vehicles in the same accident. Accident A features two people who were partners (in the sense that they lived together but had different names) one in each vehicle. Accident B had 2 people who were associated with the same address, one in each car. One woman in the "innocent car" in Accident B was linked with the same address as one person in the "guilty minibus" in Accident A, and with the same address as two people in Accident C. Accident C includes 2 people who were involved in an accident on 9th January 2005 with Mr. Adrian Brown, the partner of Will Jenkins. There appear to be 4 people called Martindale involved in Accidents C, D and E, one of whom is involved in both Accidents D and E. These three accidents occurred in February and March 2007. Either they are linked accidents in the sense alleged (bearing in mind the other common features) or that family succumbed to a level of accidental misfortune during those few weeks which strains credibility to credulity. I could continue to list all the common features, but it is not necessary. I accept the limits of Experian Searches and similar sources of information. Where "linked addresses" are relied upon, this information cannot do more than to show that at some time someone has applied for credit giving a particular name and address. Either the name or the address might be false. However, these links do not stand alone and the effect of the evidence is cumulative. The general effect of the Facebook evidence also requires assessment in this context. It tends to support the proposition that these accidents formed a series of fraudulent conspiracies. Mr. Higgins produced 7 annotated charts for me during his closing submissions which summarise some, but not all, of the links. I bear in mind the limits of this kind of evidence which I deal with further below at paragraph 20(ii) when dealing with the evidence of Mr. Smith and his cross-examination by Mr. Kidd on the links between Accident G and the rest of the series of claims. However, the following facts nevertheless appear to me to have some importance:- i) Paul Lister was at some stage a Facebook friend of Nathan McKinley, a passenger on James Stuart's car in Accident G. He was also a Facebook friend of Richard Hickman (Accident F), and Oswin Kavanagh-Jackson and John English (Accident C). ii) Gary McGivney (Accident C) was a Facebook friend of 5 people involved in Accident F (3 in one car and 2 in another). iii) Danny Batty (Accident F) was a Facebook friend of 2 people in the other car in hos won accident, and of 4 people in Accident C. iv) Gemma Byrne (Accident F) was a Facebook friend of 2 people in the other car in her own accident, and 3 people in Accident C. v) Johnny English (Accident C) was a Facebook friend of Jaimes Locke (Accident G). He is part of an interesting piece of evidence concerning "Will Jenkins Spain". In searches of Facebook in November 2008 this person, with a photograph, appeared as a Facebook friend of Johnny English and Nathan McKinley (FB/2, pages 390 and 416). In further recent searches of Facebook (22nd February 2011 at FB/3 pages 26 and 70) entries appear showing that at that date "Spanish Will", with a photograph, was a Facebook friend of both Nathan McKinley Johnny English. This means that between these two searches these two men have retained Will Jenkins as a Facebook friend but that he now goes under a different name. I find that this is the Will Jenkins who was concerned in AW Claims because Jaimes Locke accepted that the later of the two photographs looks like the Will Jenkins he knew. Further, the first reference was to Will Jenkins by name, but to him as being connected with "Spain". Further, both English and McKinley are connected to the relevant Will Jenkins because he referred an accident in which they were claimants. Finally, the photographs appear similar, although this is not a factor carrying much weight because they are small and indistinct. All that can be said is that they might have excluded the connection by showing gross differences, but they do not. The link between Johnny English and Nathan McKinley is indirect, but the identical way in which the searches of their Facebook pages show the treatment of Will Jenkins is a link. That being so, Johnny English represents a link between an occupant of each car in Accident G. Jaimes Locke admits to knowing him (and he is a Facebook friend of Jaimes Locke: FB/2, page 521). vi) Nathan McKinley, in addition to the link I have just dealt with, was also Facebook friends with 2 people in Accident C and 2 people (one in each car) in Accident F. He is also, as I have said, now a Facebook friend of Paul Lister, although he was not at the time of the first searches. He is, of course, an important person because he participated in Accident G. Mr. Smith told me that there had not been any findings of fraud in relation to any of the accidents on the A3 chart, accidents A-I. Nevertheless, I find to the appropriate standard that there is very cogent evidence which proves on the balance of probabilities that there was a series of fraudulent accidents orchestrated by AW Claims in 2005-2007 and the issue is whether it can be shown that Accident G was part of that series. Mr. Smith was asked in cross-examination about the 5 links shown in relation to accident G on the chart. He explained them as follows:- i) The claim was referred by Jaimes Locke to Will Jenkins who referred it to Gina Simpson at Aegis Law Limited. Mr. Jaimes Locke accepted in evidence that he knew Mr. Jenkins before the accident on 7th December 2006. He told me that he did a lot of networking and had been passed Mr. Jenkins' business card by someone and had also met him. This pre-accident connection is not made clear in Mr. Jaimes Locke's witness statement prepared for these proceedings at page 64 of the Trial Bundle 1, paragraph 10. I think that this is a legitimate criticism of the candour with which that statement was framed given that when it was made, Mr. Jaimes Locke knew that the Second Defendant was alleging that he had been procured as an "innocent driver" by Will Jenkins for the contrived accident which then followed. The probative value of the role of AW Claims as a common feature in these claims has been hotly contested by Mr. Kidd on behalf of the Claimant. However, I have already found that this is an important link because of their role in manufacturing accidents at or around the material time. ii) Sean Robinson was with Daniel Locke when there was an accident in April 2007 which was quite genuine, but Sean Robinson is a Facebook friend of James Stuart, the "guilty" driver in the accident which founds the present claim, accident G. James Stuart's Facebook details are at Facebook Bundle 2 page 485. They show that he had 392 Facebook friends, which Mr. Smith accepted is rather a lot of people to have as close friends. The suggestion being explored was that at least some of these supposed relationships must be virtually non-existent. In response, he pointed out that this means that James Stuart has been invited to become a friend of these people and has accepted it. To that extent the fact that they are friends on Facebook does imply some level of relationship between him and them. This may be a very distant or virtually non-existent relationship, or, of course, it may imply a real friendship. Mr. Smith also dealt with the issue of "mutual friends". By this he means that, for example, Jamie Stuart had 39 friends named on his list of friends at the date of the search of his Facebook page in February 2010 who also featured in the Claimant's list of friends. He explained that where a person has a number of friends in common with another person, Facebook may generate a suggestion that each of them should add the other as a friend. This requires them to accept the suggestion. The point is made by Mr. Kidd that the absence of a person from a list of friends in such circumstances means that they must have decided not to add them. Therefore the suggestion that the large number of mutual friends means that they move in the same circle requires some qualification. It is nevertheless of some value. This link does therefore mean that the Claimant is a real friend of Sean Robinson (as well as a Facebook friend of Mr. Robinson) and that Mr. Robinson has a Facebook relationship with James Stuart, the First Defendant in this action. iii) On 24th August 2007 a collision allegedly occurred involving a minibus in which Rebecca Locke was a passenger, one of the passengers in the Astra and the sister of the Claimant. This led to 16 claims. I know nothing more about that claim than that, but the Second Defendant says that for her to be a passenger in two accidents in an 8 month period is such bad luck that I can take it into account as some support for her willingness to participate in a fraudulent scheme. I have already made findings about the false explanation for her absence from this trial but derive no further assistance from this "link" because I have no evidence at all to suggest that the August 2007 accident was anything other than entirely genuine. This is an illustration of the need for Insurers and those who advise them to advance allegations of fraud with care and based on evidence rather than assumption. The letters of claim relating to these 16 claims are in the bundle and I have in a public trial the names of all claimants and of the driver against whom the claims were made. If this claim was fraudulent all these people have committed a serious criminal offence. In my judgment, the suggestion that this might be so is unsupported by evidence and ought not to have been made in these proceedings. iv) On 3rd February 2009 a collision is alleged to have occurred between a car in which Daniel Locke, Dianne Locke and 3 others were travelling and a car driven by a Mr. John Davies. I was told by Dianne Locke that she did not think that this was a contrived accident. She did make a claim which was dealt with. This is the same John Davies who was in an accident in which he was a passenger in a car driven by Paul Richards on 31st July 2006. On 19th May 2005 an accident was said to have occurred involving 8 people including Simon Pennington (who was involved Accident B on 13th January 2007), William Jenkins of 14 Causeway House, Wirral, and Paul Richards. The letters at Main Bundle page 296, and in the A-C Bundle pages 271 and 270 are relied upon to show that Simon Pennington was involved in this accident. There was clearly a degree of confusion when Direct Line reported the circumstances of that claim to AXA in correspondence, and the involvement of Simon Pennington does not appear from the letter of 14th August 2008, but does appear from the other two letters. I accept Mr. Smith's explanation of this, namely that the letter of the 31st December 2009 which appears to confirm Mr. Pennington's involvement in another accident altogether, namely Accident B, is an error and the letter is intended to refer to the accident about which he had asked, namely that of 19th May 2005. Direct Line did not insure the guilty vehicle in Accident B and would not be in position to provide any information about it to AXA, who did. Therefore, the date given in that letter must be an error and this was confirmed by the final letter of 17th January 2011. This means that Simon Pennington was involved in two accidents related to Will Jenkins (if the two references are to the same person). Mr. Paul Richards was also involved in two accidents, one involving Mr. Jenkins directly and the other involving Mr. John Davies, who was involved in an accident with Daniel Locke and his mother. Mr. Davies being a passenger in one accident and the "guilty driver" in another, and linked to Mr. Daniel Locke and his mother is a link on which the Second Defendant relies. Before I can rely on it, I need to be satisfied of three things:- a) That Mr. Will Jenkins was involved in both the accidents of the 13th January 2007 and the 7th December 2006 as referrer and in the accident of 19th May 2005 as a participant. The alternative theory, that there may be two men of the same name and age with the same contacts seems to me to be less probable than that it was the same man, and I so find. It is true that no link between Mr. Will Jenkins of AW Claims and the address in the Wirral has been identified, but on the balance of probability it seems to me that I can safely reject the possibility of unhappy coincidence. b) That Simon Pennington was involved in accident B despite the first of the three letters from Direct Line. I have made my finding about this above: I find that on a proper reading of all 3 letters he was so involved. c) That the collision of 3rd February 2009 was a contrived accident. Of the people named in the chart, namely Mr. Daniel Locke, Mrs. Dianne Locke, and Mr. John Davies it is striking that both Mr. Daniel Locke and Mr. John Davies had been in accidents in 2006 involving Will Jenkins. Their links to that series of accidents and to Mr. Paul Richards do support the proposition that this accident in February 2009 was a contrived accident. I would not be prepared to make this finding if these links stood alone, but this allegation against Mr. Daniel Locke is part of a significant body of evidence against him (which includes his highly unsatisfactory account of the accident of 7th December 2006) and I am prepared to take this link into account for the purpose suggested by the Second Defendant. There is a degree of circularity in this process of which I am aware and I do not attach a great deal of weight to this link. It does not follow that Mrs. Locke was inevitably aware of the fact that the accident in which she sustained minor injuries in February 2009 was contrived and I am not prepared to make that finding against her. v) The fifth link is the crucial one. It is a link between Nathan McKinley and Jaimes and Daniel Locke, which, if true, means that two people in one car were known to one of those in other. This link is demonstrated in two ways. First, there is evidence that Daniel Locke admitted that he and his brother knew both Nick McKinley (who was in Accident F) and Nathan McKinley in a telephone conversation which took place on 22nd December 2006. I shall make a specific finding about this below. Secondly, there are Facebook links between Nathan McKinley and Will Jenkins, Richard Hickman, and Paul Lister and the other further Facebook links which I have reviewed above. The Telephone Conversation On 22nd December 2008 a telephone call was made from the office at Horley of Data Research Compliance Limited to 19 Harvey Road, the family home of the Locke family. It began at 11:03am and lasted 4 minutes and 24 seconds. The record from the telephone data for the company is at Trial Bundle 1 page 262. This much is common ground. The content of the telephone call is hotly disputed. On the one hand Miss Rebecca Hawley, an employee of the company told me that her witness statement dated 4th March 2009 was true. It says, so far as relevant:- "That I did, on 22nd December 2008 at approximately 11.05 hours, place a pretext telephone call to Diane Locke, mother of James, Daniel and Rebecca Locke; passengers in the Claimant's vehicle. Mrs. Diane Locke resides at 19 Harvey Road, Wallasey CH45 5HP and her home telephone number is [number given]. I told Mrs. Locke that I was seeking a credit reference for Nathan McKinley , a passenger in the first Defendant's vehicle. Mrs. Locke readily told me that her son, James, knows Nathan McKinley. She passed the telephone to her son, Daniel, saying that he could assist me further. Daniel told me his brother, James, knows Nathan McKinley and Nathan's brother, Nick and that he has done so since he was at school. He said they had known each other for many years and James would willingly provide a credit reference for Nathan." This evidence is supported by Darren Kirby, another employee of the same firm who says that the call was made at his request and in his presence. In oral evidence they both made it clear that the call was not directed initially to Mrs. Locke but to the house, and the conversation was with her because she answered the phone. Daniel and Dianne Locke both deny resolutely that any such call took place. They have no explanation of the fact that a call was made, but say that the allegation was not drawn to their attention for nearly a year after the call, so that they might not remember it. Jaimes Locke says that he does not know the McKinleys and could not have done so when he was at school because they are both much younger than he is and they went to different schools. They live about 3 miles apart. There is no recording of the call, and the contemporaneous note which was said by Rebecca Hawley to have been made has not survived. She said she made a note, gave it to Mr. Kirby and saw it again when she made her statement in March 2009, 3 months or so after the call. She also says that she remembers the call because it was quite an unusual thing for her to be asked to do. Mr. Kirby says that he destroyed the note after its contents were recorded in Miss Hawley's witness statement. He says that this is the practice in this company, which is followed in all cases. He says that he reported the call in a Report to client (privilege in which has not been waived) and was then asked for a statement confirming it. This resulted in the witness statement of Rebecca Hawley. When it became clear on exchange of witness statements that the call and its contents were in dispute, he obtained the call record to which I have referred and made his own statement about it. This is word for word the same as the passage from the March 2009 statement I have set out, and was clearly copied from it. I do not think that his corroboration of that account adds any weight to it. Rebecca Hawley was an impressive witness. She no longer works for the company and says (apparently correctly) that she has no reason to lie. She also says that this call was made on a case about which she knew nothing and which was not one of her cases. She therefore had no real motive to lie at the time either. Further, it is obvious that there must have been a note because in her statement, made without the benefit of the call record, the time of the call is accurately given. Finally, there is no doubt at all that there was a call and one of a suitable length to contain the conversation summarised in her statement. If it was not as described by Rebecca Hawley, I have no evidence at all about what it was about. Plainly it must have been an investigative call of some kind because it was made in the course of the work of a private investigator. I entirely accept that it is a peculiar feature of the case that Daniel Locke apparently claimed that Jaimes had known the McKinleys since school when this does not make sense. It may have been intended to encourage the caller to believe that a good and reliable reference would be forthcoming from Jaimes in order to help Nathan McKinley. Daniel, unemployed or casually employed, could not perhaps himself give a credit reference but he may still have wanted to help Nathan McKinley by exaggerating Jaimes's relationship with him. That seems to me to be the most plausible explanation of the conversation although it is still not entirely satisfactory. In the end, I believe Rebecca Hawley and disbelieve all three members of the Locke family who, I find, have lied to me on this issue. I therefore find that Jaimes Locke and Daniel Locke both knew Nathan McKinley who was a passenger in the other car in Accident G and that they have lied to conceal this fact. This strongly supports the inference that this was a staged accident. Further, in an effort to explain why he has 38 mutual friends on Facebook in common with James Stuart (the other driver in Accident G and the First Defendant), Daniel Locke explained in his witness statement of 15th October 2010 (for the first time) that he had been at school with him. In fact all of these 38 people are people that Daniel knows from the Wallasey area or from school. Whatever theoretical possibilities there may be about Facebook friends not being real friends, these at least were real relationships. This does suggest that James Stuart and Daniel Locke move in the same social circles, although the fact that they are not themselves Facebook friends of each other may be more significant, as Mr. Kidd submits. In this case the first searches were done in November 2008, two years after the accident. It would not require much sophistication for fraudsters to remove the names of their partners in crime from their Facebook pages. The scheme I have found to have existed was quite complex and sophisticated and it would not surprise me if this was part of it. It would certainly be quite stupid to accept an invitation to add on a publicly available Facebook page, someone whom you were expecting to have to deny knowing. At all events, the evidence of Mr. Daniel Locke was that although they were at school together (presumably for some years) they did not know each other. He told me that he only discovered that the "other driver" had been in the same year as him at school when he asked Alex Bree, one of the mutual friends, about him. In his witness statement he did not include that detail simply saying that he was told that "Jamie Stuart went to our school". I reject this evidence. I find that Daniel Locke has been driven to volunteer an explanation for the friends in common between him and James Stuart and this caused him to make the admission that they were at the same school. When the dates of birth were obtained and they were found to match within a month or so, it became obvious that they were in fact in the same year. Therefore, Mr. Daniel Locke was in a collision caused by the negligence of someone he was at school with, but failed to reveal the fact at all until January 2010 and even then failed to include in the witness statement the telling fact that the two men not only went to the same school, but that they were in the same year. This justifies the further finding of dishonesty which I make against Mr. Daniel Locke. Jaimes Locke's Football This issue occupied some time in evidence but can be dealt with quite shortly. Mr. Jaimes Locke failed to tell the Triage Nurse or GP on 11th December 2006 that he had played football on the 9th December 2006 and scored a hat trick. He did not tell Dr. Arthur this either, when he went for his medico-legal report in his own action. He told him that he did not play football for 2-3 weeks. He did not tell District Judge Wallace this either, at the trial of his action when he gave evidence on oath. He claimed then, in his witness statement, to have been unable to train or play football for 2-3 months. The Judge rejected this and found that he had been unable to play football for 2-3 weeks only. In fact the truth was that he had played football on the 2nd day following the accident. This was discovered shortly before the trial by the internet research of the Second Defendant. This means that on the 11th December 2006 Jaimes Locke had already decided to conceal an important fact from his GP. I have already found that on the same day and at the same place Daniel Locke invented the breaking of the windscreen and the consequential hand injury about which he had forgotten when he went for his medico-legal report and gave his evidence. I do not derive any further assistance from the evidence about the truth or otherwise of paragraph 43 of the witness statement of Jaimes Locke in his own action (Trial Bundle 1 page 228). Whether it was strictly true to say that he was "under contract to play semi-professional football at Runcorn FC" is not something which I find necessary to resolve. He was, it would appear, registered to play for Runcorn at this time, although he does not appear actually to have played at all in the season 2006/07. It is enough if I say that I accept that a footballer may play, as Mr. Jaimes Locke put it, "through the pain barrier for my team in a cup game". He may find this easier to do in a game which is at a lower standard than he is accustomed to, as was the case here. What I cannot accept is that he acted honestly in failing to reveal the fact that he played on that Sunday, and in fact actively concealed it, when i) Attending the GP on 11th December. ii) Attending Dr. Arthur for his medico-legal report on 20th March 2007. iii) Preparing paragraph 44 of his witness statement of 17th June 2008. iv) Giving evidence on oath to District Judge Wallace on 18th September 2008. Although dishonest exaggeration of a claim is a feature encountered in genuine claims, its presence so soon after the accident when both brothers attended the GP on 11th December 2006 shows that they were not there simply seeking medical assistance but already seeking to improve their claims by dishonesty. This supports the assertion (abundantly supported by other evidence recorded above) that this "accident" did not happen at all. Result Accordingly I dismiss this action. I find to the necessary standard that the Second Defendant has proved that this "accident" was not an accident at all but was manufactured in order to justify the making of the 9 claims for damages for personal injuries which it spawned, of which this is one. Accordingly there will be judgment for both Defendants against the Claimant. This is a curious result as far as the First Defendant is concerned because my finding involves a finding that he was complicit in this fraud. It is, however, proper. Case Management Far too much documentation has been placed before the court. There are extenuating circumstances in that this claim was once part of a series and the extensive documentation in the bundles may perhaps have been necessary to deal with all the claims. There was an opportunity to reduce the documentation, which was not taken. It should be possible to prepare a document, based on the documentation including the witness statement of Mr. Smith and the 3 lever arch files of documents, together with the further 3 lever arch files of Facebook searches which accurately and fairly summarises their relevant contents so far as the primary facts are concerned. It can identify, in the manner of a Scott Schedule, which primary facts are in dispute so that the necessary material, and only the necessary material, can be adduced to deal with that. It may further also identify which inferences are agreed and which are not. A document can easily be devised which sets out in a short form how entries on Facebook are created and what inferences may safely be drawn from them. This document, having been created, can be used in any case where this class of evidence is adduced. I think that a significant amount of time of the court was taken up in a debate about the strengths and weaknesses of Facebook evidence where really an agreement should be capable of being reached on this question. The process of agreeing the primary facts and the proper limits of any inferences which they may justify will start with a statement such as that prepared by Mr. Smith in this case, and will be assisted if particular care is taken to include appropriate concessions as to the proper limits of any "link" contended for. On 1st September 2010 District Judge Coffey gave conventional directions for the compilation and lodging of an agreed trial bundle. It will appear from the above that this was not strictly complied with: each party lodged its own documents. This was the stage at which the parties should jointly have addressed the question of what documentation was really required to resolve this case. I explored the question of confidentiality and the use of witness statements from one action in another action with Mr. Smith. He satisfied me that this was considered in the present case and that the relevant controls on the use of material were observed. I mention this because I regard this as an important feature in this type of case and would regard it as a serious matter if it were not properly attended to. This is related to paragraph 39 below. Insurers making allegations of the kind which I have found proved in this case must do so with care. Their legal advisers have obligations which require them to advance such allegations only on proper grounds. I consider it to be inappropriate for trial bundles to contain the names and personal details of people with the suggestion that they have been guilty of fraud unless there are proper grounds evidentially for that assertion. I have found that this occurred in the case of an accident in August 2007 in Liverpool, and it may well be that it has happened in other cases too. In making these observations I intend no criticism of any of the lawyers in this case. I am very grateful to both counsel for helping me with great skill through a factually complex case in a relatively short period of time. I have heard from both solicitors in evidence and accepted what they say without reservation. The documents, though too voluminous, have been properly prepared and it is quite plain that Mr. Smith in particular has done an enormous amount of work on this case with a great deal of care. The purpose of the inclusion of this section in this Judgment is to record my experience of trying this case in the hope that it may assist the case management and preparation of any further similar cases which may arise.

Index Section Heading Paragraphs       A Introduction 1       B Cart Claim – Procedural Introduction - CO/2904/2013 2-5       C Application for Extension of Time to File Cart Claim 6-44       (1) Introduction 11 (2) Legal and procedural background 12-55 (3) Time for filing DK's Cart claim 16-22 (4) Factual background 22-35 (5) Did the orders of 21 September 2012 and 21 January 2013 extend time? 36-38 (6) Extension of time for filing judicial review claim 39-42 (7) Conclusion – extension of time 43-44       D Applicable Law 45-69       1. Overview 45-47 2. Directive 95/46/EC 48 3. 'Personal data' 49-59 3(1) Statutory definition 49-50 3(2) Guide to interpretation of 'personal data' 51-55 3(3) Discussion of meaning of 'personal data' 56-58 3(4) Conclusion – meaning of 'personal data' 59 4. 'Sensitive personal data' 60 5. 'Personal data' overlap between FOIA and DPA 61-69 5(1) Potential overlap between FOIA and DPA 61-63 5(2) How FOIA deals with the personal data overlap 64-66 5(3) Discussion - overlap 67-68 5(4) Conclusion - overlap 69       E Factual Background 70       1. DK's county court claim 70-72 2. NP's investigation of DK's complaint 73-76 3. DK's formal complaint to NP 77-78 4. DK's IPCC appeal 79 5. DK's FOIA requests for information from NP 80-82 6. DK's complaint to the IC and the IC's decision 83-90 7. DK's data subject request to NP 91-93 8. DK's and NP's response to IC's decision 94 9. DK's appeal to the IT – prior to hearing 95-108 10. DK's appeal hearing in the IT 99-105 11. The UT permission and review refusal decisions 106-108 12. DK's Cart application 109       F The Issues 110       G The Issues Discussed 111-223       Issue (1) The UT powers and remedies issue 111-117 Issue (2) The UT refusal and set aside decisions issue 118-139 Issue (3) DPA rather than FOIA issue 140-153 Issue (4) ECHR article 6(1) issue 154-174 Issue (5) DPA relevant filing system and recorded information issue 175-188 Issue (6) DPA section 1(1) 'personal data' issue 189-196 Issue (7) Third party DPA section 1(1) 'personal data' issue 197-203 Issue (8) Joint personal data issue 204-205 Issue (9) FOIA section 30(1) issue 206-207 Issue (10) FOIA section 2(2)(b) issue 208-209 Issue (11) DPA disclosure issue 210-211 Issue (12) Realistic prospect of success issue 212-213 Issue (13) Important point of principle or practice issue 214-215 Issue (14) Other compelling reason issue 216-217 Issue (15) Cart issue 218-219 Issue (16) Costs decision issue 220-221       H Conclusion – FOIA Cart Claim 223       I Discovery and DPA application – Claim CO/3391/2008 224       1. Introduction 224-226 2. The application 227-23 3. Application under section 7(9) of the DPA 233-237 4. Application under CPR 54.16 238-256 5. Applications under CPR 25.1(1)(j) and 31.17(3) 257 6. Conclusion 258       J Overall Conclusion 259 Synopsis 1. This synopsis does not form part of the judgment and is provided to assist the reader in providing a brief summary of the judgment. 2. The judgment is concerned with two issues: (1) Whether the claimant Dr Kelway ("DK") was entitled to permission to apply for judicial review of two decisions of the UT refusing him permission to appeal and to set aside that refusal decision. In the judicial review, he sought an order to set aside those two decisions. The application arises in a complex field involving a decision of the FtT (Information Rights) relating to a Freedom of Information Act ("FIOA") request to Northumbria Police ("NP") to disclose a statement made by a district judge to the police who were investigating a complaint to NP by DK that that district judge had committed a criminal offence involving an allegation of interfering with the course of justice. (2) Whether, if permission was refused, DK was entitled to an order from the Administrative Court for disclosure of that document by way of an appeal under the Data Protection Act ("DPA") from NP's refusal decision to disclose the document or under the Civil Procedure Rules ("CPR") by way of disclosure in the judicial review proceedings DK had sought to bring against the Independent Police Complaints Commission ("IPCC") or by way of non-party disclosure. In each basis of application, DK was seeking disclosure from NP. (3) These applications were made even more complex by virtue of the extremely lengthy and tortuous proceedings that preceded the applications. 3. The case concerned three witness statements and certain redactions in other documents. The predominant purpose of DK's various claims and applications was to obtain disclosure of a particular witness statement of the district judge which had been provided to NP. The synopsis below refers to that statement alone but it applies to all other documents in issue in the case and applications as well. 4. The judgment addresses and decides the following matters: (1) The time for filing a Cart claim in a claim which arose during the "transitional period" – being the period between the claim arising and the provisions in CPR 54.7A coming into effect – was 16 days after the decision of the UT refusing to set aside its earlier decision refusing permission to appeal – R(Sharma) v UT was followed on this point. (2) The Cart claim was filed almost 5 months after the date it should have been filed. DK's contention that the court had extended time in two separate orders was rejected. Since no other reason, let alone no other good reason, had been provided for the delay, time for filing the claim was not extended. The unusual features of this case were such that the court decided to consider and decide the merits of the application despite dismissing it on time grounds. The claim for permission arose out of DK's contentions that the UT judge had fundamentally misapplied the law in considering the application so that its refusal and setting aside decisions should be set aside and his application for permission should be reconsidered by the UT on the correct basis. This judgment accepts that the UT judge's decisions were both fundamentally flawed and cannot stand. In those circumstances, it is incumbent on the Administrative Court considering the Cart application to consider what decision the UT judge should have reached. If the Administrative Court considers that the UT should have concluded that permission should be granted, it should then address the Cart issue of whether to grant permission to apply for judicial review of the UT refusal decisions. The fundamental issues that the IT had to decide were the following: (1) Was the Information Commissioner correct in concluding that the witness statement of the district judge was the 'personal data' of both DK and, separately, of the district judge whose statement it was. (2) If the statement was either or both the personal data of DK and the district judge, was the document also disclosable under the FOIA and, if it was, should it have been disclosed under that Act by NP. (3) If the document was not disclosable under the FOIA, how could DK challenge NP's refusal to disclose the document under the FOIA and under the DPA given that the FOIA route for challenging a refusal decision of a public authority is by way of an appeal to the Information Commissioner ("IC") followed by a second appeal to the FtT (Information Rights) followed by, if permitted, a third appeal to the UT whereas a challenge to a DPA refusal decision is by way of an application to the court (High Court or county court at the applicant's discretion) with a second appeal, with permission, to the Court of Appeal. (4) Was the decision of the FtT based on an error of law. Two challenges were made to that decision. (1) Firstly a procedural decision; and (2) Secondly a legal challenge based on the correct interpretation of 'personal data' where that expression appears in the DPA and, by incorporation of the DPA definition, into the FOIA. 8. The procedural challenge was against the closed procedure adopted by the FtT which prevented DK having access to the document he was seeking, prevented him from attending that part of the hearing during which the FtT heard submissions on whether it fell for disclosure from counsel acting for the IC and NP in the absence of DK and the FtT giving its reasons for dismissing his appeal in an open decision with a closed decision that discussed the particular document. The open but not the closed decision was provided to DK. As a further matter, DK challenged the UT refusal decisions in part because the UT judge did not consider the closed decision of the FtT and did not inspect the document under challenge. Furthermore, the Administrative Court was not supplied with copies of either the closed decision or the document under challenge. 9. The legal challenge to the meaning of 'personal data' relied mainly on the definition allegedly provided to that phrase by the Court of Appeal in the Durrant case which it was contended was definitive and which provided a narrow definition which was applicable in this case. 10. This complex series of issues was considered sequentially. In doing so, it could be seen that DK had no reasonable prospects of succeeding in a notional appeal to the UT against the decision of the FtT. This decision was based on the following findings: (1) The UT's jurisdiction in an appeal from the FtT (Information Rights) was unusual since the FtT had a wider jurisdiction than other FtTs in that it was entitled to review the IC's findings of fact, exercise the IC's exercise of discretion decision afresh and amend the IC's refusal notice. In consequence, the UT's jurisdiction, although limited to issues of law, was entitled to review the FtT's exercise of its jurisdiction to find facts, exercise discretion and amend a refusal notice on Wednesbury grounds. (2) The FtT's powers to hold closed hearings and issue closed decisions were potentially capable of infringing a litigant's article 6 rights as adumbrated in recent Supreme Court and European Court of Human Rights decisions and, in an appropriate case, will need to be reconsidered as potentially not being compatible with those decisions. However, sufficient is known about the contents of the district judge's statement and as to the background that DK was not unduly or unfairly hampered in presenting his case before the IT and neither the UT nor the Administrative Court were hampered in considering the lawfulness of the IT's decision despite not seeing the closed decision or the document in issue. (3) The IT was correct, and its decision not challengeable, that the document constituted both DK's personal data and, additionally, the district judge's personal data. (4) In those circumstances, NP was incorrect in considering the document under the FOIA but it was no longer material to consider whether the NP's decision that the document was nonetheless not disclosable under the FOIA was correct. (5) The IC was correct in finding that NP, as the public authority holding the document, had the exclusive obligation to determine whether the application for disclosure should be dealt with under the DPA or the FOIA and that DK's decision should be determined under the DPA. (6) The IC was also correct in finding that the document was personal data of both parties and was not disclosable. (7) The FtT, correctly applying the statutory definition of personal data to the documents in question, including the applicable EC directive, the applicable guidance and the Durrant decision and the applicable guidance and with its knowledge of the contents of the document and the complex factual background, decided that the IC was correct in concluding that the document should be considered only under the DPA and was not disclosable in consequence under the FOIA. (8) Because the witness statement was the personal data of the district judge, it was not disclosable under the FOIA. Similarly, it was not disclosable under the FOIA for the separate, discrete but cumulative reason that it was DK's personal data. (9) The witness statement was also not disclosable under the DPA for the separate, discrete and cumulative reasons that it was both the personal data of the district judge and of DK. 11. The witness statement was not disclosable under the DPA because it was the personal data of both the district judge and DK, because DK had not obtained the permission of the district judge that NP should disclose it and because it was exempt from disclosure on three separate but cumulative grounds. 12. The document was also not disclosable under the DPA or under the CPRs since it was not necessary in the interests of justice that it should be disclosed and because its disclosure was prohibited under the terms of the DPA. HH Judge Anthony Thornton QC: A. Introduction General. These two applications are made by the claimant, Dr Peter Kelway ("DK"). Each is made in separate judicial review proceedings, they are closely connected and I have considered and decided them together. Each seeks the disclosure of three statements made to police officers investigating a complaint that a district judge had committed a serious criminal offence by arranging for a tape on which was recorded court proceedings to be tampered with. The principal basis for claiming discovery is by way of an application under the Freedom of Information Act 2000 ("FOIA") or, if that is unsuccessful, by way of an application for disclosure of personal data under the Data Protection Act 1998 ("DPA"). Finally, they are claimed by way of disclosure by Northumbria Police ("NP") in the relevant judicial review claim or by way of non-party disclosure in the same claim. I will deal first with the FOIA claim which is the subject-matter of the first judicial review claim and then with the disclosure applications which are the subject-matter of the applications in the second judicial review claim. B. Procedural Introduction - Cart Claim – CO/2904/2013 This application. In this application, the DK seeks permission to apply for a judicial review of a decision of the Upper Tribunal (Administrative Appeals Chamber) (UT) refusing him permission to appeal a decision of the Information Tribunal ("IT"). DK filed the judicial review claim form on 11 March 2013 seeking to set aside the refusal decision that had been sent out on or about 4 September 2012 and of the setting aside refusing to set aside the original decision that had been sent out on 1 October 2012. The decision of the UT had refused DK permission to appeal two decisions of the Information Tribunal (IT) dated 14 April 2009 (substantive decision) and 15 June 2009 (costs decision). The substantive decision of the IT had dismissed DK's appeal from a decision of the Information Commissioner (IC) dated 17 March 2008 that had confirmed the decision of Northumbria Police (NP) dated 24 November 2006 and 2 March 2008 refusing DK's requests dated 23 November and 4 December 2006 for specified documents and information under the FOIA. Lodging the appeal. The UT Rules require a claimant who seeks to appeal a decision of a First-tier Tribunal ("FtT") decision to the UT first to seek permission to appeal from the FtT and only to seek permission from the UT if the FtT has refused permission. The IT was not part of the Tribunal system at the time that it made its original substantive decision but it became one when it was moved into the Tribunal system and became part of the First-tier Tribunal (General Regulatory Chamber) on 18 January 2010. It is now known as the FtT (Information Rights). This FtT has identical jurisdiction and, in relevant respects, identical practice and procedure to that that the IT had before its transfer into the Tribunals system in January 2009 and I will refer to both the IT and the FtT (Information Rights) as the "IT" in this judgment. DK did not apply to the IT for permission to appeal since it was not necessary to apply to the IT for permission in 2009 when the substantive decision was promulgated. At that time, an appeal from the IT lay to the Administrative Court exercising appellate functions and it was necessary for him to apply to, and obtain from, the Administrative Court permission to appeal. Initially, DK mistakenly thought that his appeal from the IT lay to the Court of Appeal and he lodged a notice of appeal with the Court of Appeal within a month of the substantive decision, being the then applicable time limit for filing such an appeal in the Administrative Court. This notice of appeal was transferred to the Administrative Court and then filed with that Court on 4 March 2010. By then, the jurisdiction of the IT had been transferred to the FtT (General Regulatory Chamber) and outstanding applications for permission to appeal from the IT and the appeals themselves were also transferred automatically from the Administrative Court to the UT. The Administrative Court did not transfer the file for this appeal to the UT until April 2012. Since the appeal had been transferred automatically to the UT, it was not necessary for the file to be transferred but its non-transfer appears to have held up the processing by the UT of DK's application for permission to appeal. The file was only transferred as a result of my intervention which itself followed an email from DK dated 1 February 2012 drawing to my attention his difficulty in having his permission to appeal application heard by the UT. I investigated the apparent lack of the transfer of the court file from the Administrative Court to the UT and, in the light of those difficulties, wrote to DK on 28 February 2012 as follows: "I have located the file in your appeals against the Information Tribunal decisions in your case and find that the position is as follows: 1. Your appeals should have been filed with the Administrative Court within 28 days of the two decisions. The substantive appeal was lodged with the Court of Appeal on 14 May 2009 which was 2 days out of time since the substantive decision was issued on 14 April 2009. There is nothing on the Administrative Court file that amounts to a notice of appeal in the costs decision so nothing below relates to this possible second appeal if there ever was one. 2. The lodging of the notice of appeal with the Court of Appeal was an error since the relevant appeal court at that time was the Administrative Court (which had an appellate function from various tribunals – nothing to do with judicial review – so that lodging did not count as a filing of the appeal. It is not clear when the notice of appeal reached the Administrative Court office but there was delay in filing the appeal as a result of your fees remission application and uncertainties of the effect (if any) of the ECRO then in force. The notice of appeal was only filed on 4 March 2010. I express no view as to whether that filing amounted to an implied extension of time from 12 April 2009 until 4 March 2010. 3. The notice of appeal was, and remains, defective since it does not contain any grounds – the part of the claim form, usually an attachment, which sets out the legal basis of the appeal. This is different from the skeleton argument which comes later in the process. I express no view as to whether that defect can still be remedied by belated service of a grounds document. 4. The law changed significantly on 18 January 2010. On that date, the Information Tribunal ceased to exist and was replaced by the First Tier Tribunal (Information Rights) and any appeal no longer lay to the Administrative Court but instead went to the Upper Tribunal (Administrative Appeals Chamber). By virtue of the Transfer of Tribunal Functions Order 2010 (SI12010/32) the appeal was transferred automatically to that Upper Tribunal Chamber on 18 January 2010. I express no opinion as to whether or not the filing of the notice of appeal in the Administrative Court on 4 March 2010 was effective to file the appeal with the Upper Tribunal on that date. 5. The ICO wrote to the Administrative Court on 21 April 2010, with a copy to you, correctly pointing out that the Administrative Court did not have jurisdiction and that the proposed appeal should be removed from the Administrative Court warned list and that any appeal should be heard by the Upper Tribunal. The letter also pointed out that, in any event, the notice of appeal was filed very much out of time and was deficient in not setting out grounds of appeal. 6. Nothing has been done since that letter was received by the Administrative Court save that your letter dated 14 July 2010 is on file. This asks, incorrectly given the above, that your appeal should be listed in the Administrative Court warned list. The effect of that Order was that the appeal, in whatever state it was in and at whatever stage in the appeal process it had reached, was automatically transferred to the Upper Tribunal on 18 January 2010. 7. It is for you to decide whether you wish to attempt to activate this appeal given that three years have passed since the decision you wish to appeal was published. If you do, you should write to the Administrative Court quoting the reference CO/3349/2010[1] C/O Lyn Knapman, Deputy Master, Administrative Court, asking her to transfer the file to the Upper Tribunal (Administrative Appeals Chamber) and for that file to be placed before the Senior District judge of that Chamber with a request for that District judge to issue directions. I would suggest that, in the meantime, if you wish the appeal to be re-activated, you should draft your proposed grounds of appeal and a witness statement setting out what, from your point of view, has happened from April 2009 until the present and send this to the Upper Tribunal to be placed before the Senior District judge with the file CO/3349/2010 which you have asked to be transferred by Deputy Master Knapman to the Upper Tribunal since it concerns a proposed appeal from the Information Tribunal. It will then be for the Senior District judge to decide whether the appeal can go forward or should be struck out … As for the costs appeal (if any), you will have to bring this to the attention of the Upper Tribunal yourself if there is one and you wish this to proceed. …. ." Extension of time by the UT. DK did as was suggested and the file was transferred to the UT. DK applied to the UT for permission to extend the time for lodging his notices of appeal from the date that they should have been filed with the Administrative Court, namely within 28 days of, respectively, the 14 April 2009 and 15 June 2009, until the date that the appeals were transferred to and lodged with the UT in April 2012. DK filed two lengthy witness statements with the UT explaining the delay that had occurred and a detailed witness statement setting out his grounds of appeal and his submissions in support of those grounds. An oral hearing took place to consider whether time should be extended for both the substantive and costs appeals and permission to appeal should be granted. These documents were before the UT judge at the oral hearing that that judge had directed should take place. The UT has the power to deal with applications to extend time and for permission to appeal on paper and it is only in an exceptional case that these applications are dealt with orally. The UT judge assigned to the applications took the view that the exceptional features of this case arising from the lengthy delays that had occurred, the unusual and difficult issues of law that had to be considered and the fact that DK was a litigant in person warranted an oral hearing. The UT judge, at the outset of this hearing on 3 September 2012, ordered that the appeal should be admitted and the extension of time claimed should be granted under paragraph 5(3)(a) of the UT Rules. He then heard DK's application for permission to appeal at a two-hour hearing, reserved his decision and sent out a fully reasoned refusal decision on 4 September 2012. DK then applied to the UT to set aside the refusal decision and this application was refused on 1 October 2013. CPR 54.7A. The claim had been filed after CPR 54.7A had taken effect. When CPR 54.7A(8) and CPR 54.12 are read together, it is clear that an application for permission to apply for judicial review of a refusal by the UT to permit a claimant to appeal a decision of the FtT (including a residual appeal from the IT that has been transferred to the UT) will be dealt with on paper unless the court orders that the application should be dealt with orally. Such applications, unlike all other judicial review permission applications[2], may not be renewed at an oral hearing but, in exceptional circumstances, the court may direct that the sole permission application allowed to a claimant may be determined at an hearing and, if an order for a hearing is made, the defendant and the interested party must be given notice of the hearing and may be represented and heard at that hearing if they have lodged acknowledgements of service. The hearing of this application. Because this application is closely related to three other judicial review claims awaiting a renewal hearing, in the light of the difficult procedural history of this claim and those other claims and to assist in the effective case management of all four judicial reviews, I issued a directions order dated 22 March 2013 that included a direction that this application should be dealt with at the same hearing that all the applications in the other three judicial review claims would be dealt with. DK was advised to give notice to the defendant and the interested party of that direction. The UT served an acknowledgement of service which indicated that it relied on the two refusal decisions of UTJ Jacobs and did not propose to take any part in the proceedings and the NP did not serve one. In those circumstances, the hearing was listed for 24 May 2013 to be heard with 5 other applications in the other three judicial review claims. However, DK did not appear at that hearing having given notice to the court in an emailed letter on 23 May 2013 that he was not intending to appear. No formal application for an adjournment was issued and the letter did not expressly seek an adjournment albeit that it invited me to consider adjourning on my own motion all DK's judicial review applications that had been listed for that day. When the applications were called on, and in the absence of DK at the pre-arranged video link which he has always been provided with in the many previous hearings in his judicial reviews, I formally refused to adjourn any of the applications and gave a lengthy extempore judgment setting out my reasons why I would decide each of them in reserved judgments which I would hand down at a later date. In relation to this Cart application, as an additional reason for taking that course, it would ordinarily have been decided on paper, all the necessary documents had been lodged with the court and I was, in reality, merely reverting to the ordinary procedure for deciding the application. C. Application for an Extension of time to File Cart Claim (1) Introduction I must first address the delay that has occurred in filing this judicial review claim in the Administrative Court. DK's claim form was filed, on any view, very late. DK contends that I have previously granted an extension of time. I must therefore consider whether one is still needed and, if so, whether it should be granted. These issues require me to consider the legislative and factual context of this particular application. (2) Legal and procedural background A decision of the UT refusing permission to appeal a decision of an FtT (including an appeal from the IT which has been transferred from the Administrative Court to the UT) may not be appealed to the Court of Appeal[3]. In those circumstances, although the UT is a court of record, it is still a court or tribunal whose decisions are susceptible to judicial review if they are not capable of being appealed or reviewed in any other way. The basis on which an UT permission refusal decision may be reviewed on judicial review has been settled by the decision of the Supreme Court in Cart v The Upper Tribunal[4] and such applications are now usually referred to as "Cart" applications. The procedure for bringing such an application is now governed by CPR 54.7A which modified the procedure for other judicial reviews set out in CPR 54 and which took effect on 1 October 2012. This modified procedure applies to all Cart applications filed in the court on or after that date even if the original UT refusal decision being challenged had been sent out prior to 1 October 2012. In this case, there are three critical dates to consider, these are the date that the UT decision was sent out to DK, the date that the setting aside decision was sent out and the date that DK's application was filed with the Administrative Court. These dates were, respectively, 4 September 2012, 1 October 2012 and 11 March 2013. CPR 54.7A(2) provides that a Cart claim must be filed within 16 days after the date the UT decision was sent out to the claimant by the UT. No exception to this strict time-limit is made for UT refusal decisions which are subject to an application to review the decision by the claimant since an adverse review decision of the UT judge is not itself susceptible to any further appeal or review so that, if a review is sought, the claimant should still lodge the claim within the 16-day timescale. This rule replaced, for Cart claims, CPR 54.5(1) which provides that a judicial review claim should be filed promptly and, in any event, no later than 3 months after the grounds for making the claim (i.e. in this case when the UT refusal decision was promulgated and sent out) first arise. The timescale was shortened because of the Supreme Court, in the judgments in Cart[5] that gave effect to the views of Sir Andrew Leggatt whose report recommending the setting up of the Tribunal system[6] had advised that there should be a severely circumscribed ability to mount an appeal from the FtT and that that appeal process should be dealt with and concluded speedily. The Cart judgments and CPR 54.7A made it clear that a successful challenge to an UT refusal decision should only be permitted if there is an arguable case which has reasonable prospects of success that both the decision of the UT refusing permission to appeal and the decision of the FtT (in this case the IT) are wrong in law and that the claim raises an important point of principle or practice or that there is some other compelling reason for the Upper Tribunal to hear the claim. The Supreme Court also advised that the judicial review process should be streamlined for Cart appeals in ways that the Rules Committee should identify. That is why CPR 54.7A(3) was introduced. The new procedure did not contain any transitional provisions that, if they had been provided, would have enabled existing appeals and applications for permission to appeal already in being on 1 October 2012 to remain governed by the old procedure. (3) Time for filing DK's Cart claim On a literal construction of CPR 54.7A, DK's judicial review claim should have been lodged on or before 21 September 2012. This provides a somewhat difficult position for those such as DK who were subject to a refusal decision sent out whilst the old CPR 54.5(1) provision was applicable but which became subject to the new CPR 54A with its 16-day timescale which would run out prior to the new rule coming into force and within the remaining time for filing a claim under the old CPR 54.5(1). This difficulty was considered by Collins J in R(Sharma) v Upper Tribunal[7]. That case was similar in that the decision of the UT was sent out prior to 1 October 2011 and the claim was filed more than 16 days later and on a date after 1 October 2011. Collins J held that there would be an obvious injustice in holding the claimant to the 16-day period but that injustice would be remedied by granting a 16-day period of grace starting on 1 October 2011 within which the claimant could file a claim of this kind. However, he also stated that if a claim was filed after the 16-day period – that is on or after 18 October 2011, an explanation would be needed as to why there was a delay. DK's application is also subject to a further consideration. On receipt of the UT's decision, he immediately exercised his entitlement to apply to the UT to set aside the refusal decision. This entitlement arises pursuant to Rule 43 of the Upper Tribunal Rules and the application must be made and can only be made pursuant to one of the limited grounds set out in that Rule. DK relied on the ground that there had been a procedural irregularity in the UT permission application proceedings. This application was dismissed on the ground that there had been no procedural irregularity but it is clear from the refusal decision of UTJ Jacob that he accepted that the application was validly made and raised a ground of procedural irregularity albeit that that ground was not made out. CPR 54.7A(3) does not address the situation that arises when an UT refusal decision is subject to an in-time application for setting aside. In particular, the Rule does not address the question of whether time for filing a claim form seeking judicial review of a refusal decision of a permission application is postponed until a setting aside refusal decision has been sent out or whether time still starts to run from the date of the original decision being sent out. These difficulties arising out of the application of CPR 54.7A must be addressed by the application of the overriding objective as required by CPR 1.1. In other words, this provision, as with all other provisions of the CPR, is to be applied so as to ensure that the case is dealt with expeditiously and fairly so as to allot to the case an appropriate share of the court's resources. Furthermore, the timescale within which a judicial review claim must be lodged is subject to an extension of time if applied for under CPR 3.1(2)(a) which must be considered by taking appropriate account of all relevant circumstances including the 9 factors listed in CPR 3.9(1). Furthermore, CPR 3.9(2) provides that an extension of time application must be supported by a witness statement which should identify all the facts and matters relied on. CPR 54.7A cannot sensibly be read so as to require someone in DK's position to comply with the new 16-day filing rule before it took effect. Equally, it would be both unfair and a potential misuse of the court's resources to require someone in DK's position to file the claim form before the refusal of his application to the UT to set aside its initial refusal decision has been sent out. CPR 54.7A can sensibly be read so that the requirement that: "(1) This rule applies where an application is made, following refusal by the Upper Tribunal of permission to appeal against a decision of the First Tier Tribunal, for judicial review … ." is read so that the words "following a refusal" refer to the refusal decision of an in-time bona fide application to set aside a permission refusal decision. The potential difficulty of that construction is that a claimant has one month from the date of the sending out of the initial refusal decision in which to apply for a setting aside. The answer to that difficulty is that in the rare case where a valid setting aside application is made (as opposed to an invalid application that is made on grounds other than those prescribed by Rule 43 of the UT Rules), time for filing a judicial review claim should be postponed until the UT sends to the claimant the setting aside refusal decision. By chance, the UT setting aside refusal decision was sent out on 1 October 2012 which was the day that CPR 54.7A took effect. DK should therefore have filed this claim form on or before 17 October 2012, being 16 days after the UT setting aside refusal decision was sent out by the UT. However, DK filed his claim form on 11 March 2013, being 20 weeks and 6 days after 17 October 2012. He did not apply for an extension of time in the claim for as required by CPR 54 nor did he serve a witness statement setting out the grounds relied on for seeking an extension of time. The court in a directions order dated 11 March 2013 pointed out the 16-day timescale for filing a Cart claim and the case lawyer subsequently pointed out to DK that he needed to apply for an extension of time and serve evidence in support of that application. DK, somewhat belatedly, served his sixth witness statement in the UT proceedings dated 27 April 2013 in which he contended that time had already been extended so that there was no issue for the Court to decide in respect of the claim being filed out of time. He has not, therefore, strictly speaking, applied for an extension of time but I will, nonetheless, treat his witness statement as containing an application even though it also contends that he does not need one. (4) Factual background In order to resolve whether DK needs an extension of time and, if so, whether he should get one, it is necessary first to consider the relevant factual background to this period of apparent delay. In addition to the Cart claim, DH has three other judicial reviews awaiting a decision on his renewed applications for permission. All these judicial reviews arose out of a protracted case that DK started in the 12 August 1998 in the Gateshead County Court and which was only finally brought to an end by an order dated 13 June 2008. In that lengthy period, 110 orders were issued by the various courts involved in interminable procedural wrangling initiated by DK. In all, there were 62 separate hearings each of which yielded a perfected order and a further 48 orders were issued without a hearing. These hearings were conducted by at least 30 different judges at different levels of the court hierarchy, namely the Court of appeal and High Court and the County Court at both circuit judge and district judge levels. Amongst many other complaints about many of the district judges and court staff involved in these hearings was a two-fold complaint that a district judge had reneged on an assurance that he would not issue a particular order which he had no jurisdiction to issue and had subsequently tampered with the tape recording his proceedings so as to erase from it the recording of him giving that assurance. That district judge's statement and statements from two others who were present in the district judge's court when the critical assurance was said to have been given formed the principal subject-matter of DK's applications for disclosure under the FOIA to the Newcastle Police ("NP") and his appeals to the Information Commissioner ("IC"), the IT and the UT. DK threatened to initiate judicial review claims on a number of occasions between 2003 and 2008 as a means of persuading various courts to adjourn proceedings which otherwise would not have been adjourned. By 2008, he was fully aware that judicial review claims are solely concerned with allegedly unlawful decisions of public bodies and that there is a very short time limit that is allowed within which a judicial claim may be filed with the Administrative Court following the making of the decision that is challenged. DK finally filed his first judicial review claim in the Administrative Court on 9 April 2008. This claim challenged a decision of the IPCC dated 20 December 2007 that confirmed its earlier decision dated 20 December 2007 not to investigate DK's complaints about the conduct of the investigating police officer into his complaint to the police that the district judge had criminally tampered with the tape of his hearing. DK stated in the claim form that although he considered that his claim arose on 14 March 2008 when he received answers from the IPCC to his complaints about the decision, he accepted that the claim may have arisen on 20 December 2007. The refusing district judge's decision was that an extension should not be granted since the latest date that the claim should have been filed was immediately following the receipt of the IPCC's answers on 14 March 2008 but it was actually filed on 9 April some over 3 weeks later than it could and should have been and some 2 weeks later than the expiry of the 3-month long stop period. Permission was refused on the dual grounds that his claim was filed out of time and no extension should be granted and it lacked sufficient merit. DK filed his second judicial review claim in the Administrative Court on 15 May 2008. This claim challenged decisions of the IPCC dated 7 December 2007 and 31 March 2008. The first decision dismissed his appeal from NP's dismissal of a complaint involving the direction and control of a police officer which fell outside the complaints procedure. The second decision granted NP a dispensation from investigating a second complaint against NP because that complaint was a repetition of an earlier complaint. The substance of DK's complaints was to be found in his first complaint and his judicial review was filed more than 2 months out of time. Permission was refused on the grounds of the claims intrinsic lack of merits but could as well have been refused on the grounds that the judicial review was filed out of time. DK filed his third judicial review in the Administrative Court on 7 November 2008. This claim was brought against Newcastle Combined Court (NCC) and, on analysis, it challenged two critical decisions of different circuit judges refusing permission to appeal in decisions dated 18 June 2003 and 13 June 2008. The principle decision being challenged was the first of these two decisions. DK had threatened various judges in the NCC on several occasions since 2004 that he would be filing a judicial review claim but the claim was only filed about 4½ years after the first decision and nearly 5 months after the second decision being challenged had been made. In an attempt to circumvent the delay that had occurred, DK alleged that his challenge was to the second decision dated 13 June 2008. Even if that contention was correct, the claim should have been filed within about 1 month of the decision but was in fact filed 4 months out of time or, if the 3-month longstop time limit was appropriate, over 2 months out of time. Permission was refused on the dual grounds of delayed filing and the lack of any merits. DK made renewed applications for permission in each of the three claims. If he was still under any misapprehension about the need to file judicial review claims promptly and in accordance with the provisions of CPR 54, he would have learnt that his views were mistaken on receiving an order dated 19 August 2010 which included a provisional decision that I had drafted in relation to DK's renewed applications. This explained to DK the strict nature of the judicial review time limit provision that required a claim to be filed as soon as reasonably practicable after the decision complained of and in any event no later than 3 months later unless there are exceptional circumstances which should be spelt out in the accompanying application for an extension of time. On those grounds, the provisional decision was to the effect that all three judicial review claims were filed out of time. In consequence, the provision decision was to the effect that that permission should be refused in all three claims on the basis of delay as well as because none of the three claims had any prospect of success. Once permission to apply for judicial reviews had been refused on paper in each of the three judicial review claims, DK turned his attention to his attempts to obtain copies of material documents gathered by the NP investigations into his complaint about the district judge. The principle documents that he was seeking were copies of the statement the district judge made to the police officer investigating the complaint against him and the statements of two representatives of the defendant's solicitors who had been present at the original hearing. DK also set to work to expand his judicial review claim against the NCC to include a general complaint that there had been systematic and general unfairness by the court system that had deprived him of fair hearings throughout the entirety of the ten-year period that his claim was being pursued. DK succeeded in having his renewed permission hearings in his three claims delayed until 10 March 2010. At that hearing, he sought an adjournment on the grounds that he should first be allowed to obtain a copy of the district judge's statement from NP. He was allowed an adjournment and principally because the restored hearing was directed to await the conclusion of his FOIA disclosure proceedings, the hearing was not restored. On 21 May 2012, I informed DK that I would not conclude the renewed applications until the UT had dealt with his appeal on condition that DK kept the court informed with regular updates of the progress of his UT appeal and dealt promptly with each step he had to take in the appeal process. Soon afterwards, DK informed the court that his applications for an extension of time and for permission to appeal would be heard on 3 September 2012. I responded by informing DK that I would until 30 September 2012 to conclude the renewed permission applications. On 17 September 2012, DK informed me that the UT judge had refused him permission but he was about to apply for that decision to be set aside and that he had until 5 October 2012 to "appeal that order". He also indicated that he would be applying for a disclosure order in the judicial review against the IPCC for disclosure of the documents he was also seeking in the FOIA proceedings. On 19 September 2012, the court informed DK that if he wanted a further adjournment, he should issue a formal application in the Administrative Court which, if issued, would deal with in a telephone hearing. The court then issued a directions order issued dated 20 September 2012 which included this direction: "2. The claimant is to serve on the UT any application for a review of UT judge Jacob's decision received by the claimant on 8 September 2012, if such has not already been served, within the timescale provided for in the UT rules. The claimant is to notify the Administrative Court and, separately, District judge Thornton, by Monday 1 October 2012 whether or not the UT has reviewed the said decision and, if so, what fresh decision was made. 4. If the claimant seeks to apply for judicial review of the UT's decision refusing permission and any refusal to review that decision, he must issue a fresh judicial review application setting out the grounds on which he wishes to rely. That application must be issued against the UT and, if it is so issued, must be issued by 19 October 2012. It if is issued, the consideration of whether permission should be granted is to be heard by Judge Thornton QC at an oral hearing to be heard at the same time as the claimant's application for discovery. The claim form is to be served on the UT by the claimant." DK made a setting aside application to the UC on 21 September 2012 and this was considered and refused by UTJ Jacob and sent out to DK on 1 October 2012. On 1 October 2012, I informed DK that I had extended time until 20 October 2012 or the conclusion of the application to review and set aside proceedings, whichever was the later. DK did not file a fresh judicial review claim form as directed and had still not filed one when he sent an email to the court dated 13 December 2012 which referred to his email dated 20 October 2012. This email was not received by the court and, indeed, does not appear to have been sent since it does not appear in the chain of emails that DK always sent to the court. In the email, DK informed the court that he had failed to persuade the UT to set aside its decision refusing him permission and invited the court "to revise my draft (sic) order in the light of this situation". He also asked the court to order that a copy of the transcript of the hearing before the UT should be made available to him at public expense. DK did not issue an application seeking to vary the order dated 20 September 2012. The court issued a further order dated 21 January 2013 refusing DK'S request for a transcript at public expense. The order also directed that the relevant date in paragraphs 3 and 4 of the order of 20 September 2012 should be changed to Wednesday 13 February 2013, thus requiring the claim form to be issued by that new date. This direction did not constitute an extension of time within which to file the claim form. No extension of time had been applied for and, in any event, an extension of time can only be sought and granted once the judicial review claim has been issued. CPR 54 requires the claimant in a judicial review, if an extension of time is sought, to apply for the extension in section 7 of the claim form accompanied by reasons for the delay set out in a supporting witness statement. DK finally filed a claim form by sending 3 copies of the form without a fee or a fee remission application to the court. The documents were received by the court on 4 March 2013 but these were immediately returned to DK because he had failed to apply for a fee remission, an obvious error given the number of applications and claim forms that he had issued previously which had all been accompanied by a fee remission application. DK returned the claim form with the appropriate fee remission application and this was received and filed by the court on 11 March 2013. Section 7 of the claim form was filed in with the statement "No other applications are being made". DK, when informed by the case lawyer that he needed to apply for an extension of time and support that application with a witness statement setting out his reasons for the delay that he was relying on in support of his application, submitted a short witness statement dated 27 April 2013 which in summary stated that: (1) The UT had made no reference to the new provision in the CPR in the information it sent him with the decision refusing him permission to appeal. (2) Notwithstanding the 16-day time limit in the new provision, the court could apply the overriding objective in the interests of justice take account of submissions made and override specific rules. (3) Directions were issued on 20 September 2012 ordering that any judicial review application of the UT's refusal decision must be issued by 19 October 2012 and revised directions were issued on 21 January ordering that any such application must be issued by 13 February 2012. (4) DK followed the later directions and issued the application for judicial review before the deadline imposed. He concluded with this statement: "The claimant therefore submits that the court has already considered the matter of the timescale over which the application for judicial review must be issued and that he has met the requirements set. The claimant submits that there is no issue for the court to decide upon in respect of the application being made out of time." (5) Did the orders of 20 September 2012 and 21 January 2013 extended time? The orders issued on 20 September 2012 and 21 January 2013 must be read in the context of their procedural background. These orders were issued in the three existing judicial review claims since this Cart claim had not yet been issued. Those orders were concerned with the case management of the renewed permission applications in the three existing judicial review claims and, in particular, with the finalisation and service on the court of the final written submissions in those three existing claims. The court had directed that those steps could be delayed until the conclusion of the UT appeal proceedings in the unrelated FOIA application. The decision to delay the renewed permission application decisions was reflected in the order of 10 February 2012 and the emailed directions the court sent DK dated 28 February 2012, 28 March 2012, 10 May 2012 and 21 May 2012. It is clear from those emails that the court was determined to reach finality in the renewed applications as soon as possible and was only prepared to delay reaching and handing down a decision until the first possible moment after the UT's refusal of the permission application or, if permission was granted, the determination by the UT of the appeal. The order of 20 September 2012 was issued in the light of the information that DK had supplied to the court that the UT had refused permission but that DK was intending to apply to set aside that decision and also to apply for judicial review of the refusal decision. I was of course aware that any judicial review claim would be subject to the Cart procedure and made a case management decision in the three then current judicial reviews in the interests of speed and efficiency that I would assign the inevitable permission application to myself, direct an oral hearing for that application, direct that the claim should be issued by 19 October 2012 and that all applications in what would then be DK's four judicial reviews would be heard and concluded at the same oral hearing to be fixed as soon as possible thereafter. I could not have extended time for filing a judicial review claim by that order since the claim had not yet been filed and, in any event, could not then have been issued since it was still subject to a setting aside application. All the court was doing was instructing DK that the permission applications would be concluded without awaiting a Cart claim unless the Cart claim was issued by the stipulated dates. However, once it was issued, any extension of time application would then have to be dealt with. It follows that, given the factual background and the relevant orders, the court was not concerned with whether time for the filing of the cart claim should be extended but with whether the handing down of judgment in the renewed permission applications in the three other claims should be further delayed. (6) Extension of time for filing the judicial review claim DK has elected not to put forward any reasons for the late filing of the claim form save that his time for filing was extended, or could be taken to have been extended, by the two orders made in September 2012 and January 2013. If DK could sustain this contention, it would provide an irrefutable reason for extending time from the last day for filing provided for in the September 2012 order, which was 19 October 2012. However, for the reasons already given, the two orders do not provide any, let alone any satisfactory, basis for extending time by any further amount. I will consider the possible reasons for the delay that might have been put forward. These would appear to include the following: (1) The advice that DK indicated he had received from the UT about the possibility of an appeal referred to judicial review but did not advise that there was a very short timescale within which a judicial review claim could be started in order to comply with the CPR. (2) DK was seeking legal advice or was researching the relevant law in order to determine whether he had any grounds for a judicial review of the UT refusal decisions. (3) DK was attempting to obtain a copy of the transcript of the hearing before UT Judge Jacob on 4 September 2012 in order to finalise his grounds for seeking judicial review. For reasons he has not put forward, this had not arrived by 13 December 2012 when he applied informally to me to order that he be provided with that transcript at public expense, an order that I had no power to make and which would inevitably have been refused even if I had the power to make it. I refused that informal application in my order of 21 January 2013 and DK subsequently issued perfectly coherent grounds which demonstrated that the transcript was not a necessary document in any event. (4) DK was prepared to disregard my directions since he did not agree with them or because he wanted to further delay the court's decision in his renewed permission applications in his other three claims. None of these reasons holds water. DK had received a clear direction on 20 September 2012 to issue and file a Cart claim with the Administrative Court by 19 October 2012 if he intended to proceed with it. He made no contact with the court until he sent an email to the court on 17 December 2012 which referred to a previous contact on 20 October 2012 which was never received by the court and which it appears from the chain of emails sent with the 17 December 2012 email was never sent. If DK had been granted an extension of time on 20 September 2012 for filing a Cart claim, that extension was only to 19 October 2012 and if he wanted a further extension, he should have made a formal application having obtained a fee remission before 19 October 2012 and he would only have been entitled to delay issuing the claim beyond that date if the court granted him a further extension beyond that date. It is clear from his failure to provide an explanation for the delay that he had no basis for obtaining an extension up to 17 December 2012. The order of 21 January 2013 did not, expressly or impliedly extend time for filing the as yet non-existent claim form. All it did was to grant a yet further extension for the culmination of the application for permission process in the three existing judicial review claims. Even if time for filing had been extended until 13 February 2013, the claim was not filed by that date. The claim form did not arrive in draft at the Administrative Court until about 3 March 2013 but it could not be filed because DK had neither applied for a fee remission nor enclosed the requisite fee. This was not a minor and excusable slip as DK subsequently asserted. From his previous long history of filing applications and claims, DK knew that the court could not and would not file his claim without a fee remission. Given the delays that had occurred, even on DK's way of looking at this claim, the 13 February 2013 deadline was an absolute and final deadline which cannot be excused by postal delays or oversight with regard to the necessary fee remission. (7) Conclusion – Extension of time It follows that the time by which DK should have filed the Cart claim form will not be extended from 17 October 2012 until 11 March 2013. This is because the law as explained in the Cart case and as given effect to by CPR 54.7A clearly requires a Cart challenge to be started and progressed very quickly after a refusal decision of the UT save in exceptional circumstances. DK has provided no explanation for the delay in filing his Cart challenge for a period of nearly six months beyond the last date that it should have been filed and he has not been granted an extension of time by virtue of the two court orders dated 20 September 2012 and 21 January 2013. DK is well aware, given his experience in his three other judicial review claims over the years, learnt that all judicial reviews must be started promptly. In conformity with the overriding objective, I refuse to extend time for the filing of this Cart judicial review claim. This conclusion is only provisional at this stage since, if I was to conclude that this case is so exceptional that DK would otherwise be granted permission to apply for a review the UT judge's decision had there been no delay or need for an extension of time, I would need to consider whether to grant permission despite the lengthy delay[8]. I will therefore defer my decision as to an extension of time until after I have concluded whether this is one of those rare Cart cases in which permission should, save for the delay, be granted. B. Applicable Law 1. DPA and FOIA - Overview Before considering whether the UT decision refusing DK permission to appeal the decision of the IT, it is necessary to understand the relevant complex and arcane features of the FOIA and the DPA that deal with "personal data". The DPA was enacted in 1998 to give effect in the UK to Directive 95/46/EC on personal data, one of whose principal objectives is to protect the fundamental rights of individuals. One of the principle ways that the Directive seeks to achieve that protection is by seeking to ensure that anyone, whether a public authority or a private company or individual, who holds or processes[9] personal data of other individuals in electronic or manual form ("the data controller") preserves its confidentiality, holds it in controlled, regulated and accessible conditions and allows access to it to the individual whose data it is ("the data subject"). In other words, personal data should be processed in controlled conditions, only made accessible in situations in which it is reasonably necessary to release it and readily accessible to the individual to enable the individual to know that the personal data were being stored and to enable them to be checked and corrected. An individual who wishes to have access to his personal data should only be deprived of access for very good reason and in the overriding public interest. The FOIA was enacted two years later pursuant to the then Government's political pledge to open up decision-making and the decision-making process of public authorities to the general public. The DPA works separately and independently from the FOIA in this way[10]: (1) An individual who wishes to know whether a data controller is processing personal data about him has the right to request ("a data subject request") a data controller and to be informed by that data controller whether personal data of which that individual is the data subject are being processed by or on behalf of that data controller. (2) The data controller is required to answer that request with a description of the personal data held, the purposes for which they are being processed and the recipients to whom they may be disclosed. This obligation of the data controller is known as the obligation to confirm or deny. (3) An individual is entitled to have communicated to him in an intelligible form the information constituting any personal data of which that individual is the data subject and any information available to the data controller as the source of those data. (4) Where a data controller cannot comply with the request without disclosing information relating to another individual who can be identified from that information, he is not obliged to comply with the request unless the other individual has consented to the disclosure of the information to the person making the request or it is reasonable in all the circumstances to comply with the request without the consent of the other individual. (5) The data controller is required to process personal data in accordance with the data protection principles and the relevant conditions set out in schedules one to four of the DPA. (6) The requirement to communicate to an individual his personal data is subject to exemptions. The relevant exemption in this case is that personal data is being processed for the apprehension or prosecution of offenders except where communication is necessary for the administration of justice and, to the extent that the personal data is sensitive personal data, processing is necessary for the purpose of or in connection with any legal proceedings. The FOIA works in this way[11]: (1) Any person making a request for information to a public authority is entitled to be informed in writing by the public authority whether it holds information of the description specified in the request, being the obligation to confirm or deny, and if that is the case, to have that information communicated to him. (2) The obligation to confirm or deny and to communicate information is excluded and the public authority is exempt from the duty to communicate the information if the information is absolutely exempt or if it is exempt and the public interest in maintaining the exemption outweighs the public interest in disclosing the information. (3) Information is absolutely exempt if it constitutes personal data of which the applicant is the data subject or if it is a third party's personal data and the public authority would be exempt from disclosing that data to both the data subject and the third party. 2. Directive 95/46/EC The primary objective of the 1995 Directive on personal data is to protect individuals' fundamental rights, notably the right to privacy and accuracy of their personal data held by others ("data controllers") in computerised form or similarly organised manual filing systems whilst at the same time facilitating the free movement of such data between Member States of the European Union. Personal data is given a broad definition and the exemptions from an individual's right to access to his or her personal data are tightly drawn. The relevant provisions of the Directive are as follows[12]: Recitals (1) Whereas the objectives of the Community, as laid down in the Treaty, as amended by the Treaty on European Union, include creating an ever closer union among the peoples of Europe, fostering closer relations between the States belonging to the Community, ensuring economic and social progress by common action to eliminate the barriers which divide Europe, encouraging the constant improvement of the living conditions of its peoples, preserving and strengthening peace and liberty and promoting democracy on the basis of the fundamental rights recognized in the constitution and laws of the Member States and in the European Convention for the Protection of Human Rights and Fundamental Freedoms; (2) Whereas data-processing systems are designed to serve man; whereas they must, whatever the nationality or residence of natural persons, respect their fundamental rights and freedoms, notably the right to privacy, and contribute to economic and social progress, trade expansion and the well-being of individuals; (3) Whereas the establishment and functioning of an internal market in which, in accordance with Article 7a of the Treaty, the free movement of goods, persons, services and capital is ensured require not only that personal data should be able to flow freely from one Member State to another, but also that the fundamental rights of individuals should be safeguarded; … (10) Whereas the object of the national laws on the processing of personal data is to protect fundamental rights and freedoms, notably the right to privacy, which is recognized both in Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms and in the general principles of Community law; whereas, for that reason, the approximation of those laws must not result in any lessening of the protection they afford but must, on the contrary, seek to ensure a high level of protection in the Community; … (25) Whereas the principles of protection must be reflected, on the one hand, in the obligations imposed on persons, public authorities, enterprises, agencies or other bodies responsible for processing, in particular regarding data quality, technical security, notification to the supervisory authority, and the circumstances under which processing can be carried out, and, on the other hand, in the right conferred on individuals, the data on whom are the subject of processing, to be informed that processing is taking place, to consult the data, to request corrections and even to object to processing in certain circumstances; … (33) Whereas data which are capable by their nature of infringing fundamental freedoms or privacy should not be processed unless the data subject gives his explicit consent; whereas, however, derogations from this prohibition must be explicitly provided for in respect of specific needs, in particular where the processing of these data is carried out for certain health-related purposes by persons subject to a legal obligation of professional secrecy or in the course of legitimate activities by certain associations or foundations the purpose of which is to permit the exercise of fundamental freedoms; … Article 1 For the purposes of this Directive: 1. (a) 'personal data' shall mean any information relating to an identified or identifiable natural person ('data subject'); an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity; Article 13 Exemptions and restrictions 1. Member States may adopt legislative measures to restrict the scope of the obligations and rights provided for in Articles 6(1), 10, 11(1), 12 and 21 when such a restriction constitutes a necessary measure to safeguard: (a) national security; (b) defence; (c) public security; (d) the prevention, investigation, detection and prosecution of criminal offences, or of breaches of ethics for regulated professions; (e) an important economic or financial interest of a Member State or of the European Union, including monetary, budgetary and taxation matters; (f) a monitoring, inspection or regulatory function connected, even occasionally, with the exercise of official authority in cases referred to in (c), (d) and (e); (g) the protection of the data subject or of the rights and freedoms of others. 3. 'Personal data' (1) Statutory definition. It is not always easy to determine whether data, which includes recorded information held by a public authority, is an individual's personal data since the definition of personal data in the DPA can give rise to technical difficulties. When interpreting and giving effect to the statutory definition of 'personal data', it is both necessary and permissible to give effect to the Directive so far as is possible. An Opinion on the concept of personal data ("WPO") was adopted by the Working Party established by Article 29(1) of the Directive[13] and the IC whose decision notice in this case was promulgated in 2008 had been the UK representative on the Working Party. The WPO is therefore a particularly valuable guide as to how the definition of personal data should be applied to the documents in issue in this case. Furthermore, the IC has produced a Technical Guidance Note ("TGN") on personal data which incorporates the WPO into the eight questions it sets out which are intended to help determine whether data is personal data within the meaning of the DPA[14]. The leading authority in England on the meaning of personal data, being the decision of the Court of Appeal in Durrant v Financial Services Authority[15] is also highly relevant in this context, particularly as it the TGN was drafted to take account of this judgment as well as the WPO. The statutory formulation of "personal data" is contained in section 1(1) of the DPA: "'data' means information which- … (e) is recorded information held by a public authority and does not fall within any of paragraphs (a) to (d)." "'personal data' means data which relate to a living individual who can be identified- (a) from those data, or (b) from those data and other information which is in the possession of, or is likely to come into the possession of, the data controller, and includes any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of the individual." (2) 'information' is more widely defined in section 84 the FOIA as meaning: "information recorded in any form." (3) The DPA covers personal data processed by anybody who processes personal data whereas the FOIA is confined to information that is held by a public authority. (4) Thus, there is an overlap in the definitions of personal data and information such that all personal data, if it is processed by a public authority, also falls within the definition of information. (2) Guide to interpretation of 'personal data' WPO. The WPO considered amongst other concepts the respects in which data may "relate" to an individual in a way that makes it personal data. Three concepts were identified being those of: purpose, concept and result. The result concept is of particular significance in this case. The relevant extract of the WPO dealing with the result concept is as follows: "The Working Party has already paid attention to the issue of when the information may be considered as "relating" to a person. In the context of discussions on the data protection issues raised by RFID tags, the Working Party noted that "data relates to an individual if it refers to the identity, characteristics or behaviour of an individual or if such information is used to determine or influence the way in which that person is treated or evaluated. In view of the cases mentioned above, and along the same lines, it could be pointed out that, in order to consider that the data "relate" to an individual, a "content" element OR a "purpose" element OR a "result" element should be present. The "content" element is present in those cases where - corresponding to the most obvious and common understanding in a society of the word "relate" - information is given about a particular person, regardless of any purpose on the side of the data controller or of a third party, or the impact of that information on the data subject. Information "relates" to a person when it is "about" that person, and this has to be assessed in the light of all circumstances surrounding the case. For example, the results of medical analysis clearly relate to the patient, or the information contained in a company's folder under the name of a certain client clearly relates to him. Or the information contained in a RFID tag or a bar code incorporated in an identity document of a certain individual relates to that person, as in future passports with a RFID chip. A third kind of 'relating' to specific persons arises when a "result" element is present. Despite the absence of a "content" or "purpose" element, data can be considered to "relate" to an individual because their use is likely to have an impact on a certain person's rights and interests, taking into account all the circumstances surrounding the precise case. It should be noted that it is not necessary that the potential result be a major impact. It is sufficient if the individual may be treated differently from other persons as a result of the processing of such data. Example No. 8: monitoring of taxis' position to optimize service having an impact on drivers. A system of satellite location is set up by a taxi company which makes it possible to determine the position of available taxis in real time. The purpose of the processing is to provide better service and save fuel, by assigning to each client ordering a cab the car that is closest to the client's address. Strictly speaking the data needed for that system is data relating to cars, not about the drivers. The purpose of the processing is not to evaluate the performance of taxi drivers, for instance through the optimization of their itineraries. Yet, the system does allow monitoring the performance of taxi drivers and checking whether they respect speed limits, seek appropriate itineraries, are at the steering wheel or are resting outside, etc. It can therefore have a considerable impact on these individuals, and as such the data may be considered to also relate to natural persons. The processing should be subject to data protection rules. Also a "purpose" element can be responsible for the fact that information "relates" to a certain person. That "purpose" element can be considered to exist when the data are used or are likely to be used, taking into account all the circumstances surrounding the precise case, with the purpose to evaluate, treat in a certain way or influence the status or behaviour of an individual." TGN. The TGN listed eight questions illustrated with examples which were intended to provide guidance to a decision-maker as to whether data is personal. If the answer to any of these questions is in the affirmative, that provides evidence that the data is personal[16]. As an example of the WPG's further elaboration of these questions, it is worth considering that elaboration in relation to question (5) which is the question that the IT regarded as being the most relevant for determining whether the district judge's witness statement was personal data. This reads as follows: relevant part of the TGN, again dealing with the purpose element that can give rise to information relating to a data subject is as follows: "5 The purpose of the processing Is the data used, or is it to be used, to inform or influence actions or decisions affecting an identifiable individual? Yes: The data is 'personal data' for the purposes of the DPA. No: Go to next question. 5.1 Informing or influencing decisions There are many other examples of data which 'relate to' a particular individual because it is linked to that individual and informs or influences actions or decisions which affect an individual. Example: Data about an individual's phone or electricity account clearly determines what the individual will be charged. Context is important here. Information about a house is often linked to an owner or resident and consequently the data about the house will be personal." Durrant authority. The judgments in Durrant must also be taken into account when considering the meaning and application of 'personal data'. The leading judgment was delivered by Auld LJ. Buxton LJ delivered a short concurring judgment and Mummery LJ agreed with both judgments. This passage from the leading judgment of Auld LJ encapsulates the core ratio of the Court's decision on the personal data issue: "28. It follows from what I have said that not all information retrieved from a computer search against an individual's name or unique identifier is personal data within the Act. Mere mention of the data subject in a document held by a data controller does not necessarily amount to his personal data. Whether it does so in any particular instance depends on where it falls in a continuum of relevance or proximity to the data subject as distinct, say, from transactions or matters in which he may have been involved to a greater or lesser degree. It seems to me that there are two notions that may be of assistance. The first is whether the information is biographical in a significant sense, that is, going beyond the recording of the putative data subject's involvement in a matter or an event that has no personal connotations, a life event in respect of which his privacy could not be said to be compromised. The second is one of focus. The information should have the putative data subject as its focus rather than some other person with whom he may have been involved or some transaction or event in which he may have figured or have had an interest, for example, as in this case, an investigation into some other person's or body's conduct that he may have instigated. In short, it is information that affects his privacy, whether in his personal or family life, business or professional capacity. A recent example is that considered by the European Court in Criminal Proceedings against Lindquist, Case C-101/01 (6th November 2003), in which the Court held, at paragraph 27, that "personal data" covered the name of a person or identification of him by some other means, for instance by giving his telephone number or information regarding his working conditions or hobbies." It is also worth considering this short passage in Buxton LJ's judgment: "80. But the information sought by Mr Durrant was by no stretch of the imagination a borderline case. On the ordinary meaning of the expression, relating to him, Mr Durrant's letters of complaint to the FSA, and the FSA's investigation of that complaint, did not relate to Mr Durrant, but to his complaint. The 1998 Act would only be engaged if, in the course of investigating the complaint, the FSA expressed an opinion about Mr Durrant personally, as opposed to an opinion about his complaint; a contingency for which, nonetheless, the draftsman of the Act thought it necessary to make specific provision. And on the purposive construction of the expression, as investigated in paragraph 78 above, access to that material could not possibly be necessary for or even relevant to any protection by Mr. Durrant of his privacy. The excessive nature of his demands is perhaps best illustrated by the claim mentioned by my Lord in his paragraph 62, that Mr. Durrant should be told the identity of all those at the FSA who had handled his complaint. In the formal FSA complaints process in which Mr Durrant engaged before bringing the present proceedings (see paragraph 10 above) that information may or may not have been relevant, though there is no indication that Mr Durrant or those who may have been advising him then sought it. It has nothing whatsoever to do with Mr Durrant's privacy, and proceedings under the 1998 Act cannot be used now, or at all, to extract it." (3) Discussion of meaning of 'personal data' The concept of personal data must be considered in the context of being data which is protected by the Directive. The relevant legislation in the UK is intended to give effect to the Directive and should be read so far as possible to have a meaning which most closely gives it effect. The legislation is drafted in such a way that, in the context of this case, these three questions must be answered in the affirmative in order for the material in issue to be personal data: (1) Is the material data, namely information which is being processed or recorded or forms part of an accessible record or is recorded by a public authority in the ways defined in section 1 of the DPA? (2) Is it possible to identify a living individual from the data? (3) Does the data relate to that individual? In order to answer questions (2) and (3), it is necessary to consider the data from a number of different notions or considerations: (1) Does the data: (i) Have personal connotations affecting the data subject's privacy, being for this purpose his personal or family life or his business or professional capacity, rather than being purely biographical or factual with no personal connotations? (ii) Contain biographical information in a significant sense rather than recording the data subject's involvement in a matter or event with which the individual has no personal connections? (iii) Have the data subject as its focus? (iv) Fall in a continuum of relevance or proximity to the data subject as distinct, say, from transactions or matters in which he may have been involved to a greater or lesser degree (the Durrant tests)? (2) Does the data "relate" to an individual in the sense that it is "about" that individual because of its: (i) "Content" in referring to the identity, characteristics or behaviour of the individual? (ii) "Purpose" in being used to determine or influence the way in which the individual is treated or evaluated? (iii) "Result" in being likely to have an impact on the individual's rights and interests, taking into account all the circumstances surrounding the precise case (the WPO test)? (3) Are any of the 8 questions provided by the TGN are applicable? These questions are as follows: (i) Can a living individual be identified from the data or from the data and other information in the possession of, or likely to come into the possession of, the data controller? (ii) Does the data 'relate to' the identifiable living individual, whether in personal or family life, or business or profession? (iii) Is the data 'obviously about' a particular individual? (iv) Is the data 'linked to' an individual so that it provides particular information about that individual? (v) Is the data used, or is it to be used, to inform or influence actions or decisions affecting an identifiable individual? (vi) Does the data have any biographical significance in relation to the individual? (vii) Does the data focus or concentrate on the individual as its central theme rather than on some other person, or some object, transaction or event? (viii) Does the date impact or have potential impact on an individual, whether in a personal or family or business or professional capacity (the TGN test)? (4) Does the data "relate" to the individual including whether it includes an expression of opinion about the individual and/or an indication of the intention of the data controller or any other person in respect of that individual. (the DPA section 1(1) test)? The decision as to whether particular data or a particular document is or contains personal information will not often provide difficulties. In the relatively rare case where the answer is not clear cut, the decision-maker must apply any or all of the four separate but applicable tests. In doing so, he must attempt to give full effect to the relevant provisions of the Directive and, thereby, provide a purposive test to the statutory phrase "personal data". In doing so, the following guidance can be followed: (1) The Directive is intended to provide protection to all information relating to an identified or identifiable natural person ('data subject'). An identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity. The definition is, therefore, a broad one that extends well beyond what would be regarded as personal information in an everyday context. (2) Durrant did not, and was not intended to, provide a definitive guide to the meaning of 'personal data' as that phrase is used in both the DPA and, by incorporation, the FOIA. The case was concerned with a particular type of information that was contended to be personal data. This information contained no obvious identification of the individual in question and no identification of any of his personal features. Moreover, the suggested relationship did not extend to any possible result or impact on that individual's rights or interests and the information was not accessible to him as information under the FOIA if he could not access it under the DPA. It follows that the case was not concerned with, and did not address, information that contained or referred to a result element. (3) In this case, however, the data in question, namely the three factual witness statements, clearly refer to the district judge. Given DK's evidence as to the use he intends to make of the data on receiving it, it is likely that the data also identifies him by identifying the effects that the statements might have on his rights and interests so that they are likely to engage the result notion identified in the WPO test. Moreover, if the information does not contain personal data, the witness statements can unquestionably be accessed under the FOIA, subject to any applicable exemption, if they are not accessible under the DPA. (4) The TGN tests covered the same ground as the WPO tests and were consistent with them but were more extensive since they also incorporated the Durrant tests. This was the evidence accepted by the IT that it heard from the Assistant IC[17] – paragraph 40 of the IT's decision). (4) Conclusion – meaning of 'personal data'. It follows that, in a difficult or uncertain case, the decision-maker should apply first the Durrant test and then the WPO test coupled with the TGN test. Having done so, the decision-maker should see whether the information in question is confirmed to be personal data by an application of the statutory tests. In any but an exceptional case, information identified as personal data by the application of the Durrant, WPO and TGN tests will also be identified as personal data by a straightforward application of the statutory test since the other three tests are intended to be no more than guidance as to the application of that test. 4. 'Sensitive personal data' Section 2 of the DPA identifies 'sensitive personal data' as being data consisting of information of a particularly sensitive kind such as his racial or ethnic origin, his political opinions, his religious belief and his physical or mental health, his sexual life. Included in this definition is information as to the commission or alleged commission by the data subject of any offence or any proceedings for any offence committed or alleged to have been committed by him and the disposal of such proceedings. If personal data is also sensitive personal data, it is additionally protected by the DPA since, for example, it may not be processed by the data controller unless the data subject has given his explicit consent to that processing[18]. 5. 'Personal data' overlap between the FOIA and the DPA (1) The potential overlap between the FOIA and the DPA The relevant statutory provisions concerned with 'personal data' are not clearly defined in plain English[19] and the inter-relationship between the personal data provisions in section 40 of the FOIA[20] and section 7 of the DPA gives rise to "a less than happy marriage which should be referred to the Law Commission as soon as possible"[21]. The essential background to the statutory treatment of personal data is the enactment of the DPA in 1998 to give effect to the Personal Data Directive 1995[22]. Section 7 of the DPA contains one of its core provisions since it provides for the right of access of individuals, or data subjects, to their personal data held by a person or organisation, or data controllers. A data controller may or may not be a public authority and the right of access is subject to a number of defined exceptions. If a data subject requests details of his or her personal data held, or "processed", by the data controller and considers that that request has not been complied with in accordance with the DPA, that data subject may apply to a county court or the High Court to order the data controller to comply with that request[23]. A data subject may also apply to the IC for an assessment of whether the data controller's processing of his or her personal data has been or is being carried out in compliance with the provisions of the DPA[24]. Soon after the enactment of the DPA, the Government decided to provide a statutory right to obtain information held by public authorities and in 2000 it enacted the FOIA. This right is provided for in sections 1 and 2 of the FOIA and the FOIA provides that any individual who considers that his or her request for disclosure had not been dealt with in accordance with the FOIA can complain to the IC who can decide whether the public authority's refusal notice was in accordance with the law and, if not, whether and how to amend that notice[25]. The result of these two separate Acts is that a public authority such as NP, that holds a data subject's personal data which the data subject can request access to under the DPA would also be susceptible to a FOIA request for production of copies of the same material as information by that the same individual since much personal data held by a public authority data controller will also come within the FOIA identification of information held by the same public authority. (2) How the FOIA deals with the personal data overlap The FOIA is drafted in such a way that where there is an overlap between the right to personal protection of personal data held by a data controller and the public access right to public authority held data, the latter would only be permitted if it was permitted by the former. Thus, the FOIA has drafted in such a way that, in circumstances where the two Acts overlap, the FOIA is subordinate to the DPA. In other words, an individual who is seeking access to his or her personal data from a public authority must do so under and by using the DPA and may not make a FOIA request for the same material under the FOIA. This requirement is clearly explained in The Law of Freedom of Information as follows: "Section 40(1) of the 2000 Act is relatively straightforward. It provides that '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'. In other words, one cannot apply under the 2000 Act for information about oneself, [if that information] satisfies the definition of personal data in the 1998 Act. The 1998 Act, and its limitations and exemptions, and it alone, governs access to one's own personal data … ."[26] This principle is given effect to in the FOIA by a series of interlocking provisions. In summary: 1. FOIA (1) The right to obtain information, or to have information communicated, is given effect to by the applicant serving a request for information on a public authority. Information, in this context, means information in any form[27]. (2) The public authority must inform the individual whether it holds that information and, if it does, that information must be communicated to him[28]. (3) The right to communication is subject to statutory exemptions[29]. Unless the exemption is an absolute exemption, exempt information is in turn subject to a public interest test which requires the exemption to be upheld only where the public interest in maintaining it outweighs the public interest in disclosing the information sought[30]. (4) The relevant FOIA exemptions in this case are the 'investigations and proceedings conducted by public authorities', 'law enforcement' and 'court records etc.' exemptions[31] (5) Any information to which a request for information relates is absolutely exempt information if it constitutes personal data of which the applicant is the data subject[32]. (6) Similarly, any information to which a request for information relates is absolutely exempt information if it constitutes personal data of a third party which a public authority would not be permitted to disclose to both the data subject and the third party[33]. (7) An individual may apply to the IC for a decision whether in any specified respect, a request for information made by the individual, or complainant, to a public authority has been dealt with in accordance with Part I of the FOIA[34]. 2. DPA (8) A data subject who wishes to have communicated to him any of his personal data that is being processed, a concept that includes its being obtained, recorded or held, by a public authority may make a data subject request for and is entitled to have communicated to him that personal data[35]. (9) The only exemption from this obligation is for exempt personal data as defined in Part IV of the DP. Of particular relevance to this case are the 'crime and taxation' and 'regulatory activity' exemptions[36]. Furthermore, a data controller is not obliged to comply with a request for the disclosure of personal data if that disclosure would involve disclosing personal data of another individual who can be identified from that information unless the other individual has consented to the disclosure or it is reasonable in all the circumstances to comply with the request without the consent of the other individual[37] (10) A data subject may apply to the court for an order that the data controller complies with the data subject request where he contends that the data controller has failed to comply with the request in contravention of the DPA[38]. Furthermore, anyone who is or believes himself to be directly affected by any processing of personal data may apply to the IC for an assessment as to whether the processing has been or is being carried out in compliance with the provision of the DPA[39]. (3) Discussion – overlap. It follows from these provisions that the FOIA does not apply to a request for information which is also personal data held by a public. This follows because: (1) A request for information which is personal data is not subject to Part 1 of the FOIA. This is because that request is not subject to the obligation placed on the requested public authority to confirm or deny and, hence, to the obligation to communicate the information[40]. (2) The obligation to communicate that information which would arise if it was not personal data is subject to an absolute exemption to which the public interest proportionality test is not applicable[41]. (3) The information which is absolutely exempt from the FOIA communication provisions is information that the DPA characterises as being the personal data of an individual who could otherwise make a FOIA request for such information. Such material is therefore personal data which can only be the subject of DPA disclosure to the data subject[42]. (4) The exclusive remedy for non-communication of the applicant's personal data is by way of an application to the court whereas the exclusive remedy for non-communication of information which is not the personal data of the applicant is by way of a complaint to the IC[43]. The exclusion of personal data from the provisions of the FOIA is therefore achieved by the FOIA defining the information that is subject to its provisions in a way that excludes from that definition material that what would otherwise by within that definition but which is also personal data as defined in the DPA. The FOIA refers to its subject matter as information which is defined as "information recorded in any form" save for information that is personal material[44]. It follows that personal data is information of a particular kind and that such information is excluded from the class of material defined in the FOIA as being information which is subject to Part 1 of the FOIA. One of the obvious reasons why the two Acts are drafted so as to be mutually exclusive in relation to an applicant's personal data is that the regulation of requests for personal data are subject to a different regime to that regulating requests for information. (4) Conclusion – overlap If information held by a public authority is also personal data, it is excluded from the ambit of the FOIA and any request for its disclosure should be dealt with under the DPA. This applies to the personal data of the applicant. It also applies to the personal data of a third party where the public authority is not permitted to disclose that information to either the applicant or the third party. In all these cases, the request must be processed under the DPA[45]. E. Factual Background 1. DK's county court claim The starting point of DK's IT appeal was an assessment of costs hearing held on 27 January 2004 that was conducted by a district judge in Newcastle Combined Court ("the district judge"). The hearing had arisen out of a two-day hearing by a circuit district judge in 2003 who had, in a reserved judgment dated 11 June 2003, dismissed DK's application for permission to appeal a previous order by a different district judge that had dismissed his application to reinstate the original action. The circuit district judge had stated in her reserved judgment that DK should pay the defendant's costs of the permission application hearing. The order that the court subsequently drew up and issued did not contain a direction giving effect to the district judge's decision relating to the payment of the defendant's costs. At the subsequent costs assessment hearing which was heard by the district judge, DK alleged that that judge informed those present, being himself acting as litigant in person and two representatives of the defendant's solicitors, that he could not assess the costs awarded in the defendant's favour unless the circuit judge's order was amended to add a direction that DK should pay the costs of the permission hearing and that he did not have the power to make the amendment himself although the circuit judge did have that power. However, when the district judge, in conformity with the CPR and county court practice, subsequently drew up and arranged for the court to issue the order resulting from his hearing, the order included a direction that the defendant's costs of the action should be paid by DK. The CPR permits a district judge to amend an order made by a circuit district judge if the amendment corrects an error in the order as it had been drawn up if the result of the amendment is that the order in its amended form reflects what the circuit judge had intended it should contain. The district judge's action in correcting the order in this way was confirmed to have been correct by a different circuit judge when dismissing DK's subsequent application for permission to appeal the district judge's amendment order which DK had contended had been made by the district judge without jurisdiction. The circuit judge held that the amendment order had been made correctly and was within the jurisdiction of the district judge to make. DK only appears to have taken exception to the district judge's action in issuing the order that had corrected the circuit district judge's earlier order once he had failed in his attempt to appeal the district judge's amendment order[46]. He referred to his notes made during the hearing before the district judge. He contended that these confirmed his recollection that the district judge had stated that he lacked the jurisdiction to amend the order. The solicitor representing the defendant informed him, when he asked that solicitor what his recollection was, that he also recollected that the district judge had stated that but he added that the district judge must have realised after the hearing that he did have the jurisdiction to amend the order. DK obtained a transcript of the hearing and then obtained an order permitting him to listen to the tape of the recording of the hearing. The transcript and what he heard when listening to the tape convinced him that the district judge had arranged for the tape to be tampered with so as to have the relevant passages of the district judge's comments edited out of the tape. DK was convinced in his own mind that the district judge had deliberately interfered with, or caused the interference with, the tape. He began an obsessive campaign to expose what he considered to be the criminal behaviour of the district judge. He considered that the district judge had lied at the hearing as to his intentions so as to curtail discussion about his powers, had subsequently unlawfully issued the correcting order that he had always intended to issue, had then arranged for the tape recording the proceedings to be tampered with so as to cover up his lies when he realised that DK had arranged for a transcript of the tape to be obtained which would show that he had lied during the hearing and finally lied to the police officer who interviewed him as part of NP's investigations into DK's complaint about what DK considered to have been his criminal conduct. DK considered that the district judge's motivation to lie and then to issue the amendment order resulted from the district judge's malicious and vindictive wish to harm and punish him as a result of the district judge's animosity towards him arising from trying an unrelated case a few years previously in which DK was one of the litigants and, in the course of that trial, forming an extremely adverse view about him. He also considered that the district judge's behaviour was a particularly glaring example of the systematic manipulation of his claim by the Newcastle and Gateshead courts on many occasions so as to deny him a fair hearing and to thwart his quest for justice. A further strand in his thinking was that he felt that he had been deprived of the windfall arising from the omission of provisions requiring him to pay the defendant's costs in the order issued after the circuit judge's permission hearing. DK considered that the district judge, by correcting that order, had led him having unnecessarily to pay the defendant's costs of his unsuccessful reinstatement and permission applications which, as he informed the IT, totalled in excess of £90,000. 2. NP's investigations of DK's complaint DK's initial action was to report what he believed to be the district judge's criminal conduct to NP in October 2004 because, in his words, "he had arranged for his remarks on jurisdiction to be removed from the tape". NP undertook three successive investigations of DK's complaint about the district judge. These were undertaken under the supervision of the same Detective Inspector. The first and third investigations were carried out by different Detective Sergeants and the review of the first investigation was conducted by the supervising Detective Inspector. The first investigation concluded in May 2005 that no crime had been committed. The district judge was interviewed during this investigation but was not asked to make a statement. It is not clear whether the interview notes made by the officer formed part of the compendious document dealt with by the IT as the district judge's witness statement. DK challenged this finding and it was reviewed by the supervising Detective Inspector who, in September 2005, reached the same conclusion. DK then made what he described as "a strongly worded complaint to a senior officer at NP" and a third investigation followed. It was during this third investigation that the district judge was interviewed by the investigating officer as a witness and not under caution and a witness statement was taken from him dated 8 February 2006. The investigation report of this third investigation made by the investigating officer included a copy of the district judge's statement and copies of his notes of what was said during the interview and a copy of the district judge's notes. The document referred to by the IT in its decision as the district judge's witness statement appears to be a reference to the composite document produced by these three documents[47]. However, the district judge's notes were found by the IT not to exist or not any longer to be in existence[48] so the disclosure request no longer extended to those notes at the IT hearing. The investigating officer also interviewed and took witness statements from the two representatives of the solicitors acting for the defendant in the underlying claim and two technical witnesses involved in the forensic examination of the tape. The file containing details of the three investigations, including the five statements, was sent to the CPS for advice and, in the light of the advice received, NP informed DK in September 2006 that there was insufficient evidence on which to prosecute any party. 3. DK's formal complaint to NP DK then complained to the CPS that it had advised NP without first requiring the NP investigation to re-interview the district judge under caution. This complaint was not accepted by the CPS. DK then made a general complaint to NP. This involved 14 separate complaints of neglect and failures in duty by the supervising investigating officer of the three investigations. These included a complaint that neither of the investigating officers interviewed the district judge under caution. DK's aim in making this wide-ranging complaint was to secure a further investigation that would include the district judge being interviewed under caution and that that investigation would result in his being charged with a criminal offence. NP initially declined to accept the complaint but, in December 2006, following a complaint to the Independent Police Complaints Commission ("IPCC"), NP accepted the complaint and carried out a formal investigation into DK's complaints. The formal investigation included receiving a detailed statement from DK dated 25 June 2007, the service of a misconduct notice on the supervising investigating officer and his providing a written response under caution. The investigation was completed on 7 November 2007 and it concluded that there was no evidence of any police misconduct or of any failure of a performance duty so that all 14 complaints were unsubstantiated. In short, the complaint was dismissed. 4. DK's IPCC appeal DK then served on the IPCC a notice of appeal against that investigation decision on 5 December 2007. This took the form of a review of the NP decision and, in a decision dated 20 December 2007, the IPCC held that it did not uphold the appeal and dismissed it. DK then decided to seek a judicial review of this decision. His claim against the IPCC is made in one of the three linked judicial reviews. Permission in each was refused on paper and the renewed application for permission in each is being decided at the same time as this application. DK filed the judicial review claim form in the Administrative Court on 4 April 2008 and permission was refused on paper on 13 August 2008. The renewed application is still to be determined, the five-year delay in the decision being taken has occurred because the court has ruled that DK should be permitted to adjourn it to await the conclusion of his attempts to obtain a copy of the district judge's witness statement. 5. DK's FOIA requests for information from NP DK's first application was an information request dated 23 November 2006 for: " … reports by DS [name supplied] and DS [name supplied] regarding a complaint made by me against [the district judge] … of Newcastle Combined Court. I would also be obliged for copies of all forensic reports and all correspondence between [NP] and Newcastle Combined Court which relates to my complaint." It is to be noted that the five witness statements that remain in issue were not included in that request. NP informed DK on 24 November 2006 that his request related to his personal data and refused it as absolutely exempt under section 40(1). NP also advised DK that it would process the request under the DPA if he paid the appropriate fee[49]. DK responded on 4 December 2006 by reapplying under the FOIA and stating that his request did not relate to personal data held by NP about him since it related to a complaint made by him. The request was therefore not a DPA data subject request. NP, without giving a reason for not sticking to its refusal of 24 November 2006 changed tack and issued a decision dated 30 January 2007 stating that it would treat DK's second request under the FOIA. NP refused the request under the FOIA and its' refusal notice stated that this refusal was based on the information being exempt under sections 30(1) and 30(2) of the FOIA and that the exemption would not be disapplied because the public interest in withholding the information outweighed the public interest in disclosing it. According to DK, he was subsequently informed by someone within the NP that NP had changed its mind on receipt of the second request for information and had decided that it could proceed under both the DPA and the FOIA and that DK was entitled to choose which regime to apply under. NP was in error in dealing with this second request for information having just dealt with it and refused it unless, which was not provided, it had a good reason for doing so. It was also in error in allowing DK to choose which statutory regime he could apply under since the decision as to which regime it should proceed under was its own. Thus, without good reason to disregard the first decision, NP should have stuck to its guns and declined to deal with the second request at all or to have dealt with it in exactly the same way as it dealt with the first request. Had it done so, DK's only remedy would have been to apply again under the DPA or to complain to the IC that the refusal notices were not in accordance with the requirements of Part I of the FOIA because the refusal decisions to treat the requests as being data subject request under the DPA was Wednesbury unreasonable that they were based on an error of law or was so unreasonable that no properly informed public authority could have reached them if acting rationally[50]. 6. DK's complaint to the IC and the IC decision DK's complaint to the IC. DK was dissatisfied with the part of NP's second refusal notice which declined to disclose the information sought because it had decided to apply the section 30 exemptions having balanced the public interest in maintaining the exemptions against the public interest in disclosing the documents[51]. He first asked NP to review its decision under section 30 of the FOIA and, on 2 March 2007, NP upheld its earlier section 30 refusal. He then complained to the IC in complaint form dated 30 April 2007, a step he was entitled to do so since NP's second refusal notice was not invalid even if it was one that it had mistakenly issued. His complaint was in these terms: "The refusal if information has prejudiced action being taken to proceed against a district judge at Newcastle Court for criminal conduct. Investigations have been terminated prematurely for no sound reason. The information is required to permit a full description of the failings of [NP] to be reported to the IPCC. It is also required to enable discussions relating to my complaints to be held with an investigating officer. The position held by the police force that it is not in the public interest to release a copy of the investigating officers' reports is unsustainable. It is clearly in the public interest for matters relating to an aborted investigation of a judge who has lied to the police to be made public" Thus the complaint took issue with NP's reliance on two FOIA exemptions from disclosure since DK contended that they should have been disclosed because the public interest in not applying those exemptions should have outweighed the public interest in applying them. In short, DK contended that NP should have applied the public interest test required by section 2(2) of the DPA, as it did do, but should have exercised its discretion provided for by Part I in a way that was favourable to himself. However, the IC only had jurisdiction to decide whether DK's request for information had been dealt with in accordance with Part 1 of the FOIA[52]. The IC was, however, familiar with his limited jurisdiction. He appreciate that he had first to decide whether the information requested by DK should be considered under the FOIA or as his personal data under the DPA since, if it was dealt with as DK's personal data, the IC had no jurisdiction to deal with DK's complaint. Only the High Court or the county court could have dealt with such a complaint under section as an application under section 7(9) of the DPA. NP was, of course, a party to DK's complaint to the IC and at the IC's request it provided him with copies of all the information which formed part of the second FOIA request for information. Having considered the documents that were supplied with some care, the IC wrote to both DK and NP to advise them that the material he had received from NP and which DK had asked should be provided under the FOIA was DK's personal data so that he was closing DK's FOIA file and would now deal with his complaint as a request for an assessment under section 42(1) of the DPA. These views were incorporated into his subsequent decision notice that was dated 17 March 2008. The IC dismissed the complaint in a decision notice whose operative parts were as follows: "2. On 23 November 2006 [DK] wrote to [NP] to make a request for information citing the [FOIA]. The complainant asked: "… for the supply of reports by [a named officer] and [a second named officer] regarding a complaint made by me against District Judge [name redacted] of [name redacted] Combined Court. I would also be obliged for copies of all forensic reports and all correspondence between [NP] and Newcastle Combined Court which relates to my complaint." 3. [NP] responded to [DK's] request on 24 November 2006. The police told him that the information he was seeking was his personal data and was therefore exempt under section 40(1) of the [FOIA]. [DK] was advised that the requested information may be provided to him, subject to certain exemptions, under the provisions of section 7 of the [DPA]. [DK] was also told how to make a data subject request. However, the [IC] notes that [DK] has also explained that he was later informed by the Professional Standards Department within the public authority that the request should be process under the [FOIA] rather than the DPA. It therefore appears that he received conflicting information from different departments within the public authority about whether the request was subject to the [FOIA] or the DPA. 4. [NP] did not accept that his request was for his personal data. He wrote to [NP] on 4 December 2006 insisting that his request was made under the [FIOA]. 5. [NP] acknowledged [DK's] request on 3 January 2007. On 30 January 2007 [NP] issued a refusal notice which cited section 30(1) and (2) – Investigations and Proceedings Conducted by Public Authorities and 32(1)(c) – Court Records. … 9. On 7 April 2007 [DK] contacted the [IC] to complain about the way his request for information had been handled. For the sake of clarity, the [IC] has investigated and made a decision about the request dated 4 December 2005, though he has referred to the earlier request of 23 November 2006. The [IC] has deemed the complaint about the 4 December 2006 request as eligible because [DK] has supplied the requisite documentary evidence, such as copy of his request and internal review. … 14. The [IC] has examined the information sought by [DK] and is satisfied that it is [DK]s] personal data. … 15. … Although the [IC] is satisfied that all of the information is [DK's] personal data he recognises that it is also the [district judge's] personal data in addition, the material includes personal data about other third parties. Nevertheless, because in the [IC's] view all of the information is [DK's] personal data section 40(1) applies. … The Decision 17. The [IC's] decision is that the information sought engages section 40(1) of the Act and therefore attracts this exemption. … The [IC] notes that [NP's] response to the 23 November 2006 request on 24 November 2006 correctly cited section 40(1). However [DK's] letter on 24 November 2006 was treated as a new request and the public authority cited alternative exemptions, namely sections 30(1) and 32(1)(c). The responsibility for applying exemptions and determining whether a request should be considered under the [FOIA] or the DPA rests with the public authority and not the applicant. In this case the [IC] recognises that there are other exemptions besides section 40(1) which may have been applicable. However, in this case the [IC's] decision is that [NP] was not in fact obliged to comply with section 1(1)(a) by virtue of section 40(5). This is on the basis that the information requested was [DK's] personal data and therefore the request should have been considered under the DPA. Other matters 19. The Commissioner wishes to highlight the following matters of concern: 20. Section 7 of the [DPA] gives an individual the right to request copies of personal data held about them – this is referred to as a Right of Subject Access. The [IC] has made an assessment under section 42 of the DPA of [NP's] compliance with [the DPA]. He has communicated the outcome of his assessment to [DK] separately by way of a letter dated 14 January 2008. This assessment does not form part of this decision notice. An assessment under section 42 of the DPA is a separate legal process from consideration under section 50 of the FOI Act. 21. The Commissioner notes that [DK's request for information dated 4 December 2006] should have been dealt with as a data subject request under section 7 of the DPA. He would encourage public authorities to consider requests under the correct regime at the first instance. In this case, he appreciates that the public authority responded to an earlier request dated 23 November 2006 citing section 40(1) [DK] was advised that the request should be processed as a data subject request, subject to payment of the £10 fee and the provision of identity documents. In the Commissioner's view, it was appropriate for the police to process that request under the DPA. Further it would also have been appropriate for it to have considered the 4 December 2008 request under the DPA." The IC therefore held that the information that DK had requested from NP was exempt from disclosure under section 40(1) and that NP was not obliged under section 40(5) to confirm or deny whether it had the requested information. This finding related to all the information requested by DK and therefore included the five witness statements and all the other documents forming part of the NP investigations reports. The IC's reasoning was that the data that DK had requested was DK's personal data since it had recorded information about the way in which his allegations about the district judge were investigated and it reflected details used to inform the final decision about DK's allegations. Moreover, the outcome of that decision would arguably affect DK as well as the district judge. The IC concluded that the information was both DK's personal data and also the district judge's personal data and it also included personal data about other third parties. The IC also concluded that NP was correct in its initial decision that the request should be refused because the documents were DK's personal data so that it correctly refused his request for disclosure under section 40 of the FOIA. Moreover, the IC also expressed the view that both of DK's requests should have been made and considered as data subject requests under section 7 of the DPA. In summary, therefore, the IC decided: (1) To correct NP's mistake in issuing two mutually inconsistent decisions within one month of each other by deciding that both should have been decided in the same way; (2) That NP had the sole duty to decide which Act was applicable to the request in question; (3) That since NP had not complied with that duty and had allowed DK to dictate that the second request should be considered as a FOIA request, the IC should take the decision that NP had failed to take. He decided that the request was seeking DK's personal data and that DK should have made his request for it as a data subject request under the DPA; and (4) DK's second request for information was therefore to be treated as having been made as a data subject request under the DPA. (5) NP should have taken that same decision in relation to both requests for information that it had received from DK. (6) To dismiss DK's complaint under section 40(1) of the FOIA on the grounds that the request sought the applicant's personal data so that its disclosure was absolutely exempt under that section. [ ] 7. DK's data subject request to NP The IC's case officer wrote to DK on 10 January 2008 to inform him that the IC's view was that all the information relevant to his request was personal data and that he was not entitled to it under the FOIA but that he might be entitled to it under the DPA. DK therefore sent NP on 17 January 2008 a data subject request under section 7 of the DPA indicating that he was (i) a person reporting an offence or incident, (ii) a witness to an offence or incident and (iii) a victim of an offence. He received a bundle of documents from NP pursuant to this request that contained copies of some of the documents that he had requested. He then complained to the IC on 1 March 2008 about the non-disclosure of the balance of those documents. The IC treated this complaint as a request for an assessment under section 42 of the DPA and, in a letter dated 14 January 2008, communicated the result of that assessment to DK. The administrative court has not been provided with a copy of DK's data subject request or of the IC's letter that states his conclusions following his assessment. Any dissatisfaction with the way that a data subject request is dealt with under section 7 of the DPA must be dealt with by way of an appeal to the High Court or county court. Furthermore, assessments carried out under section 42 of the DPA are dealt with by the IC as a separate process from a complaint to the IC under section 50 of the FOIA. 93. DK was not prepared to appeal the part of his data subject request refused by NP to the High Court or county court and did not take issue with the IC's assessment under section 42. Thus, the only matters involving decisions of the IC in his appeal to the IT under section 58 of the FOIA were the decision that the five witness statements were personal data and were therefore exempt from disclosure and the failure to take a decision that the three factual witness statements were not exempt from disclosure. 8. DK's and NP's response to the IC's decision 94. NP had, following the IC's decision, two data subject requests to consider, being DK's wide-ranging data subject request dated 17 January 2008 and the second request for information which the IC had ruled should be treated as a data subject request under the DPA. NP immediately complied with the IC's decision by communicating some of the material sought by DK under both requests. This material was treated as being his personal data which NK considered could be disclosed to him. These documents were, however, heavily redacted to remove the third party personal data from them that NP considered that they contained. On 26 March 2008, DK requested the IC to undertake an assessment under section 42(1) of the DPA in order to advise him whether NP had considered and dealt with the two requests in accordance with the DPA. 9. DK's appeal to the IT – prior to hearing DK served a notice of appeal on the IT on 7 April 2008. The Administrative Court has not been provided with a copy of that notice of appeal so it is not possible to ascertain what the grounds of appeal were. However, in the light of the previous procedural history, the only ground of appeal that the IT had jurisdiction to consider was whether the IC's decision that the NP should have decided that DK's second request for information should be decided under the DPA regime was perverse. However, that appeal was now academic since all the documents being sought by DK were subject to his data subject request and his second request for information which were both being processed by NP. Any complaint that DK had about the redactions or any withholding of disclosure had to be dealt with under section 7(9) of the DPA by way of an application to the High Court or the county court. Over the next few months, an unidentified member of the IT held a number of directions hearings and pre-hearing reviews by way of telephone conferences with DK and the IC's representative. In the words of the IT decision: "There were a number of directions hearings and pre-hearing reviews by way of telephone conferences which resulted in three sets of directions being issued by the Tribunal. These were primarily aimed at determining what documents were in dispute. … By the time we arrived at the full hearing there had been further disclosures under the data subject request and under the FOIA request before us including some a few days before the hearing and one at the beginning of the first day. All that remained in issue was 5 witness statements." These resulted in three sets of directions being issued by the Tribunal. These were primarily aimed at determining what documents were in dispute and, by the time of the full hearing, there had been further DPA disclosures under the data subject request and DK's second request for information so that all that remained in issue were the 5 witness statements. Since DK had elected to apply for these as part of his data subject request, and since the IC had ruled that his other request should also be dealt with under the DPA, the IT should have ruled that it no longer had jurisdiction to deal with that residual element of the matters referred to it by DK's notice of appeal. 10. DK's appeal hearing in the IT The effect of this somewhat convoluted history was that DK had requested disclosure of most if not all of the documents in NP's possession that related to its investigations into his complaint about the district judge as a request for information under the FOIA. NP refused to disclose any documents requested under section 40 and then under section 30 of the FOIA. DK complained to the IC under section 50 of the FOIA about this refusal. The IC dismissed the complaint relating to all the documents sought on the sole ground that the data was DK's personal data. DK had also made a data subject request to NP at the suggestion of the IC[53] and NP initially responded by supplying a limited number of redacted documents. Although that disclosure took place shortly before the IC's decision, the IC did not take account of it and was probably unaware of it. Closed part of the IT proceedings. The IT was hearing an appeal against the refusal of the IC to direct that certain documents should be provided to DK which the NP and the IC had held should not be provided. In conformity with the IT and the FtT(GRC) procedure, the IT had before it at the hearing of the original appeal two folders of documents comprising the open folder of documents which all parties were entitled to see and refer to and a closed folder which only the IT and the representative of NP who held the documents and who was resisting their disclosure could see. The IT went into closed session and excluded DK in order to consider and hear submissions about these documents. Finally, the IT delivered a full open decision and also supplemented that with a closed decision, referred to by the IT as a confidential annex to the open decision, which was placed on the IT case file with a copy being sent to the NP. This confidential annex was stated in the open decision to have explained why the three factual witness statements, which with the two further expert's reports remained in issue, were personal data. This resulted from an application of the principles that had been set out and explained in the open judgment. The confidential annex also explained that this personal data was not subject to the public interest exemption provided for in section 30(1) of the FOIA. DK would not have seen nor been provided with a copy of the closed decision nor would he have heard or been aware of the contents of the closed submissions and discussion. However, the UT judge would have been provided with the tribunal file containing the closed file and the confidential annex to the open decision and his decision refusing permission would have been based on what was set out in both the open judgment and the confidential annex I have not been provided with any of the closed material or of the confidential annex but I have not seen the need to refer to it or call for it from the Upper Tribunal since I consider that I can fairly decide DK's application without seeing either of these sources. DK appealed the IC's FOIA decision and the notice of appeal covered the entirety of his FOIA request. He also, at about the same time as he served his notice of appeal, sought an assessment of the DPA disclosure from the IC. The IC informed DK of the result of his assessment which DK has not challenged. NP supplied further documents under both the FOIA and the DPA in several tranches, the last of which occurred at the beginning of the first day of the IT hearing. The result of this drip-feed of disclosure was that, following the last tranche of disclosed material, all that remained undisclosed and for decision were the district judge's and the two solicitors' representatives' factual and the two technical witness statements. Since the IT, the UT and the Administrative Court have not been told why NP disclosed any of the data under the FOIA and the DPA, it is not possible to ascertain why this disclosure was given even though NP's refusal decision to withhold all the requested data had been upheld by the IC. DK contended at all three stages of the disclosure proceedings that none of the data was personal data and all of it should therefore be disclosed. Despite these changes of position, the IT considered and decided the appeal in the same way that the IT and NP had reached their respective decisions notwithstanding that its decision related to a small fraction of the data that the NP and the IC based their decisions on. DK lodged an appeal against the IC's Decision Notice on 14 April 2008 seeking a substitution of the IC's Decision Notice with a Decision Notice providing for the disclosure of all five witness statements. There followed a number of directions hearings and pre-hearing reviews by way of telephone conferences and three sets of directions were issued by the IT. A two-day hearing took place on 30 and 31 March at which DK represented himself and the IC, as the respondent, and NP, as an additional party, were separately represented by counsel. The IT decision, promulgated on 14 April 2009, was confined to the remaining disputes concerning the existence of certain documents and as to whether five statements taken during the third inquiry, including the district judge's statement, should be disclosed. The IT decided that the three factual statements of the district judge and the two solicitors were DK's personal data and were therefore absolutely exempt from disclosure (applying section 40(1)) whereas the two technical statements were not personal data and were in principle subject to exemption as forming part of the NP's investigation into whether the district judge should be charged. However, this was a qualified exemption and should not be given effect to because the public interest in disclosure outweighed the public interest in maintaining the exemption (applying sections 30(1) and 2(2)((b)). The IT ordered their disclosure subject to certain redactions that were also ordered. The reasoning of the IT in its open decision may be summarised as follows: (1) The IT exercised its discretion to undertake a merits review of the IC's decision under section 58(2) of the FOIA and also considered whether the IC's decision was wrong in law and whether the IC ought to have exercised his discretion differently. (2) The requested information, being the five witness statements remaining for decision, was "data" within the meaning of the DPA and was recorded information held by a public authority as provided for in section 1(1)(e). (3) The information in the three factual statements, being those of the district judge and the two solicitors, comprised personal data of DK in that it related to DK, particularly because they concerned the district judge's actions and the outcome of the investigation into those actions, both of which directly affected DK. Moreover, DK was identified by these statements and had supplied the information for the purposes of NP's investigations. (4) Such information related to DK since it contained a result element in that its use was likely to have an impact on his rights and interests taking into account all the circumstances of this case. That impact included his liability to pay Canon's costs of its involvement in the underlying litigation and the other ways that DK had explained in evidence of the impact as it might relate to him of the investigations into the district judge's actions. (5) In reaching the conclusion that the three factual statements related to DK in this way, the IT stated this: "60. We are bound by the Court of Appeal's decision in Durrant. We are required to decide in this case where the mention of the data subject "falls in a continuum of relevance or proximity to the data subject as distinct, say, from transactions or matters in which he may have been involved to a greater or lesser degree."[54] In order to assist in making our decision we consider we can take into account the notions provided in the Guidance which include those provided by Auld LJ and the Opinion, but we are not bound to do so if they are not of assistance. We note that in other decisions of the Information Tribunal and elsewhere that Auld LJ's notions have appeared to be given more significance than we believe that Auld LJ intended." (6) The three factual statements were sufficiently proximate to DK to constitute his personal data whereas the other two technical statements were not. This finding was explained in more detail in the confidential annex to the decision which DK, the UT judge and I have not seen. (7) The two technical statements where, however, found to be within section 30(1)(a)(i) of the FOIA as being subject to a qualified exemption by virtue of being held by the NP for the purposes of an investigation as to whether the district judge should be charged with an offence. The reasons why this decision was reached was explained in the confidential annex. (8) However, the two technical statements were ordered to be disclosed with certain personal data of the makers of the statements redacted. This decision was reached applying the test in section 2(2)(b) of the FOIA on the grounds that the investigation into the district judge's actions was complete so that the public interest in understanding why the investigation reached a particular conclusion or in seeing that it had been properly carried out outweighed the public interest in maintaining the exemption. 11. The UT permission and review refusal decisions Upper Tribunal District judge Jacobs directed an oral hearing to consider DK's application for an extension of time to lodge his notice of appeal and his application for permission to appeal. Despite the notice of appeal being lodged nearly 3 years out of time, UTJ Jacobs had no difficulty granting DK an extension in reliance on the very lengthy witness statement that he had lodged which explained why the lodging had been held up by a series of procedural hick ups which he was not wholly responsible for. He was particularly influenced by the fact that DK had initially lodged his notice of appeal in the Court of Appeal within one month of the date of the substantive decision and not advised by court officials that he should have lodged it in the Upper Tribunal. The UT judge also granted an extension of time for lodging DK's second notice of appeal in relation to the IT's costs decision. The UT judge dismissed both of DK's applications for permission. The district judge dismissed the substantive decision because: (1) The IT decided the appeal against DK on two grounds, the personal data exception (DPA section 40) and the information held in relation to a possible offence exception (DPA section 30(1)(a)(i)). DK has to establish an error of law in both grounds in order to succeed in his appeal. (2) The meaning of personal data is difficult and somewhat nebulous. Since the IT was correct in its decision on the other ground, the district judge would not embark on an analysis of the first ground. (3) The existence of the possible offence exception was clearly made out since the data consisted of witness statements made as a result of DK's complaint against the district judge. The issue was, therefore, whether the IT erred in law when applying the balancing exercise required by section 2(2) of the FOIA in deciding that the public interest in maintaining the exception outweighed the public interest in disclosing the witness statements. The IT's decision in favour of maintaining the exception disclosed no error of law. (4) This issue involved an exercise of judgment and the IT gave a clear explanation of why they reached the decision they did which was supported by evidence that they had heard from police officers. The decision was not based on speculation and nothing was overlooked in the decision-making process. It was within the reasonable bounds of a permissible decision. (5) DK's contention that the first ground should be considered since, if it was found that the IT had erred in applying section 40, it would have been more likely to find in his favour when applying section 30 was not accepted since there was no connection between the section 40 personal data issue and the section 30 balancing of interest issue. (6) DK's proposed costs appeal has no prospects of success. He had applied for and was granted an award of costs to be paid by NP in the summarily assessed lump sum of £1,000. He contended that the award should be in a sum of approximately £26,000. Any award of costs is exceptional in a FtT, particularly where the claiming party lost the substantive appeal. The reason for an award was because NP had not complied with directions promptly thus causing DK extra time in preparation. The IT, with considerable experience in FOIA cases, reached a decision that that should fairly be represented by an award of £1,000. It provided a clear explanation for that award. That exercise of discretion was well within its permitted discretion and there were no grounds for interfering with it. DK sought a review of the refusal decision on procedural grounds. He contended that the UT judge had decided the application on the basis of there being no error of law displayed in the IT's decision on the section 30 ground whereas he should have decided the section 40 appeal. The UT judge dismissed that contention because DK's appeal could only succeed if he succeeded in showing that there were errors of law in the IT's decision in both grounds. Since he had determined that there was no error in the section 30 ground of decision, it was not necessary for him to decide whether the section 40 ground had any prospect of success. 12. DK's Cart application DK's Cart application was based on the UT judge's error of law in not considering the section 40 issues, in wrongly deciding the section 30 issue at all and in a way that led to his refusing DK permission to appeal and in denying him his article 6 rights to a fair hearing. F. The Issues This Cart judicial review permission application made under CPR 54.7A gives rise to the following issues: A. UT Errors of Law (1) What are the powers of the UT and what possible remedies could it provide in hearing an appeal from the substantive and costs decisions of the IT ("the UT powers and remedies issue"); (2) Whether there is a reasonably arguable case that the UT's refusal and set aside decisions were wrong in law ("the UT refusal and set aside decisions issue"): B. Points of Law Arising from IT Decision (1) Jurisdiction and article 6 issues (3) Whether the IT had jurisdiction to consider DK's appeal (the "FOIA IT jurisdiction issue"); (4) Whether the IT's procedure in placing the three witness statements in a closed bundle, in holding a closed hearing and in delivering a confidential annex to its open decision infringed DK's ECHR article 6(1) rights in depriving him of a fair judicial determination of his right of access to his personal data (the "ECHR article 6(1) issue"); (2) 'Personal data' issues (5) Whether the three witness statements referred to DK and were "recorded as part of a relevant filing system" and/or were "recorded information held by a public authority" as defined in sections 1(1)(c) and 1(1)(e) of the DPA (the "DPA section 1 relevant filing system and recorded information issues"); (6) Whether the three witness statements are DK's personal data of the kind defined in section 1(1) of the DPA ("the DK DPA section 1(1) personal data issue"); (7) Whether the three witness statements are the individual makers' or other third party's personal data of the kind defined in section 1(1) of the DPA ("the third party DPA section 1(1) personal data issue"); (8) Whether the three witness statements are both DK's and the individual maker's personal data and, if so, what the effect of that is ("the joint personal data issue"); (3) FOIA issues (9) Whether the witness statements are exempt information as having been held by NP for the purposes of an investigation which NP had a duty to conduct with a view to it being ascertained whether a person should be charged with an office (the " FOIA section 30(1) issue"); (10) Whether, if section 30(1) of the FOIA is engaged, the public interest in maintaining the exemption from disclosure is overridden by the public interest in disclosure (the "FOIA section 2(2)(b) issue"); (4) DPA issues (11) Whether, if the witness statements are personal data that are absolutely exempt under sections 40(1) and/ or 40(2) of the FOIA, they are or would be disclosable to DK under the DPA (the "DPA disclosure issue"); (5) Overall issue (12) In the light of the answers to issues (3) – (11), whether DK's proposed appeal to the UT has a realistic prospect of success ("the realistic prospect of success issue"); C. Cart Issues (13) Whether the proposed appeal to the UT raises an important point of principle or practice ("the important point of principle or practice issue"); (14) Whether there is some other compelling reason why the UT should hear the proposed appeal ("the other compelling reason issue"); (15) In the light of the answers to issues (1) – (14), permission to proceed should be granted under CPR 54.7A(7); and D. The costs decision Cart application (16) Whether permission should be granted to proceed in relation to the UT judge's dismissal of DK's application for permission to appeal the IT's costs decision dated 15 June 2009 (the "costs decision application issue"). G. The Issues Discussed Issue (1) - UT Errors of Law – The UT Powers and Remedies Issue 1 Issue (1) Issue (1) is as follows: What are the powers of the UT and what are the possible remedies that it could provide in hearing DK's appeal from the substantive and costs decisions of the IT ("the UT powers and remedies issue"). 2. How the issue arises The issue seeks definition and clarity as to the powers of the UT and the possible remedies that it could provide if it heard an appeal from the substantive and costs decisions of the IT. This issue arises because the powers of the IT are more extensive than other FtTs. These powers extend to its ability to review the IC's findings of fact, exercise the IC's exercise of discretion afresh and open up and amend an IC refusal notice. An appeal from the IT or the FtT (Information Rights) to the UT may only be taken on a point of law[55]. Thus, any appeal from an exercise by the IT of would be limited to a consideration of whether the IT had failed in a significant manner to take account of matters it should have taken account or taken into account matters of significance which it should not have taken into account or exercised its statutory powers in a manner that no reasonable IT exercising those powers could have exercised them. A second issue may arise. In this case, neither the IC nor the IT considered several potentially relevant issues including the section 30 issue[56] which would, to be resolved, involve the exercise of discretion. If the IT should have considered that issue, its failure to do so gives rise to an issue of law. If the UT decides that the IT should have considered that issue but did not consider it, what remedy is available to the UT? This question arises because the UT is not given express powers to undertake that exercise itself and is also not given express powers to refer the issue back to the IT. 3. IT powers in hearing an appeal The powers of the IT before and since its incorporation into the Tribunal structure as a FtT are set out in paragraph 58 of the FOIA and are as follows: Determination of appeals. (1) If on an appeal under section 57 the Tribunal considers— (a) that the notice against which the appeal is brought is not in accordance with the law, or (b) to the extent that the notice involved an exercise of discretion by the Commissioner, that he ought to have exercised his discretion differently, The Tribunal shall allow the appeal or substitute such other notice as could have been served by the Commissioner; and in any other case the Tribunal shall dismiss the appeal. (5) On such an appeal, the Tribunal may review any finding of fact on which the notice in question was based. A review under section 58(3) involves the IT in hearing evidence, inspecting the relevant data, file or information held by the public authority - including the data sought by the data subject or third party appealing the IC's decision – and then reaching its own conclusion as to, for example, the application of any statutory exemption. That power is an adjunct to the power provided for in section 58(1)(b) that enables the IT to exercise any discretion exercised by the IC differently to the way that the IC exercised it if it considers it appropriate to do so. These powers provide the IT with significantly wider powers to decide cases involving a claim to inspect and be provided with copies of documents than are generally available to FtTs. DK's appeal involved the exercise of both of the powers that I have referred to as well as the additional power to require documents to be redacted before being disclosed to the data subject and the power to substitute a different decision notice to that issued by the IC. 4. Conclusion – issue (1) The IT has the power to consider whether the IC's decision notice was issued in accordance with the law and to decide any point of law arising from the IT's decision. If the IT had failed to consider a particular ground of appeal, such as the section 30 issue, that had been referred to it and which it should have considered because that point was directly relevant to an issue arising out of the decision notice to the effect that it had not been issued in accordance with the law, the IT made an error of law. The UT has the power to consider that point of law and, by necessary implication, has the power to decide the issue itself using the evidence and materials that were before the IT. That power would include power to exercise afresh or for the first time any discretion that the IT could and should have exercised and to review any finding of fact that the IT should have reviewed since these are powers given to the IT by statute. In exercising these remedies, the UT would be confined to the evidence and materials introduced into the first hearing and could only receive fresh evidence if that evidence could not have been introduced at the first hearing. Issue (2) - UT Errors of Law – The UT refusal and set aside decisions issue 1. Issue (2) Issue (2) is as follows: Whether there is a reasonably arguable case that the UT's refusal and set aside decisions were wrong in law ("the UT refusal and set aside decisions issue") 2. How the issue arises The UT judge issued a refusal decision refusing DK permission to appeal the IT's decision and a decision refusing to set aside his refusal decision. DK wishes to seek permission to challenge both of these decisions as a prelude, he hopes, to being granted permission to appeal and then appealing the IT's adverse decision. It is a requirement in making a Cart application for permission to challenge a refusal decision that the claimant demonstrates that the refusal decision was wrong. 3. Errors in the UT refusal and setting aside decisions UT refusal and set aside decisions. These two decisions, when taken together, are defective in at least five significant respects. Error 1 – IT decision was made under both sections 40 and 30. The first and principal respect in which these decisions are erroneous is that they both state, and are based on the conclusion, that the IT dealt with DK's appeal under two exceptions, being the section 40 and section 30(1)(a)(i) exceptions. This is a clear and demonstrable error. The IT stated in its conclusion in relation to its consideration of the disclosability of the three factual witness statements under section 40: "61. Applying the statutory provisions and judicial authority cited above to the facts in this case, we find that three witness statements … [are DK's] personal data … Our finding is explained in more detail in the confidential annex. Whether S.30 FOIA is engaged? 62. We have found that three of the witness statements are caught by s.40(1) and therefore are absolutely exempt under FOIA. The remaining two witness statements fall to be considered under the alternative exemption claimed, namely s.30." It was therefore either a phantasy or a serious misreading of the IT decision to conclude that the IT had decided that the factual witness statements could not be disclosed. This error was compounded by an apparent failure to appreciate that, sections 40 and 30 of the FOIA are mutually exclusive since section 40 addresses personal data and section 30 addresses data or information that is not personal. The IT could only have decided DK's appeal under one or the other sections. Of course, the IT could have addressed the section 30 issue on a contingent alternative basis. That decision would have had to have been reached on the basis that: "if we are wrong in finding that the three factual witness statements are DK's personal data, what would we then have decided by applying section 30?" Whatever the IT could have done, however, it is clear from its decision that it decided to confine itself to the section 40 issue. Error 2 – Failure to address the IT's section 40 personal data finding. DK was seeking to appeal on one basis, namely on the sole basis upon which he had lost before the IC. He was in other words applying for permission to appeal on the ground that the IT had erred in its decision that section 40 applied on the subsidiary ground that the closed hearing and confidential annex procedure adopted by the IT was unfair to him because he did not have an adequate opportunity to answer whatever points were relied on by the IT in reaching its conclusion that the relevant data was personal. He was entitled to a decision as to whether or not he could appeal on those grounds. The UT judge appears to have decided not to address this ground because, as it was put in the refusal decision: "The meaning of personal data is difficult and to some extent nebulous. As I pointed out to him, any error of law that the tribunal may have made in applying that exemption would be of no help to him if there was no error in respect of the latter. In other words, the tribunal's decision was supported on the two exemptions in the alternative. I have decided that there was no error of law in respect of section 30. It follows that any error of law in respect of section 40 was not material." This approach led to the UT judge failing to address the only two grounds of appeal put forward by DK because he appears to have been looking for a let out from addressing what he regarded as the difficult personal data issue. This approach was adopted because he had erroneously considered that the IT had also decided the section 30 issue even though the two issues were mutually exclusive and the section 30 issue had not in fact been addressed by the IT as a contingency or in the alternative. Error 3 – Concluding that the IT had found that the section 30 exemption should stand. The UT judge concluded, and stated in terms, that the IT's decision in respect of section 30 was legally sound. In reaching this conclusion, the UT judge was clearly referring to both parts of the presumed section 30 decision, being a decision that section 30 was engaged and a decision as to the balancing exercise that had to be struck between the competing public interests in disclosing and not disclosing the three witness statements. He concluded that this second decision was evidence-based and he referred to the evidence of police officers who had given live evidence at the IT hearing. His reasoning was as follows: "7. Given the nature of the exercise, it is a difficult (sic) to explain with precision how the balance was struck. It is even more difficult to do so in a way that will convince someone who has taken a different view. Within those limits, the tribunal provided a clear explanation. It set out the factors it had taken into account. Those factors were not based on speculation; the tribunal heard evidence of their significance from police officers. And it took a nuanced approach, recognising that different considerations could apply over time to the same information. 8. I can see no error of law in the way that the tribunal dealt with the balance of interest. The factors it took into account were relevant. There are no other significant factors that the tribunal overlooked. Its conclusion was rational and reasonably open to it; it was certainly not perverse. It was within the reasonable bounds of judgment. And the tribunal explained as clearly as it could how it had exercised that judgment." In fact, the IT did not consider whether the three factual witness statements engaged section 30 nor whether the section 30 exemption should be displaced. The evidence that the police officers gave only addressed, according to the open decision, the public interest in disclosing the expert evidence. Furthermore, in relation to those two experts' witness statements, the IT concluded that the public interest was in favour of disclosure yet the UT judge stated that the IT had decided that the public interest in relation to the application of section 30 to the three factual witnesses was against disclosure. The UT judge therefore decided that the IT reached a section 30 decision about the three witness statements for good reason even though it never considered that matter at all. He therefore made two fundamental errors. Firstly, he erred because he assumed that the IT had jurisdiction to decide the section 30 issue whereas it had no such jurisdiction. Secondly, he erred because he decided the application on the basis that the IT's section 30 decision was open to it and was not therefore reviewable on appeal when, in fact, the IT had not taken a section 30 decision at all. It is possible that this error occurred for one of the following reasons: (1) The UT judge concluded that the IT had reached a contingent decision about this matter in its confidential annex and only explained that it had reached that decision in that annex; (2) The UT judge was speculating how the UT would have decided the section 30 issue had it remained a live issue at the hearing because it had found that the data was not personal and so had not had to address the section 30 issue; or (3) The UT judge was adopting the IT's reasons in deciding that the two technical witness statements should be disclosed under section 30 and transposing those reasons to the non-existent decision under section 30 in relation to the three factual witness statements. (4) The UT judge had erroneously concluded that the IT had the jurisdiction to decide the section 30 issue even though it had decided that section 40 was applicable. The UT judge's reasons do not suggest that he reached his conclusion on any these somewhat improbable grounds. If he had, he had an obligation to explain why he was adopting the particular approach that he was adopting and provide reasons for doing so. In fact, none of these three possible approaches would appear to be justified, particularly since the IT's section 30 decision was that the technical witness statements should be disclosed whereas the notional section 30 decision adopted by the district judge in relation to the other witness statements was that they should not be disclosed. The most obvious explanation is that the district judge totally misunderstood what the IT had decided and produced a rushed decision based on that misunderstanding as soon as the hearing was concluded which was sent out the following day. What he should have done, if he considered that a decision under section 30 necessarily arose in the appeal he was considering giving permission for, was to consider whether there was a realistic prospect of the UT deciding that section 30 was engaged but that the exception was not displaced even though it was displaced in relation to the two technical witness statements. This would have required him to provide a summary of the evidence received by the IT that would be available to the UT that would support the conclusion that the exception was not displaced. This summary would, if necessary, have needed to have been provided in a confidential annex. Error 4 – Other live issues not considered or decided. The UT judge did not identify that issues (1), (3) – (5) and (7) – (9) arose in the proposed appeal and in consequence did not consider whether permission to appeal should be granted on any of those issues. Indeed, he appears to have been oblivious that these issues would, or certainly might, arise in the actual appeal if it took place. Issue (3) needed to be addressed since it was an issue directly raised by DK in his notice of appeal and his skeleton. He was contending that the closed procedure adopted by the IT was inherently unfair to him and he had no clear idea why it had decided that the factual witness statements had been held to be his personal data. Since the district judge's witness statement was the principal document that he was seeking and was the document that had throughout driven his otherwise successful attempts to obtain discovery of NP's entire investigation file, this was a ground of appeal that had to be considered and addressed. Error 5 – The setting aside decision. DK expressly based his application to set aside the refusal decision on the grounds that the UT had erred in not considering his section 40 grounds of appeal and in only considering the application on his presumed section 30 grounds. His supporting witness statement pointed out that if data was declared to be exempt under section 40 (because it was personal data), it could not be considered for disclosure under section 30. He also stated that the IT had referred to section 30 but only in connection with the two technical witness statements and had never assessed the three factual witness statements under section 30. He concluded by contending that the IT's decision on the public interest test was confined to the two technical witness statements and was in his favour but that that decision was irrelevant in relation to the question of whether the decision regarding the undisclosed material was lawful. These grounds clearly raised issues of procedural irregularity which is one of the statutory grounds permitting the UT to set aside and re-make its previous decision[57]. The previous decision clearly cried out to be set aside and re-made. Instead, the UT judge erroneously dismissed DK's setting aside application in this curt passage which did not address DK's submission: "[DK's] application alleges procedural irregularity in that I concentrated on section 30 of the FOIA rather than on section 40. I explained why I did so in paragraph 4 of my reasons. The Tribunal had dismissed [DK's] appeal on two alternative grounds. An appeal to the Upper Tribunal could only succeed if neither of those grounds was sound. For the reasons that I explained, the decision was sound in respect of section 30. There was, therefore, no benefit to considering the difficult issue that arose under section 40." I have already explained that the IT did not dismiss DK's appeal on two grounds but only on the first section 40 ground. Therefore, DK could only succeed in his appeal if he first persuaded the UT to set aside the section 40 decision and then, in a succeeding step, itself exercise its own discretion to dis-apply the section 30 exception in a situation where the IC and the IT had not considered that issue at all. 4. Conclusion – issue (2). The UT judge's decisions as to both the permission and the set aside applications are fundamentally flawed. It follows that I must now decide whether DK's proposed appeal to the UT has a realistic prospect of success without the benefit of a sustainable UT refusal decision. That will require me to consider each of the issues (3) – (18) save those which I conclude cannot arise in, and are not raised by, that appeal. Issue (3) – Points of law – The DPA rather than the FOIA issue 1. Issue Issue (3) is as follows: Whether the IT and/or the UT had jurisdiction to consider DK's appeal (the "FOIA IT and/or UT jurisdiction issue") 2. How the issue arises This issue arises because of the quite separate and different statutory pathways available to an individual wishing to challenge a public authority's refusal to provide information pursuant to an information request under the FOIA compared to the same individual wishing to challenge a data controller's refusal to provide the same material which is personal data pursuant to a data subject request under the DPA. The FIOA provides for a complaint to the IC and a two-stage appeal from the IC's decision, firstly to the FtT (Information Rights) and, secondly by an appeal to the UT with permission from either the FtT or the UT to the UT. The DPA provides for an application to a district judge of the High Court or county court and by an appeal from that decision to the High Court or the County Court with permission of the deciding judge or a judge of the High Court or County Court and, by way of a second appeal, to the Court of Appeal with the permission of the Court of Appeal[58]. The UT judge should have considered whether the IT or the UT had jurisdiction to hear DK's proposed appeal given that the IC's decision under appeal was to the effect that the information request referred to him under the FOIA should be treated as having been a data subject request for personal data served under the DPA. There are, therefore, two jurisdictional issues that must now be considered. These are: (1) whether DK can appeal at all and, if so (2) whether he can appeal the substantive issue or only the procedural issue of whether the IC's jurisdictional decision was correct. 3. Analysis of the critical procedural steps Introduction. In this case, DK has always been adamant that none of material that he was requesting was his personal data or, by inference, anyone else's personal data. This view has apparently been fuelled by his belief that he is entitled to obtain copies of the various documents he applied for as information under the FIOA s but would not be entitled to them if they were his personal data that he applied for under the DPA. He never appears to have considered whether this jurisdictional controversy made any practical difference or, in other words, whether he would be denied access to the documents he sought because they were neither disclosable as information nor as personal data. DK's first request to NP was refused because NP considered that it was a request for personal data. DK resubmitted the same request and NP, without explanation, decided that the request should be dealt with under the FOIA but that it should not be disclosed because the section 30 exemption applied and that exemption should not be disapplied. The IC subsequently decided not to hear DK's appeal under section 30 because the three witness statements constituted DK's personal data and that, in consequence, DK's request should be dealt with under the DPA. DK had also made a third request under the DPA. NP accepted the IC's jurisdictional decision and answered the DPA data subject request by disclosing some of the requested documents in a redacted form. NP subsequently disclosed most of the remaining documents it had withheld under all three requests. The IT was therefore left, in an appeal from the IC's decision, with being left to consider whether the five witness statements should be disclosed and decided that three were DK's personal data and two were not, that all five were also the personal data of a third party and that the three factual witness statements should not be disclosed but the two technical statements should be disclosed in a redacted form. It is in that context that the two jurisdictional issues summarised above arise in relation to DK's proposed appeal from the IT to the UT arises. DK's two FOIA information requests. This is a summary of the relevant procedural steps that occurred in relation to DK's FOIA information requests and his DPA data subject request and the subsequent complaint to the IC, appeal to the IT and permission and set aside applications to the UT: DK's Request for information (1) 23 November 2006. DK sent NP an FOIA request for information for the communication to him of NP's two investigation reports into DK's complaint against the district judge and other documents. The request was made under section 1(1) of the FOIA. (2) 24 November 2006. NP sent DK a refusal notice specifying that the information he had requested was DK's personal data and was therefore absolutely exempt under section 40(1) of the FOIA. NP also advised DK, presumably under section 16(1) of the FOIA, that it was possible that the requested information could be provided under section 7 of the DPA and as to how to make a DPA data subject request. (3) 4 December 2006. DK informed NP that he disagreed that his request for information had been for his personal data. He resubmitted his request for information and stressed that it was being made under the FOIA. (4) 3 January 2007. NP replied to DK's second request for information with a refusal notice that stated that the information requested by DK was exempt under section 30(1) and 32(1)(c) of the FOIA and that those exemptions would apply. The effect of that refusal was that NP had dealt with the second request for information on the basis that the information was not DK's personal data. (5) 2 February 2007. DK required NP to conduct an internal review of NP's second refusal notice. (6) 2 March 2007. NP maintained its second refusal notice. DK's complaint to the IC (7) 7 April 2007. DK complained to the IC under section 50(1) of the FOIA that his second request for information dated 4 December 2006 had not been dealt with by NP in accordance with the requirements of Part I of the FOIA. (8) 10 January 2008. The IC wrote to DK and advised him that the information he had requested from NP was his personal data, that he was therefore closing DK's FOIA complaint and that he would now deal with that complaint as an assessment under section 42(1) of the DPA as to whether NP's processing of DK's personal data was carried out in compliance with the DPA. (9) 17 January 2008. DK sent NP a data subject request under section 7 of the DPA requesting the communication to him of specified personal data. The request was couched in wider terms than the earlier FOIA requests for information. Unlike the two FOIA requests for information, the data subject request included a request for copies of the witness statements held by NP. (10) 17 March 2008. The IC issued a decision notice: (1) That all the information requested by DK was DK's personal data which were subject to the absolute exemption of section 40(1) of the FOIA; (2) NP was not obliged to comply with the requirements of section 1(1)(a) of the FOIA so that it did not have to confirm or deny whether it held the information requested because the subject matter of the request was DK's personal data; and (3) The responsibility for determining whether an information request should be dealt with under the FOIA or the DPA rested with NP as the public authority concerned (4) It followed that NP should have considered DK's request under the DPA. Steps prior to IT hearing (11) 25 March 2008. DK received a bundle of heavily redacted documents from NP pursuant to his DPA data subject request. (12) 26 March 2008. DK requested the IC to undertake an assessment under section 42(1) of the DPA. (13) 7 April 2008. DK lodged a notice of appeal with the IT on the grounds that the IC's decision notice was not in accordance with the law. (14) 7 October 2008. DK received a bundle of documents from NP that were communicated under his data subject request. (15) 17 October 2008. The IC sent DK and NP his DPA assessment. DK has not provided a copy of this assessment to the Administrative Court. (16) Further documents were disclosed to DK by NP a few days before the IC hearing and on the morning of the first day of the hearing. Following that disclosure, the only outstanding documents that had been requested were the five witness statements. (17) April 2008 – April 2009. In the words of the IT's decision: "There were a number of directions hearings and pre-hearing reviews by way of telephone conferences which resulted in three sets of directions being issued by the Tribunal. These were primarily aimed at determining what documents were in dispute. … By the time we arrived at the full hearing there had been further disclosures under the data subject request and under the FOIA request before us including some a few days before the hearing and one at the beginning of the first day. All that remained in issue was 5 witness statements." The IT hearing (18) 30 and 31 March 2009. The 2-day IT hearing. (19) 14 April 2009. The IT's decision notice was promulgated. It: (1) Confirmed the decision notice dated 17 March 2008 in relation to the three factual witness statements of the district judge and the two solicitors' representatives[ (2) Confirmed the IC's decision that those statements should not be disclosed because they were DK's personal data and, in a confidential annex, provided further details of why this data was his personal data. (3) Provided a substituted decision with regard to the two technical witness statements with certain passages redacted as being the makers' personal data. (20) 14 May 2009. DK lodged a notice of appeal with the Court of Appeal against the IT's decision notice. This notice of appeal was transferred by the Court of Appeal to the Administrative Court on 4 March 2010 and by the Administrative Court to the UT in April 2012. DK's grounds and a supporting skeleton were served on the UT on 26 August 2012. The basis of the appeal was that the IT had erred on a point of law in deciding that the three factual witness statements were his personal data. This error had allegedly occurred because the IT had applied an erroneously wide erroneously wide interpretation instead of the meaning that the Court of Appeal had given it in the Durrant decision. (21) 15 June 2010. IT costs decision. The UT proceedings (22) 4 March 2010. Transfer of proceedings to Administrative Court. (23) April 2012. Transfer of case file to the UT. (24) 4 September 2012. Refusal decision of the UT (25) 1 October 2012. Setting aside refusal decision of the UT. Judicial review claim (26) 11 March 2013. Claim for judicial review 4. Jurisdiction DK's jurisdictional difficulty in this case is that his relevant request for information was made under the FOIA and he insisted that it should not be processed as personal data under the DPA. This request followed immediately upon an identical request that he had also under the FOIA which NP had declined to respond to with a decision that stated that that request should be treated as a data subject request under the DPA. Despite that, NP accepted the second request as being made under the FOIA and decided that the information requested should not be disclosed since it was exempt from disclosure under the FOIA. It was not clear why, given its first answer, NP answered the second request in this way given that DK's request could not be made under both the FOIA and the DPA and NP had already decided that the DPA was the Act that should be used. Having received NP's second decision taken under the FOIA, DK sought to challenge it on the grounds that the information he had sought was incorrectly held by NP in its second decision to be exempt from disclosure under section 30 of the FIOA. DK contended that the section 30 exemption should have been disapplied by NP. The IC appreciated that he might not have had jurisdiction to deal with a complaint raised in relation to this second refusal given that NC's first refusal appeared to be a valid refusal and DK's remedy against that first refusal should have been by way of an application to the court for disclosure of the documents under section 7(9) of the DPA. The IC first considered whether he had the jurisdiction to proceed with DR's complaint. His decision was to the effect that he did not have jurisdiction. The IC's decision spelt out very clearly that responsibility for determining whether a request for information should be considered under the FOIA or the DPA rests with the public authority and not the applicant[59]. He also made it clear in his decision that if the public authority concluded that the information was personal data, it should refuse to deal with the disclosure request for that information under the FOIA and should only proceed to deal with it under the DPA. That conclusion is clearly correct given the way that the FOIA excludes personal data from its ambit and from the complaint and appeal structure from FOIA decisions. The decision of the public authority that a request should be processed under the DPA even if it was made under the FOIA is final and not subject to appeal. An applicant must accept the public authority's decision that the application should proceed under the DPA and can only obtain disclosure of the personal data by way of a new application under the DPA. Similarly, if the application had been made under the DPA and the public authority decided it could not be dealt with under that Act, the applicant should reapply to the public authority under the FOIA. In this case, the IC was faced with the procedural difficulty that the public authority's decision being challenged was being challenged because NP had correctly applied the FOIA but had incorrectly exercised its discretion under that Act whereas the IC was of the opinion that the FOIA was inapplicable for all purposes. The IC therefore decided the application under the only section of the FOIA that his jurisdictional decision permitted him to use, namely section 40(1) which provides that: "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." The effect of that decision was to confirm the IC's view that the application should never have been dealt with under the FOIA and that, unless that decision was overturned, DK's only remedy was to apply to the court under section 9(7) of the DPA. DK's appeal to the IT was, therefore, limited in jurisdictional terms to the issue of whether the IC was correct to conclude that section 40(1) applied to his FOIA request. If it did, DK would then have to make a separate application to the Courts under section 9(7) of the DPA. In deciding that narrow issue, the IT was limited to points of law and the only point of law that arose was whether the IC was Wednesbury unreasonable in reaching the decision that had been reached, in other words whether the decision was erroneous in law or had taken into account materials that should have been ignored and vice versa or was irrational. The IT, in considering that question, was not considering whether or not the IC should have exercised his discretion differently since the question was one of fact and not one of discretion[60]. However, it did have jurisdiction to decide whether the decision was Wednesbury unreasonable and it was entitled to decide that by hearing evidence if it chose to. The IT heard evidence, considered the documents in both the open and closed bundles and concluded that the materials were subject to section 40(1) with the consequence that it had concluded that the IC and itself did not have jurisdiction to decide whether the personal statements should be disclosed to DK. However, having decided that section 40(1) did not apply to the experts' reports, it had the jurisdiction to decide whether they should be disclosed or disclosed in a redacted form. The IT went on to decide those questions and ordered their disclosure in a redacted form. DK then sought to appeal the section 40(1) decision to the UT. The only basis for such an appeal was whether the IT made an error of law in deciding the section 40(1) decision. 5. Conclusion – IT's and UT's lack of jurisdiction The IT have jurisdiction to deal with the appeal but its jurisdiction was limited to considering whether the IT's section 40(1) decision was vitiated by an error of law. Issue (4) – Points of law - The ECHR article 6(1) issue 1. Issue Issue (4) is as follows: Whether the IT's procedure in placing the three witness statements in a closed bundle, in holding a closed hearing and in delivering a confidential annex to its open decision infringed DK's ECHR article 6(1) rights in depriving him of a fair judicial determination of his right of access to his personal data (the "ECHR article 6(1) issue") 2. How the issue arises This issue was clearly raised by DK in his notice of appeal and his supporting witness statements and submissions. If the issue is expressed by reference to the facts of this case as follows: "whether the IT's procedure in placing the three witness statements in a closed bundle, in holding a closed hearing and in delivering a confidential annex to its open decision infringed DK's ECHR article 6(1) rights in depriving him of a fair judicial determination of his right of access to his personal data". 3. IT and FtT practice and procedure – closed material, hearing and decision Identifying the issue. The powers available to the IT and the practice and procedure relating to their exercise are set out in Rules 14 and 38 of its Rules of Procedure which are supplemented by an explanatory Practice Note issued by the IT some years ago which is available on its website and is worth quoting from. These Rules and the Practice Note are set out in the annex to this judgment. The Practice Note is dated May 2012 but it reproduced the practice that had been followed in the IT for some years previously and it mirrored the practice that the IT applied in this case in April 2009. These procedural provisions are underpinned in certain cases by specific provisions of the FOIA and DPA which authorise the withholding of information or data in defined situations[61]. This entire regime authorising the withholding of access to personal data is underpinned by provisions in the Directive authorising the withholding of data where this is reasonable necessary and proportionate. The IT and its successor FtT have developed and adopted various practices for the confidential consideration of documents containing personal or sensitive material. The relevant features of this practice, all of which were adopted by the IT in this case, were as follows: (1) The NP supplied copies of the documents and information that it was not prepared to disclose and which the IC had directed should not be disclosed in a closed bundle to the IT. An open bundle of those documents and information that had been disclosed to DK were provided in an open bundle to both the IT and DK. (2) The IT held an open hearing that was open to the public. This hearing took oral evidence and considered the material in the open bundle and all other relevant documents common to the parties in public. At an appropriate moment during the hearing, the IT went into closed session. DK and the public were excluded from the closed session and the IT considered the closed bundle and heard in private closed evidence and submissions from the two counsel representing, respectively, the IC and NP in the presence the other members of the legal teams representing, respectively, the IC and NP and with no other person being present. (3) The hearing was then re-opened and the remaining stages of the hearing took place. (4) The open decision was based on the open hearing and open bundle and a summary of what had occurred during the closed hearing and of the closed bundle documents. References to the closed materials did not reveal the contents of the closed documents. The decision contained a confidential annex which was said in the open decision to explain its decision that the three factual witness statements were sufficiently proximate to DK to constitute his personal data. (5) The open decision was provided to all parties, the confidential annex was only provided to the IC and NP. Both the open decision and the confidential annex were placed on the IT's file along with the closed bundle of documents. (6) At the hearing of the UT's determination of DK's application for permission to appeal, the closed decision and the closed bundle were not referred to – since DK had never seen these documents – but the IT file was available for the UT judge but he did not consider or take account of its contents in reaching his decisions as to the application for permission and for a setting aside of the permission decision. The documents remaining in issue. The IT decision was only concerned with three statements and two experts' reports that had been provided to NP during their inquiries into DK's complaint against the district judge. The principal document that DK was seeking a copy of were two statements made by the district judge on different occasions to two different investigating police officers. The other two statements were provided by two representatives of the solicitors who acted for the defendant Canon (UK) Ltd at the hearing before the district judge and two technical reports concerned with forensic examinations of the tape that DK contended had been criminally interfered with. DK's notice of appeal to the IT had also put further documents in issue but NP had disclosed all of them by the time of the IT hearing. The IT dismissed DK's appeal in relation to the three factual witnesses' statements and allowed it in relation to the two technical reports, albeit with some redactions first having been made to those reports. The IT dismissed the appeal on the basis that the absolute exemption from production provided for by section 40(1) was applicable to the three statements. This was also the first of the two bases for NP's decision to refuse DK's disclosure request and the basis relied on by the IC in dismissing his appeal from that refusal decision. Having decided the appeal on that ground, the IT did not consider DK's second ground of appeal, namely whether the qualified exemption provided for by section 30(1) should be disapplied. The IC's Director of Data Protection Practice gave written evidence to the IT at the hearing to the effect that the TGN was consistent with the Opinion. The Director also gave written evidence about the advice he gave to the team leader of the ICO team dealing with DK's appeal to the IC as to whether these statements constituted personal data about DK. His advice was based on the contents of these statements and upon the contents of other requested information that DK was seeking from NP and which NP had subsequently disclosed to DK. The IT also considered all the requested documents relating to NP investigation of DK's complaint of the district judge's alleged criminal conduct including those that NP was at that time still resisting providing to DK. These documents were placed in two separate bundles, the first being the open bundle of documents that had been disclosed by the NP prior to the hearing and the second being the closed bundle containing the documents that NP was still resisting disclosing to DK. The IT also heard evidence from DK and from the officer most actively involved in the third and most substantial investigation of DK's complaint NP had undertaken, from the officer who dealt with DK's FOI request and from the officer who was a member of NP's Intelligence and Information Department at the time of the investigation. It is clear, therefore, that in reaching its decision the IT took into account the contents Opinion and the TGN, the decision in Durrant, the evidence of the IC's Director of Data Protection Practice, the contents of both the open and closed bundles, the evidence of DK and the three NP officers who gave evidence. NP and the IC were separately represented by different counsel and each counsel provided detailed submissions in open session and further submissions in closed session when the contents of the closed bundle were considered in the absence of DK. Detailed and well-structured submissions were also presented in open session by DK who had clearly done a considerable amount of research into the relevant legal principles that the IC should apply which he made use of in his written and oral submissions. The IT that determined DK's appeal was a particularly experienced tribunal. Its chairman was the principal district judge for information rights and the other two members of the tribunal were also experienced in the working of the FOIA. 4. Article 6 and closed and confidential material The IT's closed material procedures may need to be refined in the future to take account recent changes in the law that have narrowed the procedure that it is permissible to apply to closed hearings and materials to enable a tribunal such as the IT to conform to article 6 of the ECHR[62]. These more onerous requirements are not currently practised by the IT and any refinement could be introduced without any change to the IT's rules of procedure. Such amended and more onerous requirements include the greater use of redaction, the provision of a gist which summarises the relevant information or data without disclosing the identity of third parties or any particularly sensitive material, the use of a special advocate[63], the conduct of hearings without the tribunal seeing the confidential material and the use of a more limited confidential procedure in more limited circumstances than hitherto. Since I have concluded that no injustice or unfairness occurred in this case by the adoption of the full range of closed and confidential procedures available to the IT, it has not been necessary to consider the extent to which those practices are not article 6 compliant or in possible need of review to ensure compliance with the Supreme Court judgments in Bank Mellat (No 1). Neither the confidential decision nor the closed bundle was provided to the Administrative Court and I have not seen them. Moreover, DK has not provided the Administrative Court as part of this Cart application with copies of the documents that have been disclosed to him by the NP, nor the open bundle nor copies of the two technical experts' reports in their redacted form which the IT directed should be disclosed to him. Given the nature of DK's challenge to the IT's decision, DK should have supplied the open bundle and such disclosed documents as were not in that bundle to the Administrative Court. It was also open to DK to apply to the Administrative Court to direct that it should be provided with all the open and closed documents held by the IT but he did not make any such application although it is clear that he was aware that he could make such an application. These apparent omissions are not as serious as it might appear because DK has supplied what amounts to a gist of the three relevant witness statements to the Administrative Court in connection with other applications in the three other judicial reviews and all outstanding applications in these claims are now being heard together. I have therefore been able to use material filed in these other claims when considering this Cart application and the related disclosure application that is also being considered by me. I can of course direct the UT to supply me with all the documents on its case file for this case which would include both the open and closed files and the confidential annex that it holds on file[64]. I have carefully considered whether I should obtain the UT files but I have decided that this Cart application and the related discovery application can be fairly decided without a sight of either the closed and confidential or the open and previously disclosed material[65]. 5. DK's submissions DK contends that: (1) The IT should have allowed submissions from both parties about the witness statements to have proceeded in open court. No part of the hearing should have taken place in private with him being excluded. The IT should have concluded the hearing and only then examined the disputed documents in private without the parties or their representatives being present. (2) The IT should have told DK what personal data about him was contained in the witness statements. Without that, he is unable to apply for disclosure of the statements under the DPA. (3) The IT should also have prepared a summary of the confidential annex for the benefit of both parties so as to clarify the legal basis of their decision. DK also contended that he should be permitted to see the redacted parts of the two witness statements that the IT permitted disclosure of. These steps would have allowed a proper and fair hearing and consideration of the issues by the parties without prejudicing the position of NP. DK's submissions as to the steps that the IT should have adopted have considerable force. The IT appears to have adopted all of the confidential measures that it commonly adopted at that time without providing any satisfactory explanation as to why each of the measures was necessary and proportionate. Moreover, the IT does not appear to have considered a one-off set of confidential measures that would have provided for the minimum necessary closed procedure and so as to meet the justice and fairness of the proceedings. It is to be hoped that the IT will, sometime soon, re-examine and update its closed and confidential procedure and guidance to ensure that it is compliant with articles 6 and 8 and in conformity with the Supreme Court guidance in Bank Mellat (No 1) as soon as possible[66]. 6. Whether DK was unfairly treated in this case For the reasons already given, the only conceivable issue that the IT had jurisdiction to hear, and that issue was not ultimately open to it, was whether the decision of the IC that DK's request for information should be dealt with as a data subject request under the DPA was Wednesbury unreasonable. It was unnecessary for the Administrative Court to see the disputed documents since the only basis of challenge is that the IT applied the decision in the Durrant case incorrectly. That issue can be determined without reading the documents, particularly since DK has now disclosed to the Administrative Court a number of documents he obtained from NP's investigation files as part of the DPA provided by NP. He has also served a number of witness statements in one or more of the four outstanding judicial reviews which contain extensive material about the desired outcome of his referral of the district judge to NP and his motives in making that referral. The documents obtained from NP provide a sufficient gist of the contents of the witness statements that it is neither fair nor reasonable to seek and obtain sight of the three outstanding statements. Available evidence of the contents of the three statements. DK described himself in his data subject request as being: "(i) a person reporting an offence or incident; (ii) a witness to an offence or incident and (iii) a victim of an offence." He described his motives in reporting the district judge to NP and in requesting NP to conduct a criminal investigation of the district judge's conduct and to be interviewed under caution as being for the purposes of persuading the police to charge the district judge, to prosecute him and to ensure that he was convicted. I will set out a brief summary of the currently available evidence of DK's motives in reporting the district judge to the police. I will also take into account that DK has failed to disclose much of the evidence that he has obtained from NP or his own statement made to the police a few months after he initiated the police investigations into what he considers to have been the district judge's tampering with the court tapes and his lying to the police. The district judge's statement and the police notes of the interview. A highly significant document was disclosed to DK by NP and by DK to the Administrative Court. It is the Case Summary prepared by the officer in charge of the third and final investigation conducted by NP which was sent to the CPS to obtain its charging decision as to whether NP should charge anyone involved in the subject-matter of DK's complaint. It is undated but has been dated by DK as being prepared on or about 12 May 2006. The introductory section includes these extracts: "In relation to this matter, a judicial review process relating to complaints made by [DK] against staff at Newcastle Law Courts in particular the court manager [name supplied] has been instituted[67]. … The investigating officer has liaised with the CPS who confirmed that a file of evidence should be forwarded for decision, in the light of the nature of the allegation and in particular that it involves a district judge. … District Judge [named] Statement dated 08/02/06: This statement is short and succinct he does not address any specific allegation but does deny any wrong doing on his part. An officer report by the o[fficer] i[n] c[harge] detailing what was said during this interview is attached at annex C as is (sic) the Judge's notes. The crux of this report is that whilst reading through the transcript the Judge identified a typing error to the effect that the word "effect" would in actual fact be "perfect" meaning that he would amend the order. The Judge also explained that a Judge could amend an order but not a judgment, therefore he was within his rights to change the order. Judge [named] stated that the fact that he could change an error is a basic fact within civil law not one he would ever get "confused" with. In response to the allegation that the tape of the hearing had been tampered with and by definition this would have been done by or on behalf of Judge [named], the Judge finds the allegation outrageous and scandalous." In an internal memo from the interviewing officer to the investigating officer dated 12 February 2006 from which this Case Summary was obviously prepared, the interviewing officer includes this comment: "[The district judge] … explained … so the following was established: 1) [The circuit judge] had not made an order for costs, as a result the hearing on 27/01/04 which was to assess costs could not continue. 2) [The district judge] cannot change another judge's judgment but can change an order if necessary. 3) [The district judge] identifies this during the hearing on 27/01/04 with the assistance of all parties and states that he will perfect the order of [the circuit judge] so as to reflect the issue of costs. … As a result of this interview it was established that [the district judge] could change/add to the order of [the circuit judge] and that he in fact said as much in the hearing dated 27/01/04. There may have been a misinterpretation by the other parties when [the district judge said the following: '… and I think what needs to happen is the judgment from [the circuit judge] needs to be perfected certainly in relation to the costs and needs to be served on [DK]' In layman's terms the above sentence is saying that the [district judge] will add to the order derived from [the circuit judge's] judgment in relation to costs to allow [DK] to appeal costs (copy of [district judge's] notes obtained detailing this). The subsequent order for costs was typed up the same day and sent out on 28/01/04 to all the relevant parties. This explanation would appear to remove any motive for the subsequent allegation revolving around the audio tape." One of the two legal representatives of the defendant at the hearing provided important corroborative evidence of the reported views and summary of the statement of the district judge in two letters to DK dated 8 October 2004 and 11 April 2005. In the first, the legal representative stated: "…we confirm that [the district judge] adjourned the hearing on 27 January 2004 as he did not feel able to amend the Order made by [the circuit judge] under the slip rule. [The district judge] considered at the hearing that he did not have jurisdiction to amend. As outlined in the judgment of [the senior civil judge at NCC in his judgment refusing DK permission to appeal the district judge's amendment order under the slip rule] on 27 April 2004, it is presumed that the [district judge] (after consulting the civil procedure rules) subsequent to the hearing on 27 January 2004, considered that he did have jurisdiction after all." In the second, the legal representative stated: "In the course of our meeting with [the interviewing officer], we confirmed that part of the transcript that has been recorded in our attendance note does not appear within the court transcript. The element that is missing from the transcript is our note referring to [the district judge's] comment that he would have to liaise with [the circuit judge] concerning amendment of the Order. From our note, these comments were made at the end of the hearing and it appears to us it may well be the case that the tape had run out, and that is why these comments have not been recorded in the transcript. We do not agree with your comment that there are significant gaps in the transcript at crucial points in [the district judge's statement. We do not believe that the information that is contained in our attendance note that is missing from the transcript in any way effects the outcome of that hearing, or subsequent hearings." DK also disclosed a copy of the independent technical expert's report of her examination of the cassette and tape allegedly tampered with. Her conclusion was that: "During the section of the recording alleged to have been edited, there are no features which I would expect to observe had the recording been stopped and restarted, or over-recorded, and no changes or breaks in the background noise which may indicate editing through cutting and splicing the tape and then copying a new tape. There is also no evidence that the tape is a copy. There is no evidence that the recording has been digitally edited. In order to digitally edit the recording, specialist equipment and a good level of operator skill would be required to leave no traces of edits and retain the four track configuration and speed of the recording." This evidence supports the conclusion arrived at by both the police officers carrying out the investigation and the CPS who effectively took the decision not to charge anyone since there was no evidence that a criminal offence had been committed that: (1) The tape had not been tampered with. (2) The district judge made it clear at the hearing that the circuit judge's order could and should be perfected by an amendment. (3) The district judge recollects that he made it clear that he would perfect the amended order after the hearing, the transcript suggests that that statement was made, if made at all, after the tape had run out or after it had been switched off. The statement, whether made during or at the end of the hearing, was misunderstood by DK and the two legal representatives to mean that [the circuit judge] would perfect and amend the order. This possibility is reinforced by a statement in the transcript to the effect that "the court" could amend the order which might be considered to be an ambiguous reference either to the circuit judge or to the district judge. (4) If the district judge's recollection is incorrect, the only other feasible possibility is that he made the statement that only the circuit judge could amend or change the order at the end of the hearing but after the hearing researched his jurisdiction by reading the civil procedure rules, he realised that he did have jurisdiction (which the CPRs clearly gives him) which he could exercise without recalling the hearing or notifying the parities (which he could) and proceeded to issue an amended costs order; (5) The district judge amended the order on the same day as the hearing after it had been concluded and it was typed up in its amended form the following day and sent out to the parties by the court staff; and (6) The district judge had no intention or motive to do anything other than apply the CPRs to an order which had mistakenly failed to record the circuit judge's intentions as expressed in the circuit judge's judgment and, as held by the senior civil circuit judge in the court in question in DK's subsequent application for permission to appeal the amendment order, the district judge had the jurisdiction to amend the order and was correct to amend the order in the way that he did. The police investigation file was passed to the CPS who took into account its entire contents including the statements of the district judge. The charging decision was taken by NP on the advice of the CPS. The advice of the crown prosecutor whose advice not to prosecute was followed by NP included this advice of that crown prosecutor: "… there is no evidence in respect of which a charge of attempting to pervert the course of justice, conspiracy to pervert the course of justice or any other criminal offence could be based." 7. Conclusion – issue (4) Given this information about the contents of the district judge's statement and the motives of DK in reporting the district judge to the police summarised above, a court or tribunal has sufficient knowledge of the contents of the statement to enable it to decide whether it contains the personal data of DK or of the district judge or of any other third party. It was therefore not necessary for either the UT or the Administrative Court to see and read the contents of any of the five statements that remained in the closed bundles or to be informed of the contents of the submissions given in closed session or the closed judgment about this matter. No unfairness has, therefore resulted from the IT's adoption of its closed hearing procedures. Issue (5) -'Personal data' issues – DPA section 1 relevant filing system and recorded information issues 1. Issue (5) Issue (5) is as follows: Whether the three witness statements referred to DK and were "recorded as part of a relevant filing system" and/or were "recorded information held by a public authority" as defined in sections 1(1)(c) and 1(1)(e) of the DPA (the "DPA section 1 relevant filing system and recorded information issues") 2. How the issue arises The definition of "data" in the phrase "personal data" in the DPA is set out in section 1(1)(a) and it includes five types of information including: "(c) information which is recorded as part of a relevant filing system or which the intention is that it should form part of a relevant filing system" and "(e) information which is recorded information held by a public authority and does not fall within paragraphs (a) to (d)". DK, in his grounds of appeal lodged with the UT, contended that the IT had erred in not considering whether the three statements formed part of a relevant filing system since, unless they did, they could not be "data" to which the DPA applied. In support of this contention, DK relied on a lengthy passage in Auld LJ's judgment in Durrant[68]. The IT had not ignored the definition of "data" but had concluded that the relevant sub-paragraph that was applicable was sub-paragraph (e). The decision stated: "It is accepted by all the parties that the requested information constitutes "data" within the meaning of the DPA in that – even if it does not fall within paragraphs (a) – (d) - it will fall within paragraph (e)." 3. Application of "data" definition to this case The principal requested information in issue were at least six separate documents compendiously described as the district judge's statement that had been given to, or taken from him by, investigating police officers who were gathering evidence to enable a decision to be taken as to whether there was sufficient evidence to show that the district judge should be charged with a serious criminal offence. The six documents were, or appeared to be two separate statements made to two separate police officers, one in 2005 and one made on 8 February 2006. The first statement may not have existed as a formal statement but instead appears to have been found in notes or a draft made by the investigating officer whilst interviewing the district judge during the second investigation that was carried out. The second statement appears to have been a short formal statement which was signed or acknowledged by the district judge during or after being interviewed by a different investigating officer in the third investigation. The district judge is reported in the investigation report to have denied any wrong doing. The judge is also recorded as having made notes during or in advance of the interview and the interview was conducted by reference to the transcript of the hearing that had been typed out and was available to the district judge and the investigating officer whilst the interview proceeded. The investigating officer appears to have taken a detailed written note of the entire interview. The interviewing process and a summary of, or evidence of the contents of, what the district judge said and provided by way of a draft or final statement were described and provided in the respective case summaries prepared by the investigating officer. The salient documents obtained during each investigation were placed in a file whose only contents were the statements, notes and documents obtained by the investigating officer whilst investigating DK's complaint that the district judge had perverted the course of justice. The documents obtained in the second investigation formed part of this file which had had added to it the additional documents obtained in the third investigation. This file was forwarded to the CPS with the case summaries added to it to enable the CPS to advise whether there was evidence which could base a charge of attempting to, or a conspiracy to, pervert the course of justice or any other criminal offence. The file, by the time it reached the Divisional Crown Prosecutor, contained the case summary and witness statements, the correspondence between DK, the complainant, and the police and HM Court Service, the documentary exhibits provided by DK and the officer report from the investigating officer to his Detective Sergeant dated 12 February 2006[69]. The IC had available the entire file as a discrete file within a larger collection of documents and he concluded that the district judge's witness statement or statements formed part of that file and that the entire contents of that file constituted the personal data of both the district judge and DK. The IC case worker concerned with the IC's decision notice setting out the IC's rejection of DK's complaint gave detailed evidence to the IT which it summarised in its open decision. He described the file as containing the information that was used to inform a decision as to what, if any, action should be taken against the district judge in relation to his alleged conduct which had directly impacted upon DK. In addition, DK was identified with much of the information and/or had supplied it himself for the purposes of the police investigation. The file was sufficiently compact and focused that the entirety of the file was used for the purpose of considering whether the district judge should be charged and the IC's team leader did not consider it necessary to carry out a detailed page-by-page analysis of the information but, instead, confined his consideration to an analysis of whether the information related directly to DK's allegations. It followed that the IC had no doubt that the information then being requested and decided upon was "data" because it fell squarely within the statutory definition of a "relevant filing system" and hence within subparagraph (c) of section 1(1) of the DPA. This definition is: "… any set of information relating to individuals to the extent that, although the information is not processed by means of equipment operating automatically in response to instructions given for that purpose, the set is structured either by reference to individuals or by reference to criteria relating to individuals, in such a way that specific information relating to a particular individual is readily accessible." The file in question was clearly in its entirety within that definition since it comprised: (1) "a set of information"; (2) whose contents related to two individuals – the district judge complained about and DK as the complainant; (3) whose contents were structured into four types of information as identified in the Crown Prosecutor's advice; (4) whose contents were structured by reference to individuals, being the district judge and the complainant who had supplied much of the contents of the set; (5) whose contents were structured and by reference to criteria relating to individuals, being the district judge's alleged criminal conduct and the details of the complaint made by DK in his detailed statement also contained in the file; and (6) whose contents were structured such that specific information relating to a particular individual was readily accessible, being the district judge's statements, comments and views and DK's statements, comments and views and documents supplied by him. By the time that the IT hearing, the only parts of that file that had not been disclosed were the five witness statements. These had come from the file but since the file had been dissipated by the disclosures that had already occurred, the statements could equally be regarded as being discrete and unfiled documents. The IT did not have to analyse which of the two subparagraphs these statements came within, if at all, since, as it recorded in the decision: "It is accepted by all the parties that the requested information constitutes "data" within the meaning of the DPA, in that – even if it does not fall within paragraphs (a) – (d) – it will fall within paragraph (e)." DK now seeks to challenge the IT's decision on grounds that include a challenge to the findings that (1) it was accepted by him that the information constituted data; (2) that that was because the witness statements fell within subparagraph (e) and (3) because they did not fall within subparagraph (c) either. His conclusion was that the statements were therefore not "data" so that the DPA was inapplicable. 4. Discussion DK's submissions did not develop his contention that he had accepted that the information was data or that the information did not fall within paragraph (e). I will assume that the IT was in error in treating this issue as no longer requiring a decision and turn first to DK's contention that subparagraph (c) was inapplicable. His submission relied heavily on Auld LJ's judgment in Durrant. Auld LJ's judgment concluded that the information in that case was not recorded as part of a filing system because the filing system was not structured. That case is, on analysis, not relevant to this case. The data controller in Durrant held the relevant documents in hard copy in a paper filing system which was not structured in a way that enabled specific information relating to a particular individual to be readily accessible. The relevant documents were therefore held not to fall within subparagraph (c). However, in this case, as already explained, the relevant documents were readily identifiable parts of a file that was part of a relevant filing system as defined in paragraph 1(1) of the DPA. The IT considered the relevant subparagraph to be subparagraph (e) given the parties acceptance that they were data and the fact that they had become clearly identifiable separate documents that no longer formed part of a file. The statements were therefore held by a public authority and each statement was "recorded information". It is significant to be aware of the fact that subparagraph (e) was added to the DPA by way of an amendment contained in the FOIA because the definition of data in the DPA as originally enacted did not cover completely unstructured records held by a public authority such as planning applications or permissions. Thus, subparagraph (e) was added so as to cover such records. The IT's finding that these individual statements, held in the file relating to the police's investigation of DK's complaint, were recorded information held by NP, is an unimpeachable finding. 5. Conclusion The statements were part of a relevant filing system and fell under subparagraph (c) and the IT were entitled to treat them as falling under subparagraph (e) for the purposes of the hearing since the parties had accepted that they were data and, at the time of the hearing, having been separated and isolated, they could reasonably be treated as being recorded information held by NP and falling under subparagraph (e). Issue (6) – 'Personal data' issues - DPA section 1(1) 'personal data issue' 1. Issue (6) Issue (6) is as follows: Whether the three witness statements are DK's personal data of the kind defined in section 1(1) of the DPA ("the DPA section 1(1) personal data issue") 2. How the issue arises In order to conclude that the relevant statements were DK's personal data to which section 40 was applicable, the IT had to decide whether their contents fell within the definition of personal data as interpolated by the WPO, the TGN and the findings in Durrant[70]. DK submits that the IT wrongly found that the contents of the statements "related to" him. This was a strained application of that statutory definition and it was applied by the IT because they had not followed the guidance in Durrant as to the application of this somewhat nebulous phrase but had followed the erroneously wider definition provided by the TGN which had been drafted subsequent to the promulgation of the Durrant decision and that definition did not, as it should have done, follow and apply the relevant passages in Auld LJ's judgment. 3. DK's submissions DK submitted lengthy written submissions on this issue. These submissions were addressed to two related matters, the IT's reasons for finding that the contents of the statements contained information that related to DK and enabled him to be identified and his contention that the IT's approach failed to give effect to the Durrant case that it was bound to follow. The IT's reasons are summarised above[71]. DK contended that the only references to himself in the statements must have been the personal views of the witnesses rather than information about him. That information could not have been biographical in any significant sense and could not have had him as its focus – the two notions identified by Auld LJ's judgment. The information was about his complaints about the district judge and was not information that related to him. DK also submitted that the IT's reliance on the TGN was misplaced since the TGN applied a wider concept of personal data than that identified by Durrant. 4. Discussion It is now known that the district judge's principal statement and the notes taken by the investigating officer of what the district judge said during his interview explain how DK had made a fundamental error in formulating his complaint against the district judge. DK had contended consistently that the district judge had informed him during the critical hearing that the circuit judge's order needed to be "effected" if any costs order was to be made against him which he took to mean that the order could only take effect if it was manipulated so that the district judge, in himself altering, or "effecting" the order must have done so with malicious intent since he had indicated that only a circuit judge could take this step. However, as the district judge apparently made clear in his statement, he would have stated that the order could only take effect when it was "perfected" and that the transcript recording him using the word "effected" was clearly in error. It is also known that the district judge expressed outrage at DK's reporting him to the police on the basis that he had committed a criminal offence in arranging for the tape to be doctored so as to omit his assurance that he would not "effect" the order but he would not take defamation proceedings against DK. Furthermore, DK's evidence in the judicial review proceedings was to the effect that he had reported the district judge because he wanted him to be interviewed under caution, charged, tried, convicted and punished and that he was aware that such a course of action would destroy the district judge's judicial career and would probably lead to a custodial sentence. DK in his skeleton argument adds that he wishes to use the statements once they are disclosed to prove that the police have conspired with the court to prevent the exposure of a criminal act of a member of the judiciary and/or of court officials in altering evidential matter held by the court. The district judge is reported to have strongly denied interfering with the tape and that denial is strongly corroborated by the technical investigations of the tape which showed no discernible evidence of having been tampered with in circumstances where even a skilled expert would be hard pushed to tamper with the tape in a way that had obliterated all evidence of being tampered with. There is, therefore, strong supportive evidence to support the IT's conclusion, based on the closed material, that the information in the statements related to DK. Furthermore, the IT applied the part of the definition of "relating to" contained in the TGN that has a "result element". The IT stated in its open decision that it approved this passage contained in the IC's decision notice which was to this effect: "47. … The IC is satisfied that the requested information is [DK's] personal data because it records information about the way his allegations and complaints against the judge were investigated. Further it reflects details used to inform the final decision about [DK's] allegations. The outcome of that investigation arguable affects [DK] as well as the judge." The IT added to this reasoning their own gloss which amounted to its acceptance of the submissions of counsel for the IC. The relevant part of the decision was as follows: "58. In this case, Mr [name added] on behalf of the IC places much reliance on the "notion in the Opinion which assists in understanding how information "relates to" an individual. The Opinion considers that a content or purpose or result element should be present. Mr Hooper particularly relies on the result element where data can be considered to relate to an individual because their use is likely to have an impact on a certain person's rights and interests, taking into account all the circumstances surrounding the present case. In this case, Mr {name} refers us to Mr [name]'s conclusions … that the result of the [NP's} investigation into DK's allegations could have an impact on the costs order against DK and hat this element helped Mr [name] advise the [IC] case officer that all the disputed information was DK's personal data. Also we have before us DK's own explanation in respect of his Data subject request as to how the information may relate to him." 5. Conclusion DK's contentions are based on Durrant which he contends contains a definitive explanation as to how the phrase " data which relate to a living individual" should be interpreted and applied and that the TGN in its post-Durrant revised form is not to be followed in so far as it provides a wider or different interpretation. However, these contentions amount to a significant misreading of Durrant. The relevant passage in Auld LJ's judgment are applicable to the kind of information and the factual context of that case. The passage does not cover any aspect of one of the three potential ingredients of personal data identified in the WPO, namely data with a "result" element which is a significant ingredient of the information contained in the statements I am concerned with. Furthermore, the reasoning of Auld LJ is expressed in somewhat opaque language which is not easy to apply even to information containing a "content" or "purpose" element. The WPO and the TGN appear to provide a reasonable clear and sustainable explanation of the meaning of the phrase. This explains why the Directive, the WPO, the TGN and the Durrant judgment must be read together and applied by using a structured approach incorpor]ating the relevant elements of all four sources[72]. The IT reached its decision using a structured approach which applied all four documents and which reached a balanced and sustainable decision. Even though the full explanation for the conclusion it reached is not available since it is contained in the closed decision, sufficient is revealed about the relevant evidence in the decision which, when taken with the facts now known, shows that there is no reasonable prospect of a tribunal finding that the IT's decision was in error. Issue (7) - 'Personal data' issues - third party DPA section 1(1) personal data issue 1. Issue (7) Issue (7) is as follows: Whether the three witness statements are the individual makers' or other third party's personal data of the kind defined in section 1(1) of the DPA ("the third party DPA section 1(1) personal data issue") 2. How the issue arises Both the IC and the IT reached the same very significant, and by DK overlooked these highly significant passages in, respectively the IC's decision notice and the IT's decision: "15. … Although the Commissioner is satisfied that all of the information is [DK's] personal data, he recognises that it is also the [district judge's] personal data, in addition, the material includes personal data about other third parties." This finding was repeated and adopted by the IT in paragraphs 48 – 49 of its decision. The effect of these provisions is noted by The Law of Freedom of Information as follows: " Sub-sections 4)(2) – (4) … contain what can only be described as convoluted exemptions relating to personal data about individuals other than the applicant. In order to be exempted from the right of access under the [FOIA], the personal data must satisfy one of two conditions. … Condition 1A: The data falls within section 1(1)(a) – (d) of the [DPA] and disclosure to a member of the public would contravene any of the data protection principles … The net effect of Condition 1A is that under the FOIA personal data about third parties may be obtained by members of the public from public authorities provided that the public authority would be permitted under the 1998 Act to disclose such data to both the data subject himself and the third party".[73] Such information is exempt and the duty to confirm or deny does not arise. The first data protection principle states that personal data which is sensitive personal data shall not be processed unless one of the conditions in each of Schedules 2 and 3 are met. The district judge's witness statement is sensitive personal data because it "consists of information as to the commission or alleged commission by him of any offence.[74]" None of the conditions in either of the schedules are met. In particular, the district judge has not given his explicit consent to the processing of the personal data – that is to the disclosure to DK of his statement and the other documents summarising part or all of his statement[75]. The only other condition that could conceivably be relevant and met relates to information whose processing is necessary for the administration of justice. Since no action will be taken against the district judge on the basis that there is no evidence of any wrongdoing of any kind, it cannot be said that the information is necessary or even potentially relevant for the administration of justice. In fact, it should be taken into account that the district judge was asked by DK in a letter dated 5 September 2005 whether he had made a statement to the police about the tape in question and the Diary Manager at the district judge's court replied on 7 September 2005 that the district judge could not make comment about individual cases and correspondence received and he therefore made no comment with regards to the letter. DK then wrote to the Senior Civil Judge in the same court on 9 September 2005 informing that judge of the contents of his exchange with the district judge and repeating his request for the district judge's comments. The letter informed the Senior Civil Judge that unless he got an answer, he would have no alternative than to raise a formal judicial complaint against the district judge. The Senior Civil Judge replied on 14 September 2005 who replied that he saw no evidence to suggest that the district judge had failed to cooperate with the police enquiries and declined to respond further to DK's letter. These exchanges show that the district judge, if asked directly to agree explicitly to the disclosure of his statement would either not respond at all or would respond curtly that he was not prepared to give his explicit consent. 3. Significance of section 40(2) of the FOIA and its applicability to the witness statement The effect on DK's information request under the FOIA for disclosure of the statement of the district judge and for a data subject request for the same statement under the DPA is as follows[76]: (1) The statement, being any document in which his statement or statements is or are set out or summarised or discussed, is the sensitive personal data of the district judge which is recorded as part of a relevant filing system[77]. (2) The statement is one which: (i) Constitutes DK's personal data which do not fall within section 40(1) of the FOIA and it is therefore exempt; (ii) Constitutes the maker of the statement's personal data and it is therefore exempt because: (a) The data it contains falls within paragraph (c) of the definition of data in section 1(1) of the DPA[78]; (b) Its disclosure would contravene the First Data Protection Principle set out in Schedule 1 in that it would involve processing personal data in circumstances in which none of the conditions in Schedule 2 or Schedule 3 are met[79]; and. (c) In particular in that regard, the first condition referred in each of these Schedules is not met since the maker of each statement has not given his consent or his explicit consent to that disclosure[80]. (iii) The duty to confirm or deny does not arise because: (a) The data it contains is exempt information by virtue of section 40(1); and (b) The giving of the confirmation or denial would not have to be given to comply with section 1(1)(a) of the FOIA[81]. (3) The exemption for the data is one of absolute exemption by virtue of section 2(2)(f) of the FOIA because they are exempt by virtue of section 40(1) and a combination of sections 40(2) and 40(3)(3)(a)(i) of the FOIA. (4) The statement may not therefore be processed under the FOIA and may only be processed under the DPA. (5) The statement is exempt from disclosure when processed under the DPA because: (i) Its disclosure is prohibited because the maker of the statement is a data subject for the purposes of the statement, the personal data of that data subject is sensitive personal data and that data subject has not given his explicit consent to its disclosure to DK and neither the First Data Protection Principle nor Condition 1 nor Condition 6(a) nor 7(1)(a) nor any other of the Conditions of Schedule 3 have been met [82]; (ii) It is not reasonable in all the circumstances to comply with DK's request because the maker of the statement has not consented to the disclosure of the information and it is not reasonable for NP to comply with that request despite the non-approval because NP police have a duty of confidentiality to the maker of the statement and that make has expressly refused his consent[83]; and (iii) The disclosure is for the purposes of the prevention or detection of crime or the apprehension or prosecution of offenders, for those purposes that disclosure is not exempt from the first data principle in relation to compliance with Schedule 3 of the DPA, the maker of the statement, being one of its data subjects, has not given his explicit consent to its disclosure to DK and neither the First Data Principle nor Condition 1 nor Condition 6(a) nor 7(1)(a) nor any other of the Conditions of Schedule 3 have been met[84]. (iv) The statement may, therefore, not be disclosed by NP to DK under neither the FOIA nor under the DPA even though it is personal data because it is also the sensitive personal data of the maker of the statement. (v) The same conclusions arise, mutatis mutandis, in relation to the statements of the other two witnesses and their respective failures to give explicit consent in writing to their disclosure to DK. 4. Conclusion The statements are not disclosable whether or not they are DK's personal data although the fact that they are, simultaneously, the personal data of both DK and their respective makers provides significant additional reason for the correctness of the IT in refusing disclosure. Issues (8) – (12) - Issues that have been answered in other issues or do not arise Issue (8) is as follows: Whether the three witness statements are both DK's and the individual maker's personal data and, if so, what the effect of that is ("the joint personal data issue") This issue has been answered in issue (7) above. Issue (9) is as follows: Whether the witness statements are exempt information as having been held by NP for the purposes of an investigation which NP had a duty to conduct with a view to it being ascertained whether a person should be charged with an office (the " FOIA section 30(1) issue") This issue does not arise. The IT did not address it since it decided that the IC correctly decided that DK's information request under the FOIA should be answered as a data subject request under the DPA. Issue (10) is as follows: Whether, if section 30(1) of the FOIA is engaged, the public interest in maintaining the exemption from disclosure is overridden by the public interest in disclosure (the "FOIA section 2(2)(b) issue") This issue does not arise. The IT did not address it since it decided that the IC correctly decided that DK's information request under the FOIA should be answered as a data subject request under the DPA. Issue (11) is as follows: Whether, if the witness statements are personal data that are absolutely exempt under sections 40(1) and/ or 40(2) of the FOIA, they are or would be disclosable to DK under the DPA (the "DPA disclosure issue") This issue has been answered in issue (7) above. The answer is "no". Issue (12) is as follows: In the light of the answers to issues (3) – (12), whether DK's proposed appeal to the UT has a realistic prospect of success ("the realistic prospect of success issue"); The answer is that DK's proposed appeal to the UT has no prospects of success on the grounds that the UT has no jurisdiction to hear it, the decision of the IT that DK's information request had to be dealt with as a subject access request under the DPA discloses no arguable prospect of success and that, in any event, the finding of the IC that the relevant statements are the personal data of the makers of those statements, which was challenged in the IT and is not subject of the proposed appeal to the UT, provides a conclusive answer to DK's proposed appeal and to his information request under the FOIA. Issues (13) – (15) - Cart Issues Issue (13) is as follows: Whether the proposed appeal to the UT raises an important point of principle or practice ("the important point of principle or practice issue") The only point of principle or practice of any importance relates to the meaning of personal data, the difficulties of interpreting that phrase in the light of the Durrant judgment, the lawfulness of the TGN. However, these potentially important points of principle do not arise for consideration in this potential appeal since the appeal is bound to fail on the third party personal data point arising under section 40(2) of the FOIA. Any appeal on the Durrant point would therefore be academic. Moreover, the facts in this case are such that the relevant information is DK's personal data whatever interpretation is placed on that phrase. The Durrant point would, on that ground as well, not arise save as an academic question. Issue (14) is as follows: Whether there is some other compelling reason why the UT should hear the proposed appeal ("the other compelling reason issue") There is no other compelling reason why the UT should hear the proposed appeal. Issue (15) is as follows: In the light of the answers to issues (1) – (15), whether permission to proceed should be granted under CPR 54.7A(7) ("the Cart issue") The answer is no. In the light of that answer, I do not grant DK permission to extend time in which to lodge the claim form. The application is therefore dismissed as being out of time and, on its merits, as having no prospects of success[85]. Issue (16) - The costs decision Cart application Issue (16) is as follows: Whether permission should be granted to proceed in relation to the UT judge's dismissal of DK's application for permission to appeal the IT's costs decision dated 15 June 2009 (the "costs decision issue") DK seeks permission to appeal the costs decision of the IT and seeks to judicially review the UT judge's refusal to grant permission to appeal that decision. The application raises no point of law and is, in any event hopeless. The costs decision of the IT was one which was well within the margin of discretion permitted to a tribunal in considering costs issues, was fully reasoned and was, in any event, clearly reasonable and one it was entitled to come to. DK's application for permission to seek a judicial review of the IT's costs decision is refused as being out of time, as one for which permission to extend time will not be granted and as one which raises no point of law and is totally without merit. H. Conclusion - FOIA Cart claim The order will be: (1) The application dated 27 April 2013 for a declaration that the claim form in CO/2904/2013 was filed within time is dismissed. (2) The alternative application to extend time for filing the claim until 11 March 2013 is dismissed. (3) The claim was not filed within time as provided for in CPR 54.7A(3) or within any reasonable period thereafter. The application for permission is dismissed on this ground. (4) Application for permission to apply for judicial review of the decisions of Upper Tribunal Judge Jacob dated 4 September and 1 October 2012 is dismissed on the grounds that the claim does not disclose an arguable case. I. Discovery and DPA application – Claim CO/3391/2008 1. Introduction The application that I am concerned with was issued as recently as 24 April 2013 but its origins go back to the first oral permission hearing on 9 March 2010 in the three judicial review claims issued in 2008. At that hearing, DK sought an adjournment to enable the renewed permission applications to be heard after, and in the light of, his attempts to obtain a copy of the district judge's statement dated 6 February 2006 and other documents through his FOIA request to NP. This was the same statement that he had sought in his FOIA request that I have dealt with in this judgment. I granted an adjournment on those and other grounds and gave directions for the resumed hearing which was fixed for 6 October 2010. This was again adjourned because DK had not yet obtained documents he said that he needed for the hearing, prepared the necessary hearing bundle or served an application seeking an order for the disclosure of the district judge's statement. DK then issued the first application for disclosure in claims CO/3391/2008 and CO/11166/2008 on 11 November 2010 seeking an order for the disclosure of that statement. The application sought the order without a hearing which would provide for the disclosure of the statement to DK prior to the adjourned permission applications hearing fixed for 17 December 2010. It was accompanied by a witness statement which explained that, in DK's view, it was necessary for the judge dealing with his renewed permission hearing to have sight of this statement which was the subject of the appeal from the IT that awaited a hearing in the Administrative Court[86]. The application was referred to me and, in an order dated 10 December 2010, I dismissed the application with these reasons: "The hearing is a permission hearing at which [DK] needs to show an arguable case. The hearing does not need the [district judge's] witness statement and the copies of the [Newcastle Combined Court] logs [also being sought]. If permission is granted, and it can be seen that these documents are needed for the full oral hearing, directions as sought can then be given." This order was served on DK by post on 10 December 2010 as is clear from the Administrative Court electronic records. DK applied for an adjournment of the hearing at the hearing because he had not then received the logs that he had been seeking from the Newcastle Combined Court. He did not renew his application for the district judge's statement at the same time and nothing more was heard of the application until a fresh application was issued on 12 February 2013 seeking disclosure of the district judge's statement and the two further statements, being the three statements still in contention in the UT Cart application. This application was issued in both CO/3391/2008 and CO/11166/2008. This application was replaced by a third application issued on 24 August 2013 only in CO/3391/2008 which is the application with which I am now concerned. 2. The application The application seeks an order that NP release copies of the three witness statements which are referred to as: "… [having been] created during the investigation of a complaint against [the district judge] and were subject to actions in the IT in April 2009." The application is made on two bases: (1) in CO/3391/2008 to enable the outstanding renewed permission application to be fairly and lawfully considered and (2) under CPR 31.17 for an order for disclosure against a person who is not a party to the proceedings. The application is only made against NP who is an interested party in CO/3391/2008 in a judicial review claim seeking the quashing of a decision of the Independent Police Complaints Commission's decision dated 20 December 2007. That decision dismissed his appeal against the dismissal by NP of his complaint against the Detective Inspector in charge of the police investigations into DK's complaint against the district judge. The original complaint related to 14 specific alleged incidents of misconduct by the Detective Inspector in relation to the manner in which the investigations were carried out. The application is not made against the IPCC who had copies of the three statements as part of the file that had been passed to them by NP to enable it to consider, and dismiss, DK's appeal. The application under CPR 31.17 is made against NP as a non-party. CPR 31.17 provides: (4) This rule applies where an application is made to the court under any Act for the disclosure by a person who is not a party to the proceedings. … (3) The court may make an order under this rule only where- (a) the documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and (b) disclosure is necessary in order to dispose fairly of the claim or to save costs. The application does not identify under which Act it is being made but there are two relevant Acts, being section 34(2) of the Superior Courts Act 1981 ("SCA") and section 7(9) of the DPA, which are applicable and I will consider the application under both of them. It follows that the application is being made against NP: (1) as an interested party in the judicial review brought by DR against the IPCC under CPR 54.16(2) and 31.6; (2) by way of an application under section 7(9) of the DPA against NP's refusal to provide copies pursuant to DK's subject access request dated 17 January 2008 and (3) by way of an application under section 34 of the SCA coupled with the relevant CPR, being CPR 25.1(1)(j) and 31.17(3). DK has recently suggested in emails to the court that the court has no jurisdiction to hear and determine his application because it was determined by the order dated 10 December 2010 so that the issue is, as it was put, res judicata. However, the application was not finally determined by that order. An interim or procedural order is never final and may be reviewed or set aside by a later procedural order, particularly as here when there are changed circumstances. Moreover, in judicial review proceedings, it is clear that an order refusing disclosure prior to the grant of permission by way of a paper refusal may be the subject of a fresh application made at an oral hearing or subsequent consideration of the leave application. Finally, this application is being made in changed circumstances in that it is now allied, as it had not previously been, with applications under the SCA and the DPA. These applications may be made even if the procedural decision under CPR 54.16 stands. It would be unjust, therefore, not to permit the CPR 54.16 application to be reargued given those changed circumstances. I must decide the order in which I consider the applications. The natural starting point is the application under the DPA. This application, if successful, would be determinative of DK's applications for disclosure of the witness statements, it is a natural adjunct to the Cart application and if I found that DK was entitled to the disclosure of the statements pursuant to his subject access request, he would be entitled to disclosure without any exercise of discretion. Equally, if he is not entitled to disclosure of his personal data under the DPA, that would be a highly relevant consideration to take into account when deciding his application on the other two grounds. 3. Application under section 7(9) of the DPA Section 7(9) of the DPA provides that: "If a court is satisfied on the application of any person who has made a request under the foregoing provisions of this section that the data controller in question has failed to comply with the request in contravention of those provisions, the court may order him to comply with that request." DK requested NP to supply him with various documents by a request made under section 7(1) in a request dated 17 January 2008. This request was made as a direct consequence of the IC informing DK in a letter dated 17 January 2008 advising him that the information he had requested from NP was his personal data and that he was, in consequence, closing DK's FOIA complaint since the request should have been made to and processed by DK under the DPA. NP supplied all of the documents that were the subject of the subject access request save for the three statements I am concerned with and, meanwhile, the IC and the IT on appeal affirmed NP's failure to supply them under the FOIA on the grounds that any request should be dealt with under the DPA. DK's challenge to that approach has only finally been dismissed by the Cart decision in this judgment. It follows that DK is left with his unresolved attempts to obtain copies of these statements and that section 7(9) of the DPA provides a statutory means of seeking to overturn NP's DPA refusal to supply them. This route is clearly open to DK in this court since his application to this court is wide enough in its terms to encompass a section 7(9) application which may be made to the High Court and which it is highly convenient for me to decide as an adjunct to the FOIA application that I have just decide with which it is closely connected. DK must show that the NP refused his application in contravention of the provisions of this Act. No reasons were given for that refusal so I must consider whether the unreasoned decision contravenes the DPA. In doing so, I can and do rely on my decision just reached under the FOIA to the effect that the statements are not disclosable and may not be disclosed to DK under either the FOIA or the DPA[87]. I did not explain in that earlier part of the judgment why section 7(6) of the DPA is applicable to excuse NP from disclosing the statement. Clearly, NP could not disclose it to DK, even though it contains his personal data, without disclosing the personal data of "another individual" – namely the maker of the statement being the district judge. The district judge has through the court manager and the senior civil circuit judge made it clear that he does not consent to his statement being supplied to DK and, in any event, would only have provided the statement to the police on receiving an assurance that the statement would only be used in court if it was necessary to refer to it there. Given DK's adamant wish to have the district judge prosecuted and his blind refusal to accept that the other evidence he has seen leads to the inexorable conclusion that the tape was not tampered with and no crime has been committed by anyone in relation to such tampering, it would be wholly unreasonable for NP to disclose its contents to DK. I repeat my reasoning there. The failure to obtain and the absence of any agreement of the district judge to his statement being disclosed to DK is an absolute and irrevocable bar to its disclosure to DK. The application under the DPA is therefore refused since NP's refusal to disclose it was in accordance with the law. 4. Application under CPR 54.16 Applicable principles. The following principles apply to disclosure in judicial review proceedings: (1) Disclosure is dealt with under a combination of CPR 54.16 read with CPR 31.6 and 31.12. In other words, the normal disclosure principles must be read together with judicial review rules of evidence. (2) No written evidence disclosed prior to permission being granted unless the court orders otherwise[88]. (3) An interested party is under no obligation to provide discovery before or after permission has been granted. In exceptional cases, the court may order disclosure but it is virtually unheard of for an interested party to be ordered to disclose documents prior to permission being granted. (4) The reason why disclosure is rarely ordered before permission has been granted is that the test for permission is a relatively modest one: does the claim have reasonable prospects of success. Because of the need for speed in judicial review proceedings and given that low threshold, issues of disclosure should normally await the granting of permission – if permission is to be granted at all. If permission is not granted, disclosure will not then be ordered. (5) The exceptional circumstances in which disclosure is considered and possibly ordered prior to permission being granted is where the claim cannot be considered for permission because of the absence of a vital document but the surrounding circumstances suggest that once that document is obtained, there is a good prospect of the claim being granted permission. (6) If documents are disclosed, they may not be used in any other proceedings or judicial review claims or disclosed to any other person or party unless the court expressly sanctions that use or other disclosure. Basis of DK's application. The application is made in the judicial review claim against IPCC in which a quashing order is sought to quash the IPCC's decision to dismiss DK's appeal. No clear judicial review grounds are put forward in support of the claim and the only grounds that can be identified are that the decision was Wednesbury unreasonable in that it failed to take into account highly relevant material and/or was irrational as being one that no reasonable IPCC decision-maker could have made. The basis for DK's application for discovery is set out in his third witness statement dated 18 April 2013 accompanying the application notice. This document serves as both a witness statement and a written submission. DK's overall contention is that disclosure of the district judge's statement and the other two factual statements is essential if there is to be a fair consideration of his application for permission to bring a judicial review of the IPCC's decision to dismiss his appeal. The gist of DK's complaint in the judicial review was that the shoddy manner in which his original complaint to NP was investigated led to a decision that no criminal conduct had occurred and no charges or prosecutions would result. This complaint is fleshed out by reference to 14 specific conduct complaints against the investigating officer. All these complaints were dismissed. DK appealed against that dismissal and the IPCC dismissed that appeal. In doing so, it is contended that the IPCC, who had been supplied by NP with its investigation file that contained copies of the statements in issue, dismissed the appeal in a Wednesbury unreasonable manner. He seeks an order quashing the decision and mandatory orders that NP's investigation into his complaint against the district judge be repeated from scratch during which the district judge should be re-interviewed under caution and that the IPCC should obtain all relevant documentation relating to the original investigations from NP and the CPS and provide copies to DK. DK's contentions in support of the wholly unreasonable nature of the IPCC's consideration of the appeal are convoluted but may best be summarised as follows. The background to the application was a civil claim brought by DK against a defendant which was struck out by the court. A circuit judge in a previous hearing in that case had ordered DK to pay the opposing party's costs of an earlier hearing, such costs to be assessed by a district judge. The previous order was defective in omitting certain words and the district judge, who had been assigned the costs hearing, concluded that he had no jurisdiction to assess the costs to be paid by DK and adjourned the hearing. It was clear from other independent evidence that the district judge had made a material statement in the presence of DK and the defendant's two legal representatives before adjourning the hearing. This statement amounted to an assurance he had no jurisdiction to issue an order that amended the circuit judge's previous order so as to provide himself with jurisdiction to assess DK's costs liability to the defendant. The district judge subsequently reneged on that assurance by issuing an order without notice that amended the earlier order so as to give himself that jurisdiction. DK subsequently obtained the court tape of the district judge's hearing and when it was transcribed he found that the assurance that he believed that the district judge had given was not to be found on the transcript. However, there appeared to be gaps in the tape recording and he concluded that the assurance had been deliberately edited out by and that that had occurred as a result of the actions or the instructions of the district judge whose motive in committing this grave criminal offence was to cover up his judicial error in reneging on his assurance that he would not issue an amended order that he had no power to issue. Disclosure is sought of the district judge's statement or statements that he made to the two police investigating officers who interviewed him at different states of NP's investigation into DK's complaint that the district judge had committed a criminal offence in tampering with the tape. It is vital that these documents should be considered by the judge determining DK's permission application in his judicial review claim against the IPCC since the contents will provide clear evidence of the IPCC's failure to consider the evidence provided by the statement properly or to appreciate that the district judge was guilty of perverting the course of justice. Without a sight of that statement, it would be unlikely that the district judge's guilt could be established. The statements are therefore crucial pieces of evidence because there is clear independent evidence that the district judge assured DK that he had no jurisdiction to amend the previous defective costs order. It is therefore inconceivable that his statements fail to deal with that assurance. It follows that the district judge either accepts that he had given that assurance or asserts that he had in fact stated at the hearing that he did not have jurisdiction to amend the costs order. If the district judge accepted that he gave an assurance, the investigating officer should then have questioned him further and under caution as to why he subsequently issued the amending order that he had stated agreed that he had no jurisdiction to issue and why the tape transcript shows that the tape had had that assurance edited out of it. The likely outcome of such inquiries would be that the investigating officer would be found to have carried out a wholly inadequate interview of the district judge which had led to the erroneous decision not to prosecute. Had the judge been properly interviewed, it is likely that his evidence would have led to his being prosecuted. If, on the other hand, the district judge stated that he in fact informed the hearing that he had jurisdiction to amend the order, the only reasonable conclusion that could be drawn would be that the district judge had lied to the police given the strength of the independent evidence showing what he had in fact assured those attending the hearing. Furthermore, if it was shown that he had lied, it would give rise to the inevitable conclusion that he had caused the tape to be tampered with since he could have been no other motive for lying other than to cover up his criminal behaviour in tampering with the tape. Either way, DK's complaints about the investigating police officer would be shown to have been justified since it would be clear that he had conducted the investigation in a wholly inadequate manner. Moreover, the contents of the statement would show that the district judge had not been properly interviewed and that he should be re-interviewed under caution. In summary, the IPCC should have drawn the following conclusions: (1) DK's complaints about the investigating officer's inadequate investigation were justified; (2) NP's exoneration of the investigating officer was unjustified; (3) The IPCC should have recommended that NP's investigation of DC's complaint should be undertaken afresh with the district judge being fully and thoroughly interviewed under caution. It is overwhelmingly in the public interest for a fresh investigation to be carried out and for the district judge to be interviewed under caution and prosecuted given his unlawful conduct. Moreover, the disclosure now sought should have been ordered by the IT in the FOIA proceedings and could have been provided by NP in this claim in any event so that disclosure should now be ordered. Without sight of the statement, it would be impossible for the Administrative Court to take a fair and balanced view as to whether there was a reasonable prospect of DK showing that the IPCC's decision to dismiss his appeal was erroneous and that a re-investigation of DK's complaint by NP should take place. In further support of his contentions, DK alleged that NP, the IPCC, the IC and IT and the Administrative Court ("the establishment" as he compendiously described them in his witness statement) have obstructed his attempts to bring the district judge to justice because of a wish to "protect one of its own". Discussion. DK has not referred in his supporting statement to his own statement which he provided to the investigating officer nor to any of the documents that he has obtained from NP through his subject access and information requests. However, many of the documents that were disclosed have since been disclosed by DK in the judicial reviews he is still pursuing. These documents show that: (1) The district judge in fact stated at the hearing that he would arrange for the order to be perfected by the court. This statement was erroneously transcribed from the tape as being that the order would be "effected" and was interpolated by DK as an assurance that the district judge would not himself "effect" the amendment of the order because he had no jurisdiction to do this. The defendant's legal representatives taken during the hearing recorded the district judge as stating that the order would be amended but by the circuit judge who made it and not by the district judge. It follows that the evidence clearly shows that the district judge assured those present that the order would be perfected by the court leaving it open as to whether the judge making that order would be the circuit judge or himself. (2) The forensic technical examinations of the tape showed on evidence of their being tampered with and that it only a very highly skilled technician would be capable of tampering with the tape without leaving any traces of that tampering. (3) The district judge had no motive for tampering with the tape as alleged. He stood to gain nothing by doing so, he had no malicious intent and the suggestion by DK that he had crossed swords with him in a previous case in a way that had led to him being ill-disposed towards DK was not supported in any way by the evidence produced by DK in the judicial reviews. (4) There was virtually no opportunity for the district judge to tamper with the tape even if he had the means of doing so. (5) DK's appeal to the circuit judge against the district judge's amendment order was dismissed on the grounds that the amendment was correctly made under the "slip rule" and was one that the district judge had jurisdiction to make. (6) There was therefore no evidence that the district judge had lied to the police investigating officers when giving his two statements. (7) The investigating report summarised the second statement as being very short and as containing a vehement and emphatic denial that he had tampered with the tape and a clear and cogent explanation that he had referred to the "perfecting" of the order not the "affecting" of the order so that he had stated that he did have jurisdiction to perfect the order and that he would himself perfect it[89]. It is also relevant to take account of the fact that the statements are exempt from disclosure from NP and from the IPCC by virtue of the DPA and FOIA so that there would have to be exceptional circumstances for disclosure to be ordered since to do so would circumvent the provisions of these Acts. Conclusion. The permission application can be fairly and fully considered without sight of the district judge's or the two legal representative's witness statements. The IT correctly refused to order their disclosure under the FOIA and it is clear that they are not disclosable under the DPA. In those circumstances, the application under CPR 54.16 is dismissed. 5. Application under CPR 25.1(1)(j) and 31.17(3) These provisions permit a party to proceedings to apply for disclosure from a non-party subject to the conditions set out in CPR 31.17(3). Neither of those conditions are applicable to DK's application. Firstly, the documents sought are not "likely to support the case of [DK] or adversely affect the case of [the IPCC]"[90]. For the reasons set out above[91], the witness statement is likely to adversely affect DK's case and support the IPCC's case. Secondly, the documents are not "necessary in order to dispose fairly of the claim or to save costs"[92]. In fact, the statements are not necessary at all since it is clear that they support the documents already available which show that the district judge gave no assurance of the kind contended for by DK, did not tamper with the court tape and committed no offence. Furthermore, given that these statements are the district judge's personal data which has exemption from disclosure under the DPA, it would be wrong to exercise the exceptional discretion available by virtue of these provisions to circumvent the DPA given that their disclosure is not necessary for the purpose of the fair and just disposal of this judicial review claim. Conclusion. The application under each of the three heads is dismissed. J. Overall Conclusion The following orders will be made: (1) In CO/2904/2013. (1) The application for a declaration that the claim form in CO/2904/2013 was filed within time is dismissed. (2) The alternative application to extend time for filing the claim form until 11 March 2013 is dismissed. (3) The claim was not filed in time as provided for in CPR 54.7A(3) or within a reasonable period thereafter. The application for permission is dismissed on this ground. (4) Application for permission to apply for judicial review of the decisions of Upper Tribunal Judge Jacob dated 4 September 2012 and 1 October 2012 are dismissed on the grounds that the claim does not disclose an arguable case. (5) No order as to costs. (2) In CO/3391/2008 (6) The application dated 24 April 2013 seeking disclosure of documents under CPR 25.1(1)(j) and 31.17(3) and section 7(9) of the Data Protection Act 1998 is dismissed. (7) No order as to costs. HH Judge Anthony Thornton QC Appendix THE TRIBUNAL PROCEDURE (FIRST-TIER TRIBUNAL) (GENERAL REGULATORY CHAMBER) RULES 2009 S.I. 2009 No. 1976 (L. 20) Prevention of disclosure or publication of documents and information 14.—(1) The Tribunal may make an order prohibiting the disclosure or publication of— (a) specified documents or information relating to the proceedings; or (b) any matter likely to lead members of the public to identify any person whom the Tribunal considers should not be identified. (2) The Tribunal may give a direction prohibiting the disclosure of a document or information to a person if— (a) 9(a) the Tribunal is satisfied that such disclosure would be likely to cause that person or some other person serious harm; and (b) the Tribunal is satisfied, having regard to the interests of justice, that it is proportionate to give such a direction. (3) If a party ("the first party") considers that the Tribunal should give a direction under paragraph (2) prohibiting the disclosure of a document or information to another party ("the second party"), the first party must— (a) exclude the relevant document or information from any documents that will be provided to the second party; and (b) provide to the Tribunal the excluded document or information, and the reason for its exclusion, so that the Tribunal may decide whether the document or information should be disclosed to the second party or should be the subject of a direction under paragraph (2). (4) If the Tribunal gives a direction under paragraph (2) which prevents disclosure to a party who has appointed a representative, the Tribunal may give a direction that the documents or information be disclosed to that representative if the Tribunal is satisfied that— (a) disclosure to the representative would be in the interests of the party; and (b) the representative will act in accordance with paragraph (5). (5) Documents or information disclosed to a representative in accordance with a direction under paragraph (4) must not be disclosed either directly or indirectly to any other person without the Tribunal's consent. (6) The Tribunal may give a direction that certain documents or information must or may be disclosed to the Tribunal on the basis that the Tribunal will not disclose such documents or information to other persons, or specified other persons. (7) A party making an application for a direction under paragraph (6) may withhold the relevant documents or information from other parties until the Tribunal has granted or refused the application. (8) Unless the Tribunal considers that there is good reason not to do so, the Tribunal must send notice that a party has made an application for a direction under paragraph (6) to each other party. (9) In a case involving matters relating to national security, the Tribunal must ensure that information is not disclosed contrary to the interests of national security. (10) The Tribunal must conduct proceedings and record its decision and reasons appropriately so as not to undermine the effect of an order made under paragraph (1), a direction given under paragraph (2) or (6) or the duty imposed by paragraph (9). Decisions 38.— (1) The Tribunal may give a decision orally at a hearing. (2) Subject to rule 14(10) (prevention of disclosure or publication of documents and information), the Tribunal must provide to each party as soon as reasonably practicable after making a decision which finally disposes of all issues in the proceedings (except a decision under Part 4)— (a) a decision notice stating the Tribunal's decision; (b) written reasons for the decision; and (c) notification of any right of appeal against the decision and the time within which, and manner in which, such right of appeal may be exercised. Practice Note issued by the First-tier Tribunal (Information Rights) Practice Note Closed Material in Information Rights Cases 1. It is a general principle of tribunal practice that hearings are in public with all parties entitled to be present throughout; and that the documents provided to the tribunal by any party are seen also by all the other parties. 2. In the information rights jurisdiction, there are some cases in which this principle must be modified. 3. In some appeals, the tribunal is able to make its decision without looking at the information whose disclosure is disputed. These can and do proceed normally. Sometimes however, the public authority cannot properly explain its case without showing the disputed information to the tribunal. Put another way, sometimes the tribunal cannot check, on behalf of the citizen, that the public authority is entitled to an exemption under the Freedom of Information Act 2000 or the Environmental Information Regulations 2004, without seeing the disputed information for itself. Obviously, though, disclosure of the information to everyone in the proceedings would defeat the object of the exercise. There is no point in deciding whether information should or should not be disclosed, if it already has been. Similar difficulties can occur with supporting evidence and arguments. 4. In these circumstances the law permits the tribunal to deviate from the normal rule but only so far as is necessary to ensure that the purpose of the proceedings is not defeated. Any such deviation must be authorised by a district judge. 5. Rule 14(6) GRC Rules empowers the tribunal to give a direction that certain documents or information be disclosed to the tribunal but not to the other parties to the appeal. The Information Commissioner and the public authority are normally under a duty to disclose to the tribunal all the material they hold which is relevant to the appeal. Should they wish any of that material to be withheld from the requester then one of them must apply to the district judge for a direction to that effect. 6. The application must be in writing. It should include a draft of the requested direction and enclose a copy of material which the applicant seeks to withhold. The reasons for withholding the information must be given. In respect of the disputed information it will be sufficient to say that the tribunal needs to see it in order to evaluate the evidence properly. In the case of other material, greater explanation may be required. On receipt of the application, tribunal staff will, unless there is good reason not to do so, tell all the other parties that it has been made; but they will send a copy of the application only to the district judge. 7. When considering the application, the district judge will first ask whether it is possible for a hearing to take place within the normal rules of disclosure. If yes, (s)he will give directions accordingly. If not, the district judge will make a direction under Rule 14(6) stating the information which is to be withheld. It is common to refer to the withheld information as "closed material". 8. Care must be taken, when drafting the direction, not to give away the nature or content of the withheld information. That said, it may be possible, by providing an index to the documents, for example, to give an idea of what material has been withheld. The public authority and the Information Commissioner will be expected to assist the Tribunal in this respect. 9. The district judge will limit non-disclosure to what is necessary. For example, it may be possible to edit a document so that at least some of it is disclosed even though some has to be withheld. If the district judge's provisional view is that some but not all of the material should be withheld, tribunal staff will write to the requesting party with a new proposed draft. This is to give the applicant for the direction a chance to add further comments and to ensure that the later draft is clear and correct. 10. Once the district judge makes a direction under Rule 14(6) the Tribunal must conduct the proceedings so as not to undermine its effect. All parties must co-operate in this. The district judge will also be vigilant as to whether, as events unfold, the direction might require amendment. 11. There are likely to be consequences for any hearing which takes place. It may be that all the parties being present for all of the hearing would undermine the effects of a Rule. If so, Rule 35(4)(c) permits the tribunal to exclude one of the parties for some of the time. 12. If this happens, the district judge will explain to the excluded party, usually the citizen, what is likely to happen during the closed part of the hearing. The district judge may ask if there are any particular questions or points which (s)he would like put to the other parties while (s)he is absent. 13. Before the closed part of the hearing ends, the tribunal should discuss with the remaining parties:- (a) What summary of the closed hearing can be given to the excluded party without undermining the Rule 14(6) direction. (b) Whether, in the course of the closed session, any new material has emerged which it is not necessary to withhold and which therefore should be disclosed. 14. The tribunal's final decision and reasons must also be recorded so as not to undermine the effect of any Rule 14(6) direction. 15. We are still perhaps working out the practical effects of Rules 38(2) and 14(10)[93]. They do not mean that a closed part of the decision is always needed whenever closed material has been seen. Where the Tribunal orders disclosure it may be necessary for part of the decision to remain closed until after the period for an appeal has expired. 16. It may be prudent in complex cases for a draft of the decision to be shared with the public authority/IC in advance to reduce the risk of inadvertent disclosure. 17. Tribunal practice may require further modification in cases involving matters relating to national security. See Rule 14(9). May 2012. It is ordered that: 1. In CO/2904/2013: (1) The application for a declaration that the claim form in C0/2904/2013 was filed within time is dismissed. (2) The alternative application to extend time for filing the claim form until 11 March 2013 is dismissed. (3) The claim was not filed in time as provided for in CPR 54.7A(3) or within a reasonable period thereafter. The application for permission is dismissed on this ground. (4) Application for permission to apply for judicial review of the decisions of Upper Tribunal Judge Jacob dated 4 September 2012 and 1 October 2012 are dismissed on the grounds that the claim does not disclose an arguable case. (5) No order as to costs. 2. In CO/3391/2008 (1) The application dated 24 April 2013 seeking disclosure of documents under CPR 31.17 and section 7(9) of the Data Protection Act 1998 is dismissed. (2) No order as to costs. 3. This order is to take effect on, and any time limit is to start running from the date of this order and not 20 August 2013. HH Judge Anthony Thornton QC Dated this 11th day of September 2013 By the Court Note 1    The CO number assigned to the case by the Administrative Court following its transfer from the Court of Appeal to the Administrative Court. A new file was opened by the UT and the appeal was allocated a fresh number by the UT and the file in CO/3349/2010 was automatically closed.     [Back] Note 2    This is a reference to the practice governing this application. The practice has since been changed and some non-Cart applications that are refused on paper may no longer be renewed at an oral hearing.     [Back] Note 3    Section 13(8)(c) of The Tribunals, Courts and Enforcement Act 2007.    [Back] Note 4    [2011] UKSC 28.    [Back] Note 5    Cart v The Upper Tribunal [2011] UKSC 28.    [Back] Note 6    Report of Sir Andrew Leggatt, Tribunals for Users – One System, One Service (TSO, March 2001).    [Back] Note 7    [2012] EWHC 3930 (Admin), 20 November 2012.    [Back] Note 8    The case in such circumstances might possibly be brought within the “some other compelling reason” category for granting a Cart permission. Even on that hypothesis, DK would have a struggle to succeed given the absence of any credible explanation for a delay of nearly 6 months.     [Back] Note 9    “Processing” is the word used to describe the use of data which is regulated. “Processing” is defined in section 1(1) of the DPA to include obtaining, recording or holding information or data or carrying out any operation or set of operations on the information or data including (amongst other activities) disclosure of the information.    [Back] Note 10    The following summary is a summary of the provisions in sections 1, 2, 4 and 7 and schedules 1 – 4 of the DPA that are relevant to this case.    [Back] Note 11    The following summary is a summary of the provisions in sections 1, 2 and 40(1) and 40(2) of the FOIA that are relevant to this case.    [Back] Note 12    Particularly relevant passages have been italicised.    [Back] Note 13    The Working Party adopted the WPO on 20 June 2007.    [Back] Note 14    The TGN was published on 21 August 2007. The Assistant Information Commissioner, who advised on the IC on the personal data issues arising in this case gave evidence to the IT that the TGN was consistent with the WPO (IT decision, paragraph 40). The eight questions are set out in the appendix to this judgment.    [Back] Note 15    [2003] EWHC Civ 1746, CA.    [Back] Note 16    The 8 questions are set out in paragraph 57 below.    [Back] Note 17    Paragraph 40 of the IT’s decision.    [Back] Note 18    Paragraph 1 of schedule 3 which a data controller must comply with (sections 4(3) and 4(4) of the DPA. The applicability of schedule 3, which deals with the processing of sensitive personal data, to the witness statements in issue in this case is considered under issue (7) in paragraphs 197 - 202 below.    [Back] Note 19    Lord Phillips of Worth Maltravers MR described the DPA as “an inelegant piece of legislation”, Campbell v MGN [2003] QB 633, CA at paragraph 72.    [Back] Note 20    The heading to section 40 of the FOIA is misleadingly “Personal information” but the text of the section (which must prevail over the heading) shows that the section is concerned only with information which is also personal data.    [Back] Note 21    The Law of Freedom of Information, Macdonald, Crail and Jones, second edition, 2009, paragraph 10.170.    [Back] Note 22    See paragraph 48 above.    [Back] Note 23    Section 7(9) of the DPA.    [Back] Note 24    Section 42(1) of the DPA.    [Back] Note 25    Section 50(1) of the FOIA.    [Back] Note 26    Macdonald, Crail and Jones, second edition, paragraph 10.163.    [Back] Note 27    Sections 1(1) and 84 of the FOIA.    [Back] Note 28    Section 1(1)(b) of the FOIA.    [Back] Note 29    Set out in Part II of the FOIA, in sections 21 – 44, being Part II, of the FOIA.     [Back] Note 30    Section 2 of the FOIA.    [Back] Note 31    Sections 30, 31 and 32 of the FOIA.    [Back] Note 32    This is a summary of sections 1(1), 2(1) and 2(2) of the FOIA.    [Back] Note 33    This is a summary of the extremely convoluted sections 40(2) – 40(4) of the FOIA.    [Back] Note 34    Section 50(1) of the FOIA.    [Back] Note 35    Sections 1(1) and 7(1) of the DPA.    [Back] Note 36    Sections 29 and 31 as qualified by section 35 of the DPA.    [Back] Note 37    Section 7(4) of the DPA.    [Back] Note 38    Section 7(9) of the DPA.     [Back] Note 39    Section 42(1) of the DPA.    [Back] Note 40    Sections 1(1) and 2(1) of the FOIA.    [Back] Note 41    Section 2(2) of the FOIA.    [Back] Note 42    Section 7(1) of the DPA read with section 1(1) and 2 of the FOIA.    [Back] Note 43    Section 7(9) of the DPA read with section 50(1) of the FOIA.    [Back] Note 44    Section 40(1) of the FIOA read with sections 1(1)(b), 2(1)(a) and 2(3)(f).    [Back] Note 45    See paragraphs 146 - 152 below in which the jurisdictional difficulties that arise when a FOIA request is dismissed by the public authority because the documents requested are held to be personal data that may only be processed under the DPA.    [Back] Note 46    Had DK been dissatisfied with the circuit judge’s decision, which was to refuse him permission to appeal the district judge’s order amending the earlier order by adding the provision as to the defendant’s costs, DK could and should have applied for judicial review of that refusal decision. He failed to make that application for several years afterwards. Since the circuit judge concluded, on what appears to have been correct grounds, that the district judge could and should have made his amendment order, DK never had any prospect of succeeding in a judicial review application and he suffered no prejudice in what occurred before the district judge. The circuit judge also concluded that all that had happened at the hearing was that there had been a simple misunderstanding by DK of what the district judge had actually said.     [Back] Note 47    This is ascertained from a copy of the case summary prepared by the investigating officer of the third investigation which was prepared in early 2006 and which, with its exhibits other than the five witness statements dealt with by the IT, was disclosed to DK by NP following his FOIA requests. This document was in the open bundle considered by the IT. It was provided to the Administrative Court by DK in relation to his other judicial review claims. It is highly material to this Cart application which is being heard with DK’s consent at the same time as the applications in those other judicial reviews and is therefore a document which may be taken into account when considering the Cart application.    [Back] Note 48    Paragraph 28 of the IT substantive decision.    [Back] Note 49    The advice appears to have been offered pursuant to NP’s duty to advise “persons who propose to make, or who have made, requests for information to it” provided for in section 16(1).    [Back] Note 50    A complaint under section 50(1) of the FOIA.    [Back] Note 51    The test it was required to undertake by virtue of section 2(2)(b) of the FOIA.    [Back] Note 52    Section 50(1) of the FOIA.    [Back] Note 53    It is clear that the IC had little to do with DK’s complaints and request for an assessment and that these were dealt with appropriately delegated officials. However, the decision notice and the assessment were sent out in the IC’s name and, for convenience, all dealings between DK and the IC and his staff are referred to as being with or from the IC.    [Back] Note 54    The test adumbrated by Auld LJ in paragraph 28 of the principal judgment in that case.    [Back] Note 55    Section 11(1) of the Tribunals, Courts and Enforcement Act 2007.    [Back] Note 56    Issue (10) – see paragraphs 208 - 209 below.    [Back] Note 57    Rule 43 of the Tribunal Procedure (Upper Tribunal) Rules 2008 made under section 22 of, and paragraph 15(2) of Schedule 5 to, the Tribunals, Courts and Enforcement Act 2007.    [Back] Note 58    Ordinarily, the application would first be made to a district judge in either court or to the Master in the Royal Courts of Justice and then, with permission, to the Court of Appeal if the application is made to the High Court or, with permission, to a circuit district judge and, again with permission and only in exceptional circumstances, to the Court of Appeal if the application is made to the county court. Where the appeal to the Court of Appeal is a second appeal, only the Court of Appeal may consider whether permission to appeal should be granted.    [Back] Note 59    See paragraph 86 above for the text of the relevant paragraphs 9, 14 – 15, 17 & 19 – 21 of IC’s decision notice.    [Back] Note 60    See paragraphs 115 – 116 above.    [Back] Note 61    For example, 7(4) of the DPA which authorises the data controller to refuse to comply with a request where he or it cannot comply with it without disclosing information relating to another individual who can be identified from that information.    [Back] Note 62    See Bank Mellat (No 1) [2012)] UKSC 33, particularly but not exclusively paragraphs 2 – 8 and the cases referred to in the judgment of Lord Neuberger.    [Back] Note 63    The only reported previous use of a special advocate procedure in a DPA case was in a section 7(9) application to the High Court in Roberts v Nottinghamshire Healthcare NHS Trust [2008] EWHC1934 (QB). The judgment ordering the use of this procedure was in an earlier decision in the same case but that decision ([2008] EWHC 1934 (QB) does not appear on BAILLI, it is referred to at paragraph 1 of the substantive judgment.     [Back] Note 64    The procedure that was followed in the appeals in the county court judge and the Court of Appeal in Durrant but not at the first instance hearing by the district judge in that case (see paragraphs 2 and 19 of that judgment).    [Back] Note 65    See paragraphs 167 – 173 & 254 - 256 below.    [Back] Note 66    See paragraph 48 above for the text of recitals 10 and 33 of the Directive which are of particular significance in this connection.    [Back] Note 67    This information must have come from DK. The judicial review against McCaw’s not in fact started until 7 November 2008 some 2½ years after this document was written.    [Back] Note 68    Ibid., paragraphs 32 – 50.     [Back] Note 69    These details are set out in the Crown Prosecutor’s advice dated 6 September 2006 which was sent to NP and which advised that there had been a full investigation, that no other lines of enquiry that could or should have been pursued and that there was no evidence in respect of which any charge of any criminal offence could be based.    [Back] Note 70    See paragraphs 54 - 55 above.    [Back] Note 71    See paragraph 105 above.    [Back] Note 72    See paragraphs 56 - 58 above.    [Back] Note 73    The Law of Freedom of Information, ibid., paragraphs 10.165 & 167. It is not necessary to refer to Conditions 1B and 2 even though they are, or may be, applicable as well.    [Back] Note 74    Section 2(g) of the DPA.    [Back] Note 75    Schedule 3, paragraph 1 of the DPA.    [Back] Note 76    As a result of sections 1(1), 2 and 40(1) – (5) of the FOIA and 4(3), 7, 27, 29(1)(a), Schedule 1 and condition 1, Schedule 3 of the DPA.    [Back] Note 77    Sections 1(1)(c) and 2(e) of the DPA.     [Back] Note 78    See paragraphs 192 - 196 above.    [Back] Note 79    Section 40(5)(b)(i) of the FOIA    [Back] Note 80    Condition 1 of Schedule 3 of the DPA.    [Back] Note 81    Section 40(5) of the FOIA.    [Back] Note 82    Sections 2(g), 4(3) and 4(4) and Condition 1 of the First Schedule and Condition 1 of the Third Schedule of the DPA.    [Back] Note 83    Sections 7(4), 7(6)(a) & 7(6)(b) of the DPA. See paragraph [ ] below for an explanation of why these provisions are applicable to excuse NP from disclosing the statement.     [Back] Note 84    Sections 2(g), 4(3), 4(4) and 29(1)(a) – (b) and Condition 1 of the First Schedule and Conditions 1 and 6(a) and 7(1)(a) of the Third Schedule of the DPA.    [Back] Note 85    See paragraph 44 above.    [Back] Note 86    In fact, the appeal had been automatically transferred to the UT in April 2010. DK contends that he had made and continued to make efforts to arrange for the Administrative Court to fix a hearing. He did not draw these efforts to my attention at the hearings on 6 October or 10 December 2010 and he never issued an application in the Administrative Court seeking a hearing.     [Back] Note 87    See paragraph 203 above.     [Back] Note 88    See also 54A 12.1.    [Back] Note 89    For a further elaboration of the evidence that shows that the district judge did not make any assurance of the kind contended for by DK and did not commit the offence complained of or any other offence see paragraphs 167 – 173 & 254 – 257 above and the judgment refusing DK permission to amend the claim in CO/11166/2008 [2013] EWHC 2574 (Admin) at paragraphs 111 - 125    [Back] Note 90    CPR 31.17(a).    [Back] Note 91    See paragraph 254(7) above.    [Back] Note 92    CPR 31.17(b)    [Back] Note 93    See paragraph 254 above.    [Back]

Judgment of the Court (Fifth Chamber) of 11 July 1990. - SA Sermes v Directeur des services des douanes de Strasbourg. - Reference for a preliminary ruling: Cour d'appel de Colmar - France. - Common commercial policy - Anti-dumping duties on imports of electric motors. - Case C-323/88. European Court reports 1990 Page I-03027 Summary Parties Grounds Decision on costs Operative part Keywords ++++ 1 . Common commercial policy - Protection against dumping - Review procedure - Modification of measures previously adopted - Infringement of the principle of legal certainty - None ( Council Regulation No 2176/84, Art . 14(3 ) ) 2 . Common commercial policy - Protection against dumping - Dumping margin - Determination of the normal value - Imports from countries not having a market economy ( Council Regulation No 2176/84, Art . 2(5 ) ) 3 . Common commercial policy - Protection against dumping - Injury - Factors to be taken into consideration - Several - Discretion of the institutions - Decline in the market share of dumped imports - Not decisive ( Council Regulation No 2176/84, Art . 4(2 ) ) 4 . Common commercial policy - Protection against dumping - Conduct of the investigation - Right to meetings with opposing parties - Parties directly concerned - Concept ( Council Regulation No 2176/84, Art . 7(6 ) ) 5 . Common commercial policy - Protection against dumping - Anti-dumping duty applicable to products from the German Democratic Republic - Protocol on German internal trade - No collection of duty on products imported into the Federal Republic of Germany - Infringement of the prohibition of discrimination in relation to importers established in the other Member States - None ( EEC Treaty, Protocol on German internal trade; Council Regulation No 2176/84 ) Summary 1 . Under Article 14 of Regulation No 2176/84, undertakings which have been accepted may be subject to a review which, in accordance with paragraph 3 of that provision, may result in the amendment, repeal or annulment of the measures in question . The substitution of an anti-dumping duty for a price undertaking cannot therefore be regarded as an infringement of that article or the principle of legal certainty . 2 . By providing that in the case of imports from non-market-economy countries the normal value is to be determined essentially on the basis of the price actually charged for the like product in a market-economy country, Article 2(5 ) of Regulation No 2176/84 seeks to prevent account being taken of prices and costs in non-market-economy countries which are not normally the result of market forces . 3 . In accordance with Article 4(2 ) of Regulation No 2176/84, the examination of injury must involve a series of factors no one of which can give decisive guidance . For that reason a decline in the market share of dumped imports does not preclude a finding that significant injury is being caused by them, where that finding is based on various factors to be taken into consideration under the abovementioned provision . 4 . In relation to meetings of opposing parties, the phrase "parties directly concerned" in Article 7(6 ) of Regulation No 2176/84 must be understood in the sense given to it by the Court in regard to the admissibility of actions brought against a regulation adopted in the context of protection against dumping . Accordingly, only traders belonging to one of the categories of traders which the Court has held are entitled to bring proceedings directly against regulations imposing anti-dumping duties can require the Commission to hold such a meeting . 5 . In accordance with the "Protocol on internal German trade and related problems" of 25 March 1957, annexed to the EEC Treaty, the Federal Republic of Germany is exonerated from applying the rules of Community law to German internal trade and the German Democratic Republic, while not a member of the Community, is not a non-member country vis-à-vis the Federal Republic of Germany . It follows that the difference of treatment between importers established in the Federal Republic and those established in other Member States as regards the collection of anti-dumping duties imposed by a Council regulation in respect of products originating in the German Democratic Republic has a legislative basis in that Protocol and cannot therefore be regarded as discriminatory . Parties In Case C-323/88, REFERENCE to the Court under Article 177 of the EEC Treaty by the Cour d' appel ( Court of Appeal ), Colmar ( Third Civil Chamber ), for a preliminary ruling in the proceedings pending before that court between SA Sermes, Strasbourg and Directeur des services des douanes de Strasbourg, on the validity of Council Regulation ( EEC ) No 864/87 of 23 March 1987 imposing a definitive anti-dumping duty on imports of standardized multi-phase electric motors having an output of more than 0.75 kW but not more than 75 kW, originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and the Soviet Union, and definitively collecting the amounts secured as provisional duties ( Official Journal 1987 L 83, p . 1 ), THE COURT ( Fifth Chamber ) composed of : Sir Gordon Slynn, President of Chamber, M . Zuleeg, R . Joliet, J.C . Moitinho de Almeida and G.C . Rodríguez Iglesias, Judges, Advocate General : W . Van Gerven Registrar : B . Pastor, Administrator, after considering the observations submitted on behalf of SA Sermes, by Jean-Pierre Spitzer, of the Paris Bar, the French Government, by Edwige Belliard, Deputy Director responsible for economic law at the Ministry of Foreign Affairs, and Géraud de Bergues, Principal Deputy Secretary at the Ministry of Foreign Affairs, acting as Agents, the Council, by Erik Stein, Legal Adviser, acting as Agent, the Commission, by Marie-José Jonczy, Legal Adviser, acting as Agent, having regard to the Report for the Hearing, after hearing oral argument by the applicant in the main proceedings, represented by Jean-Pierre Spitzer, by the Council, represented by Erik Stein, Legal Adviser, and by the Commission, represented by Marie-José Jonczy, Legal Adviser, assisted by Marc de Pauw, acting as an expert, at the hearing on 13 June 1989, after hearing the Opinion of the Advocate General delivered at the sitting on 8 November 1989, gives the following Judgment Grounds 1 By a judgment of 5 September 1988, which was received at the Court Registry on 4 November 1988, the Cour d' appel, Colmar ( Third Civil Chamber ), referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question concerning the validity of Council Regulation ( EEC ) No 864/87 of 23 March 1987 imposing a definitive anti-dumping duty on imports of standardized multi-phase electric motors having an output of more than 0.75 kW but not more than 75 kW, originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and the Soviet Union, and definitively collecting the amounts secured as provisional duties ( Official Journal 1987 L 83, p . 1, hereinafter referred to as the "Council regulation "). 2 That question was raised in proceedings between Sermes SA, a company incorporated under French law, and the directeur des services des douanes ( Director of Customs ), Strasbourg, with regard to anti-dumping duties claimed under the Council regulation . 3 Sermes is a company whose activities include inter alia the importation of electric motors originating in the German Democratic Republic and exported from that country by AHB Elektrotechnik . 4 In October 1985 the Groupement des industries de matériels d' équipement électrique et de l' électronique industrielle associée ( Association of electric equipment and associated industrial electronic industries, hereinafter referred to as "Gimelec "), supported by four other national electronics associations, requested the Commission to review certain anti-dumping measures in accordance with Article 14 of Council Regulation ( EEC ) No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not members of the European Economic Community ( Official Journal 1984 L 201, p . 1 ), which was the basic regulation in force at the time ( hereinafter referred to as "the basic regulation "). That request sought the review of decisions whereby price undertakings given by the exporters in question had been accepted by the institutions in the context of an earlier anti-dumping proceeding concerning imports of electric motors originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania and the Soviet Union . 5 On 30 September 1986, the Council and the Commission withdrew their acceptance of the abovementioned undertakings and the Commission imposed, by Regulation ( EEC ) No 3019/86 of the same date, a provisional anti-dumping duty on imports of standardized multi-phase electric motors having an output of more than 0.75 kW but not more than 75 kW, originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania and the USSR ( Official Journal 1986 L 280, p . 68 ). 6 By an application lodged at the Court Registry on 17 November 1986, Sermes brought proceedings under the second paragraph of Article 173 of the EEC Treaty for the annulment of Commission Regulation No 3019/86 ( Case 279/86 ). 7 By order of 8 July 1987, the Court dismissed that action as inadmissible on the ground that the contested measure constituted, as far as the applicant was concerned, a regulation of general application and not a decision within the meaning of the second paragraph of Article 173 of the Treaty, since the applicant was not connected with the exporter in question . 8 On 23 March 1987 the Council adopted the regulation imposing a definitive anti-dumping duty on the abovementioned imports and definitively collecting the amounts secured as provisional duties . 9 Following the imposition of the definitive anti-dumping duty, the French customs authorities claimed anti-dumping duties amounting to FF 419 720 from Sermes in respect of imports in April 1987 of electric motors originating in the German Democratic Republic . 10 Challenging the validity of the Council regulation, Sermes brought proceedings on 7 May 1987 against the directeur des services des douanes, Strasbourg, before the Tribunal d' instance ( District Court ), Strasbourg, to recover the amount wrongly paid . 11 By a judgment of 16 June 1987 its action was dismissed, and Sermes appealed to the Cour d' appel, Colmar, which stayed the proceedings and referred the following question to the Court for a preliminary ruling under Article 177 of the EEC Treaty : "Is Council Regulation ( EEC ) No 864/87 of 23 March 1987 imposing a definitive anti-dumping duty on imports of standardized multi-phase electric motors having an output of more than 0.75 kW but not more than 75 kW, originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and the Soviet Union, and definitively collecting the amounts secured as provisional duties, valid in the light of Community law, in particular the basic regulation, Council Regulation No 2176/84, and the fundamental principles of Community law?" 12 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court . 13 It should be stated at the outset that the judgment making the reference is worded in general terms and gives no indication of the grounds on which the national court doubts the validity of the Council regulation . In its observations submitted to the Court, Sermes, the applicant in the main proceedings, raised certain objections to the validity of that regulation . Its validity must therefore be examined in the light of those observations . Infringement of Article 14 of the basic regulation and the principle of legal certainty 14 Sermes argues first of all that the Council regulation in issue should be declared invalid on the ground that it imposed an anti-dumping duty following a review of price undertakings previously given which was carried out without sufficient evidence of a change in circumstances, contrary to Article 14 of the basic regulation . 15 In accordance with Article 14(1 ) of the basic regulation, a decision to accept an undertaking is subject to review, where warranted, either at the request of a Member State or on the initiative of the Commission . A review is also to be held where an interested party so requests and submits evidence of changed circumstances sufficient to justify the need for such review, provided that at least one year has elapsed since the conclusion of the investigation . 16 As stated in point 4 of the regulation in issue, the proceeding in the present case was reopened on the basis of an assessment ( which is specifically summarized in point 4 of that regulation ) of evidence produced by Gimelec in support of its request for a review of the undertakings given . The Commission and the Council consider that that evidence disclosed a change in circumstances and justified a review of the price undertakings given during the earlier proceeding . 17 Neither the documents before the Court nor the arguments presented to it indicate that the Commission and the Council misdirected themselves in the assessment of the evidence thus produced . 18 Sermes goes on to submit that by substituting an anti-dumping duty for a price undertaking, the regulation in issue contravened the principle of legal certainty, inasmuch as the economic circumstances had not changed since the acceptance of the price undertakings in 1982, or if they had they had deteriorated, and consequently the imposition of an anti-dumping duty was not justified by a general Community interest . 19 In that respect it must be observed that under Article 14 of the basic regulation, undertakings which have been accepted may be subject to a review which, in accordance with paragraph 3 of that provision, may result in the amendment, repeal or annulment of measures adopted in connection with those undertakings . 20 The arguments advanced by Sermes in regard to infringement of Article 14 of the basic regulation and the principle of legal certainty are therefore unfounded . Infringement of the provisions of the basic regulation relating to the calculation of normal value and the definition of injury suffered; error of assessment 21 Sermes contends first of all that the normal value was not determined in an appropriate and reasonable manner, as required by Article 2(5 ) of the basic regulation, since Yugoslavia, which was chosen as the reference country for that purpose, is not a market-economy country, inasmuch as prices are not free on that market . 22 In that connection it must be stated that Article 2(5 ) of the basic regulation provides that in the case of imports from non-market economy countries, the normal value is to be determined essentially on the basis of the price actually charged for the like product in a market-economy country . 23 The aim of that provision is to prevent account from being taken of prices and costs in non-market-economy countries which are not normally the result of market forces ( judgment in Joined Cases 294/86 and 77/87 Technointorg v Commission and Council [1988] ECR 6077, paragraph 29 ). 24 However, as the Court held in its judgment in Joined Cases C-305/86 and C-160/87 Neotype v Commission and Council [1990] ECR I-2945, paragraphs 26 and 27, Yugoslavia cannot be regarded as a country which does not have a market economy . During the period under consideration, there was no general system for the fixing of prices in Yugoslavia, and in any event there was no such system in the electric motors sector . 25 The argument by Sermes that Yugoslavia is not a market-economy country within the meaning of Article 2(5 ) of the basic regulation is therefore unfounded . 26 Secondly, Sermes contends that the institutions did not establish that Community producers had suffered injury as a result of the imports in issue . It submits first that by comparing the cost price on the Community market with the selling price of motors originating in East European countries, the institutions infringed Article 4(2)(b ) of the basic regulation, which requires any price undercutting to be evaluated in relation to the price of a like product in the Community . It goes on to stress that it was never demonstrated that nearly all Community producers sold their electric motors at a loss . On the contrary, Community production regained 3% of the market during the period under consideration . 27 In accordance with Article 4(2 ) of the basic regulation, an examination of the injury suffered by the Community must involve a series of factors no one of which can give decisive guidance . 28 As the Court held in its judgment in Neotype v Commission and Council, cited above, the Council, whilst recognizing that the market share of imports of electric motors originating in the same East European countries as those referred to in the main proceedings had gone down from 23% in 1982 to 19.6% in 1985, made a determination of injury in accordance with several factors mentioned in Article 4(2 ) of the basic regulation . As is stated in point 25 of Regulation No 3019/86, to which point 19 of the contested regulation refers, the volume of imports of electric motors originating in the countries in question increased from 716 000 units in 1982 to 784 300 units in 1985, having fallen to 604 000 and 689 000 units respectively in 1983 and 1984 . At points 21 to 24 of the contested regulation it is also shown that the resale prices of imported electric motors significantly undercut cost prices and selling prices of Community producers . The Council goes on to find at points 25 and 26 of the regulation in question that in spite of an increase in sales and production since 1982, Community producers of electric motors sustained operating losses of between 2 and 25% of the cost price, with the exception of only two undertakings, one of which is situated in a Member State in which the relevant imports are very low . Finally, it is stated at point 26 of the regulation in issue that employment directly related to the production of electric motors in the Community continued to decline between 1982 and 1985 . 29 Sermes contends finally that the sampling of electric motors on which the Council based itself is not representative as regards its own sales in France of motors originating in the German Democratic Republic . Motors imported by it are sold to a different clientele from that of the large Community manufacturers and, consequently, there is no causal link between imports originating in the German Democratic Republic and losses incurred by Community producers . 30 Since the Council rightly assessed the injury to the Community industry by taking as its basis the impact of all dumped imports of electric motors originating in the countries in question, the argument as to sampling could be taken into consideration only if that sampling was clearly unrepresentative as regards the imports as a whole . There is nothing in the documents before the Court to support that hypothesis . 31 It must therefore be held that by concluding that considerable injury was being caused to Community producers by the imports in question, despite a reduction in their market share to the extent mentioned above, the Council committed no error of assessment . Misuse of powers 32 Sermes contends that the contested regulation is vitiated by a misuse of powers inasmuch as the Council allowed itself to be guided not by the Community interest but by the interests of a Community industry - in particular a French industry . 33 A decision is vitiated by a misuse of powers only if it appears, on the basis of objective, relevant and consistent indications, to have been adopted in order to achieve purposes other than those for which it was intended ( judgment in Case C-198/87 Kerzmann v Court of Auditors [1989] ECR 2083 - see summary of the judgment, paragraph 2 ). 34 In points 33 to 35 of its regulation the Council set out the reasons which led it to take the view that the interests of the Community required, in accordance with the basic regulation, the adoption of a measure capable of defending Community producers against dumped imports . 35 Furthermore, Sermes, in challenging the existence of a Community interest, merely made certain assertions without substantiating them . 36 In those circumstances and on the basis of the information available to it, the Court cannot consider the argument put forward by Sermes that there was a misuse of powers to be valid . Infringement of essential procedural requirements and failure to state reasons 37 Sermes argues that the statement of the reasons on which the contested regulation is based is not sufficient to enable the Court to carry out judicial review, particularly as regards the evidence produced by Gimelec justifying a review of the undertakings, the sampling of motors, injury and causality . 38 As the Court has consistently held ( see in particular the judgments in Case 255/84 Nashi Fujikoshi v Council [1987] ECR 1861, paragraph 39 and in Case C-156/87 Gestetner v Commission [1990] ECR I-781, paragraph 67 ), the statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights, and to enable the Court to exercise its supervisory jurisdiction . 39 That requirement was satisfied in this case . Point 4 of the contested regulation mentions all the evidence produced by the complainants which, in the Council' s view, justified the reopening of the anti-dumping proceeding . The sample of motors chosen is mentioned in point 8 of the regulation, where reference is made to point 11 of Commission Regulation No 3019/86, which sets out clearly and exhaustively all the explanations necessary in that regard . The same is true of points 17 to 32 of the Council regulation as regards the existence of injury and causality . 40 The argument put forward by Sermes that the contested Council regulation contains an insufficient statement of reasons must therefore be rejected . Infringement of Article 7 of the basic regulation and of the right to a fair hearing 41 Sermes considers that in the course of the preparatory enquiries which led to the adoption of the contested Council regulation the Community institutions did not observe Article 7 of the basic regulation or the right to a fair hearing, inasmuch as they did not give it an opportunity to confront the complainants . 42 Under the terms of Article 7(6 ) of the basic regulation, the Commission must, on request, give the parties directly concerned an opportunity to meet, so that opposing views may be presented and any rebuttal argument put forward . 43 The expression "parties directly concerned" must be understood in the sense given to it by the Court in regard to the admissibility of actions brought against an anti-dumping regulation . As appears from the order of the Court in Case 279/86 Sermes v Commission [1987] ECR 3109, Sermes does not belong to any of the categories of traders who the Court has held are entitled to bring proceedings directly against regulations imposing an anti-dumping duty in respect of imports of certain electric motors originating in certain State-trading countries . Moreover, Sermes has produced no evidence to show that it did in fact request a meeting . 44 Consequently, the argument that the Community institutions infringed Article 7 of the basic regulation and the right to a fair hearing must be rejected . Infringement of the principle of equal treatment 45 Finally, Sermes submits that the application of specific provisions relating to German internal trade, which enable exports from the German Democratic Republic to the Federal Republic of Germany to continue to be carried out at the selling price prevailing prior to the entry into force of the contested Council regulation, entails discrimination which is not justified by objective differences between importers established in the Federal Republic of Germany on the one hand and those established in the other Member States on the other . 46 As the Court has already held ( see judgment in Case 12/88 Schaefer Shop v Minister van Economische Zaken [1989] ECR 2937, paragraph 14 ) it is pursuant to the "Protocol on German internal trade and connected problems" of 25 March 1957, annexed to the EEC Treaty, that the Federal Republic of Germany is exonerated from applying the rules of Community law to German internal trade and that the German Democratic Republic, while not a member of the Community, is not a non-member country vis-à-vis the Federal Republic of Germany . 47 Accordingly, the difference of treatment referred to by Sermes has a legislative basis in that Protocol, which forms an integral part of the Treaty and cannot therefore be regarded as discriminatory . 48 Sermes' s argument that there has been an infringement of the principle of equal treatment must therefore be rejected . 49 It follows from all the foregoing considerations that the arguments put forward by Sermes have disclosed no factor of such a kind as to affect the validity of the contested Council regulation . It must, moreover, be stated that the documents before the Court disclose no other matter of such a kind as to call in question the validity of that regulation . 50 The reply to be given to the national court must therefore be that examination of the question has revealed no factor of such a kind as to affect the validity of Council Regulation No 864/87 of 23 March 1987 imposing a definitive anti-dumping duty on imports of standardized multi-phase electric motors having an output of more than 0.75 kW but not more than 75 kW, originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and the Soviet Union, and definitively collecting the amounts secured as provisional duties . Decision on costs Costs 51 The costs incurred by the French Government, the Council of the European Communities and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court . Operative part On those grounds, THE COURT ( Fifth Chamber ), in answer to the question referred to it by the Cour d' appel, Colmar, by judgment of 5 September 1988, hereby rules : Examination of the question raised has revealed no factor of such a kind as to affect the validity of Regulation ( EEC ) No 864/87 of 23 March 1987 imposing a definitive anti-dumping duty on imports of standardized multi-phase electric motors having an output of more than 0.75 kW but not more than 75 kW, originating in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and the Soviet Union, and definitively collecting the amounts secured as provisional duties .

COURT OF APPEAL FOR ONTARIO CITATION: De Beers Canada Inc. v. Ootahpan Company Limited, 2014 ONCA 723 DATE: 20141021 DOCKET: C57122 Strathy C.J.O., Rouleau and Hourigan JJ.A. BETWEEN De Beers Canada Inc. Plaintiff (Appellant) and Ootahpan Company Limited and 473464 Ontario Ltd., d.b.a. Topax Export Packaging Systems and R.L.P. Machine & Steel Fabrication Inc. and AMEC Americas Limited Defendants (Respondents) and Firstbrook, Cassie & Anderson Limited, Ace Ina Insurance and Aviva Canada Inc. Third Parties (Respondents) Shawn K. Faguy, for the appellant Christopher R. Dunn and Joanna F. Reznick, for the respondents Ootahpan Company Limited and R.L.P. Machine & Steel Fabrication Inc. Heard: October 9, 2014 On appeal from the judgment of Justice J. Patrick Moore of the Superior Court of Justice, dated April 30, 2013. ENDORSEMENT [1] The motion judge dismissed the appellant’s claims on summary judgment on alternate grounds: (a) the respondents could take advantage of the appellant’s insurance coverage as third party beneficiaries on the basis set out in London Drugs Ltd. V. Kuehne & Nagel International Ltd. , [1992] 3 S.C.R. 299 and Fraser River Pile & Dredge v. Can-Dive Services Ltd. , [1999] 3 S.C.R. 108; and (b) the contractual arrangements between the parties make it clear that the appellant’s policy of insurance was for the benefit of all those engaged in the appellant’s diamond mine project, on the principles expressed in Commonwealth Construction Co. v. Imperial Oil Ltd. Et al. , [1978] 1 S.C.R. 317. [2] We dismiss the appeal. In so doing, we do not find it necessary to address the third party beneficiary issue as the appeal can be addressed as a matter of contract interpretation and on settled authority. [3] In interpreting the contractual arrangements between the parties, including their arrangements for insurance, we apply the principles of contract interpretation set out in Bell Canada v. The Plan Group , 2009 ONCA 548, 96 O.R. (3d) 81 at paras. 37-38. These include: (a) interpreting the contract as a whole, with a view to giving meaning to all its terms; (b) determining the intentions of the parties in accordance with the words they have used; (c) having regard to the factual matrix; and (d) interpreting the contract in a manner that accords with sound commercial principles and good business sense. [4] The motion judge’s reasons demonstrate that he correctly applied these principles and his decision is entitled to deference: see Sattva Capital Corp. v. Creston Moly Corp. , 2014 SCC 53, 373 D.L.R. (4 th ) 393. [5] The contracts between the appellant and the respondents required the appellant to obtain insurance to protect it and its contractors and subcontractors against, among other things, risks of transportation in respect of property “whilst being transported on land”. The insurance was to include contractors and subcontractors as additional named insureds. It was also to include a waiver of subrogation against any entity connected with the project. [6] These provisions can only be understood as an undertaking to obtain insurance for the benefit of the appellant’s contractors and subcontractors and a waiver of claims in respect of losses covered by such insurance: see St. Lawrence Cement Inc. v. Wakeham & Sons Ltd. (1995), 26 O.R. (3d) 321 (C.A.), leave to appeal to S.C.C. refused, [1995] S.C.C.A. No. 553. On their own, these provisions would be a defence to the claim advanced in this action, even if the appellant had not purchased the insurance. [7] To complete the circle, the policy of insurance procured by the appellant, which underlies the subrogated claim being pursued here, provided that the insurer would acquire no rights of recovery expressly waived by the insured prior to the loss. This gave full effect to the appellant’s contractual undertaking. [8] As the appellant has waived liability for losses covered by the policy of insurance, with the agreement of the insurer, the insurer has no right of subrogation. [9] We do not accept the submission of the appellant that other provisions of the contract between the appellant and the respondents show a contrary intention. We agree with the motion judge that those provisions do not override the waiver of subrogation: see Fraser River , at para. 42. They are consistent with other responsibilities of the respondents, such as a duty of care in the performance of their work, a responsibility for liabilities not covered by the appellant’s insurance, and a responsibility for deductibles under the policies. [10] Reading the contract as a whole, with a view to giving effect to all its terms and seeking harmony between those terms, the insurance and waiver provisions can be read in a manner consistent with the provisions referred to by the appellant. We agree with the respondents that the appellant’s interpretation of those provisions is unreasonable because it would strip the insurance and waiver provisions of all meaning. The interpretation advanced by the respondents and accepted by the motion judge promotes business efficacy and certainty in an important commercial project involving multiple parties. It is intended to avoid the sort of expensive, time-consuming and commercially disruptive litigation that has occurred here. [11] For these reasons, the appeal is dismissed, with costs fixed at $14,000, all inclusive. “G.R. Strathy C.J.O.” “Paul Rouleau J.A.” “C.W. Hourigan J.A.”

Monday 29 April 2002 LORD JUSTICE BUXTON:This is a renewed application for permission to apply for judicial review of a decision of the City of Westminster Housing Benefit Review Board. That decision was taken in March 2000, but not notified in detailed terms to the applicant, Mr Sier, and those advising him until September 2000, a matter to which I shall have to return at the end of this judgment. The application for permission was originally refused on paper by Newman J, and refused again by Owen J after an inter partes hearing at which Mr Sier was represented by counsel on 5 November 2001. The matter has a very detailed history which I do not intend to set out at any length in this judgment because it is well-known to both Mr Sier and to the City of Westminster Council, who are the only parties who are likely to be concerned about this matter. Putting it very shortly, between 1992 and 1995 Mr Sier, the applicant, claimed housing benefit in respect of two properties, one in Cambridge and the other in Westminster. On that being discovered, both sets of benefit were discontinued. So far as the present proceedings are concerned, Westminster decided that the benefit received by Mr Sier had been a recoverable overpayment. It so decided on the basis of the test set out in Regulation 7 of the Housing Benefit Regulations 1987, section 7(b) of which reads: "7(1) The following persons shall be treated as if they were not liable to make payments in respect of a dwelling -- .... (b) a person whose liability to make payments in respect of the dwelling appears to the appropriate authority to have been created to take advantage of the housing benefit scheme." The Housing Benefit Review Board found that that requirement had been fulfilled in this case. They held that the dominant purpose for which the applicant had entered into the tenancy of his Westminster property, 26C Lupus Street, had been to obtain benefit from the scheme. The tenancy as originally entered into in 1992 was expressed to be between Mr Sier, said to be of 26C Lupus Street, London SW1, and a company called the Iliffe Corporation UK Limited, whose address was given on the tenancy agreement as 18 Wort's Causeway, Cambridge. On 2 August 1992, following that agreement, Mr Sier submitted his first housing benefit form to Westminster. The Iliffe Corporation was in fact a company used as a vehicle by a Mr Wilkes, who was a close friend of Mr Sier. Mr Wilkes had permitted Mr Sier to live in a flat at 32 Lupus Street a long time prior to Mr Sier moving into 26 Lupus Street. Mr Sier was a director of the Iliffe Corporation, the registered office of which was 26 Lupus Street. The address given in Cambridge was not an office of the Iliffe Corporation, but the home of Mr Sier's mother. Mr Sier explained that the reason why the Iliffe Corporation had been shown as resident at his mother's address was that from time to time he used that as an address to take in building supplies. The Housing Review Board did not accept that explanation which they thought to be untrue. They considered that the Cambridge address had been used so that no connection would be identified between the landlord, Iliffe Corporation, and the address at which Mr Sier was ostensibly taking a residential tenancy from them. He was asked other questions, including whether he had other property. He did not reveal that he was then currently claiming housing benefit on another address in Cambridge. Mr Sier said that he believed at that time he was entitled to claim housing benefit on two properties concurrently. The Housing Review Board, having heard his evidence on that point, did not believe him. Having received the application for housing benefit, inquiries were made by officers in Westminster in connection with this tenancy. As the Housing Review Board found in paragraph 24 of the determination, on 17 August 1992 they attempted to contact the Iliffe Corporation at the address in Cambridge. They spoke to someone on the telephone whom they could not identify, who told them that a Mr Gibbs-Sier (as they understood it a representative of the landlord) would telephone back. Mr Sier has explained that it had been his practice to call himself by the name Gibbs-Sier out of deference to his mother's family, who had strongly supported him through a most unfortunate and disturbing illness that he had suffered in the early 1980s. There is no reason to doubt that, but when Westminster spoke to Mr Sier and asked him about the Iliffe Corporation, he told them that Mr Gibbs-Sier was his cousin and that it was he, Mr Gibbs-Sier (a different person from the gentleman claiming housing benefit) who was a director of Iliffe. The Board concluded that Mr Sier sought thereby to distance himself from the Iliffe Corporation because his connection with it would immediately have caused inquiries to be made as to the genuineness of the arrangement into which he had entered. In an interview note dated September 1992 he is recorded as saying that he had no connection with Iliffe. That matter goes further. In March 1993 Mr Sier wrote to Westminster City Council in connection with his finances. He wrote to a Mrs Leach in the Housing Benefits Division, a letter signed James Gibbs-Sier. It states: "Dear Madam, Mr Stephen Sier The above named has asked that I confirm to you the following...." Various financial details are then set out in respect of Mr Stephen Sier, the tenant of 26C Lupus Street. Mr Sier told us this afternoon that that letter was properly written so that Westminster City Council should be in no doubt as to his financial position. But what cannot be explained is why the letter purports to be written by someone other than Mr Stephen Sier, that is to say Mr James Gibbs-Sier, and clearly leaves Westminster to think that they are two different people. The only reason for that deception, as far as I can see and as far as the Board saw, was that in their initial inquiries, as I have already set out, Westminster had been told that the landlord of the property (the person connected with Iliffe) was Mr Gibbs-Sier. It would clearly have been very difficult for Mr Sier if it had come to Westminster's attention that he, the tenant, was that same person. Further untruths were told by Mr Sier. The Housing Review Board found that this had been done in order to conceal the fact that he was claiming housing benefit on two properties. Mr Sier argued before the Board, before the judge and before us that he met, and properly met, the requirements for housing benefit (leaving aside the point about the two claims). First, it was indeed intended to provide a roof over his head; and secondly, he had no income and therefore fulfilled the financial requirements of a housing benefit payment. He points to various authorities where the courts have said that, provided those factors are fulfilled, the authorities should not inquire further into the genuineness of the contract. However, that is not this case. This case is one where the arrangement was entered into between Mr Sier and Iliffe, a company of which he was a director (a fact which he concealed) and, moreover, a company in which Mr Wilkes, his very close friend, had an interest. In those circumstances the Board said this at paragraph 38 of their decision: "In normal circumstances these intentions on the part of both men would have been perfectly legitimate in demonstrating the dominant purpose of the agreement in July 1992. However, the Board finds that this was not the dominant purpose. It takes this view because of the many findings set out above that continual and repeated deceptions took place at the time of the agreement and thereafter for several years. These deceptions (names, addresses, relationship with the company etc) as found (with several admitted by the claimant) were perpetrated in order to mislead council officers. All the deceptions appear to have had one primary objective and that is to conceal the fact that Mr Sier occupied two properties at the relevant time. As we have held above, if Mr Sier had been honest about such matters he would not have been entitled to benefit in respect of 26 Lupus Street. The officers would have investigated and scrutinised the matter more closely and their attention would inevitably have turned to the property in Cambridge. 39. In the Board's view, the dominant purpose of the agreement was to maximise the income received to the company by way of housing benefit. It was Mr Sier's and Rupert Wilkes' intention that the company should eventually create a job for Mr Sier. The housing benefit received by the company from Westminster City Council, in the Board's view, provided an income for Mr Sier and to assist in the renovation of subsequently acquired properties." Mr Sier criticises that finding. He says that there is no reason to think that the dominant purpose of the agreement was to maximise income received by the company. In my judgement, it was entirely open to the Board to reach that conclusion. It found that there had been a sustained attempt to conceal from Westminster that Mr Sier was also renting a property in Cambridge. Granted that he was already doing the latter, any arrangement that he entered into in Westminster in respect of Lupus Street needed the closest scrutiny. Vigorous attempts were made, as we have set out, to prevent that happening. The conclusion that in those circumstances these arrangements were partially for the benefit of the Iliffe Corporation and not genuinely in pursuit of Mr Sier's interests and therefore genuinely to lead to payment of housing benefit, was wholly open to the Housing Review Board. They did not simply penalize Mr Sier for telling lies, which he undoubtedly did, but, on the basis of that deception, they found that the tenancy arrangements at Lupus Street were not genuine, were known by those who entered into them not to be genuine, and were therefore concealed for those reasons. There is no criticism to be made, in my judgement, of the decision of the Board, which was inevitable. Mr Sier also complains of the delay in the furnishing of the decision to him. It should be pointed out that the actual decision was notified to him very shortly after it was made. The reasoned decision, which goes into the matter in enormous detail and with great care, only followed some months later. The process, however, has been explained by Westminster. The judge was satisfied that there was no reason to think that the delay had caused any misunderstanding or failure of appreciation on the Board's part. That being so, there can be no ground for granting judicial review on the basis of delay. I therefore would not grant permission to apply for judicial review in this matter. I am of the same mind as Owen J and Newman J. MR JUSTICE JACKSON: I agree with the judgment which has just been given and with the reasons stated by my Lord for his decision. If this matter were remitted to the Housing Benefit Review Board, I do not see how the Board could reach any decision other than that the overpayment of £23,357.14 was recoverable. Accordingly the quashing order which is sought would serve no useful purpose. ORDER: Application refused.

LORD JUSTICE MOSES: Criminal trials held to determine the guilt or innocence of defendants depend upon two essential features: firstly, on the skill of the independent advocates arguing them, on the one side, and, on the other, and secondly, on the judge fairly and clearly leaving to the jury the issues which they are called upon to determine. This case amply demonstrates the skill, on the one hand, of Mr Tully for the defence and, on the other hand, Mr Taylor for the prosecution, in properly arguing, the acutely difficult issues which had to be determined in resolving the question whether a young man of 38, with no previous convictions, had indecently sexually assaulted the daughter of his good friend and neighbour in Bristol. What this case unfortunately also demonstrates is how close this judge, His Honour Judge Horton, in his failure properly to direct and sum-up the case to the jury came in upsetting the due process of the determination of the guilt or innocence of the defendant (now the appellant). This appeal has turned upon the recitation by the judge of far too much evidence running the danger of deflecting the jury from proper consideration of the clear issues that it had to resolve. Due to the skill of counsel on both sides, this case, which involved a number of witnesses concerning allegations made by a young 13 year old, lasted only some two-and-a-half days. Quite unnecessarily, and we would add wrongly, the judge then recited large portions of the evidence over a period which occupied two days. In length it was some four-and-a-half hours but it went on from one day to the other. He would have been far better occupying his time leaving the court and preparing a proper summary of the evidence, summarising the evidence and identifying the issues which had to be resolved. His failure to do so has come close to requiring this trial to be held again. We have had to very carefully consider whether the serious inadequacies in the summing-up required us to say that the verdicts were unsafe. We hope therefore that this judge will be prepared to accept our comments and not, in future treat a jury to a lengthy and unedited recital of the evidence. There were four counts alleged against this 38-year-old married man. It was alleged that when a young 13-year-old daughter of the neighbour had come to his house, as she frequently did, because the families were on very good terms, he had sexually abused her in an escalating manner described quite by the judge but not by the prosecution as "grooming", over the space of 6 months, between June 2011 and January 2012. She was vague as to the length of time these events took place making up the four specimen counts, as to the dates but allegations were clear that it had started, the subject matter of count 1, when he had stroked her hand or arm, had moved on, to the second specimen count, when he had stroked her leg, to an occasion when, on a limited number of occasions, he had held her from behind by the hips and pressed his private parts against her from behind, so that she could feel him. Finally, (the subject matter of the fourth count) there was an occasion when she said he had been sitting beside her on the 9th January 2012, with his young 10-year-old son on his lap and had stroked her leg, putting his hand underneath her comparatively short skirt, but not touching her underwear. The allegations described on a video recorded interview were played to the jury and she was cross-examined, not just as to the vagueness with which she gave her evidence but in particular as to a number of texts and Twitters that she had sent at the time she said she was being assaulted on the afternoon of 9th January 2012, and the time when apparently she had complained to her mother, at the end of the week on Friday, when she was very distressed. The defence said that that behaviour was wholly inconsistent with the apparent distress that she was showing, leading to the suggestion that they were entitled to make, that she was playacting and that the allegations were false. The matter had come to light when she complained to a number of her friends and had apparently seemed upset when doing so. In particular, when at the end of that week, on 13th January 2012, she had spoken to a teacher, Louise Reynolds, who is one of those teachers responsible for talking to children about such incidents. She had been particularly distressed because she felt the consequences of her complaining were going to upset the close relationship that there had undoubtedly been between the families living as they were alongside. She had been in the habit of going to the house next door, where she said the sexual assaults took place, where she had felt like a member of that family. Her mother also described the relationship between the two families as idyllic. There was significant evidence following the complaint. Once the child's mother had heard the complaint she confronted the defendant with it, saying that he would never touch her daughter again. It was the defendant's description of that allegation that was particularly significant, so the prosecution says. He said that that the matter challenged him and said that he had touched her daughter's leg, but in a way that was "non intimate". The mother denied having used those somewhat curious words. But the defendant, as soon as the allegation was made at the end of the week, told his wife about it, and she too recorded that her husband, the defendant, was saying that he was being accused of touching the girl's leg but in "a non intimate way". The prosecution said that was a most curious account given by the defendant, supported by his wife, in circumstances where he denied that anything untoward, not even an accidental touching had taken place. Why then should he pick on the words that he had been accused of touching the girl's leg in a non intimate way, an echo of the very events of which she was complaining, since she did not suggest that this appellant had placed his hand on her underwear or anywhere in the region of her private parts. We have to emphasise, as is clear from the facts of this case, that there were substantial points to be made on behalf of the defence. In particular, the events of 9th January 2012 are one of the few events on which particularity could be challenged. As anybody defending in these cases knows, it is extremely difficult to find purchase in the evidence successfully to cross-examine when a series of undated, unspecific allegations are made by a young girl who is perhaps inevitably vague in the complaints that she makes. But on 9th January there could be specificity, because it was alleged he had his 10-year-old on his lap whilst he stroked the girl next to him. His wife was either in the room or very close by and although unsighted perhaps at the moment of the alleged assault, she could have seen it at any moment. So he was able to deploy the forceful argument that he could not possibly have risked everything being found out with his son on his lap and with his wife close by or there or thereabouts. Quite apart from the that point he had powerful arguments as to whether he would really, as a man of good character, upset everything in the relationship between two neighbours and, as to the behaviour of this young girl on what is described as the social media at the time of making these complaints. These were all undoubtedly strong arguments, arguments on which Mr Tully relied in making his submissions to the jury. Having made those submissions, as we have said, the judge then launched into a wholly unnecessary, over-long description of the evidence that had been given. It is not suggested that his recitation of the evidence was inaccurate but it is said that it was quite unnecessary. We agree. This sort of summing-up we had hoped was a thing of the past. This court has said over and over again, that the purpose of a summing-up is to direct the jury, assist it in reaching a fair resolution of the issues. A long recitation of the evidence from one witness to the next has the opposite effect. An example that we can give in this case is of the over-long recitation of the complaints as described by this girl's friend. It was quite unnecessary to refer to those in any detail, having regard to the direction that the judge did give as to the need for great care being taken as to whether they supported the prosecution case or not. But the judge spent some 10 pages of transcript going through them, describing what the girls had said in their interviews. Quite apart from the wholly unnecessary length of this summing-up and the undiluted and uncontrolled recitation of the evidence, there were a number of passages where Mr Tully rightly accuses the judge of using emotive language. From about page 13 to about page 16, all of which needs to be read to get a full favour, the judge gave a wrongly emotive account from the prosecution point of view: "You see the Crown case is here that the Defendant in effects started, I use the word grooming. Now I will explain that in a moment. Grooming [E] from the summer of 2011. The Crown are saying that a person who sexually assaults a young child can commence by touching apparently innocent parts of a body but whilst two of them are engaged upon innocent pass time, in this case the computer. It is plainly you may think a child's mind otherwise occupied, the touching to start with is not in an overtly sexual place." So he goes on in what can only be described as putting forcefully the case on behalf of the Crown. He continued: "It is, the Crown say, in effect an acclimatisation of a victim and to quote them from their opening to you, 'to push the boundaries' as the Crown put it, 'whilst trust and friendship continue.'" He then continues: "Would this young girl who is making on the defence account, a deliberately manipulative, lying allegation, commenced by a concerned complaint to [B] in June or July 2011? She would then have to be devious enough to make the complaint in January and further to allege the event was not whilst she was alone with the Defendant when no-one else could say what has happened, but actually allege as she does and has throughout, when she was there with other people around and indeed [H] being on the Defendant's lap. The Crown suggests, it is a matter for you if you are going to making this allegation against that background, why would you not make more serious and you may think the question that [A] asked on this was important?" So it goes on for another page. We think that it was necessary to summarise the case for the prosecution and then the case for the defence, if the judge was not then going to go through a lengthy recital of the evidence, over the space of one day. If he was going to do that then to embark on what was described as a speech for the prosecution over the space of some 10 to 15 pages of the beginning was, in our view, wrong and unnecessary. Against that, we should point out that there was at least a short page at this point of the summing-up summarising the case for the defence. During the course of it, in three sentences, the judge does make clear important points on the behalf of the defence. He said: "The defence in effect say would a married man of good character with children sexually assault this 13 year old under the very noses of his wife and children indeed even with his own son on his lap? If she was being abused, why would she continue to come round so often and go to the very place where she knows he will abuse her? Would she, even though young, have been going on Twitter and if you find it was her, to vote in I think Star quiz, so soon after she was upset about what happened?" So he did in short form summarise the case for the defence. He then, after that opening of about 10 pages, as, we have pointed out, run through the case for the prosecution and run through the complaints that were made. He reminded the jury, having directed them that what the mother said about the truth of the girl was not evidence in support of the prosecution unnecessarily reminded them of those passages when the girls' mother spoke of how she had found her daughter to be truthful. That detracted from the correct direction that they could not use that as support for the prosecution. On the next day he did run in great detail through the evidence given by the defendant, by his wife and by other witnesses. So he did balance the unnecessarily long recitation of the evidence given by the Crown by a similarly lengthy and unnecessary lengthy running through of the evidence of the defence. Having criticised the judge in the way we have for the way he chose to direct the jury, at the end we have to ask ourselves whether the verdicts of guilty that the jury returned after retiring for the space of nearly 2 days and over a weekend were unsafe. This court does not sit to mark summings-up according to their excellence or otherwise but has to direct itself as to whether the effect of this summing-up was to render these verdicts unsafe. It was a finely balanced case and it is a shame that time was not taken in considering how the issues could properly be left to the jury without the unnecessary recitation of this evidence. If we had doubts on the basis that so long a recitation of the evidence might have deflected the jury from a fair consideration of the issues with which they were faced we would unhesitatingly have allowed this appeal. But we do not. The issues were clear. Although there was a stark conflict between the evidence given, on the one hand, on behalf of prosecution and that by the defence, the jury can have been in no doubt but that they had to be sure that the girl was telling the truth despite the curious circumstances, particularly of 9th January. They had to focus upon the accusation which the appellant said the mother of the child had made in the curious terminology that he said she had used and consider whether, if he was not telling the truth about it, how he knew that the allegations were that he had touched her leg in a non intimate way. This was the very stuff of those matters that we call upon a jury to decide. We cannot believe that the defects in the summing-up that we have underlined can have deflected the jury from a proper and fair consideration of those issues. Though we fervently hope that this sort of summing-up will not be given in the future, we are unable to say that the verdicts reached by the jury on 3rd December 2012 at Bristol Crown Court were unsafe. There were four convictions and we dismiss the appeal against those convictions. There is no question about the sentence, which was given some days later, of a suspended sentence. So for those reasons this appeal is dismissed. MR TULLY: I think it is inherent in my Lord's comment when giving your judgment that it is a case which was covered by the 1992 Sexual Offences Act. LORD JUSTICE MOSES: I shall make that order and renew it. We are most grateful to both counsel for the assistance given in this case.

BANUMATHI, J. Leave granted. Appellants who are the sons and daughter of the deceased Chanchali Nayak have filed this appeal seeking enhancement of companypensation for the death of their mother in the road accident on 29.09.1991 as against companypensation of Rs.70,600/- awarded by the tribunal and affirmed by the High Court of Orissa. Mother of appellants-Chanchali Nayak was working as an agricultural labourer. On the date of accident - 29.09.1991 at about 8.00 a.m., Chanchali Nayak was proceeding on the left side of the CIVIL APPEAL NOOF 2017 SLP C NO.31405/2016 road alongwith some other labourers. At that time, due to head-on-collision between two vehicles-bus bearing No.OSF 5157 and truck bearing No.OAC 495 , the bus swerved to the extreme left side of the road and ran over Chanchali Nayak and she succumbed to injuries. In the claim petition filed by the claimants, the tribunal held that the accident was due to rash and negligent driving of both the vehicles. So far as the companypensation is companycerned, the tribunal has taken the monthly income of the deceased at Rs.650/- per month and after deducting an amount of Rs.250/- towards her personal expenses, assessed the companytribution to the family at Rs.400/- per month. Deceased was aged 42 years and the tribunal adopted multiplier of 12 and awarded companypensation of Rs.57,600/- for the loss of dependency and adding companyventional damages, tribunal has awarded total companypensation of Rs.70,600/-. The respondents No.1 and 2 - owners of the bus and the truck were held liable to pay the companypensation to the claimants at 50 each alongwith interest at the rate of 9 per annum. Pointing out that the claimants have number produced the insurance policies of the vehicles, the tribunal held that CIVIL APPEAL NOOF 2017 SLP C NO.31405/2016 the insurance companypany is number liable to indemnify the companypensation. However, it is seen from the judgment of the High Court that the insurance companypany has been satisfied with the award. On appeal to the High Court by the claimants, the High Court affirmed the quantum of companypensation of Rs.70,600/- awarded to the claimants but reduced the rate of interest from 9 to 7. So far as the liability of the insurance companypany is companycerned, the High Court held that the insurance companypany-respondent No.3 having paid the companypensation to the claimants cannot avoid its liability to pay the companypensation amount. Being dissatisfied with the quantum of companypensation, the appellants have filed this appeal. We have heard the learned companynsel for the appellants. Respondent No.2 and insurance companypany-respondent No.3 have number entered their appearance. We have perused the impugned judgment and the materials placed on record. PW-1 in his evidence stated that Chanchali Nayak was earning Rs.35/- per day as wages out of the labour work. Deceased Chanchali Nayak was an agricultural labourer. The tribunal has taken her income at the rate of Rs.25/- per day and assessed the monthly CIVIL APPEAL NOOF 2017 SLP C NO.31405/2016 income at Rs.650/- per month. It is quite improbable that a labourer would be available for such a small amount of Rs.25/- per day. The wages fixed by the tribunal for the daily labourer at Rs.25/- per day and the monthly income at Rs.650/- is too low. The reasoning of the tribunal that a lady labourer may number get engagement daily is number acceptable. Even though works like cutting of paddy and other agricultural labour may number be available on all days throughout the year, in rural areas other kinds of work are available for a labourer. Deceased Chanchali Nayak even though was said to be earning only Rs.35/- per day at that time, over the years, she would have earned more. In our view, deceased Chanchali Nayak, being a woman and mother of three children, would have also companytributed her physical labour for maintenance of household and also taking care of her children. The High Court as well as the tribunal did number keep in view the companytribution of the deceased in the household work, being a labourer and also maintaining her husband, her daily income should be fixed at Rs.150/- per day and Rs.4,500/- per month. Taking income from the agricultural labour work at Rs.3,000/- per month and Rs.1,500/- per month for the household work, the CIVIL APPEAL NOOF 2017 SLP C NO.31405/2016 monthly income of the deceased is fixed at Rs.4,500/- per month deducting 1/3rd for personal expenses, companytribution of deceased towards the family is calculated at Rs.3,000/- per month and Rs.36,000/- per annum. Deceased Chanchali Nayak was aged 42 years. As per the second schedule to the Motor Vehicles Act, 1988, for the age groups 40-45 years multiplier is 15. As per Sarla Verma Smt. and Others v. Delhi Transport Corporation and Another 2009 6 SCC 121, for the age groups 41-45 years multiplier to be adopted is Therefore, the multiplier of 12 adopted by the tribunal and the High Court may number be companyrect. Hence, the multiplier of 12 adopted may number be companyrect. Adopting the multiplier of 14 loss of dependency is calculated at Rs.5,04,000/- 3,000x12x14 .

Judgment of the Court (Sixth Chamber) of 5 December 1996. - Commission of the European Communities v Hellenic Republic. - Failure to fulfil obligations not contested - Directives 92/118/EEC and 93/52/EEC - Failure to transpose within the prescribed periods. - Case C-91/96. European Court reports 1996 Page I-06393 Parties Grounds Decision on costs Operative part Keywords Member States - Obligations - Implementation of directives - Failure to fulfil obligations not contested (EC Treaty, Art. 169) Parties In Case C-91/96, Commission of the European Communities, represented by Maria Condou-Durande, of its Legal Service, acting as Agent, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, also of its Legal Service, Wagner Centre, Kirchberg. applicant, v Hellenic Republic, represented by Ioanna Galani-Maragoudaki, Assistant Special Legal Adviser in the Community Legal Service of the Ministry of Foreign Affairs, and Nana Dafniou, Secretary in the same Service, acting as Agents, with an address for service in Luxembourg at the Greek Embassy, 117 Val Sainte-Croix, defendant, APPLICATION for a declaration that, by failing to adopt within the prescribed periods the laws, regulations and administrative provisions necessary to comply with, first, Council Directive 92/118/EEC of 17 December 1992 laying down animal health and public health requirements governing trade in and imports into the Community of products not subject to the said requirements laid down in specific Community rules referred to in Annex A(I) to Directive 89/662/EEC and, as regards pathogens, to Directive 90/425/EEC (OJ 1993 L 62, p. 49) and, second, Council Directive 93/52/EEC of 24 June 1993 amending Directive 89/556/EEC on animal health conditions governing intra-Community trade in and importation from third countries of embryos of domestic animals of the bovine species (OJ 1993 L 175, p. 21), the Hellenic Republic has failed to fulfil the obligations imposed on it by the Treaty and by those directives, THE COURT (Sixth Chamber), composed of: G.F. Mancini, President of the Chamber, J.L. Murray, C.N. Kakouris, P.J.G. Kapteyn and H. Ragnemalm (Rapporteur), Judges, Advocate General: D. Ruiz-Jarabo Colomer, Registrar: R. Grass, having regard to the report of the Judge-Rapporteur, after hearing the Opinion of the Advocate General at the sitting on 24 October 1996, gives the following Judgment Grounds 1 By application lodged at the Court Registry on 22 March 1996, the Commission of the European Communities brought an action under Article 169 of the EC Treaty for a declaration that, by failing to adopt within the prescribed periods the laws, regulations and administrative provisions necessary to comply with, first, Council Directive 92/118/EEC of 17 December 1992 laying down animal health and public health requirements governing trade in and imports into the Community of products not subject to the said requirements laid down in specific Community rules referred to in Annex A(I) to Directive 89/662/EEC and, as regards pathogens, to Directive 90/425/EEC (OJ 1993 L 62, p. 49) and, second, Council Directive 93/52/EEC of 24 June 1993 amending Directive 89/556/EEC on animal health conditions governing intra-Community trade in and importation from third countries of embryos of domestic animals of the bovine species (OJ 1993 L 175, p. 21), the Hellenic Republic had failed to fulfil the obligations imposed on it by the Treaty and by those directives. 2 Under Article 20(1) of Directive 92/118 the Member States were to bring into force the laws, regulations and administrative provisions necessary to comply with Articles 12(2) and 17 of that directive by 1 January 1993 at the latest and with the other provisions before 1 January 1994. Furthermore, in accordance with that provision, they were forthwith to inform the Commission thereof. 3 Under Article 2(1) of Directive 93/52 the Member States were to bring into force the laws, regulations and administrative provisions necessary to comply with that directive before 1 January 1994 and were forthwith to inform the Commission thereof. 4 Since the Commission received no notification of any measures taken by the Hellenic Republic to transpose Directives 92/118 and 93/52 and since there was no other evidence available to it to suggest that that State had complied with its obligation, on 10 February 1994 the Commission sent the Greek Government a letter of formal notice. 5 In the absence of a reply, on 21 September 1994 the Commission issued a reasoned opinion to the Greek Government requesting it to adopt the necessary measures within two months of its notification. 6 Since it had still not been informed of any measures to transpose Directives 92/118 and 93/52, the Commission brought this action. 7 In its application, the Commission points out that, in accordance with Articles 5 and 189 of the EC Treaty, the Hellenic Republic was obliged to transpose Directives 92/118 and 93/52 in full within the prescribed periods. 8 The Hellenic Republic does not dispute that obligation. It states, however, that two draft presidential decrees intended to implement the two directives have been placed before the competent minister for signature. 9 Since Directives 92/118 and 93/52 have not been transposed within the prescribed periods, the action brought in this connection by the Commission is well founded. 10 It must be held accordingly that, by failing to adopt within the prescribed periods the laws, regulations and administrative provisions necessary to comply with Directives 92/118 and 93/52, the Hellenic Republic has failed to fulfil the obligations imposed on it by Articles 20(1) and 2(1) respectively of those directives. Decision on costs Costs 11 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. The Commission has asked for the Hellenic Republic to be ordered to pay the costs. Since the defendant has been unsuccessful, it must be ordered to pay the costs. Operative part On those grounds, THE COURT (Sixth Chamber) hereby: 1. Declares that, by failing to adopt within the prescribed periods the laws, regulations and administrative provisions necessary to comply with, first, Council Directive 92/118/EEC of 17 December 1992 laying down animal health and public health requirements governing trade in and imports into the Community of products not subject to the said requirements laid down in specific Community rules referred to in Annex A(I) to Directive 89/662/EEC and, as regards pathogens, to Directive 90/425/EEC and, second, Council Directive 93/52/EEC of 24 June 1993 amending Directive 89/556/EEC on animal health conditions governing intra-Community trade in and importation from third countries of embryos of domestic animals of the bovine species, the Hellenic Republic has failed to fulfil the obligations imposed on it by Articles 20(1) and 2(1) respectively of those directives; 2. Orders the Hellenic Republic to pay the costs.

2004 1 SCR 532 The Judgment of the Court was delivered by KAPADIA, J. The question before us is Whether the post of Assistant Public Prosecutor hereinafter referred to as APP was a Civil Post under the State of West Bengal in terms of Section 15 of the Administrative Tribunals Act, 1985. Background Facts By Notification dated 9th April, 1975, the Governor of West Bengal was pleased to appoint the petitioner to act as an Assistant Public Prosecutor with effect from date of his assuming charge in the companyrt of Judicial Magistrate, Malda. The Notification was issued in exercise of the powers companyferred by Section .25 1 of the Code of Criminal Procedure, 1973. The petitioner took charge as Assistant Public Prosecutor on 23rd April, 1975. On 29th January 1977, he was posted in the Court of Chief Judicial Magistrate at Malda as Assistant Public Prosecutor. During this period the petitioner companypleted two years probation. As per Rule 4 d of the Assistant Public Prosecutors Qualifications, Method of Recruitment and Conditions of Service Rules, 1974, on 31st March, 1978 he was appointed as Assistant Public Prosecutor in the Court of Judicial Magistrate at Malda. However, his services were terminated by the Governor of West Bengal with an order No. 21144-J dated 22nd September, 1979 which order was companymunicated to him by the Administrative Magistrate, Malda with a Memo No. 1680-J dated 25th September 1979 along with a cheque for Rs. 777.70 as one months salary in lieu of numberice as required under Rule 34B 2 of the West Bengal Service Rules 1971. Suffice it to state that the petitioner being aggrieved and dissatisfied by the impugned orders filed a Writ Petition in the High Court. By judgment and order dated 25th February, 1999, the learned Single Judge allowed the Writ Petition and the impugned order of termination of service was set aside. Being aggrieved, State of West Bengal went in appeal to the Division Bench of the High Court which took the view that the petitioner was number an officer or servant of the companyrt subordinate to the High Court that the petitioner has worked as Assistant Public Prosecutor and as Assistant Public Prosecutor lie was merely assisting the Court of Judicial Magistrate on behalf of the State of West Bengal. By the impugned judgment, the Division Bench following the decision of the apex Court in L. Chandra Kumar v. Union of India and Ors., AIR 1997 SC 1127 came to the companyclusion that it was number open to the petitioner to directly approach the High Court under Article 226 of the Constitution. The Division Bench further took the view that the learned Single Judge had numberjurisdiction to entertain, try and hear the Writ Petition field by the petitioner after companyning into force of the Administrative Tribunals Act, 1985 and, companysequently, the Division Bench transferred the matter to the State Administrative Tribunal for disposal. Being aggrieved by the impugned judgment and order passed by the Division bench dated 14th January, 2003, the petitioner has moved this Court by way of Special Leave Petition under Article 136 of the Constitution. ISSUE The short point for determination is whether the post of APP was a Civil Post under Section 15 of the Administrative Tribunals Act, 1985, hereinafter referred to for the sake and gravity the said Act, 1985 . ARGUMENTS The petitioner appeared in person. The main companytention before us was that he was an officer or servant of the companyrt subordinate to the High Court. That he was appointed as Assistant Public Prosecutor of the Malda Court vide Notification dated 9th April, 1975 and his duty was to assist the Court on behalf of the State of West Bengal. That his service companyditions were under the companytrol of the District Magistrate, Malda that his appointing authority was a judicial department and his companytrolling officer was District Officer, Malda. He companytended that the Division Bench of the High Court had erred in holding that he was number an officer of the companyrt subordinate to the High Court. He companytended that the Division Bench had erred in transferring the Writ Petition to the State Administrative Tribunal. He argued that he was appointed by the Governor of West Bengal under Section 25 1 of the Code of Criminal Procedure, 1973 and, companysequently, he was posted as Assistant Public Prosecutor in the Court of Judicial Magistrate, Malda. He companytended that the High Court had jurisdiction to companysider the matter as he was an officer of the Court subordinate to the High Court. On facts he companytended that there was a violation of Article 311 2 of the Constitution and the alleged violation was required to be examined by the High Court exercising jurisdiction under Article 226 of the Constitution of India. It was argued that the petitioner as Assistant Public Prosecutor was an officer of the companyrt of Judicial Magistrate which was companyrt subordinate to the Calcutta High Court and, therefore, the petitioner came within the ambit of the exception in Section 2 c of Administrative Tribunals, Act, 1985. Accordingly, it was argued that the Division Bench of the High Court erred in transferring the writ petition to the State Administrative Tribunal. FINDINGS For the reason mentioned hereinafter, we answer the above issue in the affirmative i.e against the petitioner. We hold that the post of Assistant Public Prosecutor was Civil Post under the State in terms of Section 15 of the said Act 1985. We hold that the High Court was right in its companyclusion that the dispute lay before the Administrative Tribunal and, companysequently, the High Court was right in transferring the writ petition to the State Administrative Tribunal. REASONS At the outset, we wish to the point out that on 19th March 1974, in exercise of the powers companyferred by the proviso to Article 309 of the Constitution, the Governor of West Bengal was pleased to frame the West Bengal Assistant Public Prosecutors Qualifications, Method Recruitment and Conditions of Service Rules, 1974. The said Rules came into force on and from 1st April, 1974. Rule 3 of the said Rules 1974 deals with method of recruitment. Rule 3 inter alia states that Assistants Public Prosecutor shall be law Officer on the establishment of Legal Rememberancer and he shall be appointed by the State Government by selection from practising lawyers of the required standing. Under Rule 4 companyditions of service of Assistant Public Prosecutor have been stipulated. Rule 4 states that the Assistant Public Prosecutor shall be whole time Government servant appointed for companyducting prosecution in the companyrt of Magistrates. It further states that Assistant Public Prosecutors shall be under the immediate companytrol of the respective Divisional Magistrate subject to the joint companytrol of the District Magistrate. Under Rule 4 d it has been further stipulated that persons appointed substantively to the permanent posts of Assistant Public Prosecutor shall undergo probation for two years. Under Rule 4 e it is further stipulated that the Assistant Public Prosecutors shall in the matter of pay, allowances, leave, retirement, pension, gratuity etc. will be governed by the Rules for the time being in force and generally applicable to persons holding appointments under the State Government. A bare reading of Rule 3 and Rule 4 of the West Bengal Assistant Public Prosecutors Qualifications, Method of Recruitment and Conditions of Service Rules, 1974 indicate that the post of Assistant Public Prosecutor is a civil post, and companysequently, all service matters companycerning such posts shall fall within the jurisdiction, powers and authority of State Administrative Tribunals under Section 15 of the Administrative Tribunals Act. 1985. Further, the order of termination passed in the present matter also indicates that the services of the petitioner came to be terminated as Assistant Public Prosecutor, Malda under Rule 6 of West Bengal Services Appointment, Probation and Confirmation Rules, 1979 on payment of one months salary in lieu of numberice. This also indicates that the post of Assistant Public Prosecutor was a Civil Post under the State in terms of Section 15 1 of the Administrative Tribunals Act, 1985. At this point, we may mention that the West Bengal Administrative Tribunal has been established under Section 4 2 of Administrative Tribunals Act, 1985, which is also indicated by West Bengal Administrative Tribunal Procedure Rules, 1994. Hence, the present dispute regarding termination of service of Assistant Public Prosecutor came within the jurisdiction, power and authority of the Tribunal under Section 15 of Administrative Tribunals Act, 1985. Lastly, it may be mentioned that a radical change was introduced in the companystitutional law relating to the Services by 42nd Constitutional Amendment Act, 1976, which inserted into the Constitutional, Article 323A, to take out the adjudication of disputes relating to companyditions of service of the public services of the Union and of the States from the Civil Courts and the High Courts and to place it before an Administrative Tribunal for the Union or of a State. In order to companye under Article 323A l , The employee must hold his employment under the Union or under a State Government. In the present case, we find that the petitioner held his employment under the State Government of West Bengal. Therefore, the Learned Single Judge of the High Court had numberjurisdiction to entertain, try and disposed of this matter under Article 226 of the Constitution.

COURT OF APPEAL FOR ONTARIO CITATION: Tolias (Re), 2019 ONCA 123 DATE: 20190219 DOCKET: C65400 Sharpe, Benotto and Brown JJ.A. IN THE MATTER OF: Helen Tolias AN APPEAL UNDER PART XX.1 OF THE CODE Jeff Marshman, for the Appellant Manasvin Goswami, for the Respondent Heard: February 8, 2019 On appeal against the disposition of the Ontario Review Board dated, March 14, 2018, with reasons for disposition dated April 9, 2018, with reasons reported at [2018] O.R.B.D. No. 794. REASONS FOR DECISION I. OVERVIEW [1] The appellant, Ms. Helen Tolias, appeals from the March 14, 2018 disposition of the Ontario Review Board (the “Board”) ordering that she be detained on the secure forensic unit at the Providence Care Hospital, Kingston (the “Hospital”). [2] Ms. Tolias submits that the Board's finding that she remains a significant threat to the safety of the public is unreasonable and the Board erred in failing to grant her an absolute discharge. In the alternative, she submits that the Board erred in failing to grant her a conditional discharge or transfer to the Centre for Addiction and Mental Health (“CAMH”) in Toronto. [3] For the reasons that follow, we dismiss her appeal. II. BACKGROUND The index offences [4] Ms. Tolias is 46 years old. She suffers from schizoaffective disorder, with persecutory delusions. [5] Ms. Tolias originally was charged in 2003 with uttering threats and criminal harassment of her ex-boyfriend, together with breach of recognizance. She was admitted to CAMH to be assessed for criminal responsibility on those charges. There, Ms. Tolias became infatuated with, and developed erotomanic delusions about, Dr. Colleton, the CAMH staff psychiatrist who conducted her assessment. She began to send him letters and repeatedly called him on the telephone. As a result, Ms. Tolias was charged with criminal harassment and with making harassing telephone calls. [6] On November 14, 2003, she was convicted of the charges relating to her ex-boyfriend. [7] Despite recognizances containing conditions that she abstain from direct or indirect communication with Dr. Colleton, Ms. Tolias persisted with her communications and was again charged. [8] On July 14, 2005, Ms. Tolias was found not criminally responsible on account of mental disorder (“NCR”) of four charges of making harassing phone calls to Dr. Colleton, three charges of failure to comply with a recognizance, and two charges of failure to comply with probation. She received a conditional discharge and was required to report to the Whitby Mental Health Centre. [9] Ms. Tolias continued in her efforts to communicate with Dr. Colleton. She was again charged and again found NCR in 2006. Since that time, Ms. Tolias has remained under the jurisdiction of the Board. Places of treatment [10] Since the disposition of the index offences in April 2006, Ms. Tolias has been detained and treated at several hospitals: she was at the Whitby Mental Health Centre from 2006 until her transfer to the Hospital in August 2009, where she remained until May 2011 when she was transferred to St. Joseph’s Healthcare in Hamilton. Ms. Tolias’s family had requested that move to facilitate visits as they lived in the GTA. [11] The Board held an early review hearing in March 2017 to consider a request by Ms. Tolias for a transfer from Hamilton to the Hospital in Kingston, which it granted. Since that time, Ms. Tolias has remained at the Hospital. [12] The capacity of Ms. Tolias to consent to treatment has fluctuated since the disposition of the index offences. At the time of the 2018 Board hearing, she had been found incapable of consenting to treatment. III. FIRST ISSUE: SIGNIFICANT THREAT TO THE SAFETY OF THE PUBLIC [13] The Board found that Ms. Tolias continued to pose a significant threat to the safety of the public because of the severe nature of her schizophrenic illness, including continued delusions of being assaulted by her treating psychiatrists, Hospital staff, and co-patients. [14] Ms. Tolias submits that the Board’s conclusion was unreasonable, for two main reasons: (i) her continued verbal misconduct was not reasonably capable of causing serious criminal harm; and (ii) she has not had any contact with Dr. Colleton who was the complainant in the index offences. [15] We do not agree. The Board’s finding was reasonable given the evidence of: the nature of Ms. Tolias’s mental illness; her continuing persecutory delusions, which have led to aggressive oral outbursts, including threats; her limited coping abilities; and the need to ensure ongoing medication compliance and optimization. [16] As well, there was evidence before the Board of a strong link between certain acts of Ms. Tolias during the review period and the conduct underlying the index offences involving her former treating psychiatrist, Dr. Colleton. Significantly, Ms. Tolias continued to voice the belief that she has a husband and, in June 2017, submitted a written request to have her name changed to Michelle Colleton, the name she used during the commission of the second index offence. As well, Ms. Tolias requested at transfer to CAMH. While that facility certainly would move her closer to family members, the evidence before the Board was that Dr. Colleton still practised there. [17] Taken together, the evidence reasonably supported the Board’s conclusion that Ms. Tolias remained a significant threat to the safety of the public. IV. SECOND ISSUE: CONDITIONAL DISCHARGE [18] The Board rejected the alternative request by Ms. Tolias for a conditional discharge. The Board described her request as “premature” for several reasons: (i) a reduction in her delusions and sometimes aggressive behaviours was needed before she could progress to grounds and community living privileges; (ii) her requests to change her name and transfer to CAMH indicated that “the delusionary thoughts regarding the victim of the index offences … remain active”; and (iii) optimization of her medications was required given the current severity of her symptoms. [19] Ms. Tolias contends that the Board failed to impose the least onerous and restrictive disposition, especially given: the lack of any violent conduct by Ms. Tolias; the existence of a strong family support network; and the lack of any attempt by her to contact Dr. Colleton when she was absent without leave from the Hospital for four days, which she spent in Toronto. [20] In its decision dismissing the appeal of Ms. Tolias from the 2016 and 2017 Board dispositions, this court directed the Board to inquire into whether conditions could be crafted to release Ms. Tolias into the community: Re Tolias , 2018 ONCA 215, at para. 20. [21] We have reviewed the transcript of the Board hearing. We are satisfied the Board made such inquiries. We are also satisfied that the evidence elicited by those inquiries support, as reasonable, the Board’s conclusion that a conditional discharge would be premature. We would also note that at the hearing Ms. Tolias, who was represented by counsel, did not present any concrete plan concerning alternative living and treatment arrangements. [22] That said, cases such as this one always raise a certain concern. The index offences involved criminal harassment. Such offences have a serious impact on the victim but, in the case of Ms. Tolias, the offences did not involve any violence. Yet, the offences occurred more than a decade ago, and since that time Ms. Tolias has remained in detention. Although the record certainly supports the Board’s conclusion that Ms. Tolias continues to suffer from a serious mental illness, cases such as this require constant vigilance and inquiry by the Board into the appropriate disposition, especially the appropriateness of a conditional discharge with community living. [23] We note that the next review hearing for Ms. Tolias will be held on February 25, 2019. We expect the Board to inquire actively into the appropriateness of alternative dispositions for Ms. Tolias. V. THIRD ISSUE: TRANSFER TO CAMH [24] As her final ground of appeal, Ms. Tolias submits that the Board erred by failing to grant her request for a transfer to CAMH. [25] We are not persuaded by this submission. First, only a year before the hearing the Board had acceded to Ms. Tolias’s request for a transfer from Hamilton to Kingston. Second, the information from CAMH placed before the Board showed that there was an extensive waiting list for secure beds at CAMH, which would delay any ordered transfer. Finally, the Board had reason to be concerned about Ms. Tolias’s request for the transfer against the background of her name change request. VI. DISPOSITION [26] For these reasons, the appeal is dismissed. “Robert J. Sharpe J.A.” “M.L. Benotto J.A.” “David Brown J.A.”

Raju, J. Delay companydoned and leave granted in SLP C Nos.1463-64/98. These matters are dealt with together since they involve companymon and identical issues and submissions have also been made by the companynsel in companymon. To properly appreciate the issues raised, the skeleton of facts, which led to the filing of the above appeals, would be necessary. Civil Appeal No.12493 of 1996 The lands in question forming part of a larger extent originally stood recorded in the name of late Nanda Oraon, a member of the Scheduled Tribe. On 15.1.42, Nanda Oraon was said to have executed a registered deed of surrender in favour of the landlord since he failed to and companyld number raise any crop on the land. The landlord, who thus came into possession of the land subsequently by a registered deed dated 16.2.42 alongwith his companysharers, settled the land permanently in favour of one Satish Chandra Baul. Part of the land settled in favour of Satish Chandra Baul was said to have been acquired under the provisions of the Land Acquisition Act and companypensation was also claimed and paid to the said person. The remaining extent was said to have been sold by the descendants of Satish Chandra Baul to various persons at different points of time during the year 1971-72. The first respondent claimed to have purchased under a registered sale deed dated 12.8.71, 5 kathas of land being a portion of plot No.1217 which was also shown as sub plot No.1217/16. She got her name mutated in the office of the Circle Officer, Ranchi, by an order dated 13.3.73 and after obtaining the necessary sanction, raised companystruction, thereon Subsequently, also for putting up additional companystruction, revised building plan was got sanctioned and when such companystruction was going on, the appellant filed an application on 12.12.85 alleging that the first respondent had forcibly with the help of her muscle men started occupying the land belonging to him and despite companyplaint made before the companycerned Police Station, it evoked numberresponse necessitating the appellant to approach the Deputy Commissioner, Ranchi. The Deputy Commissioner, Ranchi, seems to have endorsed the application to the Special Officer, Scheduled Area Regulation, Ranchi, and he, in turn, directed the first respondent to stop companystruction and also directed her to appear in his companyrt on 15.5.85 in companynection with S.A.R. case No.114/84-85 under Section 71A of the Chotanagpur Tenancy Act,1908 in short CNT Act . It may be numbericed at this stage that the appellants claim was on the basis that after the death of Nanda Oraon his son Sukhi Oraon succeeded to his interest and the appellant was adopted by Sukhi Oraon under a registered Adoption Deed dated 20.2.74. As the adopted son of late Sukhi Oraon, he succeeded to the interest of his predecessor in interest in the property. Aggrieved against the numberice direction issued by the Special Officer, the first respondent filed CWJ Case No. 118 of 1986 R challenging the jurisdiction and authority as also the legality of the proceedings initiated under Section 71A of the CNT Act. The case of the first respondent before the High Court was that Section 71A is number attracted unless it is alleged that there had been some transfer of raiyati interest by a member of Scheduled Tribe in favour of another person that there is numberprovision in the CNT Act which empowers either the Special Officer or the Police to stop companystruction of a building over the plot of land in question that the plot of land having been surrendered before the year 1947, numberprevious permission of the Deputy Commissioner was required to be obtained and that in any event the land being Chhaparbandi land, the provisions of Section 71A has numberapplication. The Writ Petition was opposed by the appellant by companytending that the registered surrender deed dated 15.1.42 was numberhing but a fraudulent method applied by the ex-landlord to get the raiyati interest in agricultural lands of recorded tenants. The claim of adoption and rights as the adopted son of Sukhi Oraon were also advanced. Since there was numberstay of further proceedings on the file of the Special Officer, he proceeded with the inquiry and directed the parties to file their respective documents because numberoral evidence was adduced before him. Ultimately, the Special Officer passed an order dated 21.11.86 directing the first respondent to restore possession of the property to the appellant and remove the companystruction, since, in his view, the matter required a decision under the first proviso to Section 71A. The first respondent was permitted to amend the Writ Petition to enable her to question the final order as well as the companysequential orders passed on 26.5.87, in the very Writ Petition. Learned Single Judge by an order dated 5.3.90 allowed the Writ Petition filed by the first respondent holding That the claim of forcible dispossession of the appellant will number amount to a transfer within the meaning of Section 71A of the CNT Act. That the lands were really Chhaparbandi lands as disclosed from the documentary evidence produced in the proceedings and even proceeding on the basis that the lands were raiyati in character inasmuch as the surrender was long before the year 1947 of the raiyati interest in favour of the landholder, the same was permissible in law and numberhing in the CNT Act prohibited such a surrender. Since the CNT Amendment Act 1947 amending Sections 46 and 72 was prospective in operation, there was numberobligation or necessity to obtain previous sanction of the Deputy Commissioner for effecting surrender in 1942, as per the earlier rulings of the said High Court and, therefore, the surrender companyld number be held to be bad for want of any proper previous permission of the Deputy 1942, or companytravention of any prohibition in law and That the surrender was made in the month of January, 1942, during the middle of the agricultural year was number an invalidating or vitiating factor, such stipulation being one devised for the benefit of the landlord and number for the benefit of the tenant. Consequently, the learned Single Judge held that Section 71A had numberapplication to the case on hand and if at all in such a case where a grievance of forcible dispossession is made, the appellant must seek only his ordinary legal remedy and quashed the orders passed by the Special Officer, challenged in the Writ Petition. Since the first respondent was dispossessed from the land during the pendency of the Writ Petition restoration of possession forthwith to the first respondent was ordered. It is against this order Civil Appeal No.12493 of 1996 has been filed in this Court. It appears that subsequently LPA No.28 of 90 R , filed against the decision of the learned Single Judge by the appellant, was also summarily dismissed and he has filed an application seeking to amend the memorandum of appeal in this Court so as to include in the relief portion a challenge to the order passed in the LPA 28 of 90 also. Application for companydonation of delay in filing a belated amendment and for exemption from filing certified companyies of the said order have also been filed. Civil Appeal Nos. of 2000 Arising out of SLP No.1463-64 of 1998 The appellant in the above appeals is the same person, who has filed Civil Appeal No.12493 of 1996 and the land involved in these appeals is also a fragment of the extent acquired initially by Satish Chandra Baul. The legal heirs of Satish Chandra Baul were said to have sold an area of 4 kathas on 1.2.72 to one Sarbeshwar Kundu who, in turn, was said to have sold the same under a registered sale deed dated 08.12.80 in favour of the first respondent-Rita Sinha. After her purchase, she got her name mutated in the official records and claimed to have paid thereafter the Chhaparbandi rents and taxes. After her purchase, she companystructed a pukka house over the land strictly in accordance with the Building Rules and Regulations, in force in the locality. While so, when the Special Officer at the instance of the appellant issued numberice directions in SAR case No.61 of 1987 on 17.10.84, the first respondent filed CWJ case No.2996 of 1994 R to quash the said proceedings. In the said Writ Petition, issues similar to those raised in the previous Writ Petition filed by Smt. Mira Nayak were raised placing reliance upon the earlier decision and the learned Single Judge by his order dated 13.3.96, applying and following the earlier judgement dated 5.3.90 in CWJ Case No.118 of 1986 R , upheld the companytentions of the first respondent. The learned Single Judge also observed that in view of the decision reported in Smt. Muni Devi and Others Vs Special Officer Scheduled Area Regulation, Ranchi 1990 PLJR 641 , even at the stage of issue of numberice initiating proceedings under Section 71A of the CNT Act, a challenge companyld be made by means of a Writ Petition since it involved a question of jurisdiction of the Special Officer and the very applicability of Section 71A to a case of pre- 1947 surrender. When the Writ Petition filed by the first respondent was allowed as above, the appellant filed a Review Petition in Civil Review No.36 of 1995 R companytending that the earlier judgement was subjudice before this Court by grant of leave to appeal and that an earlier decision of the Full Bench, which was relied upon in the earlier case also, came to be set aside by this Court. The Review Petition came to be dismissed holding that, as on date, the earlier decisions held the field and there was numberjustification to companyntenance a claim for review. Challenging the above orders in the Writ Petition and Review Petition, the above two appeals came to be filed by the appellant. The first respondent in the above appeals have number only asserted that the appellant is number the adopted son of Sukhi Oraon but that he has manipulated and fabricated a false document by impersonation also to unlawfully make a claim to usurp the land and that several adjudicating authorities, in the companyrse of dealing with statutory proceedings recorded such findings. The appellant has been found to be avoiding criminal proceedings instituted before the Chief Judicial Magistrate at Ranchi under Sections 420, 466, 467, 468, 471 and 120B, IPC, by the daughter of Sukhi Oraon claiming that her father died as early as on 18.8.73 and the appellant has fabricated documents long after his death by impersonation and that on account of his evading tactics, despite the warrants issued for his arrest, the police has moved the Chief Judicial Magistrate, Ranchi, and obtained orders of proclamation under Section 82 of the Cr.P.C. against the appellant. By producing a companyy of the order dated 21.12.98 in Ranchi Revenue Revision No.483/93 passed by the Commissioner South Chotanagpur Division it is sought to be proved that the revision filed by the appellant, claimed to be pending by the appellant in the rejoinder filed in Civil Appeal No.12493 of 1996, was already dismissed on account of companytinuous absence and number-appearance of the appellant before the Revisional Authority. The companytentions on behalf of the appellant, in all these appeals, by the learned companynsel appearing, are based upon Section 71A introduced by way of amendment in the year 1969 and Section 46 and Section 72 as they stood amended by the Amendment Act in 1947 with effect from 5.1.1948 and the decisions of this Court reported in Pandey Oraon vs Ram Chandra Sahu 1992 Suppl. 2 SCC 77 and Brisa Munda Vs Chando Kumari Others 1996 9 SCC 545 by way of challenge to the orders of the High Court. As for the claim of the appellant based on his alleged adoption, it is stated that the first respondents in the above appeals have number pursued the matter before the Appellate and Revisional Forums properly and in the absence of any adjudication by the High Court also of this issue the same cannot be urged against the appellant in these proceedings. Finally, it is pointed out that in any event the lands in question are liable to be allotted by the Deputy Commissioner to a tribal only and the first respondents in the appeals who are number tribals companyld number be allowed to hold or retain the lands in question, any longer. The learned companynsel for the first respondents while trying to justify the orders of the High Court vehemently companytended that the surrender by the tenant in this case having taken place on 15.1.1942, there was numberneed for obtaining any previous sanction from the Deputy Commissioner under pre-amended Section 72 and statutory provisions as were in force on that date only applied to the case. Likewise, according to the respondents, Section 71A, newly introduced in 1969, had numberapplication whatsoever to the case and that too at such belated point of time. The two decisions of this Court relied upon for the appellant are said to be distinguishable and number relevant for the case on hand. The character of the land was also stated to be only Chhaparbandi and that the surrender was number of any raiyati interest of a tenant to attract the provisions of CNT Act. Adverting to some of the subsequent developments and vital facts companying into existence such as - a the decision rendered on 1.8.90 in SAR case No.23/84-85 instituted by Sukhi Oraons daughter where the Special Officer held that the appellant is number the adopted son of Sukhi Oraon which came to be companyfirmed by the Appellate Court on 20.9.95 and revision filed thereon also rejected on 21.12.98 b the declaration by the companypetent Civil Court on 7.10.94 that the adoption deed under which the status of adopted son has been claimed was a forged and fraudulent document fabricated by the appellant, in title suit Nos. 80/84 and No.19/87 filed by one Sardar Amrik Singh against identical proceedings instituted by the appellant invoking Section 71A and c the criminal companyplaint filed by the daughters of Sukhi Oraon before the Chief Judicial Magistrate, Ranchi Case No.8/99 pursuant to PS No.37/99 registered under Sections 420, 466-468 and Section 120B, IPC against the appellant and his father, in which the appellant is shown to have been number only rejected bail but thereafter found to be evading arrest and absconding resulting in an order for a proclamation under Section 82 Cr.P.C. by the CJM, Ranchi, - it is forcefully companytended for the companytesting respondents that the appellant has numberlocus standi whatsoever to agitate this matter and have numberrights to claim or be vindicated and the appeals are liable to be dismissed on this ground also. We have carefully companysidered the submissions of the learned companynsel appearing on either side. The details relating to some of the subsequent developments brought on record in the shape of the relevant orders passed by the companypetent authorities disclose a disturbing picture bordering on gross misuse and abuse of process of Court involving serious criminal offences too. It is rather surprising that at a place where he had to face a factual inquiry the appellant seems to have gone underground to avoid the arms of law taking its companyrse but companytinue to fight in absentia in this companyrt. We do number propose to indict the appellant for all such misdeeds ourselves since, law in due companyrse will take care of the situation, as it deserved. Such vital facts number companying to light, which are number only grave and serious but also go to the root of the matter, undermining the very basis of his claims and even locus standi or right to agitate before companyrts in relation to the property in question, cannot be totally ignored to permit perpetuation of grave injustice and abuse of process of Court. Those facts themselves companystitute, in our view, sufficient ground to dismiss these appeals. It is by number well settled that even subsequent developments or facts and turn of events companying into existence but found really relevant, genuine and vitally important in effectively deciding the issues raised and necessary to do real, effective and substantial justice or prevent miscarriage of justice number only can but ought to be taken into companysideration by companyrts even at the appellate stage. Apparently, developing companyd feet on this account only an alternate submission has been made that in any event the first respondents being number-tribals cannot be allowed to hold or retain the property and it has necessarily to be allotted to any other tribal only by the Deputy Commissioner. Though we propose to deal with the other issues raised, having regard to the important nature of the issues raised, these appeals, in our view, have to fail even on the basis of the subsequent developments numbericed, which dis-entitle the appellant to claim or assert any rights in the lands in question. Even though this is an additional ground taken at this stage as it is serious one which dis-entitles the appellant to seek any relief on the ground that he is adopted son of Sukhi Oraon, Sukhi Oraon was son of deceased-tenant Nanda Oraon , we have companysidered the same. The said companytention is based upon judicial orders passed by the companypetent Courts ordinary as well as special companystituted by the statute with powers to adjudicate disputed question of fact and numbereffective reply denying the existence of those orders was filed by the appellant all these years. We are companycerned in these appeals only with an admitted case and class of transfer by way of surrender envisaged under Section 72 and number even any other category or class of transfer envisaged under Section 46, as it stood prior to the amendment Act of 1947. This Court was also number at all companycerned in the earlier decisions reported in 1992 Suppl. 2 SCC 77 Supra and 1996 9 SCC 545 Supra specifically with any issue relating to the law applicable to a case of surrender effected prior to 1943 but on the other hand mainly dealt with the scope of Section 71A and thereby the purport and companytent of the word transfer used therein. Even in the subsequent decision, the purport and meaning of the word transfer occurring in Section 46 4 a and that too in the companytext of dealing with a case of surrender effected in 1976 was the subject of companysideration and number the applicability of Section 71A. A perusal of the decision reported in 1992 suppl 2 SCC 77 supra would show that it did number deal with a case of surrender prior to 1947, as in this case and during the relevant point of time when surrender was made in this case there was numberstatutory provision in the CNT Act which envisaged the obtaining of prior permission of the Deputy Commissioner before surrender of the tenancy rights. Though numberfactual details are available in the judgment this is obvious from the fact that what was companysidered therein was only the scope of Section 71A added by the Amendment in the year 1969. So far as the decision reported in 1996 9 SCC 545 supra is companycerned also the date of surrender in that case is number stated specifically. Even otherwise, in para 9 of the judgment it is stated, thus - In this case an application under Section 46 4 a has been made. It is, therefore, number at all necessary whether Section 71A incorporated by amendment is applicable in respect of the land in question. Section 46 4 a companysidered in this decision which envisaged a prior sanction of the Deputy Commissioner before effecting transfer in any of the modes stated therein was introduced only in the year 1947 with effect from 5.1.1948 and numbersuch provision existed during the relevant point of time of surrender made in this case on 15.1.1942. For all these reasons, we are of the view that the two decisions relied upon for the appellant does number either apply to the present cases or support the companytentions raised before us. No doubt, the understanding of the High Court about the scope of Section 71A as interpreted by the earlier decisions of that Court numbericed therein may number be good or companyrect in view of the later declaration of law by this Court but, the High Court did number proceed to rest its companyclusion to uphold the claims of the companytesting respondents who were writ petitioners before the High Court, only on that ground. The High Court has companysidered, at length, the further question as to whether Section 71A, introduced in 1969, was attracted to this case of surrender effected by a registered deed, on 15.1.1942, in the light of the then existing statutory provisions companytained in Section 46 and 72 of the CNT Act. The nature of companysideration and the other reasons assigned in support of the order made in CWJC No.118 of 1986 R makes it clear that the statutory provisions as they stood in force on 15.1.1942 neither envisaged the obtaining of a prior sanction of the Deputy Commissioner before a surrender by a tenant companyld be made of his interest in favour of the landlord number companyld such surrender be held bad merely because it was number at the end of the Agricultural Year but immediately before. Those issues seem to have been companysidered and decided, even dehors the companytroversy raised with reference to the character of the land, proceeding on an assumption of the basis that it involved a surrender of raiyati interest. We find numberhing illegal or wrong in the said reasoning and the companyclusions arrived at by the learned Judges in the High Court appear to be well merited and quite accordance with the statutory provisions in force, at the relevant point. Therefore, in our view, numberinterference is called for with the orders of the High Court, in this regard. The submission that, in any event the companytesting respondents cannot be allowed to hold the land they being number tribals and the Deputy Commissioner is obliged to allot the same to some other tribal only does number merit our acceptance. Apart from the grounds on which we have rejected the claim of the appellant, we find that the High Court left open the question about the disputed character of the lands and the nature of interest surrendered which if had been properly companysidered and decided likely to have an impact on the question of the very applicability of the statutory provisions to the case on hand. Merely because Section 71A companymence with the words If at any time it cannot be taken to mean that those power companyld be exercised without any point of time limit, as in this case after nearly about forty years unmindful of the rights of parties acquired in the meantime under the ordinary law and the Law of Limitation.

The main issue in this case is whether the Claimant Mr Raoul Sagal was a Commercial Agent within the meaning of the The Commercial Agents (Council Directive) Regulations 1993 while selling jewellery for the Defendant Atelier Bunz GMBH ("Bunz") under an oral contract which operated for some 3½ years between 1 July 2002 and February 2006. In essence Mr Sagal says that once the substance of the entire commercial relationship and history between the parties is examined rather than the paper trail used for administrative ease it is clear that the relationship was one of commercial agency not independent distributorship. Bunz says that the relationship between the parties is clearly documented and this shows beyond serious argument that Mr Sagal was not a Commercial Agent. The litigation A Claim Form was issued on 21 September 2006, a Defence was served on 8 December. The trial took place over 4 days from 26 February as the contract between the parties was an oral one and there were disputes about its terms and about its termination. I heard from a number of witnesses, some through an admirable interpreter. I heard from the Claimant Mr Sagal, from his wife and business partner Mrs Helen Sagal, from his accountant Mr George Dub and from Mr Trevor Fitzgerald a retail jeweller in Canterbury. The Defendant called Mr Ruben Bunz its Sales Manager, Mr Georg Bunz the Managing Director and founder and Mr David Gillow, a jeweller formerly in business with Mr Sagal who now works as a Commercial Agent for Bunz. The parties wisely elected not to call other witnesses for whom statements had been prepared and served. Legal definition of Commercial Agent Before turning to the facts I first set out the test for deciding whether or not a business is a Commercial Agent. Until 1993 a "Commercial Agent" was not an animal familiar to English law as the underlying concept was derived from Roman law developed, but with differences of emphasis, in the legal systems of Germany and France. This animal has become more familiar, particularly in the Mercantile Courts and its features have been clarified in particular by two decisions of the Court of Appeal. If Mr Sagal is a Commercial Agent he can proceed with claims for compensation for loss of his exclusive agency under Regulation 17, valued for now by an expert at £227,304 and will make other claims under Regulations 7, 8 and 12. In this judgment however I am concerned only with the question whether he is a Commercial Agent within Article 2(1) of the 1993 Regulations. The definition is as follows: '…"commercial agent" means a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the "principal"), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal." In AMB Imballaggi Plastici SRL v Pacflex Ltd [1999] 2 All ER (Cmm) 249 at 252 ("Pacflex") the Court of Appeal held that a person who buys or sells as principal himself does not fall within either limb of the Article 2(1) definition and is therefore not a Commercial Agent for the purposes of the 1993 Regulations. "If a person buys or sells himself as principal he is outside the ambit of the regulations. This is so because in negotiating that sale or purchase he is acting on his own behalf and not on behalf of another. All the regulations point in the direction of the words 'on behalf of' meaning what an English Court would naturally construe them as meaning. The other person on whose behalf the intermediary has authority to negotiate the sale or purchase of goods is called the 'principal'; the duties are consistent with true agency and not with buying and reselling; 'remuneration' is quite inconsistent with 'mark up', particularly 'mark-up' within the total discretion of the re-seller". (Per Waller LJ at 252 g-j. In the second Court of Appeal decision Mercantile International Group Plc v Chuan Soon Huat Industrial Group Ltd [2002] EWCA Civ 288 ("MIG"), the reasoning in Pacflex was approved, particularly the above passage - see Lord Justice Rix at para 27. Mr Stuart for the Claimant placed emphasis on other passages in the judgment of Lord Justice Rix. He relied upon the observation in paragraph 6 that "the test is ultimately one of substance rather than form" and on the following passages from paragraphs 21 to 23. Rix LJ cites Bowstead and Reynolds on Agency - "The distinction between agent and buyer for resale normally turns on whether the person concerned acts for himself to make such profit as he can or is remunerated by pre-arranged commission. A supplier who himself fixes the resale price is likely to be a buyer for resale ..Exceptionally.. an agent may be remunerated by being allowed to keep the excess over and above a stipulated price … Each transaction must be examined on its facts, considering the extent to which an agent's duties are appropriate …" – para 21. He then goes on to analyse the reasoning of the decision in Ex parte White, re Nevill (1871) LR 6 Ch App 397 where the court had concluded that the relationship was not one of agency largely because: "It does not appear that he ever was expected to return any particular contract, or the names of the persons with whom he had dealt. He pursued his own course of dealing with the goods, and frequently before sale he manipulated them to a very great extent by pressing, dyeing, and otherwise altering their character, changing them as much as what terms he pleased as to price and to length of credit …". "But if the consignee is at liberty, according to the contract between him and his consignor, to sell at any prices he likes, and receive payment at any time he likes, but is to be bound, if he sells the goods, to pay the consignor for them at a fixed price and a fixed time – in my opinion whatever the parties may think their relationship is not that of principal and agent". – paras 22 and 23. Mr Stuart also relied on passages in Pacflex in particular observations by Peter Gibson LJ that "in construing English regulations implementing a European Directive the Court must be on its guard against giving a construction to the provisions of the regulations which defeats the purpose of the Directive or which is inconsistent with how the Directive would be understood in other member states". I do not consider that MIG has the effect claimed for it by Mr Stuart. When referring to the question of substance rather than form Rix LJ did so in a sentence which reads "it is common ground that the word "agent" can be carelessly and indiscriminately used, and that the test is ultimately one of substance rather than form". The passages at paragraphs 21 onwards relied on by the Claimant are part of a review of the authorities which lead up to the conclusions. The Lord Justice points out, in the context of the mark-up in Pacflex, that the significance of that decision was a finding by the trial judge that the basis upon which the parties did business was that of sale and resale. In MIG, unlike Pacflex and another case to which the Lord Justice refers there was documentation "which at any rate purports to describe the relationships between CSH, MIG and the purchasers and to do so in terms whereby direct contracts are brought into existence between CSH and the purchasers through the agency of MIG and with the authority and knowledge of CSH". He adds, at 31, "in my judgement, however, if the parties were not agreed that the documentation was a sham, then I do not see how it is possible to ignore its effect". A distinction in a contract between "substance" and its documentation will therefore be rare. Mr Stuart also places considerable emphasis on the decision of Fulford J in P J Pipe & Valve Co Limited v Audco India Limited [2005] EWHC 1904 (QB) which addresses various aspects of the law of commercial agency. While an important issue in that case was whether PJV was a Commercial Agent that point turned on whether the agent had authority to "negotiate" a sale (or purchase) of goods, an expression to which the Judge held that the court should avoid giving a limited or restricted interpretation. That does not arise here. The limited relevance of that decision is illustrated by the fact that the very careful analysis of the issue made no reference to either of the Court of Appeal decisions which it is common ground are central in this case. Pipe is not a licence for a broad approach to contract in this case. As I see it the test is that set out in AMB with which the Court of Appeal agreed in MIG. Immediately before the passage at 252 relied upon by Mr Kimbell Lord Justice Waller says this "In my view the question whether a person is a Commercial Agent can be more straightforwardly stated by reference to the words used in addition in the definition and was rightly answered by the Judge …". As Peter Gibson LJ puts it at 255 "the plain implication of the language of the Directive and of the Regulations is that if the sale or purchase of goods is negotiated by the intermediary in its own interest rather than on behalf of the principle, the intermediatory is not a Commercial Agent. The paradigm example of an intermediary so negotiating is as a distributor purchasing goods on the manufacturer but reselling the goods for a profit on the mark-up". It is not, as I see it, helpful to depart from that straightforward approach by conducting a close comparison between the facts of this case and those in others. The question is not whether the facts here are similar or different to case A or B where someone was held or held not to be a Commercial Agent but whether as regards the contract in question Mr Sagal was a Commercial Agent within the definition. I say straightaway that in commercial transactions the documents recorded or generated by the relationship are going to be a very important guide, more so than recollections after the event of whether the work Mr Sagal did was broadly that of a distributor or of an agent. These words are understandably used loosely in the business community without regard to any legal definition. Documents and records of transaction are particularly important in this case where the contract itself was an oral one and its terms depend upon the recollections of witnesses giving evidence about relatively sophisticated commercial matters in English, not the first language either of Mr Sagal or of those who took the decisions at Bunz. Many claims under the Regulations are brought by and against relatively modest businesses where the facts are less complex than Pacflex and MIG and the court should try to ensure that they are resolved as quickly and as cheaply as possible. Business people habitually use expressions like "agent" and "distributor" in a variety of loose ways. Moreover relationships which are in law agencies or distributors as such take a wide variety of forms. Evidence from the parties or from their witnesses of what they understand the words to mean and how they characterise a particular commercial relationship will rarely assist. Facts agreed or not much in dispute Mr Sagal has long experience in the jewellery business. From 1988 to 1992 he was a self-employed distributor of designer jewellery starting with silver and moving on to fine gold. He owned a retail shop in St Albans. He had a jewellery business in Tel Aviv between 1996 and 2001 and in 2002 entered into a contract with Bunz and resumed working in the UK with his wife who is an English law graduate. Bunz is a company which designs and manufactures jewellery made of platinum and gold employing about 45 people based in Dobel, near Karlsruhe in South West Germany. Mr Georg Bunz started the business in 1975 and his products are now sold in about 30 countries under a variety of different arrangements including, in Australia, Spain, the Benelux countries and now the UK, commercial agency. Detailed evidence of arrangements in these countries is in the bundle but it is unnecessary for me to review it for my decision. Bunz had no representative in the UK before Mr Sagal but supplied about 10 shops with jewellery. The parties made contact early in 2002 and there were meetings, mainly between Mr Sagal and Mr Ruben Bunz in April first at the Basel Jewellery Fair and then at Bunz's headquarters at Dobel. At this second meeting the parties discussed a Business Plan prepared in English by Mr Sagal, which outlined what he suggested would be a joint venture between the parties by which he would become the sole UK agent for Bunz. The plan envisaged that Mr Sagal would take orders and fax them to Bunz who would deliver and invoice Mr Sagal who would in turn invoice the customers, those invoices having reference order numbers. Mr Sagal would provide customers with UK standard terms of trading 3 days net or 3% discount for cash on delivery and require 90 days net from Bunz. Bunz would insure the UK collection, a reference to the sample line to be held by Mr Sagal. The only surviving notes of the discussions were taken by Mr Sagal with Ruben Bunz. These were taken in Hebrew but Mr Sagal has provided an English translation. These appear to be consistent with the plan. For about 90% of the products, Mr Sagal was to be sold goods at a 20% discount on Bunz's wholesale prices. Although I will refer to the competing claims by the witnesses about the terms that were agreed I do not place much reliance on the witnesses' recollections in 2008 of matters of detail discussed in English, not the first language of either, in 2002. It is more pertinent to look at what the parties did to determine what they had agreed. By July 2002 Bunz had delivered a sample line of jewellery to Mr Sagal who had already sought and secured orders and launched "Bunz UK" with Bunz's agreement and support. A letter to customers from Mr Sagal at Bunz UK informed them of the "launch of Bunz UK – the UK branch of Bunz …". Brochures and price lists were distributed and the wholesale price for jewellers was arrived at by dividing the list price by 2.2, a result which would give Mr Sagal a 25% margin. Mr Sagal had originally wanted a discount of 25%, this could in practice be achieved by increasing the recommended wholesale price for jewellers in this way. Bundle C contains sample transactions which it is accepted are representative, apart from some exceptions to which I will refer, of the pattern of trading between the parties over three and a half years. Bunz UK would take an order from a customer and then place a purchase order on Bunz. Bunz would then confirm the order giving Mr Sagal's customer number (20638) and showing the appropriate discount. Confirmations and invoices were sent to Mr Sagal in a form apparently identical to those sent to any other Bunz customer. Bunz would send an invoice to Bunz UK which in turn would send its own invoice to its customer requesting that payment be made to Bunz UK. It is unclear whether Mr Sagal ever saw Bunz's standard conditions but he had "Standard Conditions of Supply" regulating contracts between his customer and "the company", Bunz UK. Mr Sagal has produced a small number of documents showing customer numbers used by Bunz for individual retail jewellers in the UK but these appear to relate mainly to packaging and presentation material for little or no charge. The transactions appear to be notional or exceptional. When Mr Sagal did not pay Bunz on time the Bunz accounts department would send, computer generated, "dunning notices" seeking payment. Bunz issued well over 2,000 invoices to Mr Sagal during the period of the contract. From time to time during the contract Bunz agreed to postpone receiving payment from Mr Sagal until his own customer had reimbursed him. Mr Sagal's tax returns for the years 2003 to 2006 describe his occupation as being "jewellery distributor". He called his accountant to put that description in context as being a legacy of history and this is not a matter upon which I place little weight. Of more significance, Mr Sagal accounted for his purchases from Bunz and his sales to his customers, as such, in his accounts for VAT purposes. Mr Sagal's profit and loss accounts for his trading as Bunz UK record a turnover figure and then deduct expenses to arrive at profit. By far the largest expense is "purchases". On three occasions during the life of the contract Mr Sagal had to pursue customers for payment. Each time he claimed the money in his trading name of Bunz UK. For example in December 2003 Mr Lazarus, Mr Sagal's solicitor, made a witness statement in a bankruptcy claim against a customer, stating that the creditor was indeed Bunz UK. The business also seemed to have drawn a distinction when dealing with customers between its obligations to them and its own to Bunz. Thus a letter from Mrs Sagal of 7 September 2005 refers to the need for cash flow management and the fact that Bunz UK has not been paid despite having paid its own suppliers months ago (Mrs Sagal said, probably correctly, that this claim was not true and that she was trying to put pressure on but that does not mean she was mischaracterising the contractual framework). This collection activity, although limited in extent, is consistent with Bunz UK claiming for itself as the seller and not on behalf of Bunz. The parties agree about some other features of their trading relationship although dispute the significance of these. Bunz accepts that one of Mr Sagal's tasks was to promote Bunz in the UK and that it did insure (because it owned it) the sample line of jewellery handed to him in July 2002. It is agreed that Mr Sagal provided information to Bunz about all the UK retailers. Mr Sagal says that was so that credit checks could be carried out by Bunz. Bunz says that this was for the purpose of placing their details on the Bunz website and that it did not seek it to carry out credit checks. No documents suggest that it did do such checks. It is agreed that Mr Sagal did not hold stock but placed an order only when he had one from a customer. It is agreed that Bunz dealt with returns and repairs but it says it did this because it was the one with the facilities to carry out repairs and credit notes were issued by it to Bunz UK and then by Bunz UK to its customer. It is agreed that Bunz funded and expressly authorised all marketing and that Mr Sagal saw to the hallmarking of the jewellery sold in the UK. Mr Sagal sees this as evidence of commercial agency, but Bunz say this was simply part of the deal. There is disagreement about other matters said to be material. Mr Sagal says that the parties had discussed various contractual structures and opted for agency. Bunz disagrees. Mr Sagal says that Bunz fixed the prices he was to charge. Bunz disagrees and say that it agreed only to the 20% discount on wholesale price. The price Mr Sagal charged to retailers was for him and Bunz only suggested a way for him to obtain the return of 25% which he sought. Mr Sagal claims that, despite the documents, Bunz took the risk of bad debtors. Bunz rejects this. Just as Bunz points to descriptions by Mr Sagal of himself as distributor he relies upon Bunz's references to him as "representative" and "agent" (in German as "Vertreter"). Bunz says that in day to day business terminology will be legally imprecise and that the translation of "Commercial Agent" is "Handelsvertreter". There are other documents apparently consistent with Bunz UK trading on its own account. None of the dunning notices is ever questioned in principle. On one of them Mr Sagal writes back in manuscript referring to the dates when invoices are due to be paid by him. Emails from Mrs Sagal refer to the quantities of good which Bunz UK buy from Bunz and to her understanding of what the trading terms are. When their relationship is deteriorating Mr Sagal suggests matters for discussion to improve things including "change of our conditions" apparently to an informal agency. The relationship between the parties was, certainly in the early days, a successful one. The Bunz range available to Mr Sagal was extended to include the Déco Art line in February 2003 and in July 2004 Bunz was named UK jewellery awards manufacturer of the year substantially through the efforts of Mr Sagal. Unfortunately relations deteriorated and by September 2005 grievances had developed including a failure by Mr Sagal to pay monies due or to return to the sample line of jewellery when requested. Similarly Bunz sought to make an issue of Mr Sagal's decision to be involved with distribution for a company BICEGO from Italy despite the fact that it had been made aware of this development and had not opposed it. On 27 January 2006 Mr Sagal wrote to Bunz stating amongst other things "due to your recent actions we are no longer able to work with you. Please refer to my letter I offered you that we find a way to separate amicably. We expect compensation. Should you agree we can discuss the sum and how to move on from here avoiding time wasting costs and possible loss of the market for Bunz". On 7 February 2006 Bunz wrote to Mr Sagal terminating contractual relationships without notice but also as a precaution giving notice of termination to expire at the end of February 2006. The grounds relied on were the allegedly unlawful representation of BICEGO, a cut in turnover and failure to pay some €114,000. The events leading to the termination of the relationship are relevant only to the extent to which they cast light on its terms. As I see it they cast little or no light not already available. The circumstances of the termination become significant only if and when the court determines that the Claimant is a Commercial Agent. Furthermore there are other related issues currently before the court in Karlsruhe. So I propose at this stage to determine only the question of the existence or otherwise of a Commercial Agency. It would be unhelpful for me to reach uninformed conclusions on contractual issues which may be considered by another court and which have not been fully argued before me. The evidence Although the outcome of this case does not turn on evaluation of the competing accounts of witnesses of various matters I will refer briefly to the evidence of each. Mr Sagal speaks very good but not perfect English and provided a comprehensive witness statement 85 pages long. His testimony, like his witness statement argued his cause, as well as setting out his recollection of events. Answers to questions at times seemed to comprise what would suit his case rather than a considered recollection of what happened. He sometimes persisted with a position in the face of material which one would expect someone as perceptive and intelligent as he to see as plainly contradicting it. He stuck to the view that he was not a distributor but "knew that it would be easier administratively for Bunz if the paperwork trail for the business with the UK customers was conducted through me in the UK". He refers in his witness statement to "invoicing" and other inconvenient words in inverted commas. His claims that prices to the UK customers were fixed by Bunz were not consistent with the documents or with the more measured account given by Mr Ruben Bunz. He insisted that he was sure that all senior staff at Bunz knew and understood that he was a Commercial Agent and not a distributor and there was no evidence at all, beyond his assertion, to support that. He remained of the view, notwithstanding the "dunning notices" and other material that he would only ever be liable to pay money to Bunz if and when the UK customer had first paid him. Despite all the written material he emphasised "that I never bought and sold the Defendant's products on my own account". This claim and other claims such as that Bunz wanted to carry out its own credit checks on new customers were improbable and not supported by the documents. His repeated reliance on the use of words such as "representative" and "agent" in correspondence were unconvincing as was the evidence the other way from Bunz. While it is unnecessary for me to make detailed findings about what was and was not agreed at various times it seems to me very likely that the recollection of Mr Ruben Bunz is more reliable than that of Mr Sagal. Mr Sagal did not intend to mislead the court. He simply misunderstood the process and confused advocacy for his cause with dispassionate recollection of the facts. Mrs Helen Sagal was an intelligent and articulate witness who appeared to confuse what in practice Bunz was willing to do with what it was contractually obliged to do. I find it difficult to accept that she really believed, given the documentary record, that her husband's business was not buying Bunz's products and liable itself for what it bought. I do not suggest that Mrs Sagal was doing anything other than her best to assist the court but she was concentrating on putting over the case rather than giving evidence of what she recalled. Mr George Dub is Mr Sagal's accountant and he explained how his client's tax returns came to refer to him as a "distributor". I have already accepted that little turns on that description. On the question of "closing stock" I found his evidence less convincing. He described "closing stock" as a "misnomer" and said that the turnover should have been recorded instead as "commission earnings". Similarly "gross profit" should really have been "gross commission earnings". He says that this was "loose language" used by his firm "because it was easier that way". While what Mr Dub says about tax may be correct and I hesitate to disagree with a professional accountant, the use of the words turnover and purchases are entirely consistent with the written records of the dealings between the parties. Mr Trevor Fitzgerald is a retail jeweller from Canterbury who has known Mr Sagal for a number of years. He gave evidence of his understanding that he was dealing with Bunz and that Mr Sagal represented Bunz in the UK "as UK agent, trading as Bunz UK". He says that he knew Mr Sagal "was not himself responsible contractually for any problems" and that in his own mind Bunz UK was merely a part of Bunz. Mr Fitzgerald is clearly an honest man but his analysis of the contractual position from his distant standpoint added nothing. I should add that the only reason Bunz did not call similar evidence was because I made it clear, at that later stage of the trial, that I would not find it helpful. Mr Ruben Bunz, Sales Manager and the son of the founder Mr Georg Bunz was the principal witness for the Defendant. His evidence, given with the assistance of an interpreter was cautious and moderate in tone. He was very ready to agree to facts that were unhelpful to his case. He readily accepted that he had no legal basis for objecting to Mr Sagal's BICEGO contract and that he had very often agreed to postpone the payment of overdue invoices for a period and indeed in practice until Mr Sagal had been paid by a customer. In most cases his account was supported by the documents and where these were equivocal, such as on the question of whether the suggestions for retail prices were imposed rather than advised I prefer his account to that of Mr Sagal. Mr Georg Bunz, who founded the firm in 1975 was less directly involved with events affecting Mr Sagal than his son. His recollection was understandably less detailed. His recollection of events was very similar to that of his son Ruben. He was clearly doing his utmost to assist the court with his recollection of events. Mr David Gillow has long experience of the jewellery trade and was at one point in business with Mr Sagal. He gave evidence about his knowledge of Bunz UK while it was operating and of how he came to form a limited liability partnership which now acts as the Commercial Agent for Bunz in the United Kingdom. He too gave honest but irrelevant evidence about his understanding of the meaning of the terms "agent" and "distributor". Submissions of the Claimant Mr Stuart submits that except for what he describes as the "paper trail" used for invoicing everything about the case indicates a commercial agency rather than an independent distributorship. The court should look at the substance and not merely at the form of invoicing used for administrative ease. He points to the nature of the Claimant's task, to promote Bunz business for its benefit and also suggests that, as in Pacflex, the parties had discussed alternative ways of dealing and chosen agency. He points to insurance, the provision by the Claimant of information about customers, the fixing of retail prices by Bunz, the assumption by Bunz of risk of customers not paying, the absence of any holding of stock by the Claimant and the funding of marketing. He relied on how the parties characterised the relationship and other matters including the fact that Bunz operates through commercial agencies abroad and now in the UK. In his closing submissions Mr Stuart submitted that Regulation 2(1) distinguishes between two forms of Commercial Agencies, the first where the agent may "negotiate the sale or purchase of goods on behalf of another person" and the second where he may, alternatively, "negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal". He says that this is significant. It is plain from the draft that it is not necessary for the goods to be sold in the name of the principal. Thus under the Regulations goods can be sold, or appear to be sold, in the name of the agent so long as the substance of the whole transaction is that the agent is negotiating with the customer "on behalf of the principal". He then makes submissions based upon the English law of undisclosed principal, indirect representation and similar matters set out in Bowstead & Reynolds. He argues from that the existence of documents showing contracts for the sale of goods between UK retailers and the Claimant is not inconsistent with a Commercial Agency given the obligation first to construe the regulations in a way that does not defeat the purpose of the Directive and secondly to look at all the circumstances of the relationship before concluding what its nature is. Submissions of the Defendant Mr Kimbell submits that it is overwhelmingly clear that the relationship between the parties is that of a distributorship not an agency. He submits that where the documents are clear Mr Stuart's submissions based on "substance" are misconceived. In MIG Rix LJ rejected a submission that in substance the documentation did not reflect the true position which was that there were separate contracts of sale and resale in a chain. If the documentation is not a sham (and no one claims it is) it is not possible to ignore its effect. He submits that the factors identified by the Claimant are either irrelevant or wrong. He says that the initial negotiations were carried through into an arrangement from which it is obvious that the Claimant was buying from the Defendant and then selling under a separate contract to the retailer. He submits that there was no dictation of price. The dunning notices and other documents make it clear that the Claimant was aware of the true contractual position as did his own accounting and tax records. Mr Kimbell submits that the distinction between the two categories of Commercial Agent in Article 2(1) arises because within the civil law tradition a principal is only bound by a contract if it falls expressly within the mandate given to his agent. That agent may have a limited power to negotiate but none to conclude contracts on his principal's behalf. He illustrates this submission with passages from Commercial Agents and the Law by Saintier and Scholes (2005), LLP. The Regulations therefore include within the definition of Commercial Agent those who have authority to negotiate, but not to conclude sales or purchases, in the name of the principal. Is the Claimant a Commercial Agent? At the outset (in paragraph 10) I set out my views about the definition of a Commercial Agent and now apply that conclusion to the facts. There is overwhelming evidence to show that apart from on very rare and anomalous occasions the relationship was one involving purchase of goods by Mr Sagal from Bunz for the purpose of selling to his customers, mostly UK retail jewellers. He had no authority from Bunz to negotiate or contract on his behalf. This is shown by the documents recording the transactions and confirmed by other written material. The "dunning" letters were generated mechanically but recorded the reality of the contractual position. A manuscript note from Mr Sagal, emails from Mrs Sagal and legal proceedings brought against at least one defaulting jeweller confirm and are consistent with what the documents for each transaction show. The fact that Bunz from time to time agreed to accept payment only when the jeweller paid the Claimant was an indulgence of the kind one seeks in many, if not all, long-term relationships and did not change the contractual position. While I do not attach much importance to Mr Sagal's description of himself in tax records as a "distributor" it is relevant that his trading accounts and tax returns reflect the contractual structure shown by the trade documents and are not consistent with Commercial Agency. The Court of Appeal in MIG and in Pacflex was concerned with relatively complex facts which required the trial judge, at least in MIG, to consider carefully the effect of a large number of documents and the evidence of many witnesses. That exercise is not and should not be necessary in a case like this where the picture presented by the documents is clear. The documents show that Mr Sagal is not a Commercial Agent. Detailed oral evidence was not going to change that clear picture. There is, as I see it, therefore no warrant for going behind the documents and evaluating the relationship between the parties as a matter of "substance". Even if one did that exercise Mr Sagal's claim would still be likely to fail because a number of the features he identifies are consistent both with agency and distributorship and others involve disputes about the facts which, for reasons I have given, I would resolve in favour of Bunz not Mr Sagal. These reasons make it unnecessary for me to evaluate in detail Mr Stuart's able closing argument based upon the alternative definitions within Regulation 2(1) but I should say that the reason for the distinction appears plainly to be that set out in the text book cited by Mr Kimbell. There is thus no room for the broader approach for which Mr Stuart so ingeniously argues. Conclusion The Claimant was not a Commercial Agent and his claims therefore fail. There may need to be argument about further matters when judgment is handed down. I shall be grateful if the lawyers will let me have, not less than 48 hours before the hand-down of this judgment, notes of corrections of the usual kind, of what further matters they wish to raise and of reasons for anything they seek which is not agreed.

Opinion of Mr Advocate General Léger delivered on 7 October 1999. - Commission of the European Communities v Ireland. - Failure to fulfil obligations - Failure to transpose Directive 93/83/EEC. - Case C-212/98. European Court reports 1999 Page I-08571 Opinion of the Advocate-General 1 By the present application, the Commission of the European Communities requests the Court to declare that, by failing to adopt, within the prescribed period, the provisions necessary to comply with Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (1) (`the Directive'), Ireland has failed to fulfil its obligations under that directive. 2 Under Article 14 of the Directive, the Member States were to bring into force the laws, regulations and administrative provisions necessary to comply with it before 1 January 1995. Under the same article, they were required to inform the Commission immediately of the provisions adopted. 3 As it had not received any information relating to the transposition of the Directive into the Irish legal system, the Commission initiated the pre-litigation procedure provided for in Article 169 of the EC Treaty (now Article 226 EC). 4 By letter of 16 May 1995, the Commission gave Ireland formal notice to submit its observations within a period of two months. 5 By letter of 28 July 1995, the Irish Government stated that it had undertaken a comprehensive review of the Copyright Act 1963 and that the provisions of the Directive would be incorporated in the new legislation. 6 On 17 July 1996, the Commission sent a reasoned opinion to Ireland requesting it to comply with the Directive within a period of two months. 7 By letters of 2 and 9 August 1996, the Irish Government communicated its intention to adopt the necessary provisions as soon as possible. 8 The Commission brought the present action on 9 June 1998. 9 In its pleadings, the Irish Government does not deny the complaint made against it. Nevertheless, it makes two sets of observations. 10 First, it describes a number of difficulties connected with the scale of the reform of the Copyright Act and the need to implement the Directive by way of primary legislation rather than regulation. On this point, we must bear in mind that, according to settled case-law, the Court of Justice considers that a Member State cannot rely on provisions, practices or circumstances existing in its internal legal order in order to justify its failure to comply with the obligations and time-limits laid down by a directive. (2) 11 Second, the Irish Government states that the measure implementing the Directive will be published shortly. It requests the Court to order that proceedings be stayed for a fixed period, in order to enable it to comply with its obligations. (3) In my opinion, that request cannot be granted. If it agreed to stay proceedings merely on the grounds put forward by the Irish Government, the Court would be condoning Ireland's failure to fulfil its obligations rather than adjudicating on the existence of that failure. 12 Consequently, I propose that the Court should allow the Commission's application. 13 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since Ireland has been unsuccessful, it should be ordered to pay the costs, as requested by the Commission. Conclusion 14 On the basis of the foregoing, I propose that the Court: `(1) declare that, by failing to adopt, within the prescribed period, the laws, regulations and administrative provisions necessary to comply with Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, Ireland has failed to fulfil its obligations under Article 14 of that directive; (2) order Ireland to pay the costs.' (1) - Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (OJ 1993 L 248, p. 15). (2) - See, for example, Case C-238/95 Commission v Italy [1996] ECR I-1451, paragraph 7; and Case C-323/96 Commission v Belgium [1998] ECR I-5063, paragraph 42. (3) - The Irish Government states that `... [after] a period of six months ... the Commission, ... having examined the Irish legislation will find it possible to discontinue the proceedings so that the Court of Justice will not be troubled further with this case' (point 6 of the Defence).

Mr Justice Beatson : I. Introduction In these proceedings, lodged on 24 June 2011, the claimants, nine operators of residential homes in the area of the Neath Port Talbot County Borough Council ("the Council"), challenge the Council's decision on 25 March 2011 setting the rate to be paid to providers of residential accommodation for the 2011/2012 year at £426 per resident per week with a £23 supplement per week for residents with dementia. This represented an increase of 5.7%. The Council also decided to offer to enter into a four-year agreement with providers with a minimum guaranteed increase of 4% each year. Permission was granted on the papers by HHJ Vosper QC on 25 July 2011. There are 25 care homes with approximately 1032 beds in the Council's area. Approximately 814 of the beds are in independently or voluntarily run homes and 218 are in homes run by the Council. The claimants, six companies, one limited liability partnership, and two individuals, provide 351 beds, approximately 34% of the total number, and 43% of the beds in privately run homes. The Council makes arrangements under sections 21 and 26 of the National Assistance Act 1948 ("the 1948 Act") for approximately 660 elderly and frail persons. The majority are in homes in the independent or voluntary sector. Placements by the Council account for between 45% and 70% of the residents in the homes run by the claimants. The remainder of the residents are funded either by the Health Board, at fee levels set by the Welsh Ministers, or privately. Across the sector as a whole the average figure for residents placed by the Council is about 40% of the total number of residents in a home. When the homes run by the Council are taken into account, it provides or makes arrangements for accommodation for around 58% of the beds in its area. The claimants' case is that the Council unlawfully failed to set a rate which reflected their costs in providing care, and the need, given projected requirements for provision by private care homes, for the sector to be sustainable. It was also submitted by Miss Robertson QC on their behalf that the Council failed to take account in a number of ways of relevant guidance ("the Commissioning Guidance") by the Welsh Assembly Government (the relevant provisions are set out at [12] - [13]) and that the decision was procedurally unfair. As to the latter ground, it is stated that, in setting the rate for 2011/2012, the Council relied on the absence of long-term business plans by the claimants, when such plans (a) were only first mentioned shortly before the decision and (b) were mentioned in circumstances which did not inform the claimants of their importance for the decision for 2011/12. The Council's case is that the decision, which increased the rate at a time of acute pressure on its finances, clearly recognised the need to maintain the care home sector. Miss Laing QC, on its behalf, maintained that the challenge is a disguised attack on the merits of the decision or on the weight given to various factors, and that neither of these are the province of a court exercising its supervisory jurisdiction by way of judicial review. She also submitted that the claimants' reliance on the Commissioning Guidance is misconceived because that Guidance is aspirational and has the purpose of seeking to measure performance and improve performance by reference to standards rather than imposing legal duties on local authorities. More fundamentally, Miss Laing submitted that the Council's function of setting a fee under its contracts with providers is a private function and not amenable to judicial review. She also invited the court to refuse relief because, although these proceedings were lodged one day short of the three-month period from the date of the decision, there was undue delay by the claimants. Over the past twelve months there have been a number of other challenges to the weekly rates set by Councils to be paid to providers of residential accommodation: see the challenges to decisions of Pembrokeshire CC by Forest Care Homes and Mavalon Care Ltd ([2010] EWHC (Admin) 3514 and [2011] EWHC (Admin) 3371) and to a decision of Sefton BC by Sefton Care Homes Association ([2011] EWHC (Admin) 2676). This case differs from those cases because in none of them did the defendant Council argue that its function in setting the fee to be paid to providers under the contracts with them is a private function which is not susceptible to judicial review. Indeed the Council in Mavalon's case declined to adopt the position taken by Neath and Port Talbot in these proceedings: [2011] EWHC 3371 at [16]. This case is similar to those cases because the issues between the parties include the way the Council used an economic model, "the toolkit", developed by the Laing and Buisson healthcare consultancy, and the significance of that model. The model was first published in a 2002 report, Calculating a Fair Price for Care: A Toolkit for Residential and Nursing Care Costs, for the Joseph Rowntree foundation. The report was updated in 2004 and in 2008. In 2004 Laing and Buisson also prepared a report, A Fair Price for Care: Wales, for the Welsh Local Government Association ("the toolkit for Wales"). Page 5 of "the toolkit for Wales" states that in order to establish valid fair fee rates in any specific locality "it is essential to enter local data on pay rates and land prices, and to vary any other of the model's parameters if local benchmarks differ from national ones" (emphasis added). The foreword to the 2008 edition of the "toolkit" states that it "allows its users to vary the data entered according to local circumstances and conditions, and is simply intended to inform negotiation from a transparent basis". It made provision for local rather than national baseline costs and fees because pay rates and land prices, the two main determinants of care home costs, vary significantly according to locality. It did not use average baseline costs and fees (i.e. "reasonable costs") because "Councils would not wish to pay for inefficient modes of operation on a cost-plus basis – unless they were specifically to decide to do so for service quality reasons, or some other overriding reason". II. The evidence The evidence on behalf of the claimants consists of statements of Sanjiv Joshi (23 June and 27 September), Margaret Jenkins (23 June and 27 September), Martin Joyce (23 June), Barry Latham (12 June), Alison Castrey (23 June, 27 September and 9 November), Anita Williams (26 September and 24 November), Eric Davies (2 October), Timothy Valler (30 September), Pauline Barber (30 September), and Nigel Clarke (1 October). Mr Joshi is the Managing Director of the fifth claimant; Ms Jenkins is the fourth claimant and a director of the third claimant; Mr Joyce is a director of the sixth claimant, Mr Valler is the Operations Manager of a care home owned and operated by his mother, the eighth claimant, Ms Barber is a director of the second claimant, and Mr Clarke is a partner in the first claimant. Mr Latham was, until April 2011, when he retired, the senior policy advisor for Care Forum Wales, an organisation representing independent providers. His statement is made on behalf of that organisation. Ms Castrey is the claimants' solicitor. Anita Williams is the matron and company secretary of the ninth claimant. Mr Davies is a partner in the accountancy firm of DRP and Co and the third and fourth claimants' accountant. The evidence on behalf of the defendant consists of statements of Robert Rees (2 September 2011), acting Head of Community Care and Housing Services for the Council since August 2010, Susan Gorman (1 November 2011), the defendant's Principal Officer, Finance, for the Directorate of Social Services, Health and Housing, and Darren Williams (2 December 2011), a Council officer responsible for procurement and contract management. Ms Williams' second statement and Mr Williams' statement in response were filed after the hearing and concerned the ninth claimant's position in relation to PAYE. The claimants' post-hearing submission is that the new evidence supports the evidence previously before the court of a clear risk of enforcement action by HMRC against the ninth claimant and shows that risk has materialised. It is also submitted that it shows that its home "is near having to close suddenly" because it could not meet its PAYE liability. The latter is not supported by the evidence. There does appear to be an outstanding liability for PAYE in respect of 2010. But, while the recently filed material provides some additional evidence of financial pressure on a provider, it was not material before the Council when it made its decision. It is therefore not relevant to the determination of whether that decision was unlawful. III. The Law: (i) The 1948 Act Section 21 of the National Assistance Act 1948, as amended ("the 1948 Act") provides: "(1) Subject to and in accordance with the provisions in this part of this Act, a local authority may, with the approval of the Secretary of State, and to such extent as he may direct shall, make arrangements for providing – (a) residential accommodation for persons aged 18 or over who, by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them… (2) In making any such arrangements a local authority shall have regard to the welfare of all persons for whom accommodation is provided, and in particular to the need for providing accommodation of different descriptions suited to different descriptions of such persons as are mentioned in the last foregoing subsection… … (4) Subject to the provisions of section 26 of this Act, accommodation provided by a local authority in the exercise of their functions under this section shall be provided in premises managed by the authority…". In the case of Wales, by section 26(1) and (1A) of the 1948 Act, accommodation under section 21 may be provided by a private organisation that manages premises for reward. This may be done provided the premises are a care home, and the manager of the home is registered under the Care Standards Act 2000. The Care Standards Act empowers the National Assembly for Wales to set standards for care homes generally in Wales and to set conditions for individual registrations. Section 26(2) of the 1948 Act provides: "Any arrangements made by virtue of this section shall provide for the making by the local authority to the other party thereto of payments in respect of the accommodation provided at such rates as may be determined by or under the arrangements…". Section 21 has recently been considered in R (Forest Care Homes) v Pembrokeshire CC [2010] EWHC (Admin) 3514 and R (Mavalon Care Ltd) v Pembrokeshire CC [2011] EWHC (Admin) 3371) In the first of these Hickinbottom J stated (at [46]) that: "(2) In deciding whether a person is in need of care and accommodation, an authority is entitled to have regard to its own limited financial resources. However, having set that threshold and found that a particular person surpasses it, an authority is under an obligation to provide care and accommodation in fulfilment of its section 21 obligations, which is a specific duty on the authority owed to an individual, not a target duty: lack of resources is no excuse for non-fulfilment of that obligation (R v London Borough of Islington ex parte McMillan (1995) 30 BMLR 20 at page 30; and R v Sefton Metropolitan Borough Council ex parte Help the Aged [1997] 4 All ER 532). It is, however, also the position (see Forest Care Homes case at [46(3) and Mavalon at [18]) that, provided a local authority meets the minimum requirement under section 21 in some form, it has a wide discretion, both with regard to the nature of the accommodation and care, and its precise standard. (ii) Government guidance Guidance by the UK government and the Welsh Ministers tempers the wide discretion a local authority has in fulfilling its obligations under section 21 of the 1948 Act. Section 7 of the Local Authority Social Services Act 1970 provides that, in performing its functions, a local authority must "act under" the general guidance of the relevant Minister, and in the case of a devolved function, the Welsh Ministers. While it is clear on the authorities that guidance is not mandatory, it is also clear that it should be given great weight and an authority can only depart from it for cogent reasons: see the line of cases originating with R v Islington LBC, ex p. Rixon [1997] ELR 66 at 71, and most recently the Forest Care Homes and Mavalon cases to which I have referred: [2010] EWHC (Admin) 3514 at [28] and [2011] EWHC (Admin) 3371 at [22]. The National Assistance Act 1948 (Choice of Accommodation) Directions 1993 ("the Choice Directions") limit a local authority's obligation to pay for accommodation in the home preferred by the individual concerned to homes which would not cost the authority more than the "usual price" it would expect to pay for the individual's assessed needs. The Choice Directions are part of the background. But in the present case the material guidance is the Welsh Assembly Government's August 2010 Fulfilled Lives, Supportive Communities: Commissioning Framework, Guidance and Good Practice: "the Commissioning Guidance". This replaced earlier guidance issued in 2003. The relevant provisions of the Commissioning Guidance are:- "Standard 1 Social Services can demonstrate how commissioning plans have translated their commitments in local strategic plans into consistent high quality linked or seamless services to meet the needs of local citizens. ...Commissioning plans are also essential to enable local providers to develop their business plans. They should be public documents and should contain sufficient detail to signal the authority's intentions to potential service providers... Standard 2 Commissioning plans have been based upon sound evidence and reflect national policy and guidance, local strategic plans, research and best practice. They include comprehensive population needs, services, market and resource analyses. Commissioners need to have a rationale for their commissioning plans and need to be able to explain to service users, carers, councillors, taxpayers, providers and inspectors, how they arrived at their commissioning decisions... Representatives of service providers need to be engaged at each stage of the analysis process... Standard 4 Commissioning Plans have been developed with partners and have involved all key stakeholders including ... service providers... Standard 7 ...Sustainable means that short term considerations should not threaten medium to long term service delivery. Unrealistic fees, for example, may ease the pressure on the budget of the commissioner this year but if the service ceases to operate due to financial difficulties the savings will prove self-defeating. Equally, the continued investment in services which may undermine independence or fail to promote independence may prove to be unsustainable both in financial and workforce terms... Local authorities will also need to take into account that maintaining sustainable service provision in rural areas can be more costly than in urban areas and that it may be more difficult to attract new provision to such areas if existing services are lost... Local authorities are required to take into account the importance of continuity of care for individual service users in social care provision..." Standard 10 Commissioners have understood the costs of directly provided and contracted social care services and have acted in a way to promote service sustainability. Commissioners will have to take into account the full range of demands on them and their strategic priorities, as well as the resources they have at their disposal in developing their commissioning strategies. As stated earlier the financial outlook is going to be very challenging for some time to come. This makes the commissioning framework more important. In seeking long term value for money and determining the budget available for specific social care services it is necessary for commissioners to take into consideration a whole range of factors, for example: The national or local economic environment may be making it difficult for some provider organisations to remain financially viable. A requirement to improve the quality of services may put a short-term strain on resources. The move to an outcomes-based approach may pose serious cultural as well as financial challenges. Recognition of the need for service providers to be able to recruit employees with the skills and aptitudes necessary to deliver good quality care, to provide them with the training they require to obtain qualifications relevant to their duties and to facilitate continuing professional development to extend their abilities. The need to re-train the workforce to respond to more up-to-date practices may have transition cost and service implications. Thus, it will be important for commissioners, in contract, fee and service level negotiations, to recognise the financial and service challenges that are having an effect on providers, and consider both short and longer term scenarios. Local authorities need to have mechanisms in place to discuss costs and performance with providers. Fee setting must take into account the legitimate current and future costs faced by providers as well as the factors that affect those costs, and the potential for improved performance and more cost-effective ways of working. The fees need to be adequate to enable providers to meet the specifications set by the Commissioners together with regulatory requirements. Registered providers also have an obligation to ensure that the income which they receive for providing the service is sufficient to meet the cost of delivering a service which complies with all statutory requirements, contractual conditions and specified service standards. Commissioners should have a rationale to explain their approach to fee setting. The primary concern is that services operate safely and effectively to promote the welfare of service users and carer and meet regulatory requirements." The references to the "financial and service challenges" and "more cost-effective ways of working" are concerned with what Standard 9 describes as the need for "value for money" and "fit[ness] for purpose". Value for money, under Standard 9 "balances quality, cost and effectiveness, taking account of available resources". IV. The factual background In about 2007 the Council set up a sub-committee to agree a fair price for care and to narrow areas of dispute about the use of the "toolkit". One issue was that the data initially provided to the Council by care homes was in an inconsistent format which meant that it could not be used to populate the "toolkit". After publication of the 2008 edition, the Council used a version of it to inform its decision regarding fees, but the "toolkit" did not dictate the decision: Rees, statement, paragraph 44. In fact, in all but one year between 2005 – 6 and 2010 – 11 the rate paid by the Council was less than the floor rate calculated using the "toolkit". One reason for this was that the occupancy rates in Neath Port Talbot frequently exceeded the toolkit's assumed occupancy rate of 90%: Rees, paragraph 53. In October 2008, the Council and the local Health Board published the Neath Port Talbot Joint Strategy for Older People 2009 – 2012 ("the Joint Strategy") in order to influence the planning and commissioning of services in the area. The background was an anticipated increase in numbers of elderly people needing care and an overall policy of rebalancing resources to provide a greater element of support for domiciliary and community services to support people in their own homes and communities. There would, it was anticipated, be a corresponding reduction in the use of residential accommodation. Towards the end of January 2010, in the light of a report by officers Improving Residential Care Services in Neath Port Talbot, the Council's Executive Board decided to conduct a consultation exercise based on this as a preferred option. There was wide consultation, including with providers, over a three month period. In the light inter alia of the outcome of the consultation, the Council adopted a policy of rebalancing provision in this way. In January 2010 the Council also decided that the building and management of replacements for its own care homes should be undertaken by a private provider. This project was known as the TOPS project. The Council decided to do this because of the poor condition of its own homes and because it considered that it would be more cost-effective to proceed in this way than for it to refurbish its own homes. Its analysis of the cost in the strategic business plan was based on bed numbers in line with the "toolkit". In April 2010 Care Forum Wales, a group representing the providers of care services in Wales, complained to the Welsh Assembly Government's Chief Inspector of Care and Social Services ("CSSIW") about the inadequacy of the annual increases and claimed that local authorities were not complying with 2003 Commissioning Guidance, which the Welsh Assembly Government was considering updating at that time. It did so in August 2010 when the current guidance was introduced. In October 2010 Mr Latham, on behalf of Care Forum Wales, made a submission about fee levels on the basis of the "toolkit", proposing a floor rate of £499 per resident per week. The next significant event was a meeting of what was known as the fees sub-group on 26 January 2011. It was attended by Sue Gorman and Kath Williams on behalf of the defendant, and Mr Joshi, Ms Jenkins, Mr Joyce and Ms Williams, representing those operating care homes. At the meeting, Ms Gorman, responding to a question by Mr Joshi about the principles for updating the "toolkit", stated that the Council would have to rely on national indicators and figures, not actual figures, because not all the information available was usable in the model. The action points recorded in the claimants' note of the meeting are that the Council's Director was to respond to Mr Joshi's query about Care Forum Wales's proposal for a floor rate, and the providers were to supply evidence to demonstrate increase in care hours, utilities and dependency levels. Ms Jenkins is recorded as asking about current vacancies because she had several empty beds in her care homes, and said that "elderly people's rights are not being considered". On 15 February 2011 the Council met with providers to discuss the process of setting the fee for 2011 – 2012. This was the first meeting attended by Mr Rees. He and Ms Gorman stated that CSSIW had informed the Council there were no major outstanding issues from a quality point of view. They also stated that as there was still new building going on, banks must be happy to lend on a fee level of £403 per resident per week. The providers responded that the building had been commissioned at a time when there were promises of year-on-year increases, and that on current levels they were not able to build. Mr Rees said that he was willing to use the "toolkit", but needed to understand it better and wanted to see the profit margin. He was new in post, and needed to understand providers' costs on an "open-book" basis. The claimants' note of the meeting records him stating he "could not increase fees if they were just going into extra profit". There was also discussion about the "toolkit". Ms Gorman stated the information in the "toolkit" was out of date and Mr Rees that the Commissioning Guidance did not mean that the Council had to apply the "toolkit" to arrive at a fair price. There was also a discussion about the defendant's obligations and the method to be used to arrive at a sustainable fee rate. The providers' representatives stated that there were updated figures reflecting inflation which could be used, and that the "toolkit" had always been used in Neath Port Talbot. Mr Rees asked about the providers' five to twenty year business plans. He was told that providers were unable to plan even a year ahead because they did not know what the fee levels or occupancy levels would be. Mr Rees (statement, paragraphs 66 – 67) stated the Council was concerned that the "toolkit" was not giving accurate information about providers' actual current costs inter alia because the surveys of providers were historic and not enough providers had responded to them. It was this that led him to say he preferred an open-book approach. The next major development occurred on 2 March, when the Council set its overall budget. The claimants maintain that the result of this was that, although the Council had not yet set the 2011 – 12 rate, there was no provision for a change in the allocation for residential care in the light of the costs. The Council's position is that it accepted that it needed to spend more on residential care. This, it is contended, was shown by an increase in the care budget of some £728,000 to £6.4 million. The result of that meant that there would have to be considerable savings in other budgets. On 4 March, Mr Joshi furnished the Council with a synopsis of the financial strains on providers. This inter alia stated that several care homes were in breach of their financial covenants with their respective banks, that many homes stated they were deferring PAYE payments in order to enable them to be able to deal with shortfalls in cashflow, and that their bankers were rejecting applications for fresh finance because their businesses were not viable on the current fee rates. The synopsis also referred to low occupancy rates, as low as 70%, although the "toolkit" model is based on an occupancy rate of 90%. It also referred to strains resulting from increases in the cost of food and utilities in the region of 20%, and increases in the wage bill of at least 5%. The synopsis also referred to the need for capital expenditure, and to the large investment in past years to upgrade existing homes to comply with physical environment requirements of the CSSIW. It stated that the fact that homes had increased capacity in the three preceding years was not a test of the sector's financial health because those homes which had increased capacity had done so in order to enable themselves to run more efficiently, and in anticipation that low fee rates would be addressed. That assumption was based on the Council's action when it began to address the low fee rate in 2008 – 2009. The synopsis also stated that it was impossible for providers to produce business/development plans for the next five to ten years in the current environment. The reason given was that the basis of the projections "would have to be the fee rates and occupancies currently achieved", and that "using these assumptions the forecasts would not allow the development of a sustainable business". The next meeting was on 9 March. It was attended by Councillor Morgan, one of the members of the Board. Mr Joshi took Councillor Morgan through the synopsis of the financial stress experienced by providers. The providers stated that occupancy rates were lower than 90%, and one home was experiencing an occupancy rate of "mid-70%". The providers stated that the Council must be aware of the costs because of its involvement in its own homes, and the TOPS programme. They also said they were unable to go to their banks for further support because, as a result of the low fee rate, they could only make a poor business case for such support. At this meeting, Mr Rees stated that he had sufficient information to deal with the issue. The Council's budget had been approved and he knew the "global" position and what was available for the following year. He also stated that he had to consider the viability of the market and the impact on service users, and that he wanted to explore a legally binding agreement to last four years to provide stability. The issue would be the base point at which to start. On 23 March, two days before the meeting of the Council's Cabinet Board, a copy of Mr Rees's draft report was sent to Mr Joshi. On the day of the meeting, Mr Joshi sent the Council comments on behalf of the providers. He stated inter alia that the likely consequence of paying the sum proposed was that homes would "become increasingly unviable". He proposed a fee for 2011 – 2012 of £457.32 (the floor of the "toolkit" calculation) with a commitment to minimum annual increases of 4% for the next three years. He also proposed that a quality payment over and above this be instituted within the next 12 months backdated to 6 April 2011. V. Mr Rees's Report to the Council's Cabinet Board and the decision Mr Rees's report to the Council's Social Care, Health and Housing Cabinet Board (hereafter "the Cabinet Board") referred to section 7 of the Local Authority Social Services Act 1970, and to the Commissioning Guidance issued by the Welsh Assembly Government, and in particular Standard 10. He noted that the Council had to have a rationale to explain its approach to fee-setting, and set out the factors for consideration, which included analysis of demand and the providers' legitimate current and future costs. He referred to the Joint Strategy (which was a background paper) and the anticipated increase in the numbers of elderly people needing care and the level of dementia in the older age population. He also referred to the policy of enabling people to remain in their own home when possible. The section of the report on resources referred to the budget allocation for packages of care, £6.4 million for 2011/2012. This was an increase of £728,000 on 2010/2011. The report stated that the Council's strategy presumed that over a period of time resources would be rebalanced to provide a greater element of support for domiciliary and community services which encouraged independent living by residents in their own homes and communities. That process had started and the Council's own TOPS programme contemplated a reduction of the number of its beds from 261 to 220. It was also stated that it was necessary to consider, in consultation and partnership with the sector and with residents, "the numbers, size and type of facilities which will be supported by the Council over a reasonable timescale". This was stated to enable providers to prepare business plans and developments which accorded with the strategic direction of the Council. The report stated that the financial position of providers was a major factor which the Council had to weigh when considering fees. A copy of the providers' representations on financial strains was annexed to it. This section of the report also stated that the providers' response indicated the difficulties that a number of them claimed they were facing in relation to their ability to continue to provide a service, and that it was "necessary to do further work with the sector to evaluate the degree of the problem and its likely impact on providers and their service users". The report also stated that none of the businesses "seems to be able or have worked to any long-term business plan" and that the absence of such basic documents made any assessment difficult. It stated that: "it is not possible therefore to be able to provide members with any definitive position statement on the financial position of the homes, why it arose in the first place, and what, if any, part the level of fees played in the situation. Neither has it been possible from the information received to date to disentangle or understand the profit margin which is being applied as against any loss or deteriorating financial position, and the degree of likely impact that would have on their service users". In the section on classification and quality, it stated that in the last year several care homes had either extended or rebuilt, with an estimated increase of 60 beds over the next 3 months. As to monthly vacancy information, in January 2011 93% of beds were occupied, compared to 97% in October 2010. This section also considered evidence as to whether the service was operating safely and effectively by reference to contract monitoring and the Inspectorate's ("CSSIW") inspections. The main points noted from the latter were that two homes were not complying with the 2010 85% single to double room ratios. To do so would be costly and reduce the number of beds and consequently the income of those homes. It also stated that five of the homes had to invest in sluicing and laundry facilities, one home required improvements in the physical environment, and another home did not meet the ratio of toilets and bathrooms to numbers of service users. The conclusion section set out the factors the Council had to weigh before making a decision. Those are: the resource available to the Council; demands and strategy priorities; providers' legitimate and future costs; the potential for improved performance and more cost-effective ways of operating; providers' ability to meet contractual and regulatory requirements; and the need to ensure the welfare of service users. The report recommended that the Council consider a dual approach. The first limb of this was the establishment of a minimum payment level for beds for the years 2011/2012 to 2014/2015 and a discussion and consultation process. The second limb would consider the establishment of an open-book approach for ascertaining costs, profits and forward investment plans, the development of a differential fee structure to address differences in quality and outcomes. It would also consider likely bed purchasing policy over the next five to ten years to enable providers to have a framework for development of their business plans to reflect business sustainability. This section of the report referred to the Council's tight financial circumstances. But it stated that balanced alongside that "is the need to ensure that the present occupants…have a safe and effective service", that there is "sufficient finance for the present service and for improvements", and that the Council "will be able to finance sufficient new placements to replace placements which come to an end". The report also stated that, while there was "some evidence to show that there is some pressure on providers", there are other "pointers to the fact that they continue to provide the level of quality of service at the present price". It concluded that "it seems clear that some degree of price movement is required to maintain the sector". The report then stated that the Council had examined the Laing and Buisson figures and what the "toolkit" would lay down as fees for Neath Port Talbot. It stated that the Council's "toolkit" calculation indicated a figure of £457.32 per resident per week "as the cost floor", and the national "toolkit" calculation provided by Care Forum Wales indicated a national figure of £499 as the cost floor for homes which do not exceed the physical standards for existing homes. It, however, stated that "the impact of implementing that level of fee in relation to the budget available is at present unsustainable and would have an unacceptable impact on the Council's ability to finance replacement beds at the present level with considerable impact on both service users and the providers themselves". The recommendation was that the fee be set at £426 per resident per week for 2011/2012, an increase of £23, or 5%, and that the fees for the following three years be set out at a minimum level of £443, £461 and £479. In each case, this was subject to an additional supplement for residents with dementia. On 25 March the report and Mr Joshi's comments were considered by the Council's Social Care, Health and Housing Scrutiny Committee. The Committee supported the proposals that were to be considered by the Cabinet Board. On the same day, the Cabinet Board decided to accept the recommendations in Mr Rees's report and set the rate accordingly. VI. The claimants' case Miss Robertson submitted the Council fell into reviewable error on a number of grounds, some of which overlap, and some of which were first raised in a letter to the Council dated 12 August 2011, after these proceedings were instituted. I summarise the grounds now pursued thus:- (1) The Council misunderstood or misstated the nature of long term demand for residential care in its area. Miss Robertson submitted that Mr Rees's report to the Cabinet Board, (and thus the Council's decision) was based on the false assumption that the Council's change of strategy as to the use of residential placements would lead to a fall in the number of placements in privately provided accommodation over time. This, she maintained, was inconsistent with the Council's own projections of the need for funded beds in the private sector which required providers to remain in the sector and, in a number of areas, to expand their capacity by 2015. The decision made no reference to those projections and thus failed to take into account a relevant factor and was also a breach of the Commissioning Guidance. (2) The Council's decision that it was unable to judge the degree of financial pressure on providers without seeing their business plans was both procedurally unfair and irrational or perverse. As to procedural unfairness, the Council had told providers at the meeting on 9 March that it had sufficient information to make its decision for 2011/12, providers had been led to believe that business plans would only be relevant for decisions for later periods, and such plans had only been requested shortly before the decision. As to irrationality, the Council had over a number of years analysed providers' costs and the rate of return "by using" (skeleton argument, paragraph 49(b)) the Laing & Buisson "toolkit" and could have reached a conclusion on the financial pressures faced by providers from the information provided by providers and as to the finances of the Council owned and run homes and such plans could not be prepared without knowledge of the rates set. (3) The Council failed to reach a view as to whether there was an accumulated shortfall because of past underpayment of fees, as providers contended and "perversely and unfairly treated the absence of business plans as a reason not to reach any conclusion about this": skeleton argument, paragraph 55. (4) The Council misunderstood the element of "return on capital", and "took the irrational and unfair position that it was not prepared to pay an increase if this might go into profit". This was because the providers needed profit to be sustainable, a requirement promoted (see [17]) by Standard 7 of the Commissioning Guidance. Miss Robertson accepted that the "toolkit's" use of a 12% rate of return on capital was not the only one but submitted (skeleton argument, paragraph 53) that it is a relevant factor, and in view of its use in the past, in order to depart from that, the Council needed an alternative methodology or rationale which it did not have: skeleton argument, paragraphs 50 and 52(b). (5) In relation to Laing and Buisson's "toolkit":- (a) The Council's own calculation of the rate using the "toolkit" produced a figure which, at the lowest end of the range (£457.32), was £34 more per person per week than the rate determined by the Council. The rate set was also some £75 per person per week less than Care Forum Wales's "toolkit" calculation of £499. No rationale was given for picking this figure other than lack of resources. The report and the decision rejected or ignored the Laing and Buisson calculation particularly in relation to inflation. It was contended that the "lack of resources" rationale is erroneous in law. Although a Council's resources are relevant in its determination of the eligibility threshold or whether or not it is necessary to meet an individual's needs by providing residential care, lack of resources is not a reason for declining to fulfil the obligation to provide the residential care which has been determined to be necessary. (b) The Council used the "toolkit" calculation in its plans to outsource the building and management of six homes. It was submitted that it was inconsistent and irrational to treat the "toolkit" calculation as reliable in that context, but to ignore it when setting the fee rate for independent providers. (6) The Council's reliance on reports from CSSIW that quality standards were generally satisfactory and that some providers had expanded capacity was flawed because those factors were not inconsistent with the existence of a significant shortfall in the rate paid to providers. (7) The Council based its conclusion on an assumed occupancy of 93% across the sector when some providers' occupancy rates were significantly lower and some were struggling financially at 100% occupancy: skeleton argument, paragraph 56 and the witness statements referred to, for example Mrs Jenkins, second statement, paragraphs 7-8, Mr Joyce, statement, paragraphs 8-24 and Mr Joshi, second statement, paragraph 2. (8) The Council failed to have any or adequate regard to:- (a) relevant guidance from the Welsh Assembly Government (in particular Standards 7 and 10 of the Commissioning Guidance); (b) the consequences for providers should the rate be insufficient to sustain the service offered; (c) information about running costs available to it from its own homes; and (d) increased costs due to reduced occupancy rates as a result of the Council unlawfully directing residents to its own homes or to Southern Cross homes, and delaying funding assessments to residents (9) The Council failed to take proper steps to balance the welfare and interests of the residents for whom it makes arrangements and its financial resources. This ground had various forms. Originally, one was that the Budget decision of 2 March 2011 was an unlawful fetter on the Council's discretion: summary grounds of complaint, paragraph 3, and skeleton argument, paragraphs 24, 44. In the light of Ms Gorman's evidence this was not pursued in that form but (see supplemental skeleton argument, paragraphs 16-18) it was submitted that the Council failed to budget adequately in the light of the numbers needing care and the costs of the providers, and this was contrary to standard 10 of the Commissioning Guidelines. (10) Taking into account inflation, the decision is "practically a standstill" "in real terms", in a sense "no more than updating the fee for RPI inflation", an increase of "zero or close to it": see section 5 of the claim form, paragraph 20, summary grounds of complaint, paragraph 6, and first skeleton argument, paragraphs 3 and 55. Having acknowledged that some increase in the rate was necessary, it then failed to provide one in real terms. In the light of the financial pressures on providers recognised in Mr Rees' report, the implication of this (although it was advanced in a muted form at the hearing) that the decision to adopt a figure with this effect was Wednesbury unreasonable or, using Lord Diplock's terminology, "irrational". VII. Discussion (i) Amenability to judicial review Logically, the first question is whether the decision to set the rate to be paid to providers is amenable to judicial review. Miss Laing recognised that the first instance decisions on care homes present a mixed picture. She, however, submitted that only in one, R v Cleveland CC, ex p. Cleveland Care Homes Association (1994) 158 LG Rev. 641, was it held after argument that the decision, there to impose a new contract at short notice, was amenable to judicial review. In that case a challenge on Wednesbury unreasonableness/ Diplockean "irrationality" succeeded. But in the other cases (e.g. R (Birmingham Care Consortium) v Birmingham City Council [2002] EWHC 2188 (Admin); R (Forest Care Homes) v Pembrokeshire CC [2010] EWHC 3514 (Admin); R (Sefton Care Association) v Sefton BC [2011] EWHC 2076 (Admin); R (Mavalon Care Ltd) v Pembrokeshire CC [2011] EWHC 3371 (Admin)) amenability to judicial review was assumed without argument. Miss Laing submitted that the Cleveland Care Homes Association case is wrong and inconsistent with R v Newcastle CC, ex p. Dixon (1993) 92 LGR 168, which she invited me to prefer. In ex p. Dixon Auld J accepted that the decisions were not amenable to judicial review. Miss Laing's primary submission was that, as a matter of principle, although the Council is a public body, the function it exercises when setting a fee under contracts with providers is a private law function. She relied in particular on the judgment of Neuberger LJ in Hampshire CC v Supportways Community Services Ltd [2006] EWCA Civ 1035 at [35] – [43] and, by analogy, that of Pitchford J (as he then was) in R (Hopley) v Liverpool Health Authority [2002] EWHC 1723 (Admin) at [39], [55] and [58]. The question whether a particular function is a public function has been the subject of considerable analysis and differences of approach by courts: see for example YL v Birmingham CC [2008] AC 95 (Lord Bingham of Cornhill and Baroness Hale of Richmond dissenting) and R (Weaver) v London and Quadrant Housing Trust [2009] EWCA Civ 587 [2010] 1 WLR 363 (Rix LJ dissenting). In those cases the context was whether the bodies were public bodies within section 6 of the Human Rights Act 1998. Weaver's case considered whether, when terminating a tenancy, a registered social landlord, a "hybrid" rather than a "core" public body for the purposes of the 1998 Act, was subject to section 6 and to public law principles. It is clear that, because the purpose of attaching liability under section 6 of the 1998 Act is different to the purpose of subjecting a body to public law principles, "it cannot be assumed that because a body is subject to one set of rules it will therefore automatically be subject to the other": Elias LJ in Weaver's case at [37]. However, the approach taken by the majority of the court in Weaver's case to the section 6 issue is, in its broad thrust, of analogical assistance in the present context. Elias LJ (at [83]) indicated that he agreed with the Divisional Court's view that the landlord's decision to terminate a tenancy was governed by public law principles and susceptible to judicial review on conventional public law grounds. See also the discussion of Weaver's case and the approach taken by the Deputy High Court Judge (Mr John Howell QC) in R(McIntyre) v Gentoo Group Ltd [2010] EWHC 5 (Admin). At [21] the learned judge stated that "… if the act was one to which section 6 of the 1998 Act applied, it was also one also governed by public law and thus susceptible of judicial review on conventional public law grounds". For Elias LJ (at [55] and [57]) the starting point is "to focus on the nature of the act in the context of the body's activities as a whole". The act in the present case is the fee-setting decision of the Council. In respect of that decision, the wider context is the function of a local authority under the 1948 Act in providing care or making arrangements for others to provide care for those who need it. That is a public function. While the fee-setting function of the Council is less closely regulated than those of a registered social landlord, the statutory and regulatory framework shows that a Council does not have the freedom that a private individual would have to use its bargaining power to drive down the price as far as possible. The mere fact that the decision concerns the setting of a fee under a contract does not mean that it is to be characterised as a private act. In Weaver's case Elias LJ (at [76]) distinguished acts necessarily involved in the regulation of what is a public function, which he considered to be public acts, from those which are purely incidental or supplementary to it. The decision in this case cannot be characterised as purely incidental or supplementary to the function of making arrangements for the provision of care in care homes operated by third party providers for those who qualify under the 1948 Act. While there are aspects of the Commissioning Guidance which may be characterised as aspirational or as indicating "best practice", the guidance was issued by the Welsh Ministers under section 7 of the Local Authority Social Services Act 1970. The relevant legislative authority, here the UK Parliament in section 21 of the 1948 Act and section 7 of the 1970 Act, and the Welsh Assembly Government in section 26 of the 1948 Act, has entrusted responsibility for providing or making arrangements for care and accommodation for those who by reason of age, illness or disability need it. The Commissioning Guidance makes it clear that, in performing these functions, a Welsh local authority such as the Council in these proceedings, must actively consult providers. Providers themselves are under a duty to "carry on" the care homes they run in such manner as are likely to ensure they "will be financially viable": Care Home (Wales) Regulations 2002 SI 2002 No. 324, reg. 26. I reject Miss Laing's submission that the purpose of the Commissioning Guidance and its terms mean that its sole effect is to provide a framework of standards against which the effectiveness of a local authority's commission could be measured by the Annual Council Reporting Framework and each local authority's scrutiny committee. The earliest of the cases relied on by Miss Laing was ex p. Dixon. But in that case it was not argued that the defendant was in breach of a public law obligation. Moreover, the statutory requirement in that case (see (1993) 92 LGR 168 at 180) was that the contract should be of a commercial nature. Additionally, there were no constraints on the Council's approach to contracting and fee setting of the sort that there are in the Commissioning Guidance. R v Cumbria CC, ex p. Cumbria Professional Care Ltd (2000) 3 CCLR 79, on which Miss Laing also relied, did not hold that the decision challenged was not amenable to judicial review because the relationship between the Council and the provider was contractual. The claimant in that case did not succeed because it did not identify any relevant public law unlawfulness and because of delay. The other cases relied on by Miss Laing are also distinguishable. I refer only to the three cases principally relied on. In Hampshire CC v Supportways Community Services Ltd the substance of the dispute was whether or not a contract between the Council and Supportways had come to an end in accordance with its terms: [2006] EWCA Civ 1035, per Mummery LJ at [60]. Supportways's complaint was "solely based on the contention that the Council failed to comply with its (purely contractual) obligation…": ibid., per Neuberger LJ at [40]. In Hopley's case the issue, a Health Authority's decision whether to enter into a structured settlement of a personal injuries claim, was very different. There were no relevant legislative provisions or guidance as to the way the Health Authority should approach the issue. The Mercury Energy case concerned a decision by a state enterprise to terminate a contract for the supply of electricity. There was no legislative obligation restricting the power to terminate or guidance as to the approach to be taken by the enterprise to the question of termination. The statutory framework required the enterprise to operate as a successful business and to be as profitable as private sector businesses, and there was no challenge to the new price set by it. Miss Laing had two "fallback" submissions. The first was that any public law duties owed by the Council are owed to those for whom it arranges accommodation and not to those who own or manage the homes in which the accommodation is provided. She relied on the decision of Turner J in R v Cumbria CC, ex p. Cumbria Professional Care Ltd (2000) 3 CCLR 79. She also submitted that the evidence is that there has been no impact on the residents for whom the Council has made the arrangements. As to the Cumbria Professional Care case, there was no guidance similar to the Commissioning Guidance. As to impact, contrary to Miss Laing's submission, in the present context there is an impact on residents. The fee which (see [13]) local authorities are willing to pay providers is relevant to the setting of the "usual price" under the Choice Directions and therefore to whether individuals will have to pay "top-up" fees in order to live in a home they have chosen where its charges are above the "usual price" and how much those "top-up" fees will be. In this way the fee set may have an impact on individual residents. Additionally, if the Council's decision to set the fees to be paid to providers of care is amenable to judicial review by residents of care homes, the question becomes whether the claimants have standing ("sufficient interest") to bring a claim. They clearly would because the decision affects their rights under existing placement agreements and their ability to meet their duty under regulation 26 of the Care Homes (Wales) Regulations 2002 is affected by it. Miss Laing's second fallback submission was that if fee setting is amenable to judicial review by providers, in the light of the contractual context, the scope of review is narrow and (see Mercury Energy Ltd v Electricity Corporation [1994] 1 WLR 521 at 529) normally confined to fraud, corruption or abuse of power. It is said (claimants' supplementary skeleton argument, paragraph 2) to be common ground that none of those exists in the present case. This may certainly be true as far as fraud and corruption are concerned. But "abuse of power" is an umbrella term that is often used (see Wade and Forsyth, Administrative Law, 10th ed., 292-3) to refer to the conventional grounds of failure to take account of relevant considerations or to exclude irrelevant considerations, propriety of purpose, and perversity, Wednesbury unreasonableness or Diplockean irrationality. The claimants' grounds rely on a number of these. Subject to two qualifications, in a case such as this the scope of review in principle extends to all the conventional public law grounds. The first qualification is the caution expressed by Stanley Burnton J in the Birmingham Care Consortium case at [31] - [32] about the court interfering in a process in which the local authority is in effect engaged in a contractual negotiation with providers, who may wish to improve their contractual negotiating position by recourse to public law principles. The statement in the Mercury Energy Ltd case relied upon by Miss Laing may well be an example of this caution. It is to be observed that, in that case there was no statutory or regulatory provision restricting or channelling the Electricity Corporation's discretion. Its statutory duties to operate as a successful business by becoming profitable and efficient, by being a good employer, and showing social responsibility, were very different to the duties on the Council in this case. The second qualification is that, in the very different context of competitive tendering for contracts with public authorities, special considerations, including a different remedial structure, obtain. For these reasons, despite the skill with which Miss Laing developed her submissions, I accept Miss Robertson's submission that the Council's decision is amenable to judicial review. (ii) The grounds: preliminary observations Before dealing with the substantive grounds relied on, I make three observations. The first arises from the claimants' undoubted disagreement with the merits of the decision made by the Council and the wide-ranging and detailed nature of their challenge. The challenges to the decisions by Pembrokeshire in the Forest Care Homes and Mavalon cases were also wide-ranging and detailed. In those cases, the court commented that the claimants appeared to be inviting it to address the merits of Pembrokeshire's decisions in a way that is inappropriate for a judicial review court: see [2010] EWHC 3514 (Admin) at [50] and [2011] EWHC 3371 (Admin) at [40]. The nature of the evidence and the submissions in these proceedings at times created a similar appearance: see, for example, the analysis of the budgeting process in paragraphs 14 – 18 of the claimants' supplemental skeleton argument. But Miss Robertson QC submitted that this was not so. She maintained that the Council erred in a number of fundamental respects (summarised at [43]), and that those errors vitiated its decision-making process and rendered its decision unlawful. Secondly, at a number of points, the claimants' submissions rely on the absence of a reference in Mr Rees's report to the Cabinet Board of a particular factor. The guidance in the cases on this issue can be summarised as follows. A public law decision-maker must know or be told enough to ensure that nothing that is necessary because it is legally relevant for him to know is left out of account. However, sifting by the decision-maker's officials is acceptable. They are not bound to bring to the attention of the decision-maker all the minutiae relating to the matter: see R (National Association of Health Stores) v Department of Health [2005] EWCA Civ 154 at [61] – [64] and [73] – [75], applying the approach of the High Court of Australia in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 30 – 31, and 61 and 65 – 66. Provided that which it is legally relevant for the decision-maker to know is brought to its attention, it is generally for the decision-maker to decide upon the manner and intensity of the inquiry to be undertaken into any relevant factor: see R (Khatun) v Newham LBC [2005] QB 37 at [35] per Laws LJ. A related principle is that, as I observed in Mavalon's case (at [40]), provided the decision-maker has regard to a factor that is legally relevant for it to take into account, the weight given to it is a matter for the decision-maker. Absent Wednesbury unreasonableness or what has (since the GCHQ case) been called public law or Diplockean "irrationality", it is not a matter for the court. This well-known principle (see the cases digested in Fordham's Judicial Review Handbook 5th ed., 56.3.2 and, in the context of fundamental rights, R (Samaroo) v Home Secretary [2001] EWCA Civ 1139 at [39]) is also reflected in the statement of Laws LJ in Khatun's case to which I have referred, and the decision in ELS Wholesale (Wolverhampton) Ltd v Secretary of State for the Environment (1987) 56 P & C. R. 69, albeit in the context of a statutory appeal. In the latter case May LJ stated that a planning decision is not to be pored over and analysed in a way which would have been appropriate had it been a statutory instrument, a section of a statute, or a contract. My third observation is that, as I also stated in Mavalon's case, a judicial review court will be particularly circumspect in engaging with the conclusions of the primary decision-maker in relation to complex economic and technical questions. In that case it was possible to reach a decision without entering into that difficult territory because Pembrokeshire County Council had stated it would apply the "toolkit" model for determining the rate for 2010/2011. In these proceedings, the Council has not (see [67]) stated this. Some of the submissions invite the court to grapple with similar questions. (iii) The substantive grounds relied on With that introduction, I turn to the grounds upon which the decision is challenged. As to the first (summarised at [43(1)]), the Council's strategic priorities and decision to place increasing emphasis on enabling those in need to care to continue to live in their own homes are dealt with in Mr Rees's report: see [32]. The report acknowledged that the Council's Joint Strategy, one of the background papers to the report, had indicated that various factors would increase future demand. The reference to the strategic priority to reduce reliance on residential care was a balancing factor to be set against the former factor. I accept Miss Laing's submission on this. In the light of the authorities to which I have referred (see [56] – [57]) the report did not need to refer to the Council's own projections, and the way the competing factors of increased future demand and reduced reliance on residential care were to be balanced was a matter for the Council. I shall consider the submission that the Council's approach and failure to refer to the projections also constituted a breach of the Commissioning Guidance later in this section. The next ground concerns the Council's approach to business plans: see [43(2)]. Was it unfair or irrational? I do not consider that the Council fell into error in its treatment of this matter. The sections of the report on business plans are factually accurate. The report, the Scrutiny Committee and the Cabinet Board used such material as they had from providers about their costs and the pressures on them. The Cabinet Board did not regard itself as bound by the Council's budget. Its decision resulted in it exceeding the budgeted figure for residential care by over £400,000. It recognised the need for providers to plan and for sustainability by recommending minimum increases in absolute terms for a period of four years. It sought to assess the implications of the fact that quality standards were generally satisfactory and some providers had expanded capacity. In having regard to these factors it demonstrated that it had regard to the need (set out in Standard 10 of the Commissioning Guidance) to understand the costs of care and to promote sustainability. What was stated in the report was that, in the absence of business plans, a definitive position statement could not be provided. Moreover, Mr Joshi's final comments accepted that the use of business plans to assist in understanding providers' costs would be instructive, but that the Council's failure to utilise them was due to its own failure because they only raised the point recently. It cannot be said that the Council's treatment of this question amounts to Diplockean irrationality. What of the submission that it was procedurally unfair of the Council to claim at a very late stage in the process that it was unable to judge the degree of financial pressure on the providers without seeing their business plans when it had previously told providers it had sufficient information and when there was no time for providers to furnish plans? Although business plans were first raised at a late stage, the report does not state that the information that was provided by the providers could not be used and that information was used. Recording that, in the state of the information to the Council, the conclusions on providers' costs were less than definitive, was not procedurally unfair. In any event, the providers' final position was not that they did not have plans, but that they had plans which had had to be changed because of what Mr Joshi described as the poor approach of the Council in setting rates. Those plans, which were apparently available, were not, however, provided. In short, the submission that the report and the decision were focussed and premised on the absence of business plans is not borne out by the structure and reasoning of the report. The argument that the Council should have used the "toolkit" to reach a conclusion on the financial pressures faced by providers was flawed because the "toolkit" was concerned with the calculation of costs for the relatively efficient home, but the issues here were the claimants' financial difficulties. The report accepted that there were financial pressures on providers, and examined the "toolkit" calculations before it. The Cabinet Board had regard to the evidence of pressure on providers and the "toolkit" calculation undertaken by the Council and by Care Forum Wales. The report stated that implementing those was unsustainable. What the report did not say or suggest is that the inability of the providers or (in the light of Mr Joshi's last communication before the meeting) unwillingness to provide what they had meant that the fee could not be increased. The third element of the submissions concerning the treatment of the absence of business plans is (see [43(3)]) that this was perversely given as a reason for not reaching a view as to whether past underpayments of fees had resulted in an accumulated shortfall. I reject this submission. It is simply an alternative way of putting the argument that it was Wednesbury unreasonable to conclude that a definitive position statement about the pressures and costs faced by providers could not be made. The third element of the last submission is also similar to the argument (see [43(6)]) that reliance on CSSIW's reports as to quality standards and the expansion of capacity by some providers was flawed. While the contention that these factors were not necessarily inconsistent with the existence of a significant shortfall in the rate paid, they were clearly relevant factors in the Council's assessment of the position of the providers. The next issue is whether the Council fell into error in relation to the element of "return on capital". The submission that it did appears in part to be based on a remark attributed to Mr Rees in the claimants' note of the meeting on 15 February: see [25]. There is, however, nothing in his March report to the Cabinet Board which shows this to be a factor put to the decision-maker. Moreover, absent a demonstrated accumulated shortfall because of past underpayments, in what all accept has been a very difficult financial position for public authorities, it would not have been unlawful for the Council to reject an increase which went beyond reimbursement for reasonable costs and provided "extra" profit. The second limb of the submission that the Council erred in its approach to the rate of return concerns the treatment of and departure from the "toolkit's" 12% figure. Miss Robertson submitted that the Council was entitled to depart from that, but only if it had an alternative methodology or rationale, which it did not have. I reject this submission. The position of the Council in this case differs from the position of Pembrokeshire in the Forest Care Homes and Mavalon Care cases (see [2010] EWHC (Admin) 3514 at [53] and [2011] EWHC (Admin) 3371 at [40]). In those cases, the Council had decided to apply the "toolkit" model for determining the 2010/11 rate and that model involved a 12% return on capital. In the light of that it was clear that, in respect of decisions by Pembrokeshire, the "toolkit" was more than just a relevant consideration. There was no such decision by the Neath and Port Talbot Council. In all but one year since 2005/06, although the Council used a version to "inform" its decisions concerning fees, its rates were less than the floor rate produced by the "toolkit's" calculation. Accordingly, in these proceedings, while the "toolkit" and its methodology is a relevant consideration, it is no more than that. It is noteworthy that, while only using the "toolkit" calculations to "inform" its decision about fees, the Council used them in its plans to outsource the building and management side of its own care homes. But what is relevant in the context of fees are the costs to providers, not the costs to the Council of running its own homes. For example, as the claimants accepted (skeleton argument, paragraph 6(g)), wage rates differed in Council-run homes. The Council's calculation using the "toolkit" and the calculation by Care Forum Wales were before the Cabinet Board (see [41]), but Mr Rees's evidence was that implementing either was "unsustainable" and would have "an unacceptable impact on the Council's ability to finance replacement beds" with "considerable impact on both service users and the providers…". In taking account of its resources in this way, the Council was not acting unlawfully. Taking account of a Council's resources when setting a fee to be paid to providers is different to taking account of those resources when assessing an individual's needs for the purposes of section 21 of the 1948 Act. Moreover, I reject the suggestion that the Council's approach was not underpinned by a methodology or a lawful rationale. I have referred to the fact that it took account of the information it had about providers' costs, decided the budgeted figure for care, and recommended increases for four years. I have also referred to the fact the Council considered standards and the increases in capacity by some providers. That it did so showed that the Council sought to understand the costs of care services and was acting to promote service sustainability in accordance with Standard 10 of the Commissioning Guidance. This was not straightforward. One of the problems identified by the Council at the meeting on 15 February (see [26]) was that not enough providers had responded to surveys about costs. I also reject the submission (see [43(7)]) that the rate was flawed because it was determined by what the claimants (skeleton argument, paragraph 56) characterised as "assumed occupancy figures". What in fact was put to the Cabinet Board (see [37]) was an average occupancy rate across the sector derived from monthly vacancy information. But the Cabinet Board also had before it (see [35]) the providers' critique of occupancy rates which (see [28]) stated that some were about 75%, and significantly lower than the 90% occupancy rate assumed in the "toolkit". Mr Joshi had previously taken Councillor Morgan through his synopsis on 9 March: see [30]. It cannot, therefore, be said that the Cabinet Board did not take this into account. As to the substantive submission that it was wrong to take into account an average, unless rates were to be determined for individual homes, it is difficult to see what other than an average could be used. The occupancy rate of an individual home is determined by a range of factors. It is to be recalled (see [2]) that on average across the sector the Council is responsible for a minority of placements with providers. In the case of the claimants it is responsible for between 45 and 70% of placements. Although the context differs, I also observe that there is some tension between the rejection by the claimants of an average figure in this context and their submission that the Council should have used the "toolkit's" across the board modelled figure for rate of return on capital. It is also of significance that the January 2011 occupancy rate across the sector referred to in Mr Rees's report was 93%. This was not very different from the 90% assumed by the "toolkit's" model. Indeed, it was higher. The report also referred to the October 2010 figure so that the Cabinet Board was aware that, in the three-month period between October and January, there had been a 4% fall in occupancy. But micro-examination of the rate in this way is not the function of a judicial review court. I also reject the submissions summarised at [43(8)]. The Commissioning Guidance was a background paper to Mr Rees's report. The report quoted from it and the reasoning in the report reflected the reasoning in the guidance. I have referred (see [60]) to the words of Standard 10. The guidance's provision that commissioners should "understand" providers' costs and act to promote service sustainability does not require the Council to set a fee which fully reimburses providers for their costs. As to the consequences for providers, Mr Joshi's synopsis and providers' comments on Mr Rees's report were before the Cabinet Board. The synopsis referred to providers' difficulties with their banks and meeting their PAYE obligations and strains from increases in costs of food, utilities and wages. Mr Joshi's comments on the draft report referred to homes becoming "increasingly unviable". As to information about the running costs of its own homes, for the reason I have given, in the context of the "toolkit" calculation ([67]), this was not relevant in the context of determining the fees to be paid to external providers. The submission (see [43(8)(d)]) that account was not taken of increased costs because the Council unlawfully directed residents to its own homes or to Southern Cross homes, and delayed funding assessments, relied on falling occupancy rates in claimants' homes, but high occupancy rates in the Council's homes. The argument that the Council acted in a way which reduced occupancy rates in the claimants' homes was before the Cabinet Board, and there is nothing to suggest it was not taken into account. As to whether, as a matter of substance, the Council unlawfully diverted residents and delayed funding assessments, save for one case there is no evidence of such unlawfulness. Absent evidence that individuals have been placed in homes other than the ones for which they had expressed a preference, or that there have been unreasonable delays in doing so, there was no arguable unlawfulness on the part of the Council. The evidence of a delay in one case in agreeing funding after a vacancy became available in the preferred home is unfortunate but wholly inadequate to render the Council's decision unlawful. As to the impact on occupancy rates, for the reasons stated at [2] placements by the Council were not the only determinants of occupancy rates. I have also concluded that the Council did not (see [43(9)]) fail to take proper steps to balance the welfare of those in care homes who it funded and its financial resources. I have referred (see [37]) to what was stated in Mr Rees's report about improvements, inspections by CSSIW and other compliance visits. Mr Rees's report recognised (see particularly [39], but also [34] - [36]) the need to enable providers to make long-term plans and for sustainability. That was reflected in the recommendation that a dual approach be followed, with increases at a guaranteed minimum level for the three years after 2011/2012 and a dialogue with providers about the long-term. The argument that an increase of 5.7% in absolute terms which was practically a standstill or a cut in real terms was, in all the circumstances, Wednesbury unreasonable ([43(10]), was not abandoned, but it was not at the centre of the challenge. Given the financial pressures on the Council and the fact that the 5.7% increase for the current year was coupled with guaranteed minimum increases for the next three years, it is untenable. VIII. Conclusion In view of my conclusions on the grounds, it is not necessary for me to deal with the submission (see [5]) that the claimants should be barred from relief by reason of their delay in bringing the claim. I observe only that, had they otherwise succeeded, I would not have been inclined to refuse relief on the ground of delay. For the reasons I have given, however, this application is dismissed.

LORD JUSTICE PILL: 1. This is an appeal against a decision of Hooper J in which he dismissed an application by Mr Martin Philcox to quash a decision of the Epping Forest District Council ("the Respondents") whereby on 2nd July 1998 they granted a certificate of lawfulness of existing use to W. Lowe Commercials Limited in respect of land at Rockhills, Willingale, Essex. The certificate described the established use as "the breaking of motorised road vehicles and storage of parts". The certificate was granted, notwithstanding the fact that on at least a part of the site the operation had for a considerable time been conducted without the required waste management licence and therefore contrary to section 33 of the Environmental Protection Act 1990. That section is headed "Prohibition on unauthorised or harmful deposit, treatment or disposal of waste", and provides in subsection (1) that a person shall not conduct activities (including those with respect to which the certificate was issued) "except under and in accordance with a waste management licence". Subsection (6) provides that a person who contravenes subsection (1) commits an offence. 2. Section 191 of the Town and Country Planning Act 1990 ("the 1990 Act") provides, insofar as is material: (1) if any person wishes to ascertain whether- (a)any existing use of buildings or other land is lawful; (b) any operations which have been carried out in, on, or over or under land are lawful; or (c)any other matter constituting a failure to comply with any condition or limitation subject to which planning permission has been granted is lawful, he may make an application for the purpose to the local planning authority specifying the land and describing the use, operations or other matter. (2) For the purposes of this Act uses and operations are lawful at any time if- (a)no enforcement action may then be taken in respect of them (whether because they did not involve development or require planning permission or because the time for enforcement action has expired or for any other reason); and (b)they do not constitute a contravention of any of the requirements of any enforcement notice then in force." 3. Subsection (3) deals with compliance with conditions or limitations subject to which planning permission has been granted. Subsection (4) provides for the issue of a certificate and subsection (5) sets out what shall be contained in the certificate. (6) The lawfulness of any use, operations or other matter for which a certificate is in force under this section shall be conclusively presumed. (7) A certificate under this section in respect of any use shall also have effect, for the purposes of the following enactments, as if it were a grant of planning permission- (a)section 3(3) of the Caravan Sites and Control Development Act 1960; (b)section 5(2) of the Control of Pollution Act 1974; and (c)section 36(2)(a) of the Environmental Protection Act 1990." 4. The relevant time limits for enforcement action are set out in section 171B of the 1990 Act. The expiry of those time limits provides an operator with immunity from enforcement action. It is common ground that the time limit in this case had expired when the certificate was granted. 5. Section 36(2)(a) of the Environmental Protection Act 1990 deals with the grant of waste management licences and how an application shall be made. Subsection (2) provides, insofar as is material: A licence shall not be issued for a use of land for which planning permission is required in pursuance of the Town and Country Planning Act 1990 ... unless- (a)such planning permission is in force in relation to that use of the land." 6. The effect of those provisions in the submission of the respondents in the present situation is that, though an offence has been committed under section 33 of the Environmental Protection Act 1990, the effect of section 191(2) is to render the relevant operations lawful for the purposes of the 1990 Act. The effect of section 191(7) is to provide that, when applying for a licence to conduct the relevant operations, the issue of the certificate under that section shall have effect for present purposes as if it were a grant of planning permission. Thus, the operator can apply to the authority for a waste management licence. It may be noted that he is not entitled as of right to such a licence. That is because section 36(3) of the Environmental Protection Act 1990 provides, insofar as is material: ... a waste regulation authority to which an application for a licence has been duly made shall not reject the application if it is satisfied that the applicant is a fit and proper person unless it is satisfied that its rejection is necessary for the purpose of preventing- (a)pollution of the environment; (b)harm to human health; or (c)serious detriment to the amenities of the locality." 7. Thus, the waste regulation authority must first be satisfied that the applicant for a licence is a fit and proper person and, second, it has the power to reject the application if satisfied that it is necessary to do so to prevent the mischiefs set out in subparagraphs (a), (b) or (c). 8. In my judgment, the wording of section 191 is plain, and, subject to the point made by the appellant, it has the effect I have set out. Section 191 deals specifically and expressly with a specific problem. Its enactment followed the report of Mr Robert Carnwath QC in 1988 with its consideration of that planning status, the subject of earlier litigation, described as "unlawful but immune". 9. On behalf of the appellant, Mr Howard submits that section 191 must be read in the context of a fundamental presumption of law that a person must not gain from a breach of the law. The section does not, and cannot on its wording, certify as lawful acts which are criminal. If it could, the result would be that the valuable financial benefits which may follow from the grant of planning permission have been acquired by a course of criminal conduct; and there is a fundamental proposition of English law to the contrary. To read section 191 in the manner for which the respondents contend would be to place the planning legislation in a hermetically sealed unit, it is submitted. It would remove and isolate planning law from the general law of the land. Mr Howard accepts that at no point in the section can a word simply be included to give effect to what he submits is a general presumption and fundamental principle. The section must, however, be read, he submits, against the background of that fundamental principle. 10. Mr Howard does not challenge the power of a local planning authority to grant planning permission to an operator when what the operator is doing is in breach of section 33 of the Environmental Protection Act. That, he submits, is a different situation because the local planning authority have a discretion as to whether or not to grant permission to him. I interpose only that in terms of the public interest and public concern, the effect of the two situations, the purported operation of section 191 and the express grant which Mr Howard accepts would be lawful, is the same. 11. Mr Howard refers to three strands of authority in support of his submission. In Regina v Chief National Insurance Commissioner, Ex parte Connor (1981) QB 758 the Divisional Court construed section 24 of the Social Security Act 1975. That entitled a claimant to a widow's allowance if the woman has been widowed. That requirement had been satisfied. The widow had been convicted of the manslaughter of her husband and was widowed in that manner. The court decided that the allowance was not payable. Lord Lane CJ stated at page 765 B: The fact that there is no specific mention in the Act of disentitlement so far as the widow is concerned if she were to commit this sort of offence and so become a widow is merely an indication, as I see it, that the draftsman realised perfectly well that he was drawing this Act against the background of the law as it stood at the time." 12. Lord Lane concluded that the killing had been a "deliberate, conscious and intentional act", and that was sufficient to disentitle the claimant to recover. 13. Shortly afterwards, in Regina v Secretary of State for the Home Department, Ex parte Puttick (1981) QB 767, the Divisional Court construed section 6(2) of the British Nationality Act 1948 (as amended). It entitled to registration as a citizen "a woman who has been married to a citizen of the United Kingdom and Colonies". The claimant had been married to such a citizen. Donaldson LJ, sitting in the Divisional Court, cited the judgment of Lord Lane CJ in Connor and referred to the offences of perjury and forgery which the claimant had committed. Donaldson LJ referred to the case of Beresford, to which I too will refer. He concluded at 775 G: For my part, I think that when the British Nationality Act 1948 was enacted it was well established that public policy required the courts to refuse to assist a criminal to benefit from his crime at least in serious cases and that Parliament must be deemed to have been aware of this. Against this background, bearing in mind additionally that citizenship is not only a matter of private right but also of public status and concern, in my judgment, Parliament can never have intended that a woman should be entitled to claim registration as a citizen of the United Kingdom and Colonies on the basis of a marriage achieved only by the commission of serious crime." 14. In Beresford v Royal Insurance Company Ltd [1938] AC 586 it had been held that the personal representative of a person who, having insured his life, committed suicide while sane could not recover the policy monies from the insurance company. That decision, too, was put on the ground of public policy. Lord Atkin stated at page 598: I think that the principle is that a man is not to be allowed to have recourse to a Court of Justice to claim a benefit from his crime whether under a contract or a gift. No doubt the rule pays regard to the fact that to hold otherwise would in some cases offer an inducement to crime or remove a restraint to crime, and that its effect is to act as a deterrent to crime. But apart from these considerations the absolute rule is that the Courts will not recognize a benefit accruing to a criminal from his crime." 15. Those are strong statements. They make it clear that claims to benefits under United Kingdom statutes can be construed in the light of the court's notions of public policy. It emerges from Beresford that claims against insurance companies may also be considered in the same light. The court is entitled to construe a statute, or a contract conferring benefits in the light of its ability to promote its notions of public policy. The cases do not, however, in my judgment, establish a principle that the plain words of a statute which define what is lawful must be read subject to a proviso that what is criminal cannot be lawful. Section 191, in a systematic way, defines what uses and operations are lawful for the purposes of the Act and states the consequences of achieving that status with specific reference to section 36(2)(a) of the Environmental Protection Act 1990. There is no principle of public policy which requires that the intent of Parliament as expressed in section 191 should be defeated in the manner claimed. 16. The second strand of authority relied on one upon the law of prescription. In Hanning v Top Deck Travel Group Ltd [1993] 68 P&CR 14, the plaintiff claimed by prescription an easement to convey vehicles along a track. It was argued against him that the acquisition of such an easement was prevented by section 193 of the Law of Property Act 1925, which rendered the use of manorial waste land without lawful authority, upon which he relied, illegal. Subsection (4) provided that: Any person who without lawful authority draws or drives upon any land to which this section applies any ... vehicle ... shall be liable on summary conviction to a fine..." 17. Dillon LJ stated at page 20: An easement cannot be acquired by conduct which, at the time the conduct takes place, is prohibited by a public statute. It appears to me an unanswerable difficulty in the defendant's way if, for the four or five years from the defendants' first acquisition of Young Stroat Farm, the user by the buses was illegal and a criminal offence each time the track was used by a bus, yet suddenly overnight, at the end of 20 years from the commencement of someone else's user in 1965, it all becomes legitimate. Accordingly, in my judgment, the defendants in this case have not acquired any prescriptive right to drive their buses over the track across Horsell Common." 18. Dillon LJ referred to the case of George Legge and Son Ltd v Wenlock Corporation [1938] AC 204 on which Mr Howard also relies. That case involved the construction of the River Pollution Prevention Act 1876 which made it an offence to cause certain matters to enter a stream. Rights over the stream were claimed, but it was held that the status of a natural stream could not in law be changed to that of a sewer by the discharge of sewage into it, such discharge being unlawful. Lord Maugham stated at page 222: There is, however, no case in the books in which repeated violation of the express terms of a modern statute passed in the public interest has been held to confer rights on the wrongdoer. Such a contention is indeed quite untenable." 19. Those are cases upon the law of prescription. It can readily be inferred that the use contemplated in the law of prescription is a lawful use. That is a situation quite different from the present situation in which, as I have said in the earlier context, the statute provides what is lawful. A closer analogy under the law of prescription would be if a statute were passed specifying what types of use could and could not be lawful for the purpose of prescription. 20. The third strand of authority on which Mr Howard relies consists of two cases under the planning acts themselves. In Glamorgan County Council v Carter [1963] 1 WLR 1 it was claimed that planning permission was not required under the Town and Country Planning Act 1947 because of an existing use. Section 12(5) of the Act provided circumstances in which permission was not required if certain uses of the land had occurred. It was held that the applicant could not rely upon the section because the use contemplated in the section was a lawful use. The use relied on was criminal or quasi-criminal because it was in breach of a local authority scheme which made it an offence to use the land as it was used. Similarly, in Vaughan v Secretary of State for the Environment and Mid-Sussex District Council (1986) JPL 840 it was held that the use contemplated in section 94(2) of the Town and Country Planning Act 1971, where established subsisting usages were considered, did not include an illegal use. 21. In each of those cases, the inference could readily be drawn that the statute could be construed in the way it was. The cases do not assist, in my judgment, in the present situation where Parliament has spelt out what is lawful for the purposes of the Act. 22. The further point is made on behalf of the respondents that section 191(7) would be otiose unless it had the meaning for which they contend. In reply, Mr Howard has referred the court to provisions of the Waste Management Licensing Regulations 1994, which, he says, create a situation, at any rate on a transitional basis, where subsection (7) would have a purpose upon the construction of the section as a whole which he advocates. That may be -- I make no finding upon it -- but in my judgment the scheme of the section is clear. Subsection (7) is required because the waste management scheme provided by statute involves the obtaining of a licence. A prerequisite for obtaining a licence is the possession of planning permission. A certificate shall take effect for certain purposes as if it were a grant of planning permission. Section 191 of the Town and Country Planning Act 1990 fits comfortably with section 36 of the Environmental Protection Act. It may be added that we have been referred to section 3(3) of the Caravan Sites Control & Development Act 1960, which is one of the other regimes specified in section 191(7). That regime also makes it a requirement of the obtaining of the relevant site licence that planning permission is possessed. 23. In my judgment the scheme of the Acts is clear. The wording of section 191(2) is plain. It renders lawful, for limited purposes, uses and operations which are an offence under the Environmental Protection Act. I acknowledge the force of the points that the court when construing statutes should bear in mind the statements of high authority as to the construction of statutes where one construction involves advantages being obtained from criminal conduct. Plainly there are public policy arguments the other way in the present context in the light of the Carnwath report and the need for certainty and clarity in this branch of the law. In any event, section 191 is clear and the respondents were entitled to issue the certificate. 24. I would dismiss this appeal. 25. LORD JUSTICE CHADWICK: Section 191(1) of the Town and Country Planning Act 1990, as substituted by the Planning and Compensation Act 1991, enables a person who wishes to ascertain whether any existing use of buildings or other land is lawful to make application to the local planning authority for that purpose. 26. Section 191(4) of the act requires that, if on an application under the section the local planning authority are provided with information satisfying them of the lawfulness at the time of the application of the use described in the application, they shall issue a certificate to that effect and, in any other case, they should refuse the application. 27. Section 191(7) provides that a certificate issued under section 191(4) (to which I may refer as "a certificate of existing lawful use") shall have effect for the purposes of three specified statutory provisions as if it were a grant of planning permission. Those three specified statutory provisions are: section 3(3) of the Caravan Sites and Control of Development Act 1960; section 5(2) of the Control of Pollution Act 1974; and its replacement section 36(2)(a) of the Environmental Protection Act 1990. 28. A feature common to those three statutes is that they each establish or continue a regulatory regime which prevents the occupier of land from using that land for the specified purpose unless he is the holder of a licence. For example, subsection 1(1) of the Caravan Sites and Control of Development Act 1960 prohibits an occupier of land from causing or permitting any part of the land to be used as a caravan site unless he is the holder of a site licence. Section 3(1)(c) of the Control of Pollution Act 1974 prohibited a person from depositing controlled waste on land unless the land was occupied by the holder of a licence (known as a "disposal licence") issued pursuant to section 5 of that Act. Section 3(3) of the Environmental Protection Act 1990 -which was not in force when section 191 of the Town and Country Planning Act 1990 was introduced by the Planning and Compensation Act 1991, but which came into force on 1st May 1994 by virtue of the Environment Protection Act 1990 (Commencement, No 15) Order 1994 - replaced, in substance, section 3(1) of the 1974 Act. 29. Further, the regulatory regime imposed by each of those statutes is underpinned by a criminal sanction. For example, section 1(2) of the Caravan Sites and Control of Development Act 1960 provides that an occupier of land who contravenes section 1(1) is guilty of an offence and liable, on summary conviction, to a fine. Section 3(2) of the Control of Pollution Act 1974 was in similar terms, save that the offender might also be liable to imprisonment if convicted on indictment. That provision is now replaced by section 33(6) and subsections (8) and (9) of the Environmental Protection Act 1990. 30. A third feature common to the three statutes is that no licence can be granted for the use that would otherwise be prohibited unless, at the time when the licence is issued, the applicant is entitled to the benefit of a planning permission in respect of that use on the relevant land. That restriction is imposed by the statutory provisions referred to in section 191(7) of the Town and Country Planning Act 1990 to which I have already referred; that is to say, section 3(3) of the 1960 Act, section 5(2) of the 1974 Act and section 36(2)(a) of the Environmental Protection Act 1990. 31. The use of land for purposes for which a licence is required under those regulatory statutes without planning consent (where required) will constitute a breach of planning control within the meaning of section 171(a)(1) of the Act of 1990. Accordingly, it will be a use in respect of which, prime facie, an enforcement notice could be issued by the local planning authority: see section 172 of that Act. 32. The issue of an enforcement notice constitutes the taking of enforcement action: see section 171A(2)(a) of that Act. But enforcement action in relation to breach of planning control in relation to the use of land, in this context, cannot be taken after the end of the period of ten years beginning with the date of the breach: see section 171B(3) of the Act. Prima facie, therefore, the use of land without planning permission for purposes regulated by the three statutes to which I have referred cannot be the subject of enforcement action under the Town and Country Planning Act 1990 if the land has been used for those purposes for ten years or more. It can, of course, still be the subject of a prosecution under the particular regulatory statute. And, prior to the enactment of the Planning and Compensation Act 1991, it would continue to be a breach of planning control; albeit a breach in respect of which no enforcement action could be taken. 33. It was the anomaly of a continuing breach in respect of which no enforcement action could be taken, as it seems to me, that gave rise to the concept of "unlawful but immune" to which reference is made in section 7 of chapter 7 - particularly at paragraph 3.4(v) and (vi) - of the Report "Enforcing Planning Control" made by Mr Robert Carnwath QC, as he then was. It is common ground - and, if it were not, it is beyond dispute - that it was that Report which gave rise to the amendments to Part 7 of the Town and Country Planning Act 1990 which were introduced by the Compensation and Planning Act 1991. 34. It was submitted before us, on behalf of the applicant, that, despite the plain terms of section 171B(3) of the Town and Country Planning Act 1990, enforcement action could be taken in relation to a use which, because carried out without a licence required by a regulatory statute - such as the Caravan Sites and Control and Development Act 1960 or the Control of Pollution Act 1974 - was necessarily illegal (in the sense that it constituted a criminal offence), notwithstanding that that use had continued for over ten years. It is said that that result follows from the fundamental principle - identified by the House of Lords in George Legge and Son Ltd v Wenlock Corporation [1938] AC 204 and in Beresford v Royal Insurance Company [1938] AC 586, and applied more recently by the Divisional Court in Regina v Chief National Insurance Commissioner, Ex parte O'Connor [1981] QB 758 and in Regina v Secretary of State for the Home Office, Ex parte Puttick [1981] QB 767 - that the law cannot be applied so as to enable a person to profit from his own crime. 35. For my part, I am not persuaded that that principle can have any application to a statutory provision such as that in section 171B(3) of the Town and Country Planning Act 1990. That subsection does not confer any right. What it does is to confer an immunity from a particular form of enforcement; that is to say, enforcement under the provisions of the planning legislation. The subsection confers no immunity against enforcement by prosecution under the relevant regulatory statute, which itself creates the offence. No authority has been cited to us in which the courts have recognised the principle relied upon in the context of a provision confirming immunity from enforcement under planning legislation. Properly understood, the two cases upon which the applicant relies, Glamorgan County Council v Carter [1963] 1 WLR 1 and Vaughan v Secretary of State for the Environment and Mid-Sussex District Council [1986] JPL 840, provide no support the submission that that principle has any application in that context. 36. With those considerations in mind, I return to section 191 of the Town and Country Planning Act 1990. I have referred to the requirement in section 191(4) - that the local planning authority shall issue a certificate of existing lawful use to an applicant who satisfies them of the lawfulness, at the time of the application, of the use in respect of which his application is made. Section 191(2) provides the criteria by which the lawfulness of the use must be judged for that purpose. It is in these terms: For the purposes of this Act uses and operations are lawful at any time if- (a)no enforcement action may then be taken in respect of them (whether because they did not involve development or require planning permission or because the time for enforcement action has expired or for any other reason); and (b)they do not constitute a contravention of any of the requirements of any enforcement notice then in force." 37. There can be no doubt as to the meaning of that provision. Use is lawful if no enforcement action may be taken in respect of it. Section 171B(3) of the Act, to which I have already referred, describes the circumstances in which no enforcement action can be taken. The circumstances in the present case fall within section 171B(3) and so fall within section 191(2)(a). They are not taken out of those provisions by the fact that the activity in relation to which immunity from enforcement under the planning legislation is conferred may be illegal in the context of some other regulatory statute; for the reasons that I have sought to explain. 38. In those circumstances, it is necessary to ask whether public policy requires that a person who is carrying on an activity which is illegal in the context of some other regulatory statute is disentitled from making an application for a certificate of existing lawful use under section 191(1); or, if he is not, whether the local authority is entitled to refuse to give a certificate of existing lawful use under section 191(4). 39. Whatever might be the position in other contexts, it is to my mind clear beyond argument that activity which is illegal by reason of contravention of one or other of the regulatory statutes referred to in section 191(7) is not activity which (for that reason alone) prevents an application being made under section 191(1); or which prevents a local authority from fulfilling the duty imposed upon it by section 191(4). To hold otherwise would be contrary to the plain intention of Parliament when enacting section 191(7) of the Town and Country Planning Act 1990. 40. It is clear, in my view, that Parliament had in mind that in a case where (i) activity had been continuing which required a licence under one or other of the regulatory statutes described in section 191(7), but (ii) no licence could be issued because there was no planning consent in place, the process of obtaining a certificate of existing lawful use would remove that impediment to the issue of a licence. In other words, where the activity had been continuing for ten years and so was entitled to a certificate of existing lawful use, the way was to be open to an issue of a licence under the regulatory statutes. The impediment imposed by the anomalous concept "unlawful but immune" was to be removed. 41. It does not, of course, follow that the licence would necessarily be granted under the regulatory statute. That requires exercise of a different discretion by, perhaps, a different authority. But the position under section 191 of the Town and Country Planning Act 1990 is clear. There was no basis upon which a certificate of existing lawful use could be refused by the local planning authority. 42. For those reasons and for the reasons given by Pill LJ I, too, would dismiss this appeal. 43. LORD JUSTICE BUXTON: When a person makes an application under section 191 of the Town and Country Planning Act 1990 he seeks a ruling on the question, indeed the statute describes him as wishing to ascertain, whether a specific existing use of buildings or operations on land is or are "lawful". It is quite clear from the Act and from section 191(2) that it is concerned with, and only concerned with, lawfulness as described in section 191(2), that is to say whether the situation is that either the activity does not require planning permission, or the time for enforcement action has expired, or there is an enforcement notice in force; but the activity does not contravene that notice. If one of those conditions is fulfilled as a matter of fact, the local planning authority, under section 191, has no alternative but to issue a certificate of lawful existing use. 44. Mr Howard for the appellant accepted, indeed asserted, that that was so within the confines of section 191. However, he said that this case fell under a more general principle: that it was not open to the local planning authority to issue a certificate of lawful existing use in a case such as the present where the use upon which the application was based was rendered illegal, that is to say criminal, by the application of provisions other than those contained in the Planning Acts. 45. In my judgement, if that argument were to succeed it could only succeed by establishing that there is an overriding general rule that no planning consent can be given and no favourable planning decision can be made in respect of any activity which is illegal in the sense that I have just defined. That is because a certificate of lawful existing use, like a planning permission, validates the activity at which it is directed in planning terms. It was to cure uncertainty on that point in respect of existing uses, amongst other reasons, that section 191(7) of the Act assimilated, for certain particular purposes, certificates of lawful existing use to planning permissions. The provisions were passed in order to meet the difficulty identified in the report of Mr Carnwath QC, as he then was, to which my Lord has referred. 46 Mr Howard, perhaps understandably, shrank from accepting that there was any principle as broad as that which I have formulated. He said that a certificate of lawful existing use was different in this respect from what one might call an individual planning permission. The certificate by its terms, or by its conditions, depended on 10 years unlawful use as a pre-condition of its issue. A planning permission did not entail such use. Indeed, the applicant did not have to be using the land at all in order to obtain a planning permission. That distinction enabled the case of a certificate of lawful existing use, but not a planning permission, to be brought within the broadly stated proposition drawn from a number of authorities that a party should not benefit or be permitted to benefit from his own illegal acts. However, that analysis when applied to the terms and suppositions of section 191 breaks down, as my Lord Chadwick LJ has demonstrated. A planning authority that does not take enforcement action on planning grounds against an illegal use, a use that is illegal on other grounds, thus creating the condition precedent to the issuing of a certificate of lawful existing use, does not thereby confer a benefit on the applicant by reason of his illegal act. It merely refrains from preventing an activity on planning grounds: grounds that, if they were relied on, might have nothing at all to do with the element of illegality in the activity addressed. 47. Further, it seems to me impossible to say that the illegality of the activity in question has the effect of indefinitely extending the power to take enforcement action on planning grounds, that is limited in time by section 171(b)(3) of the 1990 Act. By the same token, the principle of not benefitting from illegality is not infringed by a planning authority being given discretionary power to grant planning permission on planning grounds even if the permitted activity was illegal under some other non-planning provision. The broad principle of not benefitting from a person's own illegal acts simply does not fit into the reality of what is being done when planning permission is granted or when a certificate of lawful existing use is granted on the basis of failure to take enforcement action over a period of 10 years; and, in particular, it does not fit, for the reasons that my Lords have given, into the particular case here, which is a case specifically addressed in section 191(7). 48. For those reasons, which I venture to append to those given by my Lords, with which I agree, I also would dismiss this appeal. Order: Appeal dismissed. Respondents to have their costs of the appeal up to the 4th December, assessed at £1200. Thereafter the court considers it just and equitable that there should be an order against the Commission. The assessment of any contribution to those costs by Mr Philcox is deferred. Legal aid taxation of appellant's costs. Application to appeal to the House of Lords refused. (Order does not form part of approved judgment)

SECOND SECTION CASE OF SOYMA v. THE REPUBLIC OF MOLDOVA, RUSSIA AND UKRAINE (Application no. 1203/05) JUDGMENT STRASBOURG 30 May 2017 FINAL 13/11/2017 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Soyma v. the Republic of Moldova, Russia and Ukraine, The European Court of Human Rights (Second Section), sitting as a Chamber composed of: Işıl Karakaş, President,Julia Laffranque,Paul Lemmens,Valeriu Griţco,Ksenija Turković,Dmitry Dedov,Jon Fridrik Kjølbro, judges,and Stanley Naismith, Section Registrar, Having deliberated in private on 25 April 2017, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 1203/05) against the Republic of Moldova, the Russian Federation and Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Sergiy Volodymyrovych Soyma (“the applicant”), on 28 December 2004. After his death in 2006 his mother, Ms Pavlina Petrivna Soyma, expressed her wish to pursue the proceedings before the Court. 2. The applicant, who had been granted legal aid, was represented by Ms Y. Zayikina and Mr L. Gulua, lawyers practising in Kharkiv, Ukraine. The Moldovan Government (“the Government”) were represented by their Agent, Mr L. Apostol, and the Russian Government were represented by Mr G. Matyushkin, Representative of the Russian Federation to the European Court of Human Rights. 3. The applicant alleged, in particular, that he had been detained contrary to Article 5 § 1 of the Convention and that the criminal proceedings against him had been unfair. After his death, the applicant’s mother also complained that Ukraine and Moldova were responsible for her son’s death. 4. On 14 May 2013 the application was communicated to the Moldovan and Russian Governments. On the same date the Ukrainian Government were informed of their right to intervene in the proceedings, in accordance with Article 36 § 1 of the Convention and Rule 44 § 1(b), but they did not communicate any wish to avail themselves of that right. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1976 and, until his death in 2006, lived in Vinnytsya. 6. The background to the case, including the Transdniestrian armed conflict of 1991-1992 and the subsequent events, is set out in Ilaşcu and Others v. Moldova and Russia ([GC], no. 48787/99, §§ 28-185, ECHR 2004‑VII) and Catan and Others v. the Republic of Moldova and Russia ([GC], nos. 43370/04 and 2 others, §§ 8-42, ECHR 2012 (extracts)). 7. In 2001 the applicant was arrested in the self-proclaimed “Moldavian Republic of Transdniestria” (the “MRT”) on charges of murder. On 28 June 2002 he was convicted in a final judgment by the “MRT” Supreme Court and sentenced to ten years’ imprisonment. 8. According to the applicant, during his pre-trial detention he was subjected to ill-treatment to make him confess to committing the murder. 9. After his conviction the applicant’s mother made many requests to various Ukrainian official bodies to obtain the transfer of her son to a Ukrainian prison. The case file before the Court contains approximately forty replies received by her from various Ukrainian authorities. However, her efforts were not successful. In particular, the Ministry of Foreign Affairs of Ukraine informed the applicant that it had contacted its counterpart in Moldova, which had informed it that Moldova could not secure the applicant’s transfer to a Ukrainian prison because it did not have control over the territory of the “MRT”. The Ukrainian authorities also contacted the “MRT” authorities, but to no avail. In a letter to the applicant’s mother, the “MRT” authorities stated that they would only transfer the applicant to a Ukrainian prison after the conclusion of a treaty between Ukraine and the “MRT” which would make the transfer of prisoners possible. Since Ukraine refused to sign such a treaty with it, the transfer was not possible. The applicant’s mother went so far as to initiate court proceedings against the Ukrainian Ministry of Foreign Affairs, denouncing its lack of action, but she was not successful. 10. On several occasions the applicant’s representative also contacted the Moldovan authorities, enquiring about the status of the Transdniestrian region and, on at least two occasions, asking them for assistance with the question of the applicant’s transfer to a Ukrainian prison. It does not appear from the material submitted by the applicant and his mother that he complained to the Moldovan authorities about alleged breaches of his Convention rights by the “MRT” authorities. In a letter of 25 April 2003 the Prosecutor General’s Office of Moldova informed the applicant’s representative that it had contacted the prosecuting authorities of the “MRT” and requested the necessary documents to have the applicant transferred to a Ukrainian prison. It is not clear from the case file whether the “MRT” authorities reacted to that letter. In another letter sent to the applicant’s representative by the office of the President of the Republic of Moldova, the lawyer was informed that the Moldovan authorities were unable to bring about the applicant’s transfer to a Ukrainian prison while the Transdniestrian conflict remained unsettled. 11. The applicant’s mother also wrote to the OSCE mission in Moldova, which informed her that her letter had been forwarded to the Ukrainian Embassy in Chisinau. 12. In around March 2006 the applicant broke his leg and was admitted to hospital. It appears from his mother’s statements that she was able to spend time with him during his stay in hospital. 13. On 24 May 2006 the applicant was found hanged in the gym of the prison in which he was being detained. It does not appear that the applicant’s mother requested or obtained a medical forensic report concerning the circumstances of his death. However, it appears from her statements that the applicant did not have any signs of violence on his body. II. RELEVANT DOMESTIC LAW AND PRACTICE OF THE REPUBLIC OF MOLDOVA AND OTHER RELEVANT MATERIALS 14. Reports by inter-governmental and non-governmental organisations, the relevant domestic law and practice from the Republic of Moldova and other pertinent documents were summarised in Mozer v. the Republic of Moldova and Russia ([GC], no. 11138/10, §§ 61-77, ECHR 2016). THE LAW I. JURISDICTION 15. The Court must first determine whether the applicant falls within the jurisdiction of the respondent States for the purposes of the matters complained of, within the meaning of Article 1 of the Convention. 16. In so far as Ukraine is concerned, the Court notes that neither the applicant nor his mother adduced any evidence in support of the allegation that it had jurisdiction in the present case. In those circumstances, the Court considers that the claim concerning the jurisdiction of Ukraine is unsubstantiated and holds that the applicant did not fall within Ukrainian jurisdiction under Article 1 of the Convention. Consequently, the part of the application directed against Ukraine must be declared inadmissible under Article 35 § 4 of the Convention. A. The parties’ submissions 17. As to the jurisdiction of the other respondent States, the applicant and the Moldovan Government submitted that both respondent Governments had jurisdiction. 18. For their part, the Russian Government argued that the applicant did not come within their jurisdiction and that, consequently, the application should be declared inadmissible ratione personae and ratione loci in respect of the Russian Federation. As they did in Mozer (cited above, §§ 92-94), the Russian Government express the view that the approach to the issue of jurisdiction taken by the Court in Ilaşcu and Others (cited above), Ivanţoc and Others v. Moldova and Russia (no. 23687/05, 15 November 2011), and Catan and Others (cited above) was wrong and at variance with public international law. B. The Court’s assessment 19. The Court observes that the general principles concerning the problem of jurisdiction under Article 1 of the Convention in respect of acts and facts occurring in the Transdniestrian region of Moldova were set out in Ilaşcu and Others (cited above, §§ 311-19), Catan and Others (cited above, §§ 103-07) and, more recently, in Mozer (cited above, §§ 97-98). 20. In so far as the Republic of Moldova is concerned, the Court notes that in Ilaşcu, Catan and Mozer it found that although Moldova had no effective control over the Transdniestrian region, it followed from the fact that Moldova was the territorial State that persons within that territory fell within its jurisdiction. However, its obligation, under Article 1 of the Convention, to secure to everyone within its jurisdiction the rights and freedoms defined in the Convention, was limited to that of taking the diplomatic, economic, judicial and other measures that were both in its power and in accordance with international law (see Ilaşcu and Others, cited above, § 333; Catan and Others, cited above, § 109; and Mozer, cited above § 100). Moldova’s obligations under Article 1 of the Convention were found to be positive obligations (see Ilaşcu and Others, cited above, §§ 322 and 330-31; Catan and Others, cited above, §§ 109-10; and Mozer, cited above, § 99). 21. The Court sees no reason to distinguish the present case from the above-mentioned cases. Besides, it notes that the Moldovan Government do not object to applying a similar approach in the present case. Therefore, it finds that Moldova has jurisdiction for the purposes of Article 1 of the Convention, but that its responsibility for the acts complained of is to be assessed in the light of the above-mentioned positive obligations (see Ilaşcu and Others, cited above, § 335). 22. In so far as the Russian Federation is concerned, the Court notes that in Ilașcu and Others it has already found that the Russian Federation contributed both militarily and politically to the creation of a separatist regime in the region of Transdniestria in 1991-1992 (see Ilaşcu and Others, cited above, § 382). The Court also found in subsequent cases concerning the Transdniestrian region that up until July 2010, the “MRT” was only able to continue to exist, and to resist Moldovan and international efforts to resolve the conflict and bring democracy and the rule of law to the region, because of Russian military, economic and political support (see Ivanţoc and Others, cited above, §§ 116-20; Catan and Others, cited above, §§ 121‑22; and Mozer, cited above, §§ 108 and 110). The Court concluded in Mozer that the “MRT”‘s high level of dependency on Russian support provided a strong indication that the Russian Federation continued to exercise effective control and a decisive influence over the Transdniestrian authorities and that, therefore, the applicant fell within that State’s jurisdiction under Article 1 of the Convention (see Mozer, cited above, §§ 110-11). 23. The Court sees no grounds on which to distinguish the present case from Ilașcu and Others, Ivanţoc and Others, Catan and Others, and Mozer (all cited above). 24. It follows that the applicant in the present case fell within the jurisdiction of the Russian Federation under Article 1 of the Convention. Consequently, the Court dismisses the Russian Government’s objections ratione personae and ratione loci. 25. The Court will hereafter determine whether there has been any violation of the applicant’s rights under the Convention such as to engage the responsibility of either respondent State (see Mozer, cited above, § 112). II. ALLEGED VIOLATION OF ARTICLE 5 § 1 OF THE CONVENTION 26. The applicant complained that his arrest and detention had been unlawful and contrary to Article 5 § 1 of the Convention. The relevant parts of Article 5 read as follows: Article 5 “1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: (a) the lawful detention of a person after conviction by a competent court; ... (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; ...” A. Admissibility 27. The Russian Government submitted that the complaint under Article 5 § 1 of the Convention was of an eminently personal and non‑transferable nature and, as such, could not be transferred from the applicant to his mother. They relied, inter alia, on Biç and Others v. Turkey (no. 55955/00, §§ 22-24, 2 February 2006). 28. The Court notes that according to its case-law, the next-of-kin cannot lodge complaints alleging violations of Article 5 of the Convention on behalf of people who have died (see Biç and Others, cited above). However, next‑of‑kin are entitled to continue proceedings before the Court concerning complaints lodged by a person before he or she died (see, among other cases, Lukanov v. Bulgaria, 20 March 1997, Reports of Judgments and Decisions 1997‑II; and David v. Moldova, no. 41578/05, 27 November 2007). 29. Since the complaint under Article 5 § 1 of the Convention was lodged by the applicant and not by his mother, the Russian Government’s objection must be dismissed. 30. The Court further notes that this complaint is not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention, and that it is not inadmissible on any other ground. The Court therefore declares it admissible. B. Merits 31. The applicant complained that neither his arrest nor his detention were ordered by a lawfully constituted court as required by Article 5 § 1 of the Convention. 32. The respondent Governments did not make any submissions on the merits of this complaint. 33. The Court reiterates that it is well established in its case-law on Article 5 § 1 that any deprivation of liberty must not only be based on one of the exceptions listed in sub-paragraphs (a) to (f) but must also be “lawful”. Where the “lawfulness” of detention is in issue, including the question whether “a procedure prescribed by law” has been followed, the Convention refers essentially to national law and lays down the obligation to conform to the substantive and procedural rules of national law. This primarily requires any arrest or detention to have a legal basis in domestic law; it also relates to the quality of the law, requiring it to be compatible with the rule of law, a concept inherent in all the Articles of the Convention (see, for example, Del Río Prada v. Spain [GC], no. 42750/09, § 125, ECHR 2013; and Mozer, cited above, § 134). 34. The Court reiterates that in Mozer it held that the judicial system of the “MRT” was not a system reflecting a judicial tradition compatible with the Convention (see Mozer, cited above, §§ 148-49). For that reason it held that the “MRT” courts and, by implication, any other “MRT” authority, could not order the applicant’s “lawful” arrest or detention, within the meaning of Article 5 § 1 of the Convention (see Mozer, cited above, § 150). 35. In the absence of any new and pertinent information proving the contrary, the Court considers that the conclusion reached in Mozer is valid in the present case too. It considers therefore that there has been a breach of Article 5 § 1 of the Convention in the present case. 36. The Court must next determine whether the Republic of Moldova fulfilled its positive obligation to take appropriate and sufficient measures to secure the applicant’s rights under Article 5 of the Convention (see paragraph 20 above). In Mozer, the Court held that Moldova’s positive obligations related both to measures needed to re-establish its control over the Transdniestrian territory, as an expression of its jurisdiction, and to measures to ensure respect for individual applicants’ rights (see Mozer, cited above, § 151). 37. As regards the first aspect of Moldova’s obligation, to re-establish control over the Transdniestrian territory, the Court found in Mozer that Moldova had taken all measures in its power from the onset of the hostilities in 1991-1992 until July 2010 (Mozer, cited above, § 152). Since the events complained of in the present case took place before that date, the Court sees no reason to reach a different conclusion (ibidem). 38. Turning to the second part of the positive obligations, namely to ensure respect for the applicant’s individual rights, the Court notes that the applicant’s efforts were mainly directed at seeking assistance from the Ukrainian authorities (see paragraph 9 above). The applicant’s representative made only two requests for assistance from the Moldovan authorities to secure his transfer to a Ukrainian prison. On one occasion the Prosecutor’s Office contacted the “MRT” authorities in relation to the applicant’s transfer, apparently without any success. On another occasion, the applicant’s representative was informed that the Moldovan authorities could not secure the transfer owing to their lack of control over the “MRT” authorities. Against that background, the Court notes that the applicant never complained to the Moldovan authorities of any breach of his Convention rights (see paragraph 10 above). 39. In the light of the foregoing, the Court concludes that the Republic of Moldova did not fail to fulfil its positive obligations in respect of the applicant and finds that there has been no violation of Article 5 § 1 of the Convention by the Republic of Moldova. 40. In so far as the responsibility of the Russian Federation is concerned, the Court notes that there is no evidence that persons acting on behalf of the Russian Federation directly participated in the measures taken against the applicant. 41. Nevertheless, the Court has established that Russia exercised effective control over the “MRT” during the period in question (see paragraphs 22-23 above). In the light of this conclusion, and in accordance with its case-law, it is not necessary to determine whether or not Russia exercises detailed control over the policies and actions of the subordinate local administration (see Mozer, cited above, § 157). By virtue of its continued military, economic and political support for the “MRT”, which could not otherwise survive, Russia’s responsibility under the Convention is engaged as regards the violation of the applicant’s rights (ibidem). 42. In conclusion, and after having found that the applicant’s detention was unlawful under Article 5 § 1 of the Convention (see paragraph 35 above), the Court holds that there has been a violation of that provision by the Russian Federation. III. OTHER COMPLAINTS 43. The applicant complained under Article 6 that the criminal proceedings against him had been unfair. He also complained under Article 13 that he had no effective remedies against that breach. However, the Court notes that while the criminal proceedings ended on 28 June 2002, the present application was lodged only on 28 December 2004, that is more than six months later. Consequently, these complaints must be declared inadmissible under Article 35 §§ 1 and 4 of the Convention. 44. The applicant also complained under Article 8 that he could not meet his parents while in detention. However, it appears from his mother’s statements that she was able to spend time with him in hospital on one occasion (see paragraph 12 above). Moreover, there is no evidence in the case file that either the applicant or his mother requested meetings from the prison administration. In those circumstances, the Court considers that the complaint is manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and must be declared inadmissible in accordance with Article 35 § 4 of the Convention. 45. The applicant further complained under Article 3 of the Convention that he had been subjected to ill-treatment while in detention. However, he failed to adduce any evidence such as medical documents and/or witness statements in support of his allegations. The Court therefore considers that this complaint is manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and must be declared inadmissible in accordance with Article 35 § 4 of the Convention. 46. Lastly, in so far as the complaint under Article 2 of the Convention is concerned, the Court notes that initially it was lodged only against the Republic of Moldova and Ukraine (with respect to Ukraine, see paragraph 16 above). It was only in the observations on the admissibility and the merits submitted in March 2014 that the applicant’s mother argued for the first time that the Russian Federation was also responsible for her son’s death. As the complaint against the Russian Federation was lodged almost six years after the applicant’s death, it must be declared inadmissible for failure to observe the six-month rule, pursuant to Article 35 §§ 1 and 4 of the Convention. 47. Insofar as the complaint under Article 2 of the Convention is directed against the Republic of Moldova, the applicant’s mother complained about a lack of investigation into the circumstances of her son’s death. According to her, the Moldovan authorities accepted the version of the “MRT” authorities, without conducting or trying to conduct their own investigation. The Moldovan Government argued that, since Moldova had no effective control over the Transdniestrian region, it could not be held responsible for any violation of Article 2 of the Convention. 48. The Court considers that, for the reasons given in respect of the complaint under Article 5 § 1 of the Convention (see paragraphs 36-39 above), and taking into account the fact that the Moldovan authorities are not in a position to carry out a meaningful investigation, the complaint under Article 2 is manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and must be declared inadmissible in accordance with Article 35 § 4 of the Convention. IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION 49. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 50. The applicant claimed 300,000 euros (EUR) in respect of non‑pecuniary damage. 51. The Governments contended that the claim was excessive and asked the Court to dismiss it. 52. The Court notes that it has not found any violation of the Convention by the Republic of Moldova in the present case. Accordingly, no award of compensation is to be made with regard to this respondent State. 53. Having regard to the violations by the Russian Federation found above, the Court considers that an award in respect of non-pecuniary damage is justified in this case. Making its assessment on an equitable basis, the Court awards EUR 20,000 to the applicant, to be paid by the Russian Federation. B. Costs and expenses 54. The applicant also claimed EUR 1,563 for costs and expenses. 55. The respondent Governments considered that the sum claimed was excessive. 56. The Court notes that it has found that Moldova, having fulfilled its positive obligations, was not responsible for any violation of the Convention in the present case. Accordingly, no award of compensation for costs and expenses is to be made with regard to this respondent State. 57. The Court reiterates that in order for costs and expenses to be included in an award under Article 41 of the Convention, it must be established that they were actually and necessarily incurred and were reasonable as to quantum (see, for example, Mozer, cited above, § 240). Having regard to all the relevant factors and to Rule 60 § 2 of the Rules of Court, the Court awards EUR 1,000 to the applicant for costs and expenses, to be paid by the Russian Federation. C. Default interest 58. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT 1. Declares, unanimously, the complaint under Article 5 § 1 of the Convention admissible in respect of the Republic of Moldova; 2. Declares, by a majority, the complaint under Article 5 § 1 of the Convention admissible in respect of the Russian Federation; 3. Declares, unanimously, the remainder of the application inadmissible; 4. Holds, by six votes to one, that there has been no violation of Article 5 § 1 of the Convention by the Republic of Moldova; 5. Holds, by six votes to one, that there has been a violation of Article 5 § 1 of the Convention by the Russian Federation; 6. Holds, by six votes to one, (a) that the Russian Federation is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts: (i) EUR 20,000 (twenty thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage; (v) EUR 1,000 (one thousand euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement, simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period, plus three percentage points; 7. Dismisses, unanimously, the remainder of the claim for just satisfaction. Done in English, and notified in writing on 30 May 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Stanley NaismithIşıl KarakaşRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Dedov is annexed to this judgment. A.I.K.S.H.N. DISSENTING OPINION OF JUDGE DEDOV My vote in the present case was based on my previous dissenting opinion in the case of Mozer v. the Republic of Moldova and Russia ([GC], no. 11138/10, ECHR 2016) on the issue of the Russian Federation’s effective control over Transdniestria.

K. Sabharwal, J. The circumstances under which an order was passed by this Court on 25th August, 2000 directing that numberice be issued on companytempt petitions, in brief, are these On 31st December, 1997, Civil Judge SD , Anand passed a decree in favour of respondent, inter alia, for Rs.9,33,378.37p. with interest 6 from the date of suit, i.e., from 16th March, 1982 and companyt of the suit. The said decree is the subject matter of challenge in First Appeal No.2317/98 filed by the defendants petitioners in SLP and companytempt petition in the High Court of Gujarat. A civil application was filed by the petitioners in the High Court seeking stay of the execution of the decree. The High Court by order dated 21st December, 1999 granted stay of the execution of the decree subject to the companydition that decretal amount together with companyts and interest is deposited in the trial companyrt within the period stipulated in the order. The High Court further directed that on deposit being made, the respondent who is the original plaintiff shall be entitled to withdraw 50 of the amount on furnishing security to the satisfaction of the trial companyrt and 50 without security. The order dated 21st December, 1999 is the subject matter of challenge in the Special Leave Petition. While issuing numberice in the petition on 27th March, 2000, this Court directed that the numberice shall state that the matter may be disposed of at the SLP stage by varying the order under challenge so that withdrawal of the entire amount is permitted only against security and withdrawal of 50 amount without security was stayed. The order reads Issue numberice. Notice shall state that the matter may be disposed of at the S.L.P. stage by varying the order under challenge so that withdrawal of the entire amount is permitted only against security. Pending further orders, the order under challenge is stayed to the extent that it permits the respondent to withdraw fifty per cent of the amount without furnishing security. Pursuant to the decree, a sum of Rs.19,51,268/- was deposited in the trial companyrt on 24th March, 2000. After the aforesaid order was passed by this Court, Superintendent, Central Excise declared on oath in an affidavit before the trial companyrt that this Court on 27th March, 2000 has passed in order that 50 amount can be withdrawn with full surety and remaining 50 shall number be withdrawn. It was stated that if the judgment creditor approaches for permission to withdraw, the judgment creditor may be permitted to withdraw 50 amount thereof on furnishing full security. It was further stated that the certified companyy of the order of this Court shall be produced as soon as it is received. On 1st April, 2000, an application was filed by Kanubhai Ambalal Patel, the power of attorney holder of the first respondent, before the Civil Judge praying that as per the order of the High Court of Gujarat, 50 of the amount may be allowed to be withdrawn without surety and 50 with surety. On 3rd April the Civil Judge, on companysideration of the affidavit of the Superintendent of Central Excise and the aforesaid application filed by the plaintiff permitted the judgment creditor plaintiff to withdraw 50 of the deposited amount on furnishing full surety. On 5th April, 2000, order of this Court dated 27th March, 2000 was received by the Trial Court. On 7th April, 2000, an application was filed on behalf of the plaintiff before the trial companyrt stating that this Court has passed an order to pay 50 of the amount to him without surety and praying that order may be passed to pay the said 50 amount deposited by the Excise Department without furnishing security. On the said application, after hearing companynsel for both the parties, on the same date, namely, 7th April, 2000, an order was passed permitting withdrawal of 50 amount without furnishing surety. The order reads as follows Plaintiff and his advocate are present. Heard. The defendant and his advocate the Government Pleader are present. Heard. An officer of respondent produces a companyy of the order of the Supreme Court in SLP C No. 4327/2000. Considering the same, till further order the plaintiff is permitted to withdraw 50 amount without furnishing surety. Thus, as per the order dated 27.3.2000 of the Honble Supreme Court, the plaintiff is permitted to withdraw 50 amount. Nazir to pay the amount accordingly and report. Under the aforesaid circumstances, a civil application No.3942/2000 dated 2nd May, 2000 was filed by the petitioners in the first appeal pending in the High Court bringing to the numberice of the High Court the aforesaid facts and submitting that the trial companyrt has shown scant respect to the order of this Court and in clear violation thereof has permitted the withdrawal of 50 of the amount deposited by them without furnishing security. The petitioner, therefore, prayed in the said application for quashing and setting aside the order dated 7th April, 2000 and further prayed that the plaintiff be directed to deposit the amount so withdrawn forthwith in the trial companyrt. In affidavit dated 7th June, 2000 filed in reply to the said application, the stand taken was that 50 of the amount without furnishing security had been withdrawn in terms of the order of the trial companyrt dated 7th April, 2000 and if the said order is erroneous or illegal, the applicants are entitled to challenge the same by revision or appeal but in the said application the companyrt will number go into the legality or validity of the order passed by the trial Judge. It was further submitted that the plaintiff was ready and willing to furnish security for the withdrawal of the 50 amount permitted pursuant to the order dated 7th April, 2000 and that it will number be in the interests of justice to direct redeposit of the said amount. On this application Civil Application 3492/2000 , the High Court passed an order on 14th June, 2000 to the following effect In order to test the bonafides of the request made in Para 3 of the companynter affidavit, S.O. to 28.6.2000. In the meantime security for 50 amount withdrawn by the Respondents be filed. Instead of furnishing security, what was filed before the trial companyrt was a solvency certificate dated 30th June, 2000 issued by a Mamlatdar. When Civil Application No.3492/2000 was listed before the High Court on 24th July, 2000, numbere appeared for the plaintiff. The High Court, on companysideration of the facts of the case including the fact that numbere had appeared for the plaintiff number an intimation had been given that in terms of order dated 14th June, 2000 security for 50 amount which had been withdrawn had been furnished or number, disposed of the application with the direction to the plaintiff to deposit in the companyrt of Civil Judge SD , Anand 50 of the amount withdrawn by him within a period of two weeks. On 26th July, Contempt Petition 199 of 2000 was filed in this Court, inter alia, stating that despite the order dated 27th march, 2000 having been brought to the numberice of the companyrt, the learned judge by order dated 7th April, 2000 permitted the respondent to withdraw 50 of the amount without security and thereby the respondent had companymitted companytempt. As stated earlier, numberice on the companytempt petitions was issued on 25th August, 2000. That order reads The trial companyrt had permitted the respondent to withdraw 50 of the amount deposited by the petitioners without furnishing security and the respondent states in his companynter that he was number aware of the order that we had passed when he did withdraw that amount. The petitioners then moved the High Court for a direction to the respondent to redeposit the amount so withdrawn, and, on 14th June, 2000, the High Court directed the respondent to provide security for that 50. Even so, on 30th June, 2000, the trial companyrt permitted the respondent to withdraw the amount only upon security in the form of insolvency certificate to the satisfaction of the trial companyrt. This, it seems to us prima facie, is flouting number only the order of this Court but also the order of the High Court dated 14th June, 2000. The respondent shall number redeposit the 50 of the amount forthwith in the trial companyrt. Issue numberice on the companytempt petition that has been filed by the petitioners in regard to the earlier order of the trial companyrt and suo motu numberice in regard to what appears to be a breach of the High Courts order dated 14th June, 2000 and this Courts order dated 27th March, 2000. The numberice in the suo motu petition shall issue number only to the respondent but also to the Civil Judge SD , Anand. The S.L.P. is adjourned to 9th October, 2000. The companytempt petitions shall be returnable on that day. Despite number only the knowledge but also having a companyy of the order dated 27th March, 2000, the Civil Judge permitted the withdrawal of the 50 amount to the plaintiff without furnishing security. It seems that the amount was immediately withdrawn. In the companytempt petition and also in the special leave petition, affidavit has been filed by Navinbhai Somabhai Patel being son and power of attorney holder of the original plaintiff-respondent herein. The judicial officer has also filed an affidavit in reply to suo motu proceedings of companytempt initiated against him. The facts numbericed hereinbefore have number been companytroverted in the said affidavits. Indeed, the facts are incapable of being companytroverted. First taking up the case of the respondent, Navinbhai states that the respondent who has been residing in USA since 1997 had executed a power of attorney in his favour and also in favour of one Kanubhai Patel before going to USA. Both of them have been pursuing the case. Navinbhai has tendered an unqualified and unconditional apology for withdrawing 50 amount without security under the orders of the trial companyrt dated 7th April, 2000 and has prayed for leniency. In the affidavit Navinbhai states that he is number attempting to justify his companyduct for which he has tendered unqualified and unconditional apology but is only placing the circumstances on record to show that there was numberwillful or deliberate number-compliance of the order dated 27th March, 2000 passed by this Court or order dated 14th June, 2000 passed by the High Court of Gujarat. The affidavit goes on to say that the deponent as well as Kanubhai are number well versed in English and depend entirely on the professional advice received from time to time and that whatever action they have taken were taken only on the basis of such advice. In the affidavit dated 10th August, filed in the SLP, Navinbhai stated that on 7th April, 2000 the deponent respondents were number aware of the order dated 27th March, 2000 made by this Honble Court. Now, when numberice of companytempt is issued, he states that this statement is number companyrect and has been erroneously made. He tries to explain that what he really meant by that statement was that he was number aware of the exact companytents of the order till 14th April, 2000 though he did become aware of the substance of the order dated 27th March, 2000 as had been explained to him by his companyncil, Regarding the order of the High Court dated 14th June, 2000, the explanation offered is that on receipt of the said order, he again approached his advocate and upon his advice obtained a solvency certificate from the companycerned authorities against his various immovable properties valued at Rs.29,25,000/-. While issuing the solvency certificate, the Mamlatdar has retained all the original papers of the properties of the deponent. The said solvency certificate was filed in the trial companyrt. He further states that when the Civil Application No.3492 came up for hearing before the High Court on 24th July, 2000, his advocate was number present and it companyld number be pointed out that a solvency certificate has already been filed and accepted by the trial Court and that the order of the High Court directing the respondent to furnish security to the satisfaction of the trial companyrt had been duly companyplied with. The deponent is said to have received the certified companyy of the order dated 24th July, 2000 only on 26th August, 2000 which was Saturday and the amount was redeposited on 28th August, 2000. Under these circumstances, Navinbhai submits that respondent never intended to act in willful disobedience of the order. There can be numbermanner of doubt from the circumstances of the case that in clear breach of the order of this Court, the amount was withdrawn without security. It is also apparent that in breach of the order of the High Court dated 14th June, 2000 instead of furnishing security, a solvency certificate was filed by the respondent before the trial companyrt. It also appears that in reply to the civil application, the respondent instead of taking a forthright stand took shelter under the order of the trial companyrt dated 7th April, 2000 urging that the legality of the said order cannot be examined by the High Court in that appeal. It is apparent that there has been blatant flouting of the order of this Court. It is number an order of which any one can even remotely think of two interpretations. None has so pleaded. The companyduct of the respondent has been reprehensible. In spite of the facts as aforesaid, we may have assumed that the deponent and Kanubhai did number know English and whatever action was taken were based on the professional advice received from time to time as claimed and on that basis given benefit of doubt to the respondent, since it is also claimed that the application dated 7th April, 2000 was in the handwriting of the advocate himself who told Kanubhai that this Court had permitted withdrawal of 50 amount without security, but for the manner in which the respondent companyducted himself in the High Court and before this Court. Before the High Court he took shelter under order of the Civil Judge dated 7th April, 2000 fully knowing that it was companytrary to the order dated 27th March, 2000 passed by this Court. Before this Court, as already stated, first he filed affidavit stating that he was number aware of the order dated 27th March, 2000 passed by this Court and later he tried to explain by stating that what he meant was that he was number aware of the exact companytents of the order but was aware of the substance of the order. The explanation is entirely misconceived. The admitted filing of a false affidavit which is number sought to be explained companystitutes companytempt by itself. It is evident that the deponent has numberregard whatsoever for truth. He has taken different stands at different times to suit his companyvenience. Having regard to the fact that the respondent is said to be living abroad since 1997, we do number want to punish him for the actions of his attorney, to whom numberice of companytempt has number been issued. Under these circumstances, taking a lenient view, we are inclined to accept the apology. It is ordered accordingly. Reverting number to the companytempt proceedings initiated against the judicial officer, tendering unconditional and unqualified apology, he says that with my limited understanding, I companyld number read the order companyrectly. The judicial officer further says in his affidavit that while passing the order dated 7th April, 2000, he inadvertently erred in reading and understanding the order dated 27th March, 2000 and that there has been a serious lapse on his part in this regard. What we have said earlier while dealing with the stand of the respondent that the facts are incapable of being companytroverted and in clear breach of the order of this Court, a sum of Rs.9,78,634/- was permitted to be withdrawn without security, is applicable with more force against the judicial officer. It is a matter of great companycern, regret and deep anguish that the order of the type in question which clearly and unambiguously grants a stay of the order of the High Court permitting withdrawal of 50 of amount without security companyld number be understood by the officer. The officer is holding a responsible position of a Civil Judge of Senior Division. Even a new entrant to judicial service would number companymit such mistake assuming it was a mistake. Despite these glaring facts, we assume, as pleaded by the judicial officer, that he companyld number understand the order and, thus, on that assumption it would be a case of outright negligence, which, in fact, stands admitted but wilful attempt to violate the order for any extraneous companysideration or dishonest motive would, therefore, be absent. In this view, we drop these companytempt proceedings against the officer by issue of severe reprimand. What we have said above, however, is number the end of the matter. It cannot be ignored that the level of judicial officers understanding can have serious impact on other litigants. There is numbermanner of doubt that the officer has acted in most negligent manner without any caution or care whatsoever. Without any further companyment, we would leave this aspect to the disciplinary authority for appropriate action, if any, taking into companysideration all relevant facts. We do number know whether present is an isolated case of such an understanding? We do number know what has been his past record? In this view, we direct that a companyy of the order shall be sent forthwith to the Registrar General of the High Court of Gujarat. In the special leave petition we grant leave. We feel it appropriate to make absolute the order as we had proposed in order dated 27th March, 2000.

Mr Justice Cooke: Introduction At the beginning of the trial in this action the Claimant (BAS) alleged that the two Defendants (CSS and Plurimi) in breach of statutory duty under section 150 of the Financial Services and Markets Act 2000 recommended that she enter into a series of leveraged transactions without taking reasonable steps to ensure that she understood the risks associated with that leverage and without taking reasonable steps to ensure that the recommended investments were suitable for her. There were two elements to the claim, one based on the unsuitability of the investments in themselves for her and her investment philosophy and the other based on a failure properly to explain the risks of the transactions, it being said that had proper explanation been given, BAS would not have purchased the investments in question. The allegation that the leveraged investments were unsuitable in themselves was abandoned in closing submissions, leaving the advisers' alleged failure to explain the risks and to satisfy themselves as to the suitability of the investments as the basis of the claim. Put shortly, CSS and Plurimi are alleged to have failed to explain to BAS that the structured notes that she purchased with money lent by Credit Suisse AG (CSAG) would be pledged to that bank as collateral for the loans, that the bank was entitled to call upon her to provide additional collateral in the shape of margin calls if the value of the Notes dropped, and that if she did not provide such margin calls within the time scale stipulated by the bank, her Notes could or would be sold with the consequent loss of some or all of her capital. She says that she was an inexperienced investor who was in the hands of her advisers, relied on them to tell her orally what the risks were and was led into taking risks she would never have taken, had they been explained properly to her. Following the collapse of Lehman Brothers and of two Icelandic banks in September and October 2008 and the consequent collapse in both the Equities and Fixed Interest Markets, the value of the Notes that she had purchased (both those linked to equities and those linked to interest rates) did drop significantly, with the result that CSAG made margin calls which she did not meet. CSAG sold the Notes at the then current low prices at the nadir of the market, in order to recoup the amount of the loans, but the proceeds were insufficient to do even that. BAS claims the losses which she says she incurred by investing in Notes she would not have purchased at all, had she been properly advised. As appears below, the claims pursued by BAS have altered since the first letters of claim were sent on her behalf by her solicitors. The Defendants submit that this is significant in itself and casts doubt on the validity of the claim currently maintained as well as those which were abandoned for good reason. They say that BAS has been casting about for a way to make a claim in circumstances where she knew the risks she was running in investing for high yields and was essentially the author of her own losses by failing to put up margin when she could have done, as well as failing to heed earlier advice to sell Notes which would have protected her against margin calls being made. A number of allegations of professional negligence were made by her which have been abandoned, but during the course of the trial various additional unpleaded accusations and criticisms were made of CSS and Plurimi which, it is said, lacked any evidential foundation or proper basis. All of this, they say, smacks of a specious claim. BAS is a Saudi national, born in 1959. In 1980, when she was 21, she married Walid Al Juffali (WAJ), a member of one of Saudi Arabia's richest families. For the next 21 years, all of her day-to-day requirements were taken care of by her husband's family office. In about 2000 BAS, who was then living in London because two of her children were in education in the UK, separated from her husband WAJ. On advice she established "habitual residence" and presented a petition in London for divorce in June 2002, which led to a divorce settlement which received wide publicity, because of the substantial amount of money and assets she received. The financial terms of BAS' divorce from WAJ were finalised in an agreement dated 26 April 2003. In summary: i) WAJ caused to be transferred to an existing trust of which BAS was the principal beneficiary (the BSAS Trust) his share of three properties which had previously been jointly owned, comprising BAS' home at 16 Wilton Crescent, London SW1, four flats at Wellington Court, Knightsbridge, London SW1, and an apartment at 24 Avenue Gabriel, Paris; ii) WAJ undertook to pay to BAS a capital sum of US$56 million, to be paid by instalments as follows: a) $10 million on execution of the agreement (paid on 12 May 2003) b) $9.2 million on 2 January 2004, on 3 January 2005, on 2 January 2006, on 2 January 2007 and on 2 January 2008. iii) In addition, WAJ undertook to pay $250,000 per annum towards the expenses of 16 Wilton Crescent for so long as it was the main base for any of the couple's children. BAS had, in addition, by the time of the divorce, other assets of her own, in the shape of the BSAS Trust which was a bare trust set up for her by her husband during the course of the marriage. By 2002 there were assets in it to the tune of about $7m and presumably more in 2003. In 2003 that Trust was managed by JP Morgan Chase in the USA. She had other assets mostly inherited from her father of the order of about $1-2m, some of which she had used to purchase shares in Saudi Arabia over a limited period and 2 structured notes through a friend, Abir Hammad who had become a Relationship Manager at Banque Audi. Although the exact terms of the divorce settlement were confidential, the press publicity was not altogether wrong when speaking of the sums involved as being in excess of $40m. As she put it in her evidence, she was beset by banks and others like vultures, all of whom wanted to aid her in investing her settlement monies. Although she had met Ramzy Rasamny (RR) before her separation from WAJ, BAS (largely through his mother-in-law) came to know him and his wife well thereafter. RR was a Managing Director at CSS Private Client Services and co-head of the Middle East region for Credit Suisse's Private Banking Division, London. RR's wife and mother-in-law became personal friends of BAS. BAS, at the suggestion of RR's mother in law, approached RR about investment and at a meeting on 30 May 2003 and in a telephone conversation on 11 December 2003, RR offered to help her and made suggestions, which she did not take up. Following a meeting with RR on 11 December 2004, on his recommendation, she invested through CSS in a structured note in January 2005, with money from the third instalment of her divorce settlement. Between 2005 and October 2008, she invested in 23 structured notes, 18 through CSS and 5 through Plurimi, virtually all leveraged by loans from CSAG secured by a Pledge Deed on the Notes themselves. The Notes stood as collateral (together with any deposits of cash) for the loans on those Notes and also for another loan for other investment purposes unconnected with the Notes and not recommended by RR. This was a loan of the equivalent of £2.2m taken in Yen from CSAG for the purchase of shares in a new start-up Islamic Bank, the Bank of London and the Middle East (BLME). The terms of the Pledge Deed allowed for margin calls to be made by CSAG in order to maintain sufficient collateral, as assessed by it and for the realisation of the pledged assets if such calls were not met. This collateral requirement was put into effect by requiring the loans to be no more than a specified proportion of the current value of the assets at any time, with the proportion varying according to the type of asset. The interrelationship between the aggregate of the loans and the security provided was referred to as the LTV ratio. The LTVP was what was permitted and the LTVA represented the actual LTV of the portfolio in question. RR left CSS and started his own Limited Partnership, Plurimi, with others from CSS, including Francis Menassa (FM) with effect from 1 January 2008. BAS transferred her business with him and during the year purchased 5 Notes on RR's recommendations, two of which were referred to as "switches" (a term explained hereafter) (and which are not the subject of complaint) from Notes purchased through CSS. On 8 October 2008, CSAG informed Plurimi that it would be making margin calls on a number of Plurimi's clients, including BAS. On Wednesday 15 October 2008 CSAG made a margin call on BAS in the sum of $7,572,000, to be provided by Friday 17 October 2008. She set about procuring bank guarantees and also, on October 22, sold, at a loss, a Note issued by Goldman Sachs (Note 19) that Plurimi advised her to sell. On Thursday 23 October 2008 CSAG changed its permitted LTV ratio, requiring greater collateral in respect of existing loans, which resulted on Friday 24 October 2008 in an increased margin call in the sum of $10,210,000, to be provided by Monday 27 October 2008. BAS failed to meet the call and CSAG proceeded to liquidate the Notes in her portfolio. The sum realised was less than the amount of her indebtedness, and CSAG appropriated BAS' deposits with them as well as calling the guarantees. BAS is said to have suffered an overall loss of approximately $31.7 million. The amount invested by BAS from her own funds in such Notes was of the order of $28m, whilst the amount borrowed at the time of the October 2008 crash was about $69m. She thus lost all her equity in her investments and remained liable to CSAG on the balance of the outstanding loans, following the sale of the Notes. Section 150 of the Financial Services and Markets Act 2000 (the FSMA). Although BAS' relationship with CSS and Plurimi was governed by CSS' and Plurimi's standard terms and conditions (initially the 2003 Terms and subsequently the 2006 Terms for CSS), the claim is primarily framed as a breach of statutory duty and nothing turns on the applicable conditions. CSS and Plurimi were authorised by the FSA to advise on and conduct investment business, subject to FSA regulation. It was therefore subject to the applicable FSA conduct of business rules which were contained in the Conduct of Business handbook (COB) for the period up to October 31 2007 and thereafter in the Conduct of Business Sourcebook (COBS) (so that the latter alone applied to the period of BAS' relationship with Plurimi). Under section 150 of the FSMA, breach of the COB or COBS, as applicable, is actionable at the suit of a private person who suffers loss caused by such breach. BAS was at all times a private person within the meaning of FSMA. The relevant provisions of COB are as follows: COB 5.4.3: A firm must not: (1) make a personal recommendation of a transaction ... with, to or for a private customer unless it has taken reasonable steps to ensure that the private customer understands the nature of the risks involved. COB 5.3.5R: (1) A firm must take reasonable steps to ensure that, if in the course of designated investment business, it makes any personal recommendation to a private customer to buy or sell a designated investment, the advice on investments or transaction is suitable for the customer. COB 5.3.5(3): In making the recommendation or effecting the transaction, in (1), the firm must have regard to the facts disclosed by the client and other relevant facts about the client of which the firm is, or reasonably should be, aware. The Rules are supplemented by Guidance, which includes the following: COB 5.4.2 – Principle 7 (Communications with clients) requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way that is clear, fair and not misleading. Principle 9 (Customers: relationships of trust) requires a firm to take reasonable care to ensure the suitability of its advice and discretionary decisions. The purpose of this section is to ensure that a firm takes reasonable steps to ensure that a private customer understands the nature of the risks inherent in certain transactions. The evidentiary section includes the following, which can be relied on as evidence of compliance: COB 5.4.4 – The reasonable steps in COB 5.4.3 should include the steps set out in COB 5.4.6 E to COB 5.4.12 E as appropriate, in relation to transactions in the following types of investment or activity: (7) Structured capital-at-risk products (see COB 5.4.12 E). COB 5.4.12 (1) Unless (2) applies, in relation to a transaction in a structured capital-at-risk product, the firm should provide the private customer with a notice containing a clear, fair and adequate description of the structured capital-at-risk product which is to be the subject of the transaction, in a manner calculated to bring to the attention of the private customer the risks involved, in particular and if applicable): The relevant provisions of COBS are: COBS 9.2.1: (1) A firm must take reasonable steps to ensure that a personal recommendation, or decision to trade, is suitable for its client. (2) When making the personal recommendation or managing his investments, the firm must obtain the necessary information regarding the client's (a) knowledge and experience in the investment field relevant to the specific type of designated investment or service; (b) financial situation; and (c) investment objectives; so as to enable the firm to make the recommendation, or take the decision, which is suitable for him. i) COBS 9.2.2: (1) A firm must obtain from the client such information as is necessary for the firm to understand the essential facts about him and have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of managing: (a) meets his investment objectives; (b) is such that he is able financially to bear any related investment risks consistent with his investment objectives; and (c) is such that he has the necessary experience and knowledge in order to understand the risks involved in the transaction or in the management of his portfolio. (2) The information regarding the investment objectives of a client must include, where relevant, information on the length of time for which he wishes to hold the investment, his preferences regarding risk taking, his risk profile, and the purposes of the investment. (3) The information regarding the financial situation of a client must include, where relevant, information on the source and extent of his regular income, his assets, including liquid assets, investments and real property, and his regular financial commitments. Common Law Duties Although a duty of care was pleaded in contract and tort, it is common ground that it adds little or nothing to the claim for breach of statutory duty, since it was alleged that there was a duty of care in advising BAS with regard to the purchase of Notes, to explain the risks associated with such purchases including the risk of leverage and to ensure that BAS understood those risks, and to ensure that the investments were suitable for her. The reasonable steps required under COB and COBS correlate with the exercise of reasonable care required in contract and tort to achieve the same ends. It is common ground that, so far as relevant, taking reasonable steps to ensure that an investment is suitable for a client involves taking reasonable steps to ensure that the client understands the risks involved in the transaction and that the rules are concerned with substance and not form. If an investment is in fact suitable for the client, then it does not ultimately matter if there have been failings in the process: Zaki v Credit Suisse (UK) Ltd [2011] EWHC 2422 (Comm) at [102] and in the Court of Appeal at [2013] EWCA Civ 14 at paragraphs [79]-[82]. The need for an explanation of the risks has therefore to be seen in the overall context of suitability, bearing in mind the client's investment objectives, risk tolerance, knowledge, experience and financial standing. CSS and Plurimi acted in an advisory and not a discretionary capacity in conducting business for BAS. Under the 2003 Terms and the 2006 Terms, the terms on which CSS provided general investment advisory and dealing services, CSS was to "have regard to your investment objectives and restrictions as stated on your customer profile". In the case of Plurimi, it was to give advice "on the merits of purchasing securities…. and financial instruments of any sort and rights therein, on margin or otherwise, "subject to the investment objectives, policy and restrictions of the Client". BAS' primary case in these proceedings was, at the commencement of the trial, that loss was caused by breach of duty on the part of CSS and Plurimi, in that they recommended that she enter into a series of leveraged transactions without taking reasonable steps to ensure that she understood the risks associated with that leverage, and without taking reasonable steps to ensure that the recommendations were suitable for her. In particular, CSS and Plurimi failed to explain to BAS that: i) Notes that she purchased with money lent by CSAG would be pledged to CSAG as collateral for the loans; ii) CSAG was entitled to call upon her to provide additional collateral, in the event that the value of the Notes dropped; iii) If she did not provide such additional collateral within the timescale stipulated by CSAG, her Notes could be sold, whereupon she could lose all or most of her capital. It was also said that RR, whilst considering that there was a possibility of BAS facing a margin call of $4-5 million, took no proper steps to ensure that she understood the risk that she might face a margin call at all or to satisfy himself that she had available to her liquid assets with which she could meet a margin call of any particular amount. By the end of the trial however, it was conceded that the structured notes recommended by RR were suitable investments for BAS in fact, in the sense that she had assets which could meet such a margin call. It was maintained that RR had never adequately explained the risks inherent in leverage to her nor asked the necessary questions to ensure that she understood what those risks were. Whilst therefore she did have sufficient assets to meet a potential margin call of any foreseeable size, it was alleged that RR was not in a position to know that. Although it was not submitted that there was any separate breach of duty in failing to specify what a margin call might involve or asking whether BAS had assets which could be used to satisfy such a call, it was said that, had this been done, BAS' lack of understanding of margin calls and their significance would have become apparent. There is a conflict of evidence between BAS on the one hand and RR on the other as to what was and was not said in many meetings and telephone calls between them. There are less important conflicts of evidence between BAS and FM, who was RR's right hand man at CSS and his business partner at Plurimi. The acuteness of conflict on these issues is exacerbated by BAS' evidence to the court that, in essence, she did not read the documents sent to her by RR in the shape of Indicative Term Sheets for the purchases of the structured notes, nor the Effect of Leverage documents (cash flow analyses) which accompanied many of them, nor the Final Confirmations of Terms of Purchase, nor the Structured Capital at Risk Product warning notices (SCARP warnings), the Trade Summary Risk Warnings nor the Term Sheet Risk Disclosure. Her evidence was that she did not read any of the banking documents which she signed, whether provided by CSAG or other banks with whom she dealt, including their Terms and Conditions, Facility Agreements for loans, Pledge Deeds or other standard form documents signed on opening an account with a bank, so that references to collateral, margin, margin call and the consequences of non-compliance with the latter, passed her by. She said she was in the habit of signing blind. She testified that she did not read various emails from RR which warned her of potential capital losses if the barriers set out in some of the Notes were breached, nor understood emails which advised her of the risk of leverage on other investments on which she sought his view. She did not understand that leverage was optional and accepted RR's recommendations for leveraged investment in structured notes as a package. She originally maintained that she did not even know that the value of the Notes fluctuated, but later accepted that she did. She testified that she did not understand the meaning of the words "pledge", "margin" or "margin call", if she was aware of them at all, as the subject was never mentioned. Her case is that RR should have explained the matters of which she was ignorant to her orally, since she would not have understood anything complex which was in writing. She did not say that she had ever told him (or any adviser, banker, Trustee or Trust manager) that she required all explanations to be oral, rather than in writing. The Expert Evidence There was no dispute between the parties, as might be expected, in the light of the COB and COBS regulations that CSS and Plurimi were only bound to take reasonable steps to ensure that BAS understood the risks of the investments recommended (and, as earlier claimed) to ensure their suitability for her in the light of her investment objectives, her appetite for risk and her financial situation. There were some differences between the parties' experts' reports as to what this involved in practice in assessing the suitability of the investments, but, once the ground was cleared by the putting aside of much inadmissible material from the expert reports, their evidence did not show much divergence of view on anything which mattered, which was doubtless, along with the evidence of BAS' assets, a reason for the abandonment of the "suitability" claim in the form in which it had been put. They gave evidence of the market background against which any breach of duty fell to be considered. Their Joint Memorandum revealed their agreement that: i) The structured notes proposed to BAS by RR were suitable investments for someone of her wealth and expectations of return in and of themselves. ii) There was no regulatory requirement on an adviser to seek to estimate or advise the customer on the probability of, or the likely size of, any potential margin call. iii) Leverage did not change the nature of the risks of any of the transactions – it merely magnified the potential profit or loss that could be generated by the investments. iv) The timing and extent of the market crash which occurred in September and October 2008 was not foreseeable before August 2007. v) Historic performance of the equity indices prior to 2005, whilst a factor to be considered in advising on investment, was not a reliable guide to the future. When the Claimant's expert was cross examined, the areas of agreement expanded yet further. He had not been responsible for the original report but had adopted it and, on later reflection, revised his views. The following emerged:- i) Implied volatility was more important than historic volatility of indices, when assessing future performance. ii) Structured notes did not behave in the same way as the indices of market movements for stocks or interest rates. iii) In general and in normal market conditions, the value of structured notes is relatively stable. They are considered safe if they are held until maturity but if they have to be sold before time, all the financial engineering that goes into them is unpicked. iv) The majority of the notes purchased by BAS were not principal protected. The Trigger notes and CDIs showed an aggressive approach to investment. Even with the CRANS, her portfolio was fairly aggressive. v) The spread of BAS' structured notes portfolio at any time, split between Equity Linked Notes and Fixed Interest Linked Notes was such that, in normal market conditions, a drop in the Equities market would be offset by a rise in the fixed interest market and vice-versa. vi) The spread of indices in the Equity Linked Notes to different parts of the world (eg S&P, Nikkei and Eurostoxx) gave rise to a measure of protection against national or local market falls. vii) The existence of the "buffers" or "cushions" employed by RR when recommending leveraged notes, as against the LTV, reduced the likelihood of a margin call. viii) It was a benign market in 2006 and 2007 and the risk of a margin call between March 2003 and July 2007 was not one which an adviser would have concerned himself about. Despite the Northern Rock collapse, the markets remained relatively benign in August and September 2007. There was nothing in the market conditions, which militated against purchase of any of the Notes which are the subject of the dispute. ix) The portfolio as a whole never suffered a margin call until the extreme events of October 2008. x) The extreme events of October 2008 were unforeseeable until the brink of their occurrence. xi) No events of a similar kind had been encountered before although there were shared features with the stock market collapse of 1929. The scale of the collapse was such that it might take decades for full recovery. The absence of liquidity in the market engendered real panic. This was a global crisis which was not confined to local markets. The equity indices and the interest rate indices correlated so both fell at the same time. Prices were slashed and the banks became reluctant to lend money or give guarantees on the basis of any collateral because any such collateral was severely diminished and hard to quantify. At that point all advisers and investors were in uncharted territory and the game had changed. xii) Not only was the October 2008 crash unforeseeable but so also was the change in LTV criteria by CSAG. xiii) In normal market conditions the value of structured notes is relatively stable so that it is very unlikely that the value of the note would decline so far that the value became less than the value of the loan. An investor would not expect to lose more than the equity put in. xiv) The reasonable expectation is that if a bank is entitled to make a margin call, there will be some flexibility on the part of the bank in putting it into effect. A lender may often give more time on a call if a customer makes a clear commitment to provide collateral. There is no limit on the kind of assets that can be pledged as collateral to banks, subject to agreement. Despite having agreed that there was no regulatory requirement on an adviser to seek to estimate or advise the customer on the probability of or likely size of any margin call, nor any obligation to satisfy himself that a customer had sufficient assets to meet a margin call (which was recognised to be a practical impossibility for an adviser to do) at some points in his evidence the Claimant's expert expressed the view that an adviser, as a matter of good practice, should consider if his client could meet the minimum margin call which could arise on the margin call criteria of a bank and satisfy himself that the client knew of the need to have liquid accessible assets to meet such a call at short notice or to pledge sufficient assets in the time required. If a call was made as soon as the LTV was breached (where the secured assets lost value and the outstanding loan exceeded the requisite proportion of their value) the minimum call, could, of course, be just $1. The suggestion made no sense in that context. In 2006 however, there was a change in the CSAG system which allowed additional loss of value of the security, once the prescribed LTV had been breached (the LTVP), before requiring communication to the client (the LTVC point) and yet further loss before actually making a call (the LTVM point). Thus, it was mathematically possible, at any stage after 2006, when a further buffer existed between the LTVP and the LTVM, to calculate the difference between the LTVP and the LTVM, which would represent the minimum call which might be made by CSAG, if one was made. It was not suggested to the Defendants' experts that any obligation arose to do so, nor would it have been possible to make that allegation. Nonetheless, the claimant's expert thought it would be good practice to calculate and alert the customer to this minimum level of call. This was a new unpleaded point, not raised in his expert report (the difference between LTVP and LTVM being unknown to him until evidence of it was produced, following the exchange of expert reports. It did not feature in the experts' Joint Memorandum). He stated that if the customer assured the adviser of his ability to meet such a call, the adviser was under no duty to investigate the client's financial circumstances further. The adviser had to be satisfied that the client understood the margin call requirements and the consequences of not meeting the call and accepted that risk. That was enough but if he had no assurance on that point, the adviser could not make any assumptions and should ask questions until he had satisfied himself on the point. As it was, by the end of the trial, recognised that BAS had assets sufficient to meet any foreseeable call, none of this mattered, the only significance being, apparently, that if RR had explored such matters with BAS, her ignorance of margin and margin calls would have emerged. Her case was that she knew nothing of this, as no explanation had been given, whereas, on RR's evidence, he had not only explained how leverage worked, that the Notes were collateral for the borrowing, that margin calls could be made and their consequences, but had also told her, when she had asked on occasion, as to the likely sums which might be required in a margin call, that, although it was impossible to say, it could be of the order of $4-5m. At the end of the day, therefore, there is in reality only one central issue which arises in relation to the question of breach of statutory or common law duty (as opposed to causation of loss), which I have to determine: did RR, CSS and Plurimi take reasonable steps to ensure that BAS understood the nature of the risks involved in purchasing structured notes with leverage and in particular the risk inherent in potential margin calls and the consequences of a failure to meet them. The original claim and its development in the pleadings There were three letters of claim before the action begun. In the first two, the claim was made that BAS had been told by RR that her capital would not be lost in the investments made. In the third, a full solicitor's letter before action, the allegation was made that BAS had told RR that her capital had to be safe or that any risk to capital had to be minimal and applicable to no more than a very small proportion. It was alleged that RR had encouraged BAS to invest in an unsuitable type of product when she required a safe and reliable portfolio of investments that would ensure that her capital was safe. He had misrepresented the terms of the Notes, by saying that there was not significant risk to capital and advising that leveraging was a necessary or appropriate part of the investment. There was a reference in this third letter to margin call risk but only in the following terms: BAS had never been advised about the margins operated by CSAG and the potential risk and effect of changes in margin and margin calls and the subsequent events came as a shock to her". It can be seen that the complaint on this aspect was directed to the actual levels at which CSAG made calls and the change that was made on 23 October which upped the collateral requirement. As appears hereafter, those complaints, as against CSS and Plurimi, were unsustainable. The original particulars of claim alleged in paragraph 28.4 that all of the Notes were unsuitable and that RR made representations that they carried "very little risk" and that borrowing was "desirable and suitable". These allegations followed the pattern of the letter before action. It was alleged that BAS believed that the notes were relatively low risk and that, had she been properly advised, she would not have bought any of them. As confirmed in the Further Information given pursuant to a request, it was said that, with proper advice, she would have invested in low risk products such as blue chip equities and government bonds. Whilst there were additional claims arising from the leveraged nature of the Notes, it was not alleged that RR did not advise BAS as to the risk of a margin call, nor that she did not understand the risk of a margin call, nor that she could not meet such a margin call. All the above elements of the claim disappeared before trial. It was no longer alleged that the Notes were unsuitable in themselves and none of the misrepresentation claims were pursued. Instead, by an amendment made in December 2012 (of which notice was given a couple of months earlier) the complaint was made about the recommendations for purchase, not of the Notes themselves, but of their purchase on a leveraged basis. It was said that had she been properly advised, she would have purchased the Notes without leverage, or invested elsewhere through the BAS 2003 Trust (the Trust in which she put some of the money from her divorce settlement- split into two portfolios, one managed by JP Morgan (Suisse) and the other managed by Banque Mirabaud). It was alleged that RR failed to give an explanation to BAS that a comparatively small fall in the value of the portfolio would entitle CSAG to make a margin call and that if she did not have sufficient immediately available liquid assets, there was a very significant risk that she might lose her capital and become indebted to CSAG. It was alleged that she did not understand that the value of her portfolio of Notes fluctuated from time to time or might be less than the price she had paid to purchase them. It was also alleged that she did not understand the risk of a margin call by CSAG or the consequences of failing to meet it because this had not been explained to her. In the written and oral opening of BAS' case at trial, the focus changed once again to allege a failure to explain that the Notes would be pledged as collateral at all, that CSAG was entitled to call for additional collateral and that if she did not provide the collateral, the Notes would be sold and she would lose all or most of her capital. Secondly it was said that RR failed to satisfy himself that BAS had available to her liquid assets with which she could meet a margin call of $4-5 million. The first allegation was therefore the "failure to explain" case. The second was the "unsuitability of the investment" case. This constituted a development of the case put in the amended statement of case, which is, as the Defendants point out, unsatisfactory where professional negligence or breach of regulatory or statutory duty is alleged, where the precise nature of the allegation being made and the basis for it should be spelt out. Thirdly, prior to the trial, BAS was pursuing a claim against CSS and Plurimi for failure to monitor the Notes and advise deleverage from August 2007 onwards or in the case of Plurimi, by May 2008 at the latest, this case being based on passages in the Expert Report served on her behalf. In her written opening, that claim was not advanced, but a further unpleaded claim was put forward, that Plurimi had failed to monitor the Notes and advise deleveraging in September and early October 2008. On the second day of the trial the claim that deleverage should have been advised prior to 15 September 2008 was abandoned but it w3as said that a case was still being made in respect of the failure to advise on deleverage from that point onwards. I ordered that this case be pleaded, which it was by a draft amendment served the next day. No application to amend in those terms was in the event made and on the seventh day of the trial the allegation was abandoned. BAS' written closing submissions were noteworthy in failing to make any mention of the "unsuitability" claim and in virtually his opening sentence, in his closing speech, counsel for BAS stated that it was no longer pursued, in the sense that it was no longer being said that BAS did not have sufficiently available liquid assets to meet the margin call. What remained was the allegation that the Notes were unsuitable for BAS because of the failure to explain the matters to which I have referred. The development of BAS' case is significant, not only because of the changes in themselves, but in relation to the credibility of BAS herself, whose statements of truth supported the pleaded case as it changed from time to time. The Defendants relied on a number of facts pleaded by her, supported by such statements of truth, which were contradicted in later pleadings or in evidence: i) In the pleadings, she complained of the statement in CSS' Customer Profile that her total assets amounted to $100m. She said that the true figure was $15m. This was plainly not true and she must have known that at the time she made that response. In her statement she stated that it was $70m whilst, in the amended Particulars of Claim it was stated to be approximately $85m. Her explanations, under cross examination, for this inaccuracy were not credible (saying, for example, that it referred to cash), since the issue was clear and there could be no room for misunderstanding. This is a clear example of dishonesty on her part, where correction was forced on her as disclosure of documents was ordered against her. ii) The original plea that her investment objective was capital preservation and that, properly advised she would not have invested in structured notes but would have invested in government bonds, blue chip investments and the like was again revealed by disclosure to be unsustainable, because what was revealed was a series of personal investments through other banks in high risk products, including Hedge Funds, Currency Options and other structured notes. The only investment she ever made in a Treasury Bond was effected with a view to obtaining a residential visa (and was done with leverage). Her trust, the BAS 2003 Trust in its two separately managed portfolios, which she closely supervised, with Mr Boujon, from February 2006 onwards, invested in a variety of assets, including Structured notes and Hedge Funds. Many of the very Notes recommended by RR carried a risk of capital loss, as the Indicative Term sheets showed and as she was well aware (see below). The change of case to plead that the Notes were acceptable in themselves, without leverage and that, if leverage had been explained, she would have invested in 23 Notes on an unleveraged basis, contradicted her original plea. There is no other conclusion possible save that she knew that this plea was also false. iii) The plea that BAS did not understand that the value of her portfolio of Notes fluctuated from time to time or might be less than the price she had paid to purchase the Notes in that portfolio did not survive long under cross-examination, as appears below. There was any amount of evidence to show that she must have appreciated this including an early letter of 12th December 2003 from RR in which it was expressly pointed out that the Note recommended, "if not held until maturity, could be sold at the prevailing market price at the time, which might be below the issuing price of 100%". As some Notes were Protected and others were not, and BAS accepted that the terms of the Notes were the subject of discussion between her and RR, the point was unsustainable. Moreover, in the BAS 2003 Trust portfolio, there were a number of structured notes and, from mid 2005 onwards, she received monthly reports from Mr Boujon who monitored her investments, showing the fluctuating values of those Notes. Since, during the course of her investment through RR, some Notes were actually sold at a loss and fresh Notes purchased with a view to recouping that loss, with her express authority, the point was unarguable, even on the basis that she did not read various documents sent to her. iv) BAS pleaded in the Amended Reply that, apart from the purchase of two structured notes from Banque Audi issued in May and June 2003 respectively, and a structured note from Citibank issued in June 2008, none of which investments were leveraged, she did not invest in products similar to her investments in Notes which were recommended by RR. In particular it was denied that she made any other investments on a leveraged basis. Documents disclosed at a late stage in the history of proceedings revealed that these allegations were demonstrably wrong. The structured note through Citibank was 100% leveraged; she entered into investments through UBS which involved options in currency speculation on a 100% leveraged basis in 2007; she invested in structured notes through the BAS 2003 Trust in circumstances where she pressed the trustees to invest in such Notes to achieve the same returns as those invested through RR and where, from February 2006 onwards, she and Mr Boujon were vetting any new purchase before it was made. Once again it is impossible to see how this plea could have been included without appreciating its falsity. v) Elsewhere in the Amended Reply, BAS pleaded that she consulted no other adviser apart from RR about the purchase of structured notes (whether on a leveraged basis or at all) apart from the Citibank Note, but the documents showed her sending on some of RR's proposals to Mr Boujon for his advice and in cross-examination, both he and BAS accepted that he had, from time to time, given such advice in relation to individual structured notes recommended by RR. In further information given by her she stated that from March 2005 onwards she relied on the advice of Mr Boujon in relation to recommendations from various banks but in relation to the Notes, the Claimant relied exclusively on the advice of RR. It is hard to see how these pleas could have been made without knowing they were wrong. The Witnesses I did not find any of the witnesses entirely satisfactory. Of course, actual recollection of meetings and conversations which took place between 4 and 9 years ago is bound to be limited and witnesses will inevitably reconstruct and come up with evidence of what they think must have happened on particular occasions, after looking at diaries, telephone logs, correspondence and email traffic. Allowing for all of this, the tenor of conversations over the years and the topics which would be covered by advice are matters which the main witnesses ought to be able to recollect, without necessarily being able to identify the specific occasion or occasions when this happened. At bottom, there is no room for doubt that one or other of the main protagonists is not simply suffering from a failure of recollection. Given the volume and size of the Notes purchased through RR and recommended by him after advice, the fact that RR and BAS were in regular and very frequent contact over three years about her investments and discussed not only Notes proposed by RR, but suggestions for investment made by BAS and recommendations made to her by others, both of Notes and other investments, it is not possible for one of them to be mistaken or to have forgotten whether or not they discussed the basic concepts of leverage and collateral, the interrelationship between loans and security, what might happen if the value of Notes dropped, margin, margin calls and what might happen if a margin call was not met. In the context of their discussions about investments in such Notes, whether or not BAS did or did not have an understanding of these concepts would have been apparent to both. The process of reconstruction on which the witnesses obviously embarked for the purpose of their statements is valuable because some identification of conversations can be made when an email or file note refers to it, and the contemporaneous documents provide a framework of events upon which the Court can work in deciding on the reliability of the witnesses' evidence. Whilst there is unlikely to be much actual recollection of detailed discussion at any specific meeting which took place many years ago, there will be recollection of the sort of things that were discussed from time to time, particularly if there are any explanations which are given as a matter of standard practice when investments are suggested and the contemporary documents may identify occasions when this might have or must have occurred. So here, as in many cases, I found the documents and the inherent commercial probabilities the surest guide to assessing the reliability of the evidence given, but the demeanour and reaction of witnesses in the witness box when faced with questioning and documents strongly contributed to the conclusions I have reached. I did not find BAS a satisfactory witness and I was unable to accept her evidence in many respects. There was no doubt an element of self-persuasion in casting the blame for all her investment losses on RR and reconstruction of what she thought she must have known and understood and what she did not, but some of her evidence was, I am satisfied, not only inaccurate and unreliable, but dishonest. There were internal inconsistencies in her oral evidence as well as inconsistencies with her statement and various iterations of her Statement of Case and Further Information, each supported by a signed statement of truth, as set out above. It is plain from the history of the proceedings that she misrepresented her wealth in the pleadings, the transactions she had undertaken elsewhere, the leverage involved in some of those transactions and her understanding of them. When faced with documents which contradicted her case, she resorted to saying that she had not read those sent to her, that File Notes written by RR were fabrications or, where reference was made to numerous other documents, that she had no recollection of the events to which they referred. The extent of her lack of memory was greater than could be credited and was almost always prayed in aid in relation to points detrimental to her case, whereas she purported to have good recall of the matters which supported her case and contradicted the evidence of RR. On the critical issues in the case, therefore, I looked to see if there were other matters which supported her evidence, because of the difficulty in accepting what she said without such corroboration. I did not find Mr Boujon a wholly satisfactory witness either. Much of what he said gave the lie to BAS' portrayal of herself as a naïve investor, wholly dependent on advisers to make decisions for her. It is clear that he (as did UBS, Citibank, Barings and others) treated her as a woman who knew her own mind, was able to make decisions, sometimes insisted on her own decisions contrary to advice and understood the basic concepts of loans, security, pledges, margin and margin call. She asked questions when she did not understand and was able to understand the concepts when they were explained to her. She made exacting demands of her advisers and trustees/managers and looked for high returns, with an awareness of the ordinary principle that the greater the return, the greater the risk. In particular, over the relevant period of the Notes in issue here, she was seeking double-digit returns from her investments. When however, there were more direct questions which might, in his view lead to answers which might unduly prejudice BAS' case, I did not think he was doing his best to assist the court. I found myself unable to accept his evidence about his discussions with and advice to BAS on the Notes recommended by RR to her, upon which she consulted him. He could not have given advice about the relative merits and demerits of the recommendations, as compared with other investments which he discussed with her at the time, without referring in some detail to leverage, its effect and potential risks. Further, Mr Boujon contradicted his statement where he had said that a decision was made in late October 2008, on the sale of Note 19, not to repay the CSAG yen loan taken out for an investment by BAS in the Bank of London and the Middle East. BAS said that this was his view which prevailed whilst RR recorded her decision, against his recommendation, not to repay the loan, because of her view that the yen would weaken and it could be repaid at a better exchange rate later. I could not accept his evidence on this point. Finally, I found his evidence about BAS' failure to meet the margin call and the meeting with CSAG on 27 October completely unsatisfactory for reasons which appear later in this judgement. Abir Hammad's evidence was of limited assistance to the court. She was argumentative, had little actual recollection and did not answer some questions because she said she was not really an expert, which was true. She was a friend of BAS who had advised her to invest $750,000 in two structured notes in 2003, but without leverage, when she was a Relationship Manager at Banque Audi and before BAS ever consulted RR. She said that her own knowledge of the Products was limited and that she was learning at the time and reliant on those who had knowledge of such products at the bank. She relied on the assessment of the vetting committee of the products in which she advised BAS to invest. Her insistence on BAS' investment objective as being solely the preservation of capital contradicted Banque Audi's own documents and, it seemed to me, that she was very keen to preserve her friend's case, rather than answer questions in a straightforward manner. Those documents set out what BAS was looking for, though Ms Hammad did not accept this as accurate – "regular cashflow, better returns than deposits and investments whose value did not fluctuate unduly". That seems to me to be an accurate picture of where BAS was at the time, before receipt of her divorce settlement monies. She did say that she had explained to BAS what it was she was signing when she signed a Banque Audi Deed of Pledge in October 2002, as providing security over products or cash in the bank's account in respect of any borrowings made by the customer, but avoided giving any further clarification of what she had said, telling Counsel "I can see where you are going". Mr Ramzy Rasamny has had over 20 years of experience working in the wealth management sector. He continues to be an investment adviser specialising in structured products. His expertise in this area is undoubted. His integrity was the subject of attack in cross-examination inasmuch as it was suggested that he recommended leverage in order to increase the size of the investment upon which commission was based and his own remuneration. It was suggested to him that some of his file notes were fabrications and that on a number of occasions he had sold BAS' Notes without her authority. It was also suggested that he had invented a point with regard to the LTV treatment of the Yen loan taken out by BAS in May 2007 to purchase her stake in BLME in order to cover up a mistake in his witness statement. I did not consider that there was any good basis for any of these attacks on his integrity. He was in my judgement, a witness who did his best to assist the court. Although his evidence was unsatisfactory in relation to the completion of the Transaction Suitability Forms (TSFs), this was largely because those forms were not completed with the care which they deserved. He admitted that there were mistakes in those forms, that they were not all signed by the appropriate adviser, that some of the questions raised in the forms were not properly answered though not admitting lack of care in the advice which underlay the completion of them. It is clear to me that RR recommended leverage to BAS as a means of increasing the yield on her investments, which he understood to be what she wanted (and, as appears later, was in fact what she wanted and told him she wanted). This was part of RR's specialised approach to investment in structured notes. This magnification of returns was spelt out in the Effect of Leverage documents sent by RR to BAS, whether or not she read them. Mr Boujon, whose monitoring function of the Trusts included investigation of inflated fees and who particularly checked the fee structure on one particular Note recommended by RR, made no criticism of fees charged by him. With the exception of file notes that were compiled after the liquidation of BAS' notes by CSAG, when he could have been seeking to justify his own position, it is hard to see what reason RR could have for fabricating file notes and I am clear that this did not happen. For the most part, it was clear that the underlying rationale of the file notes was to record recommendations made by RR which were taken up by the client, for compliance purposes. Where recommendations were made which were not taken up, there was no need for such a note for compliance purposes and usually none therefore existed. It might perhaps have been thought suspicious if, in those circumstances there had been a file note of rejected recommendations. There was no basis in BAS' evidence for suggesting that RR had concluded any transactions without her authority. I did not therefore consider that there was any reason to approach RR's evidence with regard to the critical questions in this trial with any prior doubts about his integrity in relation to other matters, although, of course, his evidence on these critical matters fell to be considered in the light of all the circumstances and the contemporaneous documents, as well as that of BAS. The evidence of Francis Menassa (FM) was limited. It was given with great confidence but I was not able to accept some parts of his evidence relating to the manner in which the Plurimi Acceptance Booklet had been completed, since a part of the document had plainly been "lifted" from an earlier memorandum of the 29th March 2005 sent by RR to CSAG, whether or not Mr Menassa himself had drafted that memo. That part could not have been the subject of discussion at a meeting with BAS at her house, as he said, because it repeated an inaccuracy in that note, which she could not have confirmed. Nonetheless, there were other parts of that Booklet which contained detailed information about her investment experience which could only have come from her, and I am satisfied that, in the material respects relating to her investment objectives and risk tolerance, the booklet accurately reflected answers that she must at some point have given to Plurimi. The same issue with regard to the Yen Note was held against him, as against RR, by Counsel for BAS but it was clear to me that both of them held the understanding of which they spoke, whether or not it was a correct understanding. The helpful part of his evidence in relation to the issues which I have to decide was that which related to the normal kind of explanation given to clients of structured notes and the standard procedure when sending documents to BAS. His evidence was that, whenever leverage was suggested to BAS as part of the recommendation, an Effect of Leverage document was sent with the Indicative Term Sheet (though only a certain number appear in the court documents). He also said that he had heard RR give explanations on many occasions and he talked of a standard routine when doing so and when going through "snapshots" also, which he said he also did with BAS, which she denied. It seemed to me to be inevitable that an adviser would develop some pattern when introducing concepts to a new customer and when reviewing investments or recommending notes with decisions to be made about leverage and LTV ratios and cushions or buffers (see below). He said that it was part of the standard approach to refer to LTV and margin, with the potential of a margin call, when reviewing the portfolio and when going through snapshots and leverage analyses. As I have already said, in the case of an acute conflict of evidence about oral conversations, the primary documents constitute a useful guide as to where the truth lies, particularly if they refer to conversations. The earliest meetings or conversations in 2003 and 2004 fall into this category. It is common ground between the parties therefore that there was a meeting between RR and BAS on the 30th May 2003, a telephone conversation on the 11th December 2003 and a meeting on the 11th December 2004 over lunch. Absent the correspondence, diary notes or telephone records, it is highly unlikely, in my judgement that either party would have known that meetings took place on those dates, nor would they be able to give details of what was discussed, save on the basis that certain topics were generally the subject of discussion and would therefore be expected to be discussed on the occasions in question. At the outset, prior to the first investment, some explanation of some kind, as is common ground must inevitably have been given. The Impact of the Primary documents setting out the Recommendations and the Transactions RR sent an email on the 30th May 2003 referring to the meeting of that day attaching "details of a product similar to the one we discussed, along with a Cash Flow Analysis that shows how the numbers look once the investment is underway". Attached to the email was a Term Sheet for a 10 year USD Callable LIBOR Range Accrual Note (a CRAN) together with a document headed "Effect of Leverage on the performance" of that CRAN. i) The email referred to the structure of the Note and the "barriers" below which US$ LIBOR would have to stay in order to achieve the coupon. The email also explained that the barriers and the maturity of the Note were the two most influential factors in determining the coupon and an attempt was made to find a "fine balance between achieving a decent coupon and not taking too much risk". It was explained that the attached product was one that had been traded earlier that month and that the cash flow analysis (the Effect of Leverage document) provided a snapshot of how the end result would look. There was no recommendation to invest in this note which provided for a coupon rate of 6.9% per annum provided that, in the relevant years, LIBOR did not rise beyond the figures set out (being 2.00% in year 1 and 7.5% in year 10). ii) The Effect of Leverage document set out a cash flow projection for each of the 10 years showing the annual coupon payable if LIBOR stayed under the barrier, offsetting against that the cost of borrowing at the assumed LIBOR rates. The clear benefit to be achieved by borrowing at a much lower cost than the income to be received appears clearly from the document. The illustration shows $10m of equity provided by the investor with additional borrowing of $40m and the net figures receivable for the total investment of $50m. It refers to an LTV of 80%. In the box at the foot of the document it is stated that "prices of and income of investments can fluctuate. An investor may get back less than the amount invested." From the terms of the email it is plain that a similar product had been discussed at the meeting. It is inconceivable that the manner in which Notes of this kind operated, with barriers, was not the subject of discussion. Equally, the enhanced returns available by leverage, as compared with the basic coupon, must have been discussed, since this was the structure which RR utilised when making recommendations to customers. In the Effect of Leverage document which he had attached to his email, a 6.9% p.a. coupon was enhanced to the level of 10.77% - 27.46% by use of 80% leverage. As to the product which was actually the subject of discussion at the meeting (similar to the attached CRAN), it could only be one of the two Notes in which BAS had invested in Banque Audi on 25th April or 8th May 2003 which had embedded leverage but potential coupons of 15.5% and 18%. These were 10 year and 7 year US$ Callable Reverse Floaters with capital protected at maturity, each linked to a LIBOR rate and effectively betting on LIBOR rates remaining low. The email refers to the "product" attached to the email being mentioned at the meeting also and on the 19th June, RR gave BAS information as to the movement of US Interest Rates, asking whether she had had a chance to think about the product which he had suggested at the meeting, which must be a reference to the CSS Note, details of which he had thereafter attached to the email itself. Exchanges of emails between RR and BAS over the month of June show her pursuing RR for advice in relation to Real Estate Funds (with returns of 8-10%) and a Credit Libanais certificate of deposit which was paying about 4 times as much as the equivalent LIBOR rate. On the 12th December 2003 RR sent BAS a letter referring to a telephone conversation of the previous day and enclosing an indicative Term Sheet for an 8 year US Dollar CRAN with "an indicative cash flow analysis illustrating how we arrived to the stated returns". The letter set out the reasons why the product was recommended, with a fixed coupon of 7% per annum provided that the LIBOR rate remained within the specified barriers. The letter made plain that the principal was 100% guaranteed, although the issuing bank could call the Note early. The letter also made it plain that "by borrowing on a short term basis, the investor was taking advantage of low US$ short term borrowing costs and investing in higher long term US$ fixed income products thus magnifying potential returns". The effect of leverage in enhancing yield was therefore made clear. Under the heading "What are the risks" it was made plain that if the barriers were breached, no interest would be earned in respect of the days of breach but interest would remain due on the borrowing regardless of the lack of coupon. A warning was given that if the investor wanted access to the capital which was locked up until maturity, before the term date, the note could be sold at the prevailing price in the market at the time which might be below the issuing price of 100%. Anyone reading this letter would therefore realise that there was a risk of capital loss if the Note was sold before maturity. Critically however the letter continued with a third bullet point under the risks heading:- "Moreover, please note that Bank's maximum allowed borrowing for these products is 85%. In this case we are proposing to borrow 75% as stated in the cash flow analysis in order to maintain a 10% cushion for price fluctuations". Moreover, the Effect of Leverage document, though now not available, would presumably have taken the same form as that sent earlier or the form sent in December 2004, which is referred to below. Anyone reading this letter would therefore appreciate not only that the value could fluctuate during the term of the investment but that the bank had a limit on the amount the investor could borrow, which was 85% of the value of the Note. Since the proposal was to borrow 75% "in order to maintain a 10% cushion for price fluctuations" the obvious issue raised by the letter, if there had been no prior discussion, was what would happen if the value of the Note dropped below the maximum borrowing limit of 85%. Just over one year later, on Monday 13th December 2004, RR sent BAS an email referring to their meeting on Saturday and, pursuant to their discussions, enclosing details of a Fixed Income Note as an investment proposal. The email explained that the Note paid a coupon of three months US Dollar LIBOR (currently at 2.4%) plus 3% which was payable for every day that the LIBOR rate remained below the barriers specified. The email referred specifically to leverage charged at 3 month LIBOR plus 0.5%, thus providing a net surplus credited to the account on a quarterly basis in accordance with the attached cash flow analysis. That attached cash flow analysis (Effect of Leverage document) referred to an investor's equity of $5 million with $15 million dollars borrowed (75% leverage) and an LTV of 75%. The assumed borrowing costs for each year was then set off against the annual coupon, assuming the barriers to remain unbreached, giving rise to a net return on equity of 13.26%-15.64% in each year of the 8 year period. In addition to the box which appeared at the foot of the previous Effect of Leverage document, to which I have already referred, the following wording also appeared:- "The value of the Note fluctuates according to market conditions. We may require additional collateral to cover any shortfall if the loan value increases to over 85% of the value of Note". Anybody reading these documents, with the indicative term sheet would immediately see the effect of leverage in enhancing the return on the investment by virtue of the differential between borrowing cost and annual coupon (assuming the barriers were not breached). A reader would also appreciate that not only did the value of the note fluctuate during the 8 year term but that, once again, 75% borrowing was being suggested where the bank's maximum was 85% and where the bank could require additional security if the loan value increased above that level. Although the term "margin call" was not used the document clearly set out the entitlement to make such a call. If the requirement for additional security was not met, anyone applying their mind would assume that the lender could require repayment of the loan, and it would be an obvious question to ask what would occur in that situation, if there was any doubt in the reader's mind. On the same day RR sent around, by courier, CSAG's standard account opening documents including a limited power of attorney in favour of CSS and a General Deed of Pledge, which set out at clause 5 the bank's entitlement to call for additional security "if its value decreases or if the ratio of its value to the claims is no longer satisfactory in the banks opinion". The bank's power to liquidate should the margin call not be met was then spelt out. The CSS terms of business were sent for signature with a Warrants and Derivatives Risk Warning Statement accompanying the Indicative Term Sheet. BAS signed the documents required to open the account, including the terms of business and a blank Customer Profile form, that day. Although there was a dispute between RR and BAS as to the completion of this Customer Profile form, since RR maintained that he obtained information from BAS over the telephone which was used to complete the form, whilst she maintained that this had not occurred, this dispute has receded into the background. A complaint was made that her estimated total assets were given as $100 million plus and the box for her liquid net worth (excluding house) for over £1 million was ticked. Nothing in my judgment turns on this as it is now accepted by BAS in the pleadings that she was then worth $85 million and she did undoubtedly have liquid net worth of over £1 million, which was the highest box available on the form, which was not, therefore, a form well suited to completion for high net worth individuals. No complaint was made at the investment objectives stated in the form - of income with a readiness to accept a moderate level of risk which was defined as seeking long term returns but sustaining downward investment fluctuations, with a preference for investments with a limited downside price risk and the foregoing of higher returns as a consequence. In my judgment this form could only have been completed on the basis of information supplied by BAS, whether all in that telephone conversation or not, is of no consequence. Of more significance is the Transaction Suitability Form for this investment, which was the first purchase of a Note by BAS, through RR, although not the first such Note she had purchased (see the two Notes bought through Banque Audi in April and May 2003). It referred to the investment as the first trade for a new client and stated that an explanation had been given to the client of the product, which she fully understood. It referred to the term sheet provided to her but not the Effect of Leverage document. It posed the question, "how have you satisfied yourself that the client fully understands the product and associated risks (including margin calls for leveraged positions)? The answer was given – "yes we have satisfied ourselves that the client fully understands the product." It will be noted that this is an insufficient answer to the question, as a statement that CSS had satisfied itself does not even begin to answer the question as to how it had done so. The form was completed by one of RR's assistants but signed by him. It provided, above his signature that the form had to be signed by the adviser in question and that a copy of the document, together with all supporting documents including the Term Sheet, and, amongst other documents, file notes of conversations, should be placed on the adviser's client file. There was no file note of this conversation, which RR explained as the result of BAS not being a client until the client documentation was signed. As this was a first investment, that was no satisfactory answer. This TSF was the first of many which were admittedly inadequate and showed, in my judgment a careless approach which has the result that the forms do not give the assurance that they ought to, that matters have been fully explained. The TSF for the second Note was not actually signed by RR and takes a different format to the form for the first Note. When the form asks why it was considered that the investment was suitable for the client and that BAS had sufficient knowledge to evaluate its merits and risks, it was simply stated that the investment was suitable because it was short in duration with fixed coupons linked to the equity market. It was stated that the client had sufficient funds to meet any margin call. No express reference was made in this TSF form to any risk involved in leverage or any basis for saying that the client understood margin and the risks of margin call, though a number of notes expressly said that she did so understand. The TSF for Note 3 in April 2005 followed much the same format, though this was a switch of the Banque Audi Note into a Trigger Note, without leverage. The TSF for the fourth Note was signed by one of RR's assistants in May 2005 certifying that he had reasonable grounds to believe that the client was capable of understanding and did understand the investment and that he had reasonable grounds to believe and did believe that the proposed investment would not be inconsistent with the investment objectives and risk tolerance of the client. A term sheet and a SCARP warning were provided in respect of this CDI with leverage and whilst the form contained greater detail than some other TSFs, the basis for belief that the client understood the risk was stated to be the client's sophistication and frequent investment in similar notes in the past. It was said that she understood equity linked notes and the margin call scenario. Other TSFs included similar information. TSFs were completed for the sale of Note 1 at a loss because barriers were being broken and the coupon eroded. There was no real answer given to the request for information as to why it was thought that the client had sufficient knowledge and experience to evaluate the merits and risk or the basis for belief that she understood the risk of significant loss of the principal amount of this CDI. The first file note in relation to any purchase of Notes by BAS appears in relation to this transaction. The note refers to conversation with BAS and sets out the reasons for selling Note 1 at 94.6% of its purchase price and purchasing Note 5 in its place, in an effort to maintain coupons and recoup the capital loss suffered. It records that this was explained to the client who agreed with the strategy. The TSF could have, but did not, refer to this file note which contained the usual certification of understanding by the client, on this occasion signed by RR. From this point on, there is a file note in respect of the purchase of each Note, as well as a TSF, both in the CSS period and the Plurimi period. The file note in relation to Note 6, a three year Trigger Note refers to RR talking BAS through the Note and her instruction to purchase. The TSF, in answer to the request for basis of belief that the client understood the risk, simply records that "the client fully understands the risks associated with this type of Note". The TSF for the investment in the Blackstone Real Estate Fund, in answer to the same question records that the client is experienced in these products with investments made in private equity with other banking relationships. BAS signed a suitability form for investment in that fund, in which she stated that she understood the risk of the investment although, in cross-examination she said she did not read this very short document before signature. With regard to the remainder of the investments, the TSFs are unsatisfactory inasmuch as little or no basis is given for any belief that the client understood the risk, save for previous trading. Many include a statement of BAS' understanding of the risks of margin calls, without giving an express basis for that understanding, although in the case of all the Plurimi TSFs, there is reference to conversations with RR. Each of the TSFs for Notes 5-23, could however have made reference to file notes of conversations but did not do so. Some of those file notes are brief in recording RR's conversations with BAS but some are longer and refer to a more extended process. None specifically refers to collateral or the risk of margin calls although they refer to explanations of the Notes and one to a three hour meeting and another to a full review, analysing the merits and risks of all Notes currently held in the portfolio. A number of the TSFs do, as I have said, make reference to the satisfaction of the adviser that BAS understood the risks of leverage and margin calls. Effect of Leverage documents (cash flow analyses) containing the form of words stating that the value of the Note fluctuated and that additional collateral might be required to cover any shortfall if the loan value increased to more than a given percentage of the value of the Note were found for eight occasions and SCARP warnings sent by CSS were found for five occasions. Trade summaries and interest summaries in respect of each coupon sent to her referred specifically to the fluctuation in prices and values of investments and some term sheets referred to loss of capital or (on capital protected notes) specifically to loss of capital in the event of premature sale. Plurimi's terms and conditions were sent to BAS at the beginning of 2008 and they expressly refer to a risk of a loss of capital and the effect of leverage in magnifying relatively small movement in the price of a contract in giving rise to an enhanced profit or loss. There are a series of emails in which references are made by RR to leverage as a choice to be made by BAS and to the reduction or avoidance of leverage where a product is considered to be more high risk. Thus:- i) In an email of 9th December 2005, commenting on a crude oil Note which BAS sent to him for his opinion RR said: "in general I don't like one year Notes because they seldom work but if you do want to do it, better increase the cushion i.e. make it a drop of 55% which will result in a coupon of around 8% but safer, and maybe better not to put on too much leverage". It is clear that RR assumed that she would be able to understand the concept of the Note with a 65% barrier, where he suggested a reduction to 55% and that she would understand that leverage increased the risk. ii) In an email from RR to BAS dated 16th December 2005, he suggested an alternative to the crude oil Note, namely a Note linked to the performance of the Gulf stock markets. The Note had a 4 year maturity "but can be sold at any time – if for example the market continues to do very well we can get out of it at any time". He pointed out that "to get the 95% capital protection (if needed) we need to stay in until maturity…it can also be leveraged in the usual way like the other Notes". Not only is RR talking here about limited capital protection (and implicitly fluctuations in value) but also makes it plain that leverage is an option. iii) On the 13th January 2006 RR emailed BAS to give his comments about a Booster Note, proposed to her by the managers of the BAS 2003 Trust. "On the downside however, the Note is not capital protected – you only have a buffer of 10% so if the worst performing index is down by 10% over the life of the Note which is one year, then you will get back your capital at 100% but no profit. If the worst index is down by more than 10%, then the capital starts to get reduced…unless they are able to put a 25% downside buffer on it, it is not advisable to leverage it because if the market drops more than 10% than the capital starts to get reduced and there is no coupon payable in the interim in order to compensate for that." The degree of sophistication assumed by RR in sending BAS this email is once again obvious, with clear references to loss of capital and the effect of leverage. iv) On 29th January 2008 RR emailed BAS to give his view about a structured note recommended to her by Citibank, linked to the stock prices of three banks. He suggested three different banks and then said "better not to leverage this Note, because singly stocks are much riskier than indices." v) On 30th January 2008 he emailed her in relation to a revised version of this Note saying "it is better not to use leverage on this one and to go for no more than $1 million because there is no coupon paid unless all three stocks are above 100% of their strikes when the Note redeems. In a worst case scenario, if these stocks remain below their strikes, the Note could be there for 5 years with no coupon." vi) On 12th May 2008 RR gave his view about a Note proposed to BAS by UBS. "This structure is linked to three financial stocks and although these stocks have come down a lot, there can still be a danger that they go down more, especially that they have recovered more over the past couple of months so it is better to stay away from them or if you want to do it, do so with no leverage. In any case, let them replace Lehman Brothers with another stock (like Credit Suisse) as it is the most dangerous in case of renewed market sell off." Not only did this show wisdom in relation to Lehman but the email made it plain that leverage was optional and had the effect of increasing the risk. The critical conflict of evidence BAS' evidence in her witness statement was that she did not read RR's email of 30th May 2003 and did not read the details of what he sent her on 12th December 2003. She said she did not have funds available for investment in May 2003, but it is plain that she did as she had just received the first instalment of her divorce settlement. Under cross-examination she said she must have looked at the 30th May email briefly and did not read any of the letter of 12th December 2003 save perhaps the first paragraph. In her witness statement, she said she had various discussions with RR about his structured notes during 2003 and 2004 and it was difficult to be precise as to what was discussed, when and where, as they saw each other a lot. The evidence of both her and RR established that they were in contact several times a week, by telephone and sometimes several times in a day, at least in the later years. With regard to the meeting on 11th December 2004 at the George Restaurant, she accepted that leveraging might have been mentioned but said that there was no detail about the risks and rewards involved in it. She said that she had explained to RR that she had concerns that her trust was not producing a regular or satisfactory income, which was what she would need but that her income had to come from her capital which accrued from her divorce settlement, so that capital had to be protected. RR emphasised that she would receive a regularly quarterly income which was what mattered to her the most. She was not looking for a particularly high income however. She said that she gained an understanding of how the Notes worked, including those which were 100% capital protected, and the operation of the barriers. She understood that the indices or rates would have to fall a long way before a barrier was breached and so it was not something that was likely to happen much, if at all. If there was a problem with a barrier, RR told her that he could "adjust it" but she did not understand how that would happen and he did not explain it. She therefore understood that if there was to be any loss of income it would only be for a short period as the indices would rise again or RR would do an adjustment. She thought that he did explain that the interest charges on the loan would have to be paid even if no coupon was paid but this was the only risk of which she was made aware. There was no mention of any relationship between bank lending and the value of the Notes, or of security, and no discussion of margin or margin call, which were terms that meant nothing to her. When the borrowing of money from CSAG was explained as part of the arrangement, she understood that this would increase her income, as RR explained that the income from the Notes would exceed the level of interest on the loan. She thought it was all part of the structure. RR never suggested it would be possible to invest in one of his Notes without borrowing from CSAG. In cross examination, she said she had specific recollection of what RR did and did not say, but not of specific meetings in 2003 and 2004. She saw him on a regular basis and he talked about his kind of investments on many occasions. He always discussed the Notes and the consequences of a barrier breach and he might have mentioned leverage but did not discuss the risks involved. He never, at any stage, mentioned any relationship between bank lending and the Notes or security or margin or margin collateral. She would have remembered if leverage had been mentioned in the context of a margin call. The only thing that was ever mentioned about borrowing was the need to pay interest whether or not coupons were paid. She accepted that it was possible there had been a discussion of a CRAN on the 30th May 2003. She did not recall giving RR an Audi Note term sheet at their meeting and said she did not know that the Audi Notes represented the same kind of product. She did not specify the kind of return she wanted at that point and never said that she was after double-digit returns. He never told her that if she borrowed, she would get a larger investment and never explained that the Notes would be the collateral and that she could be called on to increase that collateral. She did understand that leverage meant borrowing and paying interest but never thought about security. She considered the loan separate from the Note and understood that she had to repay the loan regardless of the value of the Note. Where reference was made to the value of the Note dropping, she thought it only meant her personal investment outside the loan. She did not know how she was to repay the loan if it was separate from the Note because that was never explained to her. In cross-examination her evidence was that, at the meeting of the 11th December 2004, she had told RR that she wanted to invest with him but not in any particular product, telling him that she had $5 million to invest. He came up with a leveraged package without explaining the risks of leverage. She said she must have read the follow up email of the 13th December which enclosed an indicative Term Sheet and an Effect of Leverage document. Although she read the parts about borrowing, the cost of borrowing, about the coupon and the return, she did not read anything about collateral and nothing was explained to her. She then said that she did know that the value of the Note fluctuated according to market conditions but she only read what RR explained to her. She said it was not enough to explain things in writing to her and RR knew that she was like his mother in law who depended on him entirely. She said she did not ask him to send the forward LIBOR rates the next day so that she could understand the bet she was taking against a rise in LIBOR rates, although he did so. She did not know whether she had read what he had sent but if she did, she would not have understood it. So far as the account opening documents are concerned, she did not read the deed of pledge, the warrant and the derivatives warning, nor the customer profile form with its warning about the need for accuracy. So far as reading documents were concerned, she said she read those which were easy to read and not in small print but if it looked complicated she would not read it. Later in her witness statement, she said that, probably during 2005, RR explained about Notes that were not 100% capital protected. He explained that if a barrier was breached during the life of a Note and if it had not recovered, then she might not get back all her original investment and there could be some deduction of up to 20%. That was the only potential risk to the capital in her mind, but as she would have more than one Note and breaching the barrier would be unlikely and rare, she would not suffer such a loss on every type of Note so as a percentage of the total portfolio, the loss would be small. At no time until things went wrong at the end of 2008 was there any discussion about the value of the Notes or of her total portfolio. In her understanding she could see that at the end of the period she would either get 100% of capital back or something a bit less and what happened in between was irrelevant. She understood that the Notes were expected to be held for a fixed period but the consequences of withdrawing from the investment before the end of the period were not discussed. All she was ever given by CSS and Plurimi were "snapshot" reports about the Notes which made no reference to value. Never, prior to October 2008, was she ever advised about the value of the Notes. If she had known at any stage that, although she was receiving income, the Note had a value much less than the capital she had invested, she would have been alarmed and not bought any more Notes. She said that she now knew that reports were produced by CSAG as the lender which gave details of the value of the Notes but she had given CSAG instructions to "hold mail" (apparently for tax reasons), so she never saw any reports until the crisis in late 2008. Elsewhere in her statement she said that she did not recall receiving "Effect of Leverage" documents in respect of each Note but did remember seeing that sort of schedule and understood that it was to show how the income would be increased by borrowing further funds from the bank. She said she did not read it in detail. She proceeded on the basis that if something was important RR would discuss it with her. She did not remember seeing or reading any SCARP warning. If she had read such documents at the time she would not have understood them. The documents were not discussed with RR and she proceeded on the basis that he would have advised her orally about everything she needed to know. In cross-examination BAS accepted that RR had taken her through the terms of each of the Notes that he recommended and had referred to the various numbers in the Effect of Leverage documents. She did understand that the higher the return, the greater the risks. He would explain the maximum loss she could suffer if the value of the Notes moved below the strike price at the end of the term which, he said, was 10-15%. This was said every time she met with him early on in their relationship. He never discussed the paragraph about capital loss and margin calls in the Effect of Leverage document. RR's evidence in his witness statement was that on the 30th May he attended BAS' Belgravia home to discuss the services which he and Credit Suisse generally might be able to provide for her, including advice on a range of investments, whilst his specialisation was in structured products. She told him at this meeting that she had an existing portfolio of hedge fund investments managed by JP Morgan, which returned approximately 6-8% per annum. The returns were automatically reinvested in the portfolio and she wanted to make some investments which would generate a receivable income which could be used by her to fund her lifestyle. He understood her to be looking for a greater return than 6-8% and specifically wanted income for use for spending purposes. He described to her a CRAN and its characteristics. It appeared to him that she was familiar with some of the key features, including the reference to LIBOR and she produced a Term Sheet for a 10 year Note. He told her that a CRAN was safer as it only required LIBOR to remain within the lower or upper barriers for the investor to receive a coupon. She asked questions about how the barriers worked vis-à-vis LIBOR but when he informed her that it would provide a coupon of approximately 7% per annum "she visibly cringed" and told him that this was similar to the returns being generated by her Trust portfolio and she was looking for more than this. At that time she had a Trust fund, set up by her husband in 1996 (the BSAS Trust) which was managed by JP Morgan Chase and held investments worth about $7m. He explained that Credit Suisse offered clients the option of leveraging investments which would create the opportunity to obtain a higher return in a CRAN. He explained that the Note she had produced (which he identified through disclosure as the Audi 10 year note) had embedded leverage whereas the CRAN he described could be leveraged externally. His evidence was that he summarised the key risks and rewards associated with leveraged investment including the magnification of losses as well as gains. He explained that interest due on the borrowed funds would be payable irrespective of whether the CRAN paid a coupon and if the value of the Notes declined beyond a certain point it might be necessary to provide additional funds as collateral to support the account. He described this as a "margin call" and explained the potential consequences of failure to meet such a call, including the risk of liquidation of the accounts. Because this was a capital protected Note, the major risk was loss of coupon, whilst still paying loan interest, provided that the Note was held to maturity. He explained that structured products were designed to be held to maturity, which meant that the investor's capital was locked up for several years, but if an investor required funds for other purposes, they could borrow against their holding of structured products with Credit Suisse. In his witness statement he described speaking with BAS on the telephone on the 11th December 2003 and then sending the letter the following day which referred to the risks of the CRAN which he was suggesting, which was similar to the product they had discussed in May. His witness statement did not descend into any detail about the telephone discussion before sending this letter, but pointed out the risks specified within the letter. His written evidence about the meeting on the 11th December 2004 at the George Restaurant in Mayfair was that she confirmed that she did want to invest in a leveraged CRAN similar to those previously discussed. He repeated his previous explanation of risks and rewards of investing in this type of product and explained that a CRAN was 100% capital protected so that there was no loss of capital if she held the Note to maturity. He explained however that if sold prior to maturity there was a risk of loss of capital because, at the point of sale, the Note would be valued by the issuer and that might be below the par value of the original investment. Once again he discussed the risks of investing in structured products on a leveraged basis, including the risk of the value of the Note going down, the risk of a margin call, the need to meet the call to avoid the account being liquidated and the possibility of meeting a call with either cash or security. There was discussion of the amount she wanted to invest and the amount she wanted to borrow to leverage the investment. Although, at the lunch he would not have had an Effect of Leverage document in hand, because this was a product he knew well from discussion with other clients, he could relate to her the approximate coupon she would receive depending upon the amount of leverage utilised. The maximum LTV for this type of product was 85% and she told him, in accordance with his previous recommendation a year before, she would want to leverage the investment by 75%. The amount she borrowed was the result of her decision in the light of the potential returns. He sent an email the following day attaching the indicative terms of the CRAN with an Effect of Leverage document which contained the information that the value of the Note fluctuated and that additional collateral might be required to cover any shortfall if the loan value increased over 85% of the Note. He was satisfied that she understood the investment and the risks and although the TSF which he signed did not properly answer the question as to how he had so satisfied himself, it did set out his satisfaction that she did understand the risks, including the risk of margin calls for leveraged positions. Although he had no clear recollection of the discussion which took place before the purchase of Note 2, because this was her first investment in a Note which did not have 100% capital protection, he was certain that he would have explained to her that, if at the point of sale or maturity, one or more of the indices of the CDI was below the barrier (30% of the strike level) there would be a loss of capital. He would have explained also that the receipt of the coupon was conditional on none of the equity indices dropping by 30% from the strike level. This Note was leveraged at 70.8%. His evidence was that, prior to each of BAS' investments in a structured product he either telephoned her or met her to discuss the proposed investment and if it was a different product from anything she had previously invested in, he would explain the risks and rewards associated with it and the rationale for making the investment. As there were essentially three different types of product in which she invested through RR, as time went by she became familiar with each and their discussions became more focussed on the economics of the Note, namely the underlying assets, the coupon, the barriers and the term of the Note by reference to the prevailing market conditions. Many of the conversations were followed up by a short email summarising the points discussed and attached to the email, or sent separately, would be an indicative term sheet and Effect of Leverage document. Following the transaction the advisers would send a transaction confirmation, a final indicative term sheet, an overall account summary and in circumstances where there was a risk of capital loss on final redemption a SCARP Warning. All of this was standard procedure with the risks explained, including changes in the value of Notes and margin calls. He said that from the very first discussions with her, BAS expressed a desire to obtain higher returns which, he explained to her, could be achieved by using leverage. This was the basis upon which virtually all later transactions proceeded with differing degrees of leverage. On every occasion there had to be a discussion about the terms of the Note itself and the amount of leverage to be employed, which was all part of considering the risk and the reward. She could not fail to be aware of changes in value of the Notes. He referred to discussions about the sale of the Audi Note and of Note 1 (a $20 m investment, with 75% leverage) at a loss and the purchase of substitute Notes (Notes 3 and 5), bought in the hope of making recoupment, as in fact happened. In cross-examination he was asked why the 30th May 2003 conversation had not been referred to in CSS' solicitors' response to the letter of claim if he had a recollection of it. He maintained that he did have a clear memory of it nonetheless, although he could not recall whether he actually talked about the value of the Note vis-à-vis the barriers and the interest rate. He maintained there was discussion of the Audi Note and a comparison made between it and the Note he discussed with her, a copy of which he sent by email that day. He said he understood she was looking for double-digit returns, in the light of her dissatisfaction with 6-8% obtained by her JP Morgan Trust portfolio. He said that she mentioned double-digit returns at the meeting, though this did not appear in his witness statement. He said that he had no recollection of the details of the telephone call on the 11th December 2003, but leverage was part of the recommendation made in the letter of the following day, based upon their discussion on the telephone. He agreed that ideally the letter should have referred to a margin call expressly and what would happen if a call was not met but he had judged the 10% cushion to be enough to avoid a margin call, which they had discussed. He told her that a margin call could be met with cash or securities but did not tell her how long she would have to meet such a call nor that the collateral would be valued by the bank as it thought appropriate. He said that at the meeting in December 2004 he orally gave her cash flow figures for 60%, 70% and 75% leverage for the first couple of years which he would have been able to recall from his dealings with other customers. He explained that the more leverage there was the riskier it was. This was not in his witness statement. At the outset he classified her as a person who was prepared to accept "moderate risk" in the Customer Profile, which meant seeking long term returns whilst being able to sustain downward investment fluctuation, though preferring investments with limited downside price risk and foregoing higher returns in consequence. He said that although the TSF did not refer to the discussion of leverage, its risks and the possibility of a margin call, he had explained that and that explanation should have been referred to in the TSF, with a copy of the file note recording that discussion. RR confirmed that the terms of the file notes prepared by him or by FM on the basis of an email or conversations with him were accurate when recording the terms of conversations with BAS. Whilst the TSFs were inadequately completed, often by members of his team, this did not mean that there had not been discussion and explanation of the risks. The Evidence of BAS' other investments and other advice Disclosure of BAS' other investment was a tortuous process which continued right until the date of trial. The Defendants were not satisfied that, even then, full disclosure had been given. Neither am I. What emerged however was a series of other investments, made through other banks, as well as her Trust investments. She had purchased two structured LIBOR Notes from Banque Audi before she purchased any Notes through RR and at the time of their first meeting in May 2003, each of those had embedded leverage. By the time of the first disputed Note recommended by RR, on 5th April 2006, BAS was involved with Mr Boujon in vetting the individual purchases of investments by the managers of the two portfolios (JP Morgan and Banque Mirabaud) which constituted the BAS 2003 Trust. She had been pressing for higher returns from them by reference to the returns generated by her CSS portfolio of structured notes. Through the JP Morgan portfolio within that trust, ten other structured notes had been purchased, some of which involved embedded leverage. She was in the process of changing the investment parameters of the Trust which had initially achieved 6-7% returns, first to 10% in 2006 and then in 2007 to 15%. Hedge funds featured in some of the investments of the trust. She had signed account opening documents with UBS in 2003, including a collateral loan agreement with a pledge agreement which contained an explicit warning about the possibility of a margin call in the event of a fall in secured assets. Initially she invested $3.5m. By the end of 2007, she had invested in leveraged investments and what appeared to be speculative currency options through this bank. She had engaged Mr Boujon of DAPM in 2005 to monitor the performance of her BAS 2003 Trust and was receiving extremely detailed and sophisticated monthly reports on what the individual investments were doing. She had regular meetings with the trustees and the managers, initially lasting a day or two at a time on a monthly or quarterly basis, which diminished by virtue of the arrangement of prior vetting of each such investment by herself and Mr Boujon before purchase. She had opened an investment account with Baring Brothers in 2006 for the purpose of investing in "alternative investments" such as hedge funds and had invested some $3.5 million in such funds. The First disputed Note was Note 9, purchased on 5th April 2006. The purchase of the second disputed Note, Note 14 on the 20th February 2007. By the time of the third disputed Note, Note 15 on the 8th May 2007, BAS had given an instruction to invest $2.2 million in the start up Islamic Bank against the advice of the managers of one portfolio in her trust fund and the advice of Mr Boujon. By the time of the fifth disputed Note, Note 17 on the 24th August 2007, BAS had an investment account with Citibank through which she had invested some $2.5 million in alternative investments, hedge funds or similar funds. In June 2008 she invested $1m through Citibank in a structured note with 100% leverage. As it appears from the documents, although she denied it, BAS took the initiative for the purchase of Notes 7, 17 and 20. She was keen to invest to secure high yields, accepting late in her evidence that she was looking to Plurimi for double- digit returns. BAS' desire for high returns and appetite for risk was clear from the documentary evidence showing her relationship with other banks apart from CSAG despite her best efforts to explain away the contents of these documents and despite the mediating influence of Mr Boujon. What emerged was that, in the years 2005-2008 she was looking for double-digit returns from all of her investments, whichever adviser or bank was involved. In cross-examination, she admitted, at one point, that there did come a point where she was looking for double-digit returns on the basis of what she described as "calculated risk". She said she relied on the advisers' judgment on risk/return but told her trustees and managers what her annual expenditure was, it being for them to work out how it could be achieved. In June 2007, a Citibank Suitability Letter, sent to her, c/o Mr Boujon, stated this: "Your risk tolerance is aggressive; ie you emphasize return on investment over principal preservation and are willing to assume greater levels of risk in pursuit of greater returns. You are willing to engage in tactical or opportunistic trading which you understand may involve higher volatility and variability of returns. You are prepared to use leverage which you understand may involve higher volatility, variability of returns and loss of principal." It also referred to her as having "extensive experience using leverage as part of an investment strategy". Despite the fact that this letter was sent to Mr Boujon shortly after the meeting with her in order to set out the contents of the discussions with her and seeking confirmation or correction, BAS maintained that none of what appeared in the letter was discussed at the meeting and that she did not know where they got these notions from. There was no response to the letter correcting the position, nor to a similar letter a year later stating much the same thing. The Defendants were able to point to any number of high risk investments in which BAS was involved. I have already referred to the Barings hedge funds, the Citibank hedge funds and structured note, the UBS currency options and the BLME shares. Reference can also be made to the Madoff Fund (where Mr Boujon advised her in terms about the 50/50 leverage, as he termed it) and the China Pacific Alliance Fund, where the Trustees or managers of the BAS 2003 Fund placed the responsibility for the risk on her and Mr Boujon, just as they had also, when refusing to invest in the BLME shares, required her to sign a disclaimer of any responsibility on their part. The Plurimi Acceptance Booklet referred to her primary investment objective as "to earn high income" and the acknowledgement "that the greater the income I earn usually means the greater the risk to the value of my investments". Her attitude towards investing was "to see my investments grow substantially over time and to do so, I am willing to accept a high degree of risk to the value of my investments". Her attitude towards her investment strategy would change if her portfolio fell by 15%-25% and her attitude towards volatility was such that she wanted her investments to grow faster than inflation and she could accept greater losses to their value. The Portfolio mandate then set out her investment objective as "balanced (capital growth and income) – you seek to increase your principal and at the same time generate income from one portfolio of securities which together have historically demonstrated a moderate to high risk of loss of principal value". No challenge was made as to this as a statement of BAS' position as at the beginning of 2008 and the other investments made by BAS accord with this assessment of her appetite for risk and desire for high returns. Wherever she may have started out in 2003, within a few years, she was demanding high returns, which, as she knew, carried commensurate risk. I have also referred to the many documents that she signed, when entering into relationships with the various banks. Pledges or similar documents were signed with Banque Audi (28.11.02) UBS (9.5.03) JPM Suisse (9.12.03), Barings (17.5.06), Citibank, (11.6.07) and JPM (5/9/07), each of which provided for margin calls of one kind or another, quite apart from documents signed with CSAG. It is inherently unlikely that she could have signed all these Pledge Agreements without explanation from any bank as to the general nature of what she was signing and the evidence, limited as it was, indicated that, although banks descended into no detail when account opening documents were signed, the nature and purpose of each document was generally explained. It is in my judgment inconceivable that she did not know what a pledge was and what its effect was, particularly when she arranged for two pledge documents specifically to secure a loan of $2m on her personal and trust account at JP Morgan in respect of the purchase of Note17. She also signed documents for trading in hedge funds, options, futures, derivatives and in other alternative investments. In discussing other investments (where she identified Mr Boujon as the person from whom she sought independent advice) Mr Boujon told the court, in the context of the Barings pledge agreement that it would never have occurred to him that BAS did not understand what the deed of pledge was. In relation to a Barings bridging loan, he told the court that he did not discuss the question of security for the loan because he assumed she understood what she was doing. In relation to a pledge on the JP Morgan portfolio of the BAS 2003 Trust, he said that he would have discussed the question of the pledge with her in relation to the loan but he did not think he would have been teaching her anything. Further, in relation to leverage which he subsequently discovered in relation to the purchase of the Citibank structured note, he said that it did not occur to him that he needed to explain to her how margins and margin calls work. He assumed that she knew about borrowing, security and the like. Mr Boujon told the court that he would have to satisfy himself, as her adviser that she understood enough about investments to make decisions in relation to them and even where she made a decision without reference to him and he found out later, I was left in no doubt that he would have advised her about the risks of it. From his detailed regular conversations with her, he took it that she understood these aspects of collateral and margin that she says she did not. Mr Boujon's evidence was that BAS' understanding of basic investment concepts was good. He gave an example of pledging in currency where she had not understood at the beginning but following explanation she did. Where she did not understand she asked and he would explain with resulting comprehension. Mr Boujon was plainly a very able man, with considerable skill in the analysis of investments. He was used to advising high net worth individuals, (with wealth up to $2 billion) many of whom were professionals, but some of whom were not. He said that he spent more time with BAS than with others, because she was not a professional, but he paid tribute to her understanding of the matters he explained to her, in relation to complex investments, where he would talk through his monthly reports with her for an hour or so, once a month, and spend one or two days with her and the Trustees and Managers of the BAS 2003 Trust on a quarterly basis until early 2006, following which he and she vetted any proposed changes in investments by the Managers before they were put into effect. He would discuss risk and return with her. He had to be well aware of her investment objectives and desire for high returns, with commensurate risk, both in relation to the portfolio he monitored for her and in her investments through RR. He personally preferred, as a matter of investment philosophy, investments in Hedge Funds to investments in structured notes, but recognised that other colleagues thought differently. Whilst he was clear that he considered that BAS understood loans and security including pledges and that she understood that the higher returns sought, the greater the risk, he was somewhat evasive when it came to the point of being asked what advice he had given about leverage and her leveraged investments with CSS and Plurimi. On a number of occasions BAS passed on RR's recommendations for investment in structured notes to Mr Boujon for his views (just as she passed investment recommendations by others to RR for his views). BAS self evidently took advice from different quarters and weighed up the views before making decisions. On some occasions however she took no advice or, on receiving it, rejected it. Some eight investments through UBS in 2007 do not appear to have been the subject of any consultation with either RR or Mr Boujon and I have already made reference to the Citibank structured note in 2008 which also falls into this category. Investments such as that in the BLME were effected contrary to their advice. There are eight or nine examples of investments suggested by RR to BAS where it is clear that she either forwarded that recommendation to Mr Boujon and then accepted his advice not to invest, or made the decision herself without reference to Mr Boujon. There was also a recommendation to her by RR to repay a loan in Japanese yen, which she declined to follow on the basis of either her, or Mr Boujon's view as to the declining strength of the yen at that point. In September 2005, for the first time, as it appears on the documents, BAS sent RR's proposal for a CRAN to Mr Boujon for his explanation and opinion and, she said, to facilitate his encouragement of her Trustees/managers to invest in similar structured products. Originally she had said that the only reason for sending RR's recommendations to Mr Boujon was to encourage the Trustees/managers to make similar investments, but as they already had similar investments, this seemed unlikely (unless it was the leverage element of which she was trying to persuade them) and she admitted in cross-examination that she had been seeking Mr Boujon's advice on such investments. She told the court that she discussed the underlying basis of the Note but not the leverage analysis with Mr Boujon. She said that Mr Boujon did not like the Note and she did not invest in it despite RR's recommendation. Mr Boujon's evidence was that he was not keen on the ten year Note and could see that, in order to achieve the return suggested, leverage was necessary. He considered that regard should be had to the intrinsic merits of the Note itself before considering leverage and he told BAS that the only point of this investment was leverage, in order to achieve the returns. The Note itself was unexciting. He said he did not discuss leverage in detail with her as he was not in favour of the investment. In this case RR was proposing that BAS put £1.5 million of her own money into the investment with a loan of £4.5 million (75% leverage). Documents reveal that Mr Boujon did tell BAS that the Note itself was unexciting and that the only advantage of the proposal lay in the leverage. Yet he denied that he had discussed this issue of leverage in any detail with her. This was not credible as he then approached TFS, who supplied an alternative proposed 10 year Note which he later sent on to BAS. TFS specifically asked Mr Boujon in writing whether the CS Note was considered suitable and whether the client wished to have leverage. TFS was asking one of the very questions which are at issue in this litigation. There was no reply which has been disclosed but it is impossible to conclude that this issue was not the subject of conversation between Mr Boujon and BAS in the context of the RR proposal and the alternative on offer from TFS. He must have advised her on the upside and downside of the one point of the investment that merited consideration and to which TFS was seeking an answer. It is to be inferred that an answer was given internally to TFS' question- namely that leveraged investment in structured notes was suitable for BAS, even if none was given to TFS. At all events, in the context of conversations which must have taken place about suitability and the risks/rewards involved in leverage, she decided not to invest on this occasion, but continued to do so on numerous other occasions, with considerable leverage. In May 2006, RR advised BAS to invest the proceeds of Note 6 in Sapic II, a CS Fund of Funds, but she declined to do so and instead opened a personal account at Barings which she used to trade in hedge funds. On 17th January 2007 BAS forwarded RR's recommendation of Note 13 to Mr Boujon, including the Effect of Leverage document, asking in the subject line of the email "what do you think?" Note 13 was a Credit Suisse Nikkei Note. Mr Boujon's evidence was that he told her that if she wanted to invest in Japan, it was better to invest in a Japanese hedge fund with a manager whom he knew. He said that this was a matter of investment philosophy, since he preferred to bet on someone who could do better than the market. He was looking at the bottom line of the leveraged Nikkei Note proposal with a projected return of 25.73% as compared with the hedge fund, without leverage. He said that he probably discussed the risk associated with the Note with leverage, as compared with the hedge fund without it, comparing the relative exposure and return. He probably discussed leverage as having the effect of increasing the profit and loss. Once again, in the context of this Note, BAS told the court that she never discussed leverage with him. She said that she only ever spoke about the underlying structure of RR's Notes with him and not about leverage. On this occasion BAS did invest in Note 13, following RR's advice rather than that of Mr Boujon. The comparison here was between the Hedge Fund without leverage and the Note with it as BAS was being faced by Mr Boujon with a choice between the two. It is inevitable that leverage and its benefits and risks must have featured strongly in this discussion when comparing the two different types of investment. On 22nd January 2007 BAS forwarded RR's recommendation in a six year Transatlantic Note, which was principal protected. This Note was based on the difference between US Dollar and Euro swap rates. Mr Boujon's evidence was that swap rates were outside his area of expertise and he was not prepared to advise on it. He said he would not personally make such an investment and BAS did not then invest in the Note. On 22nd June 2007 BAS rejected RR's proposal of a five year JPY Callable Bullish Note. On 13th June BAS sent another Note recommended by RR to Mr Noor at Citibank saying "have a look at this – let me know". BAS did not purchase this Note despite obtaining an alternative from Citibank which she then referred to RR. It is clear that, despite her denial, she played off Citibank against RR to seek to secure the best terms on a comparable Note. The Citibank Note which was the subject of discussion in June 2007, in its eight pages included a number of paragraphs dealing with risk and one expressly dealing with leverage/ gearing risk which referred to "margin" and the requirement that the investor might receive notice to make additional margin deposits or liquidate their position at significant loss. In June 2007, rather than investing through Citibank or RR it seems that BAS invested in currency options through UBS. In July 2007 a 5 year US Dollars Callable Bullish Note was recommended by RR but she did not take this up. In January 2008 he advised her to invest in a Transpond Note (which was capital protected), but she declined to do so. In May 2008 she forwarded RR's recommendation of a JP Morgan 6 year Protected Note to Mr Boujon. She did not conclude this investment but it seems that, shortly afterwards she purchased a structured note from Citibank. The significance of the above is not only that BAS was able to make up her own mind about investments, after taking advice, but that, when talking with Mr Boujon, there was inevitably talk about leverage, despite her denials of it. If Mr Boujon was being asked to advise about a Note proposed by RR, although no doubt he would focus initially on the terms of the Note itself, it was inevitable that there would be discussion of leverage and the effect it had. If regard was being had to the yield and the risk/return profile, Mr Boujon could not have failed to talk to her about the benefits and risks involved in leverage. Not only did the documents show that Mr Boujon was sent Notes recommended by RR with recommended leverage, but the evidence was that BAS was pressing her trust managers through Mr Boujon to achieve similar high returns. He denied that she had ever talked to him about leverage in this context, but he told the Court that the trustees would not have been prepared to use leverage to increase the yield. In the circumstances he must have explained to BAS that these high returns were achieved by leverage and could not otherwise have been obtained and to have explained the risks of doing so which influenced the Trustees against adopting such a course. Since the Trusts did invest in such Notes, without leverage, it is a fair inference, that what she was pressing them to do was to apply leverage to improve the returns to the level she sought. Mr Boujon's answers about the letter sent to him by Citibank on 21 June 2007 were not credible. He had accompanied BAS to open accounts with Citibank for investment purposes. The letter was sent to confirm the contents of the discussion at the bank about BAS' investment experience, her approach to investment, leverage and the risks she was prepared to take, asking for any errors to be pointed out. A successor letter of 30 May 2008 was sent also. To neither letter did he respond, pointing out any mistakes or misunderstanding. He told the court he would not have read these letters and may not even have seen them. I find that impossible to believe – it would have been negligent in the extreme for that to occur- the importance of the letters would have been obvious to any employee, let alone to himself. It must have reached him and he must have considered that it recorded her position and what had taken place sufficiently accurately not to warrant a reply. Mr Boujon took away from a meeting with RR at Plurimi's office in February 2008 an envelope, which contained details of BAS' account with Plurimi. This was handed to him because BAS asked RR to do so, but he said he was only given the envelope to pass on to BAS and never saw the contents, and so did not know what the portfolio looked like, though he had seen some of the individual Notes at purchase. I did not find this credible. He would not have been given the documents which were normally sent by email to BAS, simply as a courier. They were given to him for him to look at. He must have done so and found nothing untoward. Conclusions on the Conflict of Evidence RR's evidence is to be preferred to that of BAS on this critical conflict. Although, as Counsel for BAS pointed out, there was no file note or TSF which expressly recorded a specific warning as to margin call and its effect, in the context of the recommendations made, with leverage and reference to LTV, I do not consider that the implications of maintaining a cushion against LTV and the consequences of not maintaining the required LTV could not have been explained. The documents which do exist are consistent with RR's version of events. Whilst her background, as set out earlier in this judgment meant that BAS did not, in 2003 have any experience of investment or of financial affairs, it was clear from the evidence of her adviser, Mr Boujon, from the contemporary documents and from the evidence of RR and other witnesses, that she was (and is) an intelligent woman who, when things were explained to her, had no difficulty in grasping them. Mr Boujon told the court that he was astonished at how well she understood concepts once they were explained to her. He said she asked for further explanation when she did not understand, but once that was given, there was no problem in comprehension. It is plain from the evidence that she took advice from market professionals but was able to weigh it and come to her own conclusions, rejecting their advice, as she did both with the advice and recommendations of Mr Boujon and RR on a number of occasions. Mr Boujon said that she could be stubborn and difficult once she had an idea in her head about investing and it would be difficult to say no to her in such circumstances. Her attempt to portray herself in her evidence as a woman who understood little about her investments, was told little, left decisions to her advisers and was wholly in their hands when it came to selection of investments did not do her any credit. She learned quickly how to utilise advisers, compare their advice and even play them off against each other, with a view to securing better terms or results. By 2008 she had 5 years of experience of Trustees and Managers, of Banks and advisers and had invested through them in a significant number of structured notes and Hedge Funds, both in her personal portfolios and through her trust managers whose performance was monitored by Mr Boujon. She understood how the barriers in structured notes worked, how coupons could be lost on breach of those barriers and how capital value could be lost on unprotected capital Notes. She understood how capital could be lost on the sale before maturity of Notes which were specifically capital protected, and therefore of the fluctuation in value of those Notes during their term. I could understand and accept her evidence that she did not go through or read in any detail the documents presented by her by various banks, such as Banque Audi, Barings, UBS and Citibank when opening an account, and that she would not read the small print of documents sent to her, but I was unable to accept her evidence that she did not read the Indicative Term Sheets of investments recommended to her with values between $2.5m and $20m, or short emails giving advice or making recommendations. Likewise she must have read the Effect of Leverage documents which accompanied many Indicative Term Sheets, which showed her the coupons/returns she might expect to receive, which were the subject of most interest for her. It is inconceivable, given the size of the investments being made and the limited scope of the particular documents in question that she did not read them and absorb their contents, asking for an explanation if there was something she did not understand. At different times she gave inconsistent answers about her understanding that the market value of the notes fluctuated. It became clear on her own evidence that she knew that she might not, on a capital unprotected note, get back her capital at term, where barriers were breached and that, if she sold a note before maturity, the full value might again not be recoverable for any Note. She accepted that RR had warned her of this and said that he had told her that the maximum loss she could suffer, if the Notes moved below the strike price at the end of the term was 15-20%. She maintained towards the end of her evidence that in her mind, the maximum capital loss she could suffer was 20% of her own equity investment, without reference to the loan. It is clear that she knew of instances where, on RR's recommendation, she had sold Notes before the end of the term, because barriers had been or were close to being breached, with a view to purchase of other Notes at a discounted price, with different barriers which might enable her to recoup her loss, as in fact happened. The fluctuations in market value of such Notes in her trust portfolio were the subject of discussion with Mr Boujon and she knew that one of the first Notes she had bought through Banque Audi in 2003 had sustained a loss, which was recouped by a substitute purchase through RR and that the first Note that she bought through RR was also sold at a loss on a switch to Note 5. In parts of her evidence it appeared that what she was saying was that it was not the fluctuations in value of which she was unaware but the size of the potential loss. Yet, that very first Note that she bought through CSS for $20m, with $15m of borrowed money, was sold early at 94.6% of its full value, because a barrier had been breached and a substitute Note was purchased, which again successfully resulted in recoupment. It is fanciful to think that, when this Note sold for 94.6% of its value, she did not appreciate that she had sustained a loss of over $1m, as compared with the equity she had put in of $5m. She told the court that had she been aware of the magnitude of this loss she would not have invested further in such Notes at all. I found her evidence about loans, security and leverage impossible to credit. i) She testified that no one ever explained that leverage had the effect of enlarging her investment and therefore magnifying the profit or loss suffered. She said that she did not understand that leverage was an option, and that she could invest in the products recommended by RR, without it or with differing levels of borrowing. Yet she borrowed elsewhere for investment purposes (UBS, JP Morgan and Citibank) at different levels and she borrowed to purchase a Government Bond (in order to assist in the process of obtaining a residence visa) and the one thing that she must have understood, whether or not she read the Effect of Leverage documents fully, was the benefit that was obtainable from paying a lower rate to borrow than the rate obtainable from the investment. It is self-evident that borrowing is optional and that the effect of borrowing is to allow a purchase of that which might otherwise not be purchased. She certainly understood, the basics, as her adviser, Mr Boujon said in evidence. ii) Her evidence was that she understood what a loan was and the need to pay interest on it and repay the capital. She said that she was told by RR that she would have to pay interest on the loan even if the Notes purchased with the loan did not produce a coupon. However she said that she did not think about how the capital of the loan itself would be repaid, though she did understand that she would have to repay the loan, regardless of the value of the note. iii) She said that she did not understand what the word "pledge" meant and that the idea of leverage and its effect was never explained to her. She also said that she thought that the only loss she could suffer would be a percentage loss of part of her equity in the leveraged Notes. She did not understand the Notes to be security for the Loans. In her mind the two were not connected. iv) She said that the words "margin" and "margin call" were never used in conversation with her and no-one ever explained the concepts, so that she was unaware that if the values of the Notes dropped she could be faced with a demand for further collateral, which, if unmet, could result in CSAG selling the pledged assets to recoup the loans. v) Mr Boujon told the Court that he was satisfied that BAS understood that collateral had to be provided for a loan, what security meant and that security was given to banks in the shape of a pledge on the assets held in the account there. It would have been impossible for him to advise her properly about investment in individual notes proposed by RR to her, on which she sought his (Mr Boujon's) advice if he had not discussed leverage and the risks of it with her. When opening an account with Citibank, with his advice and in his presence, she signed documents, including loan and pledging documents similar to those signed by her with CSAG and other banks and he could not have let her do that unless she had understood the concept of security for a loan. He said that in September 2007, when he reviewed her purchase of a CSS Note where she had borrowed 100% of the price and entered into two pledges with JP Morgan for a loan from them, he would have discussed the loan and pledge with her, but he would not have been teaching her anything. The concept of a pledge is a familiar one to people of very different cultures, whether well-educated or not. Mr Boujon had no doubts that BAS understood what it meant and neither have I. vi) In one passage in her evidence she explained that when her pleaded case stated that she had never invested in similar notes to the CSS Notes on a leveraged basis (when she was being asked about borrowing money to invest in structured notes through, for example Citibank), this was because she regarded leverage as being different from borrowing to invest. Later she testified that she understood that leverage meant borrowing and paying interest on the loan but never thought about security for the loan and considered the loan separate from the Note bought with it. Elsewhere she accepted that she knew that her loan from JP Morgan was secured somehow with that bank, when she entered into two pledge documents with JP Morgan, one in respect of her personal account and the other on her trust account. "There was something in the account, to make sure they got paid". vii) Despite saying in a number of places that she never sought a specified rate of return from her investments, the evidence establishes that there was a history from 2006 onwards of BAS pressing her Trust's managers, with Mr Boujon's assistance, to increase the yield from her Trust portfolio from returns of 6-7%, to 10% and then to 15%. In doing so, she prayed in aid the returns she was getting from the structured notes purchased through RR, where the average return was of the order of 13-14%, obtainable only through leverage when purchasing Notes. The comparison was made with the purchase of investments in Hedge Funds, generally considered to be high risk investments, without leverage. Ultimately, late in her evidence, BAS accepted that she was looking for double-digit returns, which involved an increase in risk and in such circumstances it is inevitable that, when she discussed the relative merits of different investments with Mr Boujon and her Trust, when she was pressing for more investments like RR's recommendations in order to achieve higher returns, there would have been full discussion about the relative merits and demerits of leveraged Notes as against Hedge Funds and other investments, and the comparative risk/reward profiles of each. The documents show that the effect of leverage was explained to her in writing in transactions which she concluded with leverage and it is idle to consider that this was never the subject of discussion before the decision was taken to invest and to borrow. With Indicative Term Sheets, sent to her for her consideration, were enclosed Effect of Leverage documents, where leverage was suggested. In emails giving advice on investment proposed by others, on which BAS sought RR's advice, he told her sometimes not to employ leverage because he considered the product itself to be high risk. Whilst she maintained that she did not study such documents and that she relied exclusively on what RR told her orally, no discussion could have taken place, nor recommendation or decision made, without exploring how much of her own money was to be invested and how much was to be borrowed, with an eye to the difference this made to the potential return. She could not have failed to understand that leverage was optional and that the amount she borrowed was a matter for her decision, whatever the recommendation made by RR or any other adviser. BAS was looking for high yielding investments, and the difference leverage made to the return was important to her. No one commenting on the possibilities could fail to say that the effect of leverage was to increase the amount of the investment and therefore, without changing the nature of the risk involved, to increase the profit or loss engendered on the investment. The Effect of Leverage document also made it plain that the market could move, that the value of the Notes might drop and that additional security might be required in the shape of a margin call. However unsophisticated an investor she may have been at the outset in 2003, I have no doubt at all that within a very short period of time indeed, with contact with many banks, Trustees, Managers and advisers, she must have appreciated that banks required security for her borrowing and that the assets that they held, including the investments purchased with the loans, constituted that security. Contrary to the advice of Mr Boujon and to RR's cautious approach, BAS insisted on investing in a start-up Islamic Bank, the Bank of London and the Middle East, borrowing the equivalent of £2.2m in Yen from CSAG in order to do so. She professed ignorance of the security that CSAG had for this loan, which beggars belief. She had to know that CSAG were not lending without security and that the assets that CSAG held for her, whether cash deposits or Notes, represented the security for that loan. In one passage in her evidence she accepted that she did understand that what she had with her account at the Bank was something which they held against her loans. I have no doubt that in oral conversation with banks or others encouraging investment, including CSS, no stress was ever placed on the risk of loss of capital on the investments in question, on the security taken by the banks or the need for added security, should the market value of the investments drop to an extent that the banks considered inadequate collateral for their loans, but no investor, with independent advice, and particularly, after a few years' experience could fail to understand that the investments bought with borrowed money stood as security for the loan and that the value of the security provided had to match the extent of the loan in the banks' eyes. It follows that she must have known that a failure to provide such additional security, whether or not the terms "margin" or "margin call" were familiar to her, could result in realisation of the security to achieve repayment of the loan. When reference is made to the documents which were sent to her, any lack of understanding on her part is incomprehensible, unless she ignored them all, which is effectively what she said she did - at least to the extent necessary to avoid the inevitable conclusion that she had a clear grasp of the fact that her CSS Notes stood as security for the loans from CSAG. As RR knew, the documents sent to BAS referred to CSAG's collateral requirements and the possibility of a margin call if the loan exceeded a given percentage of the value of the security provided, in the shape of loans and deposits. The form of the TSF which had to be completed where purchases were concluded, even if not adequately completed, was a reminder to him that the risks had to be spelt out for each purchase. The evidence of RR and FM was that routine explanations were given in relation to each Note, its structure and risks, as well as in reviews of the account and snapshots. RR was an experienced adviser, who was able to spell out, in language which was readily comprehensible, what the various risks were. There was, in truth, no reason for him not to explain collateral, margin, margin call and the consequences of not meeting a call, since, on the expert evidence, such a call was, throughout the period until August 2008, a remote possibility, given the market conditions, the carefully balanced structure of the portfolio between Equity linked Notes and Fixed Interest Notes and the buffers or cushions for which provision was made. In referring to a cushion (as in the letter of 12 December 2003), RR must have explained what the cushion was, the risk against which it was intended to operate and what it was intended to achieve- namely avoidance of a margin call. If margin call was the subject of discussion between them, as it had to be, when discussing the amount of leverage to be applied, then so too, RR must have explained the consequences of not meeting such a call. It would be impossible not to do so, and because the risk was seen as so remote and her assets were known to be so considerable that meeting a call would present no difficulty, there would be no reason on his part not to do so. When cross-examined on the subject, RR did not say that he spelt out exactly what time would be allowed to meet a call, exactly what type of assets would have to be produced to meet a call, save to say it could be cash or securities, nor how they might be valued by a lender. RR did not therefore say in evidence that he explained every last detail. He was credible when being clear that he did tell her how the procedure worked however and it would not, I find, have been possible for him not to have done so, in the face of what the documents show. I am satisfied that although there may have been some reconstruction and some amalgamation in RR's evidence of discussions at the meetings prior to BAS first investment in Notes through CSS, he must have explained, before she made that first investment how leverage operated, how a loan was secured, the concepts of LTV and margin and the consequences of a margin call. Apart from the early correspondence/emails and enclosures in 2003 and 2004, the file notes and TSFs are good prima facie evidence that RR directed his mind to the issues which arose in respect of the purchase of each Note. With a Customer Profile completed, about which there is little material issue, the first TSF, albeit that it does not say how CSS satisfied itself that the client understood the risks associated with margin call, did say that CSS had satisfied itself that the client fully understood the product. Other TSFs completed before file notes became the norm, expressed the conclusion of suitability, the client' understanding of risks and margin calls and/or the client's ability to meet the margin call. Although these forms were not completed with the care that they deserved, they are prima facie evidence of some discussion of margin, margin calls and risk and cannot have been, and I find were not, total fabrication. An awareness of the risk and the need to explain is borne out by these forms, an awareness of which both RR and FM spoke and to which their routine form of explanation must have referred. The file notes for Note 5 and Note 6 indicate thorough discussion – the first with regard to the sale of Note 1 at a loss and the purchase of Note 5 in an attempt to recoup the loss, whilst the second refers to talking BAS through the note- i.e. in accordance with the usual pattern. Where Notes were called and instructions were given to roll over into new notes with the same structure, the file notes are less comprehensive, as are later file notes which refer more to the financial elements, but others refer to detailed account reviews of all Notes held, whilst the TSFs continue to refer to the client's understanding gained through trading in these products over some time. I have referred to a number of emails which were sent by RR to BAS which assume understanding of the risks of leverage on her part. The basis for that assumption could only be that he knew that he had explained it all to her, as well as sending her documents which referred to it. When regard is had to the course of events in 2008, as appears below, the point is borne out because of BAS' actions in response to RR's recommendations. Her retention of cash in the CSAG account is only explicable by reference to her knowledge of LTV as is her sale of Note 15 and Note 19 and her attitude to meeting the margin call when it arose. At no point is there any recrimination against RR when the calls were made. There is no complaint that he had failed to explain to her what could happen and, when she first made complaint it was about the size of the call, rather than the call itself and about the changes made by CSAG to the LTV which had the effect of increasing the amount for which a call was made. Leaving aside her more recent protestations, there was no suggestion at the time that she did not fully understand what a margin call was nor what its consequences were. The reality is that BAS' case is based on a fiction- a fiction that she was not told and did not understand the basics of loans, collateral, margin and margin call, despite leveraged trading in 23 of such Notes through RR, despite borrowing money elsewhere for investment, despite signing numerous loan facility documents and pledges with various banks, some or all of which contained warnings of varying degrees of clarity. The terms of the documents are such that, if she did not understand such features, she would have been bound to ask, as Mr Boujon said she did, when faced with something she did not understand. When money is borrowed, a borrower wants to know the terms of the loan and of the security provided. RR said he explained this at the outset, and in my judgment, it is impossible for him not to have done so, in the circumstances and by reference to the documents disclosed. BAS has put her case on a number of different bases over the course of these proceedings since the first letter before action on 28 May 2010. The current version emerged late in the day and runs counter to her earlier complaints, supported by statements of truth by her. I could not accept her evidence, when set against that background, the evidence of RR, the documents and the inherent probabilities. Did RR fulfil CSS/Plurimi's statutory duties? The questions arise in relation to COB and COBS in this way: Did RR take reasonable steps to ensure that BAS understood the nature of the risks involved in the investments he recommended (within the meaning of COB 5.4.3) and take reasonable steps to ensure that his recommendation of Notes were suitable for her (within the meaning of COBS 9.2.1) and have a reasonable basis for believing that she understood the risks involved (within the meaning of COBS 9.2.2 (1) (c)? It was clear from the evidence of BAS that she never told RR that she did not read documents that were sent to her. She was literate and educated. He was therefore entitled to assume, as he did, that she did read documents and understand them if expressed in straightforward terms. The Effect of Leverage document was clear in saying that the value of the Note in question fluctuated and that additional collateral might be required to cover any shortfall if the loan value increased to over 85% of the value of the Note. This document, together with the term sheets set out the basis of investments. The investments were of a significant size and any adviser could and would reasonably expect a customer to study those documents, even if the customer did not read anything else. Anyone reading the "Effect of Leverage" document would appreciate how leverage worked to increase the size of the investment and the returns, if the coupons received remained greater than the loan interest. Anyone with a basic understanding of loans and security, would understand from the document, that the Note purchased was collateral for the loan and that the loan could not exceed the specified percentage of the value of the Note, with the bank being able to require additional security if the Note's value dropped below that. The document did not specify what would happen if no additional collateral was provided, but given the requirement for the loan to represent only a certain percentage of the Note's value, even a moment's thought would suggest that there were only two possibilities, if that happened- either some other security would have to be found or the loan would fall to be repaid. If this was not understood, I cannot imagine an investor failing to ask. Once again, anyone who understood the basic nature of a loan and security would understand that, if the loan was not repaid or additional security provided in such circumstances, a lender could force the sale of the Note to recoup the loan. As appears in this judgment, and was plain from her own evidence to the court, the evidence of Mr Boujon and from the documents which showed that in her dealings with him, with RR, with her trust managers on both of the portfolios in the BAS 2003 Trust, with her bank advisers at Barings, UBS and Citibank, BAS did understand the basics of loans and security and the right of the lender to recoup monies due from the secured account with it. She understood what a pledge was and had signed security documents containing pledges or similar security documents with all of those banks and JP Morgan, quite apart from CSAG. By the time of the purchase of the Notes which are the subject of this action, BAS had received many copies of term sheets, Effect of Leverage documents and other documents which cross –referred to the underlying concepts which she understood. On the documents alone, it seems to me that sufficient explanation was given to her of the risks of leveraged investment in the Notes and that CSS and Plurimi took reasonable steps to ensure that BAS understood the nature of the risks involved in her investments and that they were suitable for her in the light of her investment objectives, her knowledge and experience and her financial status. As appears earlier in this judgment, I also accept RR's evidence that he did explain orally to BAS all the matters of which she now complains. There was therefore no breach of statutory duty or any other duty in failing to explain the risks of the Notes in which she invested, nor therefore any breach of the requirement that the Notes be suitable, since it is only the failure to explain which is said to give rise to unsuitability. RR dealt with BAS throughout, both at CSS and at Plurimi. He knew what he had explained to her, her increasing desire for higher returns and growing appetite for risk and with great skill, put together a portfolio which brought her income of the order of $6.5 m in four years, with a rate of return of 13-14%. It was only the unforeseeable events of October 2008 which brought disaster and, as appears below, BAS' reaction to them, notwithstanding RR's best efforts to help her. BAS' Reliance and Causation of Investment in the Notes. In her pleaded case BAS alleged that she relied exclusively on RR for advice in relation to the Notes purchased through him. In her written evidence, she alleged that she did not involve Mr Boujon in the decision to invest in any of the Notes. Whilst, in her oral evidence she sought to give the impression that she always followed RR's advice as a matter of course, it became plain that she did send Mr Boujon RR's proposals, not only to encourage him to press her Trust managers to invest in them, but also for his views. As set out earlier in this judgment, this appears plainly from Mr Boujon's own evidence and partly from hers. Whilst she rightly regarded RR as the specialist in this type of investment, she took other advice before making any decision. That did not, of course, mean that she did not rely on RR. It is plain however that BAS was a strong minded individual who rejected a number of RR's recommendations either on the advice of Mr Boujon, or of her own accord. She was also prepared to press ahead with investments against the advice of one or both. Again that does not detract from the fact of her reliance on his advice, when accepting his recommendations to invest in Notes suggested by him. I have already found that the risks involved in leveraged structured notes were adequately explained to BAS by RR. Even if this were not the case however I am satisfied that she was, by March 2007, the time at which she purchased Note 14, which is the first of those that were sold at a loss by CSAG in October/November 2008, fully aware, from her conversations with Mr Boujon in particular, of the risks of leverage and margin calls. I am also entirely satisfied that, even if there had been no explanation to her from any quarter of the risks involved, and she had only found out about the risks later, she would not have been in any way put off from investment in the Notes and would have continued to invest in them, right up to October 2008. As I have already held, at the time the Notes were purchased, no one would have foreseen the risk of a margin call as anything other than extremely remote. The events of October 2008 were unforeseeable and it was only in those circumstances that a margin call eventuated. One of the supporting reasons which leads me to conclude that RR would not have been in any way reluctant to mention the risk of a margin call and the consequences of failure to meet it is that the risk was seen as so remote as not to discourage any potential investor. For the same reason, on the hypothesis that the risk was never explained to BAS by RR, consideration has to be given to what the effect of such warnings would have been on her. I find that it would have had no impact on her desire to achieve returns which were higher than those originally obtained by her Trust, namely 6-8% or double-digit returns of the order of 13-14% which RR achieved, or returns higher than that, such as those that she came to demand of her Trust in 2007. On her own evidence she was prepared to take what she regarded as a "calculated risk". She was content, in order to achieve high returns to invest in Hedge Funds, Chinese land deals and leveraged Madoff funds, as well as a start up Islamic Bank. She was looking for high returns and, certainly by 2007, was prepared to take what she saw as acceptable risks in investing in "alternative investments" in order to achieve them. When asked, in cross-examination, as to her approach if she had been informed of the risk of margin call, she did not say that she would have altered her investment strategy despite what was said in the latest version of her pleadings and in her witness statement:- "Q - a margin call of $5 million was never a matter of concern to you, because first of all it was always relatively unlikely, and secondly, if it came, you could always meet it? A –yes, but I mean, I would have liked to know about it and given the option if I want or not, you know but I would have liked to know if my investments were doing well or I was losing money and I was losing continuously money and my value was dropping and I wasn't being told." The essence of what she appeared to be saying was not that a margin call of $5 million would have been any concern to her at all but simply that she wanted to know how her investments were doing, by which she was referring to the capital value of the Notes. This information, was, of course available to her from CSAG, being recorded in her CSAG account statements which were not sent to her by CSAG because of her instructions to "hold mail", apparently for tax reasons. That was BAS' choice. RR, CSS and Plurimi monitored the situation and referred matters to BAS only when issues arose with the LTVC or earlier if it was considered that she ought to know because of the volatility of the position. The suggestion that BAS would not have invested in the Notes, had she been told of the risks of which she says she was not told, is not therefore to be accepted. Investment in these Notes represented exactly the kind of "calculated risk" that she wanted to take. Alternative Investment On BAS' case, no adequate risk explanation was given and, had such explanation been given she would have decided not to invest in the Notes. I have rejected that contention but if, for whatever reason, BAS were to have decided not to leverage investment in structured notes, the question arises as to what alternative investments she would have made. I have drawn attention to her inconsistent answers in her statement of case on this point. Further inconsistent answers were given under cross-examination. Her desire for high returns, her preparedness to accept risk and her directions to her Trustees and managers, as well as her other investments through Barings, UBS and Citibank, all show that she would have been looking for "alternative investments" that did give high yields. She was not satisfied with the performance of her Trust managers and so looked first to RR, then to Barings, UBS and Citibank to achieve higher returns, whilst pressing her Trust managers to do better. Mr Boujon stated that the Citibank portfolio was aiming at 15%-20% returns. In the event that she had not decided to invest through RR, in my judgment it is clear beyond doubt that she would have invested through Barings, UBS and Citibank in the same type of investments that she actually purchased through them. Any idea that she would have purchased safe investments such as blue chip equities or Government Bonds disappeared with her amendment to her statement of case. Unleveraged structured notes (her current case as to her alternative investment) would not have given rise to double-digit returns, which is what she sought. The options, as explained to her by Mr Boujon, so it would appear, were leveraged structured notes or Hedge Funds or similar alternative investments. That is the road that she would have pursued, if not through RR, then through these other banks or other advisers. The events of September and October 2008 Having, at one stage in her case, alleged that, from August 2007 onwards, RR should have recommended deleverage, BAS abandoned that argument and alleged that deleverage should have been recommended from 15 September 2008 onwards, but this too was abandoned during the course of trial. The underlying basis for these allegations, when they were being pursued, was that the state of the market, as perceived by a competent professional, would have required a recommendation of deleverage in the circumstances in which BAS found herself. In summarising the expert evidence earlier in this judgment, I have referred to the agreement of the experts, at the time of the trial if not before, that the market was such in 2006 and 2007 that no adviser would have concerned himself with the risk of a margin call, at least until the collapse of Northern Rock. Even after that, the market was seen as benign and no one would have thought it necessary to contemplate deleverage. By the end of the expert evidence, it was clear that no possible criticism could be levelled at the purchase of any individual Note based on the state of the market at the time, the last such Note (with the exception of the two "switched" Notes in October 2008) being purchased on 29th April 2008 (Note 21). At that stage the general view of the market was that it had reached its nadir and that it was likely to improve, thereby representing an opportunity for an investor to make a profit, an opportunity which BAS was keen to seize. The evidence establishes that in August 2007, in November 2007 and in March 2008 the LTVA exceeded the LTVP but not the LTVC or LTVM. For a short period, according to CSAG's criteria, the aggregate of the money loaned to BAS surpassed the LTVA by a limited amount, not being enough to require any communication to the client nor to make a margin call. CSS and Plurimi had their own way of monitoring these figures on their Master Sheets which were internal to themselves, whilst the actual values as calculated by CSAG appeared only on the CSAG statements of account which would ordinarily have been sent to BAS but for her instructions to the bank to "hold mail". RR's evidence was that he would have understood her to have received all her account information from CSAG on a yearly basis, as a consequence of that instruction, but her evidence was that she never saw such statements at all. In August 2007 a file note shows that RR was in contact with BAS a number of times over the course of a few days in order to discuss what was happening in the market at the time. There was a drop in value in Notes 13 and 16 which resulted in a shortfall against LTVA. CSS applied for an increase in the specific LTV ratios on Note 16 and Note 9 to provide a further cushion and CSAG agreed. Whilst BAS was on holiday in the South of France, she took the initiative in asking for a EUR Callable Bullish Note. She was looking for a Euro denominated Note in order to furnish her with Euros for expenditure. The documents show CSS enquiring as to pricing and coming back with a Note for purchase with 60% leverage (Note 17). The file note reveals not only BAS' enthusiasm to utilise the volatility of the market but also her awareness that if funds were not received by the settlement date "then we will have to liquidate this Note and possibly others to meet any shortfall in the account". This further evidences BAS' awareness of LTV and the potential consequences of the provision of inadequate security for money borrowed. Although there was over $2 million in her CSAG account at the time of the purchase of Note 17 in August 2007, BAS transferred Euro 2 million to the CSAG account for the purchase of the Note which she had borrowed from JP Morgan. The explanation for leaving $2 million in her CSAG account, rather than utilising it for the purchase of Note 17, can only be her awareness of the LTV issues and the volatility of the market. In November 2007, Note 13 and Note 15 had fallen in value which again caused the LTVA to exceed the LTVP. This price fluctuation was caused by general market volatility but was aggravated, according to RR, by BAS' currency speculation in which she had borrowed Japanese Yen as compared with investments expressed in other currency. The situation was monitored by CSS who maintained constant contact with CSAG and various strategies were considered to remedy the shortfall such as selling Note 15, but this was not considered necessary at the time. BAS told RR that she was due to receive another tranche from her divorce settlement before too long. At the beginning of January 2008, when BAS' account was transferred to Plurimi, she held six structured notes, 9, 14, 15, 16, 17 and 18, together with the proceeds of Note 12 which had been called on 19th December 2007. She had therefore $10 million from that CRAN which she reinvested in Note 19 on the 14th January 2008. On 3rd January 2008 she paid $9.2 million into her CSAG account, being the latest instalment from the divorce settlement. From this point on, there was always a substantial cash deposit in the account, although BAS purchased Note 20 on the 4th February 2008, calling RR on the 1st February to say that she wanted to take advantage of the low level of the indices and volatility in the market at the time. There was a 20% buffer below the Note LTVP at the time of purchase. In April 2008 Note 21 was purchased on RR's recommendation, he being aware that she had money in her CSAG account which she wanted to invest. This followed a further blip in March 2008 where the LTVA of BAS' portfolio had gone above the LTVP for a few days, without reaching the LTVC. BAS' evidence was that, at the time of making these investments she wanted to keep some cash on account of the order of $6 million. Once again, given her appetite for investment, it appears that the only sensible reason for this was to maintain an appropriate LTV ratio at CSAG. On 15th September 2008 Lehman Brothers was declared to be insolvent. This, it is recognised, was unforeseeable. BAS was in Saudi Arabia at the time, following her mother's death but RR made contact with her to discuss the impact of events. RR sent her six text messages that day, one of which was copied into an email in which he stated that all her Notes were fine for the moment, the closest being 25% away from a relevant barrier, but that they would be watched. They also held a further telephone conversation that day. There was plainly concern about solvency of banks in general following Shearson Lehman's collapse. The next day, CSAG informed Plurimi that BAS' account was in shortfall by $3.2 million but Plurimi disagreed and on the following day reverted to CSAG saying that it was $152,000 only (therefore nowhere near the LTVC). Nonetheless RR telephoned BAS on the 16th September and had a conversation with her which is referred to in an email of the following day which discusses distribution of cash amongst banks and the possibility of failure of such banks. No mention is there made of any possibility of a margin call or of the LTV ratio. There was however plainly discussion about the sale of Note 15. There is a file note dated the 19th September in which RR records his recommendation to BAS that this Note be sold "in order to protect the account and preserve it from having a margin call". The note refers to two Fixed Income Notes issued by UBS and Goldman Sachs, both of those banks being under pressure in terms of their credit rating, with consequent loss of marked to market value. Note 15 was a Credit Suisse Note and was trading very close to par and the effect of selling it, as recorded in the file note, would be to increase the cash position by some $5 million. RR's evidence was that he updated BAS on the situation and told her of the real risk of a margin call and the desirability of selling some of her Notes to deleverage her portfolio. RR's evidence was that he recommended selling some of her Fixed Income Notes which were holding their value as compared with the Equity Linked Notes. BAS was hesitant to sell any Notes, not wanting to crystallise a loss by so doing. She was prepared to sell Note 15 at par, which was then done but she wished to hold onto the two other Fixed Income Notes which were trading below their nominal value. It was agreed that the position would be monitored. BAS' evidence was that she agreed to sell Note 15 to produce cash (in fact $4.5 million) and left the proceeds in cash at RR's suggestion. She said he did not explain the possibility of a shortfall or margin call at all. He did not tell her that CSAG was saying that there was an actual shortfall but that CSS' calculation showed that they were wrong. She had no recollection of RR suggesting the sale of more than one Note and if he had, she said she would have agreed. To my mind there is only one possible explanation for the agreement to sell Note 15 and lose coupon on it. It was in order to protect the account from a margin call as RR's note records. He must have explained this to her as the reason for the sale. Likewise, given the terms of his note which refers to the dubious status of UBS and Goldman Sachs at the time, I accept his evidence that he was recommending the sale of one or more of these Notes also, because of his doubts about these banks' solvency and because of potential issues with the LTV ratios, even with the cash in hand. It appears that CSAG then did accept Plurimi's calculation and, with the sale of Note 15, there was then no immediate LTV problem. Counsel for BAS suggested to RR in cross-examination that his file note was a fabrication and that he had sold the Note without authority. The reason for this allegation was because the file note referred to the sale "in order to protect the account and preserve it from having a margin call". This suggestion was untenable and was not advanced by BAS in her evidence. There was also, according to RR, discussion about conversion of BAS' Yen loan into US Dollars so that it became a "currency matched loan" which would have a beneficial effect on the LTV ratio as calculated by CSAG. Whilst there was much debate on whether there was any such benefit, it was clear to me that RR and FM thought that there was. Consistent with her view that she did not want to crystallise loses on fixed interest Notes, BAS was also not willing to convert the Yen loan and crystallise a loss there, since she thought the Yen would weaken again so that she could repay it with less US$ in due course. According to RR's file note of 30th September 2008, he spoke with a number of clients the previous day including BAS. The note refers to a lengthy discussion of the market and the options, should there be a need to switch out of some of the Notes that might be approaching their barriers. The performance of the Nikkei index was critical since BAS had six Notes with Nikkei barriers. The market was to be monitored with a view to "switching" any Notes that were approaching their barriers to others with wider barriers, in the same manner as had been done with other Notes in earlier days (such as the sale of the Audi Note and Note 1 with substitute purchases). BAS, in her evidence, accepted that RR explained that he was getting prices for her to be able to switch Notes if necessary but said that there was no talk of downsizing the account or selling other Notes. He only told her that one Note was close to the barrier. RR's evidence was that by the beginning of October the scale of the financial crisis was becoming more evident and that he was advising all of his clients to look to downsize their portfolios in order to protect themselves from margin calls. He was telling them that, although losses would be incurred now from such sales, those could be recouped later on once the market had settled down. His evidence was that around this time he had a telephone call with BAS, when he was at home in his kitchen with his wife, in which he told her to take this approach. She however appeared much less worried than he was. She asked him in Arabic why he was panicking and then said in English that he had the weight of the world on his shoulders and that he should not worry as everybody knew their risks. He thought that her view was that the market would not deteriorate and she could deal with a margin call if necessary. BAS denied that any such conversation had ever taken place. On the 2nd and 6th October, Note 16 and Note 9, both Equity Linked Notes, were switched to Notes 22 and 23 respectively at prices representing 64.6% and 66.89% of par. No criticism is made of these two switches, despite a reduction in coupon on both and the capital loss thus incurred. It is accepted that in the market position of the time, these were sensible recommendations. RR's recollection is that he was speaking to BAS very frequently during this time and discussing how she might respond to the drop in value of her Notes and the risk of margin call. His evidence is that he advised her on numerous occasions to consider selling more Notes to deleverage further, but she was resistant to that. CSAG was asking Plurimi to review the shortfall on BAS' account on 3rd October although RR did not think that CSAG's calculations were correct at that time. It is inconceivable that RR was not talking to BAS about the risks of a margin call during this period, therefore. During 7th-9th October 2008 two Icelandic banks collapsed and the market continued to fall. Uncertainty and confusion abounded and nothing appeared solid. On the 8th October at 18.58 hrs Plurimi received an email from CSAG giving notice of an imminent margin call on a number of Plurimi's clients. A margin call, expressed in CHF equivalent to about $6 million was indicated in respect of BAS. Figures were subsequently sent in support of this calculation which showed usage of the wrong LTV percentage for two equity linked Notes. It is common ground that on October 9th RR spoke to BAS about a margin call. His evidence was that he sent a text to her shortly after receipt of CSAG's message on the 8th October referring to the notification and asking her to call him to discuss it. She was at a health farm in Germany but they did speak on the 9th October and it is common ground that he referred to a figure of the order of $8 million. She indicated to him that she would be in touch on Monday 13th October but there was a sequence of text messages on the Friday and they spoke twice on the Sunday. Her evidence was that when they spoke on the 9th October he mentioned the margin call but she did not know what he was talking about. She did not realise how serious the situation was and all he did over the course of the weekend was to keep telling her to produce $8 million in cash. Although she spoke to Banque Mirabeau and Citibank that day, this was not with a view to obtain guarantees but because she was trying to understand what a margin call was. She said, contrary to his evidence, that he did not explain to her the various ways in which the margin call might be met. His evidence was that he advised her to meet the margin call in full and they discussed how she might do it, including selling more Notes to deleverage, or by moving assets into her CSAG account, or moving some or all of her Notes out of CSAG and into another financial institution where she had more collateral to cover the margin requirements. She asked how long CSAG would need the money for, but all he could say in response to that was that it would be required for as long as the markets were in that state and did not improve. She appeared to him to be somewhat reluctant to meet the margin call although she said she would do it. RR's file notes of the 10th October stated that he had been in regular contact with her throughout the last couple of weeks and kept her informed of the current market turmoil and the effect it had on her Notes. Because of BAS' location in Saudi Arabia in September and Germany in October telephone logs do not assist in showing whether or not such contact did or did not take place, but given their usual frequency of contact, it is inevitable that they were in touch regularly, given what was happening in the market. A file note of the 12th October refers to the two telephone conversations that day in which reference is made to his warning to her that if no collateral, or clear indication of its provision was forthcoming, then CSAG might liquidate the whole account, in which case very little, if anything would be left. On the following day, 13th October, there is an email from RR in which he refers to BAS providing bank guarantees, which she accepted in evidence that she had indicated she would produce. She said that she involved Mr Boujon on 14th October for him to organise the guarantees and he made contact with RR. Discussions ensued with a view to obtaining the required guarantees, BAS and Mr Boujon telling RR that their intention was to meet the call in full by such guarantees. At that stage emails show that the expectation was that there would be two guarantees for $4 million each. Plurimi continued to monitor the pricing of all BAS' Notes including the Goldman Sachs and UBS Notes (Notes 19 and 21). Mr Boujon was in close contact with BAS and aware of the state of the account, including all the current Notes, the Real Property Fund Investment, the cash deposit of $11 million and the Yen loan in respect of the BLME shares. In the early evening of the 15th October, CSAG notified Plurimi of an anticipated margin call for $7.572 million, with a payment deadline of Friday 17th October 2008, of which BAS was informed early the next morning. RR emphasised the urgency of the situation to her and the different options available and she informed him that she was considering the option of moving all her Notes to another bank. It appears that this might have been Citibank. At some point, though he did not recall the date, BAS told him that one of her banks was willing to take the portfolio but would want to sell one or two of her Notes which she did not want to do because it would crystallise losses. BAS denied that she ever said anything of this kind. BAS' evidence was that she left it to Mr Boujon to arrange the guarantees. By 17th October Barings had issued a $2 million guarantee and on that day Banque Mirabeau said that they could provide a $1.8 million guarantee in respect of their part of the BAS 2003 Trust portfolio. No approach had been made in respect of the JP Morgan portfolio in that Trust. Despite some suggestion from BAS that there was a verbal request to the trustees to consider a guarantee on the JP Morgan portfolio, it is clear that there was no such request at any stage, the request to the Trustees being limited to the Banque Mirabaud portion. No request for the Banque Mirabeau guarantee was made until the 21st October and the guarantee was actually provided on the 22nd. Although it appears that Citibank had been approached and indicated that they were prepared to provide a $2 million guarantee, this was never forthcoming. BAS said that she spoke to the trustee of the Smile Trust, another of her trusts and left it to him to sort out a guarantee but there was no mention of this in her witness statement and no documents supporting that suggestion. I do not accept that any such request was made. She made no approach to any other bank nor sought to make use of any other asset to meet the call. It appears that BAS was hoping the market would improve or that limited guarantees would be acceptable to CSAG who, she hoped, would not wish to liquidate the account of someone like her. She said she was trying to meet the call but events were happening too quickly. She said she made no deliberate decision not to get guarantees. Thus, despite a great deal of toing-and-froing between Mr Boujon and RR, with cross reference to CSAG, by 22nd October BAS had only provided two bank guarantees for a total of $3.8 million (from Barings and Banque Mirabeau) and was still significantly short of the $7.572 million margin call, with the 17th October deadline already past. RR's evidence was that he had been advising her to sell more of her Notes, in order to produce cash and reduce the amount of leverage, since mid-September. Since that time however the market had been declining drastically. He had been repeating his advice because he could see that every day she delayed selling, the position deteriorated. She remained resistant to selling any Notes because of crystallising losses and because, so he thought, she considered that the markets would recover soon and if necessary CSAG would give her more time. He was telling her that he did not share that view but he thought, from what she said, that Mr Boujon did. RR and BAS met on the 22nd October, as recorded in a file note the following day. The Note records that "in order to reduce leverage and exposure, we decided to sell the CS 6 year spread note [the Goldman Sachs Note – 19] and use the proceeds to repay some loans. We also decided to use the available cash, approximately $11 million to reduce leverage. The client is still in shortfall and we will keep following up with her to discuss what other action she is taking". According to RR, the decision to sell Note 19 only came about after lengthy discussions both that day and in earlier telephone conversation. At the meeting they looked at each of the Notes in her portfolio and concluded that the loss would be less on the sale of Note 19 than for any other Note. He had been advising her to sell several Notes in response to the margin call but she told him at the meeting that she was just going to sell this one Note and that he should tell them to leave her alone. He advised her to use the funds generated from the sale to reduce her loans but contrary to his advice she decided not to repay the Yen loan, as recorded in another file note of the following day. He advised her to use the cash balances on the account to reduce the borrowing because the effect of doing so would be the full application of the cash deposit in reduction of the loans instead of its application at 95% as collateral. In particular it was plain from RR's evidence and Plurimi's internal documents that they were exploring the prices at which Note 21, the UBS Note could be sold as well. RR recommended its sale. The effect of selling both Note 19 and Note 21 at around 86% of par would have been significant. The loans on each were $7.5 million and $1.1 million net proceeds would have been realised on each after repayment of those loans. Mr Boujon's evidence was that he was in touch with RR and BAS on a daily basis and that BAS accepted RR's advice to sell these two Notes. He said that he and RR agreed on the sale of two Notes as the best solution on the 22nd October and he did not recall any discussion about not selling the Notes. BAS' evidence was that RR did recommend the sale of both Notes and that she agreed. She said that she would have done whatever he suggested and was not reluctant to sell Notes because it would crystallise a loss. It was not true that she decided not to sell the UBS Note in the face of his recommendation. An email shows however that, following the apparent agreement to sell, "the client has decided to hold for now". BAS' evidence was that a decision had been taken to sell so it must have been RR's opinion that the Note be retained and not sold. He, she said, controlled the portfolio. This evidence from BAS constituted, I regret to say, a bare-faced lie. At this stage, $3.8 million in guarantees had been provided and it was still anticipated that Citibank would produce a guarantee for another $2 million. The use of the $11 million deposit to repay loans would result in a further benefit of $550,000 approximately still leaving a shortfall. The sale of two Notes would have met the shortfall with something to spare in the event of further falls in the market. With the continuing doubts about the solvency of the two banks issuing the Notes as well as the declining market, the idea that RR would recommend the sale of two Notes, that BAS and Mr Boujon would agree to that and then RR would decide, of his own accord, not to sell one of them is so far fetched as to be risible. The only reason that Note 21 was not sold, was because, despite the pricing indications obtained, BAS was not prepared to sell it, in the hope that the market would recover or CSAG would be satisfied with the collateral that she was prepared to provide. I am satisfied that here, in relation to all the events of September/October 2008, as elsewhere, RR's evidence is to be preferred to that of BAS. His evidence is consistent with the documentary record and accords with the advice he was giving to other clients and the logic of the market and his view of it. On 23rd October however in the late afternoon CSAG notified Plurimi of a change to the LTV ratios. This would result in an additional call on BAS which, when calculated resulted in a total revised call of $11,711,494. It was unheard of for a bank to alter its LTV ratios in this way and it was recognised by the experts as being unforeseeable. RR's evidence was that he telephoned BAS a couple of hours later and received a fresh margin call at 15.43 hours on Friday 24th October with a revised figured of $10.21 million. This thus represented an increase on the first margin call of $2.638 million. The deadline for providing this margin was now Monday 27th October at 1600 hours Geneva time with an express statement in the margin call letter that, if the deadline was not met, CSAG would be entitled to liquidate BAS' positions. The figure of $10.21 million did not include the $3.8 million in guarantees already provided, nor the deleveraging effects of the sale of Note 19 and use of the $11 million deposit to repay loans. No further guarantees were however produced by BAS or Mr Boujon. RR's evidence was that BAS told him that Mr Boujon was going to meet with CSAG in Geneva on Monday 27th October to discuss her response to the second margin call. Plurimi sent an email to CSAG, stating its belief that Mr Boujon was coming to CSAG's offices "to resolve the issue" and asking for feedback as soon as it was available. BAS did not tell RR what Mr Boujon's approach would be at that meeting. At half past four that afternoon, CSAG emailed Plurimi to say that the meeting had taken place "to review the situation of the client's account" The email concluded in this way:- "M. Boujon pointed out that according to the conversation that he has with our client, they are not going to take further measures as of transferring funds or assets from other accounts that she has under custody with other banks. Please be advised that we are claiming both guarantees of $2 million and $1.8 million." The evidence from Mr Boujon and BAS about the purpose and content of this meeting was altogether unsatisfactory. Both gave evidence that he went without any clear instructions from her. That seems inherently unlikely in the circumstances. It is effectively now recognised that BAS had the assets available to pledge by way of guarantee for the extant margin call, had she wished to do so. A schedule of her available assets, as disclosed (and there is good ground for thinking that there were further assets which remained undisclosed) was produced by Plurimi's counsel in the course of argument, showing some $14m- $15m of assets which could have been readily pledged, plus $10m of jewellery, without looking to her real property and contents valued in excess of $60m. There were both personal and trust assets which were apparently available for pledge. She made no approach to her personal bankers, nor to the JP Morgan managers of the BAS 2003 Trust nor to the trustees of the Smile Trust. She never produced the guarantee which was available from Citibank. With available guarantees of $5.8 million, the benefit of the use of the $11 million deposit to pay off loans, the effect on leverage of selling Note 19 and the use of the net proceeds to repay further loans, there should have been no difficulty in producing a further guarantee to meet the shortfall, with all the other assets at her disposal. Alternatively, she could have asked for time and indicated a willingness to come up with collateral which it is highly likely, would have been acceptable. This was not done. Mr Boujon's evidence was that he was asked by CSAG to come to a meeting and did not know what the revised margin call figure was. That does not seem likely unless the figure did not matter to him because a decision had already been taken not to produce further margin. He said he did not expect to persuade CSAG that they should not make the additional margin call, based on their revised LTV figures. That was a matter of mathematics for them. He said he told CSAG that there was still an issue about getting the original margin call of $7.512m together and he did not see how they could get $10.215 million. He did not ask for more time at the meeting. He was simply asking what the situation was and what they could do. When they told him the figure of $10.2 million was what was required, he said that they would not be able to get it and told them that BAS would not take any future steps to meet any margin call. It seems that he was thus refusing to produce even the Citibank guarantee which was apparently available for the asking. Although it was suggested by BAS' Counsel in closing that there was an issue of time in getting together the guarantees required, had this been the only issue, Mr Boujon would have asked for such time, which he admitted he did not do. By this stage, I am clear that BAS had no intention of producing further margin. As she herself said in her evidence, when she heard of the revised margin call she went "ballistic". It is inconceivable that Mr Boujon attended this meeting without instructions. He and BAS must have decided what would be said at the meeting which was, so RR was told, to resolve the issue. There are only very limited possibilities. Either the intention was to seek to persuade CSAG not to enforce the margin call or to take a lower figure by way of guarantee or it was to take a tough line and state that no more collateral would be forthcoming. The latter approach might be adopted in the hope that CSAG would back down and not liquidate the assets of a well- to- do client in circumstances where it was hoped the market would improve. If there had been an intention to meet the call, Mr Boujon would have asked for more time to pay and, as everyone realised at the time, BAS would have been perfectly capable of providing the collateral sought. There was one point in his cross examination where Mr Boujon came close to saying that an express decision had been taken not to produce more margin. When asked whether, at the time of the meeting, he and BAS were not prepared to do anything more, he agreed "especially when you cannot meet already the first step and they ask you for more". He then talked of the market going down and increasing margin calls being made. When it was suggested to him that BAS had assets of well over $100 million and they were talking about a maximum of $4.4 million in collateral in circumstances where the markets could improve, he referred to the hope that the market would get better "but if only we knew", "if we could predict what was going to happen probably we would never have ended up in this situation. This is the way the market works. It fall, there is some money need, we didn't manage to get it on time, end of the game". He went on to say that there was no other cash and it would take at least two days to sell assets and then this:- "I see your point, but at the same time, the decision was made not to do anything and it's not something we took lightly". In my judgment it is plain that a decision was made not to meet the margin call. This was probably done in the hope that CSAG would not insist on the additional collateral. Such an approach is so irrational as to be almost incomprehensible, explicable only if it really was thought that CSAG would not liquidate the account. Even then, when it became apparent that her bluff was being called, she could possibly have retrieved the position, but no attempt was made to do so. Not meeting the margin call suggests blind irrational pique at CSAG's movement of the goal posts on LTV. There is an email of the 16th October 2008 from Mr Boujon to a trustee of the BAS 2003 Trust, with a copy to the managers of the Mirabeau portion. It refers to the need for a letter of guarantee from Banque Mirabeau and then states "if the market would carry on going down we would get ride (sic) of the position at Credit Suisse rather than starting to lower Mirabeau's portfolio." That implies a willingness to sell the Plurimi Notes, rather than sell Trust assets to produce cash, but that was what BAS declined to do. It must have been her decision not to sell Notes and not to produce guarantees or further margin. Consequent on the expression of that intention at the meeting by Mr Boujon, CSAG, after asking Plurimi to sell the Notes, for which it had no instructions from BAS, proceeded to liquidate the account in accordance with its contractual rights. Causation of the Losses suffered on Liquidation of BAS' Account. In these circumstances, it would not be possible to say that any failure on the part of CSS or Plurimi adequately to explain collateral, margin, margin calls and the consequences of failure to meet such a call was the cause of BAS' losses. Not only did RR advise the sale of Notes, which BAS declined to do in September and October, which would have changed the LTV ratio beyond recognition, but he advised her to put up margin, in the shape of guarantees which she also failed to do. Even in a market in turmoil, as it was in October/November 2008, the decision on her part not to follow RR's advice to sell Notes and not to provide additional margin, when she was plainly in a position to do so, provides a break in any chain of causation. Her view of the market was such that she did not want to sell and that may or may not have been a rational view. But, having taken the decision not to sell, the failure to produce margin is explicable only as an attempt to play "hard ball" with CSAG or as the result of a fit of pique. The losses occurred by reason of the fall in value in the Notes and BAS' deliberate and irrational decision not to meet a margin call, not from any failure to explain that margin calls could occur when the Notes were purchased. BAS accepts that the investments were suitable for her in the sense that she was able to meet any margin call but her decision not to provide additional margin even in the market of October/November 2008 and thereby incur losses of the order of $30 million is so extraneous to the failure to advise and would in any event constitute a failure to mitigate, that the losses cannot be laid at CSS' or Plurimi's door. Whilst these matters should not be considered with hindsight, by looking at the improvement in the market which has taken place in the years since, it is clear that the provision of additional collateral would appear to any sensible person as the prudent course to adopt and a deliberate failure to produce additional margin and thereby precipitate the distressed sale of all the Notes, whether capital protected or not, completely nonsensical. Conclusion There are additional arguments which the Defendants have put forward in relation to the scope of the duty in relation to the loss actually suffered and why losses occurring as a result of an unforeseeable market collapse, an unforeseeable change in LTV ratios and a deliberate failure to meet margin call are not recoverable. I consider that there is much force to these arguments but do not need to decide them because of the views I have formed on the facts. In my judgment neither CSS nor Plurimi were in breach of statutory duty, contractual or tortious common law duty. BAS' evidence on critical conflicts of evidence was not credible. RR, CSS and Plurimi did explain, both in documents and orally what the risks were in leveraged investment and structured notes and the cause of the loss was not only the unforeseeable collapse of the market and change in the LTV ratios required by CSAG, but more particularly BAS' own extraordinary and unreasonable decision not to meet a margin call when she was well able to do so after ignoring RR's advice to sell more Notes. The way in which the claim has been pursued, with varying and conflicting statements of case illustrates the lack of foundation for her complaints and the irrationality of her attempts to hold others liable for her own risk- taking, the market collapse of October 2008 and her own decision not to take the obvious course when presented with margin calls. In these circumstances the claim must be dismissed and costs must follow the event.

Judgments - Masri (Respondent) v Consolidated Contractors International Company SAL and others and another (Appellant) and another HOUSE OF LORDS SESSION 2008-09 [2009] UKHL 43 on appeal from: [2008] EWCA Civ 876 OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Masri (Respondent) v Consolidated Contractors International Company SAL and others and another (Appellant) and another Appellate Committee Lord Scott of Foscote Lord Rodger of Earlsferry Lord Walker of Gestingthorpe Lord Brown of Eaton-under-Heywood Lord Mance Counsel Appellants: Alexander Layton QC Thomas Raphael (Instructed by Olswang ) Respondents: Laurence Rabinowitz QC Simon Salzedo Colin West (Instructed by Simmons & Simmons) Hearing dates: 18, 19, 20 and 21 MAY 2009 ON THURSDAY 30 JULY 2009 HOUSE OF LORDS OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Masri (Respondent) v Consolidated Contractors International Company SAL and others and another (Appellant) and another [2009] UKHL 43 LORD SCOTT OF FOSCOTE My Lords, I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Mance. I agree with it, and for the reasons given by Lord Mance I would allow this appeal and restore the order of Master Miller. LORD RODGER OF EARLSFERRY My Lords, I have had the advantage of reading in draft the speech which is to be delivered by my noble and learned friend, Lord Mance. I agree with it and, for the reasons which he gives, I too would allow the appeal and make the order which he proposes. LORD WALKER OF GESTINGTHORPE My Lords, I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Mance. I agree with it, and for the reasons given by Lord Mance I would allow this appeal and restore the order of Master Miller. LORD BROWN OF EATON-UNDER-HEYWOOD My Lords, I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Mance. I agree with it, and for the reasons given by Lord Mance I would allow this appeal and restore the order of Master Miller. LORD MANCE My Lords, Introduction Mr Masri, the respondent, is owed a judgment debt of US$ 64m by Consolidated Contractors International Company SAL (“CCIC”) and Consolidated Contractors (Oil and Gas) Company SAL (“CCOG”), both Lebanese companies. The debt arises from judgments on liability and quantum of Gloster J in the Commercial Court on 28 July 2006 and 4 May 2007. CCIC and CCOG have manifested their intention to avoid payment of this judgment debt at all costs. Permissions to appeal to the House of Lords on jurisdictional and other issues in the proceedings were discharged for failure to comply with conditions requiring payment of all or most of the judgment debt. Lord Bingham of Cornhill observed too truly in Société Eram Shipping Co. Ltd. v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260, para. 10: “As many a claimant has learned to his cost, it is one thing to recover a favourable judgment; it may prove quite another to enforce it against an unscrupulous defendant. But an unenforceable judgment is at best valueless, at worst a source of additional loss.” He added that this was a problem that our Victorian forebears had addressed with characteristic energy and pragmatism. That applies in this case. CPR 71 on which the appeal turns reflects the provisions of s.60 of the Common Law Procedure Act 1854, as extended by the Rules of the Supreme Court 1883 to redress the effect of the decision in Dickson v Neath and Brecon Railway Co (1869) LR 4 Ex 87. The issues now before your Lordships arise not between Mr Masri and CCIC or CCOG, but between Mr Masri and Mr Toufic Khoury. Mr Khoury was the chairman, general manager and a director of CCIC. He has at all times been habitually resident in Greece. On 6 July 2007, Mr Masri obtained without notice an order for his examination as an officer of CCIC in respect of CCIC’s means under CPR 71. The order, granted without notice and on paper by Master Miller, provided for service on the London solicitors then acting for CCIC. It is common ground that this was not appropriate. Subsequent steps were taken to serve Mr Khoury personally in Greece. On an application by Mr Khoury on 20 December 2007, Master Miller set aside the order, primarily on the grounds of lack of jurisdiction under both European Community and domestic law, and without finding it necessary to determine whether valid personal service had been effected in Greece. He gave permission for a “leap-frog” appeal to the Court of Appeal on all but one presently immaterial issue. On 28 July 2008 the Court of Appeal allowed Mr Masri’s appeal, and remitted the matter for further consideration of the issue relating to the validity of the service effected in Greece. The House gave leave to appeal on 14 January 2009, indicating that it would hear first the issues of English law, and that, if the appeal failed on those points, it would refer the points of European law concerning in particular the application of the Evidence Regulation (EC) No 1206/2001 of 28 May 2001 and the Brussels Regulation (EC) No 44/2001 to the Court of Justice. In the meanwhile in January 2008 Mr Khoury resigned from his offices with CCIC, while continuing to enjoy the benefit of the same legal team as represents CCIC. In December 2008 CCIC entered into judicial administration in Lebanon, but the appeal proceeds on the basis of the facts before Master Miller in December 2007. The Court of Appeal ordered on 19 February 2009 that no examination of Mr Khoury should take place until after the House’s determination of the English law issues. CPR 71 provides: “71.2 Order to attend court (1) A judgment creditor may apply for an order requiring - (a) a judgment debtor; or (b) if a judgment debtor is a company or other corporation, an officer of that body, to attend court to provide information about - (i) the judgment debtor’s means; or (ii) any other matter about which information is needed to enforce a judgment or order. (2) An application under paragraph (1) - (a) may be made without notice; and (b) (i) must be issued in the court which made the judgment or order which it is sought to enforce, except that (ii) if the proceedings have since been transferred to a different court, it must be issued in that court. (3) The application notice must - (a) be in the form; and (b) contain the information required by the relevant practice direction. (4) An application under paragraph (1) may be dealt with by a court officer without a hearing. (5) If the application notice complies with paragraph (3), an order to attend court will be issued in the terms of paragraph (6). (6) A person served with an order issued under this rule must - (a) attend court at the time and place specified in the order; (b) when he does so, produce at court documents in his control which are described in the order; and (c) answer on oath such questions as the court may require. (7) An order under this rule will contain a notice in the following terms - ‘You must obey this order. If you do not, you may be sent to prison for contempt of court.’” The issues The issues now before the House are short, although the argument was long. They are (1) whether the language of CPR 71.2 purports to confer power to order examination of a foreign director of a foreign company, (2) whether it purports to confer power to order such examination in respect of foreign assets, (3) whether, if it does, it is ultra vires the rule-making power, (4) whether, if it does, there is any basis under CPR 6 for service upon Mr Khoury out of the jurisdiction in Greece, and (5) whether, if there is, the English courts should nonetheless give “primacy” or priority to use of the Evidence Regulation (EC) No 1206/2001, before contemplating such domestic means. Mr Khoury submits that the last contention, were it thought to have any force at all and to be potentially decisive, should be referred along with the other European issues to the Court of Justice. Scope of rule-making power It is convenient to start with the third issue. This depends upon the width of the rule-making power contained in s.1 of the Civil Procedure Act 1997. The first and second issues arise only if the first issue is answered in Mr Masri’s favour and they depend upon the proper construction of CPR 71 and CPR 6. A conclusion about what would be within or outside the rule-maker’s power may itself affect the construction to be put on the rules. At the heart of Mr Alexander Layton QC’s submissions on behalf of Mr Khoury on all three issues is however a single theme, that the court lacks extra-territorial power - over Mr Khoury because he is abroad, and over CCIC’s assets (about which Mr Masri wishes to question Mr Khoury) because they are also abroad. The principle relied upon is one of construction, under-pinned by considerations of international comity and law. It is that “Unless the contrary intention appears ….. an enactment applies to all persons and matters within the territory to which it extends, but not to any other persons and matters": Bennion, Statutory Interpretation, 4th ed. (2002), p 282, s.106, cited with approval, along with the considerable case-law, by Lord Bingham of Cornhill in R (Al-Skeini) v Secretary of State for Defence (The Redress Trust intervening) [2007] UKHL 26, [2008] AC 153, para.11. The principle may not apply, at any rate with the same force, to English subjects (see e.g. The Zollverein (1856) Swab. 96, 98, per Dr Lushington and Ex p. Blain, Ex p Sawers (1879) 12 Ch D 522, 526, per James LJ, cited with approval by Lord Scarman in Clark v Oceanic Contractors Inc. [1983] 2 AC 130, 144E-H), but that is presently irrelevant. Whether and to what extent it applies in relation to foreigners outside the jurisdiction depends ultimately as Lord Wilberforce said in Clark v Oceanic Contractors Inc. (p 152C) upon who is “within the legislative grasp, or intendment” of the relevant provision. To this a nuanced answer may be given, as in that case where United Kingdom PAYE legislation was held to apply to a foreign company employing workers to work in North Sea operations and as in Holmes v Bangladesh Biman Corp. [1989] AC 1112 where apparently general wording of a United Kingdom carriage by air Order was not taken to apply to carriage by air wholly to be performed in the territory of a foreign state. The rule-making power in s.1 of the Civil Procedure Act 1997 reads:   "1  Civil Procedure Rules (1) There are to be rules of court (to be called ‘Civil Procedure Rules’) governing the practice and procedure to be followed in- …… (b) the High Court ..…. (2) Schedule 1 (which makes further provision about the extent of the power to make Civil Procedure Rules) is to have effect.” Schedule 1 includes these provisions: “1. Among the matters which Civil Procedure Rules may be made about are any matters which were governed by the former Rules of the Supreme Court …. ….. 4. Civil Procedure Rules may modify the rules of evidence as they apply to proceedings in any court within the scope of the rules.” This language raises the questions: what is the scope of “practice and procedure” within s.1(1), and what is the scope of the matters “governed by the former Rules of the Supreme Court” to which paragraph 1 of Schedule 1 refers? Mr Layton took the House through legislative and rule-making history from the reign of Queen Elizabeth I onwards. His primary submission was that any exercise of jurisdiction in respect of foreigners abroad fell outside the concept of “practice and procedure” and required express statutory legitimation before it could become one of the matters governed by rules of court. He cited Lord Halsbury’s statement in British South Africa Company v. Companhia de Moçambique [1893] AC 602, 630 that “Rules of procedure and practice in England would not, I think, in the contemplation of any one, touch questions of territorial or international jurisdiction". That was however said in relation to a claim brought for trespass to land situate abroad, long recognised as a context in which jurisdiction is strictly territorial. He also cited In re Grosvenor Hotel, London (No 2) [1965] Ch 1210 and General Mediterranean Holdings SA v Patel [2000] 1 WLR 272 for the proposition that rules of practice and procedure cannot alter substantive law (in those cases, the rules relating to privileged documents). In the former case, it was also said that they cannot alter rules of evidence, a matter now expressly catered for by Schedule 1, para. 4 to the Civil Procedure Act 1997. In the present case, Mr Layton also relies upon the limitation of the court’s power to enforce the attendance of witnesses or fine defaulting witnesses. From the Statute of Elizabeth (1562) onwards, this had been regulated by statute and had never extended beyond the United Kingdom. The procedure enacted in relation to other jurisdictions involves the taking of evidence, on commission or otherwise, with the assistance of the foreign court. The service of a writ of subpoena is still only possible under s.36 of the Supreme Court Act 1981 in respect of persons in one of the parts of the United Kingdom. The limitation of the court’s power in this respect corresponds with the principle of international law, summarised robustly by Dr Mann in his Hague lecture “The Doctrine of Jurisdiction in International Law” (Recueil des Cours, 1964-I, The Definition of Jurisdiction, p.137): “Nor is a State entitled to enforce the attendance of a foreign witness before its own tribunals by threatening him with penalties in case of non-compliance. There is, it is true, no objection to a State, by lawful means, inviting or perhaps requiring a foreign witness to appear for the purpose of giving evidence. But the foreign witness is under no duty to comply, and to impose penalties upon him and to enforce them against his property or against him personally on the occasion of a future visit constitutes an excess of criminal jurisdiction and runs contrary to the practice of States in regard to the taking of evidence as it has developed over a long period of time.” With regard to the heads of extra-territorial jurisdiction involved in what used to be RSC O.11 and is now CPR 6, Mr Layton was able to trace many of them to express statutory provisions. But he accepted that there are a number which cannot be so derived. Thus, for example, the Rules of the Supreme Court 1883 were made under s.17 of the Supreme Court of Judicature Act 1875, which authorised the making of rules for regulating practice and procedure. But they included for the first time as grounds for service out of the jurisdiction that relief was “sought against any person domiciled or ordinarily resident within the jurisdiction” (para. (c)) and that “any person out of the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction” (para. (g)). Much later, of course, the latter provision was itself amended to apply whether the action was brought against another person served within or out of the jurisdiction: SI 1983/1181. A reading of the Supreme Court Practice 1997 (applicable immediately prior to the CPR) makes it clear that there was a regular process of amendment and minor extension of the powers under O.11 in order to address some new need or “small but irritating loophole": see 11/1 (history of rule, including SI 1983/1181 and its amendment by SI 1990/1689 and 2599, SI 1992/1907 and SI 1993/ 2760) and notes 11/1/18 (breach within preceded by breach out of the jurisdiction), 11/1/19 (tort), 11/1/23 (trusts) and 11/1/25 (foreign judgment or award sufficient ground for grant of leave without presence of assets here). Most recently, following the expression by the Court of Appeal in National Justice Compania Naviera SA v Prudential Assurance Co. Ltd. (The Ikarian Reefer)(No 2) [2000] 1 WLR 603, 615D-F of anxiety about the existence of a possible lacuna in the rules, the rule-making committee added CPR 6.20(17) expressly to enable service out of the jurisdiction of a claim against a non-party for costs under Supreme Court Act 1981 s. 51 (now s. 4 of the Courts and Legal Services Act 1990) as interpreted by the House in Aiden Shipping Co. Ltd. v Interbulk Ltd. [1986] AC 965. In these circumstances I find both unpromising and unattractive Mr Layton’s submission that the rule-making power in respect of extra-territorial jurisdiction is limited to matters covered by specific statutory authority. Parliament must be taken to have understood and endorsed the manner in which the power has been understood and exercised over the years; and it permits the extension of the jurisdiction of the English courts over persons abroad to cover new causes of action and situations. This being so, I would also reject, indeed regard as paradoxical, Mr Layton’s further submission that the rule-making power in respect of persons outside the jurisdiction must exclude “purely procedural powers against non-parties". The exercise of the power to make CPR 6.20(17) was in my view legitimate. The statutory constraint contained in s. 36 of the Supreme Court Act precludes the possibility of a rule requiring an ordinary witness outside the jurisdiction to attend for examination within the jurisdiction. But it seems to me that the statutory rule-making power is wide enough, in principle, to permit the rule-making authority to enact rules relating to the examination of an officer abroad of a company against which a judgment has been given within the jurisdiction. While the two situations are not precisely comparable (see below), it is of some interest in this connection to note the origin of the rule-making power which was held by the Court of Appeal in In re Seagull Manufacturing Co. Ltd. [1993] Ch 345 to enable service out of the jurisdiction of an order for the public examination of an officer of a company being wound up by the court. S. 411 of the Insolvency Act 1986 authorises rules “for the purpose of giving effect” to, inter alia, Part IV of that Act, which includes the provisions in s.133 for public examination of such an officer. Rule 12.12 of the Insolvency Rules 1986 (SI 1986/1925), which was held to permit service out, was made under that general power. I would also reject Mr Layton’s submission that s.1 of the Civil Procedure Act 1997, should be read as limited to assets within the jurisdiction. Rules of practice and procedure could clearly be made to enable the examination of an officer within the jurisdiction about assets anywhere worldwide. If and so far as it would be legitimate to make a rule for the examination of such an officer who is abroad, I see no basis for limiting the scope of the power to authorise such examination to assets within the jurisdiction. Scope of CPR 71 I turn to the scope of the rule actually made. I accept Mr Layton’s submission that, even though the rule-making power is wide enough to enable rules to be made relating to the examination of an officer who is outside the jurisdiction, the presumption against extra-territoriality still applies when considering the scope of CPR 71. Mr Laurence Rabinowitz QC for Mr Masri points out that CPR 71 covers first and foremost judgment debtors who may be anywhere in the world. It must be possible to obtain an order for examination of an individual when he or she is the judgment debtor. Service out of the jurisdiction on such an individual will be possible with leave under, or without leave by implication from, the terms of CPR 6.30(2), stating: “…. where the permission of the court is required for a claim form to be served out of the jurisdiction the permission of the court must also be obtained for service out of the jurisdiction of any other document to be served in the proceedings". O 11, r 9(4) (the differently worded predecessor to CPR 6.30(2)) was, rightly, held to authorise service out with leave in such a situation in Union Bank of Finland Ltd. v Lelakis [1997] 1 WLR 590. Further, I would accept Mr Rabinowitz’s submission that there is nothing in CPR 71 to limit its scope to domestic assets. The Court of Appeal was right to reject a contrary submission in Interpool Ltd. v Galani [1988] 1 QB 738. That being so, Mr Rabinowitz submits that, where the judgment debtor is a company, there is no reason to limit the concept of “an officer of that body” to an officer within the jurisdiction; the situations of an individual and corporate debtor ought to be given parallel effect. Mr Layton counters by submitting, correctly in my view, that the two situations are not truly parallel. The judgment debtor is already subject to the court’s jurisdiction. In relation to him or her, the adjudicative and enforcement stages are for this purpose part of a single whole: see Union Bank of Finland Ltd. v Lelakis, above, 593F, per Henry LJ. But there is nothing in CPR 71 to enable the court to summon a third party witness who might have information about the personal judgment debtor’s assets. A corporate judgment debtor has a separate legal personality, and is not to be equated with its officers. They may have information about its affairs, but they have not submitted to the jurisdiction. Some, but certainly not all, officers of a company may for some purposes be regarded as its alter ego. That was a central element in the reasoning by which the Court of Appeal concluded that it had jurisdiction to order Mr Comninos, a non-party, to pay the costs of the false claim by his shipowning company which he had instituted, controlled and financed in The Ikarian Reefer, above. But CPR 71 is not limited to officers constituting a company’s alter ego, and the present order was not obtained and is not defended on the basis of any suggestion that Mr Khoury was CCIC’s alter ego. In these circumstances, the conjunction in CPR 71 of provision for oral examination of a personal judgment debtor (against whom an order may be obtained although he or she is out of the jurisdiction) with provision for oral examination of officers of a corporate judgment debtor is not persuasive support for a proposition that an order may be made against the latter when he or she is out of the jurisdiction. There are basic differences between the two situations, and the presumption against extra-territoriality has a potential application to the latter which it does not have to the former. In Mr Rabinowitz’s submission the key to the scope of CPR 71 lies in a recognition of the English court’s jurisdiction over the subject matter of the action (including the judgment) against CCIC and the close connection between that subject matter and Mr Khoury, who was CCIC’s chairman, general manager and director. In The Ikarian Reefer it was the existence of substantive proceedings over which the court had jurisdiction and of “a substantial connection with those proceedings by a non-party” that Waller LJ stressed in his judgment as the key to understanding the circumstances in which orders for costs would be made against such a non-party (pp.611B-612B). Mr Rabinowitz took this as a useful analogy and found direct support for his submission in Professor Brownlie’s identification in Principles of Public International Law (7th ed, 2008) p.311 of one criterion of jurisdiction as “a substantial and bona fide connection between the subject-matter and the source of the jurisdiction” (to which however Professor Brownlie added that “the principle of non-intervention in the domestic or territorial jurisdiction of other states should be observed”). Mr Rabinowitz also relied on the statement by Sir Robert Jennings and Sir Arthur Watts in Oppenheim, Public International Law (9th ed.), vol 1, pp. 457- 458 that there must be “a sufficiently close connection to justify th[e] state in regulating the matter and perhaps also to override any competing rights of other states". I accept that the existence of a close connection between a subject matter over which this country and its courts have jurisdiction and another person or subject over which it is suggested that they have taken jurisdiction will be relevant in determining whether the further jurisdiction has been taken. It will be a factor in construing, or ascertaining the grasp and intendment of, the relevant legislation or rule. Mr Layton submits that in the present case the connection between the judgment obtained in the proceedings against CCIC and Mr Khoury is weak: no or little stronger than that which exists between the court in ongoing proceedings and a witness who could give important evidence that would assist the court to resolve issues of liability or quantum. He cites In re Tucker (RC) (A Bankrupt), Ex p Tucker [1990] Ch 148, where the Court of Appeal set aside an order obtained by a trustee in bankruptcy for the examination under s.25(1) of the Bankruptcy Act 1914 of the debtor’s brother, a British subject resident in Belgium. S.25(1) gave the court power to summon before it for examination “any person whom the court may deem capable of giving information respecting the debtor, his dealings or property” and to require him to produce relevant documents, while rule 86 of the Bankruptcy Rules 1952 as amended authorised the court to order service out of the jurisdiction of any process or order requiring to be so served. The origin of s.25(1) went back before 1914 to 1883 and the trustee acknowledged that “in the light of the accepted practice of nations and comity in the field of international law and international relations, eyebrows might be raised at the notion that Parliament had in 1914 or 1883 given jurisdiction to any bankruptcy court, which might well be a county court, to summon anyone in the world before it to be examined and produce documents” (pp.156H-157B). He argued in the alternative that it sufficed that the brother was a British citizen. That submission too was rejected. Dillon LJ noted the limitations of RSC O.11 and of the power to subpoena witnesses, and said that against this background he “would not expect s.25(1) to have empowered the English court to haul before it persons who could not be served with the necessary summons within the jurisdiction of the English court” (p.158E-F). He noted first an alternative procedure provided by orders in aid in respect of persons resident in Scotland or Ireland or other British courts and “finally and conclusively” a provision in s.25(6) giving the court power to order the examination out of England of “any person who if in England would be liable to be brought before it under this section". Mr Rabinowitz relied upon the later case of In re Seagull Manufacturing Co. Ltd. [1993] Ch 345 (para 14 above), in which In re Tucker was distinguished on several grounds. In re Seagull concerned s.133 of the Insolvency Act 1986, authorising the public examination of a narrower category of persons, viz “any person who - (a) is or has been an officer of the company; or (b) has acted as liquidator or administrator of the company or as receiver or manager ….; or (c) not being a person falling within paragraph (a) or (b), is or has been concerned, or has taken part, in the promotion, formation or management of the company". Failure without reasonable excuse to obey such an order was punishable as a contempt of court under s.134. Rule 12.12 of the Insolvency Rules 1986 authorised the court to order service out of the jurisdiction of any process or order requiring to be so served for the purposes of insolvency proceedings. The Court of Appeal upheld an order made for the public examination of a former director living in Alderney. Peter Gibson J, with whose judgment the other members of the court concurred, said (p. 354F-H) that: “Where a company has come to a calamitous end and has been wound up by the court, the obvious intention of this section was that those who were responsible for the company’s state of affairs should be liable to be subjected to a process of investigation and that investigation should be in public. Parliament could not have intended that a person who had that responsibility could escape liability to investigation simply by not being within the jurisdiction. Indeed, if the section were to be construed as leaving out of its grasp anyone not within the jurisdiction, deliberate evasion by removing oneself from the jurisdiction would suffice". Peter Gibson J cited the Cork Committee’s Report (1982) for the importance placed in it on public examination during compulsory winding up proceedings: to form the basis of reports for submission to the department; to obtain material information for the administration of the estate; and to give publicity, for creditors and the community at large. Peter Gibson J distinguished In re Tucker, on the grounds that it involved private examination, that it concerned s.25(1) of the Bankruptcy Act 1914 under which the class of persons who could be “hauled” before the court went notably wider than the three categories identified in s.133 of the Insolvency Act 1986 and that s. 25(6) of the former Act had no parallel in s.133 of the latter Act. The ability to make use of the in aid procedure to procure the private examination of the former director in Alderney was regarded as no adequate substitute for an ability to require an officer abroad to be subject to public examination. Peter Gibson J also laid some emphasis on the fact that the issue before the court was the scope of the Act and the court was not concerned with whether the order for public examination could be effectively enforced out of the jurisdiction. I have some difficulty with this aspect of his judgment. Peter Gibson J cited Theophile v. Solicitor-General [1950] AC 186, 195. That was a case concerned with the legitimacy of making bankrupt, on the basis of debts unpaid in respect of his English trading, a foreigner who had left the jurisdiction. Lord Porter observed in that context that the person concerned could not take exception to such an order “though it may be he will escape from compliance with its terms because he is out of the jurisdiction and cannot be reached by English process". Making a bankruptcy order in respect of English trading against a debtor who has gone abroad is a different matter to making a mandatory order against someone abroad with no personal connection with England for attendance within the jurisdiction to be examined as a witness. Impracticality of enforcement is in my opinion a factor of greater relevance than Peter Gibson J’s words suggest. It is in particular a relevant factor when considering whether CPR 71 covers officers abroad. The present case stands between In re Tucker and In re Seagull. The category of persons embraced by CPR 71 is confined to “an officer” of the company or other corporation - on the face of it probably only a current officer at the time of the application or order, whereas s.133 extended (unsurprisingly since it deals with a company being wound up) to past officers and some other closely connected persons. There is in the context of CPR 71 no equivalent of the provision in s.25(6) which was for Dillon LJ “conclusive” in In re Tucker. On the other hand, CPR 71 is concerned with obtaining information in aid of the enforcement of a private judgment. The public interest that “those responsible for the company’s state of affairs should be liable to be subjected to a process of investigation and that investigation should be in public” (In re Seagull, at p 354) is absent. The universality of a winding up order, in the sense that it relates at least in theory to all assets wherever situate, is also absent. Private civil litigation is different. A fair and efficient legal system is of course a cornerstone of the rule of law, and it can also be said that there is a public interest in a court getting to the bottom of litigation and ensuring that parties have the means of obtaining full information to enable it to do so. Yet the parties have no right to ask the court to summon witnesses from abroad for that purpose. While a judgment crystallises rights and establishes an unsuccessful defendant’s liability, the court is still acting in aid of private rights after judgment, and it may be questioned whether, in terms of public interest, there is a very great difference between the importance of evidence for the trial of liability and quantum and for the enforcement of a judgment. A judgment which is mistaken because of a lack of full information or documentation could even be seen as a greater miscarriage of justice than a judgment which is not enforced because of the same lack. In my view Dillon LJ’s observation in In re Tucker that “eyebrows might be raised” at the notion that Parliament had in 1914 or 1883 given jurisdiction to any bankruptcy court to summon anyone in the world before it to be examined and produce documents has weight also in the context of CPR 71. The historical origin of CPR 71 consists in an amendment of the Rules in 1883 made in the light of the decision in Dickson v Neath and Brecon Railway Co in 1869. The Court of Exchequer there held that the pre-existing power to order oral examination of a judgment debtor did not enable examination of the company’s three directors, about whose presence within the jurisdiction there was clearly no doubt. The rules committee in 1883 is likely to have been focusing on domestic judgments and domestically based officers. If it thought at all about foreign judgments, which might be enforced in England, it is unlikely to have contemplated that a judgment creditor, having come here for that purpose, would then need assistance abroad to make the enforcement effective. The extreme informality of the process by which the rules enable an order for examination to be obtained continues to point towards a purely domestic focus. An application for an order may under CPR 71 be made without notice, may be dealt with ministerially by a court officer and will lead to the automatic issue of an order (albeit with the general safeguard of the right to apply to set aside which exists under CPR 23.10 in the case of any order made without service of the relevant application notice). These considerations all tend to point against the application of CPR 71 to company officers outside the jurisdiction. Sir Anthony Clarke MR, with whose judgment the other members of the Court of Appeal in the present case agreed, said ([2008] EWCA Civ 876; [2009] 2 WLR 699, para. 16) that it would “defeat its object” if CPR 71.2 were restricted to persons within the jurisdiction. That is, I think, to put matters substantially too high. Small though the world may have become, relatively few officers of companies are likely to contemplate, let alone be able to undertake, emigration or flight to a different country in order to avoid giving information about their company’s affairs. For the same reason, the deployment in In re Seagull of the possibility of “deliberate evasion” by an officer removing himself from the jurisdiction seems to me a factor of greater forensic than real weight, although such weight as it may have may be greater after the calamity of compulsory winding-up (when something has evidently gone wrong and may require embarrassing or even potentially incriminating investigation) than in the context of an unpaid judgment debt. In my view CPR 71 was not conceived with officers abroad in mind, and, although it contains no express exclusion in respect of them, there are lacking critical considerations which enabled the Court of Appeal in In re Seagull to hold that the presumption of territoriality was displaced and that the relevant statutory provision there, on its true construction and having regard to the legislative grasp or intendment, embraced a foreign officer. Although CPR 71 is limited to officers of the judgment debtor company, I regard the position of such officers as closer to that of ordinary witnesses than to that of officers of a company being compulsorily wound up by the court. I conclude that CPR 71 does not contemplate an application and order in relation to an officer outside the jurisdiction. Service out of the jurisdiction This conclusion is reinforced by a consideration of the position relating to service. Mr Salzedo advances two alternative bases upon which he submits that an order made against a non-party under CPR 71 could be served: under CPR 6.30(2), or alternatively under CPR 6.20(9). The Court of Appeal accepted the former, and found it unnecessary to consider the latter. The primary purpose of CPR 6.30(2) is, on any view, to require leave for service out of the jurisdiction on a defendant to proceedings of documents requiring to be served during such proceedings on such defendant, where the original claim form required such leave. It is an understandable provision. By inference, it indicates that if the claim form did not require leave for service out of the jurisdiction, then ancillary documents requiring to be served on the defendant during the proceedings do not require such leave. The Court of Appeal interpreted CPR 6.30(2) as having a second and much wider effect, that of enabling any non-party on whom it might be appropriate to serve any document during the course of proceedings to be served, with leave if the proceedings against the original defendant required leave for service out, without leave if they did not. The wider interpretation put by the Court of Appeal on CPR 6.30(2) leads to a surprising result. In a case where service of the original proceedings took place abroad with leave using one of the gateways in CPR 6.20, there would be an open discretion to grant leave for service out of the jurisdiction of any ancillary document on a non-party. Still more surprisingly, if the original proceedings did not require leave to serve out (e.g. because the defendant was domiciled in a Brussels Regulation State), a non-party could be served abroad (on the face of it in any country in the world) without leave. The Court of Appeal relied upon two cases under O.11 r.9 of the previous Rules, which read (as amended): “(1) Rule 1 of this Order shall apply to the service out of the jurisdiction of an originating summons, notice of motion or petition as it applies to service of a writ.   ….. (4) Service out of the jurisdiction of any summons, notice or order issued, given or made in any proceedings is permissible with the leave of the court but leave shall not be required for such service in any proceedings in which the writ, originating summons, motion or petition may by these rules or under any Act be served out of the jurisdiction without leave” (italics added). In Union Bank of Finland Ltd. v Lelakis [1997] 1 WLR 590, the Court of Appeal held that it was sufficient to engage O.11 r.9(4) if the proceedings against the defendant were proceedings which could have been served out of the jurisdiction. They did not actually have to be so served. (In that case, the proceedings had in fact been served within the jurisdiction under submission to jurisdiction clauses contained in the guarantees upon which suit was brought against the defendant.) The issue under O.11 r.9(4) arose in relation to the service on the defendant of an order for his examination as a judgment debtor. So there was no question of service on a non-party. The case does not help on the present issue. The second case is The Ikarian Reefer, where the Court of Appeal was concerned that there might be a lacuna in the rules in relation to a non-party whom the successful defendant sought to hold liable for costs ordered against the unsuccessful claimant company. However, the court considered, first, that O. 11 r.9(4) enabled leave to be given for service of an application for such costs on Mr Comninos, and opined, second, that there must anyway be an inherent power to give leave to join a non-party and serve him out of the jurisdiction. The latter proposition is at odds with the generally understood position accepted by the court in the Lelakis case (at p.593H). It has long been established that service out of the jurisdiction requires express authorisation either by statute or in the Rules. Thus, in In re Aktiebolaget Robertsfors and La Société Anonymes des Papeteries de l'Aa [1910] 2 KB 727, where the Court of Appeal had to construe O.XI r.8A made in 1909 to extend the power to serve out to summonses, orders or notices, the court held that this power was only exercisable in situations where service out of a writ was permissible under O.XI r.8 and so did not cover a summons to set aside an arbitration award. There was no suggestion that the heads of O.XI r.8 were anything other than exclusive. O.11 r.9(1) which replaced O.XI r.8A confirmed the exclusive nature of the heads of jurisdiction to serve out provided by O.11 r.1. As to the former proposition, The Ikarian Reefer may be viewed as a special case, since Mr Comninos was the alter ego of the claimant company whose proceedings he had instigated, controlled and financed. In such circumstances it may be legitimate to assimilate the party and non-party, and to treat any means of service available against the former as available also against the latter. As Waller LJ put it, at p.613E, “…. if what is alleged ….. is that the non-party in reality brought the main proceedings, the English court has jurisdiction to decide whether there has in effect been a submission to the jurisdiction by the non-party". Nothing equivalent can be or is alleged in respect of Mr Khoury in the present case, and Waller LJ’s statement was by way of coda to the primary basis on which the Court of Appeal held that there was jurisdiction to serve out on a non-party. That involved reliance upon the Court of Appeal’s previous decision in Mansour v Mansour [1989] 1 FLR 418. Waller LJ noted that Sir John Donaldson MR in Mansour had been addressing a version of O.11 r.9(4), which omitted the words “out of the jurisdiction” which I have italicised in quoting its language above. In fact Sir John Donaldson was in error in omitting those words. Waller LJ, believing that they had been added subsequent to Mansour, said that; “With the insertion of those words it is not possible to argue that, simply because the action was started by a writ where service of the same could be made without leave, any summons in the action which is to be served on a person outside the jurisdiction can be served without leave". But he continued by finding in Sir John Donaldson’s reasoning support for “the view that, where there is an action pending before the English court, then a summons in that action can be served on a person domiciled and resident outside the jurisdiction", whether or not he or she was already a party. Bearing in mind that the proceedings in The Ikarian Reefer were brought by writ served on insurers within the jurisdiction by Mr Comninos’s shipowning company, I find it difficult to discern the distinction between the proposition rejected and the proposition accepted in these two sentences. Leaving aside situations where the non-party is the alter ego of a party to existing litigation, any suggestion that any non-party can be served without leave under CPR 6.30(2) with any ancillary summons issued by either party in any proceedings properly brought and served within the jurisdiction clearly cannot be right. It is not without interest that the Rules Committee, following The Ikarian Reefer, concluded that the rules should be supplemented by adding CPR 6.20(17) in order expressly to permit service out of a claim for an order for costs against a non-party. Mr Salzedo also referred to dicta of Galliher JA and, on one view, Martin JA in Sostad v. Woldson [1925] 3 DLR 779 as supporting the view that the British Colombian equivalent of O.XI r.8A was not subject to restrictions in O.XI r.1. But the dicta do not appear to have been necessary for the decision. Galliher JA made clear that the case had been argued, and Macdonald JA decided the case, on the basis that the relevant obligation arose within the jurisdiction, and so within O.XI r.1(e) (now CPR 6.20(6)). Mr Salzedo also relied upon In re Liddell’s Settlement Trusts [1936] 1 Ch 365 as a case where the Court of Appeal had upheld an injunction issued against Mrs Liddell who was not a party to the proceedings and who had taken her children to the United States. But the court was careful to distinguish In re Aktiebolaget Robertsfors on the ground that Mrs Liddell was domiciled or ordinarily resident within the jurisdiction (see per Slesser LJ at pp.370-371, per Romer LJ at p.374 and per Greene LJ agreeing with both judgments at p.375); and that there was accordingly an independent head of jurisdiction under O.XI r.1 (now CPR 6.20(1)). The case therefore supports, rather than undermines Mr Khoury’s case. The scope of CPR 6.30(2) has been comprehensively reviewed by Tomlinson J in Vitol AS v Capri Marine Ltd. [2009] Bus LR 271, in a context paralleling the present - service on an officer resident in Greece of an order for his examination under CPR 71. Tomlinson J held that CPR 6.30(2) was concerned with documents requiring to be served on parties to the proceedings. The Court of Appeal in the present case disagreed and thought that CPR 71 was not “naturally limited” in this way. In my opinion, Tomlinson J was right, and I agree with his clear reasons (including those he gave for distinguishing The Ikarian Reefer) and his conclusion. Although there may have been lacunae in the Victorian rules regarding service out of the jurisdiction, the continuing absence in the modern rules of any provision enabling service out of an order under CPR 71 is both consistent with and in my opinion supportive of the view that CPR 71 was not contemplated, any more than its differently worded predecessors were, as applying to officers outside the jurisdiction. Finally, Mr Salzedo submitted that, all else failing, the case could be brought within one of the heads of CPR 6.20, that is “(9) a claim …. made to enforce any judgment or arbitral award". In my view, this submission also fails. An application to enforce a judgment within the jurisdiction is distinct from an application to order examination of a witness who is abroad with a view to enforcing the judgment wherever assets may prove to exist. The former does not trespass outside the jurisdiction of the English courts. The latter would, in a manner which was clearly not in mind in CPR 6.20(9). Nothing in the history of CPR 6.20(9), discussed in Tasarruf Mevduati Sigorta Fonu v Demirel [2006] EWHC 3354 (Ch), [2007] 2 All ER 815 (Lawrence Collins J) and [2007] EWCA Civ 799, [2007] 1 WLR 2508 suggests any wider intention. Conclusion It follows that Mr Khoury is in my opinion correct in submitting that CPR 71 does not enable an order for examination to be made against an officer who is outside the jurisdiction, and that CPR 6 provides no basis for service out of the jurisdiction of any such order, had it been possible to make one. The appeal should be allowed accordingly, the Court of Appeal’s order of 28 July 2008 for the examination and service out of the jurisdiction of Mr Khoury should be set aside and Master Miller’s order of 20 December 2007 restored. In these circumstances, the European issues considered in the Court of Appeal do not arise, and it is unnecessary to make any reference to the Court of Justice.

B. Sawant, J. The respondent-company M s. Somaiya Organics India Ltd. runs two Units, a Heavy Chemical factory at Barabankey and a Distillery at Captainganj. At the relevant time, the distillery unit employed about 175 workmen out of them according to the learned Counsel for the appellants, only 125 were regular workmen and the chemical factory employed 251 workmen. There is numberdispute that there is one balance-sheet for both the units though their profit and loss accounts are separate. There is also numberdispute that the distillery unit at the relevant time produced between 50,000 and 55,000 Ltrs of rectified spirit daily and the entire product was transferred to the chemical factory to be used there as raw material for production of Acetic Acid and Ethyl Acetate. It appears that the respondent-company, while it was running the distillery unit, had in 1971 purchased the chemical factory in question which was then run in the name of Shankar Distillery and Chemical Works. In the year 1968, the Heavy Chemical and Fertilizer Industries Wage Board had given an award fixing the wages in the Heavy chemical industry. After taking over the chemical factory, the respondent-company on July 28, 1973 entered into a settlement with the workmen of the said factory on the basis of that award. There is numberdispute further that some more settlements were entered into with the said workmen on the same basis from time to time. It appears that there was a tripartite settlement in respect of the workmen of the distilleries in the area which was numberified on January 8, 1974. It was valid for three years from that date and companyered about 35 distilleries in the region. The grievance of the workmen in the present distillery was that their distillery in fact, was a heavy chemical factory and hence they were number bound by the said tripartite settlement. On the other hand, they were entitled to the wages given by the respondent-company to their workmen in the chemical factory. They companytented that their distillery so-called was manufacturing rectified spirit which was an industrial alcohol and, therefore, a heavy chemical. Hence the settlements which were being entered into by the respondent-company with the workmen in the chemical factory on the basis of the award given by the Chemical and Fertilizer Industries Wage Board were applicable to them as well. They also companytended that there was admittedly a unity of ownership. There was also a functional unity between the distillery and the chemical factory since the entire product of the distillery was being used as a captive production by the chemical factory, as its raw material. Hence, they raised the industrial dispute to that effect on June 17, 1974 and eventually, the Government made a reference to the Industrial Tribunal on February 20, 1975. The terms of the reference read as follows Whether the employer should pay to the employees in Captainganj Distillery, Deoria, U.P., the same wages as were brought into effect in M s. Somaiya Organics India Ltd. by virtue of an agreement dated July 28, 1973. Before the Industrial Tribunal, a statement of claim was filed on behalf of the workmen in which it was stated that the workmen of the two units were transferable from one unit to the other and that the distillery unit was manufacturing rectified spirit which, before the transfer to the chemical factory was denatured. The Company filed two statements of reply one on behalf of the distillery and the other on behalf of the chemical factory. As regards the claim of the workmen that the workmen were transferable from one unit to the other, the reply filed on behalf of the distillery unit was silent. However, the reply on behalf of the chemical factory denied the said statement in the following vague terms- That the companytents of para 7 are number admitted as there mentioned. The fact, however, remains that with regard to the nature of the product manufactured at the distillery, there was numberdenial in either of the written statements. The said fact was number denied by the companypany even otherwise at any stage. The Tribunal did number record its finding on the question whether the product of the distillery was a heavy chemical or number and answered reference against the workmen on the ground that the two units were distinct and the workmen in the two units were governed by different awards and settlements for a long time. Shri Khera, learned Counsel appearing for the appellant-union, urged various grounds in support of his companytention that the workmen in the distillery were entitled to the same wages as paid to those in the chemical factory. We are, however, of the view that it is number necessary to go into all the said grounds, since one ground urged by him, namely, that the distillery in fact, belongs to the heavy chemical industry has numbersatisfactory answer from the respondent-Company. The Heavy Chemical and Fertilizer Industries Wage Board in its award has described rectified spirit as a heavy chemical. The Board in paragraph 3.2 of its report has also referred in this companynection to the opinion of the Directorate-General of Technical Development, Government of India, according to which any basic chemical produced in large quantities and in companymercial quality as distinct from C.P. or B.P. quality may be termed a heavy chemical. The Board has further stated that the criteria to be specified for material to be called heavy chemical are the following It should be a basic chemical for use as a raw material or essential material for other industries. It should be produced in bulk or in large tonnages. It should be low in price as the development of other industries depends on the cheap availability of this chemical. It should be of technical grade and need number be manufactured in a high state of purity. A particular industry may be companysidered as a Heavy Chemical Industry if it makes large tonnages of a technical grade basic chemical at low price for use as a raw material or essential material in other industries. In view of the number-controverted fact that the present distillery unit manufactures rectified spirit, the unit according to the above criteria, would belong to the Heavy chemical Industry. However, Mr. Nariman appearing for the respondent-company companytended that even according to the opinion given by the Directorate-General of Technical Development, the chemical must be produced in large quantities and according to the Wage Board, it should be produced in bulk, i.e. , in tonnages. According to him, the production of 50 tonnes per day cannot be said to be a production in large quantities. With respect to the learned Counsel, we are unable to agree with him. On the admitted fact that the production per day is atleast 50 tonnes, the annual production of the rectified spirit will be numberless than 12,500 tonnes. We are, therefore, of the view that the distillery unit properly belongs to the heavy chemical industry and number to the distillery industry which produces potable alcohol and is companyered by the tripartite settlement of January 8, 1974. Mr. Nariman then companytended that the tripartite settlement relating to the distillery industry was in operation in the present distillery unit from January 8, 1974 till January 7, 1977. During this period, it was number open for the appellant-union to raise an industrial dispute. Since the dispute was raised during the operation of the said settlement the reference of the dispute is itself illegal. In the view we have taken, namely that the present distillery properly belongs to the heavy chemical industry and number to the distillery industry, the said settlement did number companyer the workmen in question and hence it did number companye in their way in raising the present industrial dispute. Hence, this companytention must also fail. Mr. Nariman lastly companytended that the said settlement was never disowned by the appellant. The companyduct of the workmen itself negatives this companytention. The settlement was numberified on January 8, 1974 and within about six months thereafter the present dispute was raised on the ground that the workmen were properly companyered by the settlement which the Management had entered into with the workmen of the chemical factory. We are, therefore, unable to appreciate this companytention either.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 191 of 1955. Appeal by special leave from the judgment and decree dated July 31, 1953, of the Calcutta High Court in First Appeal No. 88 of 1950, arising out of the judgment and decree dated May 18, 1950, of the Arbitrator, 24-Parganas, Alipore, in L. Case No. 71 of 1944. V. Viswanatha Sastri and Naunit Lal, for the appellant. Sen, P. K. Ghose for P. K. Bose, for the respondent. 1958. December 16. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal pursuant to special leave granted by this Court against the judgment and order of the High Court of Calcutta varying the order of the arbitrator in regard to companypensation for companypulsory requisitioning of the premises in dispute. The appellant before us is the owner of the premises in dispute which at the relevant time companysisted of four storeys, the ground floor and three upper floors and the respondent is the State of West Bengal which was the opposite party before the arbitrator. This building No. 9 Chittaranjan Avenue was companystructed before July 28, 1940, and was taken on a registered lease for three years by the Bengal Central Public Works Division on a rental of Rs. 1,950 per mensem inclusive of taxes. On the termination of the lease the building was requisitioned by the West Bengal Government and taken possession of on July 30, 1943. The Land Acquisition Officer offered Rs. 2,200 per mensem inclusive of taxes in the form of rent as companypensation. As the appellant did number agree to this companypensation the matter was referred under s. 19 of the Defence of India Act to an arbitrator Mr. J. De. He held that Rs. 2,200 per mensem fixed by the Land Acquisition Collector was a fair companypensation. Against this order the appellant took an appeal to the High Court who set aside the order of the arbitrator, remanded the case to the arbitrator and laid down the following principle for the ascertainment of companypensation - therefore, in deciding upon a fair rent, for the purpose of section 23 of the Land Acquisition Act, it must be a numberional fair rent of a hypothetical tenant, and the assessment of such numberional fair rent must be based upon a companysideration which does number take into account restrictions temporarily imposed by any restrictive executive order or legislation like Rent Control Order, etc. The assessment in practice should be as if it was of a house of like nature let out for the first time to a tenant who is number companypelled to let it out. The practical method will be to assess rent as if it was a new house for the first time let out on that date . On remand the appellant who had previously claimed Rs. 3,998 as companypensation plus Rs. 125 for working and maintaining the lift, increased his demand to Rs. 7,700 per mensem exclusive of municipal taxes, and also Rs. 125 for the use of the lift. He stated in his application that the amount previously claimed by him was unduly low and was made through mistake and miscalculation and misconception of things and principle and moreover it was due to the want of proper information at the time . After the remand he examined further evidence and the respondent also examined some witnesses. The new arbitrator Mr. J. C. Mazumdar held that the matter must be decided according to the rent prevailing in the locality in 1943 for similar buildings with similar accommodation and amenities and proceeding on this basis he awarded companypensation of Rs. 2,581-8 per mensem inclusive of all taxes, companyt of numbermal and essential repair, companyt of the upkeep of the lift and potential value of the building in an important companymercial locality having regard to the fact that the period of requisition was indefinite. This sum was to be paid as from August 1, 1943. This order did number satisfy the appellant and against it he took an appeal to the High Court who fixed the companypensation at Rs. 16 per hundred sq. ft. for the ground floor and Rs. 13 per hundred sq. ft. for the 1st floor and Rs. 12 per hundred sq. ft. for the second floor and Rs. 11 per hundred sq. ft. for the third floor and thus calculating for the total floor area i.e. 5333 sq. ft. per floor it held the companypensation to be Rs. 2,773 per mensem. It rejected the additional award of 10 on account of potential value but allowed Rs. 77 per mensem on account of the lift and thus it awarded a total companypensation of Rs. 2,850 per mensem. The High Court however observed - We must make it clear further that in making the above calculation of the monthly companypensation at, Rs. 2,850 we have also taken into companysideration the additional advantages due to the special adaptability of the disputed premises for the purposes of the Controller of the Army Factory Accounts and his possible willingness to pay a somewhat higher rent for the same Vide 66 I.A. 104 . Against this judgment the appellant has brought this appeal by special leave. It was argued on behalf of the appellant that the method adopted by the High Court for arriving at the figure of companypensation was erroneous because it proceeded on wrong principles in that it took averages of rent paid for the premises No. 5 Chittaranjan Avenue and for No. 22 Chittaranjan Avenue and ignored the expert opinion of witness U. P. Malik according to which the rent for ground floor should have been Rs. 23 per hundred sq. ft. and Rs. 17-8 per hundred sq. ft. for other floors and also that the potentialities of the building had number been taken into companysideration. The High Court found that premises No. 22 Chittaranjan Avenue was a little better than the premises in dispute and they premises in dispute were somewhat better than the premises No. 5 Chittaranjan Avenue . In these circumstances it cannot be said that the High Court companymitted any error of principle in taking an average of the two premises No. 22 and 5 Chittaranjan Avenue. The evidence of U. P. Malik was merely an opinion unsupported by any reasons and in the circumstances of this base the High Court has rightly number placed any reliance upon it. It was then urged that the High Court had erred in taking into companysideration the rent payable for the premises No. 22 Chittaranjan Avenue, as recitals with regard to premises No. 22 in Ex. D, which was an award for premises No. 31 were inadmissible in evidence. This document has number been printed and we do number know what its companytents are or its language is. No objection was taken to its admissibility either before the arbitrator or before the High Court. It was referred to in the evidence of the witness for the respondent, Nanibhushan Sen Gupta who stated that Rs. 2,200 would be a fair rent -for the premises and in companying to this companyculsion he based his calculation it on the award in L. A. Case No. 61 of 1944 in respect of premises Nos. 22 and 31 Chittaranjan Avenue and Ex. D was the judgment of that case . In these circumstances numberobjection as to the admissibility of this document can be allowed to be raised at this stage. It was then argued that the High Court in arriving at the amount of companypensation had ignored the potential value of the premises in dispute in an important companymercial locality which the arbitrator Mr. J. C. Mazumdar had evaluated at 10 of the amount determined by him. This companytention is well founded. The High Court disallowed this award of 10 without assigning any reason. It saidand although we are number wholly accepting his additional award of 10 on account of so called potentialities, etc., including the lift, we are inclined to assess this further companypensation on account of the lift at Rs. 77 per month The principles on which companypensation is to be ascertained under the provisions of s. 19 of the Defence of India Act are the same as those given in s. 23 1 of the Land Acquisition Act, 1894, and one of the principles of ascertaining companypensation is to evaluate the potentialities of the land or the premises as the case may be which differ under different circumstances. The arbitrator in evaluating the potentialities said- In 1943, when the building was first requisitioned, the Controller of Army Factory Accounts had already his office in the neighbouring house of 5 Chittaranjan Avenue. This building had, therefore, a special value to the Controller as it would certainly be more advantageous to him if he companyld locate his office in the premises in question. This gave greater bargaining power to the landlord and, therefore, the potential value to him was greater. It has also been companyceded that the requisition is for an indefinite period. The Municipal assessment valuation Ex. B series was based purely upon the rental which the building was fetching prior to 1943 and did number take into account the potential value, the value which will be maintained for a long period of lease and the additional burden on the lift. For all these three factors, I allow an additional 10 p. c. companypensation of Rs. 234-12 As per mensem. The value of potentialities is to be ascertained by the arbitrator as best as he can from the materials before him. In Vyricherla Narayana Gajapatiraju v. The Revenue Divisional Officer 1 , Lord Romer said- The truth of the matter is that the value of the potentiality must be ascertained by the arbitrator on such materials as are available to him and without indulging in feats of the imagination. Another objection taken was in regard to companypensation for the lift. The High Court awarded Rs. 77 but on what basis it is number clear. In our opinion this claim of Rs. 125 per mensem was number excessive companysidering that two departments of the Government were using this lift, which is clear from the fact that an overhead bridge had been companystructed for going from 1 1939 L.R. 66 I.A. 104, 118. premises No. 9 Chittaranjan Avenue to the other building which the Government had also requisitioned. This will work out to Rs. 3,175. In the circumstances Rs. 3,200 per mensem would be a fair companypensation and we would therefore enhance the companypensation to that figure and the appeal would be allowed to that extent. Although the appellant has number succeeded in getting the whole-of his claim decreed, there is numberreason for depriving him of his companyts proportionate to his success.

Judgment of the Court of 18 May 1962. - "Geitling", Ruhrkohlen-Verkaufsgesellschaft mbH and others v High Authority of the European Coal and Steel Community. - Case no 13-60. European Court reports French edition Page 00165 Dutch edition Page 00171 German edition Page 00179 Italian edition Page 00167 English special edition Page 00083 Danish special edition Page 00317 Greek special edition Page 00701 Portuguese special edition Page 00047 Spanish special edition Page 00181 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords ++++ 1 . CARTELS - PRICES - POWER TO FIX PRICES AND POWER TO DETERMINE PRICES - PERMISSIBILITY OF THIS DISTINCTION - CONCEPTS ( ECSC TREATY, ARTICLE 65 ) 2 . COMMON MARKET FOR COAL AND STEEL - SYSTEM OF COMPETITION - IMPERFECT COMPETITION - CONDITIONAL ADMISSIBILITY ( ECSC TREATY, SECOND PARAGRAPH OF ARTICLE 2, ARTICLE 65 ( 2 ), ARTICLE 66 ( 2 )) 3 . CARTELS - AUTHORIZATION BY THE HIGH AUTHORITY - LIMITS - CONTROL OF MARKETING - CONCEPT ( ECSC TREATY, ARTICLE 65 ( 2 ) ( C )) 4 . CARTELS - AUTHORIZATION BY THE HIGH AUTHORITY - LIMITS - POWER TO DETERMINE PRICES WITHIN THE SCHEME OF THE TREATY - CONDITIONAL ADMISSIBILITY ( ECSC TREATY, ARTICLE 65 ( 2 ) ( C )) 5 . CARTELS - AUTHORIZATION BY THE HIGH AUTHORITY - LIMITS - POWER APPLICABLE TO A SUBSTANTIAL PART OF CERTAIN PRODUCTS WITHIN THE COMMON MARKET - CONCEPT ( ECSC TREATY, ARTICLES 2, 3, 4, 5, 65 ( 2 ) ( C ) ) Summary 1 . IN VIEW OF THE DIFFERENCE OF WORDING BETWEEN PARAGRAPHS ( 1 ) AND ( 2 ) OF ARTICLE 65 OF THE ECSC TREATY A BASIC DISTINCTION BETWEEN THE POWER TO FIX PRICES AND THE POWER TO DETERMINE PRICES IS PERMISSIBLE . FOR THE UNDERTAKING WHICH EXERCISES IT, THE POWER TO FIX PRICES REPRESENTS AN OBJECTIVE FACT ARISING OUT OF AN EASILY ASCERTAINABLE ORGANIZATIONAL STRUCTURE . ON THE OTHER HAND, THE POWER TO DETERMINE PRICES RESIDES IN THE POWER, GIVEN TO THE UNDERTAKING ENTITLED TO EXERCISE IT, TO ESTABLISH PRICES AT A LEVEL APPRECIABLY DIFFERENT FROM THAT AT WHICH THEY WOULD HAVE BEEN ESTABLISHED BY THE UNAIDED EFFECT OF COMPETITION . THUS A POWER TO DETERMINE PRICES CAN BE SAID TO EXIST ONLY WHEN IT IS ESTABLISHED THAT THE ACTUAL PRICES ARE, OR MAY BE, DIFFERENT FROM WHAT THEY WOULD HAVE BEEN IN THE ABSENCE OF ANY POWER TO FIX PRICES . 2 . IT FOLLOWS FROM THE PROVISIONS OF ARTICLE 65 ( 2 ) AND 66 ( 2 ) OF THE ECSC TREATY THAT THE TREATY IS NOT OPPOSED TO THE CONTINUED EXISTENCE OR TO THE CREATION OF LARGE PRODUCTION OR SALES UNITS, SUCH AS ARE CHARACTERISTIC OF THE COAL AND STEEL MARKET, ON CONDITION THAT THE RESULTING SYSTEM OF IMPERFECT COMPETITION SERVES THE OBJECTIVES OF THE TREATY AND, IN PARTICULAR, THAT IT SAFEGUARDS WITHIN THAT MARKET THE MEASURE OF COMPETITION ESSENTIAL FOR THE OBSERVANCE OF THE REQUIREMENTS OF THE SECOND PARAGRAPH OF ARTICLE 2 . 3 . A CARTEL WHICH HAS THE ABILITY TO REGULATE THE MARKETING OF A SUBSTANTIAL PART OF A GIVEN PRODUCT WITHIN THE COMMON MARKET EXERCISES A POWER OF CONTROL OVER MARKETING WITHIN THE MEANING OF ARTICLE 65 ( 2 ) ( C ) OF THE ECSC TREATY . 4 . BY PERMITTING THE CONTINUED EXISTENCE AND CREATION OF LARGE PRODUCTION AND SALES UNITS WITHIN THE COMMON MARKET FOR COAL AND STEEL, THE ECSC TREATY GRANTS THOSE WHO TAKE PART IN THIS MARKET A MEASURE OF POWER TO DETERMINE PRICES, WHICH IS, HOWEVER, LIMITED BY PROVISIONS SUCH AS THOSE OF ARTICLE 65 ( 2 ) ( C ) WHICH ARE INTENDED TO SAFEGUARD A NECESSARY MINIMUM OF COMPETITION . 5 . A POWER TO DETERMINE PRICES OR TO CONTROL MARKETING APPLIES TO A SUBSTANTIAL PART OF CERTAIN PRODUCTS WITHIN THE COMMON MARKET WHEN THE FULL EXTENT OF THE EFFECTS WHICH IT PRODUCES IS NOT OF SECONDARY OR MINOR IMPORTANCE, BUT IS SUCH AS TO JEOPARDIZE, WITHIN THE SAID MARKET, THE MEASURE OF COMPETITION INTENDED BY THE TREATY OR THE EXECUTION OF THE TASKS WHICH ARTICLES 2, 3, 4 AND 5 ASSIGN TO THE COMMUNITY . Parties IN CASE 13/60 1 . 'GEITLING' RUHRKOHLEN-VERKAUFSGESELLSCHAFT MBH, REPRESENTED BY ITS MANAGERS AT ESSEN, FRAU-BERTHA-KRUPP-STRASSE 4, 2 . 'MAUSEGATT' RUHRKOHLEN-VERKAUFSGESELLSCHAFT MBH, REPRESENTED BY ITS MANAGERS AT ESSEN, FRAU-BERTHA-KRUPP-STRASSE 4, 3 . 'PRASIDENT' RUHRKOHLEN-VERKAUFSGESELLSCHAFT MBH, REPRESENTED BY ITS MANAGERS AT ESSEN, FRAU-BERTHA-KRUPP-STRASSE 4, 4 . THE FOLLOWING MINING COMPANIES OF THE RUHR BASIN, AFFILIATED TO AND REPRESENTED BY THE ABOVE MARKETING COMPANIES, ACTING ALSO IN THEIR CAPACITY AS MEMBERS OF THE 'RUHRKOHLE VERKAUFSGESELLSCHAFT MBH', A COMPANY IN THE COURSE OF FORMATION, GEWERKSCHAFT AUGUSTE VICTORIA, MARL-HULS, DEUTSCHE ERDOL-AKTIENGESELLSCHAFT STEINKOHLENBERGWERK GRAF BISMARCK, GELSENKIRCHEN, CONCORDIA BERGBAU-AKTIENGESELLSCHAFT, OBERHAUSEN, HUTTEN-UND BERGWERKE RHEINHAUSEN AKTIENGESELLSCHAFT, ESSEN, BERGWERKSGESELLSCHAFT DAHLBUSCH, GELSENKIRCHEN, EMSCHER-LIPPE BERGBAU-AKTIENGESELLSCHAFT, DATTELN, ESSENER STEINKOHLENBERGWERKE AKTIENGESELLSCHAFT IN VERTRETUNG DER MANNESMANN AKTIENGESELLSCHAFT, ESSEN, EWALD-KOHLE AKTIENGESELLSCHAFT, RECKLINGHAUSEN, GEWERKSCHAFT DES STEINKOHLENBERGWERKS HAUS ADEN, RECKLINGHAUSEN, ILSEDER HUTTE, STEINKOHLENBERGWERKE FRIEDRICH DER GROSSE, HERNE, STEINKOHLENBERGWERK FRIEDRICH HEINRICH AKTIENGESELLSCHAFT, KAMP-LINTFORT, KREIS MOERS, HARPENER BERGBAU-AKTIENGESELLSCHAFT, DORTMUND, HEINRICH BERGBAU AKTIENGESELLSCHAFT, ESSEN-KUPFERDREH, STEINKOHLENBERGWERK HEINRICH ROBERT AKTIENGESELLSCHAFT, HERRINGEN B . HAMM, BERGWERKSGESELLSCHAFT HIBERNIA AKTIENGESELLSCHAFT, HERNE, HOESCH AKTIENGESELLSCHAFT, DORTMUND, GELSENKIRCHENER BERGWERKS-AKTIENGESELLSCHAFT, ESSEN, HANSA BERGBAU AKTIENGESELLSCHAFT, DORTMUND, CAROLINENGLUCK BERGBAU AKTIENGESELLSCHAFT, BOCHUM, GRAF MOLTKE BERGBAU AKTIENGESELLSCHAFT, GELSENKIRCHEN, HAMBORNER BERGBAU AKTIENGESELLSCHAFT, DUISBURG-HAMBORN, FRIEDRICH THYSSEN BERGBAU AKTIENGESELLSCHAFT, DUISBURG-HAMBORN, GEWERKSCHAFT ALTE HAASE, SPROCKHOVEL, KLOCKNER-BERGBAU KONIGSBORN - WERNE AKTIENGESELLSCHAFT, UNNA-KONIGSBORN, LANGENBRAHM STEINKOHLENBERGBAU AKTIENGESELLSCHAFT, ESSEN, BERGBAU AKTIENGESELLSCHAFT LOTHRINGEN, BOCHUM, STEINKOHLENBERGWERK MANSFELD GMBH, BOCHUM-LANGENDREER, MARKISCHE STEINKOHLENGEWERKSCHAFT, HESSEN B . HAMM, STEINKOHLENBERGWERKE MATHIAS STINNES AKTIENGESELLSCHAFT, ESSEN, HUTTENWERK OBERHAUSEN AKTIENGESELLSCHAFT, OBERHAUSEN, NIEDERRHEINISCHE BERGWERKS-AKTIENGESELLSCHAFT, DUSSELDORF, GEWERKSCHAFT PETRUS SEGEN, NIEDERSTUTER UBER HATTINGEN, RHEINPREUSSEN AKTIENGESELLSCHAFT FUR BERGBAU UND CHEMIE, HOMBERG/NIEDERRHEIN, RHEINSTAHL BERGBAU AKTIENGESELLSCHAFT, ESSEN, GEBRUDER STUMM GESELLSCHAFT MIT BESCHRANKTER HAFTUNG ZECHE MINISTER ACHENBACH, BRAMBAUER/WESTFALEN, KLOCKNER - WERKE AKTIENGESELLSCHAFT BERGBAU VICTOR-ICKERN, CASTROP-RAUXEL, BERGWERKSGESELLSCHAFT WALSUM MIT BESCHRANKTER HAFTUNG, WALSUM/NIEDERRHEIN, STEINKOHLENBERGWERK WESTFALEN AKTIENGESELLSCHAFT, AHLEN, JOINTLY REPRESENTED BY MR WERNER VON SIMSON, ADVOCATE OF THE DUSSELDORF OBERLANDESGERICHT, AND MR HANS HENGELER, ADVOCATE OF THE DUSSELDORF LANDGERICHT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MR WERNER VON SIMSON AT BERTRANGE, APPLICANTS, SUPPORTED BY THE GOVERNMENT OF THE LAND OF NORTH RHINE-WESTPHALIA, REPRESENTED BY ITS MINISTER OF ECONOMICS AND TRANSPORT, ASSISTED BY DR JOSEPH H . KAISER, PROFESSOR AT THE UNIVERSITY OF FREIBURG IM BREISGAU, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MR WERNER VON SIMSON AT BERTRANGE, INTERVENER, V HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, DR HEINRICH MATTHIES, ACTING AS AGENT, ASSISTED BY DR ERNST JOACHIM MESTMACKER, PROFESSOR AT THE UNIVERSITY OF SAARBRUCKEN, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT, Subject of the case APPLICATION FOR THE ANNULMENT OF DECISION N . 16/60 OF THE HIGH AUTHORITY OF 22 JUNE 1960 ( OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES N . 47 OF 23 JULY 1960 ), REFUSING THE APPLICANTS AUTHORITY TO FORM A SINGLE MARKETING COMPANY, THE 'RUHRKOHLE VERKAUFSGESELLSCHAFT MIT BESCHRANKTER HAFTUNG', FOR THE SALE OF THEIR COAL PRODUCTS, Grounds P . 99 ADMISSIBILITY NO OBJECTION HAS BEEN RAISED AS TO THE ADMISSIBILITY OF APPLICATION 13/60, AND NO GROUNDS EXIST FOR THE COURT TO RAISE THE MATTER OF ITS OWN MOTION . DECISION N . 16/60, THE ANNULMENT OF WHICH IS REQUESTED, IS AN INDIVIDUAL DECISION . SINCE IT AROSE OUT OF A REQUEST MADE BY THE APPLICANTS, IT IS A MATTER WHICH IS OF CONCERN TO THEM . THE INTERVENTION OF THE LAND OF NORTH RHINE - WESTPHALIA WAS ALLOWED BY AN ORDER OF THE COURT OF 3 MAY 1961, AND SATISFIES THE REQUIREMENTS OF ARTICLE 34 OF THE PROTOCOL ON THE STATUTE OF THE COURT OF JUSTICE . P . 100 FOR THESE REASONS APPLICATION 13/60 AND THE INTERVENTION ARISING FROM IT ARE ADMISSIBLE . ON THE SUBSTANCE 1 . THE SUBMISSIONS OF THE PARTIES THE APPLICANTS REQUEST THE ANNULMENT OF DECISION N . 16/60 ON THE GROUNDS OF INSUFFICIENCY OF REASONS, ERRONEOUS FINDINGS OF FACT, MISINTERPRETATION AND MISAPPLICATION OF THE TREATY AND MISUSE OF POWERS . IN THE REPLY THEY STATED THAT 'IT IS NO LONGER NECESSARY TO PURSUE THE SUBMISSION OF A MISUSE OF POWER '. IT WILL THEREFORE NOT BE DEALT WITH IN THIS JUDGMENT . THE FIRST SUBMISSION COMES UNDER THE HEAD OF 'INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT' AND THE SECOND AND THIRD SUBMISSIONS UNDER THAT OF 'INFRINGEMENT OF THIS TREATY OR OF ANY RULE OF LAW RELATING TO ITS APPLICATION '. IN THIS JUDGMENT THEY WILL BE DEALT WITH SEPARATELY UNDER THESE TWO HEADS BUT IN REVERSE ORDER TO THAT GIVEN ABOVE . 2 . RESPECTIVE POSITIONS OF THE HIGH AUTHORITY AND OF THE COURT WITH REGARD TO ARTICLE 65 OF THE TREATY ARTICLE 65 ( 2 ) STIPULATES THAT THE HIGH AUTHORITY MAY AUTHORIZE CERTAIN AGREEMENTS IF IT FINDS THAT THEY FULFIL THE CONDITIONS LAID DOWN IN THE TREATY . THIS WORDING STRICTLY LIMITS THE SUBJECT MATTER OF THE PRESENT ACTION CONCERNING ESSENTIALLY THE VALIDITY, WITH REGARD TO THE TREATY, OF THE REASONS WHICH LED THE HIGH AUTHORITY TO FIND THAT THE AUTHORIZATION OF A JOINT-SELLING AGENCY, AS SOUGHT BY THE APPLICANTS ON 20 MAY 1960, COULD NOT BE GRANTED . THESE REASONS ARE SET OUT IN DECISION N . 16/60 OF 22 JUNE 1960 . 3 . INFRINGEMENT OF THE TREATY UNDER THIS HEADING THE APPLICANTS PUT FORWARD TWO COMPLAINTS : FIRST, INACCURATE INTERPRETATION AND APPLICATION OF THE TREATY; SECOND, INACCURACIES IN THE FINDINGS OF FACT . UNDER THE FIRST HEADING THEY MAINTAIN THAT THERE HAS BEEN AN EVIDENT MISINTERPRETATION OF THE TREATY'S PROVISIONS . A - MISINTERPRETATION AND MISAPPLICATION OF THE TREATY THE APPLICANTS COMPLAIN THAT THE HIGH AUTHORITY 'INTERPRETED AND APPLIED IN A MANNER THAT WAS WRONG IN LAW ': P . 101 ( A ) THE CONCEPT OF 'THE POWER TO DETERMINE PRICES'; ( B ) THE CONCEPT OF 'THE CONTROL OF MARKETING'; ( C ) THE CONCEPT OF 'A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET '. ( A ) THE CONCEPT OF 'THE POWER TO DETERMINE PRICES' BOTH THE APPLICANTS AND THE INTERVENER STATE THAT IN THE PARTICULAR CIRCUMSTANCES OF TIME AND PLACE IN WHICH THE PROBLEM BEFORE THE COURT MUST BE SEEN, THERE EXISTS A PROFOUND DIFFERENCE BETWEEN THE POWER TO FIX AND THE POWER TO DETERMINE PRICES . THIS ASSERTION IS EXPRESSED ABOVE ALL IN THE APPLICATION IN THE FOLLOWING FORM : 'A PERSON WHO MERELY FORMULATES THE EFFECTS OF MOVEMENTS OF THE MARKET ON PRICE LEVELS DOES IN FACT FIX PRICES, BUT CANNOT DETERMINE THEM . IT IS NOT THIS FIXING OF PRICES IN THE FORMAL SENSE WHICH ARTICLE 65 ( 2 ) ( C ) PROHIBITS, BUT RATHER THE EFFECTIVE POWER WHICH ALLOWS DETERMINATION OF PRICES INDEPENDENTLY OF MOVEMENTS OF THE MARKET '. FROM THE APPLICANTS' POINT OF VIEW, EVEN IF THE SINGLE SALES ORGANIZATION, REFERRED TO IN THIS CASE, HAS THE POWER TO FIX PRICES, IT CANNOT HAVE THE POWER TO DETERMINE THEM IF IT IS OBLIGED TO ALIGN ITS PRICES POLICY ON THE PRICES OF COMPETING PRODUCTS, NOTABLY, IN THIS CASE, THE PRICES OF COAL IMPORTED FROM THIRD COUNTRIES AND OF FUEL OILS . THE HIGH AUTHORITY CONSIDERS, ON THE CONTRARY, THAT A JOINT-SELLING ORGANIZATION GIVES THE PARTIES CONCERNED THE POWER TO DETERMINE PRICES . THIS DIFFERENCE OF INTERPRETATION IS AT THE BASIS OF THE PRESENT LITIGATION . IN ORDER TO ASSESS THE COMPARATIVE MERITS OF THE OPPOSING CONTENTIONS IT IS NECESSARY TO MAKE SOME ELABORATION OF THE SUBTLE DISTINCTION, IN WHICH THE APPLICANTS' PRINCIPAL ARGUMENT RESIDES, BETWEEN THE 'POWER TO FIX PRICES' AND THE 'POWER TO DETERMINE PRICES '. SUCH A DISTINCTION IS NOWHERE EXPLAINED IN THE TREATY OR IN THE DOCUMENTS PUBLISHED AT THE TIME OF ITS RATIFICATION . AN EXAMINATION OF THE MEANING OF THE WORDS 'FIXER' ( FIX ) AND 'DETERMINER' ( DETERMINE ) FURNISHES NO DECISIVE GROUNDS FOR THIS DISTINCTION . ALTHOUGH ARTICLE 65 ( 1 ) PROHIBITS ALL AGREEMENTS TENDING TO FIX OR DETERMINE PRICES, ARTICLE 65 ( 2 ) PERMITS THE HIGH AUTHORITY TO AUTHORIZE, IN SOME CIRCUMSTANCES, CERTAIN AGREEMENTS, PROVIDED IN PARTICULAR THAT THEY ARE NOT LIABLE TO GIVE THE UNDERTAKINGS THE POWER TO DETERMINE PRICES . THE DIFFERENCE IN WORDING BETWEEN ARTICLE 65 ( 1 ) AND ( 2 ) REQUIRES AN EXPLANATION, WHICH THE DISTINCTION ASSERTED BY THE APPLICANTS IS ABLE TO PROVIDE . P . 102 ALTHOUGH CLEARLY THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY CANNOT PROVIDE A DECISIVE ANSWER IN THE PRESENT CASE, IT DOES GIVE SOME INDIRECT SUPPORT TO THE APPLICANTS' ARGUMENT, IN SO FAR AS ARTICLE 85 ( 3 ) OF THAT TREATY, WHICH DEALS WITH MATTERS ANALOGOUS TO THOSE GOVERNED BY ARTICLE 65 OF THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY, DOES NOT REQUIRE THAT AGREEMENTS CAPABLE OF QUALIFYING FOR AUTHORIZATION MUST NOT CONFER ON UNDERTAKINGS THE POWER TO DETERMINE PRICES, BUT PROVIDES THAT THEY MUST NOT AFFORD THEM THE POSSIBILITY OF ELIMINATING COMPETITION IN RESPECT OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION '. IF IT IS ACCEPTED THAT A COMMON INTENTION INSPIRED THE DRAFTING OF ARTICLE 65 OF THE ECSC TREATY AND ARTICLE 85 OF THE EEC TREATY, THE POWER TO DETERMINE PRICES WOULD BE MORE OR LESS EQUIVALENT TO THE POWER ENJOYED BY UNDERTAKINGS UNDER A SYSTEM WHERE COMPETITION HAD BEEN ELIMINATED . THIS IS CLEARLY THE APPLICANT'S ARGUMENT . THIS INTERPRETATION OF THE EXPRESSION 'POWER TO DETERMINE PRICES' IS SUPPORTED BY ARTICLE 2 OF THE TREATY, WHICH REQUIRES THAT THE COMMUNITY SHALL 'PROGRESSIVELY BRING ABOUT CONDITIONS WHICH WILL OF THEMSELVES ENSURE THE MOST RATIONAL DISTRIBUTION OF PRODUCTION AT THE HIGHEST POSSIBLE LEVEL OF PRODUCTIVITY .' IT IS AGAIN SUPPORTED IN ARTICLE 5, WHERE THE COMMUNITY IS ENJOINED TO 'ENSURE THE ESTABLISHMENT, MAINTENANCE AND OBSERVANCE OF NORMAL COMPETITIVE CONDITIONS '. IN THE LIGHT OF THESE CONSIDERATIONS, THE APPLICANTS APPEAR TO BE JUSTIFIED IN THEIR ARGUMENTS IN FAVOUR OF A DISTINCTION IN PRINCIPLE BETWEEN 'POWER TO FIX PRICES' AND 'POWER TO DETERMINE PRICES '. FOR THE UNDERTAKING WHICH IS IN A POSITION TO EXERCISE IT, THE POWER TO FIX PRICES IS AN OBJECTIVE FACT ARISING OUT OF AN EASILY PERCEPTIBLE ORGANIZATIONAL STRUCTURE . THE POWER TO DETERMINE PRICES, HOWEVER, RESIDES IN A POWER, GIVEN TO THE UNDERTAKING IN A POSITION TO EXERCISE IT, TO ESTABLISH PRICES AT A LEVEL APPRECIABLY DIFFERENT FROM THAT WHICH WOULD BE ESTABLISHED BY THE EFFECT OF COMPETITION ALONE . THUS, TO SHOW THE EXISTENCE OF A POWER TO DETERMINE PRICES, IT IS NECESSARY TO ESTABLISH THAT THE ACTUAL PRICES ARE, OR COULD BE, DIFFERENT FROM WHAT THEY WOULD HAVE BEEN IN THE ABSENCE OF ANY POWER TO FIX PRICES . SUCH A PROPOSITION INVOLVES A SUBTLE COMPARISON BETWEEN THE ACTUAL AND THE POTENTIAL, OF A KIND WHICH MUST REST TO A CONSIDERABLE EXTENT ON INFORMED SPECULATION . THE HIGH AUTHORITY MADE SUCH A COMPARISON WHEN CONSIDERING THE APPLICANTS' REQUEST FOR AUTHORIZATION OF 20 MAY 1960, AND IN THE PREAMBLE TO DECISION N . 16/60 IT STATED THE REASONS WHICH CAUSED IT TO FIND THAT THE POWER TO FIX PRICES RESULTING FROM THE EXISTENCE OF THE JOINT-SELLING ORGANIZATION WITH WHICH THE PRESENT APPLICATION IS CONCERNED, WAS EQUIVALENT TO A POWER TO DETERMINE PRICES . P . 103 IT IS, THEREFORE, APPROPRIATE TO EXAMINE THE VALIDITY OF THESE REASONS IN THE LIGHT OF THE TREATY . IT IS NOT DISPUTED THAT A JOINT SELLING ORGANIZATION ENABLES THOSE WHO CONTROL IT TO EXERCISE A LIMITED INFLUENCE UPON PRICES AND TO WARD OFF THE DANGER OF DESTRUCTIVE COMPETITION ( REQUEST OF 20 MAY 1960, P . 25 ), BY MEANS OF IMPOSING UPON ALL THE UNDERTAKINGS UNDER THEIR CONTROL, SUBJECT TO CERTAIN RESERVATIONS, A UNIFORM LIST OF PRICES . THIS IS STATED MORE PRECISELY IN THE APPLICATION ( PARAGRAPH 39 ): 'A JOINT SELLING ORGANIZATION HAS, OF COURSE, BY ITS VERY NATURE THE DUTY TO SUBSTITUTE ITSELF FOR THE INDIVIDUAL MEMBERS OF THE CARTEL ... IN ORDER TO PREVENT COMPETITION BETWEEN THE PRICES CHARGED BY MEMBERS OF THE CARTEL .' THE SAME CONTENTION IS STRESSED IN THE APPLICANTS' REPLY ( PARAGRAPH 86 ): 'NATURALLY IT IS TRUE THAT AFTER THE AMALGAMATION INTO A JOINT-SELLING AGENCY...PRICE COMPETITION BETWEEN MEMBERS OF THE CARTEL DISAPPEARS .' ( THE WORD 'BETWEEN' IS UNDERLINED IN THE TEXT .) THIS ELIMINATION OF COMPETITION BETWEEN MEMBERS OF THE CARTEL IS THE INTERNAL EFFECT OF THE AGREEMENT . THROUGH THE ELIMINATION OF COMPETITION BETWEEN ITS MEMBERS, PRICES WITHIN THE CARTEL ARE FREED NOT ONLY FROM 'DESTRUCTIVE' COMPETITION BUT ALSO FROM THE PRESSURE OF COMPETITION WHICH WOULD OTHERWISE HAVE BEEN EXERTED BY THOSE PRODUCERS WITH THE LOWEST PRODUCTION COSTS AGAINST THOSE WHO HAVE, FOR WHATEVER REASON, HIGHER PRODUCTION COSTS . ON THIS POINT THE COURT ACCEPTS THE OPINION OF THE HIGH AUTHORITY TO THE EFFECT THAT THE JOINT-SELLING AGREEMENT, 'ACCORDING TO THE VERY TERMS USED BY THE APPLICANTS BOTH IN THEIR REQUEST AND IN THEIR APPLICATION...GIVES THEM THE OPPORTUNITY TO FIX OR TO MAINTAIN, IN THEIR PRINCIPAL SALES AREA, LIST PRICES WHICH DIFFER FROM WHAT THEY WOULD HAVE BEEN IN THE ABSENCE OF A CARTEL AGREEMENT,...AND WHICH GUARANTEE PROTECTION OF THEIR PRICES TO THE UNDERTAKINGS CONCERNED IN ORDER THAT THEY MAY BE FREE TO CARRY OUT RE-ADAPTATION MEASURES .' ( STATEMENT OF DEFENCE, PARAGRAPH 19 ). P.104 THE USE OF THIS POWER IS OBVIOUSLY SUBJECT TO EXTERNAL COMPETITION, TO BE EXAMINED LATER, BUT, WITH THAT RESERVATION, IT INVOLVES A CERTAIN POWER TO DETERMINE PRICES . SUCH POWER WILL BE EFFECTIVE IN SO FAR AS IT ELIMINATES THE COMPETITIVE PRESSURE WHICH WOULD HAVE REDUCED LIST PRICES - THAT IS TO SAY, THEREFORE, IN SO FAR AS THE PROCEDURE OF JOINT SELLING MAKES IT POSSIBLE TO NEUTRALIZE THE EFFECT WHICH WOULD HAVE BEEN EXERTED BY OFFERS FROM THOSE MEMBER PRODUCERS OF THE JOINT-SELLING AGENCY WHO ENJOY THE LOWEST PRODUCTION COSTS . SUBJECT TO THE RESULTS OF AN EXAMINATION OF THE EFFECTS OF EXTERNAL COMPETITION JUST MENTIONED, IT CANNOT BE DENIED THAT THE INTERNAL EFFECT OF THE JOINT-SELLING ORGANIZATION INVOLVES A CERTAIN POWER TO DETERMINE PRICES, AND THAT THE EXTENT OF SUCH A POWER NATURALLY DEPENDS UPON THE VOLUME OF PRODUCTION UNDER ITS CONTROL . TO OBTAIN SOME IDEA OF THIS VOLUME IT IS SUFFICIENT TO NOTE, WITHOUT HERE MAKING THE DISTINCTION BETWEEN QUANTITIES PRODUCED AND QUANTITIES SOLD ( THIS DISTINCTION WILL BE MADE IN PARAGRAPH ( C ) BELOW ), THAT THE RUHR VALLEY PRODUCED, IN 1960, 115 441 000 METRIC TONS OF COAL ( THE HIGH AUTHORITY'S STATISTICAL BULLETIN, 9TH YEAR, N . 4 OCT/DEC . 1961, TABLE C, PP . 4 AND 5 ). THIS WAS PRODUCED ALMOST ENTIRELY BY THE THIRTY-EIGHT MINING COMPANIES WHICH ARE MEMBERS OF THE JOINT-SELLING ORGANIZATION . THESE FIGURES SHOW THE EXTENT OF INTERNAL COMPETITION ELIMINATED BY THIS JOINT-SELLING ORGANIZATION IN THE RUHR VALLEY . THE FOREGOING IS ENOUGH TO SHOW THAT THE HIGH AUTHORITY WAS JUSTIFIED IN FINDING THAT THIS ORGANIZATION, BY FIXING, SUBJECT TO CERTAIN CONDITIONS, THE LIST PRICES APPLIED BY THE UNDERTAKINGS UNDER ITS CONTROL, HAD TO SOME EXTENT THE POWER TO DETERMINE PRICES . HOWEVER, SUCH A POWER WOULD REMAIN PURELY POTENTIAL IF THE COMPETITION FROM COAL FROM OTHER COALFIELDS WITHIN THE COMMUNITY, COAL FROM THIRD COUNTRIES AND FROM FUEL-OIL, OBLIGED THE JOINT-SELLING ORGANIZATION TO FIX ITS LIST PRICES BELOW THE LOWEST LEVEL AT WHICH THEY WOULD HAVE BEEN FIXED UNDER THE ORDINARY MUTUAL COMPETITION BETWEEN RUHR VALLEY UNDERTAKINGS, IF THIS COMPETITION HAD NOT BEEN ELIMINATED BY THE JOINT-SELLING ORGANIZATION . IT IS, THEREFORE, APPROPRIATE TO EXAMINE THE EFFECTS OF THIS EXTERNAL COMPETITION . THIS WAS DONE BY THE HIGH AUTHORITY IN PARAGRAPHS ( B ) ( C ) AND ( D ) OF ITS DECISION N . 16/60 . IN PARAGRAPH ( B ) OF RECITAL N . 12 OF THE PREAMBLE TO THAT DECISION, THE HIGH AUTHORITY LISTS THE REASONS FOR WHICH IT FOUND THAT THE POWER OF THE JOINT-SELLING ORGANIZATION TO DETERMINE PRICES WAS NOT EXCLUDED BY COMPETITION FROM OTHER UNDERTAKINGS WITHIN THE COMMUNITY . THIS CONCLUSION IS CORROBORATED BY THE VERY STRUCTURE OF THE RUHR VALLEY COALFIELD . IN FACT, ALL UNDERTAKINGS PRODUCING HEAVY GOODS ENJOY, IN PRINCIPLE AND SUBJECT TO CERTAIN RESERVATIONS WITH REGARD TO COMPETITION FROM GOODS WHICH ARE LIGHTER OR LESS COSTLY TO PRODUCE, A MARGIN OF GEOGRAPHIC PROTECTION WITHIN WHICH THEY HAVE THE POWER TO DETERMINE PRICES . THE PROXIMITY BETWEEN PRODUCERS AND CONSUMERS OF FUEL IN THE RUHR VALLEY GIVES TO THE FORMER AN APPRECIABLE PROTECTION AGAINST MANY OTHER PRODUCERS IN THE COMMUNITY . THE ARGUMENT OF THE HIGH AUTHORITY, ACCORDING TO WHICH 'IT WOULD NOT APPEAR THAT SO FAR THE UNDERTAKINGS OF THE RUHR COALFIELD HAVE FOLLOWED THE PRICE FLUCTUATIONS OF OTHER UNDERTAKINGS WITHIN THE COMMUNITY FOR THE PURPOSE OF FIXING THEIR PRICE LEVELS, BUT THAT ON THE CONTRARY IT CAN BE SHOWN THAT THE PRICES OF RUHR VALLEY COAL HAVE AN APPRECIABLE EFFECT UPON CALCULATION OF PRICES IN THE NEIGHBOURING COALFIELDS OF THE COMMUNITY,' RAISES A PRESUMPTION IN FAVOUR OF THE EXISTENCE OF A POWER TO DETERMINE PRICES . THE ARGUMENT OF THE APPLICANTS, THAT IF THE PRICE LISTS OF THE RUHR HAVE NOT BEEN REDUCED OR ALIGNED ON THE PRICE LEVELS OF COMPETING PRODUCTS 'THIS IS BECAUSE THEY ARE VIRTUALLY WITHOUT EXCEPTION THE LOWEST PRICES IN THE COMMON MARKET' ( APPLICATION, PARAGRAPH 35 ), IF CORRECT, GIVES RISE TO THE PRESUMPTION THAT, WHATEVER THE CAUSE, THE PRODUCTS OF THE RUHR ARE NOT IN IMMEDIATE DANGER FROM COMPETITION FROM THE OTHER COALFIELDS OF THE COMMUNITY . THIS CONCLUSION IS CONFIRMED BY THE VOLUME OF SALES OF RUHR COAL IN ITS PRINCIPAL SALES AREA . IN 1959 THESE AMOUNTED TO 88.4 MILLION METRIC TONS OF COAL OR COAL EQUIVALENTS, INCLUDING AMOUNTS SUPPLIED FOR THE NEEDS OF THE COLLIERIES THEMSELVES, OUT OF 120.9 MILLION METRIC TONS, WHICH IS THE TOTAL COAL CONSUMPTION OF THE FEDERAL REPUBLIC OF GERMANY - IN ALL 73.1 %. THE UNQUESTIONED FACT THAT THE RUHR VALLEY UNDERTAKINGS HAVE SCARCELY MADE ANY USE OF THEIR POWER TO ALIGN THEIR PRICES ON THOSE OF OTHER UNDERTAKINGS IN THE COMMUNITY LENDS FORCE TO THE PRECEDING ARGUMENT . IN PARAGRAPH ( C ) OF RECITAL N . 12 OF THE PREAMBLE TO DECISION N . 16/60, THE HIGH AUTHORITY STATES THE REASONS WHICH LED IT TO FIND THAT THE COMPETITION FROM COAL FROM THIRD COUNTRIES, HOWEVER APPRECIABLE, DOES NOT CONSTITUTE AN IMMOVABLE BARRIER DEPRIVING THE JOINT-SELLING ORGANIZATION OF THE RUHR COALMINING COMPANIES OF A MEASURE OF FLEXIBILITY IN ITS PRICE POLICY . ALTHOUGH THERE IS SOME DIFFERENCE OF OPINION BETWEEN THE PARTIES AS TO THE CALCULATION OF THE RATIO BETWEEN TONNAGES IMPORTED FROM THIRD COUNTRIES INTO THE APPLICANTS' PRINCIPAL SALES AREA, THAT IS TO SAY THE FEDERAL REPUBLIC OF GERMANY, AND THE TONNAGES OF COAL PRODUCED BY THE APPLICANTS - ACCORDING TO THE HIGH AUTHORITY 6.3%, AS AGAINST MORE THAN 15% ACCORDING TO THE APPLICANTS - JUST AS THERE IS DISAGREEMENT AS TO THE BASIS TO BE USED FOR ASSESSING THE SIGNIFICANCE OF THESE FIGURES, NONETHELESS IT IS CLEAR THAT THESE FIGURES DO NOT SUPPORT THE VIEW THAT COAL IMPORTED FROM THIRD COUNTRIES HAS AN IRRESISTIBLE EFFECT UPON THE MARKETS FOR RUHR COAL WITHIN ITS PRINCIPAL SALES AREAS . P . 106 THIS SITUATION IS DUE BOTH TO THE GOEGRAPHIC PROTECTION WHICH THE MAJORITY OF THESE SALES AREAS AFFORD TO THE RUHR AS OPPOSED TO MOST OF THE SOURCES OF PRODUCTION IN THIRD COUNTRIES, AND TO THE CUSTOMS DUTIES IMPOSED BY THE GOVERNMENT OF THE FEDERAL REPUBLIC ON COAL IMPORTED FROM THIRD COUNTRIES . THE HIGH AUTHORITY RIGHTLY OBSERVES THAT, IN SO FAR AS ANY SYSTEMATIC PRICE POLICY PRACTISED BY PRODUCERS IN THIRD COUNTRIES DID NOT TAKE ACCOUNT OF THE MARKET SITUATION AND THE SITUATION WITH REGARD TO PRODUCTION COSTS, SUCH DANGERS COULD BE COUNTERED BY MEASURES OF COMMERCIAL POLICY . EVEN BEFORE A CUSTOMS DUTY ON COAL ORIGINATING IN THIRD COUNTRIES WAS INTRODUCED BY THE FEDERAL REPUBLIC OF GERMANY, THE SELLING PRICES OF RUHR COAL HAD NOT BEEN DIRECTLY DETERMINED BY THOSE OF COMPARABLE IMPORTED COAL . THIS SHOWS THAT THE POWER TO ALIGN PRICES ON THOSE OF PRODUCTS IMPORTED FROM THIRD COUNTRIES GIVES THE JOINT-SELLING ORGANIZATION, WITH WHICH THE PRESENT APPLICATION IS CONCERNED, THE MEANS TO DEFEND ITS POSITION WITHOUT ALTERING ITS PRICE LISTS THROUGHOUT ITS ENTIRE SALES AREA . THE EQUALIZATION, WITHIN A POWERFUL JOINT - SELLING ORGANIZATION, OF DIMINISHING RETURNS AS A RESULT OF PRICE ALIGNMENTS AND OTHER COMPETITIVE MEASURES, MULTIPLIES THE OPPORTUNITIES PROVIDED BY THESE MEASURES OF DIRECTING COMPETITION, SINCE IT ALLOWS THE SELECTION IN EACH CASE OF THE MINE MOST FAVOURABLY PLACED FOR MAKING THE DELIVERY FROM THE POINT OF VIEW OF TYPE OF COAL AND TRANSPORT COSTS . FOR ALL THESE REASONS THE HIGH AUTHORITY WAS JUSTIFIED IN FINDING THAT THE JOINT-SELLING AGREEMENT GIVES THE PARTIES TO IT SUCH EXTENSIVE OPPORTUNITIES FOR DIRECTING COMPETITION, THAT THE EXISTENCE OF COMPETITION FROM PRODUCERS IN THIRD COUNTRIES DOES NOT DEPRIVE THE JOINT - SELLING ORGANIZATION OF THE OPPORTUNITY OF DETERMINING PRICES IN ITS PRINCIPAL SALES AREAS ( CF . DECISION N . 16/60, OFFICIAL JOURNAL N . 47, P . 1024/60, FIRST COLUMN, LAST PARAGRAPH ). IN PARAGRAPH ( D ) OF RECITAL N . 12 OF THE PREAMBLE TO DECISION N . 16/60 THE HIGH AUTHORITY STATES THE REASONS WHICH LED IT TO FIND THAT COMPETITION FROM FUEL-OIL, ALTHOUGH STRONG AND INCREASING, DOES NOT DEPRIVE THE JOINT - SELLING ORGANIZATION OF SOME MEASURE OF FREEDOM IN SELECTING ITS LIST PRICES . P . 107 THERE IS NO DOUBT THAT COMPETITION FROM FUEL - OIL AFFECTS THE DIFFERENT CATEGORIES AND TYPES OF COAL IN VARYING DEGREES, AND THAT THE LEAST AFFECTED ARE PRECISELY THOSE WHICH FORM THE GREATER PART OF THE APPLICANTS' OUTPUT . SIMILARLY, IN SO FAR AS COAL IS SUPPLIED FOR BURNING, THE POSITION OF FUEL-OIL IN RELATION TO COAL VARIES IN STRENGTH ACCORDING TO THE USE TO WHICH IT IS PUT . THE LINE DIVIDING THE SPHERES OF INFLUENCE OF FUEL-OIL AND COAL SHIFTS IN PROPORTION TO THE RELATION BETWEEN THEIR PRICES . CONSEQUENTLY, AS REGARDS THE COMPETITION FROM FUEL-OIL, THERE EXISTS A RANGE OF PRICES WITHIN WHICH THE JOINT-SELLING BODY MAY CHOOSE, IF NOT FREELY AT LEAST WITH A DEGREE OF FREEDOM, ITS SALES POLICY AND, WITHIN CERTAIN LIMITS, ITS LIST PRICES . THE POWER TO DETERMINE PRICES RESULTING FROM THIS IS EXTENDED AND STRENGTHENED BY THE INTRODUCTION OF A FUEL-OIL TAX IN THE APPLICANTS' PRINCIPAL SALES AREA . THE CONCLUSIONS TO BE DRAWN FROM THESE REMARKS ARE IN FACT CONFIRMED BY THE DIFFERENCE IN PRICE ALTERATIONS IN THE VARIOUS CATEGORIES AND TYPES OF COAL ACCORDING TO THE EXTENT TO WHICH THEY ARE IN COMPETITION WITH FUEL-OIL . THE ABOVE CONSIDERATIONS LEAD TO THE VIEW THAT THE JOINT-SELLING ORGANIZATION WOULD HAVE SOME POWER TO DETERMINE PRICES . THIS CONCLUSION IS THE OPPOSITE OF THAT OF THE APPLICANTS WHO STATE THAT 'A PERSON WHO MERELY FORMULATES THE EFFECTS OF MOVEMENTS OF THE MARKET ON PRICE LEVELS DOES IN FACT FIX PRICES, BUT CANNOT DETERMINE THEM'; ( APPLICATION, PARAGRAPH 26 ) AND THAT IF A CARTEL CONTROLLING A SUBSTANTIAL PART OF PRODUCTS ON THE MARKET IS 'MADE TO BRING ITS PRICE POLICY INTO LINE WITH COMPETING PRODUCTS, ONE CANNOT SPEAK OF THE CARTEL AS CONTROLLING THE MARKET'; ( APPLICATION, PARAGRAPH 22 ) AND AGAIN, THAT 'A CARTEL CAN EXERT A DECISIVE INFLUENCE ON THE MARKET ONLY WHEN IT IS IN NO WAY SUBJECT TO THE LAW OF SUPPLY AND DEMAND,' THAT IS TO SAY, WHEN IT DOMINATES THE MARKET ( APPLICATION, PARAGRAPH 24 ). FROM THESE QUOTATIONS IT APPEARS THAT IF THE APPLICANTS' VIEW THAT THE JOINT-SELLING ORGANIZATION DOES IN FACT CREATE A POWER TO FIX PRICES IT STILL DOES NOT GIVE THE POWER TO DETERMINE THEM SINCE, AS IT DOES NOT DOMINATE THE MARKET, IT WOULD BE UNABLE TO FIX PRICES AT LEVELS APPRECIABLY DIFFERENT FROM THOSE IMPOSED BY THE LAWS OF SUPPLY AND DEMAND . THUS IN 'FIXING' LIST PRICES THE JOINT-SELLING ORGANIZATION WOULD HAVE NO OTHER COURSE THAN TO ASCERTAIN MARKET PRICES, THESE BEING 'DETERMINED' BY THE LAW OF SUPPLY AND DEMAND, AND MORE SPECIFICALLY, WITHIN THE FRAMEWORK OF THAT LAW, BY THE PRICES AT WHICH PRODUCTS OF OTHER MINING AREAS OF THE COMMUNITY, COAL FROM THIRD COUNTRIES AND FUEL-OIL ARE OFFERED ON THE MARKET . P . 108 THIS CONCEPTION INEVITABLY RECALLS THE ATOMISTIC MARKETS DESCRIBED BY LIBERAL ECONOMICS, WHERE EACH PARTICIPANT WAS CONFRONTED BY A MARKET PRICE WHICH HE COULD IN NO WAY AFFECT BY HIS OWN POLICIES . THIS WAS A STATE OF PERFECT COMPETITION WHERE, CLEARLY, NO SUPPLIER HAD THE POWER TO 'DETERMINE' A PRICE, BUT WAS FACED SIMPLY WITH THE OPTION TO SELL OR NOT TO SELL AT THE MARKET PRICE, OR TO VARY THE VOLUME OF HIS SUPPLY IN TERMS OF MARKET PRICES WHEN HIS PRODUCTION COSTS VARIED WITH THE QUANTITY PRODUCED . TO SEE THE COAL OR ENERGY MARKETS AS PERFECTLY COMPETITIVE ATOMISTIC MARKETS WOULD BE TO IGNORE REALITIES . THEY ARE NOT FORMED BY A SWARM OF INDIVIDUAL PRODUCERS, UNABLE TO AFFECT MARKET CONDITIONS BY THE WEIGHT OF THEIR INDIVIDUAL SUPPLIES, BUT ARE MADE UP RATHER OF A LIMITED NUMBER OF UNDERTAKINGS, WHOSE PRODUCTION IS ALMOST ALWAYS SUBSTANTIAL . IT IS THE NATURE OF THINGS WHICH MAKES OF THE ENERGY MARKET A MARKET IN WHICH LARGE UNITS CONFRONT ONE ANOTHER . IN SUCH A MARKET THE PRODUCERS ARE NOT SPARED COMPETITION FROM THEIR RIVALS BUT THEY DO EXERT BY THEIR VERY SIZE A CONSIDERABLE INFLUENCE UPON MARKET PRICES AND ARE BY THIS VERY FACT FORCED INTO A GENUINE SALES POLICY . THE APPLICANTS THEMSELVES DESCRIBE THEIR BEHAVIOUR THUS : 'A CONSIDERABLE PROPORTION OF RUHR COAL IS SOLD ACCORDING TO PRICE LISTS, WITH SPECIAL REBATES ( LONG-STANDING CUSTOM AND QUANTITY REBATES ). THESE REBATES, WHICH BENEFIT ALL CONSUMERS WHO FULFIL THE REQUIRED CONDITIONS, ARE A FORM OF REDUCTION OF LIST PRICES ADAPTED TO MEET THE COMPETITIVE SITUATION . THIS ALTERATION OF LIST PRICES AFFECTS A CONSIDERABLE PROPORTION OF THE TOTAL TONNAGE SOLD BY THE JOINT-SELLING AGENCY . FURTHER, TO RETAIN TRADITIONAL MARKETS, DISPOSE QUICKLY OF CURRENT STOCK AND IF POSSIBLE TO REDUCE THE HIGH LEVEL OF STOCKS, THE RUHR TOOK ADVANTAGE OF THE POSSIBILITY OF ALIGNING ITS PRICES ON THOSE OF THIRD COUNTRIES, IN THE FIRST PLACE, AND, TO A LESSER DEGREE, ON THOSE OF OTHER COALFIELDS OF THE COAL AND STEEL COMMUNITY . TO THIS MAY BE ADDED BUYING-IN OPERATIONS CARRIED OUT ON THE BASIS OF A MUTUAL AID PROGRAMME AND OTHER POLICIES EFFECTED TO A LARGE EXTENT WITHIN THE FRAMEWORK OF THE SO-CALLED "ERHARD PLAN"; IN THIS CONNEXION IT MAY BE OBSERVED THAT THE HIGH AUTHORITY ITSELF REFERRED TO THIS BUYING-IN AS "A POSTERIORI ALIGNMENTS",' ( APPLICATION, PARAGRAPH 35 ). P . 109 THE APPLICANTS CLAIM STILL MORE STRONGLY THAT THE COAL PRICES OF THIRD COUNTRIES ARE NOT MARKET PRICES BUT ARTIFICIAL PRICES WHICH ARE FIXED STRATEGICALLY TO CONQUER MARKETS . THE APPLICATION GOES ON TO CLAIM THAT 'IT IS NOT POSSIBLE WHEN FIXING PRICE LISTS FOR RUHR COAL TO TAKE INTO ACCOUNT POLITICAL DUMPING PRICES, AS PRACTISED BY THE STATES OF THE EASTERN BLOC, OR THE PRICES OF COAL IMPORTED FROM THIRD COUNTRIES WHERE TRANSPORT CHARGES COVER ONLY 60% OF THE COSTS OR ( AS, FOR EXAMPLE, ENGLISH COAL ) WHEN THE EXPORT PRICES ARE CONSIDERABLY BELOW THOSE OF THE ( ENGLISH ) HOME MARKET' ( APPLICATION, PARAGRAPH 35 ). THE APPLICANTS ALSO STATE THAT THE PRICES OF FUEL-OIL ARE SPECIALLY FIXED SO AS TO SUPPLANT COAL FROM ITS SALES AREAS, AND THUS ARE DETERMINED ACCORDING TO COAL PRICES IN THESE AREAS; THEY SAY IN PARTICULAR THAT 'THE OIL INDUSTRY PRACTISES SUBSTITUTION COMPETITION ( GENERALLY BELOW COST PRICE )'; THAT ALREADY 'THE FACT THAT THE PRICES OF FUEL-OIL, AS DISTINCT FROM THE LIST PRICES OF COMMUNITY COAL, ARE COMPLETELY INDIVIDUAL AND VARIABLE, NATURALLY MAKES IT IMPOSSIBLE TO COMPETE WITH FUEL-OIL BY A GENERAL LOWERING OF LIST PRICES . IT IS INTERESTING TO NOTE HERE THE VIEW EXPRESSED BY THE COAL COMMITTEE OF THE O.E.E.C . IN ITS FOURTH REPORT ( THE COAL INDUSTRY IN EUROPE, 1960, HEADINGS 5 AND 31 ). THE COMMITTEE REMARKS THAT THE COMPETITIVE ADVANTAGE OF PETROLEUM PRODUCERS OVER COAL PRODUCERS IS THAT THE FORMER KEEP THEIR PRICES FLEXIBLE, ARE ABLE, ACCORDING TO THE STATE OF THE MARKET, TO DISCRIMINATE BETWEEN DIFFERENT CONSUMERS, AND CAN, ACCORDING TO CIRCUMSTANCES, SACRIFICE THEIR PRICES IN ORDER TO CONQUER TO ANY EXTENT THE MARKET' ( APPLICATION, PARAGRAPH 35 ). MORE GENERALLY THE APPLICANTS ASSERT THAT 'IT IS IMPOSSIBLE TO STATE IN ABSTRACTO WHETHER OR NOT THERE IS ANY DOMINATION OF THE MARKET . SUCH A QUESTION DEPENDS MORE ON THE ACTUAL STATE OF THE MARKET, AND PARTICULARLY UPON THE STRUCTURE OF COMPETITION IN THE ENERGY MARKET .' ( APPLICATION, PARAGRAPH 32 ). THESE QUOTATIONS SHOW CLEARLY THAT WITHIN THE ENERGY MARKET NONE OF THE SELLERS IS CONFRONTED WITH UNCHANGEABLE PRICES BUT EACH SEEKS TO 'DETERMINE' THEM AND TO A LARGE EXTENT, ALTHOUGH THIS VARIES ACCORDING TO CIRCUMSTANCES, SUCCEEDS . THUS IT CAN BE SEEN FROM THE FOREGOING ANALYSIS THAT THE COMPETITION WHICH IN FACT EXISTS IN THE ENERGY MARKET IS UNLIKE THAT OF THE ATOMISTIC MARKETS, WHERE EACH PARTICIPANT IS FACED WITH A MARKET PRICE WHICH IT CANNOT INFLUENCE BY ITS OWN BEHAVIOUR, BUT IS A COMPETITION BETWEEN LARGE UNITS, EACH ENDOWED WITH A CERTAIN POWER OVER PRICES AND THE ABILITY CONSCIOUSLY TO ADAPT THEIR MARKET BEHAVIOUR TO THAT OF THEIR PARTNERS . SUCH A MARKET IS CHARACTERISTIC OF A STATE OF OLIGOPOLY, WHICH IS ALSO ONE OF IMPERFECT COMPETITION . THE THEORY OF IMPERFECT COMPETITION HAS NOW PASSED INTO DOCTRINE, WHICH SEES IN OLIGOPOLY A SYSTEM WITHIN WHICH EACH SELLER, WHEN MAKING HIS ECONOMIC CALCULATIONS, TAKES INTO ACCOUNT THE PROBABLE MARKET BEHAVIOUR WHICH HIS COMPETITORS WILL ADOPT IN RESPONSE TO HIS OWN DECISIONS, FOR THE SIMPLE REASON THAT WHAT THEY DO IS A DIRECT REACTION TO WHAT HE DOES . THE CONTRAST OF THIS WITH A STATE OF PURE COMPETITION IS FUNDAMENTAL IN THIS MATTER . A NOTED AUTHOR DEFINES THIS OLIGOPOLISTIC MARKET AS A MARKET IN WHICH 'PRICES CAN BE FIXED BY THE DIFFERENT UNDERTAKINGS THEMSELVES, AND THUS BECOME A PART OF THEIR MARKET STRATEGY '. HE ADDS THAT 'IT IS PARTICULARLY IMPORTANT THAT THE COMMUNITY'S POLICY WITH REGARD TO COMPETITION SHOULD AIM TO LIMIT THE STRATEGIC SCOPE WHICH ANY SUCH OLIGOPOLIES MAY HAVE IN THE MARKET '. ( BULLETIN OF THE EUROPEAN ECONOMIC COMMUNITY, N . 7-8, JULY-AUGUST 1961, PP . 21 AND 22 ). P . 110 THESE ANALYSES APPLY EXACTLY TO THE COAL MARKET AND EVEN TO THE ENERGY MARKET AS THE APPLICANTS THEMSELVES HAVE DESCRIBED IT . IN SUCH MARKETS THE POWER TO FIX PRICES IS NOT FACED, AS IT WOULD BE IN THE CASE OF PURE COMPETITION, WITH THE IMMOVABLE BARRIER OF MARKET PRICES, BUT HAS AN ILL-DEFINED AREA OF MANOEUVRE WITHIN WHICH THE AUTHORITY FIXING THE PRICES MAY CHOOSE THE LEVEL AT WHICH IT ESTABLISHES THEM . THE FIXING OF PRICES WITHIN THIS ILL-DEFINED AREA IS A PRODUCT OF THE STRATEGY OF THE LARGE UNITS WHICH CONFRONT EACH OTHER IN THE MARKET, NOT THE RESULT OF A SIMPLE ASCERTAINMENT BY THEM OF A MARKET PRICE, WHICH IS ITSELF DEPENDENT ON THEIR DECISIONS . IF THE FUEL MARKET IS INDEED AN OLIGOPOLY, OFFERING TO ITS PARTICIPANTS THE OPPORTUNITY OF A REAL ECONOMIC STRATEGY, IT MUST NECESSARILY CONFER A CERTAIN POWER TO DETERMINE PRICES . THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY TAKES INTO ACCOUNT THE TECHNICAL AND COMMERCIAL EVOLUTION WHICH CONSTANTLY AUGMENTS THE SIZE OF ECONOMIC UNITS, INCREASINGLY GIVING THE COAL AND STEEL MARKETS THE CHARACTER OF AN OLIGOPOLY . THE PROVISIONS OF ARTICLE 65 ( 2 ) AND ARTICLE 66 ( 2 ) EVIDENCE THE INTENTION OF THE AUTHORS OF THE TREATY NOT TO RESTRICT THIS EVOLUTION, PROVIDED THAT IT SERVES THE OBJECTIVES OF THE TREATY AND PARTICULARLY THAT IT ENABLES THE NECESSARY MEASURE OF COMPETITION BETWEEN THE LARGE UNITS TO EXIST, IN ORDER TO SAFEGUARD THE BASIC REQUIREMENT OF ARTICLE 2, NAMELY, THAT THE COMMUNITY SHALL 'PROGRESSIVELY BRING ABOUT CONDITIONS WHICH WILL OF THEMSELVES ENSURE THE MOST RATIONAL DISTRIBUTION OF PRODUCTION AT THE HIGHEST POSSIBLE LEVEL OF PRODUCTIVITY, WHILE SAFEGUARDING CONTINUITY OF EMPLOYMENT AND TAKING CARE NOT TO PROVOKE FUNDAMENTAL AND PERSISTENT DISTURBANCES IN THE ECONOMIES OF MEMBER STATES .' P . 111 THIS INSISTENCE UPON THE SAFEGUARDING OF A CERTAIN MEASURE OF COMPETITION WITHIN A SYSTEM OF IMPERFECT COMPETITION, SUCH AS THAT OF THE COAL AND STEEL MARKET, HAS CLEARLY INSPIRED ONE OF THE CONDITIONS IMPOSED BY ARTICLE 65 ( 2 ) UPON JOINT-SELLING AGREEMENTS QUALIFYING FOR AUTHORIZATION, NAMELY, THAT THEY SHOULD NOT GIVE THE UNDERTAKINGS CONCERNED THE POWER TO DETERMINE THE PRICES OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET . THE TREATY GOES EVEN FURTHER THAN ARTICLE 65 IN ITS CONCERN NOT TO STAND IN THE WAY OF NECESSARY EVOLUTION SINCE IT GOES SO FAR AS TO ACKNOWLEDGE IN ARTICLE 95 THAT 'FUNDAMENTAL ECONOMIC OR TECHNICAL CHANGES' COULD 'MAKE IT NECESSARY TO ADAPT THE RULES FOR THE HIGH AUTHORITY'S EXERCISE OF ITS POWERS '. ON 20 JULY 1961, THE HIGH AUTHORITY AND THE SPECIAL COUNCIL OF MINISTERS OF THE EUROPEAN COAL AND STEEL COMMUNITY SOUGHT THE OPINION OF THE COURT PURSUANT TO ARTICLE 95 ON A DRAFT AMENDMENT TO THE TREATY, DESIGNED TO COUNTER FUNDAMENTAL AND PERSISTENT CHANGES IN MARKETING CONDITIONS IN THE COAL AND STEEL INDUSTRIES . THE COURT NOTED IN ITS OPINION 1/61 OF 13 DECEMBER 1961 THAT 'IN PRINCIPLE, ARTICLE 95 DOES NOT PREVENT AN ADAPTATION OF THE RULES RELATING TO THE POWERS CONFERRED BY ARTICLE 65 UPON THE HIGH AUTHORITY BY A MODIFICATION OF ARTICLE 65 ( 2 ), WITH A VIEW TO GIVING THE HIGH AUTHORITY POWER TO AUTHORIZE EITHER AGREEMENTS OF A DIFFERENT NATURE FROM THOSE PROVIDED FOR IN THE PRESENT PARAGRAPH, BUT WITH A SIMILAR OBJECTIVE, OR AGREEMENTS OF THE SAME NATURE AS THOSE PROVIDED FOR IN THE PARAGRAPH PRESENTLY IN FORCE BUT WITH A DIFFERENT OBJECTIVE, OR, FINALLY, AGREEMENTS DIFFERING BOTH IN NATURE AND OBJECTIVE', AND THAT 'AMENDMENTS TO THE FIRST PART OF THE FIRST SUBPARAGRAPH OF PARAGRAPH ( 2 ) WHICH ALLOW THE AUTHORIZATION OF TYPES OF AGREEMENT NOT PROVIDED FOR BY THE PARAGRAPH NOW IN FORCE AND OF ARTICLE 65 ( 2 ) ( A ), CONCERNING THE OBJECTIVES OF AGREEMENTS QUALIFYING FOR AUTHORIZATION, MAY CONSTITUTE AN ADAPTATION OF THE RULES RELATING TO THE HIGH AUTHORITY'S EXERCISE OF ITS POWERS OF AUTHORIZATION, BUT ON THE OTHER HAND THE DELETION OF ARTICLE 65 ( 2 ) ( C ) WOULD GO BEYOND THE BOUNDS OF ANY ADAPTATION .' P . 112 THUS THE COURT HAS SHOWN THAT IT INTENDS, IN ACCORDANCE WITH THE APPLICANTS' WISHES, TO 'INTERPRET AND APPLY THE RULES OF LAW, BEARING IN MIND THE NEW ECONOMIC SITUATION ( AND ) ...THE NEW BURDEN IMPOSED BY THE DYNAMICS OF ECONOMIC LIFE', ( REPLY, PARAGRAPH 53 ) BUT THAT IT CANNOT ACCEPT THE ELIMINATION OF THE BASIC REQUIREMENTS OF ARTICLE 65 ( 2 ) ( C ), DESIGNED AS THEY ARE TO SAFEGUARD, IN THE OLIGOPOLISTIC MARKET IN COAL AND STEEL, THE MEASURE OF COMPETITION WHICH IS INDISPENSABLE IN ORDER THAT THE BASIC REQUIREMENTS SET FORTH IN ARTICLES 2, 3, 4 AND 5 OF THE TREATY MAY BE OBSERVED AND IN PARTICULAR THAT 'THE MAINTENANCE AND OBSERVANCE OF NORMAL COMPETITIVE CONDITIONS' MAY CONTINUE TO BE ENSURED . THE HIGH AUTHORITY CONSIDERED THAT THIS INDISPENSABLE MEASURE OF COMPETITION WAS ADEQUATELY ENSURED BY THE THREE JOINT - SELLING AGENCIES AUTHORIZED IN ITS DECISIONS N.S 5/56, 6/56 AND 7/56 OF 15 FEBRUARY 1956, BUT NOT BY THE CONTINUED EXISTENCE OF THE COMMON MACHINERY AUTHORIZED BY DECISION N . 8/56 OF 15 FEBRUARY 1956 OR BY THE JOINT-SELLING ORGANIZATION PROHIBITED BY DECISION N . 16/60 OF 22 JUNE 1960 . THE COURT SEES NO REASON FOR ACCEPTING THAT, BY INSISTING UPON MAINTAINING THIS MINIMUM MEASURE OF COMPETITION WITHIN THE RUHR COALFIELD, THE HIGH AUTHORITY HAS FAILED TO OBSERVE THE LETTER AND THE SPIRIT OF THE TREATY, AND PARTICULARLY THE OBLIGATIONS IMPOSED UPON IT BY ARTICLES 2, 3, 4 AND 5 . ONCE IT HAS BEEN FOUND THAT THE JOINT-SELLING ORGANIZATION HELD A CERTAIN POWER TO DETERMINE PRICES, THE ISSUE IN THE PRESENT APPLICATION IS REDUCED IN THE LAST ANALYSIS TO THE QUESTION WHETHER THIS POWER APPLIES TO A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET . THIS QUESTION WILL BE EXAMINED IN PARAGRAPH ( C ) BELOW . ( B ) THE CONCEPT OF 'THE CONTROL OF MARKETING' IN RECITAL N . 13 OF THE PREAMBLE TO DECISION N . 16/60, THE HIGH AUTHORITY FINDS THAT, IN TRANSFERRING TO THE JOINT-SELLING ORGANIZATION THE SOLE RIGHTS OVER THE MARKETING OF THEIR PRODUCTS ( EXCEPT FOR THE RESERVED TONNAGES ), THE UNDERTAKINGS CONCERNED GIVE TO SUCH AN ORGANIZATION THE POWER TO DIRECT, ACCORDING TO THE REQUIREMENTS OF ITS OWN SALES POLICY, THE TONNAGES TRANSFERRED TO IT FOR SALE . P . 113 THIS FINDING IS ENOUGH TO SHOW THAT BY SECURING CONTROL OF A PART OF THE COAL AND COKE IN THE COMMON MARKET, THE UNDERTAKINGS CONCERNED ACQUIRE THE POWER TO DETERMINE THE QUANTITIES, AREAS AND BUYERS WHICH THEY CONSIDER ESSENTIAL IN ORDER TO PREVENT THE PENETRATION OF COMPETITORS INTO THEIR MAIN SALES AREA . THE CONTROL EXERCISED BY THE SALES AGENCY ON THE POLICY OF PRICE ALIGNMENT ALSO GIVES THE AGENCY THE OPPORTUNITY, BY DIRECTING SUPPLIES AT WILL EVEN IN COMPARATIVELY SMALL AMOUNTS IN RELATION TO ITS TOTAL SALES, OF AFFECTING PROFOUNDLY THE MARKETING OF ITS COMPETITORS, AND THEREBY REINFORCES THE CONTROL OF ITS OWN MARKETING . IT IS IMPOSSIBLE NOT TO SEE IN THIS POWER TO REGULATE MARKETING, WHICH IS VESTED IN THE JOINT-SELLING AGENCY, A CERTAIN POWER OF CONTROL OVER MARKETING WITHIN THE MEANING OF ARTICLE 65 ( 2 ) ( C ). THE COMPLAINTS FORMULATED BY THE APPLICANTS, WHICH RAISE THE ISSUE OF THE INCLUSION OF THE RESERVED QUANTITIES ARE NOT OF SUCH A NATURE AS TO ALTER THIS QUALITATIVE CONCLUSION OF THE COURT, AS WILL BE SHOWN IN PARAGRAPH ( C ) BELOW . ( C ) THE CONCEPT OF 'A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET' THE FINDING THAT A JOINT-SELLING AGREEMENT GIVES THE UNDERTAKINGS CONCERNED A POWER TO DETERMINE PRICES OR TO CONTROL MARKETING IS NOT SUFFICIENT IN ITSELF TO ENABLE THE HIGH AUTHORITY TO REFUSE AUTHORIZATION . IT MUST FURTHER BE SHOWN THAT THIS POWER APPLIES TO A SUBSTANTIAL PART OF THE GOODS IN QUESTION WITHIN THE COMMON MARKET . IT IS, THEREFORE, NECESSARY TO EXAMINE WHETHER THIS IS THE CASE WITH REGARD TO THE POWER TO DETERMINE PRICES AND TO CONTROL MARKETING WHICH THE JOINT-SELLING ORGANIZATION IN THIS CASE HAS BEEN SHOWN TO HAVE . THE TREATY DOES NOT LAY DOWN THE CRITERIA FOR ESTABLISHING WHETHER A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION IS SUBJECT TO THE CONTROL OF THE JOINT-SELLING ORGANIZATION . THE PROVISIONS OF THE TREATY TAKEN AS A WHOLE POINT TO THE VIEW THAT A POWER TO DETERMINE PRICES OR TO CONTROL MARKETING APPLIES TO A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET WHEN THE FULL EXTENT OF THE EFFECTS WHICH IT EXERTS IS NOT OF SECONDARY OR MINOR IMPORTANCE BUT IS SUCH AS TO JEOPARDIZE, WITHIN THE COMMON MARKET, THE MEASURE OF COMPETITION INTENDED BY THE TREATY, AND THE TASK WHICH ARTICLES 2, 3, 4 AND 5 ASSIGN TO THE COMMUNITY . P . 114 IT HAS BEEN SHOWN ALREADY THAT THERE ARE NO GROUNDS FOR CLAIMING THAT THE TREATY INTENDED TO PROHIBIT THE EXISTENCE OR CREATION OF THE LARGE PRODUCTION OR SALES UNITS WHICH ARE A CHARACTERISTIC FEATURE OF THE COAL AND STEEL MARKET . IT WOULD BE UNREALISTIC AND CONTRARY TO THE REQUIREMENTS OF TECHNICAL DEVELOPMENT TO WISH TO REESTABLISH AN ATOMISTIC MARKET WHICH WOULD BE QUITE UNTHINKABLE IN THE CASE OF THE PRODUCTS AT ISSUE HERE . THE PROBLEM TO BE RESOLVED IN THIS SECTION IS : AT WHAT POINT DOES THE VOLUME OF OFFERS FOR SALE UNDER THE CONTROL OF A CARTEL CONSTITUTE A SUFFICIENTLY SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET FOR IT TO RENDER THE COMPETITION EXISTING WITHIN THE MARKET IMPERFECT, THEREBY JEOPARDIZING THE AIMS OF THE TREATY? THE HIGH AUTHORITY GAVE, AT RECITAL N . 9 OF THE PREAMBLE TO DECISION N . 16/60, A TABLE SPECIFYING FOR THE YEAR 1959 THE PROPORTION OF TONNAGES OF COAL, BRIQUETTES AND COKE SOLD ON THE COMMON MARKET BY THE APPLICANTS . THESE PROPORTIONS VARY BETWEEN 26.1% AND 43.7 %. THE APPLICANTS CONTEST THESE FIGURES ON THE GROUNDS IN PARTICULAR THAT CERTAIN RESERVED TONNAGES AND SUPPLIES TO ASSOCIATED UNDERTAKINGS HAVE BEEN WRONGLY INCLUDED IN THE CALCULATIONS . THE COURT CANNOT UPHOLD THE APPLICANTS ON THIS ISSUE . IT WAS CORRECT TO INCLUDE THESE FACTORS IN THE STATEMENT OF QUANTITIES SOLD, SINCE NO OTHER BASIS OF CALCULATION WOULD HAVE GIVEN AN ACCURATE PICTURE OF THE PART PLAYED BY THE APPLICANTS IN THE MARKET AS A WHOLE . EVEN IF IT WERE TO BE CONCEDED THAT A SUBSTANTIAL PART OF THE RESERVED TONNAGES IS NOT INVOLVED IN ESSENTIALLY COMMERCIAL TRANSACTIONS, SUCH A CONCESSION WOULD NOT INVALIDATE THE ACCURACY OF THE HIGH AUTHORITY'S CALCULATIONS . IN FACT, TONNAGES IN THE SAME CATEGORY DERIVING FROM OTHER PRODUCERS IN THE COMMON MARKET SHOULD IN THIS CASE EQUALLY BE EXCLUDED FROM CONSIDERATION AND THIS WOULD ALTER THE ABSOLUTE VALUE OF THE FIGURES, BUT WOULD ONLY ALTER TO A NEGLIGIBLE EXTENT THE PROPORTION OF TONNAGES SOLD WHICH IS THE SOLE IMPORTANT FACTOR IN THIS CASE . IN ANY CASE THE COURT CANNOT ACCEPT THE APPLICANTS' ARGUMENT WHICH WOULD EXCLUDE FROM THEIR CALCULATIONS DELIVERIES TO ASSOCIATED UNDERTAKINGS . IN FACT, AS THE HIGH AUTHORITY HAS RIGHTLY HELD IN THE CONTESTED DECISION AND THROUGHOUT THESE PROCEEDINGS, THE QUESTION CONCERNS QUANTITIES THE PRICES OF WHICH ARE FIXED, WHETHER DIRECTLY OR INDIRECTLY, BY THE JOINT-SELLING ORGANIZATION . WHATEVER IMPORTANCE IS ATTACHED TO CRITICISMS OF THE FIGURES SUBMITTED BY THE HIGH AUTHORITY, THE RESULTS SHOW CLEARLY, EVEN IF CERTAIN CORRECTIONS WERE TO BE MADE TO THEM, THAT THE QUANTITIES SOLD BY THE JOINT-SELLING ORGANIZATION CONCENTRATE UNDER THE DIRECT OR INDIRECT INFLUENCE OF THIS ORGANIZATION A SUBSTANTIAL FRACTION OF THE PRODUCTS IN QUESTION SOLD IN THE COMMON MARKET AND THAT THEREFORE THE POWERS VESTED IN THIS ORGANIZATION EXTEND TO A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION IN THE MARKET . P . 115 HOWEVER, IN THE COMPETITION OF LARGE INDUSTRIAL UNITS, SUCH AS CHARACTERIZE THE COMMON MARKET IN COAL, THE INFLUENCE OF A SALES ORGANIZATION DEPENDS NOT SO MUCH UPON THE VOLUME OF PRODUCTS IT CONTROLS AS UPON THE VOLUMES CONTROLLED BY THE RIVAL ORGANIZATIONS WHICH CONFRONT IT ON THE MARKET . IT IS APPROPRIATE TO NOTE IN THIS RESPECT THAT ARTICLE 66 ( 2 ) PROVIDES THAT, IN ORDER TO MEASURE THE EFFECTS OF A CONCENTRATION, EITHER AS A BARRIER TO EFFECTIVE COMPETITION OR AS A MEANS OF EVADING THE RULES OF COMPETITION INSTITUTED UNDER THE TREATY, THE HIGH AUTHORITY SHALL 'TAKE ACCOUNT OF THE SIZE OF LIKE UNDERTAKINGS IN THE COMMUNITY, TO THE EXTENT IT CONSIDERS JUSTIFIED IN ORDER TO AVOID OR CORRECT DISADVANTAGES RESULTING FROM UNEQUAL COMPETITIVE CONDITIONS '. THIS OBLIGATION DEMONSTRATES THE IMPORTANCE WHICH THE TREATY ATTACHES TO THE RELATIVE SIZE OF UNDERTAKINGS IN THE STRUCTURE OF COMPETITION . THE FACT, HOWEVER, THAT THE HIGH AUTHORITY SCARCELY TOUCHED UPON THIS POINT IN THE RECITALS OF THE PREAMBLE TO ITS DECISION N . 16/60 IS OF LITTLE CONSEQUENCE . IT IS IN FACT WELL KNOWN THAT, FOR EXAMPLE, THE COAL PRODUCTION OF THE UNDERTAKINGS GROUPED TOGETHER IN THE SALES ORGANIZATION IN QUESTION IS ROUGHLY FOUR TIMES AS GREAT AS THAT OF ANY OTHER COALFIELD IN THE COMMON MARKET AND IS MORE THAN TWICE THE TOTAL PRODUCTION OF CHARBONNAGES DE FRANCE, THE ONLY ORGANIZATION OF COMPARABLE SIZE . THE ABOVE-MENTIONED ORDERS OF MAGNITUDE, WHATEVER CORRECTION OF DETAIL MIGHT BE NECESSARY, LEAVE NO DOUBT THAT THE 'SIZE' OF THE RUHR COALFIELD, TAKEN AS A WHOLE, IS IN MARKED DISPROPORTION TO THAT OF OTHER FIELDS WITHIN THE COMMUNITY . SUCH DISPROPORTION CANNOT BUT BESTOW GREAT INFLUENCE UPON THE SALES ORGANIZATION WHICH CAUSES IT IN THE COMPETITION BETWEEN THE LARGE UNITS WHICH CONFRONT EACH OTHER WITHIN THE COMMON MARKET . DECISION N . 16/60, REFUSING AUTHORIZATION FOR THE ASSOCIATION OF THE THREE JOINT-SELLING AGENCIES OF THE RUHR COALFIELD INTO A SINGLE SALES ORGANIZATION, HAD THE EFFECT OF RESTORING THE RUHR SALES ORGANIZATIONS TO A SIZE WHICH NO DOUBT DIFFERS FROM THAT OF THE LARGEST SALES ORGANIZATIONS IN THE COMMUNITY OUTSIDE THE RUHR COALFIELD, BUT IS OF THE SAME ORDER OF MAGNITUDE . P . 116 THESE FINDINGS CONSTITUTE A MORE THAN ADEQUATE BASIS FOR HOLDING THAT, IRRESPECTIVE OF ANY STATISTICAL SUBTLETIES, THE SALES ORGANIZATION WHICH WAS THE SUBJECT OF DECISION N . 16/60 CONTROLS A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET . B - ERRONEOUS FINDINGS OF FACT THE APPLICANTS SUBMIT THAT THE HIGH AUTHORITY'S DECISION WAS FOUNDED ON INACCURATE OR INCOMPLETE FINDINGS OF FACT . IT HAS STATED ITS VIEW IN PARAGRAPH ( C ) ABOVE, WITH REGARD TO THE MOST IMPORTANT OF THEM, NAMELY THOSE RELATING TO THE INCLUSION OF CERTAIN RESERVED TONNAGES AND DELIVERIES TO ASSOCIATED COMPANIES IN THE CALCULATION OF QUANTITIES SOLD BY THE SALES ORGANIZATION . OTHER SUBMISSIONS, FOR EXAMPLE THOSE WHICH REFER TO THE INFLUENCE OF PRICES OF COAL FROM OTHER COALFIELDS, OF IMPORTED COAL, OF ANTHRACITE AND FUEL-OIL ON THE RUHR PRICES, BELONG TO THE REALM OF THE EVALUATION AND INTERPRETATION OF ECONOMIC CIRCUMSTANCES RATHER THAN OF FINDINGS OF FACT . OTHERS, SUCH AS THAT RELATING TO THE DIFFERENCE BETWEEN THE FIGURE OF 47% AND THAT OF 53% AS THE PERCENTAGE OF COMMUNITY COAL SOLD WITHIN THE FEDERAL REPUBLIC, RAISE DISCREPANCIES TOO TRIFLING TO CALL FOR ANY ALTERATION IN THE CONCLUSIONS WHICH HAVE BEEN REACHED ON THE BASIS OF THE CONTESTED FIGURES . FINALLY, OTHERS SUCH AS THAT REFERRING TO THE HIGH AUTHORITY'S FAILURE TO CONSIDER THE 'TREND' OF ECONOMIC DEVELOPMENT, MIGHT POSSIBLY BE OF RELEVANCE TO THE QUESTION OF INSUFFICIENCY OF THE STATEMENT OF REASONS FOR THE DECISION, BUT NOT TO THAT OF AN ERRONEOUS FINDING OF FACT . MOREOVER, THIS ARGUMENT COULD NOT HAVE ALTERED THE DECISION SINCE IN 1960 THE TREND OF ECONOMIC DEVELOPMENT WAS CONTRARY TO WHAT IT HAD BEEN IN 1959 ( REJOINDER, PARAGRAPH 41 ). IN ANY CASE NO CONCLUSION CAN BE DRAWN FROM THIS AREA OF DISAGREEMENT . THE APPLICANTS THEMSELVES REMARK, HAVING ACCUSED THE HIGH AUTHORITY OF ERRORS IN ASCERTAINING THE PROPORTION OF COAL IMPORTED FROM THIRD COUNTRIES THAT 'THE LEVEL OF THE IMPORT QUOTA IS NOT OF DECISIVE IMPORTANCE...AND IN FACT THE AMOUNT OF IMPORTS UNDER THE QUOTA DOES NOT FULLY REFLECT THE INFLUENCE EXERTED UPON THE MARKET BY COAL FROM THIRD COUNTRIES' ( APPLICATION, PARAGRAPH 35 ). THE COURT FULLY ACCEPTS THIS VIEW BUT GIVES IT A WIDER APPLICATION . IT ALSO AGREES WITH THE APPLICANTS WHEN THEY CONSIDER 'THAT A PURELY QUANTITATIVE VIEW IS INCOMPATIBLE WITH THE SPIRIT OF ARTICLE 65 ( 2 ) ( C ) AS IT APPEARS IN THE LIGHT OF THE OBJECTIVES OF THE TREATY' ( REPLY, PARAGRAPH 50 ). P . 117 IT HAS BEEN SHOWN THAT WHAT ARTICLE 65 ( 2 ) ( C ) DESCRIBES AS A 'SUBSTANTIAL PART' IS NOT A PURELY QUANTITATIVE CRITERION, BUT A REFERENCE TO THE WHOLE COMPETITIVE STRUCTURE OF THE COMMUNITY . SUCH ERRORS AND OMISSIONS IN THE FINDINGS OF FACT AS ARE REFERRED TO BY THE APPLICANTS DO NOT IN FACT OR IN LAW AFFECT DECISION N . 16/60, AND CANNOT THEREFORE CONSTITUTE GROUNDS FOR ITS ANNULMENT . C - MANIFEST FAILURE TO OBSERVE THE PROVISIONS OF THE TREATY THE APPLICANTS SUBMIT THAT THERE HAS BEEN A MANIFEST FAILURE TO OBSERVE THE PROVISIONS OF THE TREATY IN THE FAILURE BY THE HIGH AUTHORITY TO CONSIDER THE INTERDEPENDENCE OF VARIOUS FACTORS AFFECTING RUHR COAL, WHICH THEY DESCRIBE AS A 'MANIFEST VIOLATION OF AN ELEMENTARY ECONOMIC PRINCIPLE '. THIS REVEALS A 'CLEAR FAILURE TO OBSERVE THE PROVISIONS OF THE ECSC TREATY' ( APPLICATION, PARAGRAPH 35 ( 4 ) ( D )) IN THE 'GROSS VIOLATION OF THE PRINCIPLES OF LOGIC' REPRESENTED BY THE GENERAL APPRECIATION SET OUT IN RECITAL N . 12 ( C ) OF THE PREAMBLE TO DECISION N . 16/60 . THE COURT HAS NOT BEEN ABLE TO FIND IN THE PART OF THE PREAMBLE REFERRED TO ABOVE THE INFRINGEMENTS OF THE TREATY WHICH THE APPLICANTS CLAIM TO HAVE DISCOVERED, NOR CAN IT FIND THEREIN THE RESULT OF A MANIFEST FAILURE TO OBSERVE THE TREATY . ACCORDINGLY, IT CANNOT ON THESE GROUNDS ORDER THE ANNULMENT SOUGHT BY THE APPLICANTS . 4 . INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT THE APPLICANTS SUBMIT UNDER THIS HEAD THAT INSUFFICIENT REASONS WERE STATED FOR THE DECISION . THE COURT HAS STATED IN SECTIONS 2 ( A ) ( B ) AND ( C ) OF THIS JUDGMENT THAT THE GROUNDS SET OUT IN THE PREAMBLE TO DECISION N . 16/60 ADEQUATELY JUSTIFIED IN LAW THE CONCLUSIONS BASED UPON THEM . THE COURT IS UNABLE TO FIND IN THE PREAMBLE TO DECISION N . 16/60 THE CONTRADICTIONS WHICH THE APPLICANTS CLAIM TO HAVE DISCOVERED . THE COURT CONSIDERS THE STATEMENT OF REASONS IN DECISION N . 16/60 TO BE DECISIVE . ALL OTHER CONSIDERATIONS, INCLUDING THOSE WHICH THE APPLICANTS REGARD AS CONTRADICTORY OR INADEQUATE, MUST BE CONSIDERED AS SUPERFLUOUS AND CANNOT THEREFORE JUSTIFY THE ANNULMENT OF THAT DECISION . FOR ALL THESE REASONS THE APPLICATION MUST BE DISMISSED . Decision on costs THE APPLICANT AND THE INTERVENER, HAVING FAILED IN ALL THEIR SUBMISSIONS, MUST, PURSUANT TO ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE OF THE COURT BE ORDERED TO PAY THE COSTS . Operative part THE COURT HEREBY : 1 . DISMISSES APPLICATION 13/60 AS BEING UNFOUNDED; 2 . ORDERS THE APPLICANTS AND THE INTERVENER TO PAY THE COSTS OF THE ACTION .

Arijit Pasayat, J. Leave granted. The State of U.P. is in appeal against the judgment of the learned Single Judge of the Allahabad High Court, Lucknow Bench. By the said impugned judgment, Criminal Appeal No.37 of 1995 was disposed of by reducing the respondents sentence of 7 years RI imposed in respect of offence punishable under Section 304 Part II of the Indian Penal Code, 1860 in short the IPC to the period already undergone with a direction to pay fine of Rs.15,000/- with default stipulation of one year RI. The respondent hereafter referred to as the accused was found guilty by the learned Sessions Judge, Sitapur. The accused had faced trial for offence punishable under Section 302 IPC for having caused homicidal death of one Chetai hereinafter referred to as the deceased on 7.5.1988. The injury was caused by a spade over a land dispute. Though the accused was charged for companymission of offence punishable under Section 302 IPC, the trial Judge held that appropriate companyviction would be under Section 304 Part II IPC and rigorous imprisonment for 7 years was awarded. Before the High Court the accused did number press appeal on merits but only addressed on the question of sentence. It was submitted that the alleged occurrence took place in 1988 and a lenient view should be taken. The High Court practically by an unreasoned and number-speaking order which is impugned in this appeal disposed of the appeal reducing the custodial sentence as afore-noted. All that the High Court said in the judgment is as follows Considering all facts and circumstances of the case as well as age, character and other antecedents of the appellant, I find that it will meet the ends of justice if the sentence awarded to the appellant is modified and reduced. The appeal is accordingly dismissed. The companyviction recorded against the appellant under Section 304 Part II IPC is maintained, but the sentence awarded is reduced to the period already undergone and to pay a fine of Rs.15,000/- and in default of payment of fine to further undergo RI for a period of one year. The logic behind the sentence in a criminal trial has been highlighted by this Court in State of M.P. v. Ghanashyam Singh . Undue sympathy to impose inadequate sentence would do more harm to the justice system to undermine the public companyfidence in the efficacy of law and society companyld number long endure under such serious threats. It is, therefore, the duty of every companyrt to award proper sentence having regard to the nature of the offence and the manner in which it was executed or companymitted etc. This position was illuminatingly stated by this Court in Sevaka Perumal etc. v. State of Tamil Naidu . After giving due companysideration to the facts and circumstances of each case, for deciding just and appropriate sentence to be awarded for an offence, the aggravating and mitigating factors and circumstances in which a crime has been companymitted are to be delicately balanced on the basis of really relevant circumstances in a dispassionate manner by the Court. Such act of balancing is indeed a difficult task. It has been very aptly indicated in Dennis Councle MCGDautha v. State of Callifornia 402 US 183 28 L.D. 2d 711 that numberformula of a foolproof nature is possible that would provide a reasonable criterion in determining a just and appropriate punishment in the infinite variety of circumstances that may affect the gravity of the crime. In the absence of any foolproof formula which may provide any basis for reasonable criteria to companyrectly assess various circumstances germane to the companysideration of gravity of crime, the discretionary judgment in the facts of each case, is the only way in which such judgment may be equitably distinguished. The object should be to protect the society and to deter the criminal in achieving the avowed object of law by imposing appropriate sentence. It is expected that the Courts would operate the sentencing system so as to impose such sentence which reflects the companyscience of the society and the sentencing process has to be stern where it should be. Imposition of sentence without companysidering its effect on the social order in many cases may be in reality a futile exercise. The social impact of the crime, e.g. where it relates to offences against women, dacoity, kidnapping, misappropriation of public money, treason and other offences involving moral turpitude or moral delinquency which have great impact on social order, and public interest, cannot be lost sight of and per se require exemplary treatment. Any liberal attitude by imposing meager sentences or taking too sympathetic view merely on account of lapse of time in respect of such offences will be resultwise companynter productive in the long run and against societal interest which needs to be cared for and strengthened by string of deterrence inbuilt in the sentencing system. The Court will be failing in its duty if appropriate punishment is number awarded for a crime which has been companymitted number only against the individual victim but also against the society to which the criminal and victim belong. The punishment to be awarded for a crime must number be irrelevant but it should companyform to and be companysistent with the atrocity and brutality with which the crime has been perpetrated, the enormity of the crime warranting public abhorrence and it should respond to the societys cry for justice against the criminal. It is rather surprising that the High Court has number even indicated what period of custody the respondent has suffered. Since all these aspects have number been numbered by the High Court and by practically unreasoned order the matter was disposed of in a most unsatisfactory manner, it would be appropriate for the High Court to re-hear the appeal on the question of sentence. It goes without saying that while deciding the matter afresh the High Court shall keep in view the position in law as highlighted by this Court in Ghanshyam Singhs case supra .

OPINION OF ADVOCATE GENERAL SHARPSTON delivered on 16 February 2012 ( ) Case C-542/09 European Commission v Kingdom of the Netherlands ‛Access to education — Funding for higher education abroad — Residence requirement — ‘Three out of six years rule’’ 1. Erasmus of Rotterdam was an early beneficiary of funding to study abroad. The then bishop of Cambray, Henry of Bergen (for whom Erasmus had started to work as secretary), gave him both leave and a stipend in 1495 to go and study at the University of Paris. Erasmus never looked back; and, in a career that spanned Paris, Leuven, Cambridge and Basel, he became arguably the outstanding scholar of his generation: the ‘Prince of the Humanists’. It is tolerably safe to say that he put the funding for his university studies abroad to excellent use ( ) — and, indeed, the current exchange programmes between EU universities bear his name. 2. Modern day compatriots of Erasmus enjoy similar good fortune. Under the provisions of the Wet Studiefinanciering (Law on the Financing of Studies — ‘the WSF’), they can often obtain funding for higher education pursued outside the Netherlands. However, do the detailed rules governing the grant of such funding — in particular, the rule under which an applicant must, in addition to being eligible for funding to study in the Netherlands, also have resided lawfully in the Netherlands during at least three out of the last six years (the ‘three out of six years rule’) — fall foul of Article 45 TFEU (formerly Article 39 EC) ( ) and Article 7(2) of Regulation (EEC) No 1612/68 ( ) inasmuch as they discriminate indirectly and without justification against migrant workers and their dependent family members? Legal background Treaty provisions 3. Article 45 TFEU states: ‘1. Freedom of movement for workers shall be secured within the Union. 2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment. …’ 4. Pursuant to Article 165(1) TFEU (formerly Article 149(1) EC), Member States are responsible ‘for the content of teaching and the organisation of education systems’. Article 165(1) states that ‘[t]he Union shall contribute to the development of quality education by encouraging cooperation between Member States and, if necessary, by supporting and supplementing their action’. Union action is also to be aimed at ‘encouraging mobility of students’. ( ) Regulation No 1612/68 5. Regulation No 1612/68 aimed to secure the freedom of nationals of one Member State to work in another Member State and thereby implement the Treaty provisions on freedom of movement for workers. The first recital in the preamble to that regulation described its overall objective as being to achieve ‘the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment, as well as the right of such workers to move freely within the [Union] in order to pursue activities as employed persons subject to any limitations justified on grounds of public policy, public security or public health’. 6. The third and fourth recitals, respectively, stated that ‘freedom of movement constitutes a fundamental right of workers and their families’ and that that right was to be enjoyed ‘by permanent, seasonal and frontier workers and by those who pursue their activities for the purpose of providing services’. 7. According to the fifth recital, the exercise of this fundamental freedom, ‘by objective standards, in freedom and dignity, require[d] that equality of treatment shall be ensured in fact and in law in respect of all matters relating to the actual pursuit of activities as employed persons and to eligibility for housing, and also that obstacles to the mobility of workers shall be eliminated, in particular as regards the worker’s right to be joined by his family and the conditions for the integration of that family into the host country’. 8. Article 7(2) of Regulation No 1612/68 provided that a worker, who is a national of a Member State, in the territory of another Member State ‘shall enjoy the same social and tax advantages as national workers’. 9. Article 12 of Regulation No 1612/68 read: ‘The children of a national of a Member State who is or has been employed in the territory of another Member State shall be admitted to that State’s general educational, apprenticeship and vocational training courses under the same conditions as the nationals of that State, if such children are residing in its territory. ...’ Directive 2004/38 10. Article 7 of Directive 2004/38/EC ( ) governs the conditions under which EU citizens can reside more than three months in another Member State. It states: ‘1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they: (a) are workers or self-employed persons in the host Member State; or (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State; or ...’ 11. Article 24 of that directive provides: ‘1. Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty. The benefit of this right shall be extended to family members who are not nationals of a Member State and who have the right of residence or permanent residence. 2. By way of derogation from paragraph 1, the host Member State shall not be obliged … prior to acquisition of the right of permanent residence, to grant maintenance aid for studies, including vocational training, consisting in student grants or student loans to persons other than workers, self-employed persons, persons who retain such status and members of their families.’ National law 12. The WSF defines who can receive funding to study in the Netherlands and abroad. Funding to study abroad is called ‘meeneembare studie financiering’ (‘MNSF’), that is to say, ‘portable’ funding for studies. 13. For higher education in the Netherlands, funding for studies is available to students who are between 18 and 29 years old, study at a designated or approved educational establishment and satisfy a nationality condition. ( ) Article 2(2) defines the nationality condition. Those eligible are: (i) Netherlands nationals, (ii) non-Netherlands nationals who are treated, in the area of funding for studies, as Netherlands nationals based on a treaty or a decision of an international organisation and (iii) non-Netherlands nationals who live in the Netherlands and belong to a category of persons who are treated, in the area of funding for studies, as Netherlands nationals on the basis of a general administrative measure. 14. The second category includes EU citizens who are economically active in the Netherlands and their family members. They need not have resided in the Netherlands to qualify for this type of funding. Thus, cross-border workers and their family members are covered. The third category includes EU citizens who are not economically active in the Netherlands. They qualify for funding after five years of lawful residence in the Netherlands. 15. For funding for higher education pursued outside the Netherlands, students must be eligible for funding for higher education in the Netherlands and, pursuant to Article 2(14)(2)(c) of the WSF, must additionally have resided lawfully in the Netherlands during at least three out of the six years preceding enrolment at an educational establishment abroad. This requirement applies irrespective of students’ nationality. 16. As long as they satisfy the relevant conditions, students can apply sequentially for funding to study in the Netherlands and then for MNSF to study abroad. 17. Until 1 January 2014, the three out of six years rule does not apply to students, whatever their nationality, pursuing higher education in the ‘border areas’ of the Netherlands (Flanders and the Brussels-Capital Region in Belgium, and North-Rhine Westphalia, Lower Saxony and Bremen in Germany). 18. MNSF consists of four components: (i) a basic grant, which is a fixed amount paid per month and based on whether the student lives at home or independently, together with an allowance for travel costs and an additional allowance if the student has a partner or is a single parent, (ii) an additional grant, based on the income and contribution of the student’s parents and subject to a maximum limit, (iii) a basic loan, if applied for, subject to a maximum limit and (iv) a loan to cover fees, if applied for, limited in principle to the maximum fee chargeable by Netherlands educational institutions for an equivalent course. 19. The basic grant, the additional grant (except for the first year of studies) and the allowance for travel costs are given as loans. They become grants if the studies are completed within 10 years of their commencement. 20. The maximum limit for MNSF funding, excluding allowances, ranges from EUR 739.15 to EUR 929.69 per month, depending on whether the student lives at home or independently. The same limit applies to funding for studies in the Netherlands. Procedure 21. Following a regular pre-litigation procedure, the Commission asks the Court to declare that, by requiring that migrant workers, including cross-border workers, and their dependent family members fulfil a residence requirement (that is, the three out of six years rule) to be eligible under the WSF for the funding of educational studies abroad, the Kingdom of the Netherlands indirectly discriminates against migrant workers and has failed to fulfil its obligations under Article 45 TFEU and Article 7(2) of Regulation No 1612/68, and to order the Kingdom of the Netherlands to pay the costs. 22. The Netherlands Government contends that the Court should dismiss the application and order the Commission to pay the costs. 23. The Governments of Belgium, Denmark, Germany and Sweden have intervened in support of the Netherlands. 24. The principal parties and all the interveners made oral submissions at the hearing on 10 November 2011. Assessment Preliminary remarks 25. The Commission has throughout limited its claim to Article 45 TFEU and Article 7(2) of Regulation No 1612/68. It argues that there is indirect discrimination against migrant workers working in the Netherlands and their dependent family members with respect to MNSF. It makes no complaint under Article 24 of Directive 2004/38, Article 21 TFEU or any other provisions of EU law governing citizenship rights. 26. Article 7(2) of Regulation No 1612/68 expresses the principle of equal treatment set out in Article 45 TFEU with regard to social and tax advantages and must be interpreted in the same manner. ( ) Thus, if a measure regulating access to a social advantage infringes Article 7(2) because it treats migrant workers less favourably than national workers, it is also incompatible with Article 45 TFEU. However, even if a measure is compatible with Article 7(2), it may still infringe Article 45. ( ) I shall therefore first consider the residence requirement in the light of Article 7(2) of Regulation No 1612/68. If it infringes Article 7(2), it is equally prohibited by Article 45 TFEU. 27. The Netherlands, supported by the intervening Member States, submits that Article 7(2) of Regulation No 1612/68 does not apply. In the alternative, the Netherlands argues that the residence requirement is not indirectly discriminatory against migrant workers. 28. In any event, the Netherlands and the intervening Member States contend that the residence requirement is justified for two reasons. First, the requirement serves to identify the desired target group of students: namely, those who, without MNSF, would study in the Netherlands and, if they study abroad, will return to the Netherlands. Second, the residence requirement prevents the scheme from becoming an unreasonable financial burden which could have consequences for the overall level of funding that is granted. That objective was endorsed by the Court in Bidar and confirmed in Förster. ( ) Does the residence requirement infringe Article 7(2) of Regulation No 1612/68 in principle? The beneficiaries of equal treatment under Article 7(2) of Regulation No 1612/68 29. The Netherlands contends that Article 7(2) of Regulation No 1612/68 does not apply in principle to dependent family members of migrant workers, irrespective of their place of residence. It accepts that an exception exists in cases of direct discrimination against children of migrant workers. Generally, however, such persons are covered by Article 12 of Regulation No 1612/68, not by Article 7(2). This is because Article 12 is a specific expression of the equal treatment obligation as it applies to children and to access to general educational, apprenticeship and vocational training courses. Reading Article 7(2) as applying to children of migrant workers risks rendering the residence requirement in Article 12 meaningless. 30. The Commission contends that the Court’s case-law confirms that Article 7(2) applies to all dependent family members of the migrant workers. 31. I agree with the Commission. 32. The direct beneficiaries of the equal treatment guaranteed by Article 7(2) are nationals of a Member State who work in another Member State. Cross-border workers, who reside by definition outside the host Member State, belong to this category. ( ) Thus, workers are not required to reside where they work to enjoy protection under Article 7(2), nor does Article 7(2) make entitlement to equal treatment conditional on where the social advantage is actually enjoyed. 33. Dependent family members of a migrant worker are the indirect beneficiaries of the equal treatment obligation under Article 7(2) because discrimination against them with respect to a social advantage also discriminates against the migrant worker who then has to support the family member. The Court has already made clear that this group of indirect beneficiaries includes the workers’ dependent family members in the descending and ascending line and spouses. ( ) They are not required to reside in the Member State where the migrant worker is employed to enjoy protection under Article 7(2). ( ) 34. The term ‘social advantages’ in Article 7(2) includes funding for higher education studies pursued by migrant workers or their dependent family members. ( ) In the present case, the dependent children of migrant workers working in the Netherlands may, in particular, wish to apply for MNSF to study elsewhere than in the Netherlands. 35. The Netherlands relies heavily on the fact that the cases in which the Court has held that Article 7(2) applies to children of migrant workers have all involved direct discrimination. Unlike the Netherlands, I see no logic in an interpretation which renders the personal scope of an equal treatment obligation dependent on the type of discrimination involved. I therefore consider that it is of no consequence whether the alleged discrimination is direct or indirect. 36. Article 12 of Regulation No 1612/68 gives a separate, distinct entitlement to children of migrant workers in their own right. 37. Pursuant to that provision, the host Member State must allow children of migrant workers access to its general educational, apprenticeship and vocational training courses. Article 12 applies also to children who pursue education outside the host Member State. ( ) 38. Article 12 specifically applies to ‘[t]he children of a national of a Member State who is or has been employed in the territory of another Member State’ and who ‘are residing in its territory’. The Court has held that Article 12 grants children who have established their residence in a Member State during their parent’s exercise of the right of residence as a migrant worker in that Member State an independent right of residence in order to attend general educational courses there. ( ) The child enjoys that right whether or not the parent retains the status of migrant worker in the host Member State. ( ) 39. Furthermore, a child does not have to demonstrate dependence on the migrant worker to rely on Article 12. If the parent is no longer a migrant worker benefiting from equal treatment under Article 7(2) or providing for the maintenance of the child, the child may none the less claim in his own right access to the types of social advantage defined in Article 12 and under the same conditions as nationals, provided that the child resides in the host Member State. ( ) 40. Unlike the Netherlands, I do not consider that because Article 12 expressly governs a defined, limited group of family members as direct beneficiaries, it necessarily follows that the personal scope of Article 7(2) should be read as excluding that group as indirect beneficiaries. The Netherlands relies on a series of cases in support of its position. None of these cases resolves the issue as to whether Article 7(2) protects dependent family members of a migrant worker seeking financial support for higher education. 41. In Brown, the claimant was denied protection under Article 7(2) because he acquired the status of migrant worker exclusively as a result of being accepted to undertake studies in the host Member State. ( ) He could not seek protection under Article 12 (nor, on my reasoning, as an indirect beneficiary under Article 7(2)) because neither parent had the status of migrant worker after his birth. ( )Lair and Matteucci, on the other hand, concerned the application of Article 7(2) to claimants who were themselves migrant workers. ( ) 42. In Casagrande, the Court interpreted Article 12 in a dispute involving the child of a migrant worker residing where the parent was employed, and held that that provision also covered general measures intended to facilitate educational attendance. ( ) Similarly, di Leo ( ) concerned the application of Article 12 to the child of a migrant worker leaving the host Member State to study abroad. 43. I conclude that dependent family members, including children, benefit from the migrant worker’s right to equal treatment under Article 7(2) of Regulation No 1612/68. That conclusion applies irrespective of where they or the migrant worker reside and whether the alleged discrimination is direct or indirect. Does an objective difference exist between workers residing in the Netherlands and those residing outside the Netherlands? 44. The Commission claims that migrant workers (including cross-border workers) working in the Netherlands and their dependent family members are treated less favourably than Netherlands workers and their dependent family members. 45. The Netherlands argues that an objective difference exists between workers residing in the Netherlands and those residing outside the Netherlands because the latter do not require incentives to study abroad. That argument implies that migrant workers working in the Netherlands and residing in another Member State are not in a comparable situation to Netherlands workers (and migrant workers, for that matter) working and residing in the Netherlands. 46. I disagree with the Netherlands. 47. Discrimination under Article 7(2) exists when migrant workers are treated less favourably than national workers in a comparable situation. To decide whether that is the case, it is necessary to determine who benefits from equal treatment and in connection with what particular benefit. In that regard, the object of the rules establishing the difference in treatment is relevant to assessing whether an objective difference exists between the relevant categories of people. ( ) I add that, in my view, the alleged objective difference must generally reflect a distinction made in law or in fact other than that made by the very legal rule that is at issue. 48. In the present case, the benefit is the grant of funding for studies anywhere outside the Netherlands. In the context of Article 7(2), migrant workers in the Netherlands benefit from equal treatment. 49. There is relatively little difficulty about accepting that the following two categories contain workers who may properly be compared with each other. First, migrant workers residing and working in the Netherlands are clearly comparable to, and are to be treated equally with, Netherlands nationals residing and working in the Netherlands. Second, migrant workers working in the Netherlands but residing elsewhere are clearly comparable to, and are to be treated equally with, Netherlands nationals working in the Netherlands but residing elsewhere. 50. The Netherlands uses the fact that these two identifiable categories exist to argue that no comparison can be made between those categories — that is, it claims that those residing in the Netherlands are objectively different from those residing outside the Netherlands. At one level, this is self-evidently true. Living in Amsterdam is not the same as living in Paris. But is this a relevant difference such as, objectively, to justify different treatment? ( ) 51. I do not think so. 52. The Netherlands accepts (rightly) that children of migrant workers who wish to study in the Netherlands should have access to funding for such studies on exactly the same terms as Netherlands nationals, irrespective of whether those migrant workers (and their dependent children) reside in the Netherlands or elsewhere. 53. In so doing, it has implicitly accepted that at least some children of migrant workers may — like the children of Netherlands workers — be pre-disposed to study in the Netherlands (whether or not they are residing there) and that they should have access to funding to do so. But the necessary corollary of that — it seems to me — is that the Netherlands can no longer legitimately assert that the place of residence will, in a quasi-automatic manner, determine where the migrant worker or his dependent children will study. And, if that is right, then it is not legitimate to use place of residence as an allegedly ‘objective’ criterion for different treatment. On the contrary: a migrant worker employed in the Netherlands but residing in another Member State can properly be compared with a Netherlands worker residing and working in the Netherlands. Does the residence requirement result in indirect discrimination? 54. It is settled case-law that, in infringement proceedings, the Commission must prove the existence of the alleged infringement and provide the Court with the evidence necessary for it to establish that an obligation has not been fulfilled. In so doing, the Commission may not rely on a presumption. ( ) 55. In this case, the Commission must demonstrate that migrant workers and Netherlands workers are treated differently with results similar to those that would follow from applying a condition of nationality. 56. The Commission argues that the residence requirement infringes Article 7(2) of Regulation No 1612/68 because national workers are always likely to satisfy it more easily than migrant workers. It submits that Meeusen ( ) and Meints ( ) establish that a residence requirement is, by definition, indirectly discriminatory. In the present case, the residence requirement is indirectly discriminatory in any event to the extent that it necessarily excludes cross-border workers and their dependent family members. The Netherlands relies on Sotgiu and Kaba II to argue that a residence requirement is not discriminatory in all circumstances. ( ) 57. I share neither reading of the Court’s case-law. 58. In Meeusen, the Court found that ‘a Member State may not make the grant of a social advantage within the meaning of Article 7 … dependent on the condition that the beneficiaries be resident within its territory’. ( )Meeusen concerned a residence requirement that was directly discriminatory and therefore prohibited. The Court’s statement in Meeusen was based in turn on Meints. ( ) In that case, the Court concluded that the residence requirement at issue was indirectly discriminatory only after examining whether that requirement was more easily met by national workers (and whether it could be justified). ( ) Neither judgment therefore establishes that a residence requirement is always indirectly discriminatory. 59. However, nor are the Court’s rulings in Sotgiu and Kaba II authority for the contrary position, namely that it may be possible to impose a residence requirement on nationals and non-nationals who are in a comparable situation without that resulting in indirect discrimination. In Sotgiu, the workers concerned belonged to different categories based on whether they were obliged to move. The Court therefore considered that residence formed an objective criterion for different treatment of workers in objectively different situations. In Kaba II, the spouse of a migrant worker who was a national of a Member State other than the United Kingdom and the spouse of a person who was ‘present and settled’ in the United Kingdom were held not to be comparable due to a distinction made in a provision of national law other than that at issue. ( ) 60. I agree none the less with the Commission that the residence requirement indirectly discriminates against migrant workers. 61. A requirement of past, present or future residence (especially if it stipulates residence for a particular duration) is intrinsically likely to affect national workers of a Member State less than migrant workers who are in a comparable situation. That is because such a condition always distinguishes between workers who do not need to move to satisfy it and workers who do need to move. The former are usually, although possibly not invariably, more likely to be nationals of the host Member State. 62. The three out of six years rule pertains to past residence of a certain duration. I consider that Netherlands workers are more likely to be able to satisfy that condition than migrant workers residing in the Netherlands. 63. It is conceivable that such a residence requirement may not discriminate against every cross-border worker. ( ) Nevertheless, it is likely that a considerable number of cross-border workers and their dependent family members are excluded from MNSF because the family resides together in a border area and thus outside the Netherlands. 64. I therefore conclude that the residence requirement constitutes indirect discrimination prohibited in principle by Article 7(2) of Regulation No 1612/68. Is the residence requirement none the less justified? 65. If the residence requirement constitutes indirect discrimination prohibited by Article 7(2) of Regulation No 1612/68, the Court must determine whether it is none the less justified. To that effect, the Netherlands must demonstrate that the residence requirement (i) pursues a legitimate aim which is justified by overriding reasons of public interest, (ii) is appropriate to achieve the legitimate objective pursued (appropriateness) and (iii) does not go beyond what is necessary to achieve the desired objective (proportionality). ( ) 66. The Netherlands argues that the residence requirement is justified because it is appropriate and does not go beyond what it necessary (i) to avert an unreasonable financial burden resulting from making MNSF available to all students (the economic objective) and, at the same time, (ii) to ensure that MNSF is available solely to students who, without it, would pursue higher education in the Netherlands, and who are likely to return there if they study abroad (the social objective). 67. Before turning to the justification of the residence requirement on the basis of each objective, I should like to comment on the principles governing the burden of proof and the standard of proof. I do so because neither party in this case has applied those principles properly. 68. The Court has held that the defendant Member State must provide ‘reasons which may be invoked by a Member State by way of justification’ and ‘an analysis of the appropriateness and proportionality of the restrictive measure adopted by that State and specific evidence substantiating its arguments’. ( ) It thus bears the onus of establishing a prima facie case that the measure is appropriate and does not go beyond what is necessary to achieve its objective(s). 69. However, the burden on the defendant Member State to demonstrate proportionality ‘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’. ( ) Put another way, the Member State cannot be required to prove a negative. 70. If the defendant Member State establishes that the contested measure is prima facie proportionate, it is then for the Commission to rebut the Member State’s analysis by suggesting other less restrictive measures. The Commission cannot merely propose an alternative measure. It must also explain why and how that measure is appropriate to achieve the stated objective(s) and is, above all, less restrictive than the contested measure. Without such an explanation, the defendant Member State cannot know on what its rebuttal should focus. Is the residence requirement justified on the basis of the economic objective? – Is the economic objective a legitimate aim which is justified by overriding reasons in the public interest? 71. The Netherlands argues that the residence requirement is justified because it seeks to ensure that MNSF does not impose an excessive financial burden on society. In Bidar and Förster, the Court accepted that Member States may be legitimately concerned with the financial consequences of policies and therefore require a degree of integration before making funding for studies available. ( ) The Netherlands estimates that eliminating the residence requirement would result in an additional financial burden of some EUR 175 million per year spent on providing MNSF for, in particular, children of migrant workers and Netherlands nationals who either live outside the Netherlands or have lived less than three out of the previous six years in the Netherlands. 72. The Commission argues that the reasoning in Bidar and Förster does not apply to migrant workers because EU law treats economically active EU citizens differently from economically inactive EU citizens. Article 24(2) of Directive 2004/38 confirms that distinction. Even if the Netherlands were allowed to require a degree of connection, the status of migrant worker itself demonstrates a sufficiently close connection with the Netherlands; and the Court in Bidar recognised that no residence requirement can be imposed in such circumstances. ( ) Furthermore, mere concerns about budgetary implications cannot qualify as overriding reasons relating to the general interest. 73. I agree with the Commission. 74. The Court is being invited to apply the reasoning in Bidar and Förster as regards economically inactive EU citizens to migrant workers. But first: what precisely did the Court rule in Bidar and Förster? 75. In Bidar, the United Kingdom sought to justify a residence requirement of three years based on the need to ensure that (i) contributions made through taxation were sufficient to justify the grant of the funding and (ii) a genuine link existed between the student claiming the funding and the employment market of the host Member State. ( ) In essence, the concern was that students from all over the European Union might arrive in the United Kingdom and forthwith apply for funding to study there. 76. In response to the first part of the United Kingdom’s argument, the Court accepted that ‘it is permissible for a Member State to ensure that the grant of assistance to cover the maintenance costs of students from other Member States does not become an unreasonable burden which could have consequences for the overall level of assistance which may be granted by that State’. ( ) As a result, it was legitimate to grant funding ‘only to students who have demonstrated a certain degree of integration into the society of that State’. ( ) 77. The Court did not accept the second part of the United Kingdom’s argument. A Member State was not entitled to make the grant of funding for studies dependent on a link between the student and the employment market. In essence, the Court found that an indirectly discriminatory residence requirement could not be justified based on the need to grant funding only to students who had already worked in the host Member State or would work there after their studies. Indeed, the Court found that education does not necessarily assign a student to a particular geographical employment market. ( ) Unlike the Commission, I do not read this part of the judgment in Bidar as precluding any requirement that migrant workers demonstrate a degree of connection to the host Member State. The Court simply did not address that point. What it did was to reject the argument that linking the place of studies and the place of employment was an objective that could justify indirect discrimination. 78. The Court went on to accept that past residence for a certain time in the host Member State may establish the necessary degree of connection. ( ) Limiting the group of recipients through a criterion expressing a degree of closeness to the financing Member State, such as past residence, was thus an appropriate measure to ensure that the grant of funding to students from other Member States did not become an unreasonable burden which could have consequences for the overall level of assistance which might be granted by that State. 79. The Netherlands appears to read the judgment in Förster as confirming that in Bidar. 80. I am not convinced by that reading of Förster. 81. In Förster, the Court first noted that, according to Bidar, it is legitimate for a Member State to ensure that a social advantage does not become an unreasonable burden which could have consequences for the overall level of assistance. ( ) That was, indeed, the legitimate objective recognised in Bidar. ( ) 82. Next, the Court stated that, also according to Bidar, it is legitimate to grant assistance to cover maintenance costs only to students demonstrating a certain degree of integration into the society of the Member State. ( ) The Court referred to the passage in Bidar where it held that a student may be regarded as demonstrating a certain degree of integration in the host Member State if the student has resided there for a certain period of time. ( ) 83. The Court next applied that reasoning to the facts in Förster. The Court needed to resolve whether the indirectly discriminatory residence requirement of five years could ‘be justified by the objective, for the host Member State, of ensuring that students who are nationals of other Member States have to a certain degree integrated into its society’. ( ) The Court in Förster therefore examined the proportionality of the residence requirement in relation to the objective of ensuring integration of the student, and not that of avoiding the collapse of the existing scheme due to its financial cost. ( ) 84. However, the Court in Bidar had not recognised that objective. In that judgment, evidence of a degree of integration was treated as a means to avert an unreasonable financial burden. 85. It would be unfortunate if a superficial reading of Förster were to lead to confusion between means and end. There is a risk that Förster might be read as indicating that Member States can set a residence requirement, irrespective of whether its purpose is to ensure that making available a social advantage does not adversely affect the stability of its public finances or the pursuit of any other legitimate objective justified by overriding reasons of public interest. On that basis, Member States might seek to justify less favourable treatment of (both economically active and inactive) EU citizens in terms of social policy (integration) by applying access criteria such as length of residence, marital and family status, language, diplomas, employment, and so forth, without ever explaining why the availability of a social benefit should be limited in that way. 86. Against the background of that reading of Bidar and Förster, I turn to examine whether averting an unreasonable financial burden which could have consequences for the overall level of funding for studies is an objective that can be transposed from the context of economically inactive EU citizens and invoked to justify indirect discrimination against migrant workers. 87. I consider it cannot. 88. I accept that the financial burden of making a social advantage widely available may compromise its existence and overall level. ( ) In such circumstances, concerns about budgetary implications are intrinsically linked with the existence and objective of the social advantage itself and cannot therefore be wholly disregarded. Member States might otherwise forgo altogether providing particular forms of social advantage, to the detriment of the public interest. 89. I am nevertheless of the view that the Netherlands cannot invoke budgetary concerns to justify discriminatory treatment of migrant workers and their dependent family members. Any conditions attached to MNSF in order to keep expenditure within acceptable limits must be borne equally by migrant workers and Netherlands workers. 90. Migrant workers and their families enjoy the freedom to move to another Member State based on the consideration that ‘mobility of labour within the [Union] must be one of the means by which the worker is guaranteed the possibility of improving his living and working conditions and promoting his social advancement, while helping to satisfy the requirements of the economies of the Member States’. ( ) Member States must therefore eliminate any obstacles to the exercise of the freedom of movement and related rights of migrant workers, including those affecting ‘the worker’s right to be joined by his family and the conditions for the integration of that family into the host country’. ( ) 91. In my opinion, if Member States make a social advantage available to their own workers, irrespective of whether the benefit is tied to a person’s contributions or not, they must grant it on equal terms to migrant workers. Any limitation imposed for preserving financial integrity must be applied on equal terms to national workers and migrant workers. ( ) 92. It is true that the Court has accepted that the objective of averting an unreasonable financial burden which can have consequences for the overall level of social assistance granted can justify discrimination against economically inactive EU citizens. In my opinion, the Court has done so because, as EU law stands, all EU citizens are not yet guaranteed full equal treatment with regard to social advantages. 93. Before the introduction of EU citizenship, several directives provided that nationals of Member States who were not exercising an economic right to free movement had the right to move to and reside in another Member State on condition that they and their family members were covered by sickness insurance and had ‘sufficient resources to avoid becoming a burden on the social assistance system of the host Member State during their period of residence’. ( ) The condition was imposed because these nationals ‘must not become an unreasonable burden on the public finances of the host Member State’. ( ) In particular, Directive 93/96 limited the right of students to reside in another Member State and did not establish any right to payment of maintenance grants by the host Member State. ( ) 94. These nationals whatever their activity became EU citizens ( ) following the entry into force of the Maastricht Treaty. Based on that status, they have the right to move and reside freely within the territory of the Member States, subject to limitations laid down in EU law. The Court has held that the host Member State must show a certain degree of financial solidarity to students who are nationals of other Member States and have exercised their right to move to and reside in the host Member State. ( ) 95. Directive 2004/38 consolidated much of the earlier legislation and case-law. It maintains the distinction between EU citizens who have exercised an economic right of free movement and other EU citizens and expressly preserves the right of Member States to discriminate for a certain time against the latter. Thus, Article 24(2) of Directive 2004/38 provides that, until students have acquired permanent residence in the Member State where they study, ‘[b]y way of derogation from’ the obligation to treat equally nationals and other EU citizens, the host Member State cannot be obliged to grant them maintenance assistance for studies, consisting out of grants or loans. Although the facts giving rise to Bidar preceded the adoption of Directive 2004/38, the reasoning in that case reflects Member States’ freedom to discriminate in those circumstances. The derogation does not, however, apply to ‘workers, self-employed persons, persons who retain such status and members of their families’. Such persons are, on the contrary, protected by the general rule of equal treatment. 96. I therefore conclude that the economic objective cannot be regarded as a legitimate aim which is justified by overriding reasons in the public interest. It follows that, unless the social objective can be upheld, the Netherlands’ defense must fail. 97. However, in case the Court should disagree with my conclusions on the economic objective, I shall briefly examine both the appropriateness of the residence requirement in relation to that objective and its proportionality. – Is the residence requirement appropriate to achieve the economic objective? 98. The Netherlands argues that the residence requirement is an appropriate means to ensure that MNSF does not lead to an excessive, unreasonable financial burden. The Netherlands has submitted a study which it contends demonstrates that eliminating the requirement would result in an additional burden of some EUR 175 million per year. 99. The Commission laconically indicates that it has ‘doubts’ about the Netherlands’ position on the appropriateness of the measure. 100. Even if the Commission makes no convincing effort to refute the Netherlands’ argument and evidence, it is for the Netherlands to make a persuasive case that excluding students who have lived less than three out of six years in the Netherlands is correlated to the unreasonable financial burden it allegedly averts. That does not involve establishing that the residence requirement is the most appropriate measure to achieve the stated objective. ( ) 101. I accept the Netherlands’ argument. 102. The residence requirement necessarily excludes a group of potential claimants and hence limits the cost of MNSF. The Netherlands appears to take the view that the additional burden of EUR 175 million per year would undermine the MNSF scheme as it presently stands. 103. I find no reason to question that position. After all, Member States remain free to decide at what point a particular level of funding for studies becomes an unreasonable financial burden with consequences for the overall level of assistance granted under the scheme. It is for the Member State, and not the Court, to determine where that threshold lies. 104. Since the Commission has made no effort to rebut the Netherlands’ position, I conclude that the Netherlands has established that the residence requirement is appropriate. – Is the residence requirement proportionate in relation to the economic objective? 105. The parties’ arguments on proportionality became clearer at the hearing held at the Court’s initiative. 106. The parties disagree in essence about whether it is proportionate to require migrant workers, who are already connected to the Netherlands through their employment there, also to comply with the three out of six years rule. 107. The Commission contends that the status of migrant worker is sufficient by itself to demonstrate the required degree of connection and that the Netherlands cannot impose an additional residence requirement. It suggests coordination with other Member States as an alternative measure. The Netherlands argues that the status of migrant worker is insufficient and that no alternative measures are available. When deciding to impose the residence requirement, it also took into account that alternative sources of funding and types of financial support may be available, that other Member States make funding similar to MNSF conditional on past residence and that the residence requirement prevents certain risks of fraud. 108. I am not convinced that the residence requirement is proportionate. 109. Unlike the Netherlands, I find that the fact that the Court accepted a residence requirement of five years as proportionate in Förster does not mean that the three out of six years rule is proportionate here. In Förster, the Court relied on the text of Articles 16(1) and 24(2) of Directive 2004/38 to rule that a Member State was not required to grant maintenance assistance for studies to economically inactive EU citizens who had not resided legally in that Member State for a continuous period of five years. ( ) Unlike the Advocate General, ( ) the Court appeared not to be inclined to question the thesis that the required degree of connection could not be demonstrated through other means. 110. However, Article 24(2) makes clear that the five years’ residence condition in Directive 2004/38 cannot be imposed on migrant workers and their dependent families. 111. Can a Member State nevertheless impose a requirement of three out of six years residence on such persons? 112. I consider it cannot. 113. Unlike the Netherlands, I do not read Bidar as endorsing such a residence requirement. In that case, the Court did not need to examine proportionality because the effect of the residence requirement coupled with the rules on obtaining ‘settled status’ in the United Kingdom was that, whatever his actual degree of integration, Mr Bidar could never qualify for assistance to cover his maintenance costs. 114. The difficulty in assessing the proportionality of the residence requirement in this case is that the parties’ arguments are based on the understanding that the Netherlands can require a certain degree of connection without taking into account that that is a means to an end. 115. On my reading of Bidar, examining the proportionality of the residence requirement involves deciding whether the Netherlands has established that the three out of six years rule does not go beyond what is necessary to avoid an unreasonable financial burden. 116. The Netherlands has indeed submitted evidence to that effect. 117. The figure of EUR 175 million per year is based on a risk analysis that calculates the estimated additional cost of funding, in particular, children of migrant workers (group 1) and Netherlands nationals (group 2) who are currently excluded from MNSF. ( ) Eliminating the residence requirement for children in group 2 would, it is said, result in an additional cost of EUR 132.1 million, which is almost three times as high as the cost of EUR 44.5 million resulting from eliminating the requirement for children in group 1. 118. These estimates are based on a range of assumptions that appear, at best, questionable. For example, in calculating the number of children in group 1 residing outside the Netherlands, the authors of the study estimate that between 15% and 30% of Eastern European migrant workers in the Netherlands continue to reside with their families in their home Member State. These workers are therefore assumed to commute either on a daily or a less regular basis from, for example, Warsaw to the Netherlands. At the same time, the fact that these commuting migrant workers may spend more days a week in the Netherlands than in the home Member State is not taken into account in determining whether they are resident in the Netherlands. Another example is that the authors of the study assume that children of cross-border workers will study in the border area where they reside. They therefore do not appear to apply a correction for the children of migrant workers and Netherlands nationals residing abroad, whether or not in a border area, who are entitled to obtain MNSF to study in a border area. 119. Leaving aside these concerns about the methodology applied, children in groups 1 and 2 qualify for funding to study in the Netherlands despite the fact that they do not reside there. The Netherlands has voluntarily assumed the burden of financing such students up to certain maximum limits. The same limits apply to funding to study in the Netherlands and abroad. The Netherlands has not explained why the same financial burden is acceptable when assumed in connection with studies in the Netherlands, but unreasonable in the context of MNSF. ( ) 120. If the Court should decide that the Netherlands can require a certain degree of connection independently of concerns about the financial cost of MNSF, I consider that it is nevertheless disproportionate to require a migrant worker and his dependent family members to satisfy the three out of six years rule. 121. The Court has accepted that a residence requirement may be disproportionate if it is too exclusive in nature because it ‘unduly favours an element which is not necessarily representative of the real and effective degree of connection … to the exclusion of all other representative elements’. ( ) To be proportionate, the relevant connecting elements must also be known in advance and provision must be made for the possibility of a means of redress of a judicial nature. ( ) 122. In my opinion, the Netherlands has not explained convincingly why either a more flexible residence requirement than the three out of six years rule or other elements expressing a comparable degree of connection, such as employment, would not achieve the same objective in a less restrictive manner. In particular, it has not explained why it accepts that an EU citizen residing in the Netherlands during three out of six years is always sufficiently connected to the Netherlands, irrespective of his participation in that society but rejects outright the possibility that a person’s status as a migrant worker might properly serve to demonstrate the requisite degree of connection with the Netherlands. 123. The Netherlands’ other arguments do not lead me to reconsider that conclusion. 124. Unlike the Netherlands, I consider that it is of no relevance that alternative sources of funding may be available to study outside the Netherlands or outside the home Member State for students excluded from MNSF, and that other Member States make funding for studies abroad conditional on a similar requirement. The fact that students may apply to the Netherlands to obtain funding to study in the Netherlands or that they may claim a generally available tax benefit and enjoy other benefits in connection with studies abroad cannot remedy the discriminatory treatment afforded to them in connection with MNSF. In any event, as the Commission submits in rebuttal, it would appear that these alternative benefits may not be as beneficial as MNSF; and their availability does not demonstrate that the residence requirement does not go beyond what is necessary to achieve the desired objective. Measures adopted by other Member States likewise cannot remedy the discriminatory treatment applied by the Netherlands. It is settled case-law that a Member State cannot justify an unlawful measure based on the fact that other Member States have adopted the same measure and may thus be infringing EU law in the same manner. ( ) 125. The Netherlands further contends that the residence requirement: (i) prevents students residing abroad from claiming that they live independently and are thus entitled to a higher grant when in fact they still live at home, and (ii) prevents people from acquiring the status of migrant worker in the Netherlands after a token period of employment, becoming entitled to MNSF and then studying outside the Netherlands (possibly, indeed, in their home Member State). 126. In my opinion, neither risk is peculiar to MNSF. Both also exist in connection with students’ applications to receive funding to study in the Netherlands. The Netherlands has presumably found other ways of addressing the same concerns adequately in relation to that funding since it is granted to Netherlands nationals and migrant workers alike irrespective of where they reside. 127. In any event, the Netherlands can verify a person’s status as a migrant worker ( ) and take the measures to guard against abuse of rights and fraud, taking into the account the individual circumstances of the case and the distinction between taking advantage of a possibility conferred by law and an abuse of rights. ( ) 128. I therefore conclude that the Netherlands has not demonstrated that the residence requirement is prima facie proportionate. 129. For the sake of completeness, I will consider none the less whether the Commission has put forward other less restrictive measures. 130. The Commission has proposed only one alternative. It suggests that the Netherlands should coordinate with other Member States. In so doing, it relies on a remark I made in Bressol that the host Member State and the home Member State share a responsibility actively to seek a negotiated solution for problems resulting from high volumes of student mobility. ( ) 131. I agree with the Netherlands that EU law imposes no duty of coordination. Rather, coordination is a form of cooperation that requires the consent of at least one other Member State. If the Netherlands is entitled to invoke a legitimate aim to justify indirect discrimination, the means to achieve that aim cannot be made conditional upon other Member States’ consent and willingness to find a negotiated solution. Member States remain responsible for the organisation of their education systems. While coordination might resolve some of the difficulties facing Member States which, like the Netherlands, wish to promote student mobility through funding, requiring them to achieve coordination would run counter to the entire spirit of Article 165(1) TFEU. Coordination is not, therefore, an alternative measure. 132. In any event, the Commission has not explained how and why the possibility of coordination demonstrates that the residence requirement is not proportionate. 133. The Netherlands in its rejoinder appears to accept that the Commission put forward three possible measures: limiting where MNSF can be used, limiting the duration of MNSF and the obligation of coordination. However, the first and second options are canvassed in the section of the Commission’s reply where the Commission summarises the measures that the Netherlands itself put forward and discussed in its defence. I therefore do not consider that the Commission has put forward these suggestions. In any event, they are not, properly speaking, less restrictive alternatives. A Member State must be free to offer generous financial support for studies anywhere in the world, provided it respects its obligations under EU law (and, of course, assumes the financial responsibility for the cost of its generous scheme). – Conclusion 134. I conclude that the indirect discrimination against migrant workers and their dependent family members resulting from the residence requirement cannot be justified on the basis of the economic objective recognised by the Court in Bidar. However, I must still examine whether the residence requirement can be justified on the basis of the social objective invoked by the Netherlands. Is the residence requirement justified on the basis of the social objective? – Is the social objective a legitimate aim which is justified by overriding reasons in the public interest? 135. The aim of MNSF is to increase student mobility from the Netherlands to other Member States. It is not to promote mobility between two Member States other than the Netherlands, or from another Member State to the Netherlands, or to fund students residing outside the Netherlands who wish to study where they reside. MNSF is reserved for students who would otherwise study in the Netherlands, and who are — so the Netherlands argues — likely to return there if they study abroad. It thus seeks to target students who are likely to use their experience abroad to enrich Netherlands society and (possibly) the Netherlands employment market. 136. I accept that this is a legitimate aim. Nor does the Commission appear to contest it. 137. ‘Encouraging mobility of students’ is one of the EU’s objectives; and its importance has been stressed by the Parliament and the Council. ( ) It is likewise a legitimate objective for Member States to pursue in the organisation of their educational and study finance systems. ( ) 138. I also accept that encouraging student mobility serves the public interest. It promotes cultural and linguistic diversity and enhances professional development. In that way, it contributes to a pluralistic society in Member States and in the European Union as a whole. 139. In a fully-integrated European Union, it might not be acceptable to make access to funding conditional on the likely return of a student to the originating Member State, because that would impede freedom of movement for EU citizens. In the absence of harmonisation in this area, however, Member States retain considerable freedom to decide the conditions of entitlement to funding for studies, provided they do so in a manner consistent with EU law. 140. I therefore accept that the social objective is a legitimate aim which is justified by overriding reasons in the public interest. – Is the residence requirement appropriate to achieve the social objective? 141. The Netherlands argues that the residence requirement is appropriate to ensure that MNSF goes only to the target group. 142. The Commission advances no argument in that regard. It merely states that it has ‘doubts’ about the Netherlands’ position. 143. Even if the Commission once again makes no convincing effort to refute the Netherlands’ argument, it is for the Netherlands to make a persuasive case that the residence requirement is appropriate to achieve the stated objective. ( ) 144. I am not convinced that the Netherlands has done so. 145. I accept that where students reside prior to pursuing higher education may have some influence on where they study. It is true that the Netherlands has not submitted evidence substantiating that correlation. I do not consider that to be an obstacle. The actual or potential contribution of a measure to the stated objective can be established through quantitative or qualitative analysis. In the present case, I consider that qualitative analysis is sufficient, and that the argument is inherently plausible. 146. I also agree with the Netherlands that the residence requirement prevents students from using MNSF to study where they reside, since students residing outside the Netherlands are precluded from applying for MNSF. 147. However, I am not convinced that there is an obvious link between where students reside prior to pursuing higher education and the likelihood that they will return to that Member State after completing their studies abroad. I do not regard it as inherently likely that a majority of students who reside in the Netherlands and then study abroad will necessarily return to reside in the Netherlands. There may be ways of encouraging that to happen, ( ) but it is not self-evident that past residence is a good way of predicting where students will reside and work in the future. 148. I conclude that the Netherlands has not established that the residence requirement is appropriate to identify the group of students to whom it wishes to give MNSF. 149. For the sake of completeness, I shall consider briefly whether the residence requirement is proportionate in relation to the social objective. – Is the residence requirement proportionate in relation to the social objective? 150. It is for the Netherlands to show that the three out of six years rule does not go beyond what is necessary to identify the group of students who would otherwise study in the Netherlands and who are likely to return there if they study abroad. ( ) 151. I consider that its arguments in that regard are insufficient. 152. I agree with the Netherlands that a requirement to know Dutch or to have a diploma from a Netherlands school would not be effective alternative measures. 153. Proficiency in Dutch is not necessarily a good indicator of whether students would study in the Netherlands without MNSF or whether they will return there after their studies abroad. A Dutch-speaking student may decide to study in Antwerp because he knows the language there. He might also opt to study in Paris to improve his French or in Warsaw to learn Polish. 154. The same reasoning applies to requiring the would-be student to hold a diploma from a Netherlands school. Assuming that a Netherlands school diploma is recognised in other Member States and that the Netherlands similarly accepts the equivalence of diplomas obtained abroad, it is difficult to see any necessary direct correlation between where a school diploma is obtained and whether a particular student would study in the Netherlands without MNSF and will return there after his studies abroad. 155. In any event, both those requirements appear indirectly discriminatory and likely to affect migrant workers in the same way as the residence requirement. 156. Is it sufficient for the Netherlands to advance two measures that are clearly not proportionate ways of achieving the objective (and that are, in any event, as (if not more) discriminatory as the residence requirement) in order to show that the residence requirement satisfies the proportionality test? 157. I consider it is not. 158. As the party bearing the burden of proof, the Netherlands needs at least to show why it favours residence of three out of six years to the exclusion of all other representative elements, such as (for example) residence of a shorter duration, or why the target group cannot be identified through other (possibly less restrictive) measures, such as (for example) a rule prescribing that MNSF cannot be used to study in the place of residence. 159. If the Court were none the less to take the view that the Netherlands has established that the residence requirement is in principle proportionate, I consider that the Commission has failed to show that other, less restrictive, measures exist that achieve the same result. It is quite unclear from the Commission’s written and oral observations whether it was putting forward any such alternatives. If its argument with regard to coordination is meant to apply in relation to the social objective, I consider that that argument should be rejected for the reasons already given. ( ) – Conclusion 160. I conclude that the indirect discrimination against migrant workers and dependent family members resulting from the residence requirement could in principle be justified on the basis of the social objective invoked by the Netherlands. However, I am not convinced that the Netherlands has shown that the residence requirement is an appropriate and proportionate means of attaining that objective. In my view, its defence must accordingly fail. Conclusion 161. In the light of all the foregoing considerations, I am of the opinion that the Court should: (1) declare that, by requiring that migrant workers and dependent family members fulfil a residence requirement to be eligible under the Wet Studiefinanciering for the funding of educational studies abroad, the Kingdom of the Netherlands has failed to fulfil its obligations under Article 45 TFEU and Article 7(2) of Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community; (2) order the Kingdom of the Netherlands to pay the costs. ( ) Original language: English. ( ) Certainly he was devoted to his studies, as witnessed by one of his most charming quoted sayings, ‘When I get a little money I buy books; and if any is left I buy food and clothes’. See also the Opinion of Advocate General Ruiz-Jarabo Colomer in Joined Cases C-11/06 and C-12/06 Morgan and Bucher [2007] ECR I-9161, point 43. ( ) The deadline for complying with the Commission’s reasoned opinion expired on 15 June 2009 and thus before the entry into force of the Lisbon Treaty. For ease of reference and the sake of consistency, I shall refer to Article 45 TFEU. In any event, the texts of Article 39 EC and other relevant treaty provisions remain unchanged in the Lisbon Treaty. ( ) Regulation of the Council of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475). Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union (OJ 2011 L 141, p. 1) repealed Regulation No 1612/68 with effect from 16 June 2011, well after the expiry of the deadline in the Commission’s reasoned opinion. The texts of Articles 7(2) and 12 of Regulation No 1612/68 remain unchanged in Regulation No 492/2011. ( ) Second indent of Article 165(2) TFEU (formerly Article 149(2) EC). The Erasmus programme and other EU action programmes in the field of education are based on Articles 165 and 166 TFEU. See Decision No 1720/2006/EC of the European Parliament and of the Council of 15 November 2006 establishing an action programme in the field of lifelong learning (OJ 2006 L 327, p. 45) as amended by Decision No 1357/2008/EC (OJ 2008 L 350, p. 56). ( ) Directive of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States, amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77, and corrigenda OJ 2004 L 229, p. 35, OJ 2005 L 30, p. 27, OJ 2005 L 197, p. 34 and OJ 2007 L 204, p. 28). ( ) Article 2(1) of the WSF. ( ) Case C-287/05 Hendrix [2007] ECR I-6909, paragraph 53 and case-law cited. ( ) See Case C-208/07 Chamier-Glisczinski [2009] ECR I-6095, paragraph 66 and case-law cited. ( ) Case C-209/03 Bidar [2005] ECR I-2119 and Case C-158/07 Förster [2008] ECR I-8507. ( ) Fourth recital in the preamble to Regulation No 1612/68 and Case C-269/07 Commission v Germany [2009] ECR I-7811, paragraph 52 and case-law cited. ( ) Commission v Germany, cited in footnote 11 above, paragraph 65 and case-law cited (spouses); Case C-258/04 Ioannidis [2005] ECR I-8275, paragraph 35 and case-law cited (descendants); and Case 261/83 Castelli [1984] ECR 3199, paragraph 12 (ascendants). ( ) Case C-337/97 Meeusen [1999] ECR I-3289, paragraph 25. That case involved a directly discriminatory residence requirement (in that it applied only to non-Netherlands nationals). ( ) Meeusen, cited in footnote 13 above, paragraph 19 and case-law cited. ( ) Case C-308/89 di Leo [1990] ECR I-4185, paragraph 12. ( ) See Case C-413/99 Baumbast and R [2002] ECR I-7091, paragraph 63, and Case C-480/08 Teixeira [2010] ECR I-1107, paragraph 46. ( ) Teixeira, cited in footnote 16 above, paragraph 51, and Case C-310/08 Ibrahim [2010] ECR I-1065, paragraph 39. ( ) Case C-7/94 Gaal [1995] ECR I-1031, paragraph 30. ( ) Case 197/86 [1988] ECR 3205, paragraph 28. ( ) Brown, cited in footnote 19 above, paragraphs 29 and 31. ( ) Case 39/86 Lair [1988] ECR 3161 and Case 235/87 Matteucci [1988] ECR 5589. In Lair, the claimant had worked in the host Member State, but not for long enough to satisfy the requirement (applicable to foreigners but not to nationals) of five years’ regular occupational activity there before applying for study assistance. Matteucci proceeded on the basis that the claimant was not merely the child of a migrant worker, but was herself also engaged in genuine and effective activity (see paragraphs 9 and 10 of the judgment). ( ) Case 9/74 Casagrande [1974] ECR 773, paragraph 9. ( ) Cited in footnote 15 above. ( ) See Case C-356/09 Kleist [2010] ECR I-11939, paragraph 34 and case-law cited. ( ) For some reflections on what are, and are not, relevant differences in the context of the right to equal treatment, see also my Opinion in Case C-427/06 Bartsch [2008] ECR I-7245, point 44. ( ) Case C-400/08 Commission v Spain [2011] ECR I-1915, paragraph 58 and case-law cited. ( ) Cited in footnote 13 above, paragraph 21. ( ) Case C-57/96 [1997] ECR I-6689. ( ) Case 152/73 Sotgiu [1974] ECR 153 and Case C-466/00 Kaba II [2003] ECR I-2219. ( ) Cited in footnote 13 above, paragraph 21. ( ) Cited in footnote 28 above, paragraph 51. ( ) Meints, cited in footnote 28 above, paragraphs 45 and 46. ( ) See Sotgiu, cited in footnote 29 above, paragraphs 12 and 13, and Kaba II, cited in footnote 29 above, paragraph 55. ( ) For example, the child of a cross-border worker might, for some reason, nevertheless reside in the Netherlands or have resided there for long enough to satisfy the three out of six years rule before moving back across the border. ( ) Case C-325/08 Olympique Lyonnais [2010] ECR I-2177, paragraph 38 and case-law cited. ( ) Case C-147/03 Commission v Austria [2005] ECR I-5969, paragraph 63 and case-law cited. ( ) Case C-110/05 Commission v Italy [2009] ECR I-519, paragraph 66. ( ) Bidar and Förster, both cited in footnote 10 above. ( ) Bidar, cited in footnote 10 above, paragraph 58. ( ) Bidar, cited in footnote 10 above, paragraph 55. ( ) Bidar, cited in footnote 10 above, paragraph 56. In Morgan and Bucher, cited in footnote 2 above, the Court confirmed that the same reasoning applies as regards the award by a Member State of grants to students wishing to study in other Member States (see paragraph 44). ( ) Bidar, cited in footnote 10 above, paragraph 57. ( ) Bidar, cited in footnote 10 above, paragraph 58. ( ) Bidar, cited in footnote 10 above, paragraph 59. ( ) Förster, cited in footnote 10 above, paragraph 48. ( ) See Bidar, cited in footnote 10 above, paragraph 56. ( ) Förster, cited in footnote 10 above, paragraph 49. ( ) Förster, cited in footnote 10 above, paragraph 50. ( ) Förster, cited in footnote 10 above, paragraph 51. ( ) Förster, cited in footnote 10 above, paragraph 54. ( ) Bidar, cited in footnote 10 above, paragraph 56. See also, in the context of health benefits and social security systems, Case C-372/04 Watts [2006] ECR I-4325, paragraph 103, and Case C-169/07 Hartlauer [2009] ECR I-1721, paragraph 50. ( ) Third recital in the preamble to Regulation No 1612/68. ( ) Fifth recital in the preamble to Regulation No 1612/68. ( ) This conclusion does not mean that I consider that in all circumstances Member States are precluded from requiring a degree of connection from migrant workers. Indeed, the social objective invoked by the Netherlands Government as justifying a degree of connection from all applicants is a legitimate aim which is justified by overriding reasons in the public interest (see points 135 to 140 below). ( ) Article 1(1) of Council Directive 90/364/EEC of 28 June 1990 on the right of residence (OJ 1990 L 180, p. 26). The right of residence was granted under the same conditions to former migrant workers and self-employed persons who had ceased their occupational activity. See Article 1(1) of Council Directive 90/365/EEC of 28 June 1990 on the right of residence for employees and self-employed persons who have ceased their occupational activity (OJ 1990 L 180, p. 28). See also Council Directive 90/366/EEC of 28 June 1990 on the right of residence for students (OJ 1990 L 180, p. 30) and its successor, Council Directive 93/96/EEC of 29 October 1993 on the right of residence for students (OJ 1993 L 317, p. 59). Each of those directives, apart from Directive 90/366 which had already been annulled by the Court in Case C-295/90 Parliament v Council [1992] ECR I-4193 (see paragraph 21), was repealed by Directive 2004/38. ( ) Fourth recital in the preamble to Directive 90/364. ( ) Articles 1 and 3 of Directive 93/96. ( ) Case C-34/09 Ruiz Zambrano [2011] ECR I-1177, paragraph 40 and case-law cited. ( ) Case C-184/99 Grzelczyk [2001] ECR I-6193, paragraph 44. The case concerned the payment of the Belgian ‘minimex’ support to a final year student who had managed to be self-financing for the previous three years of his studies. ( ) See also my Opinion in Commission v Spain, cited in footnote 26 above, point 89. ( ) Förster, cited in footnote 10 above, paragraph 55. ( ) Opinion of Advocate General Mazák in Förster, cited in footnote 10 above, points 129 to 135. ( ) These are the largest groups of persons who would qualify for MNSF if the residence requirement were to be eliminated. The estimate is calculated by multiplying the estimated number of such persons by an average cost per capita figure comprising the basic grant, the additional grant and the allowance for travel costs. ( ) Nor is it known how many students receive funding to study in the Netherlands and then benefit from MNSF to study abroad. See also point 16 above. ( ) See Case C-503/09 Stewart [2011] ECR I-6497, paragraph 95 and case-law cited, and Morgan and Bucher, cited in footnote 2 above, paragraph 46 and case-law cited. See also Förster, cited in footnote 10 above, Opinion of Advocate General Mazák, point 133. ( ) See Case C-138/02 Collins [2004] ECR I-2703, paragraph 72. ( ) Case C-111/03 Commission v Sweden [2005] ECR I-8789, paragraph 66 and case-law cited. ( ) A migrant worker is ‘[a]ny person who pursues activities which are effective and genuine’ and who ‘for a certain period of time … performs services for and under the direction of another person in return for which he receives remuneration’. That group excludes persons who perform ‘activities on such a small scale as to be regarded as purely marginal and ancillary’. Meeusen, cited in footnote 13 above, paragraph 13 and case-law cited. ( ) Case C-212/97 Centros [1999] ECR I-1459, paragraphs 24 and 25 and case-law cited. ( ) See point 154 of my Opinion in Case C-73/08 Bressol [2010] ECR I-2735. ( ) See Article 149(2) EC (now Article 165(2) TFEU) and the Recommendation of the European Parliament and of the Council of 10 July 2001 on mobility within the Community for students, persons undergoing training, volunteers, teachers and trainers (2001/613/EC) (OJ 2001 L 215, p. 30). ( ) The objective of encouraging students to return to their Member State of origin after studying abroad may be a concern to Member States where the outflow of students exceeds the number of incoming students. See, for example, Working Group on Portability of Grants and Loans, Report to the Bologna Follow Up Group (http://www.ond.vlaanderen.be/hogeronderwijs/bologna/documents/WGR2007/Portability_of_grants_and_loans_final_report2007.pdf), p. 15, and Recommendation of the European Parliament and of the Council of 18 December 2006 on transnational mobility within the Community for education and training purposes: European Quality Charter for Mobility (2006/961/EC) (OJ 2006 L 394, p. 5), Annex. ( ) See point 100 above. ( ) For example, the grant of funding might perhaps be made conditional upon the student returning to the Netherlands to work there for a minimum period of time. ( ) See points 67 to 70 above. ( ) See points 130 to 132 above. Opinion of the Advocate-General Opinion of the Advocate-General 1. Erasmus of Rotterdam was an early beneficiary of funding to study abroad. The then bishop of Cambray, Henry of Bergen (for whom Erasmus had started to work as secretary), gave him both leave and a stipend in 1495 to go and study at the University of Paris. Erasmus never looked back; and, in a career that spanned Paris, Leuven, Cambridge and Basel, he became arguably the outstanding scholar of his generation: the ‘Prince of the Humanists’. It is tolerably safe to say that he put the funding for his university studies abroad to excellent use (2) — and, indeed, the current exchange programmes between EU universities bear his name. 2. Modern day compatriots of Erasmus enjoy similar good fortune. Under the provisions of the Wet Studiefinanciering (Law on the Financing of Studies — ‘the WSF’), they can often obtain funding for higher education pursued outside the Netherlands. However, do the detailed rules governing the grant of such funding — in particular, the rule under which an applicant must, in addition to being eligible for funding to study in the Netherlands, also have resided lawfully in the Netherlands during at least three out of the last six years (the ‘three out of six years rule’) — fall foul of Article 45 TFEU (formerly Article 39 EC) (3) and Article 7(2) of Regulation (EEC) No 1612/68 (4) inasmuch as they discriminate indirectly and without justification against migrant workers and their dependent family members? Legal background Treaty provisions 3. Article 45 TFEU states: ‘1. Freedom of movement for workers shall be secured within the Union. 2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment. …’ 4. Pursuant to Article 165(1) TFEU (formerly Article 149(1) EC), Member States are responsible ‘for the content of teaching and the organisation of education systems’. Article 165(1) states that ‘[t]he Union shall contribute to the development of quality education by encouraging cooperation between Member States and, if necessary, by supporting and supplementing their action’. Union action is also to be aimed at ‘encouraging mobility of students’. (5) Regulation No 1612/68 5. Regulation No 1612/68 aimed to secure the freedom of nationals of one Member State to work in another Member State and thereby implement the Treaty provisions on freedom of movement for workers. The first recital in the preamble to that regulation described its overall objective as being to achieve ‘the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment, as well as the right of such workers to move freely within the [Union] in order to pursue activities as employed persons subject to any limitations justified on grounds of public policy, public security or public health’. 6. The third and fourth recitals, respectively, stated that ‘freedom of movement constitutes a fundamental right of workers and their families’ and that that right was to be enjoyed ‘by permanent, seasonal and frontier workers and by those who pursue their activities for the purpose of providing services’. 7. According to the fifth recital, the exercise of this fundamental freedom, ‘by objective standards, in freedom and dignity, require[d] that equality of treatment shall be ensured in fact and in law in respect of all matters relating to the actual pursuit of activities as employed persons and to eligibility for housing, and also that obstacles to the mobility of workers shall be eliminated, in particular as regards the worker’s right to be joined by his family and the conditions for the integration of that family into the host country’. 8. Article 7(2) of Regulation No 1612/68 provided that a worker, who is a national of a Member State, in the territory of another Member State ‘shall enjoy the same social and tax advantages as national workers’. 9. Article 12 of Regulation No 1612/68 read: ‘The children of a national of a Member State who is or has been employed in the territory of another Member State shall be admitted to that State’s general educational, apprenticeship and vocational training courses under the same conditions as the nationals of that State, if such children are residing in its territory. ...’ Directive 2004/38 10. Article 7 of Directive 2004/38/EC (6) governs the conditions under which EU citizens can reside more than three months in another Member State. It states: ‘1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they: (a) are workers or self-employed persons in the host Member State; or (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State; or ...’ 11. Article 24 of that directive provides: ‘1. Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty. The benefit of this right shall be extended to family members who are not nationals of a Member State and who have the right of residence or permanent residence. 2. By way of derogation from paragraph 1, the host Member State shall not be obliged … prior to acquisition of the right of permanent residence, to grant maintenance aid for studies, including vocational training, consisting in student grants or student loans to persons other than workers, self-employed persons, persons who retain such status and members of their families.’ National law 12. The WSF defines who can receive funding to study in the Netherlands and abroad. Funding to study abroad is called ‘meeneembare studie financiering’ (‘MNSF’), that is to say, ‘portable’ funding for studies. 13. For higher education in the Netherlands, funding for studies is available to students who are between 18 and 29 years old, study at a designated or approved educational establishment and satisfy a nationality condition. (7) Article 2(2) defines the nationality condition. Those eligible are: (i) Netherlands nationals, (ii) non-Netherlands nationals who are treated, in the area of funding for studies, as Netherlands nationals based on a treaty or a decision of an international organisation and (iii) non-Netherlands nationals who live in the Netherlands and belong to a category of persons who are treated, in the area of funding for studies, as Netherlands nationals on the basis of a general administrative measure. 14. The second category includes EU citizens who are economically active in the Netherlands and their family members. They need not have resided in the Netherlands to qualify for this type of funding. Thus, cross-border workers and their family members are covered. The third category includes EU citizens who are not economically active in the Netherlands. They qualify for funding after five years of lawful residence in the Netherlands. 15. For funding for higher education pursued outside the Netherlands, students must be eligible for funding for higher education in the Netherlands and, pursuant to Article 2(14)(2)(c) of the WSF, must additionally have resided lawfully in the Netherlands during at least three out of the six years preceding enrolment at an educational establishment abroad. This requirement applies irrespective of students’ nationality. 16. As long as they satisfy the relevant conditions, students can apply sequentially for funding to study in the Netherlands and then for MNSF to study abroad. 17. Until 1 January 2014, the three out of six years rule does not apply to students, whatever their nationality, pursuing higher education in the ‘border areas’ of the Netherlands (Flanders and the Brussels-Capital Region in Belgium, and North-Rhine Westphalia, Lower Saxony and Bremen in Germany). 18. MNSF consists of four components: (i) a basic grant, which is a fixed amount paid per month and based on whether the student lives at home or independently, together with an allowance for travel costs and an additional allowance if the student has a partner or is a single parent, (ii) an additional grant, based on the income and contribution of the student’s parents and subject to a maximum limit, (iii) a basic loan, if applied for, subject to a maximum limit and (iv) a loan to cover fees, if applied for, limited in principle to the maximum fee chargeable by Netherlands educational institutions for an equivalent course. 19. The basic grant, the additional grant (except for the first year of studies) and the allowance for travel costs are given as loans. They become grants if the studies are completed within 10 years of their commencement. 20. The maximum limit for MNSF funding, excluding allowances, ranges from EUR 739.15 to EUR 929.69 per month, depending on whether the student lives at home or independently. The same limit applies to funding for studies in the Netherlands. Procedure 21. Following a regular pre-litigation procedure, the Commission asks the Court to declare that, by requiring that migrant workers, including cross-border workers, and their dependent family members fulfil a residence requirement (that is, the three out of six years rule) to be eligible under the WSF for the funding of educational studies abroad, the Kingdom of the Netherlands indirectly discriminates against migrant workers and has failed to fulfil its obligations under Article 45 TFEU and Article 7(2) of Regulation No 1612/68, and to order the Kingdom of the Netherlands to pay the costs. 22. The Netherlands Government contends that the Court should dismiss the application and order the Commission to pay the costs. 23. The Governments of Belgium, Denmark, Germany and Sweden have intervened in support of the Netherlands. 24. The principal parties and all the interveners made oral submissions at the hearing on 10 November 2011. Assessment Preliminary remarks 25. The Commission has throughout limited its claim to Article 45 TFEU and Article 7(2) of Regulation No 1612/68. It argues that there is indirect discrimination against migrant workers working in the Netherlands and their dependent family members with respect to MNSF. It makes no complaint under Article 24 of Directive 2004/38, Article 21 TFEU or any other provisions of EU law governing citizenship rights. 26. Article 7(2) of Regulation No 1612/68 expresses the principle of equal treatment set out in Article 45 TFEU with regard to social and tax advantages and must be interpreted in the same manner. (8) Thus, if a measure regulating access to a social advantage infringes Article 7(2) because it treats migrant workers less favourably than national workers, it is also incompatible with Article 45 TFEU. However, even if a measure is compatible with Article 7(2), it may still infringe Article 45. (9) I shall therefore first consider the residence requirement in the light of Article 7(2) of Regulation No 1612/68. If it infringes Article 7(2), it is equally prohibited by Article 45 TFEU. 27. The Netherlands, supported by the intervening Member States, submits that Article 7(2) of Regulation No 1612/68 does not apply. In the alternative, the Netherlands argues that the residence requirement is not indirectly discriminatory against migrant workers. 28. In any event, the Netherlands and the intervening Member States contend that the residence requirement is justified for two reasons. First, the requirement serves to identify the desired target group of students: namely, those who, without MNSF, would study in the Netherlands and, if they study abroad, will return to the Netherlands. Second, the residence requirement prevents the scheme from becoming an unreasonable financial burden which could have consequences for the overall level of funding that is granted. That objective was endorsed by the Court in Bidar and confirmed in Förster . (10) Does the residence requirement infringe Article 7(2) of Regulation No 1612/68 in principle? The beneficiaries of equal treatment under Article 7(2) of Regulation No 1612/68 29. The Netherlands contends that Article 7(2) of Regulation No 1612/68 does not apply in principle to dependent family members of migrant workers, irrespective of their place of residence. It accepts that an exception exists in cases of direct discrimination against children of migrant workers. Generally, however, such persons are covered by Article 12 of Regulation No 1612/68, not by Article 7(2). This is because Article 12 is a specific expression of the equal treatment obligation as it applies to children and to access to general educational, apprenticeship and vocational training courses. Reading Article 7(2) as applying to children of migrant workers risks rendering the residence requirement in Article 12 meaningless. 30. The Commission contends that the Court’s case-law confirms that Article 7(2) applies to all dependent family members of the migrant workers. 31. I agree with the Commission. 32. The direct beneficiaries of the equal treatment guaranteed by Article 7(2) are nationals of a Member State who work in another Member State. Cross-border workers, who reside by definition outside the host Member State, belong to this category. (11) Thus, workers are not required to reside where they work to enjoy protection under Article 7(2), nor does Article 7(2) make entitlement to equal treatment conditional on where the social advantage is actually enjoyed. 33. Dependent family members of a migrant worker are the indirect beneficiaries of the equal treatment obligation under Article 7(2) because discrimination against them with respect to a social advantage also discriminates against the migrant worker who then has to support the family member. The Court has already made clear that this group of indirect beneficiaries includes the workers’ dependent family members in the descending and ascending line and spouses. (12) They are not required to reside in the Member State where the migrant worker is employed to enjoy protection under Article 7(2). (13) 34. The term ‘social advantages’ in Article 7(2) includes funding for higher education studies pursued by migrant workers or their dependent family members. (14) In the present case, the dependent children of migrant workers working in the Netherlands may, in particular, wish to apply for MNSF to study elsewhere than in the Netherlands. 35. The Netherlands relies heavily on the fact that the cases in which the Court has held that Article 7(2) applies to children of migrant workers have all involved direct discrimination. Unlike the Netherlands, I see no logic in an interpretation which renders the personal scope of an equal treatment obligation dependent on the type of discrimination involved. I therefore consider that it is of no consequence whether the alleged discrimination is direct or indirect. 36. Article 12 of Regulation No 1612/68 gives a separate, distinct entitlement to children of migrant workers in their own right. 37. Pursuant to that provision, the host Member State must allow children of migrant workers access to its general educational, apprenticeship and vocational training courses. Article 12 applies also to children who pursue education outside the host Member State. (15) 38. Article 12 specifically applies to ‘[t]he children of a national of a Member State who is or has been employed in the territory of another Member State’ and who ‘are residing in its territory’. The Court has held that Article 12 grants children who have established their residence in a Member State during their parent’s exercise of the right of residence as a migrant worker in that Member State an independent right of residence in order to attend general educational courses there. (16) The child enjoys that right whether or not the parent retains the status of migrant worker in the host Member State. (17) 39. Furthermore, a child does not have to demonstrate dependence on the migrant worker to rely on Article 12. If the parent is no longer a migrant worker benefiting from equal treatment under Article 7(2) or providing for the maintenance of the child, the child may none the less claim in his own right access to the types of social advantage defined in Article 12 and under the same conditions as nationals, provided that the child resides in the host Member State. (18) 40. Unlike the Netherlands, I do not consider that because Article 12 expressly governs a defined, limited group of family members as direct beneficiaries, it necessarily follows that the personal scope of Article 7(2) should be read as excluding that group as indirect beneficiaries. The Netherlands relies on a series of cases in support of its position. None of these cases resolves the issue as to whether Article 7(2) protects dependent family members of a migrant worker seeking financial support for higher education. 41. In Brown , the claimant was denied protection under Article 7(2) because he acquired the status of migrant worker exclusively as a result of being accepted to undertake studies in the host Member State. (19) He could not seek protection under Article 12 (nor, on my reasoning, as an indirect beneficiary under Article 7(2)) because neither parent had the status of migrant worker after his birth. (20) Lair and Matteucci , on the other hand, concerned the application of Article 7(2) to claimants who were themselves migrant workers. (21) 42. In Casagrande , the Court interpreted Article 12 in a dispute involving the child of a migrant worker residing where the parent was employed, and held that that provision also covered general measures intended to facilitate educational attendance. (22) Similarly, di Leo (23) concerned the application of Article 12 to the child of a migrant worker leaving the host Member State to study abroad. 43. I conclude that dependent family members, including children, benefit from the migrant worker’s right to equal treatment under Article 7(2) of Regulation No 1612/68. That conclusion applies irrespective of where they or the migrant worker reside and whether the alleged discrimination is direct or indirect. Does an objective difference exist between workers residing in the Netherlands and those residing outside the Netherlands? 44. The Commission claims that migrant workers (including cross-border workers) working in the Netherlands and their dependent family members are treated less favourably than Netherlands workers and their dependent family members. 45. The Netherlands argues that an objective difference exists between workers residing in the Netherlands and those residing outside the Netherlands because the latter do not require incentives to study abroad. That argument implies that migrant workers working in the Netherlands and residing in another Member State are not in a comparable situation to Netherlands workers (and migrant workers, for that matter) working and residing in the Netherlands. 46. I disagree with the Netherlands. 47. Discrimination under Article 7(2) exists when migrant workers are treated less favourably than national workers in a comparable situation. To decide whether that is the case, it is necessary to determine who benefits from equal treatment and in connection with what particular benefit. In that regard, the object of the rules establishing the difference in treatment is relevant to assessing whether an objective difference exists between the relevant categories of people. (24) I add that, in my view, the alleged objective difference must generally reflect a distinction made in law or in fact other than that made by the very legal rule that is at issue. 48. In the present case, the benefit is the grant of funding for studies anywhere outside the Netherlands. In the context of Article 7(2), migrant workers in the Netherlands benefit from equal treatment. 49. There is relatively little difficulty about accepting that the following two categories contain workers who may properly be compared with each other. First, migrant workers residing and working in the Netherlands are clearly comparable to, and are to be treated equally with, Netherlands nationals residing and working in the Netherlands. Second, migrant workers working in the Netherlands but residing elsewhere are clearly comparable to, and are to be treated equally with, Netherlands nationals working in the Netherlands but residing elsewhere. 50. The Netherlands uses the fact that these two identifiable categories exist to argue that no comparison can be made between those categories — that is, it claims that those residing in the Netherlands are objectively different from those residing outside the Netherlands. At one level, this is self-evidently true. Living in Amsterdam is not the same as living in Paris. But is this a relevant difference such as, objectively, to justify different treatment? (25) 51. I do not think so. 52. The Netherlands accepts (rightly) that children of migrant workers who wish to study in the Netherlands should have access to funding for such studies on exactly the same terms as Netherlands nationals, irrespective of whether those migrant workers (and their dependent children) reside in the Netherlands or elsewhere. 53. In so doing, it has implicitly accepted that at least some children of migrant workers may — like the children of Netherlands workers — be pre-disposed to study in the Netherlands ( whether or not they are residing there ) and that they should have access to funding to do so. But the necessary corollary of that — it seems to me — is that the Netherlands can no longer legitimately assert that the place of residence will, in a quasi-automatic manner, determine where the migrant worker or his dependent children will study. And, if that is right, then it is not legitimate to use place of residence as an allegedly ‘objective’ criterion for different treatment. On the contrary: a migrant worker employed in the Netherlands but residing in another Member State can properly be compared with a Netherlands worker residing and working in the Netherlands. Does the residence requirement result in indirect discrimination? 54. It is settled case-law that, in infringement proceedings, the Commission must prove the existence of the alleged infringement and provide the Court with the evidence necessary for it to establish that an obligation has not been fulfilled. In so doing, the Commission may not rely on a presumption. (26) 55. In this case, the Commission must demonstrate that migrant workers and Netherlands workers are treated differently with results similar to those that would follow from applying a condition of nationality. 56. The Commission argues that the residence requirement infringes Article 7(2) of Regulation No 1612/68 because national workers are always likely to satisfy it more easily than migrant workers. It submits that Meeusen (27) and Meints (28) establish that a residence requirement is, by definition, indirectly discriminatory. In the present case, the residence requirement is indirectly discriminatory in any event to the extent that it necessarily excludes cross-border workers and their dependent family members. The Netherlands relies on Sotgiu and Kaba II to argue that a residence requirement is not discriminatory in all circumstances. (29) 57. I share neither reading of the Court’s case-law. 58. In Meeusen , the Court found that ‘a Member State may not make the grant of a social advantage within the meaning of Article 7 … dependent on the condition that the beneficiaries be resident within its territory’. (30) Meeusen concerned a residence requirement that was directly discriminatory and therefore prohibited. The Court’s statement in Meeusen was based in turn on Meints . (31) In that case, the Court concluded that the residence requirement at issue was indirectly discriminatory only after examining whether that requirement was more easily met by national workers (and whether it could be justified). (32) Neither judgment therefore establishes that a residence requirement is always indirectly discriminatory. 59. However, nor are the Court’s rulings in Sotgiu and Kaba II authority for the contrary position, namely that it may be possible to impose a residence requirement on nationals and non-nationals who are in a comparable situation without that resulting in indirect discrimination. In Sotgiu , the workers concerned belonged to different categories based on whether they were obliged to move. The Court therefore considered that residence formed an objective criterion for different treatment of workers in objectively different situations. In Kaba II , the spouse of a migrant worker who was a national of a Member State other than the United Kingdom and the spouse of a person who was ‘present and settled’ in the United Kingdom were held not to be comparable due to a distinction made in a provision of national law other than that at issue. (33) 60. I agree none the less with the Commission that the residence requirement indirectly discriminates against migrant workers. 61. A requirement of past, present or future residence (especially if it stipulates residence for a particular duration) is intrinsically likely to affect national workers of a Member State less than migrant workers who are in a comparable situation. That is because such a condition always distinguishes between workers who do not need to move to satisfy it and workers who do need to move. The former are usually, although possibly not invariably, more likely to be nationals of the host Member State. 62. The three out of six years rule pertains to past residence of a certain duration. I consider that Netherlands workers are more likely to be able to satisfy that condition than migrant workers residing in the Netherlands. 63. It is conceivable that such a residence requirement may not discriminate against every cross-border worker. (34) Nevertheless, it is likely that a considerable number of cross-border workers and their dependent family members are excluded from MNSF because the family resides together in a border area and thus outside the Netherlands. 64. I therefore conclude that the residence requirement constitutes indirect discrimination prohibited in principle by Article 7(2) of Regulation No 1612/68. Is the residence requirement none the less justified? 65. If the residence requirement constitutes indirect discrimination prohibited by Article 7(2) of Regulation No 1612/68, the Court must determine whether it is none the less justified. To that effect, the Netherlands must demonstrate that the residence requirement (i) pursues a legitimate aim which is justified by overriding reasons of public interest, (ii) is appropriate to achieve the legitimate objective pursued (appropriateness) and (iii) does not go beyond what is necessary to achieve the desired objective (proportionality). (35) 66. The Netherlands argues that the residence requirement is justified because it is appropriate and does not go beyond what it necessary (i) to avert an unreasonable financial burden resulting from making MNSF available to all students (the economic objective) and, at the same time, (ii) to ensure that MNSF is available solely to students who, without it, would pursue higher education in the Netherlands, and who are likely to return there if they study abroad (the social objective). 67. Before turning to the justification of the residence requirement on the basis of each objective, I should like to comment on the principles governing the burden of proof and the standard of proof. I do so because neither party in this case has applied those principles properly. 68. The Court has held that the defendant Member State must provide ‘reasons which may be invoked by a Member State by way of justification’ and ‘an analysis of the appropriateness and proportionality of the restrictive measure adopted by that State and specific evidence substantiating its arguments’. (36) It thus bears the onus of establishing a prima facie case that the measure is appropriate and does not go beyond what is necessary to achieve its objective(s). 69. However, the burden on the defendant Member State to demonstrate proportionality ‘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’. (37) Put another way, the Member State cannot be required to prove a negative. 70. If the defendant Member State establishes that the contested measure is prima facie proportionate, it is then for the Commission to rebut the Member State’s analysis by suggesting other less restrictive measures. The Commission cannot merely propose an alternative measure. It must also explain why and how that measure is appropriate to achieve the stated objective(s) and is, above all, less restrictive than the contested measure. Without such an explanation, the defendant Member State cannot know on what its rebuttal should focus. Is the residence requirement justified on the basis of the economic objective? – Is the economic objective a legitimate aim which is justified by overriding reasons in the public interest? 71. The Netherlands argues that the residence requirement is justified because it seeks to ensure that MNSF does not impose an excessive financial burden on society. In Bidar and Förster , the Court accepted that Member States may be legitimately concerned with the financial consequences of policies and therefore require a degree of integration before making funding for studies available. (38) The Netherlands estimates that eliminating the residence requirement would result in an additional financial burden of some EUR 175 million per year spent on providing MNSF for, in particular, children of migrant workers and Netherlands nationals who either live outside the Netherlands or have lived less than three out of the previous six years in the Netherlands. 72. The Commission argues that the reasoning in Bidar and Förster does not apply to migrant workers because EU law treats economically active EU citizens differently from economically inactive EU citizens. Article 24(2) of Directive 2004/38 confirms that distinction. Even if the Netherlands were allowed to require a degree of connection, the status of migrant worker itself demonstrates a sufficiently close connection with the Netherlands; and the Court in Bidar recognised that no residence requirement can be imposed in such circumstances. (39) Furthermore, mere concerns about budgetary implications cannot qualify as overriding reasons relating to the general interest. 73. I agree with the Commission. 74. The Court is being invited to apply the reasoning in Bidar and Förster as regards economically inactive EU citizens to migrant workers. But first: what precisely did the Court rule in Bidar and Förster ? 75. In Bidar , the United Kingdom sought to justify a residence requirement of three years based on the need to ensure that (i) contributions made through taxation were sufficient to justify the grant of the funding and (ii) a genuine link existed between the student claiming the funding and the employment market of the host Member State. (40) In essence, the concern was that students from all over the European Union might arrive in the United Kingdom and forthwith apply for funding to study there. 76. In response to the first part of the United Kingdom’s argument, the Court accepted that ‘it is permissible for a Member State to ensure that the grant of assistance to cover the maintenance costs of students from other Member States does not become an unreasonable burden which could have consequences for the overall level of assistance which may be granted by that State’. (41) As a result, it was legitimate to grant funding ‘only to students who have demonstrated a certain degree of integration into the society of that State’. (42) 77. The Court did not accept the second part of the United Kingdom’s argument. A Member State was not entitled to make the grant of funding for studies dependent on a link between the student and the employment market. In essence, the Court found that an indirectly discriminatory residence requirement could not be justified based on the need to grant funding only to students who had already worked in the host Member State or would work there after their studies. Indeed, the Court found that education does not necessarily assign a student to a particular geographical employment market. (43) Unlike the Commission, I do not read this part of the judgment in Bidar as precluding any requirement that migrant workers demonstrate a degree of connection to the host Member State. The Court simply did not address that point. What it did was to reject the argument that linking the place of studies and the place of employment was an objective that could justify indirect discrimination. 78. The Court went on to accept that past residence for a certain time in the host Member State may establish the necessary degree of connection. (44) Limiting the group of recipients through a criterion expressing a degree of closeness to the financing Member State, such as past residence, was thus an appropriate measure to ensure that the grant of funding to students from other Member States did not become an unreasonable burden which could have consequences for the overall level of assistance which might be granted by that State. 79. The Netherlands appears to read the judgment in Förster as confirming that in Bidar . 80. I am not convinced by that reading of Förster . 81. In Förster , the Court first noted that, according to Bidar , it is legitimate for a Member State to ensure that a social advantage does not become an unreasonable burden which could have consequences for the overall level of assistance. (45) That was, indeed, the legitimate objective recognised in Bidar . (46) 82. Next, the Court stated that, also according to Bidar , it is legitimate to grant assistance to cover maintenance costs only to students demonstrating a certain degree of integration into the society of the Member State. (47) The Court referred to the passage in Bidar where it held that a student may be regarded as demonstrating a certain degree of integration in the host Member State if the student has resided there for a certain period of time. (48) 83. The Court next applied that reasoning to the facts in Förster . The Court needed to resolve whether the indirectly discriminatory residence requirement of five years could ‘be justified by the objective, for the host Member State, of ensuring that students who are nationals of other Member States have to a certain degree integrated into its society’. (49) The Court in Förster therefore examined the proportionality of the residence requirement in relation to the objective of ensuring integration of the student , and not that of avoiding the collapse of the existing scheme due to its financial cost. (50) 84. However, the Court in Bidar had not recognised that objective. In that judgment, evidence of a degree of integration was treated as a means to avert an unreasonable financial burden. 85. It would be unfortunate if a superficial reading of Förster were to lead to confusion between means and end. There is a risk that Förster might be read as indicating that Member States can set a residence requirement, irrespective of whether its purpose is to ensure that making available a social advantage does not adversely affect the stability of its public finances or the pursuit of any other legitimate objective justified by overriding reasons of public interest. On that basis, Member States might seek to justify less favourable treatment of (both economically active and inactive) EU citizens in terms of social policy (integration) by applying access criteria such as length of residence, marital and family status, language, diplomas, employment, and so forth, without ever explaining why the availability of a social benefit should be limited in that way. 86. Against the background of that reading of Bidar and Förster , I turn to examine whether averting an unreasonable financial burden which could have consequences for the overall level of funding for studies is an objective that can be transposed from the context of economically inactive EU citizens and invoked to justify indirect discrimination against migrant workers. 87. I consider it cannot. 88. I accept that the financial burden of making a social advantage widely available may compromise its existence and overall level. (51) In such circumstances, concerns about budgetary implications are intrinsically linked with the existence and objective of the social advantage itself and cannot therefore be wholly disregarded. Member States might otherwise forgo altogether providing particular forms of social advantage, to the detriment of the public interest. 89. I am nevertheless of the view that the Netherlands cannot invoke budgetary concerns to justify discriminatory treatment of migrant workers and their dependent family members. Any conditions attached to MNSF in order to keep expenditure within acceptable limits must be borne equally by migrant workers and Netherlands workers. 90. Migrant workers and their families enjoy the freedom to move to another Member State based on the consideration that ‘mobility of labour within the [Union] must be one of the means by which the worker is guaranteed the possibility of improving his living and working conditions and promoting his social advancement, while helping to satisfy the requirements of the economies of the Member States’. (52) Member States must therefore eliminate any obstacles to the exercise of the freedom of movement and related rights of migrant workers, including those affecting ‘the worker’s right to be joined by his family and the conditions for the integration of that family into the host country’. (53) 91. In my opinion, if Member States make a social advantage available to their own workers, irrespective of whether the benefit is tied to a person’s contributions or not, they must grant it on equal terms to migrant workers. Any limitation imposed for preserving financial integrity must be applied on equal terms to national workers and migrant workers. (54) 92. It is true that the Court has accepted that the objective of averting an unreasonable financial burden which can have consequences for the overall level of social assistance granted can justify discrimination against economically inactive EU citizens. In my opinion, the Court has done so because, as EU law stands, all EU citizens are not yet guaranteed full equal treatment with regard to social advantages. 93. Before the introduction of EU citizenship, several directives provided that nationals of Member States who were not exercising an economic right to free movement had the right to move to and reside in another Member State on condition that they and their family members were covered by sickness insurance and had ‘sufficient resources to avoid becoming a burden on the social assistance system of the host Member State during their period of residence’. (55) The condition was imposed because these nationals ‘must not become an unreasonable burden on the public finances of the host Member State’. (56) In particular, Directive 93/96 limited the right of students to reside in another Member State and did not establish any right to payment of maintenance grants by the host Member State. (57) 94. These nationals whatever their activity became EU citizens (58) following the entry into force of the Maastricht Treaty. Based on that status, they have the right to move and reside freely within the territory of the Member States, subject to limitations laid down in EU law. The Court has held that the host Member State must show a certain degree of financial solidarity to students who are nationals of other Member States and have exercised their right to move to and reside in the host Member State. (59) 95. Directive 2004/38 consolidated much of the earlier legislation and case-law. It maintains the distinction between EU citizens who have exercised an economic right of free movement and other EU citizens and expressly preserves the right of Member States to discriminate for a certain time against the latter. Thus, Article 24(2) of Directive 2004/38 provides that, until students have acquired permanent residence in the Member State where they study, ‘[b]y way of derogation from’ the obligation to treat equally nationals and other EU citizens, the host Member State cannot be obliged to grant them maintenance assistance for studies, consisting out of grants or loans. Although the facts giving rise to Bidar preceded the adoption of Directive 2004/38, the reasoning in that case reflects Member States’ freedom to discriminate in those circumstances. The derogation does not, however, apply to ‘workers, self-employed persons, persons who retain such status and members of their families’. Such persons are, on the contrary, protected by the general rule of equal treatment. 96. I therefore conclude that the economic objective cannot be regarded as a legitimate aim which is justified by overriding reasons in the public interest. It follows that, unless the social objective can be upheld, the Netherlands’ defense must fail. 97. However, in case the Court should disagree with my conclusions on the economic objective, I shall briefly examine both the appropriateness of the residence requirement in relation to that objective and its proportionality. – Is the residence requirement appropriate to achieve the economic objective? 98. The Netherlands argues that the residence requirement is an appropriate means to ensure that MNSF does not lead to an excessive, unreasonable financial burden. The Netherlands has submitted a study which it contends demonstrates that eliminating the requirement would result in an additional burden of some EUR 175 million per year. 99. The Commission laconically indicates that it has ‘doubts’ about the Netherlands’ position on the appropriateness of the measure. 100. Even if the Commission makes no convincing effort to refute the Netherlands’ argument and evidence, it is for the Netherlands to make a persuasive case that excluding students who have lived less than three out of six years in the Netherlands is correlated to the unreasonable financial burden it allegedly averts. That does not involve establishing that the residence requirement is the most appropriate measure to achieve the stated objective. (60) 101. I accept the Netherlands’ argument. 102. The residence requirement necessarily excludes a group of potential claimants and hence limits the cost of MNSF. The Netherlands appears to take the view that the additional burden of EUR 175 million per year would undermine the MNSF scheme as it presently stands. 103. I find no reason to question that position. After all, Member States remain free to decide at what point a particular level of funding for studies becomes an unreasonable financial burden with consequences for the overall level of assistance granted under the scheme. It is for the Member State, and not the Court, to determine where that threshold lies. 104. Since the Commission has made no effort to rebut the Netherlands’ position, I conclude that the Netherlands has established that the residence requirement is appropriate. – Is the residence requirement proportionate in relation to the economic objective? 105. The parties’ arguments on proportionality became clearer at the hearing held at the Court’s initiative. 106. The parties disagree in essence about whether it is proportionate to require migrant workers, who are already connected to the Netherlands through their employment there, also to comply with the three out of six years rule. 107. The Commission contends that the status of migrant worker is sufficient by itself to demonstrate the required degree of connection and that the Netherlands cannot impose an additional residence requirement. It suggests coordination with other Member States as an alternative measure. The Netherlands argues that the status of migrant worker is insufficient and that no alternative measures are available. When deciding to impose the residence requirement, it also took into account that alternative sources of funding and types of financial support may be available, that other Member States make funding similar to MNSF conditional on past residence and that the residence requirement prevents certain risks of fraud. 108. I am not convinced that the residence requirement is proportionate. 109. Unlike the Netherlands, I find that the fact that the Court accepted a residence requirement of five years as proportionate in Förster does not mean that the three out of six years rule is proportionate here. In Förster , the Court relied on the text of Articles 16(1) and 24(2) of Directive 2004/38 to rule that a Member State was not required to grant maintenance assistance for studies to economically inactive EU citizens who had not resided legally in that Member State for a continuous period of five years. (61) Unlike the Advocate General, (62) the Court appeared not to be inclined to question the thesis that the required degree of connection could not be demonstrated through other means. 110. However, Article 24(2) makes clear that the five years’ residence condition in Directive 2004/38 cannot be imposed on migrant workers and their dependent families. 111. Can a Member State nevertheless impose a requirement of three out of six years residence on such persons? 112. I consider it cannot. 113. Unlike the Netherlands, I do not read Bidar as endorsing such a residence requirement. In that case, the Court did not need to examine proportionality because the effect of the residence requirement coupled with the rules on obtaining ‘settled status’ in the United Kingdom was that, whatever his actual degree of integration, Mr Bidar could never qualify for assistance to cover his maintenance costs. 114. The difficulty in assessing the proportionality of the residence requirement in this case is that the parties’ arguments are based on the understanding that the Netherlands can require a certain degree of connection without taking into account that that is a means to an end. 115. On my reading of Bidar , examining the proportionality of the residence requirement involves deciding whether the Netherlands has established that the three out of six years rule does not go beyond what is necessary to avoid an unreasonable financial burden. 116. The Netherlands has indeed submitted evidence to that effect. 117. The figure of EUR 175 million per year is based on a risk analysis that calculates the estimated additional cost of funding, in particular, children of migrant workers (group 1) and Netherlands nationals (group 2) who are currently excluded from MNSF. (63) Eliminating the residence requirement for children in group 2 would, it is said, result in an additional cost of EUR 132.1 million, which is almost three times as high as the cost of EUR 44.5 million resulting from eliminating the requirement for children in group 1. 118. These estimates are based on a range of assumptions that appear, at best, questionable. For example, in calculating the number of children in group 1 residing outside the Netherlands, the authors of the study estimate that between 15% and 30% of Eastern European migrant workers in the Netherlands continue to reside with their families in their home Member State. These workers are therefore assumed to commute either on a daily or a less regular basis from, for example, Warsaw to the Netherlands. At the same time, the fact that these commuting migrant workers may spend more days a week in the Netherlands than in the home Member State is not taken into account in determining whether they are resident in the Netherlands. Another example is that the authors of the study assume that children of cross-border workers will study in the border area where they reside. They therefore do not appear to apply a correction for the children of migrant workers and Netherlands nationals residing abroad, whether or not in a border area, who are entitled to obtain MNSF to study in a border area. 119. Leaving aside these concerns about the methodology applied, children in groups 1 and 2 qualify for funding to study in the Netherlands despite the fact that they do not reside there. The Netherlands has voluntarily assumed the burden of financing such students up to certain maximum limits. The same limits apply to funding to study in the Netherlands and abroad. The Netherlands has not explained why the same financial burden is acceptable when assumed in connection with studies in the Netherlands, but unreasonable in the context of MNSF. (64) 120. If the Court should decide that the Netherlands can require a certain degree of connection independently of concerns about the financial cost of MNSF, I consider that it is nevertheless disproportionate to require a migrant worker and his dependent family members to satisfy the three out of six years rule. 121. The Court has accepted that a residence requirement may be disproportionate if it is too exclusive in nature because it ‘unduly favours an element which is not necessarily representative of the real and effective degree of connection … to the exclusion of all other representative elements’. (65) To be proportionate, the relevant connecting elements must also be known in advance and provision must be made for the possibility of a means of redress of a judicial nature. (66) 122. In my opinion, the Netherlands has not explained convincingly why either a more flexible residence requirement than the three out of six years rule or other elements expressing a comparable degree of connection, such as employment, would not achieve the same objective in a less restrictive manner. In particular, it has not explained why it accepts that an EU citizen residing in the Netherlands during three out of six years is always sufficiently connected to the Netherlands, irrespective of his participation in that society but rejects outright the possibility that a person’s status as a migrant worker might properly serve to demonstrate the requisite degree of connection with the Netherlands. 123. The Netherlands’ other arguments do not lead me to reconsider that conclusion. 124. Unlike the Netherlands, I consider that it is of no relevance that alternative sources of funding may be available to study outside the Netherlands or outside the home Member State for students excluded from MNSF, and that other Member States make funding for studies abroad conditional on a similar requirement. The fact that students may apply to the Netherlands to obtain funding to study in the Netherlands or that they may claim a generally available tax benefit and enjoy other benefits in connection with studies abroad cannot remedy the discriminatory treatment afforded to them in connection with MNSF. In any event, as the Commission submits in rebuttal, it would appear that these alternative benefits may not be as beneficial as MNSF; and their availability does not demonstrate that the residence requirement does not go beyond what is necessary to achieve the desired objective. Measures adopted by other Member States likewise cannot remedy the discriminatory treatment applied by the Netherlands. It is settled case-law that a Member State cannot justify an unlawful measure based on the fact that other Member States have adopted the same measure and may thus be infringing EU law in the same manner. (67) 125. The Netherlands further contends that the residence requirement: (i) prevents students residing abroad from claiming that they live independently and are thus entitled to a higher grant when in fact they still live at home, and (ii) prevents people from acquiring the status of migrant worker in the Netherlands after a token period of employment, becoming entitled to MNSF and then studying outside the Netherlands (possibly, indeed, in their home Member State). 126. In my opinion, neither risk is peculiar to MNSF. Both also exist in connection with students’ applications to receive funding to study in the Netherlands. The Netherlands has presumably found other ways of addressing the same concerns adequately in relation to that funding since it is granted to Netherlands nationals and migrant workers alike irrespective of where they reside. 127. In any event, the Netherlands can verify a person’s status as a migrant worker (68) and take the measures to guard against abuse of rights and fraud, taking into the account the individual circumstances of the case and the distinction between taking advantage of a possibility conferred by law and an abuse of rights. (69) 128. I therefore conclude that the Netherlands has not demonstrated that the residence requirement is prima facie proportionate. 129. For the sake of completeness, I will consider none the less whether the Commission has put forward other less restrictive measures. 130. The Commission has proposed only one alternative. It suggests that the Netherlands should coordinate with other Member States. In so doing, it relies on a remark I made in Bressol that the host Member State and the home Member State share a responsibility actively to seek a negotiated solution for problems resulting from high volumes of student mobility. (70) 131. I agree with the Netherlands that EU law imposes no duty of coordination. Rather, coordination is a form of cooperation that requires the consent of at least one other Member State. If the Netherlands is entitled to invoke a legitimate aim to justify indirect discrimination, the means to achieve that aim cannot be made conditional upon other Member States’ consent and willingness to find a negotiated solution. Member States remain responsible for the organisation of their education systems. While coordination might resolve some of the difficulties facing Member States which, like the Netherlands, wish to promote student mobility through funding, requiring them to achieve coordination would run counter to the entire spirit of Article 165(1) TFEU. Coordination is not, therefore, an alternative measure. 132. In any event, the Commission has not explained how and why the possibility of coordination demonstrates that the residence requirement is not proportionate. 133. The Netherlands in its rejoinder appears to accept that the Commission put forward three possible measures: limiting where MNSF can be used, limiting the duration of MNSF and the obligation of coordination. However, the first and second options are canvassed in the section of the Commission’s reply where the Commission summarises the measures that the Netherlands itself put forward and discussed in its defence. I therefore do not consider that the Commission has put forward these suggestions. In any event, they are not, properly speaking, less restrictive alternatives. A Member State must be free to offer generous financial support for studies anywhere in the world, provided it respects its obligations under EU law (and, of course, assumes the financial responsibility for the cost of its generous scheme). – Conclusion 134. I conclude that the indirect discrimination against migrant workers and their dependent family members resulting from the residence requirement cannot be justified on the basis of the economic objective recognised by the Court in Bidar . However, I must still examine whether the residence requirement can be justified on the basis of the social objective invoked by the Netherlands. Is the residence requirement justified on the basis of the social objective? – Is the social objective a legitimate aim which is justified by overriding reasons in the public interest? 135. The aim of MNSF is to increase student mobility from the Netherlands to other Member States. It is not to promote mobility between two Member States other than the Netherlands, or from another Member State to the Netherlands, or to fund students residing outside the Netherlands who wish to study where they reside. MNSF is reserved for students who would otherwise study in the Netherlands, and who are — so the Netherlands argues — likely to return there if they study abroad. It thus seeks to target students who are likely to use their experience abroad to enrich Netherlands society and (possibly) the Netherlands employment market. 136. I accept that this is a legitimate aim. Nor does the Commission appear to contest it. 137. ‘Encouraging mobility of students’ is one of the EU’s objectives; and its importance has been stressed by the Parliament and the Council. (71) It is likewise a legitimate objective for Member States to pursue in the organisation of their educational and study finance systems. (72) 138. I also accept that encouraging student mobility serves the public interest. It promotes cultural and linguistic diversity and enhances professional development. In that way, it contributes to a pluralistic society in Member States and in the European Union as a whole. 139. In a fully-integrated European Union, it might not be acceptable to make access to funding conditional on the likely return of a student to the originating Member State, because that would impede freedom of movement for EU citizens. In the absence of harmonisation in this area, however, Member States retain considerable freedom to decide the conditions of entitlement to funding for studies, provided they do so in a manner consistent with EU law. 140. I therefore accept that the social objective is a legitimate aim which is justified by overriding reasons in the public interest. – Is the residence requirement appropriate to achieve the social objective? 141. The Netherlands argues that the residence requirement is appropriate to ensure that MNSF goes only to the target group. 142. The Commission advances no argument in that regard. It merely states that it has ‘doubts’ about the Netherlands’ position. 143. Even if the Commission once again makes no convincing effort to refute the Netherlands’ argument, it is for the Netherlands to make a persuasive case that the residence requirement is appropriate to achieve the stated objective. (73) 144. I am not convinced that the Netherlands has done so. 145. I accept that where students reside prior to pursuing higher education may have some influence on where they study. It is true that the Netherlands has not submitted evidence substantiating that correlation. I do not consider that to be an obstacle. The actual or potential contribution of a measure to the stated objective can be established through quantitative or qualitative analysis. In the present case, I consider that qualitative analysis is sufficient, and that the argument is inherently plausible. 146. I also agree with the Netherlands that the residence requirement prevents students from using MNSF to study where they reside, since students residing outside the Netherlands are precluded from applying for MNSF. 147. However, I am not convinced that there is an obvious link between where students reside prior to pursuing higher education and the likelihood that they will return to that Member State after completing their studies abroad. I do not regard it as inherently likely that a majority of students who reside in the Netherlands and then study abroad will necessarily return to reside in the Netherlands. There may be ways of encouraging that to happen, (74) but it is not self-evident that past residence is a good way of predicting where students will reside and work in the future. 148. I conclude that the Netherlands has not established that the residence requirement is appropriate to identify the group of students to whom it wishes to give MNSF. 149. For the sake of completeness, I shall consider briefly whether the residence requirement is proportionate in relation to the social objective. – Is the residence requirement proportionate in relation to the social objective? 150. It is for the Netherlands to show that the three out of six years rule does not go beyond what is necessary to identify the group of students who would otherwise study in the Netherlands and who are likely to return there if they study abroad. (75) 151. I consider that its arguments in that regard are insufficient. 152. I agree with the Netherlands that a requirement to know Dutch or to have a diploma from a Netherlands school would not be effective alternative measures. 153. Proficiency in Dutch is not necessarily a good indicator of whether students would study in the Netherlands without MNSF or whether they will return there after their studies abroad. A Dutch-speaking student may decide to study in Antwerp because he knows the language there. He might also opt to study in Paris to improve his French or in Warsaw to learn Polish. 154. The same reasoning applies to requiring the would-be student to hold a diploma from a Netherlands school. Assuming that a Netherlands school diploma is recognised in other Member States and that the Netherlands similarly accepts the equivalence of diplomas obtained abroad, it is difficult to see any necessary direct correlation between where a school diploma is obtained and whether a particular student would study in the Netherlands without MNSF and will return there after his studies abroad. 155. In any event, both those requirements appear indirectly discriminatory and likely to affect migrant workers in the same way as the residence requirement. 156. Is it sufficient for the Netherlands to advance two measures that are clearly not proportionate ways of achieving the objective (and that are, in any event, as (if not more) discriminatory as the residence requirement) in order to show that the residence requirement satisfies the proportionality test? 157. I consider it is not. 158. As the party bearing the burden of proof, the Netherlands needs at least to show why it favours residence of three out of six years to the exclusion of all other representative elements, such as (for example) residence of a shorter duration, or why the target group cannot be identified through other (possibly less restrictive) measures, such as (for example) a rule prescribing that MNSF cannot be used to study in the place of residence. 159. If the Court were none the less to take the view that the Netherlands has established that the residence requirement is in principle proportionate, I consider that the Commission has failed to show that other, less restrictive, measures exist that achieve the same result. It is quite unclear from the Commission’s written and oral observations whether it was putting forward any such alternatives. If its argument with regard to coordination is meant to apply in relation to the social objective, I consider that that argument should be rejected for the reasons already given. (76) – Conclusion 160. I conclude that the indirect discrimination against migrant workers and dependent family members resulting from the residence requirement could in principle be justified on the basis of the social objective invoked by the Netherlands. However, I am not convinced that the Netherlands has shown that the residence requirement is an appropriate and proportionate means of attaining that objective. In my view, its defence must accordingly fail. Conclusion 161. In the light of all the foregoing considerations, I am of the opinion that the Court should: (1) declare that, by requiring that migrant workers and dependent family members fulfil a residence requirement to be eligible under the Wet Studiefinanciering for the funding of educational studies abroad, the Kingdom of the Netherlands has failed to fulfil its obligations under Article 45 TFEU and Article 7(2) of Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community; (2) order the Kingdom of the Netherlands to pay the costs. (1) . (2) – Certainly he was devoted to his studies, as witnessed by one of his most charming quoted sayings, ‘ When I get a little money I buy books; and if any is left I buy food and clothes’. See also the Opinion of Advocate General Ruiz-Jarabo Colomer in Joined Cases C-11/06 and C-12/06 Morgan and Bucher [2007] ECR I-9161, point 43. (3) – The deadline for complying with the Commission’s reasoned opinion expired on 15 June 2009 and thus before the entry into force of the Lisbon Treaty. For ease of reference and the sake of consistency, I shall refer to Article 45 TFEU. In any event, the texts of Article 39 EC and other relevant treaty provisions remain unchanged in the Lisbon Treaty. (4) – Regulation of the Council of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475). Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union (OJ 2011 L 141, p. 1) repealed Regulation No 1612/68 with effect from 16 June 2011, well after the expiry of the deadline in the Commission’s reasoned opinion. The texts of Articles 7(2) and 12 of Regulation No 1612/68 remain unchanged in Regulation No 492/2011. (5) – Second indent of Article 165(2) TFEU (formerly Article 149(2) EC). The Erasmus programme and other EU action programmes in the field of education are based on Articles 165 and 166 TFEU. See Decision No 1720/2006/EC of the European Parliament and of the Council of 15 November 2006 establishing an action programme in the field of lifelong learning (OJ 2006 L 327, p. 45) as amended by Decision No 1357/2008/EC (OJ 2008 L 350, p. 56). (6) – Directive of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States, amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77, and corrigenda OJ 2004 L 229, p. 35, OJ 2005 L 30, p. 27, OJ 2005 L 197, p. 34 and OJ 2007 L 204, p. 28). (7) – Article 2(1) of the WSF. (8) – Case C-287/05 Hendrix [2007] ECR I-6909, paragraph 53 and case-law cited. (9) – See Case C-208/07 Chamier-Glisczinski [2009] ECR I-6095, paragraph 66 and case-law cited. (10) – Case C-209/03 Bidar [2005] ECR I-2119 and Case C-158/07 Förster [2008] ECR I-8507. (11) – Fourth recital in the preamble to Regulation No 1612/68 and Case C-269/07 Commission v Germany [2009] ECR I-7811, paragraph 52 and case-law cited. (12) – Commission v Germany , cited in footnote 11 above, paragraph 65 and case-law cited (spouses); Case C-258/04 Ioannidis [2005] ECR I-8275, paragraph 35 and case-law cited (descendants); and Case 261/83 Castelli [1984] ECR 3199, paragraph 12 (ascendants). (13) – Case C-337/97 Meeusen [1999] ECR I-3289, paragraph 25. That case involved a directly discriminatory residence requirement (in that it applied only to non-Netherlands nationals). (14) – Meeusen , cited in footnote 13 above, paragraph 19 and case-law cited. (15) – Case C-308/89 di Leo [1990] ECR I-4185, paragraph 12. (16) – See Case C-413/99 Baumbast and R [2002] ECR I-7091, paragraph 63, and Case C-480/08 Teixeira [2010] ECR I-1107, paragraph 46. (17) – Teixeira , cited in footnote 16 above, paragraph 51, and Case C-310/08 Ibrahim [2010] ECR I-1065, paragraph 39. (18) – Case C-7/94 Gaal [1995] ECR I-1031, paragraph 30. (19) – Case 197/86 [1988] ECR 3205, paragraph 28. (20) – Brown , cited in footnote 19 above, paragraphs 29 and 31. (21) – Case 39/86 Lair [1988] ECR 3161 and Case 235/87 Matteucci [1988] ECR 5589. In Lair , the claimant had worked in the host Member State, but not for long enough to satisfy the requirement (applicable to foreigners but not to nationals) of five years’ regular occupational activity there before applying for study assistance. Matteucci proceeded on the basis that the claimant was not merely the child of a migrant worker, but was herself also engaged in genuine and effective activity (see paragraphs 9 and 10 of the judgment). (22) – Case 9/74 Casagrande [1974] ECR 773, paragraph 9. (23) – Cited in footnote 15 above. (24) – See Case C-356/09 Kleist [2010] ECR I-11939, paragraph 34 and case-law cited. (25) – For some reflections on what are, and are not, relevant differences in the context of the right to equal treatment, see also my Opinion in Case C-427/06 Bartsch [2008] ECR I-7245, point 44. (26) – Case C-400/08 Commission v Spain [2011] ECR I-1915, paragraph 58 and case-law cited. (27) – Cited in footnote 13 above, paragraph 21. (28) – Case C-57/96 [1997] ECR I-6689. (29) – Case 152/73 Sotgiu [1974] ECR 153 and Case C-466/00 Kaba II [2003] ECR I-2219. (30) – Cited in footnote 13 above, paragraph 21. (31) – Cited in footnote 28 above, paragraph 51. (32) – Meints , cited in footnote 28 above, paragraphs 45 and 46. (33) – See Sotgiu , cited in footnote 29 above, paragraphs 12 and 13, and Kaba II , cited in footnote 29 above, paragraph 55. (34) – For example, the child of a cross-border worker might, for some reason, nevertheless reside in the Netherlands or have resided there for long enough to satisfy the three out of six years rule before moving back across the border. (35) – Case C-325/08 Olympique Lyonnai s [2010] ECR I-2177, paragraph 38 and case-law cited. (36) – Case C-147/03 Commission v Austria [2005] ECR I-5969, paragraph 63 and case-law cited. (37) – Case C-110/05 Commission v Italy [2009] ECR I-519, paragraph 66. (38) – Bidar and Förster , both cited in footnote 10 above. (39) – Bidar , cited in footnote 10 above, paragraph 58. (40) – Bidar , cited in footnote 10 above, paragraph 55. (41) – Bidar , cited in footnote 10 above, paragraph 56. In Morgan and Bucher , cited in footnote 2 above, the Court confirmed that the same reasoning applies as regards the award by a Member State of grants to students wishing to study in other Member States (see paragraph 44). (42) – Bidar , cited in footnote 10 above, paragraph 57. (43) – Bidar , cited in footnote 10 above, paragraph 58. (44) – Bidar , cited in footnote 10 above, paragraph 59. (45) – Förster , cited in footnote 10 above, paragraph 48. (46) – See Bidar , cited in footnote 10 above, paragraph 56. (47) – Förster , cited in footnote 10 above, paragraph 49. (48) – Förster , cited in footnote 10 above, paragraph 50. (49) – Förster , cited in footnote 10 above, paragraph 51. (50) – Förster , cited in footnote 10 above, paragraph 54. (51) – Bidar , cited in footnote 10 above, paragraph 56. See also, in the context of health benefits and social security systems, Case C-372/04 Watts [2006] ECR I-4325, paragraph 103, and Case C-169/07 Hartlauer [2009] ECR I-1721, paragraph 50. (52) – Third recital in the preamble to Regulation No 1612/68. (53) – Fifth recital in the preamble to Regulation No 1612/68. (54) – This conclusion does not mean that I consider that in all circumstances Member States are precluded from requiring a degree of connection from migrant workers. Indeed, the social objective invoked by the Netherlands Government as justifying a degree of connection from all applicants is a legitimate aim which is justified by overriding reasons in the public interest (see points 135 to 140 below). (55) – Article 1(1) of Council Directive 90/364/EEC of 28 June 1990 on the right of residence (OJ 1990 L 180, p. 26). The right of residence was granted under the same conditions to former migrant workers and self-employed persons who had ceased their occupational activity. See Article 1(1) of Council Directive 90/365/EEC of 28 June 1990 on the right of residence for employees and self-employed persons who have ceased their occupational activity (OJ 1990 L 180, p. 28). See also Council Directive 90/366/EEC of 28 June 1990 on the right of residence for students (OJ 1990 L 180, p. 30) and its successor, Council Directive 93/96/EEC of 29 October 1993 on the right of residence for students (OJ 1993 L 317, p. 59). Each of those directives, apart from Directive 90/366 which had already been annulled by the Court in Case C-295/90 Parliament v Council [1992] ECR I-4193 (see paragraph 21), was repealed by Directive 2004/38. (56) – Fourth recital in the preamble to Directive 90/364. (57) – Articles 1 and 3 of Directive 93/96. (58) – Case C-34/09 Ruiz Zambrano [2011] ECR I-1177, paragraph 40 and case-law cited. (59) – Case C-184/99 Grzelczyk [2001] ECR I-6193, paragraph 44. The case concerned the payment of the Belgian ‘minimex’ support to a final year student who had managed to be self-financing for the previous three years of his studies. (60) – See also my Opinion in Commission v Spain , cited in footnote 26 above, point 89. (61) – Förster , cited in footnote 10 above, paragraph 55. (62) – Opinion of Advocate General Mazák in Förster , cited in footnote 10 above, points 129 to 135. (63) – These are the largest groups of persons who would qualify for MNSF if the residence requirement were to be eliminated. The estimate is calculated by multiplying the estimated number of such persons by an average cost per capita figure comprising the basic grant, the additional grant and the allowance for travel costs. (64) – Nor is it known how many students receive funding to study in the Netherlands and then benefit from MNSF to study abroad. See also point 16 above. (65) – See Case C-503/09 Stewart [2011] ECR I-6497, paragraph 95 and case-law cited, and Morgan and Bucher , cited in footnote 2 above, paragraph 46 and case-law cited. See also Förster , cited in footnote 10 above, Opinion of Advocate General Mazák, point 133. (66) – See Case C-138/02 Collins [2004] ECR I-2703, paragraph 72. (67) – Case C-111/03 Commission v Sweden [2005] ECR I-8789, paragraph 66 and case-law cited. (68) – A migrant worker is ‘[a]ny person who pursues activities which are effective and genuine’ and who ‘for a certain period of time … performs services for and under the direction of another person in return for which he receives remuneration’. That group excludes persons who perform ‘activities on such a small scale as to be regarded as purely marginal and ancillary’. Meeusen , cited in footnote 13 above, paragraph 13 and case-law cited. (69) – Case C-212/97 Centros [1999] ECR I-1459, paragraphs 24 and 25 and case-law cited. (70) – See point 154 of my Opinion in Case C-73/08 Bressol [2010] ECR I-2735. (71) – See Article 149(2) EC (now Article 165(2) TFEU) and the Recommendation of the European Parliament and of the Council of 10 July 2001 on mobility within the Community for students, persons undergoing training, volunteers, teachers and trainers (2001/613/EC) (OJ 2001 L 215, p. 30). (72) – The objective of encouraging students to return to their Member State of origin after studying abroad may be a concern to Member States where the outflow of students exceeds the number of incoming students. See, for example, Working Group on Portability of Grants and Loans, Report to the Bologna Follow Up Group (http://www.ond.vlaanderen.be/hogeronderwijs/bologna/documents/WGR2007/Portability_of_grants_and_loans_final_report2007.pdf), p. 15, and Recommendation of the European Parliament and of the Council of 18 December 2006 on transnational mobility within the Community for education and training purposes: European Quality Charter for Mobility (2006/961/EC) (OJ 2006 L 394, p. 5), Annex. (73) – See point 100 above. (74) – For example, the grant of funding might perhaps be made conditional upon the student returning to the Netherlands to work there for a minimum period of time. (75) – See points 67 to 70 above. (76) – See points 130 to 132 above.

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 224/60. Appeal from the judgment and order dated October 7, 1960, of the Patna High Court in Criminal Revision No. 979/1958. K. Sinha, for the appellants. P. Varma, and R. N. Sachthey, for the respondent. 1962. November 20 The. judgment of the Court was delivered by SUBBA RAO, J.-This appeal by Certificate raises the question of the scope of s. 537 of the Criminal Procedure Code. The facts are number in dispute and may be briefly stated. On September 16, 1956, at about 3-55 P.M. the Sub Inspector of Police, attached to Chainpur outpost, found 10 to 15 persons gambling by the side of the road. He arrested five out of them and the rest had escaped. The Sub Inspector took the arrested persons to the out-post and as one of the arrested persons Jamal adopted a violent attitude, he ordered him to be handcuffed whereupon he began to abuse the Sub Inspector. It happened that a large number of Bhuians, male and female, were dancing close to the outpost. Some of them hearing the numberse rushed with lathies to the out-post, assaulted the Sub-Inspector and two companystables and looted the out-post. Three charge-sheets were filed in the companyrt of the Sub- Divisional Officer in respect of the said incidents, first against the appellants Nos. 1 to 4 and others under ss. 147, 452 and 379 of the Indian Penal Code alleging that they raised the outpost, looted some properties and assaulted the informant and others the second against the appellants 5 and 4 others under s. 224 of the Indian Penal Code and the third against appellant No. 5 and 4 others under s. 11 of the Bengal Public Gambling Act. The said Sub Divisional Officer took companynizance of the said cases and transferred them to the companyrt of the Magistrate 1st Class, Daltonganj. On December 29, 1956, on a petition filed by the Prosecuting Inspector the said Magistrate held a joint trial. On July 22, 1957, he delivered a single judgment companyvicting appellants Nos. 1 to 4 under s. 147 of the India Penal Code and also under ss. 452 and 380/34 of the Indian Penal Code and sentencing them to undergo rigorous imprisonment for one year for the former offence. No sentence was imposed for the latter offences. The appellant No. 5, along with 4 others was companyvicted under s. 224 of the Indian Penal Code and sentenced to two years rigorous imprisonment and was also companyvicted under s. 11 of the Bengal Public Gambling Act, and ss. 353 and 380/34 of the Indian Penal Code, but numberseparate sentence was awarded for the said offences. The appellant and others preferred an appeal against the said companyvictions and sentences to the companyrt of the Additional judicial Commissioner of Ranchi and he by his judgment dated July 10, 1958, companyvicted the appellants Nos. 1 to 4 under s. 147 of the Indian Penal Code and acquitted them in respect of other charges. The companyviction of the appellant No. 5 under s. 224, Indian Penal Code, was maintained but the sentence was reduced to one yearss rigorous imprisonment and a sentence of rigorous imprisonment for one month was imposed on appellants Nos. 4 and 5 and others under s. 11. of the Bengal Public Gambling Act. The learned judicial Commissioner held that the offence under s. 11 of the Bengal Public Gambling Act was number companymitted in the companyrse of the same transaction as the other offences were companymitted at the police-post and therefore there was a misjoinder of charges. Nonetheless he held that the said defect was curable as numberprejudice had been caused to the appellants. The appellants preferred a revision petition to the High Court of judicature at Patna and the said High Court dismissed the same on the ground that by reason of s. 537 b of the Criminal Procedure Code the companyviction companyld number be set aside as the said misjoinder of charges did number occasion a failure of justice. The present appeal was filed against the said order on a certificate issued by the High Court. The learned companynsel for the appellants companytended that s. 537 b of the Criminal Procedure Code companyld only save irregularities in the matter of framing of charges but companyld number cure a joint trial of charges against one person or several persons, that was number sanctioned by the Code. Elaborating his argument the learned companynsel companytended that the expression mis-joinder of charges in s. 537 b of the Code must be companyfined only to mis-joinder of accusations-according to him charge in the Code means only an accusation-and therefore a joint trial of offences and persons outside the scope of ss. 233 to 239, of the Criminal Procedure Code, would number be misjoinder of charges within the meaning of said expression. As the question raised turns upon the companystruction of the provisions of s. 537 of the Criminal Procedure Code, it would be companyvenient to read the material part of it at this stage - Subject to the provisions hereinbefore companytained, numberfinding, sentence or order passed by a Court of companypetent jurisdiction shall be reversed or altered under Chapter XXVII or on appeal or revision on account a of any error, omission or irregularity in the companyplaint, summons, warrant, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under this Code, or b of any error, omission or irregularity in the charge, including any misjoinder of charges, or c xx xx xx xx d of any misdirection in any charge to a jury unless such error, omission, irregularity, or mis-direction has in fact occasioned a failure of justice. EXPLANATION-In determining whether any error, omission or irregularity in any proceeding under this Code has occassioned failure of justice, the Court shall have regard to the fact whether the objection companyld and should have been raised at an earlier stage in the proceedings. Clause b was inserted by Act XXVI of 1955. The word charge which occured after warrant in clause a was omitted and the new clause which specifically relates to charge was added. Further the expression mis-joinder of charges was included in the general terms error, omission or irregularity in the charge. The object of the section is manifest from its provisions. As the object of all rules of procedure is to ensure a fair trial so that justice may be done, the section in terms says that any violation of the provisions to the extent narrated therein number resulting in a failure of justice does number render a trial void. The scope of clause b companyld be best understood, if a brief historical background necessitating the amendment was numbericed. The judicial Committee in Subrahmania Ayyar v. King Emperor 1 held that the disregard of an express provision of law as to the mode of trial was number a mere irregularity such as companyld be remedied by s. 537 of the Criminal Procedure Code. There the trial was held in companytravention of the provisions of ss. 233 and 234 of the Code of Criminal Procedure which provide that every separate offence shall be charged and tried separately except that the three offences of the same kind may be tried together in one charge if companymitted within a period of one year. It was held that the mis-joinder of charges was number an irregularity but an illegality and therefore the trial having been companyducted in a manner prohibited by law was held to be altogether illegal. The judical Committee in Abdul Rehman The King Emperor 2 companysidered that a violation of the provisions of s. 360 of the Code which provides that 1 1902 I. L.R. 25 Mad. 61 L.R. 28. I.A. 257. 2 1927 I. L. R. 5 Rangood 53 L.R. 54 I.A. 96. the depositions should be read over to the witnesses before they sign, was only an irregularity curable under s. 537 of the Code. Adverting to Subrahmania Ayyars case it pointed out that the procedure adopted in that case was one which the Code positively prohibited and it was possible that it might have worked actual injustice to the accussed. The question again came before the Privy Council in Babu Lal Choukhani v. Emperor 1 . One of the points there was whether the trial was held in infringement of s. 239 d of the Criminal Procedure Code. The Board held that it was number. Then the question was posed that if there was a companytravention of the said section, whether the case would be governed by Subrahmania Ayyars case or Abdul Rehmans case. The Board did number think it was necessary to discuss the precise scope of what was decided in Subrahmania Ayyars case because in their understanding of s. 239 d of the Code that question did number arise in that case. The point was again mooted by the Board in Pulukuri Kotayya v. King Emperor 2 . In that case there had been a breach of the proviso to s. 162 of the Code. It was held that in the circumstances of the case the said breach did number prejudice the accused and therefore the trial was saved by s. 537 thereof. Sir John Beaumont speaking for the Board observed at p. 12 When a trial is companyducted in a manner different from that prescribed by the Code, as in Subrahmania Ayyar v. King Emperor, 3 the trial is bad, and numberquestion of curing an irregularity arises, but if the trial is companyducted substantially in the manner prescribed by the Code, but some irregularity occurs in the companyrse of such companyduct, the irregularity can be cured under s. 537, and numberthe less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very companyprehensive provisions of the Code. The distinction drawn in many of the cases in India between an illegality and an 1 1938 I.L.R. 2 Cal. 295. 2 I.I.R. 1948 Mad. 1. I.L.R. 1902 26 Mad. 1. irregularity is one of the degree rather than of kind. It will be seen from the said observations that the judicial Committee left to the companyrts to ascertain in each case whether an infringement of a provision of Code is an illegality or an irregularity. There was a marked cleavage of opinion in India whether the later decisions of the Privy Council modified the rigor of the rule laid down in Subrahmania Ayyars case and a view was expressed in several decisions that a mere misjoinder of charges did number necessarily vitiate the trial unless there was a failure of justice, while other decisions took a companytrary view. This companyrt in Janardan Reddy v. The State of Hyderabad 1 left open the question for future decision. In this state of law, the Parliament has intervened to set at rest the companyflict by passing Act XXVI of 1955 making a separate provision in respect of errors, omissions or irregularities in a charge and also enlarging the meaning of the expression such errors etc. so as to include a misjoinder of charges. After the amendment there is numberscope for companytending that mis-joinder of charges is number saved by s. 537 of the Criminal Procedure Code if it has number occassioned a failure of justice. The next question is what is the meaning of the word charges in the expression misjoinder of charges. The word charge, the learned companynsel for the appellants companytends means only an accusation of a crime or an information given by the Court of an allegation made against the accused. Does the section only save irregularities in the matter of mis-joinder of such accusations ? Does it only save the irregularities companymitted in mixing up accusations in respect of offences or persons the joinder whereof has been permitted by the provisions of the Criminal Procedure Code ? The misjoinder cured by the section, it is said, is illustrated by the decision in Kadiri Kunhahammad v. The State of Madras 2 . There in a case of companyspiracy to companymit a breach of 1 1951 S.C.R. 344. A.I.R. 1960 S.C. 661. trust a separate charge was framed in companytravention of the proviso to s. 222 of the Criminal Procedure Code i.e. in regard to an amount misappropriated during the period exceeding one year. This Court held that as acts of misappropriation companymitted during the companyrse of the same transaction companyld be tried together in one trial, the companytravention of s. 222 was only an irregularity, for that act of misappropriation companyld have been split up into two parts, each of them companyering a period less than one year and made subject of a separate charge. In that view it was held that s. 537 saved the trial, as there was numberfailure of justice. There a joint trial was permitted by the relevant provisions of the Code, but the defect was only in having one charge instead of two charges. The question is whether the expression should be given only the limited meaning as companytended above. The word charge is defined in s.4 c . It says that the charge includes any head of a charge where charge companytained more heads than one. This definition does number throw any light, but it may be numbered that that is only an inclusive one. Chapter XIX provides for the form of charges and for joinder of charges. Section 221 to 232 give the particulars that a charge shall companytain and the manner of rectifying defects if found therein. Section 221 says that in every charge the companyrt shall state the offence with which the accused is charged. Section 222 provides that the charge shall companytain such particulars as to the time and place of the alleged offence and the person against whom or the thing in respect of which it was companymitted, as are reasonably sufficient to give the accused numberice of the matter with which he is charged. Section 233 repeats that a charge shall also companytain such particulars mentioned in ss. 221, and 222. The form of a charge prescribed in Schedule 5 shows that it companytains an accusation that a person companymitted a particular offence. It is, therefore, clear that a charge is number an accusation made or information given in abstract but an accusation made against a person in respect of an act companymitted or omitted in violation of a penal law forbiding or companymanding it. In other words it is an accusation made against a person in respect of an offence alleged to have been companymitted by him. If so, sections 234 to 239 deal with joinder of such charges. Section 233 says that for every distinct offence of which any person is accused, there shall be a separate charge and every such charge shall be tried separately, except in cases mentioned in ss. 234, 235, 236 and 239. Sections 234 to 236 permit joinder of charges and trial of different offences against a single accused in the circumstances mentioned in those sections and s. 239 provides for the joinder of charges and the trial of several persons. The scheme of the said sections also indicates that a charge is number a mere abstraction but a companycrete accusation against a person in respect of an offence and that their joinder is permitted under certain circumstances whether the joinder of charges is against one person or different persons. If the joinder of such charges is made in companytravention of the said provisions it will be misjoinder of charges. As we, have numbered already, before sub-section b was added to s. 537 of the Criminal Procedure Code there was a companyflict of view on the question whether such a misjoinder was only an irregularity which companyld be cured under that section, or an illegality which made it void. The amendment steered clear of that companyflict and expressly included the misjoinder of charges in the errors and irregularities which companyld be cured thereunder. To summarise a charge is a precise formulation of a specific accusation made against a person of an offence alleged to have been companymitted by him. Sections 234 to 239 permit the joinder of such charges under specified companyditions for the purpose of a single trial. Such a joinder may be of charges in respect of different offences companymitted by a single person or several persons. If the joinder of charges was companytrary to the provisions of the Code it would be a mis-joinder of charges. Section 537 prohibits the revisional or the appellate companyrt from setting aside a finding, sentence or order passed by a companyrt of companypetent jurisdiction on the ground of such a misjoinder unless it has occasioned a failure of justice. In this case there was a clear misjoinder of charges against several persons. But the High Court held that there was numberfailure of justice and the appellants had their full say in the matter and they were number prejudiced in any way. We, therefore, hold that the High Court was right in number setting aside the companyvictions of the accused and the sentence passed against them.

Lord Justice Laws : INTRODUCTION This is an appeal brought pursuant to s.103 of the Extradition Act 2003 (the 2003 Act) against the decision of District Judge Riddle on 4 December 2009 to send the appellant's case to the Secretary of State for her to decide whether the appellant should be extradited to Canada. There was also an appeal under s.108 against the decision of the Secretary of State of 1 February 2010 to order his extradition, but that is not independently pursued and I need say no more about it. There are two points in the case. (1) Is the appellant wanted for an extradition offence? (2) Should his extradition be barred by reason of the passage of time? THE FACTS The appellant has dual German/Canadian nationality. He is aged 73. He was arrested on a provisional warrant on 9 May 2009 and has since then been detained at HMP Wandsworth. His extradition is sought by the Government of Canada, which is a Category 2 territory for the purposes of the 2003 Act. In what follows I will refer to the Government of Canada as the respondent. The case duly went before the extradition judge at the City of Westminster Magistrates Court (DJ Riddle) who gave a reserved judgment on 4 December 2009, as I have said, sending the appellant to the Secretary of State for a decision as to his extradition. The appellant is a scientist and engineer who has worked in many parts of the world, in particular in Canada, Germany and Venezuela. He was voted "Businessman of the Year 1984" by the Victoria Chamber of Commerce. He has patented inventions on such matters as CO2-free electric energy generation and enhanced oil recovery with geothermal resources. He has no previous convictions anywhere in the world. It is said that he has committed offences contrary to the Canadian Income Tax Act. The critical facts alleged may be reduced to a very short narrative as follows. At all material times the appellant was the President and directing mind of a company called International Electronics Corporation ("IEC"). There was another company, Eurocana Hightech Research and Development (Canada) Ltd ("Eurocana"). It was owned by Michael Hertel, the appellant's brother. The essence of the respondent's case concerns a payment of about $3.9m from IEC to Eurocana at the direction of the appellant. It was described in company documents as "R & D", and recorded as business expenses of IEC. The background to this payment was a series of transactions or apparent transactions concerning the purchase by IEC of a coal liquefaction plant in New Jersey and its sale on through an intermediary, a Liechtenstein company called Cugnot, to Eurocana for $4m. The respondent says it was made to appear that Eurocana paid $4m for the plant, but the actual figure was much less. Then Eurocana purported to sell the plant to IEC for $4m. The respondent asserts that all these agreements were fraudulent, designed to justify the transfer of up to $4m by IEC to Eurocana. It is said that the payment of $3.9m odd, being in fact made to provide a benefit to the appellant or his brother or perhaps some other party (but not IEC), gave rise to a charge to tax against the appellant under s.56(2) of the Canadian tax code, but this liability was dishonestly concealed from the Canadian revenue authorities. THE EXTRADITION PROCESS The appellant has not been charged with any offences in Canada. His extradition was sought pursuant to an information which had been laid on 5 February 1986, and an amended information laid on 22 April 1986, by Mr Glen Barras, a taxation officer. The appellant says that this process was issued maliciously on the part of Mr Barras; but this accusation plays no part in these appeal proceedings. Mr Barras is now dead as are three other witnesses or potential witnesses in the case. The appellant was arrested in this jurisdiction on a provisional warrant on 9 May 2009. There is some controversy on the papers as to when the appellant had left Canada: 7 February, 13 February and 24 March 1986 are all canvassed. He had not by any of those dates been arrested or charged with anything. I shall consider the facts relevant to the arguments as to the effects of the passage of time when I come to confront that aspect of the case directly. THE ISSUES The appellant's amended grounds of appeal specified six grounds of challenge under s.103 directed to the District Judge's decision. Only two, however, survive; the others have either been abandoned, or amount to adjectival rather than self-standing arguments. As I have foreshadowed the two live points are (1) that the conduct for which the appellant's extradition is sought does not constitute an extradition offence or offences within the meaning of s.137(2)(b) of the 2003 Act; for reasons which will become apparent I will call this "the tax point"; and (2) that the appellant's extradition is barred by the passage of time: s.82 of the 2003 Act: "the delay point". The tax point was not taken in the court below. There is no contest but that the appellant is free to take it here. It has, however, caused some logistical difficulties, whose consequence has been that this judgment is being delivered much later in time than the court would have wished, not least given that the appellant has been remanded in custody throughout these proceedings. The appeal was first listed before my Lord and myself on 19 May 2010, when we heard full argument on the delay point. However it became clear during the hearing that the tax point raised, or at least potentially raised, questions of taxation law which were by no means straightforward. The appellant was armed with specialist tax counsel, Mr Henry Legge. The respondent was represented by Mr Brandon who, while no doubt well up to speed on the law of extradition, is not a tax lawyer, though he strove in his skeleton argument to address the tax point. The court required assistance from both sides on this part of the case. We concluded that it could not be properly dealt with unless the respondent were given an opportunity to instruct specialist tax counsel to consider the matter, and, if so advised, to represent the respondent at a further hearing. Accordingly we adjourned the case on 19 May. It was not possible to restore it to court until 30 July 2010, when Mr Legge again appeared for the appellant alongside Mr Jones, and the respondent was represented by Mr Vallat, tax counsel, alongside Mr Brandon. We heard dense and careful argument, and found it necessary to reserve judgment. I shall deal with the delay point first. THE DELAY POINT By s.82 extradition is barred on time grounds if it would be unjust or oppressive to extradite by reason of the passage of time since the person is alleged to have committed the extradition offence or to have become unlawfully at large. The legal approach to s.82 has been subject to some recent development, and we should consider the learning in some detail. THE AUTHORITIES The leading recent authority is Gomes and Goodyear [2009] UKHL 21. The appellate committee's single joint report cites at paragraph 19 the earlier leading case of Kakis [1978] 1 WLR 779 in which Lord Diplock said this at 782-783: "Unjust' I regard as directed primarily to the risk of prejudice to the accused in the conduct of the trial itself, 'oppressive' as directed to hardship to the accused resulting from change in his circumstances that have occurred during the period to be taken into consideration; but there is room for overlapping, and between them they would cover all cases where to return him would not be fair. Delay in the commencement or conduct of extradition proceedings which is brought about by the accused himself by fleeing the country, concealing his whereabouts or evading arrest cannot, in my view, be relied upon as a ground for holding it to be either unjust or oppressive to return him. Any difficulties that he may encounter in the conduct of his defence in consequence of the delay due to such cases are of his own choice and making. Save in the most exceptional circumstances it would be neither unjust or oppressive that he should be required to accept them. As respects delay which is not brought about by the acts of the accused himself, however, the question of where responsibility lies for the delay is not generally relevant. What matters is not so much the cause of such delay as its effect; or, rather, the effects of those events which would not have happened before the trial of the accused if it had taken place with ordinary promptitude. So where the application for discharge under section 8(3) is based upon the 'passage of time' under paragraph (b) and not on absence of good faith under paragraph (c), the court is not normally concerned with what could be an invidious task of considering whether mere inaction of the requisitioning government or its prosecuting authorities which resulted in delay was blameworthy or otherwise. Your Lordships have no occasion to do so in the instant case." For convenience their Lordships in Gomes proceeded to refer to these paragraphs as Diplock para 1 and Diplock para 2. Then at paragraph 26 and 27, after referring to a judgment of mine in La Torre v Italy [2007] EWHC Admin 137, their Lordships' opinion states: "26. True it is that Laws LJ then added: 'An overall judgment on the merits is required, unshackled by rules with too sharp edges.' If, however, this was intended to dilute the clear effect of Diplock para 1, we cannot agree with it. This is an area of the law where a substantial measure of clarity and certainly is required. If an accused like Goodyer deliberately flees the jurisdiction in which he has been bailed to appear, it simply does not lie in his mouth to suggest that the requesting state should share responsibility for the ensuing delay in bringing him to justice because of some subsequent supposed fault on their part, whether this be, as in his case, losing the file, or dilatoriness, or, as will often be the case, mere inaction through pressure of work and limited resources. We would not regard any of these circumstances as breaking the chain of causation (if this be the relevant concept) with regard to the effects of the accused's own conduct. Only a deliberate decision by the requesting state communicated to the accused not to pursue the case against him, or some other circumstance which would similarly justify a sense of security on his part notwithstanding his own flight from justice, could allow him properly to assert that the effects of further delay were not 'of his own choice and making'. "27. There are sound reasons for such an approach. Foremost amongst them is to minimise the incentive on the accused to flee. There is always the possibility, often a strong possibility, that the requesting state, for want of resources or whatever other reason, may be dilatory in seeking a fugitive's return. If it were then open to the fugitive to pray in aid such events as occurred during the ensuing years – for example the disappearance of witnesses or the establishment of close-knit relationships – it would tend rather to encourage flight than, as must be the policy of the law, discourage it. Secondly, as was pointed out in Diplock para 2, deciding whether 'mere inaction' on the part of the requesting state 'was blameworthy or otherwise' could be 'an invidious task'. And undoubtedly it creates practical problems. Generally it will be clear one way or the other whether the accused has deliberately fled the county and in any event, as was held in Krzyzowski, given that flight will in all save the most exceptional circumstances operate as an almost automatic bar to reliance on delay, it will have to be proved beyond reasonable doubt (just as the issue whether a defendant has deliberately absented himself from trial in an inquiry under section 85(3) of the Act). But it will often be by no means clear whether the passage of time in requesting the accused's extradition has involved fault on the part of the requesting state and certainly the exploration of such a question may not only be invidious (involving an exploration of the state's resources, practices and so forth) but also expensive and time consuming. It is one thing to say – as Lord Edmund-Davies said in Kakis and later Woolf LJ said in Osman (No 4) and Laws LJ in La Torre – that in borderline cases, where the accused himself is not to blame, culpable delay by the requesting state can tip the balance; quite another to say that it can be relevant to and needs to be explored even in cases where the accused is to blame." Then at paragraph 29: "… The rule contained in Diplock para 1 should be strictly adhered to. As the rule itself recognises, of course, there may be 'most exceptional circumstances' in which, despite the accused's responsibility for the delay, the court will nevertheless find the section 82 bar established. The decision of the Divisional Court (Hobhouse LJ and Moses J) in Re: Davies CA 443/96, (unreported, 30 July 1997), discharging a defendant who had become unfit to plead notwithstanding his responsibility for the relevant lapse of time, may well be one such case. In the great majority of cases where the accused has sought to escape justice, however, he will be unable to rely upon the risk of prejudice to his trial or a change in his circumstances, brought about by the passing year, to defeat his extradition." At paragraph 32 in Gomes the House referred to Woodcock [2004] 1WLR 1979 in which in paragraph 29 Simon Brown LJ as he then was said: "There can be no cut-off point beyond which extradition must inevitably be regarded as unjust or oppressive." Mr Jones for the appellant also referred us to Patel [1995] 7 Admin LR 56, where this was said: "Wherever law is practised, justice is reproached by delay. There is a real danger that those of us who have spent a life time in the law become inured to delay. So too laymen associate the law with delay, and their expectation of it may harden them to the fact of it. So the years trip off the tongue, and so we reach a position where a citizen may be surrendered to face a trial in another state for matters at least 9 years stale without examination of the reasons for the length of the delay or consequences of it… So it is we are left with a delay period… of 9 to nearly 12 years, with yet some time to pass before trial. It is salutary to look back over one's own life to evaluate the real length of that period, so as not to regard it just as a figure on a piece of paper." THE DISTRICT JUDGE'S VIEW The learned District Judge below had little difficulty with the delay point. He held as follows: "I am satisfied that Dr Hertel is and has been a deliberate fugitive from justice in Canada throughout the relevant period. It makes no difference that he was summonsed rather than bailed. I have not thought it necessary or appropriate to seek an explanation as to what steps were taken to extradite this defendant from Germany: it may or may not be that Germany will extradite its own citizens to Canada. It is clear the defendant was well aware his attendance was required in Canada." THE APPELLANT'S ARGUMENT This conclusion is vigorously contested by Mr Jones on the appellant's behalf. It is submitted (1) that the District Judge wrongly equated an awareness of the relevant proceedings in the requesting State with being a deliberate fugitive from justice: and that (2) the District Judge should in any event have held that the appellant's extradition would be unjust or oppressive having regard to the passage of time. THE FACTS The evidence primarily relied on by the respondent consists in two affidavits of Crown Counsel Janna Hyman, respectively sworn in June and November 2009. The appellant has made a witness statement dated 15 April 2010. The following facts emerge. As I have said an information was first laid against the appellant on 5 February 1986. He had not by then left Canada, and he was aware of the investigation into the transactions in question from the outset. His counsel met with State investigators on several occasions. On 7 February 1986 (following the information laid two days earlier) a summons was issued and served on the appellant's wife requiring his attendance at court on 24 February 1986. He did not attend on that date. His counsel produced a letter from his doctor dated 19 February 1986, stating that he had been in hospital suffering from hepatitis but was now at home. The court proceedings were adjourned to a date in May 1986. There is no doubt that the appellant left Canada before the adjourned date. The respondent has information from a confidential source that he was seen boarding a flight to the United States on 24 March 1986. The appellant himself claims (witness statement, penultimate page (unparagraphed)) to have left for Venezuela "on or about 13 February 1986". He says he was unaware of the summons which had been served on his wife. Even in the absence of cross-examination I find this extremely difficult to believe. Not only was the summons served on his wife; counsel instructed on his behalf appeared at court on 24 February and deployed the doctor's letter. On 7 July 1986 the appellant's counsel gave an indication that the appellant intended to return to the jurisdiction of the court. He failed to do so. A warrant for his arrest was issued on 22 August 1986. In October 1991 the warrant was quashed by the court, apparently as a matter of discretion, in light of assurances from the appellant's counsel and his wife that he desired to return to Canada to "deal with matters". A further summons was issued. A series of adjournments followed. The appellant, however, never returned to the Canadian jurisdiction. As I have said he was at length arrested in this jurisdiction on a provisional warrant on 9 May 2009. CONCLUSION As I have shown, Gomes insists (paragraph 29) that "the rule contained in Diplock para 1 should be strictly adhered to". And paragraph 26 of their Lordships' report shows how strict the requirement is. Delay brought about by the fugitive's fleeing the country, concealing his whereabouts or evading arrest cannot, save wholly exceptionally, enure to his benefit for the purposes of s.82 of the 2003 Act. In my judgment this is a case where the rule applies; where the effects of delay were of the appellant's "own choice and making". Mr Jones' distinction between an awareness of the proceedings on the one hand, and a deliberate flight from justice on the other, which is of its nature fragile, collapses on the facts. And nothing in the case of Patel, relied on by Mr Jones, can in my judgment soften the rigour of this conclusion. There is nothing "wholly exceptional" about the case, and I also reject Mr Jones' second submission that the District Judge should in any event have held that the appellant's extradition would be unjust or oppressive having regard to the passage of time. The Canadian jurisdiction to which the appellant would be returned is plainly fully equipped with all necessary procedural resources to deal with any risk of unfair trial resulting from the long passage of time since the material events. I would reject the appellant's submissions on the delay point. THE TAX POINT A person may only be extradited from the United Kingdom under Part II of the 2003 Act if he is wanted in relation to an extradition offence. This is what is sometimes called the double criminality rule. S.137 provides, so far as material: "(1) This section applies in relation to conduct of a person if— (a) he is accused in a category 2 territory of the commission of an offence constituted by the conduct... (2) The conduct constitutes an extradition offence in relation to the category 2 territory if these conditions are satisfied— (a) the conduct occurs in the category 2 territory; (b) the conduct would constitute an offence under the law of the relevant part of the United Kingdom punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment if it occurred in that part of the United Kingdom; (c) the conduct is so punishable under the law of the category 2 territory (however it is described in that law)". The respondent's case is that the conduct on which it relies would, if it was perpetrated in England, constitute the common law offence of cheating the Revenue. It is required to establish this proposition to the criminal standard of proof: s.206 of the 2003 Act. So much was not contested before us. It does not of course mean that the conduct itself must be proved in the extradition proceedings, to the criminal or any other standard. What must be proved is that the conduct, if it were established, would constitute the extradition offence relied on, here cheating the Revenue. That position reflects the treatment by their Lordships' House in the leading case of Norris [2008] 1 AC 920 of a distinction which is critical to the operation of the double criminality rule. In their composite opinion their Lordships said this (paragraph 65): "It is possible to define the crimes for which extradition is to be sought and ordered (extradition crimes) in terms either of conduct or of the elements of the foreign offence. That is the fundamental choice. The court can be required to make the comparison and to look for the necessary correspondence either between the offence abroad (for which the accused's extradition is sought) and an offence here, or between the conduct alleged against the accused abroad and an offence here. For convenience these may be called respectively the offence test and the conduct test. It need hardly be pointed out that if the offence test is adopted the requested state will invariably have to examine the legal ingredients of the foreign offence to ensure that there is no mismatch between it and the supposedly corresponding domestic offence. If, however, the conduct test is adopted, it will be necessary to decide, as a subsidiary question, where, within the documents emanating from the requesting state, the description of the relevant conduct is to be found." After a full review of authority the House concluded (paragraph 87) that "[t]he language of section 137 is... consistent with either test", but that (paragraph 91) "the wider construction [viz. the conduct test] should prevail". Clearly the application of this approach requires a notional transposition of the conduct alleged from the requesting to the requested State. In explaining how this is to be effected, their Lordships at paragraph 97 found assistance in the judgment of Duff J in the Canadian case of Re Collins (No 3) (1905) 10 CCC 80: "[I]f you are to conceive the accused as pursuing the conduct in question in this country, then along with him you are to transplant his environment; and that environment must, I apprehend, include, so far as relevant, the local institutions of the demanding country, the laws effecting the legal powers and rights, and fixing the legal character of the acts of the persons concerned, always excepting, of course, the law supplying the definition of the crime which is charged." (p. 103) This learning demonstrates the central importance, for the purpose of s.137(2)(b) of the 2003 Act, of two elements: the conduct alleged (and notionally transposed to this jurisdiction), and the relevant English law. Now, Mr Vallat initially submitted (respondent's tax skeleton paragraph 2) that "asking whether there would have been a UK tax liability is the wrong approach. The correct approach is to treat the tax liability as, essentially, part of the background, a fact that needs to be proved to establish liability, but not part of the criminal conduct." I was at first mystified by this. At length however it became clear that Mr Vallat was merely emphasising what should no doubt be obvious, namely that the appellant is not of course to be extradited for failing to pay tax due, but only if the conduct relied on by the respondent would establish an extradition crime if it took place here. In particular, as I have stated, the respondent must prove that the conduct, if it happened here, would constitute the offence under English law of cheating the Revenue. A failure or omission to pay tax due (whether on the part of the proposed extraditee or some other party) is indeed "part of the background, a fact that needs to be proved to establish liability", since if the conduct relied on does not disclose such an unmet liability, the Revenue would have been cheated of nothing. Against this background I may enter into the details of Mr Vallat's case on the tax point. He advanced three categories of tax charge which, he submits, potentially arise on the facts alleged (had they happened here), so as to give rise to a UK tax liability of which it may be shown that the Revenue would have been defrauded. The first is a charge to corporation tax on IEC, arising on the footing that IEC was preparing to seek a tax deduction in respect of the payment to Eurocana to which it was not entitled. The second is an employment income charge, arising on the footing that the appellant was acting as a director of IEC and was extracting a profit from the company for his own purposes. The third is a distribution charge, arising on the footing that the appellant was acting as a shareholder in directing the payment. A SHORT ANSWER? At the end of the argument it seemed to me that there might be a short answer to the whole of Mr Vallat's case on the tax point, as follows. As I have indicated Mr Vallat found it necessary to advance these three alternative potential tax scenarios. The respondent has to establish that the conduct alleged would constitute the offence of cheating the Revenue. If the basis for doing so rests on three alternatives, then no single basis is securely established, unless it is said that any of the three is demonstrated without more. But Mr Vallat does not, as I understood him, distinctly submit that any of the three is so demonstrated. If he did, the others would be no more than the fifth wheel of the coach and he would have no reason to advance them. If Mr Vallat can show no more than that any of the three scenarios might be made out if the alleged facts were replicated here, he will not have demonstrated that any of the three would be so made out; and therefore he would not have proved, to the standard required by s.206 of the 2003 Act, that that the conduct relied on by the respondent would, if perpetrated in England, constitute the common law offence of cheating the Revenue. Accordingly s.137(2)(b) would not be satisfied and the appellant would be entitled to be discharged. I apprehend Mr Vallat would accept this logic. His riposte is that the facts alleged must constitute at least one of the three scenarios. But this encounters a further difficulty. If it is not possible to show that the facts without more definitively constitute one of these scenarios, it must be necessary to draw inferences from the facts in order to conclude that any one of them is actually made out. But what inferences? In this context (as in most) the court is entitled to draw proper inferences, that is to arrive at conclusions which, though not stated in the expressed facts, are in effect dictated by them. As Mr Jones for the appellant submitted, the court is not entitled to speculate. But if such a proper inference were available and, once it was drawn, would lead the court to conclude that one of the three scenarios were established, Mr Vallat would have established the extradition offence on that basis; and, again, the others would be no more than the fifth wheel of the coach. But as I see it that is not the position. However it would clearly be wrong to leave the matter there. We need to consider, in concrete terms, what is and what is not established by the facts relied on by the respondent material to the offence of cheating the Revenue if the facts had happened here. I will deal with Mr Vallat's three scenarios in turn. CORPORATION TAX Mr Vallat submits that it is to be inferred from the dishonest misdescription of the payment to Eurocana as "R & D" or "business expenses" that IEC was preparing to seek a deduction, for tax purposes, in its trading profits by the amount paid to Eurocana. Given that the payment was made at the appellant's direction for purposes of his own, IEC would not have been allowed any such deduction: Taxes Management Act 1970 s.130(a). But as Mr Legge points out, nothing in the facts alleged suggests that IEC would have been liable to pay tax but for the payment to Eurocana. There is no allegation that IEC intended to deploy the payment as a deduction from its corporation tax bill, or that the appellant cheated or sought to cheat the Canadian Revenue by causing the tax due from IEC to be misdeclared. Mr Vallat's case under this head is nothing but speculation, and my impression was that he pressed it very lightly in the course of his submissions. EMPLOYMENT INCOME CHARGE The argument here is that in directing the payment to Eurocana the appellant was acting as a director of IEC and was extracting a profit from the company to his own advantage. In that case Mr Vallat submits that a charge to tax would arise under Schedule E Case I (in the UK tax legislation effective in 1984) on the footing that the payment was an "emolument". Emoluments included "all salaries, fees, wages, perquisites and profits whatsoever" (Taxes Management Act 1970 s.183). There are a number of difficulties here. First, in order to be taxable as an emolument the benefit received must be money or money's worth (see Tennant v Smith [1892] AC 150). But there is no assertion by the respondent that by virtue of the payment to Eurocana the appellant received any benefit by way of money or money's worth. However Mr Vallat submitted, graphically enough, that where a person takes money out of a company, he does so either as a director (in which case an employment income charge to tax arises), or as shareholder (in which case a charge to tax on a distribution in respect of shares arises: see the next heading), or he is stealing the money. Accordingly, as regards the claim of a charge to tax upon an employee's emolument, he submitted that it is enough that the respondent asserts that the appellant (being a director of IEC) procured that the payment to Eurocana be made. Mr Vallat cites Glynn v CIR [1990] STC 227, per Lord Templeman at 231f. But Lord Templeman does not support so wide a proposition. Indeed he said at 231f: "Money may also be expended indirectly for the benefit of an employee without being taxable; for example, if a contract of service does not provide for medical expenses to be paid and the employer does not normally pay medical expenses the employer may, for compassionate or other reasons, as a special case, voluntarily pay the medical expenses of transporting and treating a child of the employee. The expense if not contractual and if lacking the elements of expectation and continuity would not be taxable." Moreover it is settled law that the payment must be made "in reference to the services the employee renders by virtue of his office, and it must be something in the nature of a reward for services past, present or future": Hochstrasser v Mayes [1959] Ch 22 per Upjohn J at 33, approved by Lord Simonds in the House of Lords ([1960] AC 376, 387). There is no suggestion that the payment to Eurocana was made under or pursuant to a contract of employment between IEC and the appellant. Nor is there any suggestion that it was otherwise made "in reference to the services [the appellant rendered] by virtue of his office". In short there is in my judgment no inference as to the circumstances or purpose of the payment to Eurocana which Mr Vallat might be entitled to ask us to draw which would bring the case within the scope of an employment income charge to tax. Mr Vallat has an alternative argument on this part of the case, to the effect that funds applied for a director's benefit may constitute "benefits in kind" (dealt with in the then legislation by s.61 of the Finance Act 1976). Although under this head there is no requirement of "money or money's worth", it must still be shown that the benefit is provided to the taxpayer "by reason of his employment" (Finance Act 1976 s.61(1)(a)). But no such fact is asserted or relied on by the respondent. DISTRIBUTION CHARGE Here the argument is that the appellant directed the payment to Eurocana as shareholder. Mr Vallat submits that a payment out of the company procured by a shareholder is to be treated as a payment to the shareholder, and accordingly falls to be treated as a distribution in respect of shares and therefore subject to a charge to tax under Schedule F (in 1984). He refers to an observation in Noved Investment Co [2006] STC (SCD) 120 at paragraph 42 that "the exercise by a shareholder of a right to require a payment to a third party, and the subsequent payment out of the assets of the company to the third party would be a payment in respect of a share even though not made to the holder". But Noved is with respect a doubtful vade mecum for the purpose of the present case. It concerned a complex tax avoidance scheme giving rise to an argument that a payment to a shareholder was not a distribution "in respect of shares" because the payment was made pursuant to a power inserted in the Articles of Association of the company specifically for the purpose. The reasoning in the case has to be viewed in that context. There are other difficulties. Obviously a charge to tax under this head could only arise if it were demonstrated that the appellant was a shareholder in IEC. But the material before the court going to that question is unclear and equivocal; part suggests he was, part suggests he was not a shareholder. Thus Janna Hayman's affidavit of 11 June 2009 suggests at paragraph 39 that the appellant owned the shares in IEC for all but a month, during which they belonged to a Mr Alexander from whom the appellant then re-purchased them. On the other hand a draft "information to obtain a search warrant" prepared for the respondent asserts (paragraph 3(a)(v)) that the shares are held by a company called AB Sixteen Holdings Ltd, of which however the appellant was the president. As I have said we are limited to proper inferences, that is conclusions which, though not stated in the expressed facts, are in effect dictated by them. We cannot pick and choose between different pieces of evidence; certainly we cannot do so in order to realise a result which favours the respondent. That is not the end of it. Mr Legge submits that the transfer of funds from IEC to Eurocana was done by the company (IEC), acting through its board of directors. The board is not an agent for the shareholders. It follows that there is no reason to treat this act of the company as if it were done in furtherance of the rights of a shareholder. Mr Legge submits also that if there were a chargeable distribution, the charge to tax would fall on the recipient (Eurocana) rather than the shareholder (the appellant). He cites ss.232(1) and 284(2) of the Income and Corporation Taxes Act 1970. Mr Vallat accepts that if this scenario is to work in his favour, there must be a distribution to the appellant. These are, to say the least, formidable difficulties. Perhaps Mr Vallat might escape them if the asserted facts showed that IEC had distinctly placed the relevant funds at the disposal of the appellant as shareholder and the appellant had then directed a payment to Eurocana. But while Mr Vallat canvasses this as a possibility, it is not in fact any part of the conduct relied on by the respondent. Mr Vallat's case must again depend on speculation. GENERALLY In relation to all three scenarios the respondent has not in my judgment established (certainly not to the standard required) that the conduct alleged, if transposed to the United Kingdom, would involve or generate a charge to tax whose concealment by the appellant would then amount to the offence of cheating the Revenue. The critical area, of course, concerns the payment to Eurocana. In order to tie the payment into any putative UK tax liability, Mr Vallat is driven to offer up what is no more than speculation as to its circumstances and purpose. That is an impermissible exercise. The case is rendered more acute, I think, by reason of the fact that in scenarios (2) and (3) the respondent seeks to find a liability to tax on the appellant's shoulders arising out of a payment to another – Eurocana. The law recognises that there will be cases where A has directed a payment out of company B to C in which a charge to tax falls on A. But if that is to happen (in the context both of an employment income charge and a distribution charge) such a payment must enure for the benefit of A, the director or shareholder sought to be charged. The payment will not enure for the benefit of A merely because it goes where A chooses. It has to be shown that the payment provides some material and objective advantage to A. That was not done on the facts alleged here. Mr Legge submitted that the very complexity of Mr Vallat's various scenarios told against the possibility that an offence of cheating the Revenue might be got out of the conduct relied on. As I understood it, his point was that the subtlety of the analysis required was such that it was simply unrealistic to ascribe the conception of such a process to the mind of a dishonest tax-evader. I see no reason to take so modest a view of the capacities of tax cheats. The true point, and the recurrent theme of this judgment on the tax point, is that Mr Vallat's scenarios require factual assumptions to be made which cannot be justified as proper inferences from the conduct stated to be relied on. Before leaving the principal issues on the tax point I should mention a submission advanced in paragraph 26 of the Secretary of State's skeleton argument. It is said that given the conduct test approved in Norris, "it is irrelevant whether or not the alleged transactions would give rise to personal liability for income tax under UK tax law". It is enough (paragraph 28) that the conduct alleged demonstrates the making of false statements in an income tax return, and evading the payment of tax, purely in the context of the tax law of Canada, once it is shown that such misstatements or evasion would, in a purely English context, amount to cheating the Revenue. I think this misunderstands the conduct test. For the reasons I have given it is not shown that the conduct, transplanted here, would constitute the actus reus of the UK law offence of cheating the Revenue. I do not think that this conclusion is undermined by Duff J's reference (approved by the House of Lords) to the transportation of the "environment [which] must... include, so far as relevant, the local institutions of the demanding country, the laws effecting the legal powers and rights, and fixing the legal character of the acts of the persons concerned". THE HILLSDOWN ARGUMENT This was by way of an addendum to Mr Legge's submissions on the tax point. I propose to deal with it shortly, since for the reasons I have already given in relation to the tax point, if my Lord agrees with them, the appeal must be allowed. The appellant's argument runs as follows. On the facts alleged by the respondent it appears plain that the appellant procured the payment to Eurocana in breach of his fiduciary duty as a director of IEC. In those circumstances Eurocana would have held the money paid as constructive trustee for IEC: Rolled Steel [1986] 1 Ch 246. In those circumstances Hillsdown Holdings [1999] STC 561 supports the proposition that the beneficial interest in the money paid never passed to Eurocana: see in particular per Arden J as she then was at 572a. It makes no difference, says Mr Legge, whether or not the money was repaid by Eurocana. There is as it happens no statement in the facts relied on whether or not the money was so repaid. This argument may be right, but I have an uneasy sense that, just like arguments advanced by the respondent which I have rejected, it requires more facts than are stated or can be properly inferred. Mr Vallat submits that the payment was valid for the purpose of giving rise to a tax charge, and relies on certain observations of Chadwick LJ in Venables v Hornby [2002] STC 1248 at paragraphs 26 – 36, distinguishing Hillsdown and indicating that the precise statutory context had to be examined in order to determine whether an ultra vires payment was caught by the tax charge in question. CONCLUSION I would allow the appeal on the tax point. Mr Justice Coulson: I agree.

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 15 MARCH 1979 ( ) Mr President, Members of the Court, 1. The application with which we are concerned raises once again the question of the requirements for the validity in form and substance of a decision by which the selection board for a competition refuses to admit one of the candidates to the written tests. The applicant, Mrs Kobor, applied in 1977 to enter Open Competition No COM/B/155 to constitute a reserve for future recruitment of administrative assistants in Category B. She was not admitted to the written tests because the selection board held that she did not possess sufficient practical experience in the field of ‘Application of rules of administrative management’, which she had chosen for the purposes of the competition. In view of that refusal, Mrs Kobor first requested, by a letter of 29 September 1977, a re-examination of her case; then, after receiving a negative reply, she submitted to the Commission a complaint under Article 90 (2) of the Staff Regulations. As the complaint was fruitless she brought the present action, which was lodged at the Court on 8 May 1978, maintaining that the selection board had erred in its assessment of her practical experience and requesting therefore annulment of the decision not to admit her to the tests. Later, in her reply, the applicant added to the first ground of complaint a second ground involving a question of form: to the effect that the statement of reasons on which the decision was based was insufficient. It is convenient, in my opinion, to begin by examining this point which is of more general interest. 2. It might be questioned whether a complaint raised for the first time on the reply is admissible. Article 42 (2) of the Rules of Procedure provides that: ‘No fresh issue may be raised in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the written procedure’. The second subparagraph of Article 42 (2) adds that: ‘If in the course of the written procedure one of the parties raises a fresh issue which is so based, the President may, even after the expiry of the normal procedural time-limits, … allow the other party time to answer on that issue’. At first sight it would seem that these provisions must be interpreted as meaning that the prohibition imposed by the first subparagraph must be applied without derogation save in the exceptional cases expressly mentioned. But it must be remembered that the rule in question has a specific function, which emerges clearly from the second subparagraph quoted above: to avoid one party being denied the opportunity to reply to the new complaint during the written procedure (cf. the opinion of Mr Advocate General Warner to that effect in Case 46/75 IBC v Commission [1976] ECR at p. 89). Therefore too rigid an interpretation of Article 42 (2) does not seem justified: the important point is to establish whether the party against whom the new complaint has been raised has been handicapped in resisting it as a result of the other party's conduct of the procedure. In the present case the Commission, in its defence (bottom of p. 6), was the first to raise the question of the adequacy of the statement of reasons on which the decision in dispute was based, maintaining that the unfavourable decision of the selection board was sufficiently reasoned. Later, in the course of the oral procedure, the Commission's representative examined that aspect of the dispute, expressly stating that it was not his intention to plead the inadmissibility of the complaint. So, not only must we accept that the Commission was not denied the opportunity to defend itself, but on the contrary the question of the formal requirements of the decision in question was raised by the Commission itself. Besides, it must be remembered that the subject of the new complaint was the insufficiency of the statement of reasons on which the decision was based. It is well established that the requirements that the decision reasoned is laid down not only to pro tea the persons to whom it must apply, but also to place the Court in a position to exercise fully the judicial review which the Treaty entrusts to it. It follows that the Court must always be able to raise of its own motion the question of a defect in the statement of reasons. Such was the import of the view expressed by the Court in the judgment of 20 March 1959 in Case 18/57, Nold v High Authority [1959] ECR 41. As regards questions of substance, the factor to be borne in mind is this: the selection board's decision was notified to the person concerned by means of a standard letter which contained a list of four reasons for not admitting a candidate to the tests, an X being marked in the box placed beside the third reason (‘insufficient practical experience’). As I have already had occasion to point out in a similar case (opinion of 16 November 1978 in Joined Cases 4, 19 and 28/78, Salerno, Authié and Massangioli v Commission [1978] ECR 2403) the statement of the reasons on which the decisions of selection boards on the admission of candidates to tests are based cannot be considered appropriate and sufficient when it merely indicates in a general way the failure to satisfy one of the requirements stated in the announcement. Therefore I shall simply repeat my view, which was shared by the Court in the judgment of 30 November 1978 in the joined cases cited above: in my opinion it is essential that the statement of reasons given to the candidates should be drafted in such a way as to enable them to understand precisely why they have been excluded and to facilitate the task of reviewing the legality of such decisions. The expression ‘insufficient practical experience’ is ambiguous to say the least: the insufficiency may be qualitative in nature, or it may be due to the short duration of the experience or imply that that experience was not related to the field chosen. The letter, formulated in general terms which I have mentioned, does not allow one to ascertain the specific deficiency on account of which the candidate was not admitted to the written tests. As for the difficulties due to the large number of candidates, I do not believe that they were sufficient to justify an incomplete statement of reasons. I have already said in the Salerno case and in others that ‘the unfortunate effects of the excess numbers must not be visited upon the candidates’ and that, in order to avoid such a consequence, ‘the authority organizing a competition is bound to make preparations so that it can carry out its task in complete conformity with the rules even if there are thousands of candidates’. I would recall that the Court has already held that decisions of selection boards for competitions must be accompanied by an adequate statement of reasons. This may be seen in the judgments in Case 44/71 Marcato v Commission [1972] ECR 427, Case 37/72 Marcato v Commission [1973] ECR 361, and Case 31/75 Costacurta v Commission [1975] ECR 1563, as well as in Joined Cases 4, 19 and 28/78 Salerno and Others v Commission [1978] ECR 2403 which I have already cited. I do not see any reason to depart from that line in the present case. 3. The other ground on which the applicant challenges the decision is, as I have said, that her practical experience was incorrectly assessed. In my opinion, that complaint also is confirmed by the matters, taken as a whole, which have emerged in the course of the proceedings. Above all one cannot ignore the fact that in two previous competitions, announced in 1974 and 1975 for the same purpose of recruiting Administrative Assistants in Category B (Competitions COM/B/117 and COM/B/139), the selection boards considered the practical experience acquired by the applicant in the field of ‘administrative management’ to be appropriate and so admitted her to the tests. It is true that the notice of the 1974 competition required rather limited practical experience (at least five months); but the notice of the later competition required at least one year's practical experience, that is to say of the same duration as was prescribed for admission to the competition involved in the present dispute. So it is extremely puzzling to find that two years after the 1975 competition the same candidate was denied recognition of the same experience as had previously been considered sufficient. In reply the Commission has said that each competition constitutes a separate procedure, so that there are no grounds for comparing one selection board's assessment of the same candidate with that of another in the context of different competitions. The Commission also argued that the greater severity apparent in the 1977 competition was a consequence of the much greater number of candidates, which required a more selective approach as from the stage of examining candidates' qualifications for admission to the written tests. As regards the criteria for assessing candidates' performance in the tests, there is no doubt that each competition is a separate matter; but here the question concerns the assessment of individual qualifications and of the conditions stated in the notice for admission to the tests. As the Court declared, in the judgments, already cited, of 14 June 1972 in Case 44/71 and 15 March 1973 in Case 37/72, although the stage at which performance in the tests is assessed ‘consists mainly of comparison’, the previous stage, which involves deciding on the admission of candidates to the tests, ‘entails the matching of the qualifications offered by the candidates against the qualifications required by the competition notice … on the basis of objective facts’. At that stage therefore the number of candidates cannot have a decisive influence. In the present case no specific criterion for assessment is disclosed by the minutes of the selection board's meetings on 8 and 9 September 1977, still less by the statement of reasons (which was insufficient, as has been said) accompanying the decision to exclude the candidate from the written tests. Thus it is difficult to overcome the contradiction which exists between the favourable assessments in 1974, and especially 1975, and the negative one in 1977. To that must be added the fact that the periodic report covering the period from 1 July 1975 to 30 June 1977 (enclosed with the application) states that Mrs Kobor, as well as performing other duties, had contributed to ‘the organization of meetings, to the preparation of documents and works for printing’ and had made an ‘important contribution to the preparation of the meetings of numerous working groups … and to the preparation of an important and complex publication of a technical nature’ (p. 1, point 4 (b)); so that ‘the official's training and ability are suitable not only for the duties performed, but would suffice for the performance of more difficult duties’ (p. 2, point 5 (b)). Final confirmation of the fact that Mrs Kobor possessed the required practical experience in the administrative field may be obtained from the notes dated 25 March 1977 and 6 February 1978 sent by the head of division, Mr Henz, to the Director-General, Mr Degimbe, containing a proposal to promote the applicant to Grade C 1 (Annexes 3 and 4 to the reply). Both those notes state that ‘for some time, and in particular as a result of the extension of the work of my division, Mrs Kobor has been performing more and more frequently the duties of a senior administrative assistant’. Thus I think it proved that the applicant possessed the minimum of one year's practical experience in the administrative field required by the competition notice. In any case the selection board had a duty to state explicitly any more restrictive criteria, if only to permit judicial review, and then to state expressly for what reasons it was considered that the applicant did not have the required practical experience. That did not happen: thus it has to be recognized that, in excluding the applicant from the written tests, the selection board erred in its application of the criteria on which, according to the notice, selection was to be based. 4. On account of all the considerations examined I believe that the application deserves to succeed. However, the annulment must be limited to the decision not to admit the applicant to the tests: indeed, as it was an open competition announced for the purpose of constituting a reserve for future recruitment, the exclusion of the applicant did not affect the admission to the written tests of the persons who, in the selection board's opinion, possessed the necessary requirements. Consequently, as the Court has already declared in the Costacurta and Salerno cases, the rights of the applicant ‘will be sufficiently protected if the selection board reconsiders its decision, without it being necessary to question the whole of the results of the competition or to annul appointments made in consequence thereof’. I accordingly suggest that the Court, in partially accepting the application submitted by Mrs Kobor, should annul the decision not to admit her to Competition COM/B/155 and should order the Commission to pay the costs. ( ) Translated from the Italian.

LORD JUSTICE MANTELL: This appeal of Darren Christian comes before the court as a result of a Reference by the Criminal Cases Review Commission made under section 9 of the Criminal Appeal Act 1995. On 15th September 1992 at the Central Criminal Court, Darren Christian was convicted of possessing a shotgun without a firearm certificate. He was sentenced to three years' imprisonment. He appealed and his appeal was dismissed. The matter was referred to the Criminal Cases Review Commission who, having carried out their own investigations, came to the conclusion that the conviction could not be regarded as safe because police officers involved in the search of the premises where the shotgun was alleged to have been found had since been found wanting and indeed considered guilty of corruption. It is not desirable to name names because we are unclear as to whether or not there have been any criminal prosecutions. Suffice it to say that it now appears that some at least of the officers involved in the arrest of the appellant and in the alleged finding of the shotgun had been party to a corrupt practice which involved taking around with them imitation weapons, primarily with a view to planting them on persons who may perhaps have been "shot" in the course of the carrying out of police duties, in order, it is suggested, to justify police actions on those occasions. Given that background, the Crown represented by Mr Jeremy do not attempt to uphold the convictions as safe. Of course it remains a matter for this court and the decision does not ultimately rest with the Crown, but we respect the Crown's position and we happen to agree with it. In our view the conviction cannot be regarded as safe and accordingly the appeal succeeds and the conviction will be quashed. MR DEIN: May I raise one very short matter? There is an application which I am asked to make for a defendant's costs order relating to expenses incurred by the appellant in respect of the former appeal, that is to say representation throughout the early 1990s. My Lord, I do not intend to trouble the court with detail, but I am asked to make the application and to invite your Lordships to say in principal, subject to taxation, that a defendant's costs order would be -- LORD JUSTICE MANTELL: You do not have any figures? MR DEIN: My Lord I have not been given figures today, but details will be supplied for the purpose of taxation so that costs can be granted from central funds once taxed if your Lordships makes the order. LORD JUSTICE MANTELL: Yes, Mr Dein, a defendant's costs order, costs to be taxed. MR DEIN: Thank you very much indeed. I am grateful. LORD JUSTICE MANTELL: You do not oppose that, do you, Mr Jeremy? MR JEREMY: No, my Lord.

JUDGMENT OF THE GENERAL COURT (Sixth Chamber) 13 September 2013 ( *1 ) ‛Access to documents — Regulation (EC) No 1049/2001 — Studies received by the Commission concerning the transposition of directives on the environment — Partial refusal of access — Exception relating to protection of the purpose of inspections, investigations and audits — Specific and individual assessment — Compatibility with the Aarhus Convention — Overriding public interest — Consequences of exceeding the period for the adoption of an express decision — Extent of the obligation actively to disseminate environmental information’ In Case T‑111/11, ClientEarth, established in London (United Kingdom), represented by P. Kirch, lawyer, applicant, v European Commission, represented initially by P. Oliver and C. ten Dam, and subsequently by P. Oliver and C. Zadra, acting as Agents, defendant, APPLICATION, initially, for annulment of the Commission’s implied decision refusing to grant the applicant access to certain documents on the conformity of the Member States’ legislation with European Union environmental law and then for annulment of the Commission’s subsequent express decision of 30 May 2011 refusing in part access to some of those documents, THE GENERAL COURT (Sixth Chamber), composed of H. Kanninen (Rapporteur), President, S. Soldevila Fragoso and G. Berardis, Judges, Registrar: N. Rosner, Administrator, having regard to the written procedure and further to the hearing on 10 April 2013, gives the following Judgment Facts The applicant, ClientEarth, is a company limited by guarantee under English law one of whose objects is protection of the environment. On 8 September 2010 ClientEarth submitted to the European Commission’s Directorate General Environment (‘DG Environment’) an application for access to documents under Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (OJ 2001 L 145, p. 43) and Regulation (EC) No 1367/2006 of the European Parliament and of the Council of 6 September 2006 on the application of the provisions of the Aarhus Convention on access to information, public participation in decision-making and access to justice in environmental matters to Community institutions and bodies (OJ 2006 L 264, p. 13). That application (‘the initial application’) concerned several documents mentioned in the document titled ‘Management Plan 2010’ of DG Environment, published on its website. By email of 16 September 2010 the Commission acknowledged receipt of the initial application and stated that it had been registered on 14 September 2010. By letter of 29 October 2010 the Commission rejected in part the initial application. The Commission sent to the applicant one of the documents requested and stated that the others were covered by the exceptions provided for in the third indent of Article 4(2) and the first subparagraph of Article 4(3) of Regulation No 1049/2001, relating, respectively, to the protection of the purpose of inspections, investigations and audits and the protection of the decision-making process of the institutions. On 10 November 2010 the applicant submitted, pursuant to Article 7(2) of Regulation No 1049/2001, a confirmatory application asking the Commission to reconsider its position as regards a number of the documents to which access had been refused (‘the confirmatory application’). By letter of 1 December 2010 the Commission informed the applicant that, pursuant to Article 8(2) of Regulation No 1049/2001, the time-limit for replying to the confirmatory application was to be extended by 15 working days. By letter of 15 December 2010 the Commission notified the applicant that it was still not in a position to reply to the confirmatory application. By letter of 20 December 2010 the applicant pointed out to the Commission that the time-limit for replying to the confirmatory application expired on 22 December 2010. The applicant asked the Commission to send to it the requested documents by 22 January 2011 and stated that, if the Commission failed to do so, it would consider bringing an action before the General Court against the Commission’s implied decision to reject the confirmatory application (‘the implied decision’. By application lodged at the Registry of the General Court on 21 February 2011, the applicant brought this action and sought the annulment of the implied decision. On 30 May 2011 the Commission adopted an express decision on the confirmatory application (‘the express decision’), of which the applicant was notified that same day. In the express decision, first, the Commission defined the scope of the confirmatory application. The Commission considered that that application concerned, inter alia, 63 studies, carried out by an external undertaking on behalf of the Commission and received by it in 2009, on the conformity of the legislation of several Member States with European Union environmental law and 8 documents entitled ‘implementation action plans’, produced in 2009 and 2010 in respect of all ‘key directives’. The Commission stated that the confirmatory application did not concern certain documents covered by the initial application and concluded that the applicant was no longer requesting access to those documents. Second, the Commission stated that the documents requested contained environmental information within the meaning of the Convention on access to information, public participation in decision-making and access to justice in environmental matters, signed at Aarhus on 25 June 1998 (‘the Aarhus Convention’), and noted that the provisions of that convention were applicable to European Union institutions pursuant to Regulation No 1367/2006. As Article 3 of that regulation provides that requests for access to environmental information held by European Union institutions are to be processed in accordance with Regulation No 1049/2001, the Commission considered that the confirmatory application was to be assessed under both those regulations. Third, the Commission divided the documents covered by the confirmatory application into two groups. The first group consisted of 22 of the studies and the 8 action plans mentioned in paragraph 10 above. The Commission granted the applicant full access to those documents, except for the names of the authors of some of the studies. The second group consisted of 41 of the studies referred to in paragraph 10 above (‘the studies at issue’). The Commission granted the applicant partial access to those studies. Specifically, the Commission sent to the applicant, in respect of each of the studies at issue, the cover page, the table of contents, the list of abbreviations used, an annex containing the legislation examined, and the sections headed: ‘Introduction’; ‘Overview of the Legal Framework of the Member State’; and ‘Framework for Transposition and Implementation’. On the other hand, the Commission refused to grant the applicant access, in respect of each of those studies, to the sections headed ‘Summary Datasheet’, ‘Legal Analysis of the Transposing Measures’ and ‘Conclusions’, and an annex containing a ‘Table of concordance’ between the legislation of the Member State concerned and the relevant European Union law. The Commission divided the studies at issue into two categories. The first category comprised one study where the assessment and dialogue with the Member State concerned on the implementation of European Union law had been recently started. The second category comprised 40 studies on which dialogue with the Member States concerned had progressed further. Fourth, the Commission set out three reasons why access to some parts of the studies at issue was refused and why the names of the authors of some of the disclosed studies were withheld. In the first place, the Commission stated that the withheld parts of the contested studies were covered by the exception to the right of access to documents provided for in the third indent of Article 4(2) of Regulation No 1049/2001, namely, in particular, the protection of the purpose of investigations. The Commission stated that those studies were carried out in order to enable it to monitor the transposition of several directives by the Member States and, if necessary, to bring proceedings for failure to fulfil obligations under Article 258 TFEU (‘infringement proceedings’) against those Member States. As regards the study placed in the first category mentioned in paragraph 14 above, the Commission stated that it had not yet reached a conclusion on the transposition of the directive concerned. Disclosure of the data and conclusions contained within that study, which had not yet been verified and on which the Member State in question had not had the opportunity to respond, would have exposed that Member State to possibly unjustified criticism and would have undermined the climate of mutual trust required to assess the implementation of the directive concerned. As regards the studies at issue in the second category mentioned in paragraph 14 above, the Commission stated that, in some cases, it had initiated infringement proceedings against the Members States concerned and that, in other cases, it had not yet decided whether such proceedings should be initiated. Disclosure of the studies at issue would have undermined the climate of mutual trust necessary to resolve disputes between the Commission and the Member States concerned without having to resort to the judicial stage of such proceedings. Next, the Commission stated that the withheld parts of the studies at issue were also covered by the exception to the right of access to documents provided for in the first subparagraph of Article 4(3) of Regulation No 1049/2001, concerning the protection of the decision-making process of the institutions. In that regard, the Commission stated that those studies had been carried out at its request for purely internal use in the preliminary stage of an investigation concerning the transposition of European Union law. The Commission added that it was entitled not to endorse the conclusions of those studies, and to use other tools of investigation, including its own internal assessment and information obtained from dialogue with the Member States concerned. The Commission considered that, since it had not yet made any final decision on the conformity of the national legislation with European Union law or on whether it was appropriate to initiate infringement proceedings, a matter in respect of which the Commission had broad discretion, the disclosure sought would have undermined its internal decision-making process, which might thereby have exposed it to undue external pressure. Lastly, the Commission stated that the names of the authors of some of the disclosed studies and some of the studies at issue were protected by the exception to the right of access to documents provided for in Article 4(1)(b) of Regulation No 1049/2001, concerning the protection of the privacy and the integrity of the individual. Fifth, the Commission stated that the exceptions to the right of access to documents provided for in the third indent of Article 4(2) and the first subparagraph of Article 4(3) of Regulation No 1049/2001 must not be applied if there is an overriding public interest justifying disclosure of the documents in question. However, the Commission considered that, in the present case, the public interest was better served by protecting the climate of mutual trust between the Member States and the Commission itself and by protecting the Commission’s discretion to take administrative decisions in relation to possible infringements. Moreover, the Commission stated that the confirmatory application did not contain any arguments capable of demonstrating the existence of an overriding public interest justifying disclosure. Procedure and forms of order sought As stated in paragraph 8 above, the applicant brought the present action seeking annulment of the implied decision by application lodged at the General Court Registry on 21 February 2011. On 30 May 2011 the Commission lodged its defence. It claimed that, following the adoption of the express decision, the action had become devoid of purpose, since the applicant had no further interest in securing the annulment of the implied decision. The Commission invited the Court to declare that there was no longer any need to adjudicate. By document lodged at the Court Registry on 31 May 2011, the Kingdom of Denmark requested leave to intervene in support of the form of order sought by the applicant. That leave was granted by order of the President of the Eighth Chamber of 14 July 2011. On 29 July 2011 the applicant lodged its reply. It stated that, as the Commission had granted access to the disclosed studies and action plans (see paragraph 13 above), those documents were no longer the subject of the action. The applicant also sought leave to adapt its pleas in law and claims following the adoption of the express decision, in order that the action should now be deemed to be directed against the express decision, in that the Commission had granted to it only partial access to the studies at issue. On 7 November 2011 the Commission lodged its rejoinder. It asked the Court to allow the amendments to the applicant’s pleas in law and claims in the interests of the sound administration of justice and procedural economy. Following changes in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Sixth Chamber, to which the present case was therefore allocated. By letter received at the Court Registry on 12 March 2013, the Kingdom of Denmark informed the Court that it was withdrawing its application for leave to intervene in support of the forms of order sought by the applicant in this case. By order of the President of the Sixth Chamber of 9 April 2013, the name of the Kingdom of Denmark as an intervener was removed from the Court’s register. Upon hearing the report of the Judge-Rapporteur, the Court (Sixth Chamber) decided to open the oral procedure. The parties presented oral argument and their answers to the questions put by the Court at the hearing on 10 April 2013. In its application, the applicant claims that the Court should: — annul the implied decision; — order the Commission to pay the costs, including the costs of any interveners. In its reply, the applicant asks to be allowed to adapt its pleas in law and claims further to the express decision and claims that the Court should: — annul the express decision; — order the Commission to pay the costs. In its defence, the Commission contends that the Court should declare that there is no longer any need to adjudicate on the implied decision following the adoption of the express decision. In its rejoinder, the Commission contends that the Court should: — permit the amendment of the applicant’s claims and pleas in law; — dismiss the action; — order the applicant to pay the costs. At the hearing, the applicant confirmed that its application for annulment was directed at the express decision in that the Commission had partially refused it access to the 41 studies at issue listed in Table 2 in Annex II to that decision. Law Adaptation of the applicant’s claims and pleas in law As stated above, the implied decision, which was initially the subject of the application for annulment in the action brought by the applicant, was replaced by the express decision after the lodging of the action. That change led the applicant to adapt its initial claims and the pleas in law in support of those claims. The Commission has not objected to that adaptation. In that regard, it must be recalled that, in accordance with settled case‑law, heads of claim initially directed against a measure which is replaced during the course of proceedings may be regarded as being directed against the replacement measure because the latter constitutes a new factor which entitles the applicant to adapt its heads of claim and pleas in law. In such circumstances, it would be contrary to the principle of the sound administration of justice and to the requirements of procedural economy to oblige the applicant to make a fresh application to the Court (see Case T-111/00 British American Tobacco International (Investments) v Commission [2001] ECR II-2997, paragraph 22 and case‑law cited). The adaptation of the claims and pleas in law should therefore be allowed and the action should be considered as now directed to the partial annulment of the express decision (‘the contested decision’). Substance Further to the adaptation of its claims and pleas in law, the applicant relies on seven pleas in law in support of its application for the annulment of the contested decision. Those pleas relate to (i) an infringement of Article 8(1) and (2) of Regulation No 1049/2001 in that the Commission unlawfully extended the time-limit for responding to the confirmatory application; (ii) an infringement of Article 4(1), (2) and (4) of the Aarhus Convention, in that that provision does not allow any exception to the right of access to documents designed to protect the purpose of investigations other than those of a criminal or disciplinary nature; (iii) an infringement of the obligation actively to disseminate environmental information stemming from Article 5(3) to (7) of the Aarhus Convention and Article 4(2)(b) of Regulation No 1367/2006; (iv) an infringement of the third indent of Article 4(2) of Regulation No 1049/2001, in that the Commission disregarded the limits attaching to the exception to the right of access to documents laid down by that provision; (v) an infringement of the first subparagraph of Article 4(3) of Regulation No 1049/2001, in that the risk that full disclosure of the studies at issue might undermine the Commission’s decision-making process was hypothetical and was not reasonably foreseeable; (vi) an infringement of Article 4(2) in fine and (3) in fine of Regulation No 1049/2001, due to the existence of an overriding public interest justifying that disclosure, and (vii) the serious and recurrent infringement by the Commission of Article 8(1) and (2) of Regulation No 1049/2001 and Article 4(1) of the Aarhus Convention, which requires the adoption of deterrent measures by the General Court. Preliminary observations The seven pleas submitted by the applicant may be divided into two groups, the first group comprising the second, fourth, fifth and sixth pleas, and the second group comprising the first, third and seventh pleas. In the first group of pleas, the applicant challenges the grounds of the express decision. Thus, in its second and fourth pleas, the applicant disputes the finding in that decision that the withheld information was covered by the exception to the right of access to documents based on the protection of the purpose of investigations. In its fifth plea, the applicant disputes the finding that that information was covered by the exception based on the protection of the decision-making process. In its sixth plea, the applicant claims that, if those exceptions were applicable, the Commission erred in holding that there was no overriding public interest which required the disclosure of the information requested. On the other hand, in the second group of pleas, the applicant submits arguments intended to show that the express decision should be annulled for reasons unrelated to whether the grounds of that decision are vitiated by error. In its first and seventh pleas, the applicant thus claims, in essence, that the express decision was adopted excessively late, which reflects a consistent and reprehensible practice on the part of the Commission. By its third plea, the applicant submits that the Commission, irrespective of the reply it had to make to the confirmatory application, was required actively to disseminate the information requested. It must be observed, first, that the applicant has not claimed that the Commission erred in holding that the names of the authors of some of the studies at issue and some of the disclosed studies were covered by the exception to the right of access to documents provided for in Article 4(1)(b) of Regulation No 1049/2001, relating to the protection of personal data. It is clear therefore that, subject to the observations made by the applicant in relation to the second group of pleas, the applicant is not challenging the Commission’s decision not to disclose those names. That was confirmed by the applicant at the hearing. Next, it must be observed that a European Union institution may take into account cumulatively a number of grounds for refusal set out in Article 4 of Regulation No 1049/2001 in order to assess a request for access to documents held by it (see, to that effect, Case C‑404/10 P Commission v Éditions Odile Jacob [2012] ECR, paragraphs 113 and 114). As stated in paragraphs 16 to 19 above, the Commission held that the studies at issue were covered both by the exception provided for in the third indent of Article 4(2) of Regulation No 1049/2001, relating to the protection of the purpose of investigations, and by the exception provided for in the first subparagraph of Article 4(3) of that regulation, relating to the protection of the institutions’ decision-making process. Accordingly, without prejudice to examination of the second group of pleas, if the applicant is successfully to demonstrate that the contested decision is vitiated by an error of such a kind as to justify its annulment, the applicant must establish either, in the context of the second, fourth or fifth pleas, that the Commission erred in holding that it was entitled partially to refuse access to the studies at issue pursuant to each of those exceptions, or, in the context of the sixth plea, that full disclosure of those studies was in any event justified by an overriding public interest. It is appropriate to begin by examining the first group of pleas. The first group of pleas As stated above, the first group of pleas consists of the second, fourth, fifth and sixth pleas in law. It is appropriate first to examine the fourth plea and, thereafter, the second, fifth and sixth pleas. – The fourth plea: infringement of the third indent of Article 4(2) of Regulation No 1049/2001 in that the Commission disregarded the limits attaching to the exception laid down by that provision As stated in recital 1 in the preamble to Regulation No 1049/2001, that regulation reflects the intention expressed in the second paragraph of Article 1 of the EU Treaty, which was inserted by the Treaty of Amsterdam, to mark a new stage in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen. As is stated in recital 2 in the preamble to that regulation, the right of public access to documents of the institutions is related to the democratic nature of those institutions (see Case C-506/08 P Sweden v MyTravel and Commission [2011] ECR I-6237, paragraph 72 and case‑law cited). To that end, Regulation No 1049/2001 is intended, as is apparent from recital 4 in its preamble and from Article 1 thereof, to give the fullest possible effect to the right of public access to documents of the institutions (see Sweden v MyTravel and Commission, paragraph 46 above, paragraph 73 and case‑law cited). Admittedly, that right is nonetheless subject to certain limits based on grounds of public or private interest. More specifically, and in accordance with recital 11 in the preamble thereto, Article 4 of Regulation No 1049/2001 provides for a number of exceptions on reliance on which the institutions may refuse access to a document where its disclosure would undermine the protection of one of the interests protected by that provision. However, since those exceptions derogate from the principle of the widest possible public access to documents, those exceptions must be interpreted and applied strictly (Sweden v MyTravel and Commission, paragraph 46 above, paragraphs 74 and 75). It is apparent from the Court file, read in the light of the parties’ observations, that the studies at issue concern the transposition by 19 Member States of a number of European Union directives relating to protection of the environment, each of the studies at issue concerning a single Member State and a single directive. Further, it is common ground between the parties that those studies were ordered by the Commission in the context of the obligation imposed on it, under Article 17 TEU, to oversee, under the control of the Court of Justice, the application of European Union law. Consequently, it is clear that the studies at issue were not produced to obtain information or for academic purposes, but as targeted instruments designed to detect specific infringements of European Union law. As the Commission correctly states, the objective of those studies is to enable it to assess whether the Member States have correctly transposed the directives concerned and, if necessary, to initiate infringement proceedings against Member States who have failed to fulfil their obligations. It follows from the foregoing that the studies at issue are part of an investigation conducted by the Commission, within the meaning of the third indent of Article 4(2) of Regulation No 1049/2001. However, it is clear from the case‑law that the fact that a document is related to an investigation, within the meaning of that provision, cannot, by itself, be sufficient ground for the applicability of the exception provided for by that provision, taking into consideration the need to interpret and apply strictly the exceptions mentioned in Article 4(2) of Regulation No 1049/2001. The risk of the protected interest being undermined must be reasonably foreseeable and not purely hypothetical (Joined Cases C-39/05 P and C-52/05 P Sweden and Turco v Council [2008] ECR I-4723, paragraphs 43 and 63). Further, as is apparent from its wording, that exception is not designed to protect investigations as such, but the purpose of those investigations (see, to that effect, Joined Cases T-391/03 and T-70/04 Franchet and Byk v Commission [2006] ECR II-2023, paragraphs 105 and 109 and Case T-36/04 API v Commission [2007] ECR II-3201, paragraph 127). In an investigation relating to infringement proceedings, that purpose is to induce the Member State concerned to comply voluntarily with the requirements of the Treaty or, when appropriate, to give it the opportunity to justify its position (see, to that effect, API v Commission, paragraphs 121 and 133 and case‑law cited). As is essentially stated in paragraph 17 above, the Commission indicated, in the contested decision, that the reason why the disclosure of the studies at issue might adversely affect its investigations was that such disclosure might undermine the climate of mutual trust required either for the assessment of the implementation of European Union law, in respect of one study which the Commission had not yet had the opportunity to analyse in sufficient detail, or to resolve disputes between the Commission and the Member States without having to use the judicial phase of the infringement proceedings, in respect of the other studies which the Commission had analysed in detail and on the basis of which, in some cases, the Commission had commenced infringement proceedings and, in other cases, had not yet decided whether such proceedings should be commenced. The applicant claims that those reasons are general and not substantiated. Consequently, those reasons fail adequately to demonstrate the existence of a non-hypothetical risk that the disclosure of the studies at issue would specifically and actually undermine the Commission’s investigations. In particular, if a possible infringement of European Union law were public knowledge, that would not prevent the Commission from continuing an investigation. The applicant adds that the Commission did not explain either what type of pressure might hinder its investigating procedures or whether that pressure would be applied to its own departments or to those of the Member States. According to the applicant, the Member States could, in any event, demonstrate that they are complying with European Union law if they were exposed to unjustified criticism or pressure. Further, the applicant claims that since the Commission did not explain how the disclosure of the studies at issue would specifically and actually undermine its investigations, it has not interpreted strictly the exception invoked. Lastly, the applicant claims that transparency enhances the effectiveness of infringement proceedings by reason of the public pressure on the Member State concerned and should be guaranteed in order to enable citizens to participate in the decision-making process and to provide information to the Commission. The Commission disputes the applicant’s arguments. First, it must be observed that, in accordance with settled case‑law, the Commission may legitimately rely on the exception set out in the third indent of Article 4(2) of Regulation No 1049/2001 in order to refuse access to documents relating to investigations of a possible contravention of European Union law which might lead to the initiation of infringement proceedings or which have in fact led to the initiation of such proceedings. In those circumstances, refusal of access has been considered justified because the Member States concerned are entitled to expect the Commission to observe confidentiality as regards investigations, even where a period of time has elapsed since the closure of those investigations (see API v Commission, paragraph 52 above, paragraph 120 and case‑law cited). In particular, it is clear from the case‑law that the disclosure of documents relating to the investigation stage, during the negotiations between the Commission and the Member State concerned, could undermine the proper conduct of the infringement proceedings inasmuch as its purpose, which is, as stated in paragraph 52 above, to induce the Member State concerned to comply voluntarily with Treaty requirements or, if appropriate, to give it an opportunity to justify its position, could be jeopardised. This requirement of confidentiality remains even after the matter has been brought before the Court of Justice, on the ground that it cannot be ruled out that the discussions between the Commission and the Member State concerned regarding the latter’s voluntary compliance with Treaty requirements may continue during the court proceedings and up to the delivery of the judgment. The preservation of that objective, namely an amicable settlement of the dispute between the Commission and the Member State concerned before the Court of Justice has delivered judgment, therefore justifies refusal of access to those documents (see API v Commission, paragraph 52 above, paragraph 121 and case‑law cited). It follows from the foregoing that, as the Commission correctly submits, the Commission is entitled to maintain the confidentiality of documents assembled in the course of an investigation relating to infringement proceedings where their disclosure might undermine the climate of trust which must exist, between the Commission and the Member State concerned, in order to achieve a mutually acceptable solution to any contraventions of European Union law that may be identified. It must therefore be held that the Commission was, in principle, entitled to rely on the exception laid down in the third indent of Article 4(2) of Regulation No 1049/2001 in order to refuse to disclose the studies at issue. That conclusion cannot be invalidated by the applicant’s arguments that, first, citizens have the right to know whether their governments are complying with European Union environmental rules pursuant to the principles of openness and transparency in Article 1 TEU and Article 15 TFEU and, secondly, the Commission is obliged to oversee the application of those rules, to be accountable to citizens on how it performs that task and to make citizens partners in the decision-making process. The second subparagraph of Article 15(3) TFEU provides that the general principles and limits which, on grounds of public or private interest, are to govern citizens’ right of access to documents are to be determined by regulations by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure. Accordingly, Regulation No 1049/2001, adopted on the basis of Article 15(3) TFEU, determines those general principles and limits in relation to the right of access to documents held by the Commission. One of those limits is the exception set out in the third indent of Article 4(2) of that regulation, relating to the protection of the purpose of investigations by the institutions. The applicant cannot therefore rely on general treaty provisions to support an argument that that exception is not applicable. Further, it must be observed that, as has been acknowledged in the case‑law, where an institution is asked to disclose a document, it must assess, in each individual case, whether that document is covered by the exceptions to the right of access set out in Article 4 of Regulation No 1049/2001 (Sweden and Turco v Council, paragraph 51 above, paragraph 35). In that regard, it has been made clear, first, that the examination of a request for access to documents must be specific and individual and must relate to the content of each document referred to in that request and, secondly, that the nature of that examination must be apparent from the reasons stated for the institution’s decision, in relation to all the exceptions mentioned in Article 4(1) to (3) of that regulation on which that decision is based (see, to that effect, Case T-2/03 Verein für Konsumenteninformation v Commission [2005] ECR II-1121, paragraphs 69 to 74). As the applicant claims, in essence, the Commission’s examination of the studies at issue was general and abstract. It is not apparent from the contested decision that the Commission made a specific analysis of the precise content of each of the studies at issue in order to decide whether its disclosure was likely to undermine the climate of trust which must exist between the Commission and the Member State concerned. Contrary to what is argued by the Commission, the partial disclosure of those studies does not constitute evidence that they were individually examined, since the disclosed parts of each study are identical. There are however a number of exceptions to the Commission’s obligation to examine specifically and individually the documents to which access has been requested. Such an examination may not be necessary where, owing to the particular circumstances of the individual case, it is obvious that access must be refused or, on the contrary, granted. Such a situation could arise, for example, if certain documents (i) were manifestly covered in their entirety by an exception to the right of access, or (ii) were manifestly accessible in their entirety, or (iii) had already been the subject of a specific, individual assessment by the Commission in similar circumstances (Verein für Konsumenteninformation v Commission, paragraph 65 above, paragraph 75, and API v Commission, paragraph 52 above, paragraph 58). In addition, it is, in principle, open to the institution concerned to base its decisions in that regard, including in the statement of reasons for the decision refusing access, on general presumptions which apply to certain categories of documents, as general considerations of a similar kind are likely to apply to requests for disclosure relating to documents of the same nature, provided that it establishes in each case whether the general considerations normally applicable to a particular type of document are in fact applicable to a specific document which it has been asked to disclose (Sweden and Turco v Council, paragraph 51 above, paragraph 50). Due to the particular circumstances of this case, the Commission was entitled to consider, first, that all the studies at issue fell within the same category of documents and, secondly, that access to that category of documents had to be refused on the basis of the exception invoked (see, to that effect, Case T-29/08 LPN v Commission [2011] ECR II-6021, paragraph 121). As the applicant states, it is true that the studies at issue were not produced by the Commission, do not reflect its position, and do not cause the Commission to incur any liability. Nonetheless, the studies were ordered by the Commission as part of the preliminary stage of infringement proceedings and they examine in depth the compatibility of the legislation of the Member States concerned with European Union law. Those studies constitute therefore material which may have an effect on the extent to which the Commission can commence negotiations with those Member States, free from external pressure, with the objective that the Member States comply voluntarily with European Union law. That assessment is confirmed by the principles recognised in the judgment of the Court of Justice in Case C-139/07 P Commission v Technische Glaswerke Ilmenau [2010] ECR I-5885, paragraphs 54 to 62, as interpreted by the General Court in LPN v Commission, paragraph 70 above. In Commission v Technische Glaswerke Ilmenau, the Court of Justice held that, as regards the administrative procedures relating to reviewing State aid, a general presumption of confidentiality such as that mentioned in paragraph 69 above could arise from Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 [EC] (OJ 1999 L 83, p. 1), and from the case‑law relating to the right to consult the documents on the Commission’s administrative file. In that regard, the Court noted that the procedure for reviewing State aid was, in view of its general scheme, a procedure initiated against a Member State, in which only the latter has rights of defence, including the right to have certain documents disclosed to it, unlike the interested parties, who do not have, in that procedure, a right to consult the documents on the Commission’s administrative file. The Court also held that account must be taken of that fact for the purposes of interpreting the exception laid down by the third indent of Article 4(2) of Regulation No 1049/2001. If those interested parties were able to obtain access, on the basis of Regulation No 1049/2001, to the documents in the Commission’s administrative file, the system for the review of State aid would be jeopardised. The Court of Justice concluded that, where the activities of the institutions fall within the framework of administrative duties which are specifically allocated to them by Article 88 EC, it was necessary to take account of the fact that interested parties other than the Member State concerned in the procedures for reviewing State aid did not have the right to consult the documents in the Commission’s administrative file, and, therefore, to acknowledge the existence of a general presumption that disclosure of documents in the administrative file might, in principle, undermine the protection of the purpose of investigations, with the result that the institution concerned could itself decide that a specific and individual prior examination of the documents concerned was unnecessary. It remains the case however, according to the Court of Justice, that interested parties retain the right to demonstrate that a given document is not covered by that general presumption or that there is an overriding public interest justifying its disclosure. As regards the review which the Commission is required to carry out in the context of infringement proceedings, the General Court held, in LPN v Commission, paragraph 70 above (paragraph 126), that that review falls within the scope of an administrative duty, in the context of which the Commission has wide discretion and enters into a bilateral dialogue with the Member States concerned. The General Court observed that, by contrast, parties other than those Member States did not have the benefit of specific procedural safeguards compliance with which is subject to effective judicial review. Accordingly, the General Court held that, by analogy with the situation of interested parties in the context of the procedure for the review of State aid, there is a general presumption that disclosure of the documents in the administrative file relating to an investigation of a Member State’s failure to fulfil obligations would, in principle, undermine protection of the purpose of investigations, and consequently that it was sufficient for the Commission to establish whether that general presumption should apply to all the documents concerned, without its necessarily being required to undertake a specific and individual prior examination of the content each of those documents. The General Court then held that in a situation where, when the decision to refuse access was made, the infringement proceedings were ongoing, the Commission was necessarily required to start from the principle that that general presumption applied to the documents concerned in their entirety (LPN v Commission, paragraph 70 above, paragraph 127). In that regard, first, the applicant puts forward a number of arguments intended to demonstrate that the general presumption that the disclosure of the Commission’s ‘administrative file’ relating to a procedure for reviewing State aid would undermine the protection of the purpose of investigations, established by the Court of Justice, in Commission v Technische Glaswerke Ilmenau, paragraph 71 above, flows from the specific rules relating to ‘access to the file’ during the administrative procedure relating to State aid and is applicable only to documents concerning State aid. As the Commission correctly maintains, those arguments are incompatible with what is stated by the General Court in LPN v Commission, paragraph 70 above. They must therefore be rejected. Secondly, the applicant claims that the studies at issue are not part of a ‘file’, since they were produced as part of the preliminary stage preceding infringement proceedings. In that regard, it must be observed that the studies at issue are targeted documents, the purpose of which is the analysis of the transposition by a specific Member State of a specific directive, which are intended to form part of a Commission file relating to that transposition. Where infringement proceedings have already commenced, it cannot be held that those studies are not part of the file relating to those proceedings, since those studies are among the material on which the Commission based its decision to commence those proceedings. As regards studies in respect of which the Commission has not yet initiated infringement proceedings, it is equally necessary to maintain their confidentiality, since once information is in the public domain it cannot be withdrawn when the proceedings are commenced, as the Commission rightly submits. Moreover, it must be recalled that the exception relating to the protection of the purpose of investigations does not apply solely to documents relating to infringement proceedings which have been commenced but also to documents concerning investigations the outcome of which might be such proceedings (see paragraph 58 above). Lastly, the applicant claims that, even if the case‑law of the Court of Justice relating to State aid might be directly transposable to infringement proceedings, the contested decision should be annulled. Unlike the undertaking which was requesting access to documents in the case which gave rise to Commission v Technische Glaswerke Ilmenau, paragraph 71 above, which was unable to demonstrate that there was an overriding public interest, but only relied on its private interest as a recipient of State aid, the applicant claims that it represents an overriding public interest which concerns the entire population of the European Union, namely the protection of the environment. The essence of that argument by the applicant is that the disclosure of the studies at issue was justified by an overriding public interest. The argument must therefore be examined, if appropriate, in the context of the sixth plea in law, relating to the existence of such an interest. It follows from all the foregoing that, subject to examination of the issue referred to in paragraph 82 above, this plea in law must be rejected. – The second plea in law: infringement of Article 4(1), (2) and (4) of the Aarhus Convention, in that that provision does not allow any exception to the right of access to documents intended to protect the purpose of investigations other than those of a criminal or disciplinary nature It should be noted, as a preliminary point, that, by virtue of Article 216(2) TFEU, where international agreements are concluded by the European Union they are binding on its institutions, and consequently they prevail over acts of the European Union (Case C-366/10 Air Transport Association of America and Others [2011] ECR I-13755, paragraph 50). The Aarhus Convention was signed by the Community and subsequently approved by Decision 2005/370. Consequently, the provisions of that convention now form an integral part of the legal order of the European Union (Case C-240/09 Lesoochranárske zoskupenie [2011] ECR I-1255, paragraph 30). Article 3(1) of the Aarhus Convention states that each party to the convention is to take the necessary legislative, regulatory and other measures, including measures to achieve compatibility between the provisions implementing the provisions of the convention relating to, inter alia, the provision of environmental information to the public, in order to establish and maintain a clear, transparent and consistent framework to implement the provisions of the convention. Article 4(1) of the Aarhus Convention states that each party to the convention is to ensure that public authorities make available to the public, within the framework of their national legislation, the environmental information requested from them. Lastly, Article 4(3) and (4) of the Aarhus Convention provide for a number of grounds for refusal of requests for environmental information. The grounds for refusal laid down in Article 4(4) of the convention must, in accordance with the second subparagraph of that provision, be interpreted in a restrictive way taking into account the public interest served by disclosure of the information requested and whether or not the information relates to emissions into the environment. Regulation No 1367/2006 was adopted in order to ensure the application of the requirements of the Aarhus Convention to the institutions and bodies of the European Union. Article 1(1) of that regulation states that its objective is to contribute to the implementation of the obligations arising under that convention. Recital 3 in the preamble to that regulation states that ‘[p]rovisions of [European Union] law should be consistent with [the Aarhus] Convention’. Article 3 of Regulation No 1367/2006 provides that ‘Regulation No 1049/2001 shall apply to any request for access to environmental information held by [European Union] institutions or bodies’. Lastly, Article 6 of Regulation No 1367/2006 contains specific provisions on the application of exceptions to the right to access to documents provided for in Article 4 of Regulation No 1049/2001. Recital 15 in the preamble to Regulation No 1367/2006 states that ‘[w]here Regulation … No 1049/2001 provides for exceptions, these should apply subject to any more specific provisions in this Regulation concerning requests for environmental information’. In this case, the Commission examined the applicant’s request for access in the contested decision in the light of Regulations Nos 1367/2006 and 1049/2001 and, as stated in paragraph 16 above, the Commission relied on the third indent of Article 4(2) of Regulation No 1049/2001 to support its refusal to disclose certain parts of the studies at issue. Further, the Commission stated that Article 6(1) of Regulation No 1367/2006 did not alter that conclusion and pointed out that Regulation No 1367/2006 provided that the exception relating to the protection of the purpose of investigations, in particular those concerning possible infringements of European Union law, could be applied with regard to documents containing environmental information, where disclosure was not justified by an overriding public interest. Consequently, the Commission did not carry out its examination of the confirmatory application, as regards the exception relating to the protection of the purpose of investigations, by relying directly on the Aarhus Convention, but by relying on the provisions of Regulations Nos 1049/2001 and 1367/2006. Nonetheless, by this plea in law, the applicant claims that the conclusion reached by the Commission following examination is incompatible with Article 4(1), (2) and (4) of the Aarhus Convention, which, according to the applicant, is sufficient reason for the contested decision to be annulled on that point. It must be borne in mind that the legality of an act of the European Union may be affected by the fact that that act is incompatible with an international agreement. Where it is claimed before the Courts of the European Union that an act of the European Union is incompatible with rules of international law, those courts may examine the issue provided that two conditions are satisfied. First, the European Union must be bound by those rules. Secondly, the Courts of the European Union can examine the legality of an act of the European Union in the light of a provision of an international treaty only where the nature and the broad logic of the latter do not preclude this, and, moreover, where that provision can be seen, as regards its content, to be unconditional and sufficiently precise (Air Transport Association of America and Others, paragraph 84 above, paragraphs 51 to 54). It must be observed that the European Union is bound by the Aarhus Convention. However, as regards the grounds for refusal of a request for access to environmental information, that convention cannot be seen, as regards its content, to be unconditional and sufficiently precise within the meaning of the case‑law referred to in paragraph 91 above. As stated above, Article 3 of the Aarhus Convention provides that each party to the convention is to take the necessary legislative, regulatory and other measures, including measures to achieve compatibility between the provisions implementing the provisions in the convention, to establish and maintain a clear, transparent and consistent framework to implement the provisions of the convention. Further, it follows from reading Article 4(1) and (4) of the Aarhus Convention together that all parties to that convention have a wide discretion in respect of how to organise the ways in which environmental information requested from public authorities is made available to the public. The applicant claims that the application in this case by the Commission of the relevant provisions of Regulations Nos 1367/2006 and 1049/2001, and in particular the third indent of Article 4(2) of Regulation No 1049/2001, is incompatible with the provisions of Article 4(4)(c) of the Aarhus Convention. However, Article 4(4)(c) is not sufficiently precise to be directly applicable, at least in relation to the institutions of regional economic integration referred to in Article 2(d) of the Aarhus Convention. The Aarhus Convention, and in particular Article 4(4)(c) thereof, was manifestly designed to be applicable principally to the authorities of the States which are contracting parties thereto and uses concepts appropriate to them, as is apparent from the reference to the framework of national legislation in Article 4(1) thereof. On the other hand, the convention does not take into account the specific features which are characteristic of institutions of regional economic integration, which may nonetheless accede to the convention. In particular, there is nothing in Article 4(4)(c), or in the other provisions of the Aarhus Convention, which makes it possible to interpret the concepts used in that provision and to determine whether an investigation relating to infringement proceedings can be covered by such concepts. In the absence of any specific information for that purpose, it cannot be held that the Aarhus Convention prevents the European Union legislature from providing for an exception to the principle of access to the documents of the institutions relating to the environment where those documents pertain to infringement proceedings, which form part to the constitutional mechanisms of European Union law, as established by the Treaties (Case T‑59/09 Germany v Commission [2012] ECR, paragraphs 63 and 64). Further, it would be illogical if the Aarhus Convention were to provide for exceptions for the benefit of some contracting parties, namely the States, while precluding the application of similar exceptions by other contracting parties, namely, institutions of regional economic integration, which include the European Union for the purposes of that convention. It follows from all the foregoing that the applicant’s argument that the third indent of Article 4(2) of Regulation No 1049/2001, as applied by the Commission in the contested decision, is incompatible with Article 4(4) of the Aarhus Convention, in that that provision does not allow any exception to the right of access to documents intended to protect the purpose of investigations other than those of a criminal or disciplinary nature, cannot be upheld. Consequently, the second plea in law must be rejected. The fourth and the second pleas in law having been rejected, it must be held that the applicant has failed to demonstrate that the Commission committed, in this case, an error in refusing to disclose the studies at issue in order to protect the purpose of its investigations. Since that ground was, in itself, capable of justifying the Commission’s refusal to disclose to the applicant the withheld parts of the studies at issue, there is therefore no need to examine whether the Commission erred in holding that it was also entitled to refuse that disclosure in order to protect its decision-making process, as is claimed by the applicant in its fifth plea in law. It is however necessary to examine the arguments submitted by the applicant in its sixth plea in law, to the effect that disclosure of the studies at issue was in any event justified by an overriding public interest. – The sixth plea in law: infringement of Article 4(2) in fine and (3) of Regulation No 1049/2001, due to the existence of an overriding public interest justifying disclosure of the documents requested The applicant states that the exceptions to the right of access to documents must be interpreted in accordance with the principles laid down in Article 1 TEU, under which the public must be granted the widest possible access to institutions’ documents. Further, the applicant claims that the Commission can accordingly not refuse access to a document in order to protect an interest covered by one of the exceptions laid down in Article 4(2) of Regulation No 1049/2001 unless the Commission, first, determines that there is no overriding public interest justifying the disclosure of that document, secondly, weighs the various competing interests and, thirdly, gives a detailed statement of reasons, as the Commission failed to do in the contested decision. The applicant adds that European citizens have a vested interest in knowing whether, and to what extent, European Union environmental legislation is complied with at national level, so that, when necessary, they can insist that that legislation is actually applied, by reason of its primacy and its direct effect, by the national courts and also request that the national legislation be brought into compliance with European Union law. Further, transparency intensifies the interest of citizens in the policies of the institutions and the extent of their participation, which in its turn strengthens the democratic character of the European Union and contributes to the protection of the principles of openness and transparency laid down in Articles 1 and 11 TEU and in Article 15 TFEU. The Commission disputes the applicant’s arguments. It must be observed that the fact that citizens have the opportunity to obtain appropriate environmental information and genuine opportunities to participate in the decision-making process in relation to the environment plays an essential role in a democratic society. As is indicated in the preamble to the Aarhus Convention, improved access to information and increased public participation in decision-making enhance the quality and the implementation of decisions, contribute to public awareness of environmental issues, give the public the opportunity to express its concerns and enable public authorities to take due account of such concerns. The public’s right to receive that information constitutes the expression of the principle of transparency, to which the provisions of Regulation No 1049/2001, as a body, give effect, as is apparent from recital 2 in the preamble to that regulation, according to which openness enables citizens to participate more closely in the decision-making process and guarantees that the administration enjoys greater legitimacy and is more effective and more accountable to them, and contributes to strengthening the principle of democracy. Nonetheless, it follows from the case‑law that the overriding public interest, referred to in Article 4(2) in fine and the first subparagraph of Article 4(3) in fine of Regulation No 1049/2001, which is capable of justifying the disclosure of a document which undermines or seriously undermines the legal interests protected by the exceptions provided for in those provisions must, as a rule, be distinct from the abovementioned principles which underlie that regulation (API v Commission, paragraph 52 above, paragraph 97). Admittedly, the fact that, as is the case here, a party requesting access does not invoke any public interest distinct from the abovementioned principles does not automatically imply that it is unnecessary to weigh up the competing interests. The invocation of those same principles may, in the light of the particular circumstances of the case, be so pressing that it outweighs the need to protect the documents in question (API v Commission, paragraph 52 above, paragraph 97). However, that is not the case here. The applicant has not presented any argument capable of demonstrating that, in relation to the studies at issue, the invocation of those principles raises, having regard to the particular circumstances of this case, any issue of particularly pressing concern. The applicant has done no more than refer to non-specific considerations unrelated to the particular circumstances of this case, namely that citizens have a right to be informed of the extent to which the Member States are complying with European Union environmental law and to participate in the procedure for making decisions. Yet non-specific considerations cannot provide an appropriate basis for establishing that the principle of transparency represents in a specific case an issue of particularly pressing concern which prevails over the reasons justifying the refusal to disclose the documents requested (see, to that effect, Joined Cases C-514/07 P, C-528/07 P and C-532/07 P Sweden and Others v API and Commission [2010] ECR I-8533, paragraph 158). This plea in law must therefore be rejected. The second group of pleas It is appropriate, first, to examine together the first and seventh pleas in law, relating, in essence, to the infringement of Article 8(1) and (2) of Regulation No 1049/2001 and of Article 4(1) of the Aarhus Convention, in that the Commission is alleged unlawfully to have extended the time-limit for a reply to a confirmatory application and, thereafter, the third plea in law, relating to the breach of the obligation actively to disseminate environmental information stemming from Article 5(3) to (7) of the Aarhus Convention and Article 4(2)(b) of Regulation No 1367/2006. – The first and seventh pleas in law: in essence, infringement of Article 8(1) and (2) of Regulation No 1049/2001 and of Article 4(1) of the Aarhus Convention, in that the Commission unlawfully extended the time-limit for a reply to a confirmatory application, which is claimed to be a regular practice on the part of the Commission which should be deterred Article 8(1) of Regulation No 1049/2001 provides as follows: ‘A confirmatory application shall be handled promptly. Within 15 working days from registration of such an application, the institution shall either grant access to the document requested and provide access in accordance with Article 10 within that period or, in a written reply, state the reasons for the total or partial refusal. In the event of a total or partial refusal, the institution shall inform the applicant of the remedies open to him or her, namely instituting court proceedings against the institution and/or making a complaint to the Ombudsman, under the conditions laid down in Articles 230 [EC] and 195 [EC], respectively.’ Article 8(2) of that regulation provides: ‘In exceptional cases, for example in the event of an application relating to a very long document or to a very large number of documents, the time-limit provided for in paragraph 1 may be extended by 15 working days, provided that the applicant is notified in advance and that detailed reasons are given.’ The applicant claims that the adoption of the contested decision was in breach of those provisions. The confirmatory application concerns neither a particularly long document nor a large number of documents, and it is not of an exceptional character. Even in such cases, the time-limit for a reply to that application can be extended only by 15 working days. It is settled case‑law that that time-limit is mandatory. Nonetheless, the Commission adopted the contested decision more than five months after the expiry of that time-limit. The Commission accepts that it exceeded the time-limit for a reply to the confirmatory application, but contends that that failure, in accordance with the case‑law, does not entail that the contested decision is unlawful. At the hearing, the applicant accepted that in accordance with settled case‑law a failure to comply with the time-limit for reply to a confirmatory application does not entail the invalidity of the decision taken by the institution concerned with regard to that application. Nonetheless, the applicant decided to pursue these pleas in law, and the arguments submitted in their support, in order to draw attention to what it considers to be the Commission’s regular practice, namely that the Commission systematically ignores the mandatory time-limits for reply which are imposed on it. In that regard, it must be observed that the time-limit laid down in Article 8(1) of Regulation No 1049/2001 is mandatory and cannot be extended other than in the circumstances provided for in Article 8(2) of that regulation, without depriving that article of all practical effect, since the applicant could no longer know precisely the date from which he could bring the action or complaint provided for in Article 8(3) of that regulation (see Joined Cases T-494/08 to T-500/08 and T-509/08 Ryanair v Commission [2010] ECR II-5723, paragraph 39 and case‑law cited). As the applicant submits, even where the circumstances provided for in Article 8(2) of Regulation No 1049/2001 are satisfied, that time-limit may be extended only by 15 working days. However, as the applicant itself accepts, the expiry of the time-limits laid down in Article 8 of Regulation No 1049/2001 does not have the effect of depriving the Commission of the power to adopt an express decision (Joined Cases T-355/04 and T-446/04 Co-Frutta v Commission [2010] ECR II-1, paragraph 56, and Ryanair v Commission, paragraph 117 above, paragraph 50). If the legislature had intended silence on the part of the institutions to bring about such an effect, specific reference would have been made in the legislation concerned. In the field of access to documents, the legislature specified the consequences of failure to comply with the time-limits laid down in Article 8(1) and (2) of Regulation No 1049/2001, by providing, in Article 8(3) thereof, that such failure on the part of the institution is to give the applicant the right to institute judicial proceedings. In that context, the consequences which the applicant wishes to attribute to the Commission’s failure to comply with the time-limits laid down in Article 8(1) and (2) of Regulation No 1049/2001 must be considered to be disproportionate. There is no legal principle which results in the administration losing its power to respond to an application, even outside the time-limits laid down for that purpose. The mechanism of an implied refusal decision was established in order to counter the risk that the administration would choose not to reply to an application for access to documents and escape any review by the courts, not to render unlawful every decision which is late. On the other hand, the administration is required, in principle, to provide – even late – a reasoned response to every application by a citizen. That approach is consistent with the function of the mechanism of the implied refusal decision, which is to enable citizens to challenge inaction on the part of the administration with a view to obtaining a reasoned response from it (Co‑Frutta v Commission, paragraph 118 above, paragraphs 57 to 59). It must therefore be held that the lawfulness of the contested decision is not affected by the fact that the period allowed for the response to the confirmatory application was exceeded. Since the applicant itself accepted, at the hearing, that that conclusion was correct, there is no need to examine the additional arguments to the contrary which the applicant submitted in its reply. Lastly, the applicant claims that the contested decision was made after the expiry of the ‘15 day time-limit set out in … Article 4(1) of the Aarhus Convention’. However, that provision does not include any indication that the authority which has received a request for access to a document is subject to a time-limit within which it must decide on the request. Even if the applicant intended to rely on the failure to comply with Article 4(2) of that convention, which fixes as two months the maximum period of time within which the environmental information must be disclosed to the persons who have requested it where that disclosure concerns lengthy documents or complex information, the failure by the Commission to comply with that time-limit in this case does not affect the lawfulness of the contested decision, for the same reasons as those set out in paragraphs 117 to 119 above. The first and seventh pleas in law must therefore be dismissed. – The third plea in law: infringement of the obligation actively to disseminate environmental information stemming from Article 5(3) to (7) of the Aarhus Convention and Article 4(2)(b) of Regulation No 1367/2006 Article 4(2) of Regulation No 1367/2006 provides as follows: ‘The environmental information to be made available and disseminated shall be updated as appropriate. In addition to the documents listed in Article 12(2) and (3) and in Article 13(1) and (2) of Regulation (EC) No 1049/2001, the databases or registers shall include the following: (a) texts … of [European Union] legislation on the environment or relating to it, and of policies, plans and programmes relating to the environment; (b) progress reports on the implementation of the items referred to under (a) where prepared or held in electronic form by [European Union] institutions or bodies; …’ Article 5(3) of the Aarhus Convention provides: ‘Each Party shall ensure that environmental information progressively becomes available in electronic databases which are easily accessible to the public through public telecommunication networks. Information accessible in this form should include: … (c) as appropriate, policies, plans and programmes on or relating to the environment, and environmental agreements …’ Article 5(5) of the Aarhus Convention provides: ‘Each Party shall take measures within the framework of its legislation for the purpose of disseminating, inter alia: (a) legislation and policy documents such as documents on strategies, policies, programmes and action plans relating to the environment, and progress reports on their implementation, prepared at various levels of government …’ The applicant claims, in essence, that, pursuant to the abovementioned provisions and Article 1(2) and Article 11 TEU, the Commission was under an obligation actively to disseminate the studies at issue. In that regard, suffice it to observe that both the Aarhus Convention and Regulation No 1367/2006 provide for public access to environmental information either on request or as part of active dissemination by the authorities and institutions concerned. However, since authorities and institutions may refuse a request for access to information where that information falls within the scope of a number of exceptions, it necessarily follows that they are under no obligation actively to disseminate that information. Were matters otherwise, the exceptions concerned would cease to serve any useful purpose, which is manifestly incompatible with the spirit and the letter of the Aarhus Convention and Regulation No 1367/2006. This plea in law must therefore be rejected. In the light of all the foregoing, the action must be dismissed in its entirety. Costs Under Article 87(3) of its Rules of Procedure, the Court may order the costs to be shared or the parties to bear their own costs if each party succeeds on some and fails on other heads, or where the circumstances are exceptional. In this case, the Commission, in the course of the proceedings, gave access to a substantial part of the documents which the applicant had requested in the confirmatory application and the refusal of access to which had caused this action to be brought. Having regard to those exceptional circumstances, the parties must be ordered to bear their own costs. On those grounds, THE GENERAL COURT (Sixth Chamber) hereby: 1. Dismisses the action; 2. Orders ClientEarth and the European Commission each to bear their own costs. Kanninen Soldevila Fragoso Berardis Delivered in open court in Luxembourg on 13 September 2013. [Signatures] ( *1 ) Language of the case: English.

-------- P. KURDUKAR, J. ---------------- The lands bearing Survey Nos. 200/2 admeasuring 3 acres 2 gunthas and 201/2 admeasuring 12 acres 8 qunthas situate at village Madgyal admittedly belonged to Maruti Deo, a deity, through V.M.Kulkarni. It is also number disputed that the said Deosthan is managed by a Managing Committee which is under the supervision of the Secretary, Deosthan Managing Committee, Western Maharashtra, Kolhapur. It appears that since 1948, these lands were in possession of Bhimanna Mallappa Mali the first respondent as a protected tenant on payment of rent to the Deosthan Managing Committee. The Deosthan Managing Committee found that the income received from the lands was too inadequate to manage Deosthan and, therefore, in a meeting of Deosthan Managing Committee, it was resolved to give these lands on lease for a period of five years. It was further resolved that the Managing Committee should move Tahsildar Jath to hold an auction in respect of these lands. Accordingly, the Tahsildar Jath held the auction sometime in 1978 and Rachappa Shivrudra Hiremath, the third respondent, being the highest bidder, the lands were allotted to him on lease for a period of five years. Consequently, on June 20, 1979, the tenant was dispossessed and possession of these lands were given to Rachappa. Immediately sometime in July, 1979, the tenant applied to Tahsildar Jath under Section 29 1 of the Bombay Tenancy and Agricultural Lands Act, 1948 for short Act for possession of these lands on the ground that he was illegally dispossessed from the tenanted lands. This petition of the tenant was companytested by the appellants as also by the third respondent. The appellant, however, did number file any written statement but the third respondent filed his say. According to him, the Managing Committee was fully authorised to request the Tahsildar to auction these lands and he being the highest bidder is entitled to companytinue in possession in terms of the auction. He has also numberright to claim the possession of these lands under the provisions of the Act. The tenant was number unlawfully dispossessed from the lands. He being the highest bidder in public auction, he cannot be dispossessed from the lands in a proceeding initiated under Section 29 1 of the Act. The Tahsildar Jath granted the application filed by the tenant holding that he companyld number be deprived of the possession of these lands being the tenant and accordingly directed that the possession be restored. Being aggrieved by the order passed by the Tahsildar, the appellant and the third respondent filed two separate appeals before the Collector who after hearing the parties by his judgment and order dated 16.8.1979, upheld the direction given by the Tahsildar for restoring the possession of these lands but, however, he held that the tenants application would more appropriately fall under Section 84 of the Act and number under Section 29. Accordingly, in exercise of his jurisdiction under Section 84 of the Act, he directed that the third respondent be evicted and the tenant be put in possession of these lands. Feeling aggrieved by this order, the respondent No.3 preferred a revision application before the Maharashtra Revenue Tribunal, Kolhapur. Learned Single member of the said Tribunal held that these lands were exempted from the operation of the Act by virtue of Section 88 1 a of the Act. Consistent with this finding, the Tribunal dismissed the application filed by the tenant as number maintainable and companysequently, set aside the order passed by the Tahsildar and the Collector. Aggrieved by this judgment and order passed by the Maharashtra Revenue Tribunal, the tenant preferred the Writ Petition under Article 227 of the Constitution of India. The Bombay High Court, after hearing the parties, by its judgment and order dated January 14, 1983, allowed the Writ Petition partly and remanded the matter back to the Tribunal for disposal in accordance with law. The High Court held that the Revenue Tribunal was wrong in allowing a new point to be raised as regards number application of the Act by virtue of Section 88 1 a of the Act. The High Court recorded a specific finding that Section 88 1 a of the Act had numberapplication because the lands neither belong to the government number the third respondent held on lease from the government. The High Court, therefore, while setting aside the finding of the Maharashtra Revenue Tribunal, remanded the matter back to the said Tribunal to companysider the legality and companyrectness of the order passed by the Tahsildar and the Collector in accordance with law. It is against this order made by the High Court on January 14, 1983, the Secretary, Deosthan Managing Committee, the appellant has filed a special leave petition in this Court which was beyond a period of limitation by 821 days. This Court, however, companydoned the delay and granted special leave out of which Civil Appeal No. 756 of 1991 arises. Pursuant to the order of remand dated January 14, 1983 passed by the High Court, the Maharashtra revenue Tribunal after hearing the parties by its judgment and order dated April 24, 1985 dismissed the revision application filed by the Revision Petitioner. Aggrieved by this order passed by the Tribunal, the appellant preferred Writ Petition to the High Court, but the same was dismissed summarily on August 14, 1985. It is against this order the appellant has filed Civil Appeal No. 757 of 1991 after obtaining the special leave. From the facts narrated above, it would be evident that the Civil Appeal No.756 of 1991 arises out of an order of remand passed by the High Court on January 14, 1983, but neither the appellant number the third respondent moved this Court early and companysequently the order or remand was worked out. The Revenue Tribunal by its judgment and order dated April 24, 1985 dismissed the revision application on merits upholding the orders passed by the Tahsildar and the Collector. Since the parties in both these appeals as also the issues involved being companymon, they are disposed of by this companymon judgment. Mr. Khanwilkar, learned companynsel appearing in support of this appeal, urged that the order of remand dated January 14, 1983 passed by the High Court was totally erroneous. He urged that Maruti Deosthan being a registered public trust, the properties held by such trust are exempted from the application of the Act. He then urged that under Regulation 9 promulgated by the former ruler of Jath, the lands in dispute must be held to be under the supervision of the Mamlatdar government and. therefore, Section 88 1 a of the Act will govern the field. In support of this submission, he drew our attention to Regulation 9 which is set out in the judgment of the Maharashtra Revenue Tribunal. He, therefore, urged that the tenants application under Section 29 1 as also under Section 84 of the Act was totally misconceived and number maintainable and companysequently the orders passed by the authorities below be set aside and the tenants application be dismissed. The learned companynsel for the tenant, however, supported the impugned judgment. Section 88 1 a of the Act reads thus - Save as otherwise provided in sub-section 2 , numberhing in the foregoing provisions of this Act shall apply a to lands belonging to, are held numberlease from the government. b xxxxxxxxxxxxxx c xxxxxxxxxxxxx d xxxxxxxxxxxxxx It is number disputed by the learned companynsel for the appellant that first part of clause a would number apply to the present case. The second part which reads held on lease from the government would apply to the facts of the present case. From the material on record, it is clear that the tenant was in possession of these lands as a tenant since 1948 and for the first time he came to be dispossessed in April, 1979. The tenant was also recorded in the revenue records as a protected tenant. In Kabjedar companyumn, Maruti Deosthan has been recorded as Kabjedar. Regulation 9 indicates that the Deosthan lands companyld be leased out by auction by the Mamlatdar Jath. In the present case, in fact, the appellant-Managing Committee had resolved to move the Collector to hold the auction in respect of these lands. It is pursuant to this resolution, the Mamlatdar held the auction of these lands. Now, the question is holding of such auction by the Mamlatdar at the request of the appellantthe Managing Committee would be companyered by the expression held on lease from the government under clause a of sub-section 1 of Section 88. It is true that the regulation framed by the former ruler of Jath would indicate that the Collector and or Tahsildar will have a supervisory power over the income and expenditure of the trust property. Assuming that in exercise of such supervision, the Tehsildar Collector had leased out these lands to respondent No.3 in an auction, it cannot be said that such an action on the part of the Tahsildar and a lease given to the third respondent would be held on lease from the government. In this view of the matter, the High Court was right in deciding the issue as regards the applicability of Section 88 1 a of the Tenancy Act. For the foregoing companyclusions, it must follow that the Civil Appeal No.757 of 1991 filed by the appellant must also fail. As far as the applicability of Section 84 of the Act is companycerned, we are of the companysidered view that having regard to the long possession of the tenant since 1948, the Tahsildar companyld number have dispossessed him in April, 1979 without determining the rights of the tenant under the Tenancy Act. It must, however, be made clear that it would be open to the appellant-Deosthan Managing Committee to file appropriate proceedings before appropriate forum for appropriate reliefs against the tenant. If the appellant-Deosthan Managing Committee is of the opinion that the lands in dispute are exempt from the application of the Act because of various provisions companytained in the Act as well as under the Trust Act, it would be open to them to adopt appropriate proceedings.

S. Hegde, J. This is an election appeal Under Section 116A of the Representation of the People Act, 1951. It relates to the mid term election in 1969 to the U.P. Legislative Assembly from Rajpur companystituency in the District of Kanpur. The poll took place on February 5, 1969. Five candidates companytested the election. The appellant stood as an independent. Ram Dulare Misra, respondent No. 2 in this appeal was the companygress numberinee. The companytest was mainly between the appellant and respondent No. 2. The appellant was declared elected having secured 36997 votes as against 22198 votes secured by Misra. The election of the appellant was challenged by the respondent Onkar Nath, a voter in the companystituency on various grounds. The High Court set aside the election of the appellant on the ground that he was guilty of companyrupt practices Under Section 123 3 of the Representation of the People Act, 1951. The High Court held that the appellant was guilty of appealing to the voters to vote for him on the ground of his caste and refrain from voting to Misra on the ground that he was a Brahmin. The other grounds alleged against the election of the appellant were negatived by the High Court. Hence in this appeal we are only companycerned with the companyrectness of the findings of the High Court that the appellant was guilty of companyrupt practices Under Section 123 3 . The appellant was elected to the U.P. Legislative Assembly in the General Election in 1967 on the S.S.P. ticket. He was the Finance Minister in the U.P. Government when the S.V.D. was in power. The allegation of Onkar Nath is that after the fall of the S.V.D. Government the appellant formed an association called Arjak Sangha. It was a companymunal organisation The membership of that association was companyfined to those who are born in the so called lower castes like Kurmi, Yadava, Kori, Chamar, Mallah, Gadaria and Hari-jans. The activities of that Sangha were primarily directed for the companysolidation of these castes as against the upper classes in general and Brahmins in particular. It was said that this Sangha under the guidance of the appellant carried on virulent propaganda against the Brahmins before the election, during the election as well as thereafter. According to the allegations companytained in the election petition, respondent No. 2 was the brain behind this Sangha and its principal spokesman. It is also alleged that during the election the appellant as well as B.P. Maurya spoke at several election meetings hurling abuses against the Brahmin companymunity, highlighting the exploitation by that companymunity in the past and requesting the voters number to vote to Misra who was a Brahmin but to cast their votes to the appellant who is a Kurmi. In support of this plea several witnesses have been examined on behalf of the first respondent. Evidence was also led to show that the principal objective of Arjak Sangha was to denounce the Brahmins and Brahminism. The Constitution of the Arjak Sangha was placed before the Court to demonstrate the anti-Brahmin objective of Arjak Sangha. Several pamphlets published by Arjak Sangha after the election wherein Brahmins and Brahminism had been assailed were placed before the Court It was said that one of the slogans raised during election was Brahmin Bania Lalla Inka Munh ker do Kala. Evidence was also led to show that security proceedings had been initiated against some of the supporters of the Arjak Sangha at about the time of the election for preaching hatred against Brahmins and thus creating tension in certain localities Apart from this general evidence adduced to show the anti-Brahmin activities of the appellant and his supporters before the election, at the time of the election and after the election, evidence was also led to show that appeals were made at certain meetings number to cast votes to Misra as he was a Brahmin and that votes should be cast in favour of the appellant on the ground that he belongs to a lower caste. The High Court has accepted the evidence referred to hereinbefore. The appellant in his evidence did number hesitate to admit that he is against Brahminism and he wants to finish Brahminism. His antipathy towards Brahminism is writ large in his evidence. The High Court has relied on this circumstance as well as the evidence relating to the activities of Arjak Sangha before and after the election for probabilising the evidence adduced in support of the election petition that the appellant and his supporters particularly B.P. Maurya had appealed to the voters to vote for the appellant on the ground of his caste and number to vote for Misra as he is a Brahmin. The appellant has denied that he had at any time appealed or permitted others to appeal to the voters during the election to vote for him on the ground of his caste and number to vote for Misra as he is a Brahmin. He also examined certain witnesses on his side to support that plea of his but that evidence has number been believed by the trial Court. The High Court has also relied on the initiation of a security proceedings as a circumstance probabilising the evidence that during his election meetings the appellant had company milled the companyrupt practice companying within Section 123 4 . It was urged by Mr. A.S.R. Chari, learned Counsel for the appellant that the evidence relating to the past activities of the appellant or of the Arjak Sangha as well as the utterances of the appellant after the declaration of the result of the election were wholly irrelevant According to him the evidence relating to the initiation of a security proceeding is neither relevant number admissible. Counsel for the appellant companytended that the admission of irrelevant evidence has caused companysiderable prejudice to his clients case as it must have weighed with the Court. We have number thought it necessary to go into the question whether Mr. Chari is right in his companytention that the evidence objected to by him is admissible or number as in our opinion there is reliable evidence to show that in some of the election meetings, the appellant and his supporter B.P. Maurya did appeal to the electorate to cast their votes in favour of the appellant on the ground of his caste and number to vote for Misra because he was a Brahmin. There is companyvincing evidence on this point at least in respect of three meetings held at Sandalpur, Baraur and Rajpur respectively on February 2, 1969. So far as Sandalpur meeting is companycerned, there is evidence of P W. 23, Nathu and P.W. 24, Radhey Shyam. Both of them appear to be disinterested witnesses. Their evidence has been accepted by the trial Court. We have ourselves gone through their evidence and we are of opinion that their evidence is credit worthy. To rebut the evidence of those witnesses, the appellant has examined P.W. 13 Radhey Shyam R.W. 18 Pyare Lal R.W. 19 Ram Avtar. Radhey Shyam was the polling agent of the appellant Ram Avtar and Pyare Lals evidence did number impress the trial Court. We have also number been impressed by their evidence. They appear to be partisans of the appellant. So far as the meeting at Barer is companycerned, on behalf of the election-Petitioner, P.W. 19 Ram Narain s p Lachman and P W. 33 another Ram Narain son of Kunja have been examined. They support the case put forward in the election petition. They speak to the fact that both the petitioner and Maurya appealed to the voters on the basis of castes. P.W. 19 is a Dhore by caste. He has read upto B. S.C. He is number shown to be interested either in Misra or the election petitioner number is it shown that he had any enmity with the appellant. His evidence was companyroborated by P.W. 33 He also appears to be disinterested witness. To companynter the evidence of P.Ws. 19 and 33, the appellant examined R.W. 5, Hublal R.W. 6, Babu Lal R.W 15, Chandra Shekhar, The trial Court has given good reasons for number relying on their testimony. These witnesses companytradict each other on various material particulars. It is clear from their evidence that they were number present at the meeting. Now companying to the meeting at Rajpur on the side of the election petitioner we have the evidence of P.W. 11, Gur Narain P.W. 12 Jagat Narain and P.W. 13 Mod, Lal. All these witnesses companysistently speak to the fact that both the appellant as well as Maurya appealed to the voters to vote for the appellant on the basis of his caste and number to vote for Misra as he was a Brahmin. It was said that both of them told their audience that Brahmins had been ruling over the lower castes for hundreds of years and that by reciting Mahabharata and Ramayana they had been earning a lot without putting any labour and that the lower castes should number allow the Brahmins to have a predominating position. The witnesses examined on behalf of the petitioner appear to be disinterested witnesses. It is number established that they had any reason to speak against the appellant As against their evidence the appellant has examined R.W. 4, Kalika Prasad R.W. 16, Babu Ram and R.W. 17, Ram Shanker Ojha Both Babu Ram and Ram Shanker admitted in their cross-examination that they worked for the appellant during the election. The evidence of Kalika Prasad did number impress the trial Court. One important circumstance to be numbered in this case is that according to the evidence of all the witnesses Maurya was the chief spokesman on behalf of the appellant. But strangely enough Maurya was number examined in the case No explanation has been offered for his number-examination. It is true that both Misra and Onkarnath have number been examined. Neither Misra number Onkarnath claims to have any personal knowledge of the companyrupt practices companymitted by the appellant. Therefore their number-examination has numbersignificance.

COURT OF APPEAL FOR ONTARIO CITATION: Burgiss v. Canada (Attorney General), 2013 ONCA 16 DATE: 20130111 DOCKET: C55897 MacPherson, Cronk and Lauwers JJ.A. BETWEEN Robert Burgiss Plaintiff/Appellant and Attorney General of Canada Defendant/Respondent Robert Burgiss, in person Michael J. Sims, for the respondent Heard: January 11, 2013 On appeal from the order of Justice Donald J. Gordon of the Superior Court of Justice, dated July 24, 2012. APPEAL BOOK ENDORSEMENT [1] The appellant appeals from the order of Gordon J. of the Superior Court of Justice, dated July 24, 2012, striking his amended statement of claim, without leave to amend. [2] We see no basis for appellate interference with the motion judge’s ruling.  The appellant’s pleading fails to disclose any reasonable cause of action in law against the respondent or any material facts sufficient to support his claims of negligent investigation and misfeasance in public office by the Royal Canadian Mounted Police arising from the police failure to investigate the appellant’s various criminal complaints.  The police owed no private or public law duty to the appellant to exercise their discretion in favour of investigating his complaints.  The motion judge, therefore, did not err in striking the appellant’s pleading, without leave to further amend. [3] The appeal is dismissed.  This is not an appropriate case for an award of the costs of the appeal.

THIRD SECTION CASE OF DEMIRTEPE v. FRANCE (Application no. 34821/97) JUDGMENT STRASBOURG 21 December 1999 In the case of Demirtepe v. France, The European Court of Human Rights (Third Section), sitting as a Chamber composed of: SirNicolas Bratza, President,MrJ.-P. Costa,MrL. Loucaides,MrP. Kūris,MrW. Fuhrmann,MrK. Jungwiert,MrsH.S. Greve, judges,and Mrs S. Dollé, Section Registrar, Having deliberated in private on 7 December 1999, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case was referred to the Court by the French Government (“the Government”) on 9 April 1999, within the three-month period laid down by former Articles 32 § 1 and 47 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”). It originated in an application (no. 34821/97) against the French Republic lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 by a Turkish national, Mr Bédirhan Demirtepe (“the applicant”), on 22 January 1997. The applicant was represented by Mr J.‑M. Darrigade, of the Montpellier Bar, and the Government were represented by their Agent, Mr R. Abraham, Head of the Department of Legal Affairs at the Ministry of Foreign Affairs. The Government’s application referred to former Articles 47 and 48. The object of the application was to obtain a decision as to whether the facts of the case disclosed a breach by the respondent State of its obligations under Article 8 of the Convention. 2. Following the entry into force of Protocol No. 11 to the Convention on 1 November 1998 and in accordance with the provisions of Article 5 § 4 thereof read in conjunction with Rules 100 § 1 and 24 § 6 of the Rules of Court, a panel of the Grand Chamber decided on 7 July 1999 that the case would be examined by a Chamber constituted within one of the Sections of the Court. 3. In accordance with Rule 52 § 1, the President of the Court, Mr L. Wildhaber, then assigned the case to the Third Section. The Chamber constituted within that Section included ex officio Mr J.-P. Costa, the judge elected in respect of France (Article 27 § 2 of the Convention and Rule 26 § 1 (a)), and Sir Nicolas Bratza, President of the Section (Rule 26 § 1 (a)). The other members designated by the latter to complete the Chamber were Mr L. Loucaides, Mr P. Kūris, Mrs F. Tulkens, Mr K. Jungwiert and Mrs H.S. Greve (Rule 26 § 1 (b)). Subsequently Mrs F. Tulkens, who was unable to take part in the further consideration of the case, was replaced by Mr W. Fuhrmann, substitute judge (Rule 26 § 1 (c)). 4. On 25 August 1999 the Court decided that there was no need to hold a hearing. 5. The applicant submitted his memorial on 25 October 1999 and the Government submitted theirs on 5 November 1999. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 6. On 5 April 1993 the applicant, who was then in Villeneuve-lès-Maguelonne Prison serving an eighteen-year sentence for murder imposed by the Assize Court of the Hérault département, lodged a criminal complaint with the senior investigating judge at the Montpellier tribunal de grande instance against the prison mail officer for breach of the secrecy of correspondence. He also lodged a concomitant application for leave to join the criminal proceedings as a civil party. 7. The applicant alleged in his complaint that since being imprisoned in Villeneuve-lès-Maguelonne Prison he had received a number of letters from his lawyers, the judiciary, the prison social services and the prison chaplain that had already been opened, in breach of Articles D. 69, D. 262, D. 438 and D. 469 of the Code of Criminal Procedure and Article 8 of the Convention. 8. In an order of 24 October 1994 the investigating judge of the Montpellier tribunal de grande instance ruled that there was no ground for bringing criminal proceedings for breach of the secrecy of correspondence because there was “insufficient evidence that anyone had committed the offence of breaching the secrecy of correspondence referred to in the complaint”. 9. The applicant appealed against that decision to the Indictment Division of the Montpellier Court of Appeal. In a judgment of 6 April 1995 the Court of Appeal upheld the decision and dismissed the appeal. As to whether the actus reus of the offence had been made out, the Court of Appeal held that it had for the following reasons: “It should be pointed out in the instant case that while there is general provision for interference by the prison authorities with prisoners’ mail, such interference is formally prohibited by Articles D. 69, D. 262, D. 438 and D. 469 of the Code of Criminal Procedure in respect of letters to prisoners from their defence lawyers, from administrative and judicial authorities, from prison chaplains and from social workers belonging to one of the departments of the Ministry of Justice. The evidence shows that letters falling into the categories referred to above, addressed to Demirtepe, were opened by the prison staff and that the administrative departments of Villeneuve-lès-Maguelonne Prison admitted opening them since the staff employed in the mail department mentioned opening letters in error owing to the volume of mail received and the use of an electric machine. Furthermore, among the documents filed in evidence were a number of envelopes which had clearly been marked so as not to be censored but had evidently been opened by a machine. Lastly, there is also a letter from the deputy governor of the prison accompanying a letter which had, according to him, been opened in error. ...” 10. The Court of Appeal found, however, that although the actus reus of the offence complained of by the applicant had been established, that is to say that letters had been opened, the prison mail department could not be held collectively liable, nor could the officer in charge of it be held individually liable. It upheld the decision that no prosecution should be brought. 11. The applicant lodged an appeal on points of law against that judgment. The Court of Cassation dismissed his appeal in a judgment of 14 May 1996, which was served on him on 20 August 1996. II. RELEVANT DOMESTIC LAW A. Code of Criminal Procedure 12. The relevant Articles of the Code of Criminal Procedure provide: Article D. 69 § 1 “Sealed letters sent from remand prisoners to their defence lawyers and from defence lawyers to remand prisoners are not subject to the censorship referred to in Article D. 416 if it can be unequivocally ascertained that such letters are genuinely intended for the defence lawyer or have been sent by him.” Article D. 259 “All prisoners shall be entitled to submit an application or a complaint to the governor of the prison, who shall grant him a hearing if the ground on which he relies is sufficient. Any prisoner may request a hearing by the judges and officials responsible for inspecting or visiting the prison, without any member of the prison staff being present.” Article D. 260 “A prisoner or party adversely affected by an administrative decision can apply for it to be referred to the regional director if the decision was made by a prison governor, or to the Minister if it was made by a regional director. However, any decision taken pursuant to powers conferred by law, regulations or a ministerial circular shall be immediately enforceable notwithstanding recourse to the remedy provided for above.” Article D. 262 “Prisoners may at any time send letters to the French administrative or judicial authorities, a list of which is drawn up by the Minister of Justice. Such letters may be sent sealed and are accordingly not subject to any censorship; they must be dispatched without delay. Any prisoner who takes advantage of the above provision to make insulting remarks, threats or defamatory allegations or to repeat unjustified complaints which have already been dismissed shall be liable to a disciplinary penalty, without prejudice to any criminal penalties.” Article D. 415 “Letters to and from prisoners must not be encoded and must not contain any coded sign or character. They shall be stopped if they contain specific threats to the security of persons or of prisons.” Article D. 416 “… all prisoners’ incoming and outgoing mail may be read for the purposes of censorship. Letters to and from remand prisoners shall also be sent to the judge in charge of the investigation as and when that judge requires. Letters which do not comply with the legal requirements may be stopped.” Article D. 438 “Prisoners may always correspond freely in sealed envelopes with the prison chaplain. That right cannot be withdrawn as part of any disciplinary penalty.” Article D. 469 § 1 “Correspondence between prisoners and social workers belonging to one of the departments of the Ministry of Justice may be undertaken freely in sealed envelopes.” B. Circular no. AP 86.29.G1 13. Article 29, third paragraph, of Circular no. AP 86.29.G1 of 19 December 1986 provides: “If there is doubt as to the source of a sealed letter, it may be opened in the presence of the prisoner if he consents, or, failing that, in the presence of the Chairman of the Bar or of his representative.” PROCEEDINGS BEFORE THE COMMISSION 14. Mr Demirtepe applied to the Commission on 22 January 1997. He alleged that the opening of his letters, which were not subject to censorship under the domestic law, by officials at Villeneuve-lès-Maguelonne Prison had violated his right to respect for his correspondence as guaranteed by Article 8 of the Convention. The applicant also relied on Article 3. 15. On 2 July 1997 the Commission (Second Chamber) decided to give notice of the application (no. 34821/97) to the Government and to invite the parties to submit observations on the admissibility and merits of the applicant’s complaint that there had been a violation of his right to respect for his correspondence. It declared the remainder of the application inadmissible. On 20 May 1998 the Commission declared the application admissible with regard to the complaint based on Article 8. In its report of 1 December 1998 (former Article 31 of the Convention) it concluded, by twenty-two votes to two, that there had been a violation of Article 8[1]. THE LAW I. THE GOVERNMENT’S PRELIMINARY OBJECTION 16. As they had done before the Commission, the Government submitted that the applicant had failed to exhaust domestic remedies as required by Article 35 § 1 of the Convention (former Article 26). The Government considered that although the applicant had indeed sought relief, he had not used the remedies which would have been effective for obtaining compensation for the damage he had suffered as a result of his letters being unlawfully opened. In that connection, the Government observed that the applicant could have applied to the relevant administrative authority and to the administrative courts complaining of an infringement of his right to respect for his correspondence and, if appropriate, seeking damages. Whether or not he had applied to the administrative authority, the applicant could have sued the Prison Service for damages in the administrative courts. Had he done so, he could have requested the court to find that there had been an official error on the ground that the infringements of his freedom of correspondence were contrary to the domestic legal provisions and Article 8 of the Convention. 17. The Government added that this case was special in that it had already been determined in a decision delivered in criminal proceedings that there had been a malfunctioning of the prison mail department. In the Government’s submission, that court decision undeniably constituted for the applicant irrefutable proof of the facts alleged, which would have to be taken into account by the administrative court dealing with a claim for damages and should normally lead it to find that the authorities had been negligent in the case (a fact, moreover, that was not disputed). It was settled case-law that the decision on the facts of a case given by a criminal court trying that case in criminal proceedings was binding on the administrative courts as regards the facts found (Conseil d’Etat, judgment of 9 June 1972, Vve Allemand, Rec. CE). Furthermore, given that in the instant case letters addressed to the applicant were opened as a direct result of a breach of the legal requirements, it was likely that any claim for damages submitted by the applicant to the administrative court would have very good prospects of succeeding. Indeed, developments in administrative case-law on the liability of the Prison Service suggested that an action for damages in the administrative courts would be effective. In the instant case an action undoubtedly lay against the prison authorities in straightforward negligence (faute simple). 18. In that connection, the Government observed that, in a recent case concerning correspondence between a prisoner and his lawyer, the Versailles Administrative Court had found against the State on 10 October 1997 on the ground that the letters had been unlawfully opened “while effecting operations which, although they were part of the Prison Service’s sphere of activity, did not entail any particular difficulties” and that that act had therefore “constituted negligence for which the State can be held liable”. The Administrative Court consequently awarded the prisoner 2,000 French francs in damages. That judgment had been circulated to all prison governors. In a second decision, dated 3 December 1997 and delivered by the Melun Administrative Court, the State had likewise been ordered to pay damages to a prisoner after a letter to him from his lawyer had been opened in error. A further judgment of the same Administrative Court, dated 15 October 1997, had set aside a prison governor’s decision to stop a letter sent to a prisoner by a fellow inmate. The Ministry of Justice had not appealed against any of those judgments, thereby – in the Government’s submission – clearly showing that while the Ministry might not have agreed with the reasoning of the administrative courts, it at least realised that the authorities would not have had a serious prospect of having the decisions reversed on appeal, given the general case-law of the Conseil d’Etat on liability for negligence arising out of the infringement of a regulation. In that connection, contrary to the Commission’s findings in its admissibility decision, the existence of established case-law in this area made it unnecessary for the Conseil d’Etat to give an opinion in so far as the administrative courts concerned had merely applied the general principles of administrative liability. There was therefore no need to await a judgment of the Conseil d’Etat on the particular situation in issue. 19. In the Government’s submission, the fact that the impugned opening of letters had occurred in 1993 did not prevent the applicant from bringing an action in the administrative courts as in the other cases they had cited. The fact that the decisions to which they had referred concerning the opening of prisoners’ mail dated only from 1997 did not affect the actual existence of the remedy or its effectiveness, seeing that the courts had based the relevant decisions on the ordinary law governing administrative liability. 20. In the light of all their observations, the Government therefore considered that the applicant should have brought proceedings in the administrative court since such proceedings were indeed effective within the meaning of the case-law of the Convention institutions. 21. The applicant, for his part, submitted that he had exhausted all the domestic remedies available to him under the Criminal Code and the Code of Criminal Procedure for seeking damages for the criminal offence of breaching the secrecy of correspondence. In his submission, the damage caused by the deliberate opening of letters to him which were not subject to censorship could be compensated only by instituting criminal proceedings as he had done. In that connection, he stressed that between 25 March and 1 April 1993 the Montpellier public prosecutor had sent him a communication suggesting that he apply to join the criminal proceedings as a civil party by lodging a complaint with the senior investigating judge, which he had done (see paragraph 6 above). With regard to the Government’s submissions relating to the developments in administrative case-law, he considered that they could not be used against him. Any compensation he might have obtained in the administrative courts was purely hypothetical and in any event it had not been shown that such hypothetical compensation would have been greater than the amount he could have claimed in the criminal courts had they dealt with his case properly. 22. The Court observes that, as well as lodging a complaint in criminal proceedings, the applicant could – according to the Government – have brought an action in the administrative courts to complain of the infringements of his right to respect for his correspondence and, if appropriate, seek an award of damages. In support of their submission the Government referred to developments in the case-law on prison correspondence and cited three decisions delivered at the end of 1997 by the Versailles and Melun Administrative Courts. However, the Court notes, firstly, that the applicant’s complaints date back to 1993, that is to a period well before the aforementioned decisions. Moreover, since the Conseil d’Etat has never ruled on the point, it would appear premature to conclude that the case-law has actually been established and that it would have afforded the applicant an effective remedy here with regard to the complaint lodged under Article 8 of the Convention (see Vernillo and Siciliano v. France, application no. 11889/85, Commission decision of 10 March 1989, Decisions and Reports 59, p. 95). The Court notes that the fact, stated by the Government in their observations, that the Versailles Administrative Court’s judgment was circulated to all prison governors contradicts the Government’s assertion that the judgment reflected well-established case-law (see paragraph 18 above). Moreover, the Government have failed to provide any evidence that the remedy in criminal law used by the applicant was an inadequate remedy for the purpose of obtaining damages for the infringement complained of. In that connection, the Court reiterates that the exhaustion of domestic remedies requires only that the applicant make use of remedies likely to be effective and adequate in remedying his or her complaints (see the Vernillo and Siciliano decision cited above, p. 95). In the circumstances, the Government’s objection on the ground of non-exhaustion of domestic remedies cannot be allowed. II. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION 23. The applicant alleged that the opening by the prison authorities of mail addressed to him infringed his right to respect for his correspondence and violated Article 8 of the Convention, which 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.” 24. The applicant submitted that the opening by the prison authorities of various letters to him which were not subject to censorship under domestic law amounted to an interference with his right to respect for his correspondence within the meaning of paragraph 1 of Article 8 and that it could not be justified under paragraph 2 of that Article. 25. The Government did not dispute that the prison authorities’ opening of letters to the applicant which should have been given to him sealed amounted to an interference with his right to respect for his correspondence within the meaning of Article 8 of the Convention. Moreover, that interference did not satisfy the conditions laid down in the second paragraph of Article 8, precisely because such interference was not provided for in the domestic legal provisions. The prison mail service probably did not open the mail deliberately. Nevertheless, since letters were opened repeatedly, the incidents revealed a malfunctioning of the mail service within the prison such as could attract a penalty in domestic proceedings in the administrative courts. 26. The Court is of the opinion that the opening of the applicant’s letters in the circumstances described above indisputably amounted to an interference with his right to respect for his correspondence within the meaning of Article 8 § 1 (see the Campbell v. the United Kingdom judgment of 25 March 1992, Series A no. 233, p. 21, § 57). 27. The issue therefore arises whether in the instant case the interference satisfied the conditions laid down in paragraph 2 of Article 8. The Court notes in this connection that the Government have acknowledged that it did not, precisely because the interference in question was not provided for in domestic law. 28. That being so, the Court considers that the prison authorities’ interference with the applicant’s mail was not justified under Article 8 § 2. There has therefore been a violation of Article 8 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 29. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 30. The applicant claimed one million French francs (FRF) for non-pecuniary damage on account of the endless harassment the prison authorities inflicted on him in an attempt to undermine him and make him abandon the various criminal proceedings he had instituted. 31. The Government submitted that the amount claimed was manifestly excessive in view of the amounts generally awarded for the unlawful opening of mail sent to a prisoner. 32. The Court considers that the applicant has sustained non-pecuniary damage and that he should be awarded FRF 5,000 in compensation on an equitable basis. B. Costs and expenses 33. The applicant sought, firstly, reimbursement of the costs and expenses incurred in the criminal proceedings in the domestic courts in the sum of FRF 84,478. With regard to the costs incurred before the Convention institutions, the applicant claimed FRF 10,000 plus FRF 2,060 in value-added tax, that is a total amount of FRF 12,060. 34. The Government pointed out that the applicant had been granted legal aid for the domestic proceedings. Consequently, he should not be awarded any compensation for costs already paid for by the national authorities. As regards the costs incurred before the Convention institutions, the Government observed that the first bill of costs produced by the applicant did not distinguish between the costs incurred in the domestic proceedings and those relating to the proceedings before the Convention institutions. As to the second, it did not provide any explanation for the amount mentioned. In the light of their observations, the Government considered that an aggregate sum of FRF 10,000 could be awarded to the applicant in just satisfaction. 35. The Court notes that the applicant was granted legal aid for the domestic proceedings. No amount can therefore be awarded under that head. As to the costs and expenses incurred before the Convention institutions, the Court considers that the amount claimed is not excessive. It therefore awards him the full sum claimed under that head, namely FRF 12,060. C. Default interest 36. According to the information available to the Court, the statutory rate of interest applicable in France at the date of adoption of the present judgment is 3.47% per annum. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Dismisses the Government’s preliminary objection; 2. Holds that there has been a violation of Article 8 of the Convention; 3. Holds (a) that the respondent State is to pay the applicant, within three months, the following amounts: (i) 5,000 (five thousand) French francs for non-pecuniary damage; (ii) 12,060 (twelve thousand and sixty) French francs for costs and expenses; (b) that simple interest at an annual rate of 3.47% shall be payable from the expiry of the above-mentioned three months until settlement; 4. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in French, and notified in writing on 21 December 1999, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. S. DolléN. BratzaRegistrarPresident [1]. Note by the Registry. The report is obtainable from the Registry.

Lord Justice Mummery: This is a renewed application by Mr Malcolm Pithers for permission to appeal. The decision which he wishes to appeal is that of HHJ Gosnell in the Leeds County Court dated 16 January 2012. The judge heard and dismissed an appeal that Mr Pithers had brought against the earlier order of District Judge Woodhead on 1 June 2011. That was an order for possession on the grounds of mortgage arrears. The appeal notice asks that the judge's order below be set aside on grounds that are explained by Mr Pithers in his skeleton argument. In order to appeal to this court, Mr Pithers appreciates that he needs permission, which he did not obtain from the court below and which he then had to apply to this court for. There were particular difficulties in him obtaining permission because this is a second appeal. The first appeal against the order of the District Judge was to HHJ Gosnell and that was unsuccessful. The appeal to this court is a second one, and permission for a second appeal cannot be given by this court unless it is satisfied that the appeal would raise an important point of principle or practice or that there is some other compelling reason for the Court of Appeal to hear it. So it is a more difficult hurdle to surmount in order to obtain permission for a second appeal. I should mention before I go more into the history of the matter that earlier this week an application was put before me by the Civil Appeals Office. It had been received from Mr Pithers. He was seeking an adjournment of today's hearing on the ground of illness, that he was not going to be well enough to attend the hearing. I refused that application in the light of the earlier history of this matter. An earlier hearing of the renewed application had been adjourned on a direction by Stanley Burnton LJ, who said, in giving reasons for granting it, that it would be extremely unlikely that any further adjournment would be granted. That adjournment had been granted on the same grounds that Mr Pithers now seeks a further adjournment. The position (as was made clear to Mr Pithers) is that if, unfortunately, he is not well enough to attend and is unable to obtain representation on his behalf, then the court has little choice but to deal with the matter on the basis of the papers, and fortunately there is in the papers a quite detailed account by Mr Pithers of the reasons why he challenges the possession order. The position today is that this matter was listed for hearing not before 10.30. Mr Pithers has not turned up, and therefore I propose to deal with it on the basis of the written submissions which he has made in the papers. On that, the submissions were first considered on paper by Lewison LJ when he considered the application and refused it on 25 September 2012. He refused a stay of execution unless within a 14-day period he had sought to renew his application. As he has done that, the stay was to continue until this application was disposed of. The reasons given by Lewison LJ for refusing the application are very helpfully set out in six short paragraphs. I will read them and then comment on them. The reasons he gave were: "1. A mortgagee has a right to possession from the inception of the mortgage, although the court has a discretion not to order possession if any arrears can be paid within a reasonable time. 2. It is admitted that there are arrears outstanding under the mortgage. Instalments are accruing at the rate of £789 [per] month, with the consequence that a monthly payment of £100 (even if it had been agreed with the mortgagee) would not ever keep up with the current payments let alone reduce the arrears. 3. In those circumstances the judge was entitled to find on the facts that the arrears could not be discharged within a reasonable time. 4. The judge directed himself correctly, and his conclusion was one that he was entitled to reach on the facts. 5. The proposed appeal raises no important point of principle or practice nor is there any compelling reason why the appeal should [be] heard by the Court of Appeal. 6. However, since this proposed appeal concerns the family home I am prepared to stay execution until any renewed application is heard." In my view, the comprehensive reasons set out by Lewison LJ for refusing the application are unanswerable. In particular, I rely on his fifth point, that this is a second appeal and it is not apparent from anything that is said in his written submissions by Mr Pithers that there is any general or important point of principle or practice raised by this case. It was decided on its own facts in relation to his mortgage with this mortgagee, and the state of arrears and the problems there were in keeping up current payments, let alone reducing the arrears. As Lewison LJ says, the fact that the appeal concerns a family home makes it no doubt something of considerable importance to the people who are involved, but that by itself does not amount to a compelling reason why the appeal should be heard by this court. There is no point of law raised by the appeal that has not already been settled by earlier authorities, and there is nothing special about the facts in this case which would constitute a compelling reason for the appeal being allowed to proceed. For those reasons the application is refused. Order: Application refused

OPINION OF ADVOCATE GENERAL KOKOTT delivered on 7 September 2006 1(1) Case C-401/05 VDP Dental Laboratory NV v Staatssecretaris van Financiën (Reference for a preliminary ruling from the Hoge Raad der Nederlanden (Netherlands)) (Sixth VAT Directive – Exemptions within the territory of the country – Supplies of dental prostheses by dentists and dental technicians – Intra-Community supply – Deduction of input tax)I – Introduction 1. In the present case, questions have been referred on the interpretation of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (2) (‘the Sixth Directive’) which concern the supply of dental prostheses. 2. Firstly, it is necessary to clarify whether the exemption of such supplies contained in Article 13A(1)(e) of the Sixth Directive applies also where the dental prosthesis concerned is not supplied directly by a dentist or dental technician, but rather by an intermediary who does not himself have the relevant professional qualifications. 3. Secondly, the question arises as to whether a right to deduct turnover tax in respect of intra-Community supplies of dental prostheses exists where the supply is deemed taxable in the Member State of designation under a transitional arrangement in derogation of Article 13A(1)(e) of the Sixth Directive. Similar questions also underlie Case C-240/05 Eurodental. (3) II – Legal framework A – Community law 4. Article 2 of the First VAT Directive (4) provides the following definition of the essential elements of the common system of value added tax: ‘The principle of the common system of value added tax involves the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, whatever the number of transactions which take place in the production and distribution process before the stage at which tax is charged. On each transaction, value added tax, 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 value added tax borne directly by the various cost components.’ 5. Article 13 of the Sixth Directive is headed ‘Exemptions within the territory of the country’. Article 13A(1)(e) provides, in part: ‘Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse: … (e) services supplied by dental technicians in their professional capacity and dental prostheses supplied by dentists and dental technicians …’ 6. Article 28(3) of the Sixth Directive permits exemptions from Article 13 for a transitional period: ‘During the transitional period referred to in paragraph 4 [(5)] the Member States may (a) continue to subject to tax the transactions exempt under Article 13 or 15 set out in Annex E to this Directive; …’ 7. The transactions of dentists and dental technicians referred to in Article 13A(1)(e) of the Sixth Directive are listed in point 2 of Annex E, thereto. 8. Council Directive 91/680/EEC of 16 December 1991 (6) inserted a new Title XVIa (Transitional arrangements for the taxation of trade between Member States; Articles 28a to 28m) into the Sixth Directive. These provisions still apply, since so far no definitive rules on the taxation of the movement of goods between undertakings in trade between Member States have been enacted. 9. Article 28a (7) lays down the following provisions regarding liability to tax in respect of intra-Community acquisition. ‘1. The following shall also be subject to value added tax: (a) intra-Community acquisitions of goods for consideration within the territory of the country by a taxable person acting as such or by a non-taxable legal person where the vendor is a taxable person acting as such who is not eligible for the tax exemption provided for in Article 24 and who is not covered by the arrangements laid down in the second sentence of Article 8(1)(a) or in Article 28b(B)(1). By way of derogation from the first subparagraph, intra-Community acquisitions of goods made under the conditions set out in paragraph 1a by a taxable person or non-taxable legal person shall not be subject to value added tax. Member States shall grant taxable persons and non-taxable legal persons eligible under the second subparagraph the right to opt for the general scheme laid down in the first subparagraph. Member States shall determine the detailed rules for the exercise of that option, which shall in any case apply for two calendar years. … 1a. The following shall benefit from the derogation set out in the second subparagraph of paragraph 1(a): (a) … (b) intra-Community acquisitions of goods other than those at (a), made: – … by a taxable person who carries out only supplies of goods or services in respect of which value added tax is not deductible, or by a non-taxable legal person, – for a total amount not exceeding, during the current calendar year, a threshold which the Member States shall determine but which may not be less than the equivalent in national currency of ECU 10 000 and – provided that the total amount of intra-Community acquisitions of goods did not, during the previous calendar year, exceed the threshold referred to in the second indent. The threshold which serves as the reference for the application of the above shall consist of the total amount, exclusive of value added tax due or paid in the Member State from which the goods are dispatched or transported, of intra-Community acquisitions of goods other than new means of transport and other than goods subject to excise duty.’ 10. Article 28b(B) defines the place of the intra-Community supply in exceptional cases as follows: ‘1. By way of derogation from Article 8(1)(a) and (2), the place of the supply of goods dispatched or transported by or on behalf of the supplier from a Member State other than that of arrival of the dispatch or transport shall be deemed to be the place where the goods are when dispatch or transport to the purchaser ends, where the following conditions are fulfilled: – the supply of goods is effected for a taxable person eligible for the derogation provided for in the second subparagraph of Article 28a(1)(a), for a non-taxable legal person who is eligible for the same derogation or for any other non-taxable person, ... 2. However, where the supply is of goods other than products subject to excise duty, paragraph 1 shall not apply to supplies of goods dispatched or transported to the same Member State of arrival of the dispatch or transport where: – the total value of such supplies, less value added tax, does not in one calendar year exceed the equivalent in national currency of ECU 100 000, and – the total value, less value added tax, of the supplies of goods other than products subject to excise duty effected under the conditions laid down in paragraph 1 in the previous calendar year did not exceed the equivalent in national currency of ECU 100 000. [(8)] The Member State within the territory of which the goods are when dispatch or transport to the purchaser ends may limit the thresholds referred to above to the equivalent in national currency of ECU 35 000 where that Member State fears that the threshold of ECU 100 000 referred to above would lead to serious distortions of the conditions of competition. Member States which exercise this option shall take the measures necessary to inform the relevant public authorities in the Member State of dispatch or transport of the goods. … 3. The Member State within the territory of which the goods are at the time of departure of the dispatch or transport shall grant those taxable persons who effect supplies of goods eligible under paragraph 2 the right to choose that the place of such supplies shall be determined in accordance with paragraph 1. The Member States concerned shall determine the detailed rules for the exercise of that option, which shall in any case apply for two calendar years.’ 11. Under Article 28c(A) of the Sixth Directive, intra-Community supplies between two Member States are in principle exempt from tax. This provision reads, in part, as follows: ‘Without prejudice to other Community provisions and subject to conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions provided for below and preventing any evasion, avoidance or abuse, Member States shall exempt: (a) supplies of goods, as defined in Articles 5 and 28a(5)(a), dispatched or transported by or on behalf of the vendor or the person acquiring the goods out of the territory referred to in Article 3 but within the Community, effected for another taxable person or a non-taxable legal person acting as such in a Member State other than that of the departure of the dispatch or transport of the goods. This exemption shall not apply to supplies of goods by taxable persons exempt from tax pursuant to Article 24 or to supplies of goods effected for taxable persons or non-taxable legal persons who qualify for the derogation in the second subparagraph of Article 28a(1)(a); …’ 12. Article 17 in the version of Article 28f of the Sixth Directive (9) lays down the right of deduction. Paragraphs 2 and 3 are relevant to this case: ‘2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay: (a) value added tax due or paid in respect of goods or services supplied or to be supplied to him by another taxable person liable for the tax within the territory of the country, … 3. Member States shall also grant every taxable person the right to the deduction or refund of the value added tax referred to in paragraph 2 in so far as the goods and services are used for the purposes of: (a) transactions relating to the economic activities referred to in Article 4(2), carried out in another country, which would be deductible if they had been performed within the territory of the country; (b) transactions which are exempt pursuant to Article 14(1)(i), 15, 16(1)(B), (C), (D) or (E) or (2) or 28c(A); (c) any of the transactions exempt pursuant to Article 13(B)(a) and (d)(1) to (5), when the customer is established outside the Community or when those transactions are directly linked with goods to be exported to a country outside the Community.’ B – National law 13. Under Article 11(1)(g) of the Netherlands Law on turnover tax, in the version in force until 1 December 1997, supplies by dental technicians were exempt from tax. According to the interpretation by the Netherlands courts, the exemption did not apply to supplies by intermediaries who are not themselves dental technicians. 14. Since 1 December 1997, the above provision has exempted ‘supplies of dental prostheses’ from tax without laying down precise provisions regarding the person of the supplier. III – Facts and questions referred 15. VDP Dental Laboratory NV (‘VDP’), a company established in the Netherlands, has dental fittings such as crowns, inlays, frames, bridges, etc. manufactured to order for dentists established in the Netherlands, Belgium, Denmark, Germany, France, Italy and non-member countries. To that end, the dentists who place the orders make one or more plaster casts of a set of teeth which are sent to VDP or collected by it. VDP assesses whether the casts are usable and, where necessary, sends them to a dental laboratory (usually established outside the Community). The laboratory supplies the dental prosthesis to VDP, who pays remuneration for it and, where necessary, has the dental prosthesis imported into the Community. Finally, VDP supplies the prosthesis – in return for payment of remuneration and free at domicile after clearance through customs – to the dentist who ordered the prosthesis. VDP does not employ any qualified dental technicians or dentists. 16. VDP took the view that the supplies it made in the Netherlands are exempt from turnover tax and that it has no right to deduct turnover tax in respect of supplies to dentists established in the Netherlands. However, it deducted turnover tax in respect of supplies to dentists established outside the Netherlands. 17. In order to avoid double taxation, the tax authority permitted the deduction of input tax in so far as it was charged to VDP in respect of goods and services obtained by it which relate to intra-Community supplies. It did so on the condition that VDP recorded the VAT identification number of the purchaser in its accounts and indicated intra-Community supplies. 18. Since these conditions were not satisfied in respect of supplies to the abovementioned Member States (see point 15 above), the tax authority issued an additional assessment for turnover tax amounting to NLG 117 530 in respect of the period from 1 January 1996 to 31 March 1998. 19. The court of first instance ruled that the appellant’s services in the period from 1 January 1996 to 1 December 1997 were not exempt under Article 11(1)(g) of the Law on turnover tax (in the version prior to 1 December 1997). With regard to the period from 1 December 1997 to 31 January 1998, the court ruled that although the services are not covered by the exemption contained in the Sixth Directive because VDP is not a dental technician, Article 11(1)(g) of the Law on turnover tax (in the version from 1 December 1997) was complied with. A right to deduct is ruled out because the service is exempt. VDP cannot rely, on the one hand, on the liability of the supply to tax under the Sixth Directive in order to infer a right to deduct and, on the other, on the exemption from tax under national law. In conclusion, the court reduced the additional tax payable to NLG 9 527. This amount relates to supplies of dental prostheses to dentists established in other Member States in the period from 1 December 1997 to 31 March 1998. 20. In the proceedings in cassation before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), it is a matter of dispute whether a right to deduct input tax exists also in respect of supplies to dentists established in France and Italy since there supplies of dental prostheses are not exempt from tax. In this context, the Hoge Raad referred the following questions to the Court of Justice for a preliminary ruling by a judgment of 11 November 2005: ‘(1) Is Article 13A[(1)](e) of the Sixth Directive to be interpreted as meaning that dental prostheses supplied by a taxable person who contracts out the manufacture thereof to a dental technician are covered by the notion of “dental prostheses supplied by dental technicians”? (2) If the answer to that question is in the affirmative: Is Article 17(3)(a) of the Sixth Directive to be interpreted as meaning that a Member State which has exempted the abovementioned supplies from VAT must attach the right to deduct to those supplies in so far as (in particular under the first indent of Article 28b(B)(1) of the Sixth Directive) they take place in another Member State which has excluded them from exemption pursuant to Article 28(3)(a) of the Sixth Directive, in conjunction with point 2 of Annex E thereto?’ 21. In the proceedings before the Court of Justice, VDP, the Netherlands Government, the Greek Government and the Commission of the European Communities submitted written observations. IV – Legal appraisal A – Applicable regime governing intra-Community trade 22. Before the questions referred by the Hoge Raad can be examined in detail, it is necessary to consider which provisions on intra-Community trade are relevant to the present situation. Different rules on the deduction of input tax apply depending on the applicable regime. 1. The normal regime 23. Under the normal regime, intra-Community supply from one taxable person to another taxable person in his State of origin is exempt from VAT under Article 28c(A)(a) of the Sixth Directive. Under the first subparagraph of Article 28a(1)(a) of the Sixth Directive, the recipient rather than the supplier must pay the VAT on intra-Community acquisition in the Member State of destination. 24. Under Article 17(3)(b) of the Sixth Directive, Member States are also to grant to every taxable person the right to a deduction or refund of input tax in so far as the goods and services are used for the purposes of his transactions exempt under Article 28c(A) of the Sixth Directive, that is to say the tax on services which a taxable person has received as inputs for an intra-Community supply. 25. At first sight this rule is surprising because the right to deduct VAT charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them was a component of the cost of the output transactions that gave rise to the right to deduct. (10) 26. However, Article 17(3)(b) is completely and entirely consistent with the system for the taxation of trade between Member States, as Advocate General Ruiz-Jarabo Colomer also concluded in his Opinion in Eurodental. (11) This provision takes account of the transfer of tax law to the Member State of destination and ensures the added value of the inputs is liable to tax in the country in which an economic good is consumed, as is in keeping with the character of VAT as a tax on private consumption. (12) 2. The de minimis regime 27. In the case of certain small-scale intra-Community supplies, special rules apply which I would like to term, in summary, the de minimis regime. The conditions for the application of these special rules are legally complicated and can be affected by the exercise of various options. 28. Put simply, the place to which the goods are dispatched or transported is defined as the place of supply, in derogation of the general provisions on long-distance supplies. Consequently, the tax on the supply must be paid by the supplier in the Member State of destination and not, as under the normal regime governing intra-Community trade, by the acquirer. Therefore, de minimis supplies to taxable persons in another Member State are largely equated with cross-border supplies from a taxable person to a final consumer. In particular, this special regime is laid down in the following terms. 29. Under the second subparagraph of Article 28a(1)(a) of the Sixth Directive, in conjunction with Article 28a(1a) thereof, intra-Community acquisitions of goods are exempt from tax where the acquirer only carries out supplies in respect of which VAT is not deductible and the total amount of the intra-Community acquisition by that taxable person during a calendar year remains below a threshold which the Member States are to determine. This threshold may not be less than the equivalent in national currency of ECU 10 000 – now EUR 10 000. Furthermore, the taxable person concerned may not, during the current or previous calendar year, have availed himself of the possibility under the third subparagraph of Article 28a(1)(a) to opt for the normal regime (taxation of intra-Community acquisitions). 30. Article 28b(B)(1) of the Sixth Directive shifts the place of intra-Community supplies of goods whose acquisition is exempt under the second subparagraph of Article 28a(1)(a) to the Member State of destination. This legal consequence applies to goods subject to excise duty – such as dental prostheses, for example – only provided that the supplies to a Member State have not exceeded ECU/EUR 100 000 during the current or previous calendar year. The Member State may also reduce this threshold to ECU/EUR 35 000 (Article 28b(B)(2)). However, in this case too the supplier may opt for application of the normal regime. 31. The de minimis regime is supplemented by the second subparagraph of Article 28c(A)(a) of the Sixth Directive. This provision makes it clear that the intra-Community acquisition of goods in derogation of the normal regime is not exempt from VAT where the corresponding acquisition of these goods is not liable to tax under the second subparagraph of Article 28a(1)(a). 32. As regards the deduction of input tax in relation to these supplies made by the supplier in the Member State of destination, Article 17(3)(a) of the Sixth Directive provides that a comparison must be made with the treatment of similar transactions within the territory of the country. If the right to deduct input tax existed where the final transactions were effected within the territory of the country then such right exists also in respect of inputs for foreign transactions. 3. Which regime is applicable in the main proceedings? 33. In response to a question put to it by the Court, the Commission took the view that the de minimis regime is applicable in the main proceedings. 34. However, the order for reference does not provide clear information in this respect. On the one hand, in its second question the Hoge Raad specifically requests an interpretation of Article 17(3)(a) of the Sixth Directive in connection with supplies deemed to have been made in another Member State under the first indent of Article 28b(B)(1) of the Sixth Directive. This points to the de minimis regime. 35. On the other hand, in the grounds for its order the national court refers to Eurodental and states that the request for an interpretation of Article 17(3)(b) of the Sixth Directive made in that case is also relevant to this. However, this provision applies only to intra-Community supplies which are subject to the normal regime. 36. The Commission bases its view primarily on its own analysis of the facts provided in the order for reference. 37. In this respect, it should be noted that the dispute originally concerned an additional assessment for turnover tax amounting to NLG 117 530 (the equivalent of around EUR 53 000) in respect of the period from 1 January 1996 to 31 December 1998. Taking an average VAT rate in the Member States of destination of around 19%, the value of the relevant intra-Community supplies amounted to around EUR 279 000. 38. However, the facts of the case provided do not show how the supplies break down over the various tax years and the Member States of destination. It is also unclear whether and, where appropriate which, countries have availed themselves of the possibility to reduce the threshold for the application of Article 28b(B) of the Sixth Directive to ECU/EUR 35 000. Finally, the scale on which supplies were made during the previous calendar year and whether or not VDP opted for application of the normal regime are unknown. 39. Furthermore, the information provided in the order for reference does not show beyond doubt whether or not VDP’s purchasers have only provided services which grant no right to deduct input tax or availed themselves of the option to pay tax on the intra-Community supply. In any event, those dentists supplied by VDP who were established in Member States which avail themselves of the transitional rules contained in Article 28(1)(a) of the Sixth Directive, in conjunction with Annex E thereto, probably have a right to deduct input tax. 40. Consequently, it is for the national courts to determine which of the two regimes applies in the present case. Since there are different rules on the deduction of input tax in each case, below I will examine in respect of both options the effects produced by the coincidence of the provisions on intra-Community trade and the exemption of national supplies of dental prostheses. B – The relationship between the provisions on intra-Community trade and the exemption of supplies of dental prostheses within the territory of the country 1. Hypothesis 1: Application of the normal regime in respect of intra-Community supplies 41. Under Article 28c(A)(a) of the Sixth Directive, intra-Community supplies are exempt from VAT. However, in connection with intra-Community supplies Article 17(3)(b) establishes a right to deduct input tax without making it in any way conditional on the goods supplied. 42. If these rules were applied as a matter of priority, it would not be necessary to answer Question 1 since the classification of the supply in accordance with the criteria laid down by Article 13A(1)(e) of the Sixth Directive would not be relevant. The only relevant factor would be that an intra-Community supply is made which gives rise to a right to deduct input tax under Article 17(3)(b). 43. However, this solution raises the problem that national supplies may accordingly be placed at a disadvantage in comparison with intra-Community supplies and that could lead to distortions of competition. 44. If a national supply in the Member State of destination is exempt from tax pursuant to Article 13, an intra-Community acquisition is also exempt under Article 28c(B)(a) of the Sixth Directive. Consequently, a taxable person can supply his purchasers in another Member State without them having to pay VAT in any form. However, the supplier could deduct the input tax because he has carried out an intra-Community supply. 45. A taxable person established in the Member State of destination can also make supplies without paying tax under Article 13. However, he would have no right to deduct input tax under Article 17(2) of the Sixth Directive. 46. In my view, this problem should be tackled by granting the right to deduct input tax in connection with intra-Community supplies only where the output supply is actually taxed in the Member State of destination. 47. However, in his Opinion in Eurodental Advocate General Ruiz-Jarabo Colomer proposed a different course of action. He considers that deduction of input tax in connection with an intra-Community supply is not possible where the transaction concerned is ‘by nature’ not liable to tax under Article 13. (13) In the present case, the intervening governments and the Commission also take the view that the exemption under Article 13 should be given priority over the exemption of intra-Community supplies. 48. There is no clear support for this approach in the wording of the relevant provisions. On the contrary, the express proviso in the introductory sentence of the provision, namely ‘[w]ithout prejudice to other Community provisions, Member States shall exempt …’ militates against the priority application of the exemption under Article 13A. Moreover, there are doubts as to whether the supply of dental prostheses must be regarded as exempt by nature even though Article 28(3)(a) of the Sixth Directive, in conjunction with Annex E thereto, allows the taxation of such services. 49. Advocate General Ruiz-Jarabo Colomer puts forward two further arguments in favour of his approach. Firstly, he refers – as does the Commission in the present case – to Article 17(3)(c) of the Sixth Directive. This provision confers the right to deduct input tax in relation to specific services exempt under Article 13B where the transaction goes beyond the frontiers of the Community. The Advocate General and the Commission consider that this provision is superfluous where these exemptions could also be based directly on Article 17(3)(b), as soon as the services covered thereby take on an international dimension. 50. I find this argument unconvincing. The exemptions under Article 13B(a) and (d)(1) to (5) referred to in Article 17(3)(c) of the Sixth Directive relate to insurance and financial services linked with supplies of goods to non-member countries. Article 17(3)(b), on the other hand, covers the supply of goods to other Member States or non-member countries themselves. Consequently, the provisions of Article 17(3)(b) and (c) concern entirely different services and therefore neither of the provisions can render the other superfluous. 51. Secondly, Advocate General Ruiz-Jarabo Colomer takes up a Commission argument and states that the exemption would lead to distortions of competition in an undertaking’s home State if it were able to deduct input tax in relation to the intra-Community supplies of dental prostheses whilst other undertakings which carried out similar intra-Community supplies in that State would have no right to deduct input tax. 52. On this point too I am unable to concur with my colleague. In so far as an undertaking carries out cross-border supplies to another Member State, it is not competing with undertakings operating on its home market. Instead, there is a competitive relationship between the intra-Community supply and national supplies in the Member State of destination. Therefore, to avoid distortions of competition it is necessary to ensure that these supplies in the Member State of destination are subject to the same tax treatment. 53. The solution proposed by Advocate General Ruiz-Jarabo Colomer takes no account of this fact. In certain situations, such as that in the case of Eurodental and also possibly in the case of VDP, it leads both to breaches of the principle of VAT neutrality and obstacles to intra-Community trade. 54. Eurodental relates to whether an undertaking established in Luxembourg has the right to deduct input tax in connection with supplies of dental prostheses to Germany. Whilst Luxembourg exempts supplies of dental prostheses by dental technicians from VAT under Article 13A(1)(e) of the Sixth Directive, Germany continues to subject them to the tax pursuant to the transitional rules contained in Article 28(3)(a) of the Sixth Directive, in conjunction with Annex E thereto. 55. If the exemption of supplies of dental prostheses in the Member State of origin under Article 13 were taken as a basis as a matter of priority, an undertaking such as Eurodental would be denied the right to deduct input tax even though its supply is actually liable to tax in the Member State of destination. The consequence would be that not only VAT proportionate to the final price but also the remaining VAT on the inputs would be borne by the intra-Community supply. 56. This is contrary to the principle of VAT neutrality which underlies the rules on the deduction of input tax. The right of deduction is an integral part of the VAT scheme and in principle may not be limited . (14) The deduction system is meant to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities. The common system of VAT consequently ensures complete neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject in principle to VAT. (15) 57. As set out in Article 2 of the First Directive, the final consumer is to pay tax exactly proportional to the value of the service without the inputs occurring at various stages being repeatedly taxed. However, if the approach taken by Advocate General Ruiz-Jarabo Colomer were followed, there would be double taxation of the inputs and consequently the overall tax burden would no longer be proportional to the price paid by the final consumer. (16) 58. Furthermore, the Court considers that the fact that similar goods and supplies of services, which are thus in competition with each other, may not be treated differently for VAT purposes is an application of the principle of neutrality. (17) Strictly speaking, the principle of neutrality thus construed merely constitutes a specific application of the general principle of equal treatment. (18) This principle too would be breached if a dental technician established in the Member State of destination could deduct VAT paid on inputs whilst a dental technician from another Member State who carried out intra-Community supplies from another Member State into that Member State of destination were still denied the right to deduct input tax. 59. In addition, the fact that national supplies and intra-Community supplies in competition with them are treated differently for tax purposes places an obstacle in the way of intra-Community trade safeguarded by Article 28 EC since the double taxation of inputs makes it more expensive to import dental prostheses from other Member States. In this respect, the obstacle emanates from the Member State of origin of the intra-Community supply which grants no right to deduct even though the output service concerned is actually subject to the tax in the Member State of destination. 60. By contrast, Advocate General Ruiz-Jarabo Colomer considers, as does the Commission, that the problem stems solely from the fact that the Member State of destination avails itself of an exemption. The lack of complete harmonisation in that respect should not result in an additional financial burden being placed on the treasury of the Member State of origin – Luxembourg in the case of Eurodental – by a unilateral decision of the Member State of destination – Germany. 61. It is certainly desirable for the VAT system to be harmonised as much as possible and for long-established exemptions to be abolished. However, as long as such exemptions lawfully exist, it is necessary to minimise as far as possible the resulting unfavourable effects on the internal market and above all on individual taxable persons, even if this entails a loss of tax revenue for a Member State in a given case. 62. The problems illustrated by way of the Eurodental example could also arise in the present case if the supply of a dental prosthesis by an intermediary in principle constituted a service exempt under Article 13A(1)(e) of the Sixth Directive but continued to be taxed in the Member State of destination of the intra-Community supplies specifically made by VDP, under Article 28(3)(a) of the Sixth Directive, in conjunction with Annex E thereto. 63. In this situation, the breaches of the principle of neutrality and the restriction on the free movement of goods set out above could be avoided if the Member State of origin of an intra-Community supply actually subject to tax in the Member State of destination allowed the deduction of input tax on the inputs of these supplies or reimbursed the input tax. 64. This is required firstly by the unequivocal wording of Article 17(3)(b) of the Sixth Directive. Secondly, it is consistent with the logic of the system of intra-Community supply and the character of VAT as a tax on consumption that the tax is collected only in the Member State of consumption. The Member State of origin, by contrast, generally has no right to the VAT on services paid by final consumers in another Member State. 65. VDP also highlights the following problem. Since the Netherlands wrongly – in the view of VDP – extended the national exemption also to supplies of dental prostheses by intermediaries and therefore refused to grant the right to deduct input tax in connection with such supplies, VDP is placed at a disadvantage in comparison with intermediaries which make supplies to the Netherlands from other Member States. The home States granted these competitors of VDP the right to deduct input tax because they assumed that supplies by intermediaries were not covered by the exemption. 66. In this regard, it should be observed that the lawfulness of the tax treatment of VDP’s competitors in their Member States of establishment does not form the subject-matter of the present case, nor does the exemption of the national supplies by VDP or the denial of the right to deduct input tax in relation to those supplies. What is disputed instead is merely whether VDP has the right to deduct in connection with intra-Community supplies. What is decisive in this respect is whether intra-Community acquisitions corresponding to intra-Community supplies are subject to tax in the Member States of destination. 67. Finally, it should be noted that the solution I have put forward is entirely consistent with the judgment in Debouche. (19) That judgment was based on the following facts. Mr Debouche, a lawyer established in Belgium, rented a car in the Netherlands which he used exclusively for his professional activity in Belgium. In Belgium, services provided by lawyers were exempt from VAT pursuant to Article 28(3)(b) of the Sixth Directive, in conjunction with Annex F, point 2, thereto, whilst they were subject to the tax in the Netherlands. 68. The Court ruled that in such a situation there is no right to reimbursement of the VAT on the car rental as input tax. Since the lawyer’s services are not subject to tax in the Member State in which they are provided – in that case Belgium – the tax in relation to inputs received in another Member State cannot be deducted. This applies even where the relevant outputs are subject to tax in the Member State in which the inputs were received. 69. That judgment makes it clear that in principle the important factor as regards the deduction of input tax is how the output is actually treated for tax purposes in the Member State in which it is placed on the market. If it is regarded as exempt there – albeit only as a consequence of a transitional rule – the right to deduct input tax must be denied. 70. On the other hand, if the exemption contained in Article 13A(1)(e) of the Sixth Directive did not apply to supplies of dental prostheses by intermediaries, in the present case, unlike in that of Eurodental, there would be no conflict between the exemption under Article 13 with no deduction of input tax and the exemption with deduction of input tax applicable to intra-Community supplies. If these requirements were implemented correctly in the Member States of destination, the right to deduct input tax could, in the Member State of origin, be granted as a matter of course in respect of the inputs for intra-Community supplies under Article 17(3)(b) of the Sixth Directive. 2. Hypothesis 2: Application of the de minimis regime in respect of intra-Community supplies 71. In the case of intra-Community supplies covered by the de minimis regime, the right to deduct under Article 17(3)(a) of the Sixth Directive depends on whether these transactions would be eligible for deduction of tax if they had occurred in the territory of the country. 72. Consequently, Article 17(3)(a) lays down rules which specifically derogate from Article 17(3)(b) – as I understand it – in respect of this category of intra-Community supplies. Instead of taking account of the tax treatment in the Member State of destination, as would be appropriate in the case of intra-Community supplies for the logical reasons set out above, Article 17(3)(b) takes as a basis the rules applicable in the territory of the country. 73. However, this difference is justified by the de minimis nature of the supplies concerned. In the case of sporadic supplies of low value it would create an unjustified administrative burden if it were necessary to determine whether there is in the Member State of destination a supply which is subject to tax and therefore gives rise to the right to deduct input tax. 74. Here too there is a danger that the principle of tax neutrality will be breached and the free movement of goods will be hindered where dental prostheses are supplied to Member States which continue to subject to tax similar supplies pursuant to Article 28(3)(a) of the Sixth Directive, in conjunction with point 2 of Annex E thereto. However, as is evident from the clear wording of Article 17(3)(a), the legislature accepted this danger so as not to render the tax treatment of de minimis supplies excessively difficult as a whole and thus create obstacles to intra-Community trade in far more cases. 75. However, in relation to the present case the question arises as to how to proceed where Article 17(3)(a) is applied if the supplier’s home State has not implemented the Sixth Directive correctly and exempts transactions which are in fact subject to tax under the directive. I will return to this question (20) after I have examined more closely the interpretation of Article 13A(1)(e) of the Sixth Directive. C – Question 1 76. By this question, the national court wishes to determine whether supplies of dental prostheses by a taxable person who is not himself a dentist or dental technician fall within the scope of Article 13A(1)(e) of the Sixth Directive. 77. According to the wording of Article 13A(1)(e), only supplies made by dentists or dental technicians are exempt. As an exception to the principle that VAT is to be levied on all supplies and services, the exemptions provided for in Article 13 are to be interpreted strictly. (21) For that reason, there are no grounds for extending the scope of the provision beyond its wording. 78. Moreover, a strictly literal interpretation is also consistent with the spirit and purpose of the provision. Unlike other exemptions, in particular those provided in Article 13B, the scope of the exemptions laid down in Article 13A is generally defined not only by particular requirements relating to the subject-matter of the service concerned but also to the person of the provider. 79. As the Court recently ruled in respect of Article 13A(1)(c) of the Sixth Directive in its judgment in Solleveld and van den Hout-van Eijnsbergen, (22) the requirements on the person of the provider are to ensure that the exemption applies only to medical care provided by practitioners with the required professional qualifications. 80. The exemption of medical services is aimed at ensuring, in the public interest, that these services remain affordable for everyone and not be made more expensive by VAT. (23) However, a public interest exists only in the tax exemption of medical services provided by qualified personnel. (24) This applies not only in the case of the provision of medical care within the meaning of Article 13A(1)(c) but also in the case of the supply of dental prostheses under Article 13A(1)(e). 81. In the present context, the question may remain open whether or not the last-mentioned exemption applies only where the dental technician making the supply also manufactured the dental prosthesis himself. Even where he supplies a dental prosthesis manufactured by a third party, he can at least assess, on the basis of his qualifications, whether the product is of the required quality. Furthermore, he can advise the dentist when he is ordering the dental prosthesis and – where necessary – carry out additional work on the dental prosthesis and receive and process complaints. 82. This is particularly true where the dental prosthesis in question has been manufactured by dental technicians in non-member countries whose requirements concerning professional qualifications are difficult to ascertain. Furthermore, in this case the carrying-out of repairs could lead to particular difficulties. 83. The possibility cannot be ruled out that in a given case even a person who is not a dental technician himself could, in time, acquire the necessary skills to perform tasks which arise in connection with the supplies. Nor should it be asserted that a dental prosthesis which has been manufactured in a non-member country and is marketed by an intermediary in the Community will not, in principle, meet the quality standard there. However, in order to ensure in general that the exemption applies only in the case of supplies which are of the required quality, it seems reasonable to restrict it to supplies made by trained dental technicians (or dentists). 84. The principle of tax neutrality does not preclude this interpretation of Article 13A(1)(e). According to case-law, this principle precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes. (25) 85. The exemption is based on the legislature’s unobjectionable assessment that only dental technicians or dentists have the necessary professional qualifications that generally ensure that the dental prostheses supplied by them are of the required quality. The service provided by an intermediary who does not have the relevant professional qualifications is regarded as not being equal and therefore does not have to be treated equally for reasons of tax neutrality. 86. Accordingly, the answer to Question 1 must be that the exemption under Article 13A(1)(e) of the Sixth Directive covers only supplies carried out by dental technicians or dentists. D – Question 2 87. The Hoge Raad submits Question 2 only in the event that the answer to Question 1 is in the affirmative, namely that supplies of dental prostheses by intermediaries also fall within the scope of the exemption. 88. This question is based on the understanding that the important factor in respect of the right to deduct input tax in connection with intra-Community supplies is the treatment of the relevant output transactions in the Member State from which the supply originates. This is suggested by Article 17(3)(a) of the Sixth Directive, an interpretation of which is being sought by the national court as part of this question. However, if the normal regime applied, the interpretation of Article 17(3) – and certainly subparagraph (b) thereof – would in fact be the main question. 89. In view of the above uncertainty as to the regime which actually applies, I would like to propose an answer to both possible hypotheses even though the national court has not requested an interpretation of Article 17(3)(b). In order to provide a satisfactory answer to a national court, the Court of Justice may deem it necessary to consider provisions of Community law to which the national court has not referred in its question. (26) 1. Hypothesis 1: Application of the normal regime in respect of intra-Community supplies 90. As stated above, (27) there is under Article 17(3)(b) of the Sixth Directive a right to deduct input tax in connection with intra-Community supplies which are exempt from VAT under Article 28c(A). The right to deduct certainly exists if the supply of the dental prosthesis in the Member State of destination is regarded as a taxable supply in keeping with the directive since it is not carried out by a dental technician or dentist. 91. However, input tax can also be deducted in respect of supplies of dental prostheses which per se would be exempt from VAT under Article 13A(1)(e) of the Sixth Directive but which continue to be subject to tax in the Member State of destination pursuant to Article 28(3)(a) of the Sixth Directive, in conjunction with point 2 of Annex E thereto. 2. Hypothesis 2: Application of the de minimis regime in respect of intra-Community supplies 92. Under Article 17(3)(a) of the Sixth Directive, input tax may be deducted in respect of services received within the territory of the country where they are used in respect of transactions relating to the economic activities as referred to in Article 4(2) carried out in another country, which would be eligible for deduction of tax if they had occurred in the territory of the country. 93. Consequently, there can be no right to deduct input tax in connection with the supply of a dental prosthesis to another Member State to which Article 28b(B) of the Sixth Directive, in conjunction with the second subparagraph of Article 28a(1)(a) thereof, applies where the supply would be exempt from VAT in the Member State in which the supplier is established under Article 13A(1)(e) of the Sixth Directive. 94. However, there is uncertainty as to what the consequences for the deduction of input tax are if the Member State in which the supplier is established has not correctly implemented Article 13A(1)(e) and extended the exemption to transactions not covered by the directive. This has been so in the case of the Netherlands provisions since it also exempted from tax supplies of dental prostheses made by intermediaries not qualified as dental technicians or dentists. 95. If it is not possible to interpret national law in conformity with Article 13A(1)(e) of the Sixth Directive, an individual may rely directly on the directive to acquire a right to deduct input tax. Both Article 13A(1)(e) and Article 17(1) and (2) of the Sixth Directive are sufficiently precise. (28) However, ‘asymmetrical reliance’ on the directive is not in principle possible, that is to say a taxable person may not assert the right to deduct input tax without paying tax on the output transactions. 96. A central principle of the VAT systems is that right to deduct VAT charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them was a component of the cost of the output transactions that gave rise to the right to deduct. (29) However, where a taxable person supplies services to another taxable person who uses them for an exempt transaction, the other taxable person is not entitled to deduct the input VAT paid, except in the cases expressly provided for in the relevant directives. (30) 97. In the case of supplies within the territory of the country which are exempt from tax as a result of the improper implementation of the directive, it would be contrary to this principle if input tax were nevertheless deductible in respect of these supplies. Consequently, to assert the right to deduct input tax on the basis of the directive, a taxable person must at the same time request to be treated as a taxable person. (31) In this regard, national procedural law must ensure that an individual is able to assert his rights flowing from the directive. On the other hand, it would not be a solution for a taxable person to derive from the interpretation of the directive an advantage which is contrary to the principles of the directive itself. 98. However, in the case of cross-border supplies the situation is completely different under the de minimis regime which is involved in the present case. These supplies are not actually subject to any taxation at the place where the supplier is established since they are regarded as having occurred in the Member State of destination. Under Article 17(3)(a) of the Sixth Directive, the treatment of similar transactions in the territory of the country is taken as a basis for the deduction of input tax only notionally on grounds of administrative simplification. 99. If it is assumed that the Member States have properly implemented Article 13A(1)(e) of the Sixth Directive, the supplies concerned made to the Member States of destination should be treated as subject to tax and therefore the deduction of input tax would be justified in accordance with the principles set out above. There can be no question here of any asymmetrical reliance on the directive. 100. Therefore, where Article 17(3)(a) of the Sixth Directive is applied, notional account should not be taken of how similar transactions are treated under national law not in conformity with the directive. Instead, it is necessary to take a notional basis and ask how similar transactions would be classified for tax purposes in the territory of the country if the directive had been implemented properly. 101. In the majority of cases, this solution would avoid a breach of tax neutrality. Such a breach would occur if the right to deduct input tax were denied at the place where the supplier is established, even though the supply of dental prostheses by an intermediary is not treated as an exempt supply in the Member State of destination in accordance with the provisions of the directive. In the absence of a right to deduct input tax, there would be double taxation of the inputs which would also hinder cross-border trade. 102. Therefore, supplies in the territory of the country and supplies made to another Member State are treated differently in relation to the deduction of input tax. However, the situation of national and foreign supplies is also different since the supplies are actually taxed in the Member State of destination – assuming that the directive has been implemented correctly – whilst similar supplies in the territory of the country are exempt from tax in breach of the directive. V – Conclusion 103. In the light of the foregoing considerations, I propose that the Court should reply as follows to the questions referred by the Hoge Raad der Nederlanden: (1) Article 13A(1)(e) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment – is to be interpreted as meaning that dental prostheses supplied by an intermediary who is not himself qualified as a dental technician or dentist are not covered by the notion of supplies exempt under this provision. (2) Under Article 17(3)(b) of the Sixth Directive, a taxable person has the right to a deduction or refund of input tax in respect of intra-Community supplies of dental prostheses which are exempt from tax under the first subparagraph of Article 28c(A)(a) of the Sixth Directive where the corresponding intra-Community acquisition is subject to tax in the Member State of destination since that Member State continues to subject similar transactions to tax pursuant to Article 28(3)(a) of the directive, in conjunction with point 2 of Annex E thereto. Under Article 17(3)(a) of the Sixth Directive, a taxable person has the right to a deduction or refund of input tax in respect of supplies made in another Member State under Article 28b(B) of the Sixth Directive, in conjunction with the second subparagraph of Article 28a(1)(a) thereof, in so far as they would be eligible for deduction of tax if they had occurred in the territory of the country. In that case, a right to deduct input tax exists also where the supply would be treated as an exempt transaction in the territory of the country in breach of the Sixth Directive. 1 – Original language: German. 2 – OJ 1977 L 145, p. 1. 3 – [2006] ECR I-0000. See, in this respect, the Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 22 June 2006. 4 – Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967 (I), p. 14). 5 – According to that provision, the transitional period is to last until the abolition of the rules in Article 28 which has not yet been effected in relation to the present transactions. 6 – OJ 1991 L 376, p. 1. 7 – In the version of Council Directive 92/111/EEC of 14 December 1992 amending Directive 77/388/EEC and introducing simplification measures with regard to value added tax (OJ 1992 L 384, p. 47), corrigendum OJ 1993 L 197, p. 57. 8 – Greater details in this respect are now set out in Article 22 of Council Regulation (EC) No 1777/2005 of 17 October 2005 laying down implementing measures for Directive 77/388/EEC on the common system of value added tax (OJ 2005 L 288, p. 1), which does not apply to the present case ratione temporis. 9 – In the version of Directive 92/111 (cited in footnote 7). 10 – Case C-465/03 Kretztechnik [2005] ECR I-4357, paragraph 35, with reference to Case C-98/98 Midland Bank [2000] ECR I-4177, paragraph 30, Case C-408/98 Abbey National [2001] ECR I-1361, paragraph 28, and Case C‑16/00 Cibo Participations [2001] ECR I-6663, paragraph 31. 11 – Cited in footnote 3, point 34. See also, for greater detail regarding the system of intra-Community supply and intra-Community acquisition, the Opinion which I delivered in Case C-245/04 EMAG Handel Eder [2006] ECR I-3227, points 19 to 25. 12 – See, in this respect, the Opinion in Eurodental (cited in footnote 3), point 27, and Article 2 of the First Directive which is reproduced at point 4 above. 13 – Opinion in Eurodental (cited in footnote 3), point 35. 14 – See, in particular, Case C-62/93 BP Supergas [1995] ECR I-1883, paragraph 18; Joined Cases C-110/98 to C-147/98 Gabalfrisa and Others [2000] ECR I-1577, paragraph 43; and Kretztechnik (cited in footnote 10), paragraph 33. 15 – Kretztechnik (cited in footnote 10), paragraph 34, with reference to Case 268/83 Rompelman [1985] ECR 655, paragraph 19, Case C-37/95 Ghent Coal Terminal [1998] ECR I-1, paragraph 15, Gabalfrisa and Others (cited in footnote 14), paragraph 44, Midland Bank (cited in footnote 10), paragraph 19, and Abbey National (cited in footnote 10), paragraph 24. 16 – See footnote 16 to the Opinion in Eurodental (cited in footnote 3). 17 – Case C-216/97 Gregg [1999] ECR I-4947, paragraph 20; Joined Cases C-453/02 and C-462/02 Linneweber and Akritidis [2005] ECR I-1131, paragraph 24; and Case C-246/04 Turn- und Sportunion Waldburg [2006] ECR I-589, paragraph 33. 18 – Joined Cases C-443/04 and C-444/04 Solleveld and van den Hout-van Eijnsbergen [2006] ECR I-3617, paragraph 35. See, in that respect, also point 40 of the Opinion which I delivered in these cases on 15 December 2005. 19 – Case C-302/93 [1996] ECR I-4495. 20 – See point 94 et seq. below. 21 – Case C-141/00 Kügler [2002] ECR I-6833, paragraph 28; Case C-307/01 d’Ambrumenil and Dispute Resolution Services [2003] ECR I-13989, paragraph 52; and Case C-498/03 Kingscrest Associates and Montecello [2005] ECR I-4427, paragraph 29. 22 – Cited in footnote 18, paragraph 37, with reference to Kügler (cited in footnote 21), paragraph 27. 23 – d’Ambrumenil and Dispute Resolution Services (cited in footnote 21), paragraph 58, with reference to Case C-76/99 Commission v France [2001] ECR I-249, paragraph 23, and Kügler (cited in footnote 21), paragraph 29. 24 – See the Opinion in Solleveld and van den Hout-van Eijnsbergen (cited in footnote 18), point 39. 25 – See the judgments cited in footnote 17 and Case C-109/02 Commission v Germany [2003] ECR I-12691, paragraph 20; Kingscrest Associates and Montecello (cited in footnote 21), paragraph 54; and Solleveld and van den Hout-van Eijnsbergen (cited in footnote 18), paragraph 39. 26 – See, in particular, Case 35/85 Tissier [1986] ECR 1207, paragraph 9; Case C-315/88 Bagli Pennacchiotti [1990] ECR I-1323, paragraph 10; Case C-107/98 Teckal [1999] ECR I-8121, paragraph 39; and Joined Cases C-228/01 and C-289/01 Bourrasse and Perchicot [2002] ECR I-10213, paragraph 33. 27 – Point 41 et seq. 28 – See in general as regards the direct application of the Sixth Directive: Case C-150/99 Stockholm Lindöpark [2001] ECR I-493, paragraph 31; specifically as regards a tax exemption under Article 13, see Case 8/81 Becker [1982] ECR 53, paragraph 49; and as regards Article 17(1) and (2) BP Supergas (cited in footnote 14), paragraph 34 29 – See the references cited in footnote 10. 30 – Case C-4/94 BLP Group [1995] ECR I-983, paragraph 28, and Debouche (cited in footnote 19), paragraph 16. 31 – In combination with the right to deduct, liability to tax can be advantageous to a taxable person, as Advocate General Darmon explained in his Opinion in Case C‑63/92 Lubbock Fine [1993] ECR I-6665, point 19.

FOURTH SECTION CASE OF K.H. AND OTHERS v. SLOVAKIA (Application no. 32881/04) JUDGMENT This version was rectified on 24 August 2011 under Rule 81 of the Rules of Court STRASBOURG 28 April 2009 FINAL 06/11/2009 This judgment has become final under Article 44 § 2 (c) of the Convention. It may be subject to editorial revision. In the case of K.H. and Others v. Slovakia, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: Nicolas Bratza, President,Lech Garlicki,Giovanni Bonello,Ljiljana Mijović,Ján Šikuta,Mihai Poalelungi,Nebojša Vučinić, judges,and Lawrence Early, Section Registrar, Having deliberated in private on 7 April 2009, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 32881/04) against the Slovak Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by eight Slovak nationals, K.H., J.H., A.Č., J.Čo., J.Če., V.D., H.M. and V.Ž., on 30 August 2004. The President of the Chamber acceded to the applicants’ request not to have their names disclosed (Rule 47 § 3 of the Rules of Court). 2. The applicants were represented by Ms V. Durbáková, a lawyer practising in Košice and Ms B. Bukovská from the Centre for Civil and Human Rights in Košice. The Slovak Government (“the Government”) were represented by their Agent, Mrs M. Pirošíková. 3. The applicants alleged, in particular, that their rights under Articles 6 § 1, 8 and 13 of the Convention had been infringed as a result of the failure by the domestic authorities to make photocopies of their medical records available to them. 4. By a decision of 9 October 2007 the Court declared the application partly admissible. 5. The Government filed further written observations (Rule 59 § 1). The Chamber having decided, after consulting the parties, that no hearing on the merits was required (Rule 59 § 3 in fine), the applicants replied in writing to the Government’s observations. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 6. The applicants are eight female Slovakian nationals of Roma ethnic origin. A. Background to the case 7. The applicants were treated at gynaecological and obstetrics departments in two hospitals in eastern Slovakia during their pregnancies and deliveries. Despite continuing to attempt to conceive, none of the applicants has become pregnant since their last stay in hospital, when they delivered via caesarean section. The applicants suspected that the reason for their infertility might be that a sterilisation procedure was performed on them during their caesarean delivery by medical personnel in the hospitals concerned. Several applicants had been asked to sign documents prior to their delivery or on discharge from the hospital but they were not sure of the content of those documents. 8. The applicants, together with several other Roma women, granted powers of attorney to lawyers from the Centre for Civil and Human Rights, a non-governmental organisation based in Košice. The lawyers were authorised to review and photocopy the women’s medical records in order to obtain a medical analysis of the reasons for their infertility and possible treatment. The applicants also authorised the lawyers to make photocopies of their complete medical records as potential evidence in future civil proceedings for damages, and to ensure that such documents and evidence were not destroyed or lost. The photocopies were to be made by the lawyers with a portable photocopier at the expense of the Centre for Civil and Human Rights. 9. The applicants attempted to obtain access to their medical records in the respective hospitals through their authorised representative in August and September 2002. The lawyer unsuccessfully asked the management of the hospitals to allow her to consult and photocopy the medical records of the persons who had authorised her to do so. 10. On 11 October 2002 representatives of the Ministry of Health expressed the view that section 16(6) of the Health Care Act 1994 did not permit a patient to authorise another person to consult his or her medical records. The above provision was to be interpreted in a restrictive manner and the term “legal representative” concerned exclusively the parents of an underage child or a guardian appointed to represent a person who had been deprived of legal capacity or whose legal capacity had been restricted. B. Civil proceedings 11. The applicants sued the hospitals concerned. They claimed that the defendants should be ordered to release their medical records to their authorised legal representative and to allow them to obtain a photocopy of the documents included in the records. 1. Action against the J. A. Reiman University Hospital in Prešov 12. Six applicants brought an action against the J.A. Reiman University Hospital (Fakultná nemocnica J. A. Reimana) in Prešov (“the Prešov Hospital”) on 13 January 2003. 13. On 18 June 2003 the Prešov District Court delivered a judgment ordering the hospital to permit the plaintiffs and their authorised representative to consult their medical records and to make handwritten excerpts thereof. The relevant part of the judgment became final on 15 August 2003 and enforceable on 19 August 2003. 14. With reference to section 16(6) of the Health Care Act 1994 the District Court dismissed the request to photocopy the medical documents. The court noted that the records were owned by the medical institutions concerned and that such a restriction was justified with a view to preventing their abuse. It was not contrary to the plaintiffs’ rights and freedoms guaranteed by the Convention. The applicants appealed against that part of the judgment. 15. On 17 February 2004 the Regional Court in Prešov upheld the first-instance decision, according to which the applicants were not entitled to make photocopies of their medical files. There was no indication that the applicants’ right to have any future claim for damages determined in accordance with the requirements of Article 6 § 1 of the Convention had been jeopardised. In particular, under the relevant law the medical institutions were obliged to submit the required information to, inter alia, the courts, for example in the context of civil proceedings concerning a patient’s claim for damages. 2. Action against the Health Care Centre in Krompachy 16. H.M. and V.Ž., the two remaining applicants, brought an identical action against the Health Care Centre (Nemocnica s poliklinikou) in Krompachy (“the Krompachy Hospital”) on 13 January 2003. 17. On 16 July 2003 the District Court in Spišská Nová Ves ordered the defendant to allow the applicants’ representative to consult their medical records and to make excerpts thereof. It dismissed the claim concerning the photocopying of the medical documents. The court referred to section 16(6) of the Health Care Act 1994 and noted that even courts or other authorities were not entitled to receive photocopies of medical records. Such a restriction was necessary in order to prevent abuse of personal data contained therein. 18. The applicants appealed against the decision concerning the photocopying of the documents. They relied on Articles 6 and 8 of the Convention and argued that, unlike public authorities and the medical institutions concerned, they had only limited access to their medical records, which meant that they were restricted in assessing the position in their cases and in bringing an appropriate action for damages. 19. On 24 March 2004 the Regional Court in Košice upheld the first-instance decision to reject the claim concerning the photocopying of the medical records. C. Constitutional proceedings 1. Complaint of 24 May 2004 20. On 24 May 2004 the six applicants who had sued the Prešov Hospital lodged a complaint under Article 127 of the Constitution. They alleged that the Prešov Hospital, the District Court and the Regional Court in Prešov had violated, inter alia, their rights under Articles 6 § 1 and 8 of the Convention. 21. As regards Article 6 § 1 the applicants argued that, in practice, handwritten excerpts from medical records could be abused just as photocopies of the relevant documents could. However, preventing the applicants from making photocopies of those documents put them at a disadvantage vis-à-vis the State, to which the medical institutions concerned were subordinated and which would act as defendant in proceedings concerning any future claim for damages. Furthermore, the principle of equality of arms required that the applicants should have at their disposal all the documentation in the form of photocopies. This would enable an independent expert, possibly abroad, to examine them, and also provide a safeguard in the event of the possible destruction of the originals. 22. Under Article 8 of the Convention the applicants complained that they had been denied full access to documents pertinent to their private and family lives in that they had been refused the right to make photocopies of them. 23. On 8 December 2004 the Constitutional Court (Third Chamber) rejected the complaint. It found no appearance of a violation of Article 6 § 1 of the Convention in the proceedings leading to the Regional Court’s judgment of 17 February 2004. As to the alleged violation of Article 8 of the Convention, the Constitutional Court held that the Regional Court had correctly applied section 16(6) of the Health Care Act of 1994 and that a fair balance had been struck between the conflicting interests. Reference was made to the explanatory report to that Act. Furthermore, Article 8 of the Convention did not encompass a right to make photocopies of medical documents. 2. Complaint of 25 June 2004 24. On 25 June 2004 the remaining two applicants lodged a similar complaint under Article 127 of the Constitution alleging a violation of, inter alia, Articles 6 § 1 and 8 of the Convention as a result of the conduct of the representatives of the Krompachy Hospital and in the proceedings leading to the Košice Regional Court’s judgment of 24 March 2004. 25. On 27 October 2004 the Constitutional Court (Second Chamber) rejected the complaint as being premature. The decision stated that the plaintiffs had lodged an appeal on points of law against the part of the Regional Court’s judgment by which the first-instance decision to grant their claim for access to medical records had been overturned. D. Subsequent developments 26. Subsequently seven applicants were able to access their files and to make photocopies thereof under the newly introduced Health Care Act 2004 (see paragraph 35 below) in circumstances which are set out in the decision on the admissibility of the present application. 27. As regards the eighth applicant, Ms J. H., the Prešov Hospital only provided her with a simple record of a surgical procedure indicating that surgery had been performed on her and that she had been sterilised during the procedure. On 22 May 2006 the Director of the Prešov Hospital informed the applicant that her complete medical file had not been located and that it was considered lost. On 31 May 2007 the Ministry of Health admitted that the Prešov Hospital had violated the Health Care Act 2004 in that it had failed to ensure the proper keeping of the medical file of Ms J. H. II. RELEVANT DOMESTIC LAW A. Code of Civil Procedure 28. Article 3 guarantees to everyone the right to seek judicial protection of a right which has been placed in jeopardy or violated. 29. Under Article 6, courts shall proceed with a case in cooperation with the parties in a manner permitting the speedy and efficient protection of persons’ rights. 30. Article 78 § 1 provides that, prior to starting proceedings on the merits, courts can secure evidence on the proposal of the person concerned where it is feared that it will be impossible to take such evidence later. 31. Article 79 § 2 obliges a plaintiff to submit the documentary evidence relied upon in an action, with the exception of evidence which the plaintiff is unable to submit for external reasons. 32. Pursuant to Article 120 § 1, parties are obliged to produce evidence in support of their arguments. The decision as to which evidence will be taken lies with the court. Exceptionally, courts can take other evidence than that proposed by the parties where it is necessary for the determination of the point in issue. B. Health Care Act 1994 33. Until 31 December 2004, the following provisions of Health Care Act 277/1994 (Zákon o zdravotnej starostlivosti – “the Health Care Act 1994”) were in force: “Section 16 – Medical records 1. The keeping of medical records shall form an inseparable part of health care. 2. All medical institutions ... shall be obliged to keep medical records in written form ... The documents are to be dated, signed by the person who established them, stamped and numbered on each page ... 3. Medical records shall be archived for a period of 50 years after the patient’s death. ... 5. A medical institution shall be obliged to provide medical records on a specific written request and free of charge, to a public prosecutor, investigator, police authority or court in the form of excerpts, to the extent that they are relevant in the context of criminal or civil proceedings. The medical records as a whole cannot be put at the disposal of the above authorities. 6. A patient, his or her legal representative ... shall have the right to consult medical records and to make excerpts thereof at the place [where the records are kept] ... 8. A medical institution shall provide an expert appointed by a court with information from medical records to the extent that it is necessary for preparing an expert opinion ... 11. An excerpt from a person’s medical record ... shall contain exact and true data and give an overview of the development of the health of the person concerned up to the date when the excerpt is established. It shall be established in writing on numbered pages.” 34. The relevant part of the Explanatory Report to the Health Care Act 1994 reads as follows: “Medical records remain the property of the medical institution concerned. They contain data about the patient and often also about the members of his or her family or other persons. That information being of a strictly confidential and intimate nature, the obligation of non-disclosure extends to them in their entirety. It is therefore necessary to define as precisely as possible cases where a patient or other persons may acquaint themselves with such information.” C. Health Care Act 2004 35. Law no. 576/2004 on health care and health care services and on the amendment and completion of certain Acts (Zákon o zdravotnej starostlivosti, službách súvisiacich s poskytovaním zdravotnej starostlivosti a o zmene a doplnení niektorých zákonov – “the Health Care Act 2004”) came into force on 1 November 2004 and became operative on 1 January 2005. It repealed, inter alia, section 16 of the Health Care Act 1994. Its relevant provisions read as follows: “Section 25 – Access to data included in medical records 1. Data included in medical records shall be made available by means of consultation of the medical records to: (a) the person concerned or his or her legal representative, without any restriction; ... (c) any person authorised in writing by the person mentioned in point (a) ... subject to the signature of the latter being certified in accordance with a special law ... to the extent that it is specified in the authorisation; ... (g) an expert appointed by a court or an authority in charge of a criminal case or whom one of the parties has asked for an opinion ...; the extent of data necessary for preparing the opinion shall be determined by the expert ... 2. The persons entitled to consult medical records shall have the right to make excerpts or copies of them at the place where the records are kept to the extent indicated in paragraph 1.” III. RECOMMENDATION OF THE COMMITTEE OF MINISTERS OF THE COUNCIL OF EUROPE No. R (97) 5 ON THE PROTECTION OF MEDICAL DATA 36. Point 8 of the Recommendation adopted on 13 February 1997 deals with the rights of persons whose medical data have been collected. The relevant part provides: “Rights of access and of rectification 8.1. Every person shall be enabled to have access to his/her medical data, either directly or through a health-care professional or, if permitted by domestic law, a person appointed by him/her. The information must be accessible in understandable form. 8.2 Access to medical data may be refused, limited or delayed only if the law provides for this and if: a. this constitutes a necessary measure in a democratic society in the interests of protecting state security, public safety, or the suppression of criminal offences; ...” THE LAW I. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION 37. The applicants complained that they had been unable to obtain photocopies of their medical records under the Health Care Act 1994. They relied on Article 8 of the Convention, which in its relevant part provides: “1. Everyone has the right to respect for his private and family life, .... 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.” A. Arguments of the parties 1. The applicants 38. The applicants maintained that the mere possibility of consulting the files and making handwritten excerpts thereof did not provide them with effective access to the relevant documents concerning their health. In particular, medical records contained charts, graphs, drawings and other data which could not be properly reproduced through handwritten notes. They were voluminous as a rule and their transcript by hand was not only insufficient but also time consuming and burdensome. 39. The originals of the records contained information which the applicants considered important from the point of view of their moral and physical integrity. In particular, the applicants feared that they had been subjected to an intervention affecting their reproductive status. The records would convey not only information about any such intervention, but also whether the applicants had given consent to it and in what circumstances. A typed or handwritten transcript of the records could not faithfully represent the particular features of the original records bearing, in some cases, the applicants’ signatures. With photocopies of the records the applicants would not only be able to establish a basis for civil litigation but also to demonstrate to their families and communities, where appropriate, that their infertility was not a result of any deliberate action on their part. 40. Finally, the applicants saw no justification for the Government’s argument according to which submitting transcripts of the relevant parts of the medical documents to prosecuting authorities or courts protected their privacy to a greater extent than making copies of the relevant files available. 2. The Government 41. The Government argued that the refusal to allow the applicants to make photocopies of their medical files had been in accordance with the relevant provisions of the Health Care Act 1994. It had been compatible with the applicants’ right to respect for their private and family life in the circumstances. In particular, the applicants had been allowed to study all the records and to make handwritten excerpts thereof. 42. The refusal to allow the applicants to photocopy their medical records had been justified, at the relevant time, by the State’s obligation to protect the relevant information from abuse. The State enjoyed a margin of appreciation in regulating similar issues. It had not been overstepped in the case of the applicants, who had not been prevented from obtaining all relevant information related to their health. The Contracting States’ positive obligations under Article 8 did not extend to an obligation to allow persons to make photocopies of their medical records. 43. Under the relevant law health institutions were obliged, upon a written request, to provide relevant information contained in the medical records of the person making the request, in the form of written excerpts, to police investigators, prosecutors or a court. That procedure provided the advantage that, unlike a copy of the medical file, it gave access to the relevant parts of the files without disclosing other information which was not related to the subject-matter of the proceedings. B. The Court’s assessment 44. The complaint in issue concerns the exercise by the applicants of their right of effective access to information concerning their health and reproductive status. As such it is linked to their private and family lives within the meaning of Article 8 (see, mutatis mutandis, Roche v. the United Kingdom [GC], no. 32555/96, § 155, ECHR 2005‑X, with further reference). 45. The Court reiterates that, in addition to the primarily negative undertakings in Article 8 of the Convention, there may be positive obligations inherent in effective respect for one’s private life. In determining whether or not such a positive obligation exists, it will have regard to the fair balance that has to be struck between the general interest of the community and the competing interests of the individual concerned, the aims in the second paragraph of Article 8 being of a certain relevance (see, for example, Gaskin v. the United Kingdom, 7 July 1989, § 42, Series A no. 160). 46. The existence of such a positive obligation was established by the Court, among other circumstances, where applicants sought access to information about risks to one’s health and well-being resulting from environmental pollution (Guerra and Others v. Italy, 19 February 1998, § 60, Reports 1998‑I), information which would permit them to assess any risk resulting from their participation in nuclear tests (McGinley and Egan v. the United Kingdom, 9 June 1998, § 101, Reports of Judgments and Decisions 1998‑III) or tests involving exposure to toxic chemicals (Roche v. the United Kingdom [GC], referred to above). The Court held, in particular, that a positive obligation arose to provide an “effective and accessible procedure” enabling the applicants to have access to “all relevant and appropriate information” (see, for example, Roche v. the United Kingdom [GC] cited above, § 162, with further references). Similarly, such a positive obligation was found to exist where applicants sought access to information to social service records containing information about their childhood and personal history (see Gaskin v. the United Kingdom, cited above and M.G. v. the United Kingdom, no. 39393/98, § 31, 24 September 2002). 47. Bearing in mind that the exercise of the right under Article 8 to respect for one’s private and family life must be practical and effective (see, for example, Phinikaridou v. Cyprus, no. 23890/02, § 64, ECHR 2007‑... (extracts), with further reference), the Court takes the view that such positive obligations should extend, in particular in cases like the present one where personal data are concerned, to the making available to the data subject of copies of his or her data files. 48. It can be accepted that it is for the file holder to determine the arrangements for copying personal data files and whether the cost thereof should be borne by the data subject. However, the Court does not consider that data subjects should be obliged to specifically justify a request to be provided with a copy of their personal data files. It is rather for the authorities to show that there are compelling reasons for refusing this facility. 49. The applicants in the present case obtained judicial orders permitting them to consult their medical records in their entirety, but they were not allowed to make copies of them under the Health Care Act 1994. The point to be determined by the Court is whether in that respect the authorities of the respondent State complied with their positive obligation and, in particular, whether the reasons invoked for such a refusal were sufficiently compelling to outweigh the Article 8 right of the applicants to obtain copies of their medical records. 50. Although it was not for the applicants to justify the requests for copies of their own medical files (see paragraph 48 above), the Court would nevertheless underline that the applicants considered that the possibility of obtaining exclusively handwritten excerpts of the medical files did not provide them with effective access to the relevant documents concerning their health. The original records, which could not be reproduced manually, contained information which the applicants considered important from the point of view of their moral and physical integrity as they suspected that they had been subjected to an intervention affecting their reproductive status. 51. The Court also observes that the applicants considered it necessary to have all the documentation in the form of photocopies so that an independent expert, possibly abroad, could examine them, and also in order to safeguard against the possible inadvertent destruction of the originals are of relevance. As to the latter point, it cannot be overlooked that the medical file of one of the applicants had actually been lost (see paragraph 27 above). 52. The national courts mainly justified the prohibition on making copies of medical records by the need to protect the relevant information from abuse. The Government relied on the Contracting States’ margin of appreciation in similar matters and considered that the Slovak authorities had complied with their obligations under Article 8 by allowing the applicants or their representatives to study all the records and to make handwritten excerpts thereof. 53. The arguments put forward by the domestic courts and the Government are not sufficiently compelling, with due regard to the aims set out in the second paragraph of Article 8, to outweigh the applicants’ right to obtain copies of their medical records. 54. In particular, the Court does not see how the applicants, who had in any event been given access to the entirety of their medical files, could abuse information concerning their own persons by making photocopies of the relevant documents. 55. As to the argument relating to possible abuse of the information by third persons, the Court has previously found that protection of medical data is of fundamental importance to a person’s enjoyment of his or her right to respect for private and family life as guaranteed by Article 8 of the Convention and that respecting the confidentiality of health data is a vital principle in the legal systems of all the Contracting Parties to the Convention (see I. v. Finland, no. 20511/03, § 38, 17 July 2008). 56. However, the risk of such abuse could have been prevented by means other than denying copies of the files to the applicants. For example, communication or disclosure of personal health data that may be inconsistent with the guarantees in Article 8 of the Convention can be prevented by means such as incorporation in domestic law of appropriate safeguards with a view to strictly limiting the circumstances under which such data can be disclosed and the scope of persons entitled to accede to the files (see also Z v. Finland, judgment of 25 February 1997, Reports 1997-I, §§ 95-96). 57. The fact that the Health Care Act 2004 repealed the relevant provision of the Health Care Act 1994 and explicitly provides for the possibility for patients or persons authorised by them to make copies of medical records is in line with the above conclusion. That legislative change, although welcomed, cannot affect the position in the case under consideration. 58. There has therefore been a failure to fulfil the positive obligation to ensure effective respect for the applicants’ private and family lives in breach of Article 8 of the Convention. II. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION 59. The applicants complained that their right of access to a court had been violated as a result of the refusal to provide them with copies of their medical records. They relied on Article 6 § 1 of the Convention, which in its relevant part provides: “In the determination of his civil rights and obligations ... everyone is entitled to a ... hearing ... by [a] ... tribunal ...” 60. The applicants argued that they had been barred from having effective access to their medical records and from securing the evidence included in those records by means of photocopies. Having copies of the files was important for later civil litigation concerning any possible claims for damages on their part and for compliance with the burden of proof, which would be incumbent on the applicants as plaintiffs. 61. Obtaining copies of the medical records was essential for an assessment, with the assistance of independent medical experts of the applicants’ choice, of the position in their cases and of the prospects of success of any future civil actions. The latter element was important because the applicants, who were living on social benefits, would be ordered to reimburse the other party’s costs if the courts dismissed their action. 62. The applicants considered that they could not obtain redress by means of asking a court under Article 78 of the Code of Civil Procedure to secure the files as evidence in the proceedings. They relied on section 16(5) of the Health Care Act 1994, which allowed courts to receive information from medical records exclusively in the form of excerpts but not the records as such or their copies. The domestic courts were thus unable to directly check any inconsistency in the applicants’ medical records. 63. The Government referred to the conclusions reached by the Constitutional Court on 8 December 2004. Consulting and making excerpts from the medical documents had provided the applicants with a sufficient opportunity to assess the position in their cases and initiate civil proceedings if appropriate. The relevant provisions of the Code of Civil Procedure included guarantees for the applicants to be able effectively to seek redress before the courts in respect of any infringement of their rights which they might establish during the consultation of their medical records. The use of excerpts of the files had the advantage of protecting confidential information and personal data which had no bearing on the litigation in issue. 64. The Court reiterates that the right of access to a court is an inherent aspect of the safeguards enshrined in Article 6. It secures to everyone the right to have a claim relating to his civil rights and obligations brought before a court. Where the individual’s access is limited either by operation of law or in fact, the Court will examine whether the limitation imposed impaired the essence of the right and, in particular, whether it pursued a legitimate aim and there was a reasonable relationship of proportionality between the means employed and the aim sought to be achieved (see Ashingdane v. the United Kingdom, 28 May 1985, § 57, Series A no. 93). 65. The Court accepts the applicants’ argument that they had been in a state of uncertainty as regards their health and reproductive status following their treatment in the two hospitals concerned and that obtaining the relevant evidence, in particular in the form of photocopies, was essential for an assessment of the position in their cases from the perspective of effectively seeking redress before the courts in respect of any shortcomings in their medical treatment. 66. The protection of a person’s rights under Article 6 requires, in the Court’s view, that the guarantees of that provision should extend to a situation where, like the applicants in the present case, a person has, in principle, a civil claim but considers that the evidential situation resulting from the legal provisions in force prevents him or her from effectively seeking redress before a court or renders the seeking of such judicial protection difficult without appropriate justification. 67. It is true that the statutory bar at the material time on the making available of copies of the records did not entirely bar the applicants from bringing a civil action on the basis of information obtained in the course of the consultation of their files. However, the Court considers that section 16(6) of the Health Care Act 1994 imposed a disproportionate limitation on their ability to present their cases to a court in an effective manner. It is relevant in this respect that the applicants considered the original form of the records, which could not be reproduced manually and which, in accordance with the above-cited provision, could not be made available to either the applicants or the courts (compare and contrast in this connection the McGinley and Egan case (cited above, § 90)), decisive for the determination of their cases. 68. When examining the facts of the case under Article 8 of the Convention the Court has found no sufficiently strong justification for preventing the applicants from obtaining copies of their medical records. For similar reasons, that restriction cannot be considered compatible with an effective exercise by the applicants of their right of access to a court. 69. There has therefore been a violation of Article 6 § 1 of the Convention. III. ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION 70. The applicants complained that they had no effective remedy at their disposal in respect of their above complaints under Article 8 and Article 6 § 1 of the Convention. They alleged a violation of Article 13 of the Convention, which provides: “Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.” 71. The Government argued that the applicants had at their disposal an effective remedy, namely a complaint under Article 127 of the Constitution. A. Alleged violation of Article 13 in conjunction with Article 8 72. The Court recalls that Article 13 does not guarantee a remedy whereby a law as such can be challenged before a domestic organ (see M.A. and 34 Others v. Finland (dec.), no. 7793/95, 10 June 2003). It follows from the terms of the applicants’ submissions that it is basically the legislation as such which they attack. However, as stated above, Article 13 does not guarantee a remedy for such complaints. In these circumstances, the Court concludes that there has been no violation of Article 13 taken together with Article 8 of the Convention. B. Alleged violation of Article 13 in conjunction with Article 6 § 1 73. In view of its conclusion in relation to Article 6 § 1 (see paragraph 69 above), the Court does not consider it necessary to examine separately the complaint in relation to Article 13, the requirements of which are less strict than and absorbed by those of Article 6 § 1 in this case (see also McGinley and Egan v. the United Kingdom referred to above, § 106). IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION 74. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 75. The eight applicants claimed 15,000 euros (EUR) each in respect of non-pecuniary damage. They submitted that they had been unable to obtain photocopies of their medical records for three years, as a result of which they had experienced anxiety about the state of their health and reproductive abilities. Their personal lives had been thereby affected. 76. The Government considered that claim to be excessive. 77. The Court accepts that the applicants suffered non-pecuniary damage which cannot be remedied by the mere finding of a violation. Making its assessment on an equitable basis, the Court therefore awards each of the eight applicants EUR 3,500 in respect of non-pecuniary damage. B. Costs and expenses 78. The applicants claimed EUR 6,042 for their representation in the domestic proceedings by Mrs V. Durbáková and the Centre for Civil and Human Rights in Košice. They claimed a total of EUR 11,600 in respect of the proceedings before the Court. Finally, the applicants claimed EUR 812 in respect of the administrative costs of their legal representatives (preparation of legal documents, photocopying, telephone calls, sending of faxes and postage) and EUR 1,127.50 for translation of documents and expenses incurred in correspondence with the Court. 79. The Government considered that the claims relating to the applicants’ representation and the administrative costs were overstated. They had no objection to the sums claimed in respect of translation costs and international postage. 80. The Court reiterates that costs and expenses will not be awarded under Article 41 unless it is established that they were actually and necessarily incurred and are also reasonable as to quantum. Furthermore, legal costs are only recoverable in so far as they relate to the violation found (see Rule 60 and, among other authorities, Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, § 54, ECHR 2000-XI; Beyeler v. Italy (just satisfaction) [GC], no. 33202/96, § 27, 28 May 2002; and Sahin v. Germany [GC], no. 30943/96, § 105, ECHR 2003-VIII). 81. Having regard to the documents submitted, the number of applicants, the scope of the proceedings at both national level and before the Court and the fact that the applicants were only partly successful in the Convention proceedings, the Court awards the applicants a total of EUR 8,000 in respect of costs and expenses, together with any tax that may be chargeable to the applicants. C. Default interest 82. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT 1. Holds unanimously that there has been a violation of Article 8 of the Convention; 2. Holds by six votes to one[1] that there has been a violation of Article 6 § 1 of the Convention; 3. Holds unanimously that there has been no violation of Article 13 in conjunction with Article 8 of the Convention; 4. Holds unanimously that a separate examination of the complaint under Article 13 in conjunction with Article 6 § 1 of the Convention is not called for; 5. Holds unanimously (a) that the respondent State is to pay, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts: (i) EUR 3,500 (three thousand five hundred euros) to each applicant, plus any tax that may be chargeable, in respect of non-pecuniary damage; (ii) EUR 8,000 (eight thousand euros) jointly to all applicants, plus any tax that may be chargeable to the applicants, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 6. Dismisses unanimously the remainder of the applicants’ claim for just satisfaction. Done in English, and notified in writing on 28 April 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Lawrence EarlyNicolas Bratza RegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the partly dissenting opinion of Judge Šikuta is annexed to this judgment. N.B.T.L.E. PARTLY DISSENTING OPINION OF JUDGE ŠIKUTA To my regret, I cannot agree with the majority’s conclusion that there has been a violation of Article 6 of the Convention, for the following reasons. Since the Chamber was unanimous in finding the violation of Article 8 of the Convention, which was the real substance of the case, I was of the opinion that there was no need to examine the complaint under Article 6 of the Convention. The national courts at two levels of jurisdiction, in two different sets of civil proceedings, granted the applicants’ claim and ordered the J.A. Reiman University Hospital in Prešov and the Health Care Centre in Krompachy to permit all the applicants and their representatives to consult their medical records and to make handwritten excerpts thereof. As regards access to medical records, that was the maximum that was allowed and permitted according to the relevant national legislation in force at the material time. Accordingly, the courts dismissed their request to make a photocopy of the medical documents. The fact that the Court has found a violation of Article 8 of the Convention because the applicants had no possibility of making copies of their medical records does not mean that they had no access to a court. I do agree that in such a situation the applicants had only a limited amount of evidence and information in their hands since they were not allowed to make copies of medical records. I do not agree that this amount of information in their possession was not sufficient to assess the position in their cases and that that amount of information was not sufficient to initiate civil proceedings if appropriate. I do not agree that the unavailability of copies of the records barred the applicants from starting a lawsuit on the basis of the information obtained in the course of the consultation of their files. Firstly: If additional information to that in the possession of the applicants were needed in the course of civil proceedings, a national court, according to the standard practice, would appoint an expert, whose role would be to study originals of the medical records, to examine the state of health of the applicants and to reply to qualified medical questions put forward by the court dealing with the case. This procedure would come into play regardless of whether the applicants had available copies of all medical records, and regardless of whether the applicants also attached to the lawsuit a private expert opinion prepared by another expert upon their request. The national court would be obliged, after the commencement of the proceedings, to appoint of its own motion another independent expert from the List of Court Experts, who would have access to all originals of medical records in line with Section 16 of the Health Care Act 1994 (Zákon o zdravotnej starostlivosti č. 277/1994 Z.z.). Secondly: The applicants did not even try to bring such civil proceedings. Therefore the arguments of the applicants to the effect, that the lack of copies was very important for potential civil litigation concerning any possible claims for damages, for discharge of the burden of proof and for the assessment of the prospects of success of any future civil actions are of a hypothetical and speculative nature. Here I fully agree with the Constitutional Court’s conclusions. In addition, if the applicants were unable to support their lawsuit sufficiently with more evidence because of statutory restrictions, the courts would not reject such lawsuit and would not disadvantage the applicants as regards their burden of proof, but would order both health institutions – the University Hospital in Prešov and the Health Care Centre in Krompachy, to disclose all originals or relevant excerpts of the applicants’ medical records. Thirdly: Such broad and wide interpretation of the right of access to a court goes far beyond the Court’s established case-law. In the case of McGinley and Egan v. The United Kingdom (judgment of 9 June 1998), which is to a certain extent the most similar to this case, the Court did not find a violation of Article 6 § 1 of the Convention, on the basis that a procedure was provided for the disclosure of documents which the applicants failed to utilise, and under such circumstances it could not be said that the State denied the applicants effective access to the PAT (Pension Appeal Tribunal). We now have the same situation in the instant case; the applicants could initiate civil proceedings, in the course of which all relevant medical records of the applicants would be disclosed according to Section 16 of the 1994 Health Care Act. The applicants did not bring any such proceedings and they therefore failed to utilise an existing available procedure. In conclusion, I am of the opinion, that the applicants in the instant case did have a limited amount of information in their hands since they were not allowed to make copies of all medical records, but they were not limited to such an extent and in such a manner, as would bar their effective access to a court and would violate Article 6 § 1 of the Convention. [1]. Rectified on 24 August 2011. The wording “Holds by a majority” was replaced by “Holds by six votes to one”.

MR JUSTICE PENRY-DAVEY: The claimant was employed by the defendant bank as a derivatives trader from May 1998 until 13 January 2009. By his contract of employment he was entitled to a performance-related bonus. It is in respect of that bonus, calculated at approximately €1.6 million, that this application is made. The claimant seeks summary judgment on the basis that the defendant has no real prospect of defending the claim. The defendant submits that this is not an appropriate case for summary judgment and that he has a real prospect of successfully defending the claim. Additionally, there are factual disputes between the parties that cannot be resolved on a summary judgment application. The issue, as I have indicated, is whether the claimant is entitled to be paid the bonus in respect of his employment in 2008. He says he is; the defendant disputes it. He commenced employment in June 1998, his contract providing that he would participate in the defendant's annual discretionary bonus scheme. By letter dated 18 March 2008 that contract was varied in that his basic salary was increased to £100,000, he was awarded a guaranteed bonus of £50,000 and became eligible to receive a performance-related bonus, set out in the following terms, and I refer to page 30 of the bundle of documents: : "You will also be eligible to receive a performance-related bonus from the bank, subject to your individual revenue generation. Any payment due will be made at the time the bank makes its annual performance bonus payment, but in any event no later than 31st March in the year following the performance year for which you are being awarded, i.e. 31st March 2009 in respect of 2008. The formula used to calculate the bonus due to you will be as follows and will be calculated for 2008. [It is not necessary to set out the formula in detail, but it goes on] The above table is applicable to your 2008 bonus. The bank maintains the right to review or remove this formula-linked bonus arrangement at any time." The claimant's case is that the express contractual provision that he would receive performance-related bonus for 2008 in accordance with that table is clear and unqualified, subject only to his individual performance threshold being reached (as it is accepted it was in 2008) and the bank's bonus deferral arrangements which it is conceded are not relevant to this claim. In July 2008 the claimant was notified that he was at risk of redundancy, but the suggestion was withdrawn by letter on 23 July. The letter (at page 33 of the bundle) is in these terms: "I write further to our recent meetings of 21st and 22nd July, at which you were advised that your position was at risk of redundancy. The bank can now confirm that the selection process is now complete. As a result I can advise that you are no longer at risk of redundancy. I can also confirm that you have been successfully redeployed as a trader within the Global Financial Markets, Position Management, Interest Rate Derivatives Desk. A further letter detailing the amended terms and conditions of your employment which will apply to your change in role will follow. The first three months from today's date will be regarded as a trial period for your new role. This will provide an opportunity for the bank and yourself to assess your suitability for the role. Once the trial period has been completed successfully your appointment would be confirmed. Should your trial period not be successful, the bank will offer you redundancy terms on a without prejudice basis, subject to the signing of a settlement and compromise agreement. If you have any questions please do not hesitate to contact me." That was followed by a letter the following day (page 34 onwards of the bundle). It reads materially as follows: "Further to your recent meetings with Henk Rozendaal and Julie Fitzgerald, I am writing detailed amendments to your original contract of employment, dated 29 May 1998 following your successful appointment as trader within the Global Financial Markets, Position Management, Interest Rate Derivatives Desk." It then goes on to set out the status and duties in the numbered paragraph 1: "[In relation to remuneration guaranteed bonus] The terms relating to the guaranteed bonus attributable to the 2008 calendar year continue to apply, as per the letter dated 18 March 2008. [For a discretionary bonus] For future calendar years you will also be eligible to participate in the bank's annual discretionary performance-related bonus scheme. This scheme will vary from year to year. Bonuses which are made entirely at the discretion of the bank on the basis of a number of factors including your individual performance, the performance of the business area in which you work and the performance of the bank. The bank may also take into account your strategic importance and the need to retain your future services in deciding the level of any bonus. Any bonus may be subject to partial deferral, in accordance with the bank's deferral policy in operation at the time of each payment. The bank reserves the right to vary or withdraw its discretionary performance-related bonus scheme at any time in its complete discretion. Payment of a bonus in any year does not guarantee payment of a bonus in subsequent years. Any bonus payment is usually paid in the March following the end of the relevant calendar year. You must be employed on the bonus payment date and not under notice of termination, given or received, or subject to disciplinary sanction, to receive a bonus payment. For clarification please note that following the closure of the London desk the formula-driven bonus relating to the desk will cease with immediate effect and you will be eligible to participate in the discretionary bonus for 2008." That letter is considerably longer than the passage that I have read out, but it concludes: "I should be grateful if you would sign below to indicate your acceptance of this offer. Should you have any questions then please do not hesitate to contact me." There is an area for signing and dating which follows the signature of Kate Richardson .. The claimant was invited to sign the letter but he did not do so. He continued, however, to work and to receive his salary. Eventually by email dated 21 October he wrote stating that following the closure of the proprietary desk he had been asked to and had continued to trade as before. His books were reporting profit of just over €1 million, with further profits anticipated. He stated that he rejected the amendment to his contract of employment proposed in the letter of 23 July and said that he had continued to work under the terms of his contract dated 18 March. The claimant's case is that he rejected those amendments within the three-month trial period and at the end of that period made it clear that he would not accept the redeployment. The defendant submits that it was contractually entitled unilaterally to remove the performance-related bonus at any time, but the submission of the claimant is that the words, "at any time" relate to the years after 2008 and not to 2008 itself. As to the question of variation, the claimant suggests that the offer documentation provided for the manner in which such could be accepted, namely by signing by the claimant. It is clear that he did not do so and he submits, therefore, that the variation was not accepted. The claimant further submits that his continuing to work and receive a salary does not imply consent to a contractual variation (see Rigby v Ferodo (1988) ICR 29) On the variation issue the defendant asserts that it has a good prospect of establishing that the claimant did accept the varied offer of employment by his conduct, in that he continued to work without protest or reservation of rights at the new desk, rather than at his original trading desk, which had been closed. He reported to a different individual and continued to receive his salary and benefits, paid each month. That it is suggested implies acceptance of the variation. Part 24 of the Civil Procedure Rules provides for the granting of summary judgment only where the court considers that (1) the defendant has no real prospect of successfully defending the claim and (2) there is no other compelling reason why the claim should be disposed of at trial. The principles relating to that exercise are well established and some were set out by Lewison J in Nigeria v Santolina Investment Corporation (2007) EWHC 437, Chancery: 1. The court must consider whether the defendant has a "realistic" as opposed to a "fanciful" prospect of success. 2 A "realistic" defence is one that carries some degree of conviction. This means a defence that is more than merely arguable. 3. In reaching its conclusion the court must not conduct a "mini-trial". 4. This does not mean that the court must take at face value and without analysis everything that a defendant says. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents. 5. However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial. 6. Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without a fuller investigation into the facts at trial than is possible or permissible on an application for summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case." In addition, in relation to the court's function in applications of this kind, Lotd Hope concisely pointed out in Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at page 261, that the procedure is essentially designed to deal with cases that are not fit for trial at all. There are thus two issues, identified as the construction issue, namely the meaning of the words "at any time", and the variation issue, that is the question of whether or not there were variations to the contract which were accepted. As to the first issue, the conflict between the parties is stark. The claimant contends that the only conditions to which payment of the performance-related bonus by the bank to the claimant is subject are the claimant's individual revenue generation and the bank's bonus deferral arrangements. The bonus, it is submitted, in respect of 2008 became payable on 31 March 2009 or earlier, the table was applicable and the bonus was not limited to 2008. The claimant relies on the defendant's e-mails of 7 March, which I have not set out in detail, referring to the claimant's successful trading, the fact that he had been underpaid in their estimation, and that it was in the bank's interest to retain him. It is submitted that it would be unusual, on the evidence, to negotiate a bonus structure on a year-by-year basis but usual for there to be a formula, which was then applied each year. The defendant submits that the words "at any time" mean simply that, and there is no proper basis for departing from their plain and ordinary meaning. It is pointed out that the defendant reserved the right "to review or remove this performance-linked bonus arrangement at any time" and thus submitted that on proper construction the word "this" is clearly referable to 2008. As to the claimant's submission that this construction renders the clause worthless, that is disputed by the defendant on the basis that the claimant was given a performance-related bonus as he wished, albeit one that could be reviewed or removed. The defendant equally accepts that the right to removal or review was not unfettered, in that there could not be removal that was irrational, perverse or in bad faith(see Horkulak v Cantor Fitzgerald International [2005] ICR 402). There is, however, no suggestion in this case that the removal was irrational, perverse or in bad faith. The defendant submits that further weight is given to its construction by the fact that where the parties wanted to guarantee a particular position they did so. The claimant was guaranteed a bonus payment of £50,000 in 2008, subject to certain conditions. . Had the parties wanted to guarantee the formula bonus arrangement for the year so that it could not be reviewed or removed in respect of that year they would, the defendant submits, have been expected to do so by words such as, "except in respect of 2008". The defendant, if the claimant's construction is correct, asks why the position for 2008 should be guaranteed so that it could not be reviewed or removed for that year but could for years thereafter. If the defendant's construction of the words is correct the claimant's claim necessarily fails. Thus, if the defendant was entitled to review or remove the formula bonus arrangement in 2008 it clearly did so in July, and it is not suggested that it acted irrationally, perversely or in bad faith. In relation to the construction issue, in my judgment the claimant has failed to demonstrate that the defendant has no real prospect of successfully defending the claim. There is considerable force in the submissions made on behalf of the defendant and I consider that the defendant has a realistic, as opposed to a fanciful or lesser prospect, of success on the basis that the right to remove the performance-related bonus at any time included the right to remove for 2008 and did not exclude that year.. That conclusion is sufficient on its own for the defendant to succeed and for the application for summary judgment to fail, but I should also deal with the second issue . The claimant's case is that the defendant purported unilaterally to amend his contract of employment by the letter dated 24 July which included the statement that his performance-related bonus would cease with immediate effect and be replaced for 2008 and future years with a discretionary bonus. As I have indicated the claimant contends that he did not accept the variation, and within the three-month trial period referred to in the letter said in terms that he rejected the variation. He did not, he submits, by his conduct accept the variation because there was in the letter express provision for the way in which the offer could be accepted, namely by signing, and he did not do so. Further, as I pointed out, he submits that his continuing to work and to receive his previous salary did not imply consent to any purported contractual variation. He says that it was understood that he had not accepted the removal of the performance-related bonus, that is was initially implicit but made explicit in his email of 21 October, expressly rejecting the trial period, the proposed contract amendment and affirming that he was working formally to his contract of 18 March 2008. Those contentions are disputed by the defendant, who submits that there was acceptance of the variations by the claimant by his conduct in continuing to work without protest or reservation of rights, and continuing to receive his salary and benefits each month. On this issue also I conclude that the defendant has a real prospect of success in defending the claim, but the issue of acceptance is very dependent upon the facts relating to the defendant's conduct and activities between July and October 2008. As a very fact-sensitive issue it is not the sort of issue that can or should properly be resolved on an application for summary judgment. Accordingly, for all the reasons that I have set out, the application for summary judgment is dismissed.

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 171-172 of 1973. From the Judgment and Order dated 9-3-1972 of the Calcutta High Court in I.T Reference No. 117/67. V. Patel, S. P. Nayar and Miss A. Subhashini for the Appellant. B. Ahuja Amicus Curiae for the Respondent. The Judgment of the Court was delivered by. TULZAPURKAR, J.-These two appeals by certificate raise an important question as regards the proper companystruction of s. 33B of the Indian Income Tax Act, 1922 with particular bearing on the scope of sub-s. 4 thereof and the effect of sub-s. 2 b on the sub-s. 4 . The facts giving rise to the aforesaid question may briefly be stated The assessment years involved are 1957-58 and 1958-59 companyresponding to the accounting years ending March 31, 1957 and March 31, 1958 respectively. On or about August 5, 1960 the respondent-assessee submitted voluntary returns, inter alia, for the said two assessment years alongwith a declaration dated August 8, 1960. The assessment for these years were companypleted on August 12, 1960 by the Income-Tax Officer, E Ward, District II 1 Calcutta on total incomes of Rs. 7,000/- and 7,500/- respectively, the same having been made in the status of unregistered firm companysisting of three partners, namely, Asha Devi Vaid, Santosh Devi Vaid and Sugni Devi Vaid with equal shares. On August 2, 1962, the Commissioner of Income-Tax issued a numberice to show cause why the said assessments should number be cancelled under s. 33B of the Act as he felt that the companypleted assessments were erroneous as being prejudicial to the interests of the revenue and that the Income-Tax Officer, E Ward, District II 1 Calcutta had numberterritorial jurisdiction over the case of the assessee. The numberice was served on the assessee on August 3, 1962 and the hearing was fixed by the Commissioner for August 6, 1962. On the ground that numbere appeared and that there was numberapplication for adjournment, the Commissioner passed his order under s. 33B ex parte on that date. By his said order the Commissioner cancelled the assessments made by the Income-Tax Officer on August 12, 1960 on three grounds a that some of the partners were minors and were number companypetent to enter into any partnership agreement with the result that the status of unregistered firm assigned to the assesse by the Income-Tax Officer was clearly wrong and as such the assessments deserved to be cancelled, b that the books of account were unreliable and they were number properly examined by the Income-Tax Officer with the result that the assessments made were prejudicial to the interests of the revenue and c that the Income-Tax Officer companycerned had numberterritorial jurisdiction over the case which fell within the jurisdiction of Income-Tax Officer, District III II Calcutta, and directed the I.T.O. having proper jurisdiction to make fresh assessments after examining the record of the assesse in accordance with law. In the appeals preferred to the Appellate Tribunal under s. 33B 3 the respondent-assessee challenged the said order of the Commissioner on various grounds. The Tribunal, negativing all other companytentions of the respondent-assessee, came to the companyclusion that on merits the facts justified the assumption of jurisdiction under s. 33B by the Commissioner but held that the Commissioner had number companyformed to the requirements of natural justice by putting to the respondent assessee what case it had to meet and by giving due opportunity for explaining the same. The Tribunal numbered that the Commissioner had disposed of the matter at 11.30 A.M. when numbere appeared on behalf of the respondentassessee while the numberice served upon the latter permitted filing of objections at any time during the companyrse of August 6, 1962 and objections had been filed by the respondentassessee later in the day. The Tribunal, therefore, allowed the appeals, vacated the Commissioners order dated August 6, 1962 and remanded the case to him with the direction to dispose it of afresh after giving due opportunity to the respondent-assessee. Feeling aggrieved by the Tribunals aforesaid order dated July 5, 1965 the appellant sought to refer a set of six questions of law said to arise out of the said order to the Calcutta High Court but the Tribunal referred the following two questions only for the opinion of the High Court Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assumption of jurisdiction by the Commissioner under s. 33B of the Income-Tax Act was valid in law? Whether, on the facts and in the circumstances of the case, the Tribunal acted properly by vacating the order of the Commissioner under s. 33B of the said Act and in directing him to dispose of the proceedings under the said section afresh after giving due opportunity to the assessee? The High Court disposed of the Reference I.T. Reference No. 117 of 1967 by its judgment dated March 9, 1972 whereby it answered the first question in the affirmative against the assessee, that is to say, on merits it held that the assessments made by the Income-Tax Officer required revision at the hands by the Commissioner. As regards the second question the High Court was of the view that it companyprised two aspects, one relating to the vacating of the Commissioners order and the other relating to the giving of a direction to him to dispose of the case under s. 33B afresh after giving due opportunity to the assessee and the High Court held that in exercise of its appellate powers the Tribunal acted properly in vacating or cancelling the Commissioners order but did number act properly in directing him to dispose of the case afresh under s. 33B 1 because the period of limitation of two years prescribed under s. 33 2 b for him to act under s. 33B 1 had expired and answered the question accordingly i.e. in the affirmative on the first aspect and in the negative on the second aspect . In doing so the High Court held that the provision of sub-s. 2 b was absolute and companyered even a revisional order of the Commissioner passed in pursuance of a direction given by any appellate authority and relied in that behalf on the aspect that, unlike 2nd proviso to sec. 34 3 , there was numberprovision removing or relaxing the bar of limitation on the power of the Commissioner under s. 33B 2 b . The High Court preferred the view of the Assam High Court in I.T. v. Sabitri Debi Agarwalla 1 to the view of the Bombay High Court in C.I.T. Kishoresingh Kalyansinh Solanki 2 . The Revenue has companye up in appeal to this Court challenging the aforesaid view of the High Court. Since the question relates to the proper companystruction of s. 33B of the Act with particular bearing on the scope of the appellate powers of the Tribunal under sub-s. 4 thereof and the effect of sub-s. 2 b thereon, it will be desirable to numbere the material provisions of s. 33B. Under sub-s. 1 power has been companyferred upon the Commissioner to revise Income-Tax Officers orders but the exercise of such power is regulated by the two companyditions mentioned therein, namely, a he must companysider the order sought to be revised to be erroneous as being prejudicial to the interests of the revenue and b he must give an opportunity to the assessee of being heard before revising it. Sub-s. 2 b prescribes a period of limitation in negative words by providing that numberorder shall be made under sub-s. 1 after the expiry of two years from the date of the order sought to be revised. Sub-s. 3 companyfers on the assessee a right to prefer an appeal to the Appellate Tribunal against the Commissioners order made under sub-s. 1 while sub-s. 4 indicates the powers of the Appellate Tribunal in dealing with such appeal by providing that such appeal shall be dealt with in the same manner as if it were an appeal under sub-s. 1 of s. Two things stand out clearly or a fair reading of the two companycerned provisions, namely, sub-s. 2 b and sub-s. 4 . The bar of limitation companytained in sub-s 2 b is on the Commissioners power to pass revisional orders under sub-s. 1 and the same appears to be absolute in the sense that it applies to every order to be made under sub-s. 1 . At the same time sub-s. 4 companyfers on the Appellate Tribunal very wide powers which it has while dealing with an appeal under s. 33 1 . In other words, the Appellate Tribunal has power to pass such orders thereon i.e. on the appeal as it thinks fit. In Hukumchand Mills 3 , case this Court has explained that the word thereon restricts the jurisdiction of the Appellate Tribunal to the subject-matter of the appeal which merely means that the Tribunal cannot adjudicate or give a finding on a question which is number in dispute and which does number form the subject-matter of the appeal but the words pass such orders thereon as it thinks fit include all the powers except possibly the power of enhancement which are companyferred on the Assistant Appellate Commissioner by s. 31 and companysequently the Tribunal has authority in exercise of its appellate powers to set aside the order appealed against and direct fresh assessment in the light of the observations made by it in its judgment. In other words, similar power is possessed by the Appellate Tribunal while dealing with the appeal under subs. 4 of s. 33B. The question that arises for our companysideration is whether such a direction to dispose of the case afresh can be given to the Commissioner by the Appellate Tribunal when the period of limitation prescribed under sub-s. 2 b has expired ? In other words, whether sub-s. 2 b of s. 33B has the effect of attenuating or curtailing the appellate powers of the Tribunal under sub-s. 4 ? Counsel for the Revenue companytended that it was a well settled principle that all the parts of a section or statute should be companystrued together and that every clause of a section should be companystrued with reference to the companytext and other clauses thereof, so that the companystruction put on a particular provision makes a companysistent enactment of the whole statute. He further urged that the object of companyferring revisional power upon the Commissioner under s. 33B 1 obviously was to companyrect erroneous orders of Income- Tax Officer in so far as they were prejudicial to the interests of the revenue and such object would be defeated if the bar of limitation companytained in sub-s. 2 b is held applicable to revisional orders passed by the Commissioner in pursuance of or in obedience to a direction given or order made by the Appellate Tribunal in appeal under s. 33B 4 or for that matter by the High Court or Supreme Court in case the matter is carried to those Courts. According to him it would be proper to companystrue the provision in sub-s. 2 b as being applicable to suo motu revisional orders passed by the Commissioner under sub-s. 1 and number to orders passed by him in pursuance of a direction issued to him by the Tribunal in appeal. He urged that there was numberreason why sub-s. 2 b should be regarded as having the effect of attenuating or curtailing the very wide appellate powers companyferred upon the Tribunal. He further urged that numberargument companyld be based on the absence of a provision, similar to the 2nd proviso to s. 34 3 , in s. 33B of the Act the support of his companytention strong reliance was placed by him upon the Bombay High Courts decision in Solankis case supra . On the other hand, companynsel for the assessee canvassed the High Courts view for our acceptance by pointing out that both ss. 33B and 34 3 together with the second proviso were introduced in the Act by the same Amending Act 1948 but in s. 33B numberprovision for removing or relaxing the bar of limitation companytained in sub-s. 2 b was made and hence it was number for the Court to supply a casus omissus. He also relied on the fact that in the 1961 Act the necessary provision has been enacted in s. 263 3 which also showed that in the absence of such provision in s. 33B of the 1922 Act the bar of sub-s. 2 b was applicable to every order of the Commissioner irrespective of whether it was made suo motu or in pursuance of a direction issued by the appellate authority. According to him since the bar of limitation companytained in sub-s. 2 b of s. 33B always operated for the benefit of the assessee as the same accorded finality to the assessment orders, the appellate powers of the Tribunal under sub-s. 4 must be regarded as having been curtailed to the extent that the Tribunal cannot remand the case to the Commissioner for making fresh assessment if by then the limitation has expired. Two principles of companystruction-one relating to casus omissus and the other in regard to reading the statute as a whole-appear to be well settled. In regard to the former the following statement of law appears in Maxwell on Interpretation of Statutes 12th Edn. at page 33 Omissions number to be inferred-It is a companyollary to the general rule of literal companystruction that numberhing is to be added to or taken from a statute unless there are adequate grounds to justify the inference that the legislature intended something which it omitted to express. Lord Mersey said It is a strong thing to read into an Act of Parliament words which are number there, and in the absence of clear necessity it is a wrong thing to do. We are number entitled, said Lords Loreburn L.C., to read words into an Act of Parliament unless clear reason for it is to be found within the four companyners of the Act itself. A case number provided for in a statute is number to be dealt with merely because there seems numbergood reason why it should have been omitted, and the omission in companysequence to have been unintentional. In regard to the latter principle the following statement of law appears in Maxwell at page 47 A statute is to be read as a whole-It was resolved in the case of Lincoln College 1595 3 Co. Rep. 58b, at p. 59b that the good expositor of an Act of Parliament should make companystruction on all the parts together, and number of one part only by itself. Every clause of a statute is to be companystrued with reference to the companytext and other clauses of the Act, so as, as far as possible, to make a companysistent enactment of the whole statute. Per Lord Davey in Canada Sugar Refining Co., Ltd. v. R 1898 AC 735 . In other words, under the first principle a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it found in the four companyners of the statute itself but at the same time a casus omissus should number be readily inferred and for that purpose all the parts of a statute or section must be companystrued together and every clause of a section should be companystrued with reference to the companytext and other clauses thereof so that the companystruction to be put on a particular provision makes a companysistent enactment of the whole statute. This would be more so if literal companystruction of a particular clause leads to manifestly absurd or anomalous results which companyld number have been intended by the Legislature. An intention to produce an unreasonable result, said Danckwerts L.J. in Artemiou v. Procopiou 1 is number to be imputed to a statute if there is some other companystruction available. Where to apply words literally would defeat the obvious intention of the legislation and produce a wholly unreasonable result we must do some violence to the words and so achieve that obvious intention and produce a rational companystruction, Per Lord Reid in Luke v. I.R.C.-1968 AC 557 where at p. 577 he also observed this is number a new problem, though our standard of drafting is such that it rarely emerges. In the light of these principles we will have to companystrue sub-s. 2 b with reference to the companytext and other clauses of s. 33B. Section 33B was introduced in the Indian Income-Tax Act, 1922 by the Income Tax and Business Profit Tax Amendment Act, 1948 with effect from March 30, 1948 and the object of introducing the same was obviously to companyfer revisional powers upon the Commissioner to companyrect the erroneous orders of an Income Tax Officer in so far as they were prejudicial to the interests of the revenue. The language of the sub-sec. 1 clearly suggests that the said power was companytemplated to be exercised suo motu by the Commissioner inasmuch as the opening words show that it was upto the Commissioner to call for and examine the record of any proceedings under the Act and on examination of the record if he were satisfied that any order passed by an Income Tax Officer was erroneous as being prejudicial to the interests of the revenue he companyld revise the same after giving an opportunity to the assessee of being heard. It is true that sub-s. 2 b thereof prescribed a period of limitation on his power by providing that numberorder shall be made under sub-s. 1 after the expiry of two years from the date of the order sought to be revised by the Commissioner and a literal companystruction of sub-s. 2 b also suggests that the bar of limitation imposed thereby was absolute in the sense that it applied to every kind of order to be made under sub-s. 1 and numberdistinction was made between a suo motu order and an order that might be made by him pursuant to a direction given by any appellate or other higher authority but the question is whether such a literal companystruction should be accorded to that provision ? As stated earlier sub-s. 3 companyferred on an assessee a right to prefer an appeal to the Appellate Tribunal against the Commissioners order made under sub-s. 1 and under sub-s. 4 the Tribunal had authority to deal with the impugned order of the Commissioner in such manner as it deemed fit in exercise of its appellate powers for instance, it companyld companyfirm the impugned order, it companyld annul that order, it companyld after vacating it remand the case back to the Commissioner for making a fresh assessment in the light of the observations made by it in its judgment or it companyld, after calling for a remand report, rectify the erroneous order of the Income Tax Officer. Further there was numberperiod prescribed within which an appeal against the impugned order of The Commissioner had to be disposed of by the Tribunal and in the numbermal companyrse on rare occasions such appeals would have been heard and disposed of before the expiry of two years from the date of the Income Tax Officers order which was regarded as erroneous by the Commissioner. More often than number such appeals would companye up for hearing after the expiry of the said period of two years-a fact fully known and within the companytemplation of the Legislature when it introduced the section in the Act in 1948. In these circumstances did the Legislature intend to attenuate or curtail the appellate powers which it companyferred on the Appellate Tribunal in very wide terms under sub-s. 4 by enacting sub-s. 2 b prescribing a time limit on the Commissioners power to revise an erroneous order of the Income Tax Officer when the Commissioner-was seeking to exercise the same number suo motu but in pursuance of or obedience to a direction from the Appellate authority ? According to the companystruction companytended for by the assesses and which found favour with the High Court the answer was in the affirmative because sub-s. 2 b , on its literal companystruction, was absolute. In our view such literal companystruction would lead to a manifest y absurd result, because in a given case, like the present one, where the appellate authority Tribunal has found a the Income Tax Officers order to be clearly erroneous as being prejudicial to the interests of the revenue and b the Commissioners order unsustainable as being in violation of principles of natural justice how should the appellate authority exercise its appellate powers ? obviously it companyld number withhold its hands and refuse to interfere with Commissioners order altogether for, that would amount to perpetuating the Commissioners erroneous order, number companyld it merely cancel or set aside the Commissioners wrong order without doing anything about the Income Tax Officers order, for. that would result in perpetuating the Income Tax Officers order which had been found to be manifestly erroneous as being prejudicial to the revenue. But such result would flow from the view taken by the High Court which has held that the Tribunal acted properly in vacating the Commissioners order but did number act properly in directing him to dispose of the proceedings afresh after giving opportunity to the assesses. Such manifestly absurd result companyld never have been intended by the Legislature. Moreover, it was fairly companyceded by the companynsel for the assesses before us that in exercise of its appellate powers it was open to the Tribunal itself to call for a remand report from either the Commissioner or the Income Tax Officer and rectify the Income Tax Officers erroneous order after giving opportunity to the assesses and in doing so numberquestion of limitation would arise. It was also number disputed by him that it was equally open to the Tribunal to set aside the Commissioners order and remand the case directly to the Income Tax Officer giving the requisite direction to rectify his erroneous order and thereupon the Income Tax Officer companyld carry out the Tribunals direction. for, admittedly, the bar of limitation under 1 sub-s. 2 b was only on the Commissioners paver to make an assessment afresh and number on the Income Tax Officer. If this be the companyrect position then it is gravely anomalous that the Tribunal should number be in a position to set aside the Commissioners order and remand the case back to the Commissioner for making a fresh assessment because in the meantime two years period of limitation has expired, for, it would mean that the Tribunal was prevented from achieving the desired effect directly through the Commissioner but it companyld do so indirectly through the Income Tax Officer. A literal companystruction placed on subs. 2 b would lead to such manifestly absurd and anomalous results, which, we do number think, were intended by the Legislature. These companysiderations companypel us to companystrue the words of sub-s 2 b as being applicable to suo motu orders of the Commissioner in revision and number to orders made by him pursuant to a direction or order passed by the Appellate Tribunal under sub-s. 4 or by any other higher authority. Such companystruction will be in companysonance with the principle that all parts of the section should be companystrued together and every clause thereof should be companystrued with reference to the companytext and other clauses thereof so that the companystruction put on that particular provision makes a companysistent enactment of the whole statute. Having regard to the above discussion we are clearly of opinion that the view taken by the Bombay High Court in Solankis case supra on the companystruction of sub-s. 2 b of s. 33B is companyrect and we approve of it. In Sabitri Devi Agrawallas case supra the Assam High Court took a companytrary view and held that under s. 33B 4 of the Act the Tribunal would number be justified in remanding the case to the Commissioner after the two years had expired from the date of the order sought to be revised. The decision seems to rest on three aspects a it being fiscal statute the same must be strictly companystrued, b the bar of limitation companytained in sub-s. 2 b was absolute and unqualified and companyered all types of orders and c that unlike the second proviso to s. 34 3 there was numberprovision for removing or relaxing the bar of limitation on the power of the Commissioner under s. 33B 2 b and that since s. 33B as well as s. 34 3 with second proviso had been introduced in the Act by the same Amending Act of 1948 there was a deliberate omission to make a provision removing of relaxing the oar of limitation in s. 33B and for such an omission the remedy lay with the Legislature and number with the Court. The Assam High Court also alluded to the fact that under the 1961 Act the Legislature had made a provision removing or relaxing the bar of limitation in s. 263 3 . As regards aspect b we have already dealt with it above. As regards aspect a it is well settled that the principle that the fiscal statute should be companystrued strictly is applicable only to taxing provisions such as a charging provision or a provision imposing penalty and number to those parts of the statute which companytain machinery provisions and by numberstretch companyld s. 33B be regarded as a charging provision. As regards aspect c we have already pointed out above that a casus omissus has number to be readily inferred and it companyld number be inferred from the mere fact that both ss. 33B and 34 3 together with the second proviso were inserted simultaneously in the Act by the same Amending Act of 1948 and that in the case of former a relaxing provision was number made as was made in the case of the latter provision, firstly because the two provisions operated in distinct fields and secondly it would be improper to do so without companyparing the various stages of amendments through which each set of these provisions had undergone since inception. The further aspect that the Legislature has in the 1961 Act made the requisite provision removing or relaxing the bar of limitation in s. 263 3 , is, in our view, number of much companysequence. Irrespective of the question whether the second proviso to s. 34 3 was enacted ex majore cautella or number over which companyflicting views obtain , it is clear to us that s. 263 3 of the 1961 Act must be regarded as an ex majore cautella provision. Admittedly, at the time when the said provision was enacted in the 1961 Act, the Bombay view held the field and, there was numberdecision to the companytrary of any other High Court. Obviously, therefore, the enactment of s. 263 3 must be regarded as declaratory of the law which was already prevailing and this position has been clarified in the Notes on Clauses of the Income Tax Bill 1961 where it has been stated that sub-cl. 3 of s. 263 was new and had been 19 added to get over the difficulty experienced in wrongly state caused by the Bombay High Courts decision in Solankis case supra . The enactment of an ex majore cautella provision in the 1961 Act would, therefore, be a legislative recognition of the legal position that obtained as a result of judicial pronouncement qua the 1922 Act. In our view, therefore. the Assam case was wrongly decided. Reference may number be made to a decision of this Court in Pooran Malls case, where in a similar situation arising under s. 132 of the Income Tax Act, 1961, a restricted companystruction was accorded by this Court to sub-s. 5 thereof which prescribed certain period of limitation. In that case pursuant to an authorisation issued under s. 132 1 of the 1961 Act searches were carried out on October 15 and 16, 1971 at the residence and business premises of P, an individual, and at certain office premises of the firms in which he was a partner, and jewellery, cash and account books were seized. There was also a search of two banks and a restraint order was made under s. 132 3 in respect of l 14 silver bars pledged with those banks on the ground that they were the property of P. On January 12, 1972, the Income Tax Officer passed a summary order under s. 132 5 on the basis that all the assets seized and 114 silver bars belonged to P. Thereupon, P Sons, one of the firms in which P was a partner, and P filed a writ petition in the High Court challenging the order dated January 12, 1972 and on April 6, 1977, on the basis of the companysent of the parties, the High Court quashed the order and permitted the department to make a fresh enquiry after giving an opportunity to the petitioner and pass a fresh order within two months. After a fresh enquiry the Income Tax Officer passed an order on June S, 1972. holding that the silver bars belonged to P, the individual, and number the firm, P and Sons. Thereupon, the firm and P again filed a writ petition challenging the second order. The High Court held that the Income Tax Officer had numberjurisdiction to pass that order beyond the period prescribed in s. 132 5 and set aside the order and directed the return of the 114 bars of silver. This Court held, inter alia, that the order made in pursuance of a direction given - under s. 132 12 or by a Court in writ proceedings, was number subject to the limitation prescribed under s. 132 5 . At page 394 this Court has observed thus Even if the period of time fixed under section 132 5 is held to be mandatory that was satisfied when the first order was made. Thereafter, if any direction is given under section 132 2 or by a Court in writ proceedings, as in this case, we do number think an order made in pursuance of such a direction would be subject to the limitations prescribed under A section 132 5 . Once the order has been made within ninety days the aggrieved person has got the right to approach the numberified authority under section 132 11 within thirty days and that authority can direct the Income Tax Officer to pass a fresh order. We cannot accept the companytention on behalf of the respondents that even such a fresh order should be passed within ninety days. It would make the subsections 11 and 12 of section 132 ridiculous and useless. It may be pointed out that in s. 132 there is numberprovision removing or relaxing the bar of limitation companytained in s. 132 5 enabling the Income Tax Officer to pass an order afresh pursuant to any direction issued to him by a higher authority under s. 132 12 and even the this Court took the view that the limitation prescribed under s. 132 5 will be applicable only to the initial order to be made by the Income Tax Officer and number to an order that would be made by him pursuant to a direction from the Board or numberified authority. The companycerned provisions were read together and such companystruction was put on sub-s. 5 of s. 132 as made a companysistent enactment of the whole statute. In the result, we are of opinion that the answer given by the High Court to the second aspect of the second question referred to it was clearly wrong and, in our view, the Tribunals order vacating the Commissioners order and directing the Commissioner to make assessment afresh after giving due opportunity to the respondent-assessee was proper. The appeal is accordingly allowed but in the circumstances, there will be numberorder as to companyts.

NAGAPPAN, J. Leave granted. CRMP No.12896 of 2011 seeking impleadment as a party is dismissed. This appeal is preferred against order dated June 29, 2010, passed by the High Court of Calcutta in CRR No.1978 of 2006 in FIR No.251 dated 10.11.2005 on the file of Amherst Street Police Station registered for the alleged offences under Section 420/120B IPC including the order dated 28.10.2005 in case No.C/949 of 2005 passed by the Additional Metropolitan Magistrate, Calcutta. Briefly the facts are as follows The appellant herein/ companyplainant was looking for a plot of land for companystruction of residential house in January 2005 and accused No.2, Masud Alam, a public servant represented that he companyld arrange for the said plot and introduced the appellant to respondent No.1/accused No.1 who stated that he had a plot of land and the appellant believing the representation made by the accused No.2 entered into an agreement for sale with respondent No.1 herein accused No.1 and also paid a sum of Rs.5,00,001/- in cash. The respondent No.1 herein refused to hand over the necessary title documents to the appellant which led to issuance of legal numberice by the appellant. All other methods to companypel respondent No.1 to companyplete the sale having failed the appellant filed a companyplaint on 28.10.2005 in the Court of Additional Chief Metropolitan Magistrate, Calcutta against respondent No.1 herein accused No.1 and accused No.2 for the offences punishable under Section 420, read with Section 120B of the IPC. The Additional Chief Metropolitan Magistrate forwarded the companyplaint to the officer in-charge of the Amherst Street Police Station for causing investigation under Section 156 3 of Criminal Procedure Code by treating the companyplaint as First Information Report. Respondent No.1 herein accused No.1 filed application under Section 482 of Cr.PC for quashing the said proceedings including the FIR. Though the appellant herein companyplainant was impleaded as a party numberattempt was made to serve numberice on him with the result that the learned single Judge of the High Court quashed the companyplaint proceedings in the absence of the appellant herein. Challenging the said order the appellant herein preferred appeal to this Court in Criminal Appeal No.852 of 2008 and this Court by judgment dated May 09, 2008 allowed the appeal and remitted the case to the High Court for a fresh decision in accordance with law. Thereafter the High Court heard both the parties and by impugned order dated June, 29, 2010 allowed the application under Section 482 Cr.P.C and quashed the companyplaint proceedings. Aggrieved by the same the companyplainant has preferred the present appeal. The learned companynsel for the appellant companytended that the companytents of the companyplaint would disclose the companymission of the companynizable offences alleged and the High Court at the preliminary stage would number be justified in embarking upon an inquiry and quashing the proceedings and hence the impugned order is liable to be set aside. Per companytra the learned companynsel for the Respondent No.1/accused No.1 companytended that the dispute involved in the companyplaint is of civil nature and numbere of the acts allegedly companymitted by the Respondent No.1 gave rise to any criminal liability as rightly held by the High Court. In support of the submission he relied on the following decisions of this Court in Hridaya Ranjan Prasad Verma and others Vs. State of Bihar and another 2000 4 SCC 168, Murari Lal Gupta Vs. Gopi Singh 2005 13 SCC 699 and Ram Biraji Devi and another Vs. Umesh Kumar Singh and another 2006 6 SCC 669. The legal position with regard to exercise of jurisdiction by the High Court for quashing the First Information Report is number well settled. It is number necessary for us to delve deep thereinto as the propositions of law have been stated by this Court in R. Kalyani Vs. Janak C. Mehta 2009 1 SCC 516 in the following terms Propositions of law which emerge from the said decisions are The High Court ordinarily would number exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless the allegations companytained therein, even if given face value and taken to be companyrect in their entirety, disclosed numbercognizable offence. For the said purpose the Court, save and except in very exceptional circumstances, would number look to any document relied upon by the defence. Such a power should be exercised very sparingly. If the allegations made in the FIR disclose companymission of an offence, the Court shall number go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus. If the allegation discloses a civil dispute, the same by itself may number be a ground to hold that the criminal proceedings should number be allowed to companytinue. Yet again in Mahesh Chaudhary Vs. State of Rajasthan 2009 4 SCC 443 this Court stated the law thus The principle providing for exercise of the power by a High Court under Section 482 of the Code of Criminal Procedure to quash a criminal proceeding is well known. The Court shall ordinarily exercise the said jurisdiction, inter alia, in the event the allegations companytained in the FIR or the companyplaint petition even if on face value are taken to be companyrect in their entirety, does number disclose companymission of an offence. In the present case the companyplaint does make averments so as to infer fraudulent or dishonest inducement having been made by Respondent No.1 herein and accused No.2 pursuant to which the appellant parted with money. It is the case of the appellant that Respondent No.2 does number have title over the property since the settlement deed was number a registered one and Respondent No.1 herein and accused No.2 had entered into criminal companyspiracy and they fraudulently induced the appellant to deliver a sum of Rs.5,00,001/- with numberintention to companyplete the sale deal. The averments in the companyplaint would prima facie make out a case for investigation by the authority. In the decisions relied on by the learned companynsel for the respondent No.1, cited supra, this Court on the facts therein held that the allegations in the companyplaint read as a whole prima facie did number disclose companymission of offences alleged and quashed the criminal proceedings. Those decisions do number apply to the fact situation of the present case.

MR. JUSTICE ROTH: This is the latest in a series of interim judgments delivered in a very substantial damages claim arising from a grave infringement of Article 101 TFEU (formerly Article 81 EC) which is now listed for trial to commence on 9th June. It concerns applications by the claimant for further information pursuant to CPR Part 18. Indeed, this is not the first time in this action that I have had to consider an application under Part 18: see my judgment of 4th April 2012 [2012] EWHC 869 (Ch), to which it will be necessary to refer. The case arises from the European Commission Decision in Case Comp/F38.899 - Gas Insulated Switchgear ("GIS") issued on 24th January 2007 ("the Decision"). The Decision was addressed to 20 companies and found that they had been engaged in an extensive and sophisticated cartel regarding the supply of GIS. GIS is heavy electrical equipment used to control energy flow in electricity grids and is therefore used as a major component for power substations. The Decision found that the cartel lasted, with variation in the involvement of some of the participants, over a period of some 16 years from 1988 to 2004. The Decision imposed fines in the total amount of over €750 million, the largest set of fines imposed as at that date in respect of a single cartel. Various addressees of the Decision appealed and as a result there was some amendment by the European courts to the duration of individual companies' participation, and in consequence to the level of fines, but as to the overall substance of the cartel, the appeals to the General Court, and thereafter to the European Court of Justice, have been dismissed. The most recent judgments of the ECJ were handed down on 10th April 2014. There are now 22 defendants to the claim. Some were addressees of the Decision; others are subsidiaries of addressees of the Decision. The relationship of the defendants is complicated by various transfers of companies and businesses, often with changes of name since both the period of the cartel and the Decision. The defendants now fall into four corporate groups, although that description requires some refinement. For present purposes it is sufficient to summarise their composition in broad terms. The position appears to be as follows: (1) the ABB Group: that comprises the 1st to 5th defendants. (2) Areva: the 10th defendant. (3) the Alstom Group: that comprises the 6th to 9th defendants, which throughout were part of Alstom -- and also the 11th defendant and 22nd and 23rd defendants, which were previously subsidiaries of Areva and are referred to as the Alstom Grid companies. Moreover, the GIS business of GEC became part of Alstom either during or after the cartel period. (4) the Siemens Group: that comprises the Siemens companies which have been part of the Siemens Group throughout: the 13th, 16th, 18th and 21st defendants; and also companies which at the time or during the cartel period were wholly independent of Siemens and part of VA Tech Reyrolle Group: the 14th to 15th defendants, the 17th defendant and the 19th to 20th defendants. I shall refer to the first group as "Siemens", to the second group as "VA Tech/Reyrolle" and to all of them together as "the Siemens defendants". The claimant ("NGET") owns and maintains the high voltage electricity system in England and Wales and operates the system across Great Britain. It alleges that it suffered substantial losses by reason of overcharges resulting from the illegal cartel. The quantification of damages, as most recently calculated, amounts to well over £200 million, including interest. The Decision This is what is often referred to as a "follow-on claim", relying on the infringement in the Decision. It will be necessary to return to consider what that expression means, but it is relevant to refer to the findings in the Decision concerning the cartel as a whole and then more specifically the UK market in which all of NGET's activity is conducted. The Decision includes confidential redactions. By order of 17th May 2012, and pursuant to the ECJ judgment in Pfleiderer, this court ordered disclosure of some of the redacted parts of the Decision. At present, sight of those passages remains restricted to a confidentiality ring and I therefore do not quote from them directly, but they have been taken into account where relevant for the purpose of this judgment. The Decision found that the infringement covered at least the whole territory of the EEA. Paragraph 235 states that the undertakings subject to the proceedings: "agreed on allocating the worldwide GIS market (except for the USA, Canada and, for some time, Russian China) amongst all cartel members on the basis of quotas largely reflecting historic market shares and according to the following underlying principles". One of those principles concerned European "home countries". Paragraph 238 states: "…the European countries where the European cartel members had their stronghold (France, Germany, Austria, Switzerland, Sweden, Italy, United Kingdom) received an equivalent treatment (also considered as 'home countries'). For the same reasons, each of those territories was not reserved to all European companies in general but to the relevant 'home producers' ... Accordingly, the projects allocated within those territories were not reflected either in the joint European global quota or in the individual quotas of either global or European projects in [the specific cartel master agreements]". Further details regarding home countries is provided at paragraphs 133 to 134 of the Decision, and paragraph 138 gives the example of a violation of the agreement to respect home markets through activity by Siemens in the United Kingdom at a certain time. The confidential parts of the Decision evidence some other discussion regarding protection of the UK market, and that by nature of certain countries being home markets discussion about them would be at a more local level. A summary of the overall operation of the cartel is set out in paragraph 281: "The infringement showed throughout a consistent pattern of collusive contacts aimed at restricting competition: (a) the object of the infringement remained the same; (b) projects were notified, discussed, allocated; (c) contacts and meetings took place at both management and working level; (d) tenders were manipulated by organising bids and supporting tenders; (e) price competition was avoided for projects not suitable for allocation; (f) licensing of 'uncontrolled' outsiders was avoided; (g) confidential information was regularly exchanged; (h) compensation mechanisms were applied and retaliation mechanisms were put in place; (i) measures to conceal the cartel were used; (j) Japan and the European home countries were reserved, while projects one outside home countries were counted in the relevant quotas; and (k) the individuals and companies participating in the cartel showed a high degree of continuity". It is clear that the Decision found that the reservation of the United Kingdom as a home market was part of the overall cartel. That finding was upheld by the General Court after careful review of the evidence when challenged by Siemens on appeal: see case T-110/97, judgment of 3rd March 2011. However, there is relatively little detail in the Decision as to how the home market aspect of the cartel was implemented or operated. It was sufficient for the Commission's purpose to establish that this was part of the cartel and it was not necessary as part of that exercise to look into the detail. It is also clear that as a very sophisticated cartel operated by major international companies over a long period, the participants went to elaborate lengths to conceal and disguise their unlawful activities, using code words, secret meetings and the like: see paragraphs 170 to 172 of the Decision. The applications The Part 18 requests for further information on which the court has to rule are contested by the Alstom defendants and the Siemens defendants. The requests essentially fall into three broad parts: first, the claimant seeks details of the individuals involved in the operation of the cartel in the UK; second, it seeks explanation of certain specific documents and answers to targeted questions; third, it seeks a response to Annex A to the requests, first served on 31st January 2014 and then amended on 2nd April 2014. Annex A sets out NGET's best understanding, by reference to particular documents and witness statements, of how it says the cartel operated, for the most part, in the United Kingdom. As I indicated at the outset, this is not the first time that the issue has arisen of Part 18 requests seeking an explanation from the defendants as to how the cartel operated. As long ago as October 2011, NGET made applications pursuant to Part 18 for further information as against ABB and Siemens, albeit in more limited terms as disclosure was then at an early stage. No application was then made as against Alstom since at that time it was relying on the French blocking statute as preventing it from giving disclosure or information in these proceedings. I refer to part of the requests issued in 2011. Question 1(b) sought the names of the main individuals acting on behalf of the company regarding the implementation of the cartel in the United Kingdom. Question 4 included the following: "Please state, insofar as this is within the knowledge of the individuals still within your employment who took part in the cartel in the UK, how the 'home country' cartel arrangement in the UK was operated in the relevant period, by explaining and setting out ... (b) to which particular cartel members the supply to UK customers were reserved, and for which period and in what shares or proportions or amounts; (c) how these shares or proportions or amounts were calculated, based on different elements of GIS; (d) how the cartel arrangement in the UK was implemented to ensure that each relevant cartel member supplied no more than the shares or proportions or amounts allowed; (e) in particular (without prejudice to the foregoing) having regard to [a particular document that is then identified] and to the methodology referred to briefly in recital 165 of the Decision, what pricing or weighting formulae were used (and explain precisely how they were used) in order to value different elements of GIS, such as 400 KV bays or 132 KV bays, and to value GIS projects as a whole; (f) how the cartel arrangement in the UK was monitored to ensure that each relevant cartel member supplied no more than the share or proportions or amounts concerned and what 'compensation' arrangements were applied under the cartel rules". ABB and Siemens both strongly objected at that time to the application for an order to respond to the request to which I have referred. They did not resist the provision of a response to the request seeking names of the main individuals involved in the cartel as a whole and whether those individuals were still in their employment. Most of those names in any event are set out in a confidential annex to the Decision, of which I ordered disclosure. It is right to record that Alstom did not participate in that argument as no application was made against it. The competing submissions are summarised in my judgment of 4th April 2012: "68. Both ABB and Siemens refused to answer the other questions in the Part 18 Request. They both provided evidence from the partners in their respective solicitors that the requested information is not at present in the knowledge of their clients. That is explained on the basis that neither the amount by which the cartel may have raised prices nor the operation of the cartel in the United Kingdom was a focus of the Commission's investigation. Moreover, in Siemens' case, none of the relevant individuals are still in its employment, which explains its inability to provide any answer to Question 2. The solicitors to ABB and Siemens state that at this stage of the litigation, with no date yet set for witness statements, they have not yet conducted full interviews with all the potential witnesses and that in those circumstances, if they had to provide this information now it would be a burdensome exercise. 69. Moreover, Mr. Hoskins [counsel for ABB] and Ms. Demetriou [counsel for Siemens] submitted that it would be entirely inappropriate and premature to require the defendants to provide such information now. The defendants are entitled to set out their evidence on the matters in issue in their witness statements and the Part 18 procedure should not be used to force a defendant in adversarial litigation to provide what amounts to fragmentary witness evidence at the behest of the claimant at an early stage in the proceedings. 70. For NGET, Mr. Turner referred to the opaque nature of many of the pre-existing documents, as mentioned above. He submitted that disclosure had provided little information on the operation of the cartel in the United Kingdom or the effect which the participants thought the cartel was having on price. In the nature of cartels, discussion of the latter is likely to have occurred. He said that some three years since the litigation started, NGET has therefore made little progress in quantifying its damages. The defendants should by now have taken steps to gather this information and equality of arms means that they should provide it to the claimant so that the action could progress". After referring to CPR Part 18 and authority, I refused to make the orders sought, save as against Siemens in respect of the explanation of one document that originated from them. Essentially, I accepted the argument of counsel for ABB and Siemens that it would be premature and a disproportionate burden on them to require them to provide the requested information in advance of their service of witness statements: see paragraph 79 of the judgment. That is the background to the present application. The exchange of witness statements was subject to some delay and occurred only in November-December 2013. After digesting the witness statements from the defendants, NGET formed the view that they clearly did not address many of the relevant documents which appeared to indicate how the cartel may have operated in the United Kingdom, and so it served fresh requests on ABB, Siemens and on Alstom. The response by ABB, as subsequently clarified, gives rise to no issues and thus no application is pursued against ABB, although it will be necessary to explain how the request as regards Annex A will be addressed. However, the responses of the Siemens and Alstom defendants refused to answer, and strongly objected on principle, to many of the questions. It is necessary to address the objections of principle and then look at the detailed requests made. For the Siemens defendants, Mr. Brealey stresses that this is a follow-on claim in which, as previous judgments in the action have recorded, the only issues are causation and quantum. He says that not to minimise the complexity of those issues (and they could hardly be more complex than in the present action) but to emphasise that the only infringement of competition law relied on is that found by the Commission in the Decision. By contrast, he submits that what is being sought by way of NGET's Part 18 requests does not go to the infringement found by the Commission. He readily accepts that NGET would not be barred from claiming for a wider or different infringement, since this is an action in the High Court as, by contrast with the position in the Competition Appeal Tribunal where jurisdiction is strictly limited by the Competition Act 1998, s.47A. But any such wider claim would fall outside NGET's present pleading and so require permission to amend, and that at a very late stage in the proceedings. As regards VA Tech/Reyrolle, the position is that the Decision finds that under the cartel they were one of the companies to which the UK was reserved as a home market, but so also was GEC/Alstom. There is no finding that projects were allocated as between those two companies or groups within the United Kingdom. Such an arrangement, argues Mr. Brealey, would amount to a distinct infringement, which was not part of the Decision. As regards Siemens, there is no finding at all that it was a home producer in the UK. On the contrary, the Decision indicates that Siemens were supposed to keep out of the UK. Thus, Mr. Brealey submits that requests based on an assumption that there was an allocation of projects to Siemens, or that Siemens participated in anti-competitive arrangements concerning the UK projects, amounts to a wholly distinct set of allegations not based on the Decision. As I observed during the hearing of these applications, the proper interpretation of the Decision is a matter for final resolution at trial after full argument. Nonetheless, to address these submissions I think it is both appropriate and necessary to proceed on the basis of what I consider to be a strongly arguable case. Before doing so, I should make three preliminary observations. First, it is clear that this court, as a national court, cannot take a decision or make a finding that it is contrary to the decision of the Commission: Article 16 of Regulation 1/2003. Secondly, the expression "follow-on action" as used for present purposes is not a term of art. The High Court is not concerned with the difficulties that have been shown to arise under s.47A of the Competition Act and which will be swept away if the Consumer Rights Bill currently before Parliament becomes law. Thirdly, a Commission decision concerning a cartel is almost always concerned with establishing the infringement, and thus what cartel arrangements were entered into, by whom and over what period. It is not particularly concerned with an elaboration of the consequences. Therefore, it is unsurprising that much of the detail as regards the actual operation of the cartel is not the subject of findings in the Decision. That is particularly the case where the cartel was of the complexity, scale and scope of the GIS cartel. The UK market was only one of several home markets and the "home market" aspect in general was only one of several elements comprising this extensive cartel. That is the context in which discussion in the Decision, specifically of the operation of the cartel in the UK home market, is extremely brief. It follows, in my view, that any claim for loss caused in the UK by the cartel will therefore involve, as part of the determination of causation, an assessment of how the cartel found by the Commission operated in the UK. I accept Mr. Turner's submission that there is a fundamental distinction between, on the one hand, putting forward a case that is inconsistent with a Commission decision, which is not permitted, or, I would add, alleging some other infringement of competition law aside from the cartel that is the subject of the Decision; and, on the other hand, making allegations that are a development of the findings in the Decision as to how the cartel, which is the subject of the Decision, was implemented in practice, although the discussion of that aspect in the Decision is extremely brief. In my judgment, considering the Decision as a whole and in light of its surrounding circumstances, it is strongly arguable that the Decision found that the UK home market arrangement involved a sharing of the internal UK market by some form of allocation. I reach that view for several reasons. First, referring to exceptions of home market countries from the European producers' global quota used as one of the cartel mechanisms, the Decision states (at paragraph 119): "They also allowed for the preservation of prior arrangements in Europe among the European participants concerning GIS projects, where also so-called 'home countries' were reserved for one, sometimes two or three companies with a traditional stronghold therein. In principle, those projects were not subject to the notification and allocation mechanisms applicable between the Japanese and the European groups of cartel members but only to the notification and allocation mechanisms applicable amongst the European cartel members" [my emphasis]. On a fair reading, "those projects" in the second sentence appear to refer expressly to the GIS projects in home countries described in the previous sentence. That is also consistent with paragraph 126, which refers to the "specific allocation rules" operating in the territories excluded from the overall quotas; and paragraph 238, which refers to "projects allocated within those territories", a reference to the home countries. Secondly, this analysis is supported by the description of the cartel in a leniency statement submitted to the Commission by ABB, which is conveniently referred to by the General Court in its judgment dismissing the appeal brought by Siemens in Case T110/07, at paragraph 62: "Lastly, in its statement of 4th October 2005, ABB admitted the existence of a system of 'home countries' according to which, if there was only one producer in those countries, it was the sole owner of the projects and, if there were a number of producers, they shared the projects among themselves". Thirdly, the Commission is primarily concerned with arrangements having an effect on trade within the EEA. When assessing the gravity of the infringement, the Decision expressly relies on the participating undertakings' turnover across the whole of the EAA, including therefore the so-called home countries (see paragraph 478). Not only the UK but also Germany, France and Italy were home countries where the Decision records that the market was reserved to two or more home producers. It would be a major criticism of a Decision which found that European companies went to elaborate lengths to share between them most of the world markets, excluding only North America, if it failed to make clear that such potentially valuable markets within the EAA as the UK, Germany, France and Italy, were left free for open and unrestricted competition as between the handful of home producers in each case. I say that not simply by way of comment and inference. Another leniency application now disclosed in these proceedings indicates very specifically that this was certainly not the case for Italy. All this, in my view, points strongly to a reading of the Decision as finding that the cartel embraced arrangements within home markets. Accordingly, as regards VA Tech/Reyrolle, I do not consider that NGET are alleging a different infringement from that found by the Decision. The Enron judgments in the Court of Appeal, relied on by Mr. Brealey, are fundamentally different. Not only do they concern s.47A and, secondly, s.58 of the Competition Act, that have no application in this case, but the position there was that the claimant was seeking to advance a case that EWS had breached the Chapter II prohibition of the Competition Act, along with what was then Article 82 EC, by overcharging for coal haulage under a 1999 contract as regards flows to two power stations, and the April 2000 contract as regards closure to a third power station, whereas the Decision of the rail regulator being relied on found that the abuse committed by EWS comprised discriminatory and selective pricing practices in negotiations for new contracts in the latter half of 2000. On that basis, the court held that the alleged overcharging under those earlier contracts was not the infringement found in the regulator's Decision, and under s.47A the claimant was not entitled to argue that such an infringement might be inferred from the Decision. That judgment, in my view, is manifestly distinguishable. The second Enron judgment of the Court of Appeal, in my view, takes the matter no further, as I think Mr. Brealey in the end accepted. As regards Siemens, and the allegation that it was involved in the sharing of projects on the UK market, the position under the Decision is unclear. Mr. Brealey can point to paragraph 134, where Siemens is not included in the companies identified as being beneficiaries of the UK home market. Mr. Turner can point to passages which indicate that the Commission found that the identity of home market producers changed over time (see e.g. paragraphs 137 to 138). But I reject Mr. Brealey's submission that "NGET cannot make independent allegations which do not arise from the face of the Decision". As I have already observed, the allegation of further facts not set out in the Decision is almost inevitable in a follow-on action of this nature. The relevant question is whether the allegation that Siemens participated in discussions or arrangements regarding projects within the UK home market is part of NGET's pleaded case. In my judgment, it is. The last sentence of paragraph 14C of the re re re-amended particulars of claim expressly alleges that the Alstom Grid defendants by way of implementation of the cartel took part in discussion with Siemens and refrained from making bids so as to allow Siemens to secure orders with NGET. Paragraph 45A, which is to be read as referring to that sentence of paragraph 14C, expressly makes that allegation against, for example, the 16th defendant, Siemens PLC. Accordingly, no amendment to the pleading is, in my view, required. The objections put forward for the Alstom defendants by Mr. Morris are different. He submits that to permit a claimant to require a defendant to provide information of the nature sought here, in response to a Part 18 request that has to be verified by a statement of truth, is contrary to the adversarial system that is at the heart of English litigation. Indeed, he went so far as to say that it would "subvert" the adversarial system. It is fundamental that it is for the claimant to prove its case, and that principle applies as much to a cartel case as any other. Here, submitted Mr. Morris, NGET is effectively seeking evidence from the defendants. Just as the court cannot compel a defendant to call a particular witness, so it cannot require a defendant to provide information which a claimant believes may help it make its own case. I reject those submissions. This is an issue which was addressed in part in my judgment of April 2012, to which I referred at the outset, although I of course accept that Alstom is not bound by that judgment as it did not then participate in the argument since no application had been issued against it, for reasons I have explained. CPR Rule 18.1(1) states, in so far as material: "The court may at any time order a party to – (a) clarify any matter which is in dispute in the proceedings; or (b) give additional information in relation to any such matter, whether or not the matter is contained or referred to in a statement of case". PD 18, paragraph 1.2 provides: "A request should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or understand the case he has to meet" [my emphasis]. The expression in the rule that the information need not relate to a matter contained in a pleading is significant. A Part 18 request is not like the old request for particulars under the Rules of the Supreme Court. It is to be interpreted in the light of the overriding objective and is part of the more open approach to litigation which the CPR seeks to establish and promote. Information sought must of course relate to "any matter in dispute". But if it does, then the rule precisely covers a situation where there is potentially relevant information relating to that matter which is solely within the knowledge of one side. In modern litigation, it is not the position that a party can hold back on relevant information and leave its opponent to take a chance to see if it chooses to put forward a witness from whom that information might be elicited by way of cross-examination during trial. Indeed, if taken to its logical conclusion, Mr. Morris' submission would call into question the rules of disclosure whereby a party is obliged to search for and disclose material documents that assist its opponents case and not simply those which advance its own. The underlying principle for the purpose of Part 18 is, of course, no different, because this is a cartel damages case. But a Part 18 request must always be proportionate and necessary. The application of the principle will have regard to the nature of the particular case. In a cartel damages claim it is well recognised that there is a significant asymmetry of information as between the claimant and the defendants who are participants in the cartel: see the extract from the Commission Staff Working Paper accompanying its 2008 White Paper on damages, quoted at paragraph 40 of my April 2012 judgment, which I shall not repeat here. Although there has been wide-ranging documentary disclosure in this case, documents directly relating to the operation of the cartel inevitably are limited and those documents that do exist are frequently opaque and cryptic. Moreover, this was deliberate. As the Decision records, the participants in the cartel went to great lengths to try to conceal their unlawful activity. Of course, I held in my earlier judgment that it may well be (and here was) oppressive to require a party to answer requests well in advance of the preparation of witness statements. At paragraph 79 of that judgment, I said this: "My conclusion that to require answers to the other questions in the Part 18 Request is premature should not be misunderstood as indicating that I regard those questions as inappropriate. ABB and Siemens are now clearly on notice, if they were not before, that NGET regards those matters as very relevant. It will be for ABB and Siemens to determine, with their respective legal advisers, whether and how to deal with these matters in their witness evidence. If those matters are not addressed in that evidence, NGET may then wish to issue a fresh Part 18 Request that may include some or all of the unanswered questions in the Request currently before the court. Any opposition to provision of such information at that stage will require separate consideration". Although addressed specifically to ABB and Siemens, since they were the defendants then facing applications under Part 18, the observation will not have been lost on Alstom as well. NGET duly waited for the service of witness statements to see what they said. As I have mentioned, the defendants served their witness statements near the end of last year. The present requests arise from consideration of all the documents on disclosure and what those witness statements said. On that basis, requests were served by NGET on 31st January 2014. Some answers were given, leading to further and refined requests served on 2nd April 2014, and it is following the responses to those second requests that the present applications are made. I turn to the detail of the information sought and discuss at the end the position as regards Annex A to NGET's requests. First, as regards the Siemens defendants, I should emphasise at the outset that for this group of defendants it will be necessary in their answers to distinguish between information that applies to VA Tech/Reyrolle and information that applies to Siemens, as I have defined it. They were, as I understand it, entirely distinct at the time of the cartel and there are some differences also in the periods for which they participated in the cartel. Request 1(a) to (e) seeks identification of relevant individuals involved and what they did. Provided that the request is limited to the operation of the cartel as regards the UK, I think that is reasonable and proportionate to enable NGET to understand the disclosed documents. I have rejected earlier in this judgment the objections set out by Siemens to answering this request that were set out in its response of 14th April 2014. Accordingly, I strike out the words "more generally and/or" in the second sentence of Request 1(a). Subject to that qualification, the request should be answered, but I should make clear that "in relation to the UK" should not be taken to mean exclusively in relation to the UK. For example, if an individual took steps regarding home markets generally, then that would include steps regarding the UK, even if the UK was not expressly identified. Request 2 relates back to Request 2 in the request of 31st January 2014 and seeks further confirmation based on information that Siemens may have provided to the Commission for the purpose of its investigation of the cartel or which it may have seen in the course of the Commission's investigation. I think that is a reasonable and proportionate request. Requests 4(b) and 5 both arise from the response of Siemens to the 31st January 2014 request and are fundamental to understanding Siemens' case on the operation of the home market aspect of the cartel regarding the UK. That information will provide necessary clarification and elaboration of an important part of the dispute and they should be answered (and I interpose that Request 4(b), I think, should be read as cross-referring to Request 4(a)(ii) and not 3(a)(ii)). Secondly, as against Alstom, Request 1(a) seeks clarification of its earlier answer to the request of 31st January 2014 regarding the individuals involved regarding the cartel in the UK. As I was told that Request 1(b) is not resisted, I am not clear whether Request 1(a) is resisted but, in any event, it seems to me an entirely appropriate request. In the light of the French blocking statute, it is probably better for the Alstom defendants that both Requests 1(a) and (b) are covered by an order. Requests 2 to 3 ask whether, as regards the Alstom defendants, (a) bushings and, (b) gas insulated lines, were included within the scope of GIS for the purpose of the cartel. This information is clearly important for any calculation of the overcharge and is a degree of detail not found in the Decision. It is uniquely in the knowledge of the defendants and the Alstom defendants should answer it. Request 4 reads as follows: "Please set out the actions that were taken in the cartel by each of the individuals referred to in Alstom's response dated 5th March 2014 to Requests 1(a) and (b) of the 31st January RFI in relation to each period in which they took part". I was not addressed specifically on this by Mr. Morris, but even if limited to actions regarding the UK market, this seems to me a request going too far. The actions of a particular individual do not seem to me to be matters necessarily in dispute, nor is this, in my view, a proportionate request. The Alstom defendants do not have to answer it. Mr. Turner also added orally (and this was not objected to) a request that the Alstom defendants clarify answer 5(b) of the answers which they gave on 14th April 2014. This related to six contemporary documents which were obtained by the Commission from Alstom in the course of its investigation. NGET asked as regards each of those documents: "Please identify the recipients of the document and the undertaking on behalf of which they were acting at the time the document was received". For three of the six documents, the Alstom defendants responded as follows: "The Alstom defendants do not know who the recipients of the document were but understand that the document was shared between at least some of the European addressees of the Decision". That is, in my view, a rather cryptic response and so NGET now asks the Alstom defendants to set out the basis of their pleaded understanding and to identify specifically those European addressees of the Decision. I regard that as a targeted and proportionate question which is entirely reasonable. It should be answered. Annex A That leaves what has been referred to as "Annex A". That is the annex to NGET's requests that sets out, over some 20 pages, what NGET describes as "The claimant's understanding of the operation of the cartel in the UK based on its review of the documents disclosed". In fact, it appears that it also draws on some of the defendants' witness statements. In each of its requests under Part 18, NGET asked the ABB, Alstom and Siemens defendants to provide a "full and proper response" to the factual propositions in Annex A. I find Annex A very helpful as a statement of how NGET puts its case as best it can at this stage as to how the cartel operated in the UK market. But the proper place for that is not as an annex to a Part 18 request but, as I think Mr. Turner in the end accepted, by way of voluntary further and better particulars of NGET's pleading. If permission for such further particulars is required, I grant it. It is helpful and appropriate for everyone to have that now and not saved up for a skeleton argument. It should be verified by a statement of truth, obviously on the basis that this is the best understanding which NGET can currently reach. However, I will not grant permission for those particulars to include the final paragraph 33 which relates to North America. That does not fall within the scope of the heading of Annex A, which refers to the UK market. I do not consider that any anti-competitive arrangements regarding North America come within the scope of NGET's pleaded case and it is much too late to open up such an avenue of inquiry now. As I made clear in the course of the hearing, I do not think that a requirement to respond to Annex A should be by way of a Part 18 request. I do not accept Mr. Turner's argument that each paragraph could be the subject of a distinct request. Many of them are statements as to what NGET believes the position to have been. The claimant cannot by way of Part 18 request ask a defendant in effect, "Do you agree with my view that such and such happened?". However, once the annex stands as particulars of NGET's case, it is appropriate that each defendant should plead to it. As Mr. Hoskins for ABB very properly recognised, any response must satisfy CPR Rule 16.5. In particular, a defendant may respond with a non-admission only if it is unable to admit or deny an allegation, not because it is simply unwilling to do so. Given the proximity of trial and the fact that these requests to a great extent were served over three months ago, the information sought must clearly be provided quickly. I shall hear counsel as to the date or dates to be specified in the order which the court will make. _________

LITTTTTTJ J U D G M E N T THOMAS, J. Can a legal presumption be based on a factual presumption? The latter is discretionary whereas the former is companypulsory. Such a question arose in this appeal and in view of the importance of the issue a two-Judge Bench has referred this case to be heard by a larger bench. The legal presumption envisaged in Section 20 of the Prevention of Corruption Act 1988 for short the Act is that on proof of certain fact the companyrt shall presume certain other fact. When there is numberdirect evidence for establishing the primary fact the companyrt has to depend upon the process of inference drawn from other facts to reach the said primary fact. The crux of the question involved, therefore, is whether an inference thus made companyld be used as a premise for the companypulsory presumption envisaged in Section 20 of the Act. The aforesaid question arose from the following assortment of facts. Appellant was manager of a Milk JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ Chilling Centre attached to Andhra Pradesh Dairy Development Co-operative Federation. He is alleged to have received bribe money of Rs.500/- from a milk-transporting companytractor PW1-Satya Prasad . He was caught red handed on 20.4.1989 in a trap arranged by the officials of the Anti Corruption Bureau ACB . They charge-sheeted him before a Special Court for offences under Sections 7 and 13 2 read with Section 13 1 d of the Act. After trial the Special Judge companyvicted him and sentenced him to rigorous imprisonment for two years and a fine of Rs.2000/- under each of the above companynts. The High Court of Andhra Pradesh companyfirmed the companyviction but reduced the sentence of imprisonment to a period of one year. This appeal is in challenge of the said companyviction and sentence. A summary of the allegations made against the appellant are thess PW1-Satya Prasad was to get some amount from Andhra Pradesh Dairy Development Corporation for transporting milk to or from the Milk Chilling Centre at Luxettipet Adilabad district . He approached the appellant for taking prompt steps so as to enable him to get the money disbursed. But appellant demanded Rs.500/- for sending the recommendation in favour of payment of the amount due to PW1. As the appellant persisted with his demand PW1 yielded to the same, but before handing over the money to the appellant PW1 lodged a companyplaint Ex.P2 with the DSP of Anti Corruption Bureau. On the basis of the said companyplaint PW7 DSP registered Ex.P18 FIR and then made all arrangements for a trap to catch the companyrupt public servant red handed. On 24.4.1984 PW1 brought the currency numberes to the office of the ACB for making up the demanded bribe amount. The said currency numberes were treated with phenolphthalein powder by or at the direction of PW7 as preparation for the trap. PW1 and the already arranged witness PW2 together went to the house of the appellant by about numbern. When appellant asked whether the amount was brought PW1 handed over the phenolphthalein smeared currency numberes to the appellant. He accepted the amount and put the currency numberes in his pocket. Thereupon, a pre-scheduled signal was transmitted to the members of the ACB team who were waiting outside. They suddenly rushed to the place where the appellant was then standing, caught the appellant red-handed and the tainted currency numberes were recovered from his pocket. All the usual follow up steps were thereafter adopted by the ACB team and on companypletion of the investigation the case was chargesheeted against the appellant. It took four years thereafter for the Special Judge to companymence evidence taking for the prosecution. The said long interval, perhaps, helped the appellant as is reflected from the fact that PW1 and PW2 made a volte-face in the trial companyrt and they denied having paid any bribery to the appellant and also denied that appellant demanded the bribe amount. PW1 said, for the first time, that he acted at the behest of one Dr. Krishna Rao and went to the office of the appellant and did everything as directed by the said Krishna Rao. Both the witnesses were declared hostile by the Public Prosecutor and both were cross-examined in detail. After examining the remaining witnesses for prosecution the appellant was called upon to answer questions put to him under Section 313 of the Code of Criminal Procedure for short the Code . He then submitted a written statement in which he said that Dr. Krishna Rao bore grudge against him and that person orchestrated this false trap against him by employing PW1 and PW2. According to the appellant, the tainted currency numberes were forcibly stuffed into his pocket. He examined two witnesses on the defence side and both of them said that on the dates when the alleged demand was made by the appellant he was on tour at a different place. Both the trial companyrt and the High Court disbelieved the defence evidence in toto and found that PW1 and PW2 were won over by the appellant and that is why they turned against their own version recorded by the investigating officer and subsequently by a magistrate under Section 164 of the Code. The Special Judge ordered those two witnesses to be prosecuted for perjury and the said companyrse suggested by the trial judge found approval from the High Court also. In the appeal the High Court dealt with the companytention that it is number possible to draw any presumption against the delinquent public servant in the absence of direct evidence to show that the public servant demanded bribery and that the same was paid to him. Learned single judge of the High Court observed thus on that aspect It is true that there is numberdirect evidence in this case that the accused demanded and accepted the money. But the rest of the evidence and the circumstances are sufficient to establish that the accused had accepted the amount and that gives rise to a presumption under section 20 of the Prevention of Corruption Act that he accepted the same as illegal gratification, particularly so when the defence theory put forth is number accepted. Mr. L. Nageswara Rao, learned companynsel for the appellant, adopted a twin companytention. First is that the JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ presumption under Section 20 of the Act companyld be drawn only when the prosecution succeeded in establishing with direct evidence that the delinquent public servant accepted or obtained gratification. That premise cannot depend on an inference for affording foundation for the legal presumption envisaged in Section 20 of the Act, according to the learned companynsel. The second limb of his companytention is that it is number enough that some currency numberes were handed over to the public servant to make it acceptance of gratification. Prosecution has a further duty to prove that what was paid amounted to gratification, companytended the companynsel. In support of the first companytention, learned companynsel relied on the decision of a two judge bench of this companyrt in Sita Ram vs. State of Rajasthan 1975 2 SCC 227. It was held by the bench that on mere recovery of certain money from the person of an accused without the proof of its payment by or on behalf of some person to whom official favour was to be shown the presumption cannot arise. The said observation was made in the background of a finding made by the High Court in that case that the evidence of the witnesses was number reliable and particularly because so many jerks and jolts seem to have been given to the prosecution case by companytradictory and hostile statements of the witnesses that a good part of it had to be rejected by the High Court. That decision and the observation companyld thus companyfine to the facts of that case, and numberlegal principle for future application companyld be discerned therefrom. Learned companynsel then relied on another decision of a two judge bench of this companyrt in Suraj Mal vs. State Delhi Administration 1979 2 SCC 725 wherein the bench observed that in our opinion, mere recovery of money divorced from the circumstances under which it is paid is number sufficient to companyvict the accused when the substantive evidence in the case is number reliable. In that case also the said finding depended upon the veracity of the testimony of the witnesses. But the companytention raised by the learned companynsel in this case on the point companyvassed by him cannot find any support from the said decision either. While adverting to the first companytention of the learned companynsel we may reproduce Section 20 1 of the Act. That subsection is virtually the same as Section 4 1 of the predecessor Act of 1947. 20 1 Presumption where public servant accepts gratification other than legal remuneration. - 1 Where, in any trial of an offence punishable under section 7 or section 11 or clause a or clause b of sub-section 1 of section 13 it is proved that an accused person has accepted or obtained or has agreed to accept or attempted to obtain for himself, or for any other person, any gratification other than legal remuneration or any valuable thing from any person, it shall be presumed, unless the companytrary is proved, that he accepted or obtained or agreed to accept or attempted to obtain that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in section 7 or, as the case may be, without companysideration or for a companysideration which he knows to be inadequate. Before proceeding further, we may point out that the expressions may presume and shall presume are defined in Section 4 of the Evidence Act. The presumptions falling under the former category are companypendiously known as factual presumptions or discretionary presumptions and those falling under the latter as legal presumptions or companypulsory presumptions. When the expression shall be presumed is employed in Section 20 1 of the Act it must have the same import of companypulsion. When the sub-section deals with legal presumption it is to be understood as in terrorum i.e. in tone of a companymand that it has to be presumed that the accused accepted the gratification as a motive or reward for doing or forbearing to do any official act etc., if the companydition envisaged in the former part of the section is satisfied. The only companydition for drawing such a legal presumption under Section 20 is that during trial it should be proved that the accused has accepted or agreed to accept any gratification. The section does number say that the said companydition should be satisfied through direct evidence. Its only requirement is that it must be proved that the accused has accepted or agreed to accept gratification. Direct evidence is one of the modes through which a fact can be proved. But that is number the only mode envisaged in the Evidence Act. The word proof need be understood in the sense in which it is defined in the Evidence Act because proof depends upon the admissibility of evidence. A fact is said to be proved when, after companysidering the matters before it, the companyrt either believes it to exist, or companysider its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. This is the definition given for the word proved in the Evidence Act. What is required is production of such materials on which the companyrt can reasonably act to reach the supposition that a fact exists. Proof of the fact depends upon the degree of probability of its having existed. The standard required for reaching the supposition is that of a prudent man acting in any important matter companycerning him. Fletcher Moulton L.J. in Hawkins vs. Powells Tillery Steam Coal Company, Ltd. 1911 1 B. 988 observed like this Proof does number mean proof to rigid mathematical demonstration, because that is impossible it must mean such evidence as would induce a reasonable man to companye to a particular companyclusion. The said observation has stood the test of time and IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII can number be followed as the standard of proof. In reaching the companyclusion the companyrt can use the process of inferences to be drawn from facts produced or proved. Such inferences are akin to presumptions in law. Law gives absolute discretion to the companyrt to presume the existence of any fact which it thinks likely to have happened. In that process the companyrt may have regard to companymon companyrse of natural events, human companyduct, public or private business vis--vis the facts of the particular case. The discretion is clearly envisaged in Section 114 of the Evidence Act. Presumption is an inference of a certain fact drawn from other proved facts. While inferring the existence of a fact from another, the companyrt is only applying a process of intelligent reasoning which the mind of a prudent man would do under similar circumstances. Presumption is number the final companyclusion to be drawn from other facts. But it companyld as well be final if it remains undisturbed later. Presumption in Law of Evidence is a rule indicating the stage of shifting the burden of proof. From a certain fact or facts the companyrt can draw an inference and that would remain until such inference is either disproved or dispelled. For the purpose of reaching one companyclusion the companyrt can rely on a factual presumption. Unless the presumption is disproved or dispelled or rebutted, the companyrt can treat the presumption as tantamounting to proof. However, as a caution of prudence we have to observe that it may be unsafe to use that presumption to draw yet another discretionary presumption unless there is a statutory companypulsion. This Court has indicated so in Suresh Budharmal Kalani vs. State of Maharashtra 1998 7 SCC 337. A presumption can be drawn only from facts - and number from other presumptions by a process of probable and logical reasoning. Illustration a to Section 114 of the Evidence Act says that the companyrt may presume that a man who is in the possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession. That illustration can profitably be used in the present companytext as well when prosecution brought reliable materials that appellants pocket companytained phenolphthalein smeared currency numberes for Rs.500/- when he was searched by PW-7 DSP of the Anti Corruption Bureau. That by itself may number or need number necessarily lead to a presumption that he accepted that amount from somebody else because there is a possibility of somebody else either stuffing those currency numberes into his pocket or stealthily inserting the same therein. But the other circumstances which have been proved in this case and those preceding and succeeding the searching out of the tainted currency numberes, are relevant and useful to help the companyrt to draw a factual presumption that appellant had willingly received the currency numberes. PW-7 DSP said that PW-1 approached him on the previous day and lodged Ext.P-2 companyplaint stating that appellant was persistently demanding Rs.500/- from him. The currency numberes were actually prepared by PW-7 by smearing them with phenolphthalein powder. When appellant was caught red handed with those currency numberes he never demurred to PW-7 that those numberes were number received by him. In fact, the story that such currency numberes were stuffed into his pocket was companycocted by the appellant only after lapse of a period of 4 years and that too when appellant faced the trial in the companyrt. From those proved facts the companyrt can legitimately draw a presumption that appellant received or accepted the said currency numberes on his own volition. Of companyrse, the said presumption is number an inviolable one, as the appellant companyld rebut it either through cross-examination of the witnesses cited against him or by adducing reliable evidence. But if the appellant fails to disprove the presumption the same would stick and then it can be held by the companyrt that the prosecution has proved that appellant received the said a mount. In Raghubir Singh vs. State of Haryana 1974 4 SCC 560 V.R. Krishna Iyer, J, speaking for a three Judge Bench, observed that the very fact of an Assistant Station Master being in possession of the marked currency numberes against an allegation that he demanded and received that amount is res ipsa loquitur. In this companytext the decision of a two Judge Bench of this Court R.S. Sarkaria and O. Chinnappa Reddy, JJ in Hazari Lal vs. Delhi Delhi Administration 1980 2 SCC 390 can usefully be referred to. A police companystable was companyvicted under Section 5 2 of the Prevention of Corruption Act, 1947, on the allegation that he demanded and received Rs.60/- from one Sriram who was examined as PW-3 in that case. In the trial companyrt PW-3 resiled from his previous statement and was declared hostile by the prosecution. The official witnesses including PW-8 have spoken to the prosecution version. The companyrt found that phenolphthalein smeared currency numberes were recovered from the pocket of the police companystable. A companytention was raised in the said case that in the absence of direct evidence to show that the police companystable demanded or accepted bribery numberpresumption under Section 4 of the Act of 1947 companyld be drawn merely on the strength of recovery of the marked currency numberes from the said police companystable. Dealing with the said companytention Chinnappa Reddy, J. who spoke for the two Judge Bench observed as follows It is number necessary that the passing of money should be proved by direct evidence. It may also be proved by circumstantial evidence. The events which followed in quick succession in the present case lead to the only inference that the money was obtained by the accused from PW3. Under Section 114 of the Evidence Act the companyrt may presume the existence of any fact which it thinks likely to have happened, regard being had to the companymon companyrse of natural events, human companyduct and public and private business, in their relation to facts of the particular case. One of the illustrations to Section 114 of the Evidence Act is that the companyrt may presume that a person who is in possession of the stolen goods soon after the theft, is either the chief or has received the goods knowing them to be stolen, unless he can account for his possession. So too, in the f acts and circumstances of the present case the companyrt may presume that the accused who took out the currency numberes from his pocket and flung them across the wall had obtained them from PW3, who a few minutes earlier was shown to have been in possession of the numberes. Once we arrive at the finding that the accused had obtained the money from PW3, the presumption under Section 4 1 of the Prevention of Corruption Act is immediately attracted. The presumption is of companyrse rebuttable but in the present case there is numbermaterial to rebut the presumption. The accused was, therefore, rightly companyvicted by the companyrts below. The aforesaid observation is in companysonance with the line of approach which we have adopted number. We may say with great respect to the learned Judges of the two Judge Bench that the legal principle on this aspect has been companyrectly propounded therein. Regarding the second limb of the companytention advanced by Shri Nageshwar Rao, learned companynsel for the appellant that it was number gratification which the appellant has received we think it is number necessary to deal with the matter in detail because in a recent decision rendered by us the said aspect has been dealt with at length. Vide Madhukar Bhaskarrao Joshi vs. State of Maharashtra, JT 2000 supple.2 SC 458. The following statement made by us in the said decision would be the answer to the aforesaid companytention raised by the learned companynsel The premise to be established on the facts for drawing the presumption is that there was payment or acceptance of gratification. Once the said premise is established the inference to be drawn is that the said gratification was accepted as motive or reward for doing or forbearing to do any official act. So the word gratification need number be stretched to mean reward because reward is the outcome of the presumption which the companyrt has to draw on the factual premise that there was payment of gratification. This will again be fortified by looking at the companylocation of two expressions adjacent to each other like gratification or any valuable thing. If acceptance of any valuable thing can help to draw the presumption that it was accepted as motive or reward for the official act, the word gratification must be treated in the companytext to mean any payment for giving satisfaction to the public servant who received it. We, therefore, agree with the finding of the trial companyrt as well as the High Court that prosecution has proved that appellant has received gratification from PW1. In such a situation the companyrt is under a legal companypulsion to draw the legal presumption that such gratification was accepted as a reward for doing the public duty. Of companyrse, the appellant made a serious endeavour to rebut the said presumption through two modes. One is to make PW1 and PW2 speak to the version of the appellant and the other is by examining two witnesses on the defence side. True PW1 and PW2 obliged the appellant. The two defence witnesses gave evidence to the effect that the appellant was number present at the station on the date when the alleged demand was made by PW1.

Lord Justice Scott Baker: Paul Stellato appeals with the permission of the Divisional Court (Hallett L.J. and Jack J.) against their decision that as a prisoner recalled to prison after 4 April 2005 he was not entitled to unconditional release at the three quarter point of his sentence but remains, if released, subject to licence until the end of his sentence. The Divisional Court refused his application for judicial review. Facts. On 17 December 1998 the appellant was sentenced to a total of 10 years imprisonment for offences including arson with intent to endanger life and perverting the course of justice committed in June 1998. He had been in custody since 27 June 1998, so the period of 10 years expires on 26 June 2008. On 17 February 2005, at the two thirds point of his sentence, he was released, as was his entitlement, on licence. However, the very same day he was recalled to prison for breach of his licence. On 16 June 2005 he was again released on licence but on 1 August 2005 his licence was again revoked and on 11 August 2005 he was returned to custody. On 24 October 2005 the Parole Board issued a decision letter replacing an earlier decision letter dated 4 October 2005. It stated that he should be released on licence on his notional licence expiry date namely 27 December 2005, which was the three quarter point of his sentence. He was in fact released on 23 December because it is the practice, where a prisoner's release date falls on a Bank Holiday or a weekend, to release him on the last working day prior to it. The decision of the Parole Board was unsurprising because of a direction it had received under section 239(6) of the Criminal Justice Act 2003 ("the 2003 Act") that: "The Parole Board shall take into account the fact that prisoners who have been sentenced under the provisions of the Criminal Justice Act 1991 cannot be disadvantaged by the recall provisions of the Criminal Justice Act 2003." I shall turn in more detail to the legislation in a moment, but one of the major changes brought about by the 2003 Act was that henceforth a prisoner was entitled to release at the half way point in his sentence rather than two thirds, but he remained on licence for the whole of the remainder of his sentence. The appellant was returned to custody on 9 January 2006 following breach of his licence. It is his case that he had been released the previous month unconditionally as was his entitlement under the legislation; he was not subject to any licence and could not therefore be in breach. He remains in prison. The fundamental question on this appeal is whether the appellant's release following recall to prison after 4 April 2005 is governed by the 2003 Act or the Criminal Justice Act 1991 ("the 1991 Act"). If it is the latter, the appellant's release on licence became, as he contends, unconditional at the three quarter point of his sentence on 27 December 2005. If it is the former, he remains, or if free would have remained, on licence until the completion of his 10 year sentence which is not until 26 June 2008. The answer to this question turns on the true construction of Schedule 2 to the Criminal Justice Act 2003 (Commencement No.8 and Transitional and Savings Provisions) Order 2005 ("the 2005 Order"). And in particular paragraphs 19 and 23. The legislation. It is necessary to consider three statutory schemes relating to release of prisoners on licence. The first is to be found in part 2 of the 1991 Act, the second in part 4 of the Crime and Disorder Act 1998 ("the 1998 Act") and the third in Chapter 6 of Part 12 of the 2003 Act. The key features of the 1991 Act are: Definition of long-term prisoner s.33(5). Power of release at half way stage s.35(1). Duty to release at two thirds stage s.33(2). Unconditional release at three quarter stage s.33(3). Compassionate release s.36. Licence expiry at three quarter stage s.37(1). Revocation provisions s.39(1). Power of Court to order offender to serve rest of term s.40. Special provision for sex offenders. s.44. Accordingly, save where the sentencing court exercised its powers under section 44 at the time of sentence or where the offender committed a further imprisonable offence and the sentencing court exercised its powers under s.40 to return him to prison in respect of the original offence, the three quarter point marked the end of the period when the offender was subject to the coercive effects of the sentence. If an offender was detained at that point, he should have been released unconditionally. If he was not so detained, he ceased to be liable to recall or to any of the terms of the licence. A 10 year sentence was, for practical purposes, a 7 ½ year sentence. But the position changed with the 1998 Act which amended the 1991 Act in a number of respects. The key features are: Amendment to s.33(3) preserving entitlement to release at three quarter stage but making re-release subject to licence rather than unconditional, s.104 New provisions extending the scope of s.44. s.59 S.116 of the Powers of Criminal Courts (Sentencing) Act 2000 replaced s.40 of the 1991 Act giving the court power on a subsequent conviction to order an offender to serve the rest of the term. None of these amendments affected the appellant because they only applied to offenders whose offence was committed after 30 September 1998. The key features of the 2003 Act are: Duty to release fixed term prisoners on licence at half way stage in cases other than extended sentences, sentences of less than 12 months and intermittent custody orders s.244. Licence continues to end of sentence unless revoked s.249. Conditions of licence provided for s.250. Duty to comply s.252. Power of revocation and recall in Secretary of State s.254. Provisions for further release after recall s.256. S.116 of Powers of Criminal Courts (Sentencing) Act 2000 repealed   The 2003 Act received Royal Assent on 20 November 2003. Some provisions came into force on that date (s.336(1)), others four weeks later (s.336(2)). The rest come into force by orders under the enabling powers under ss.336(3) and 330(4)(b). This appeal is concerned with the 2005 Order which was made on 24 March 2005. Subject to paragraph 2(2) and Schedule 2, it brings into force Chapter 6 of Part 12 of the 2003 Act and repeals Part 2 of the 1991 Act, both as from 4 April 2005. Schedule 2 contains two paragraphs that are of importance to the present appeal. They are paragraphs 19 and 23. Paragraph 19 is the first in a group of paragraphs headed: "Savings for prisoners convicted of offences committed before 4 April 2005." It reads: "19. The coming into force of – (a) sections 244 (duty to release prisoners), 246 (power to release prisoners before required to do so), 248 (power to release on compassionate grounds), 249 (duration of licence) and 250 (licence conditions); (b) paragraph 8(2)(b) of Schedule 32 (Criminal Appeal Act 1968); (c) the repeal of sections 33, 33A to 38A, 40A to 44, and 46 to 47 and 51 of the 1991 Act; and (d) the repeal of sections 59 and 60, 99 and 100, 101, 103 to 105 and 121 of the Crime and Disorder Act 1998, is of no effect in relation to a prisoner serving a sentence of imprisonment imposed in respect of an offence committed before 4 April 2005. Paragraph 23 is headed: "Transitional Arrangements for recall after release." It reads: "23.- (1) Subject to sub-paragraphs (2) and (3), in relation to a prisoner who falls to be released under the provisions of Part 2 of the 1991 Act after 4 April 2005 – (a) the reference to release on licence in section 254(1) of the 2003 Act (recall of prisoners while on licence) shall be taken to include release on licence under those provisions; and (b) the reference in sections 37(1) and 44(3) and (4) of the 1991 Act to revocation under section 39 of that Act shall be treated as a reference to revocation under section 254 of the 2003 Act. (2) paragraph 12(1) and (2) of Schedule 9 of the Crime and Disorder Act 1988 shall continue to apply to the recall of prisoners whose sentence was committed before the commencement of section 103 of that Act. (3) the repeal of section 39 of the 1991 Act is of no effect in a case in which the Secretary of State has received a request for the recall of an offender from an officer of a local Probation Board before 4 April 2005." It is common ground that the clear intention behind these provisions is that the initial release and licence provisions for prisoners serving a sentence for offences committed before 4 April 2005 should not be affected by the 2003 Act. The benefit for prisoners sentenced under the 2003 Act of release having served half their sentence was not extended to this category of prisoner, but neither was the disadvantage of remaining subject to a licence (and hence recall) for the whole of the remainder of their sentence. This is consistent with the longstanding principle that existing prisoners should not be adversely affected by changes to the sentencing regime after their conviction. This is a principle to which Parliament has been loyal in successive Criminal Justice Acts. It is to be noted that on 22 January 1998 Lord Bingham of Cornhill C.J. issued a Practice Direction that defendants should be told on sentence the effect of the sentence. In the appellant's case that would have included: "After your release you will also be subject to supervision on licence until the end of three quarters of the total sentence" see [1998] 1 WLR 278. Accordingly, the initial release and licence provisions for prisoners serving a sentence for offences committed before 4 April 2005 remain governed by Part 2 of the 1991 Act, with the result that they are entitled to be considered for release from the point at which they have served half of their sentence (s.35(1)) until actual release on licence not later than at the two thirds stage (s.33(2)) and to unconditional release at the three quarter stage (save where they are convicted of a subsequent offence etc.) (s.33(3)). The conditions of any licence on which they are released are governed by ss.37(2) – (4) and the licence duration by s.37(1) (i.e. it expires at the three quarter stage subject to revocation.) The problem in this appeal is caused by paragraphs 19 and 23 of the 2005 Order. For the Secretary of State, Mr Pannick Q.C.'s argument is that although after 3 April 2005 the provisions in the 1991 Act apply to the release of a prisoner serving a sentence of imprisonment imposed in respect of an offence committed before 4 April 2005, nevertheless the provisions in the 2003 Act apply in relation to the recall of such prisoners once they have been released on licence. Once they have been recalled, the regime of the 2003 Act applies to their further treatment. Not so, submits Mr Starmer Q.C., who has appeared for the appellant. The key provision relied on by Mr Pannick, namely paragraph 23 of Schedule 2 to the 2005 Order is, submits Mr Starmer, aimed simply at ensuring that there is a single procedure for recall; it has no effect on the status of recalled and re-released prisoners during the final quarter of their sentence. In particular it does not result in such a prisoner being on licence and liable to recall. This court has already had cause to consider paragraph 23(1) in Buddington v Secretary of State for the Home Department [2006] EWCA Civ 280. The court there accepted that where an offender is released on licence after 3 April 2005, revocation of the licence is pursuant to the 2003 Act and not the 1991 Act. At paragraph 20 Sir Igor Judge P. said that paragraph 23 is concerned with the continuing and preserved duty of the Secretary of State to release prisoners after they have served a specified proportion of their sentence. When this duty arises the prisoner "falls to be released." Paragraph 23(1) should therefore be read as "is entitled to be released," or "is released." The President drew attention to two obvious drafting errors in Paragraph 23(2). First, the date of the Crime and Disorder Act is 1998 and not 1988 and second the reference to "prisoners whose sentence was committed" should be to offence rather than sentence. The Divisional Court in the present case found in favour of the Secretary of State. The result of this finding is that the appellant is one of a very small group of offenders sentenced under the 1991 Act who does not qualify for release on licence at the half way point of his sentence (because the 1991 Act regime applied) and yet finds himself subject to licence, and therefore to be recalled to prison for breach of it, for much longer than he previously was, solely because he was recalled after 3 April 2005. On the Secretary of State's argument it makes no difference whether his recall was justified; even if it was not and he was subsequently released by the Parole Board when the error was appreciated, the very fact of recall would have triggered the operation of the new regime and the extended licence provisions. The reasoning of the Divisional Court. Jack J.'s reasoning, with which Hallett L.J. agreed, was as follows: "19 The section on which the appellant, a recalled prisoner, must rely for his release at the three quarter point is section 33(3) of the 1991 Act. If it had been provided in paragraph 23(1)(b) that the reference in section 33(3) to recall under section 39 was to be read as a reference to recall under section 254 it would be clear that a 1991 Act prisoner who was recalled under section 254 was entitled to his release at the three quarter point. That omission is crucial. The substitution of references to section 39 was considered by the draftsman and that consideration has borne its fruit in paragraph 23(1)(b) of Schedule 2 to the Order and section 33(3) is not referred to. On the other hand, if it was the intention that section 33(3) was to be deprived of effect, it can be asked why the whole section was saved by paragraph 19(c). The omission of the subsection from the saving would have made the position clear. It would have been a direct indication of the intention. But clarity is not the hallmark of this drafting. Jack J. went on to pose the question: "If a 1991 Act prisoner is released on licence following recall under section 254, under what provisions are the conditions of his licence to be specified?" He continued: "Section 250 is the relevant section under the 2003 Act. It is one of the sections which by paragraph 19(a) do not apply to 1991 Act prisoners. The section under the 1991 Act is section 37, in particular subsections (4) to (6). The section is preserved for 1991 Act prisoners by paragraph 19(c). It is clear that a 1991 Act prisoner who is released under section 33(1) or section 35(1) – that is at the two thirds point or earlier - must have his conditions specified under that section." The judge then went on to say that the 1991 and 1998 Acts made no reference, at least expressly, to the possibility of a second release following recall, whereas section 254 does. He posed the question if further release occurs under what provisions are the conditions to be specified? The judge accepted that there was little if any argument on the matter but before us it has been accepted by both sides that s.37(1) is not limited to a single, or first, release on licence. The section does not become a spent force once a prisoner has been recalled. What the section means is that once a prisoner has been released on licence, whether on the first or subsequent occasion, except whilst the licence is revoked he remains on licence until the three quarter point of his sentence. It is in my view important and significant that s.37 is expressly preserved by paragraph 19 of Schedule 2 to the 2005 Order for 1991 Act prisoners. When s.37(1) uses the expression "subject to any revocation" it expressly refers to revocation under s.39(1) or (2). This in my judgment leads into an important point. The 2003 Acts made a significant change with regard to recall. Previously there were two routes to recall, one by the Secretary of State following recommendation by the Parole Board and the other utilised, when speed was of the essence, by the Secretary of State of his own volition. S.254 of the 2003 Act provides for a single procedure with the recall decision being taken by the Secretary of State and the Parole Board is only involved thereafter. Thus it is argued by Mr Starmer, and in my judgment with some considerable force, that paragraph 23(1)(b) of Schedule 2 to the 2005 Order is doing no more than making the necessary transitional arrangements to apply the new unified recall procedure to all recalled prisoners. It obviously makes sense not to have the old and new procedures running in parallel at the same time. Further, one would not expect to find a provision headed: "Transitional Arrangements for recall after release" to have the consequences contended for by Mr Pannick i.e. to make a recalled 1991 Act prisoner subject to licence for the last quarter of his sentence, when previously he was not, and, on Mr Starmer's argument, on close examination it does not. Jack J. expressed his conclusion in these terms: "23. The conclusion I have reached is that the (2005 Order) is to be construed to provide that once a prisoner has been recalled under section 254, if he is subsequently released prior to the expiry of his sentence either under section 254 or section 256, it is on licence in accordance with Chapter 6. I consider that the intention of the transitional provisions contained in the (2005 Order) is to impose the new regime once a recall takes place, which is in substitution for the regime provided by the previous legislation. The repeal of section 39 without saving points to that, though I accept that it is explicable as part of an intention not to have two parallel recall procedures. The intention is most clearly to be deduced from the omission to include section 33(3) in paragraph 23(1)(b) of Schedule 2. Section 249 (duration of licence) does not apply, but in the absence of provision for the determination of the licence it continues until the sentence itself expires." He thus recognised that s.249 does not apply to existing prisoners but in the absence of a provision for the determination of the licence concluded it continued until the end of the sentence. The Secretary of State did not, however, rely before us on this aspect of the Divisional Court's reasoning. The Secretary of State's argument. The Secretary of State's argument can be summarised thus: (1) Since s.33(3) of the 1991 Act is not referred to in paragraph 23(1)(b) of Schedule 2 to the 2005 Regulations it follows that the reference to recall under s.39(1) of the 1991 Act cannot be treated as being a reference to recall under section 254 of the 2003 Act. (2) If that is so, s.33(3) of the 1991 Act has no meaning because, except for paragraph 23(3) cases, recall under section 39(1) of the 1991 Act no longer exists. (3) Since s.33(3) of the 1991 has no meaning, it is to be treated as extinguished for recalled prisoners, not withstanding its express preservation under paragraph 19(c) for all prisoners serving a sentence for offences committed before 4 April 2005. (4) On its true construction, although it does not expressly say so, paragraph 19 does not apply to prisoners serving a sentence for an offence committed before 4 April 2005 once they are recalled. (5) Any recall and release under the provisions of ss.254 and 256 of the 2003 Act can only be "release on licence under this Chapter." Since s.33(3) no longer exists for recalled prisoners, that means a licence governed by section 249 of the 2003 Act (i.e. a licence remaining in force for the remainder of the prisoner's sentence). Mr Pannick points out that among the sections of the 2003 Act that do apply to prisoners serving a sentence imposed in respect of an offence committed before 4 April 2005 are s.254 (recall while on licence) and s.256 (further release after recall), whereas s.39 of the 1991 Act on the recall of prisoners released on licence is generally repealed. By paragraph 23(1)(a) of Schedule 2 to the 2005 Order references to s.39 in ss.37(1) and 44(3)(4) of the 1991 Act are to be treated as references to s.254 of the 2003 Act. And this applies even to prisoners serving sentences for pre 4 April 2005 offences. Thus, after 3 April 2005 the 1991 Act still applies to the release of a prisoner serving a sentence of imprisonment imposed before 4 April 2005. But, as from 4 April 2005, the provisions in the 2003 Act apply in relation to the recall of such prisoners once they have been released on licence (see Buddington). Once recalled, the regime of the 2003 Act applies to their further treatment. Mr Pannick argues that paragraph 23(1)(a) provides that the reference in s.254(1) of the 2003 Act to release on licence under this Chapter (i.e. Chapter 6 of the 2003 Act) is to be read as including release under Part 2 of the 1991 Act. S.254(1) refers to "any person who has been released on licence under this Chapter" and the recall provision in s.39 of the 1991 Act has been repealed. Accordingly, any prisoner recalled on or after 4 April 2005, even if previously released under the 1991 Act, falls within the recall provision in s.254(1). However, paragraph 23(1)(a) does not make the same provision in respect of the same wording ("release on licence") in s.254(4) or s.256(1) of the 2003 Act. The reason, he submits, is because any prisoner recalled after 3 April 2005, whether or not he was originally released under Part 2 of the 1991 Act, is thereafter further released under the provisions of Chapter 6 of the 2003 Act. Turning to paragraph 23(2)(b), he argues that this is designed to emphasise that revocation decisions are taken under s.254 of the 2003 Act even in relation to a prisoner serving a sentence of imprisonment imposed for an offence committed before 4 April 2005. Paragraph 23(3) expressly preserves s.39 for a specific situation, that is where the Secretary of State has been asked for the recall of an offender by a local Probation Board before 4 April 2005. This obviously makes sense in a very specific situation where the s.39 recall process has already started. So, submits Mr Pannick, the way the legislation worked in the present case was this. The purpose and effect of the transitional provisions is that when a prisoner is recalled to prison after 3 April 2005, even if his original offence was before that date, the provisions of the 2003 Act apply to that recall and to any subsequent release (leaving aside the one situation provided for in paragraph 23(3) of Schedule 2 to the 2005 Order). This is in contrast to release on licence for the first time after 3 April 2005 of prisoners whose offence was committed before 4 April 2005. They remain covered by the 1991 Act. Accordingly, when the appellant was recalled to prison on 1 August 2005 his licence was revoked under s.254 of the 2003 Act. His further release in December 2005 was under s.256 of the 2003 Act. S.254(4) applies and so the licence under which he was released was to continue (unless further revoked) until the end of the sentence (s.249). The licence was subject to conditions under s.250. The licence was lawfully revoked on 28 December 2005 under ss.245(1) and 254(6). The Secretary of State has referred the case to the Parole Board and the Board has power: (i) to direct immediate release (s.254(4)); (ii) to direct release at a future date (s.256(1)(a) or (iii) to direct a future review at a specified date (s.256(1)(b)). The appellant's argument. True it is that s.33(3) is not referred to in paragraph 23(2)(b) but it is not the only provision of the 1991 Act that governs the duration of licences for prisoners serving a sentence for offences committed before 4 April 2005. S.37(1) provides that such a licence remains in force only until the three quarter point of the sentence. Since, contrary to the analysis of the Divisional Court, s.37(1) applied to the appellant, his licence expired on 27 December 2005. S.37(1) was expressly preserved for prisoners serving a sentence for offences committed before 4 April 2005. Paragraph 19(a) expressly excludes the application of s.249 (new rules for duration of licence) to that category of prisoner. Further, paragraph 19(c) expressly provides that the repeal of s.37(1) is of no effect for this category of prisoner. It is a cornerstone of the Secretary of State's argument that the omission of s.33(3) of the 1991 Act from paragraph 23(1)(b) is highly significant. The omission is, on the face of it surprising, but so, if the Secretary of State is correct, is the preservation without qualification of ss.33(3) and 37(1) in paragraph 19. One might have expected this paragraph to have concluded with words to the effect: "except where he is recalled on or after that date under s.254 of the 2003 Act." Mr Starmer submits that the Secretary of State's construction is fundamentally at odds with the clear intention underpinning the savings provision for prisoners convicted of offences before 4 April 2005 (i.e. paragraph 19), namely that the release and licence provisions for these prisoners should remain governed by the 1991 Act. The target of paragraph 23, which is apparent from its heading, is transitional arrangements for recall after release. It is not directed to the substantive consequences for a prisoner on a subsequent re-release. The Secretary of State's directions to the Parole Board that prisoners sentenced under the provisions of the 1991 Act cannot be disadvantaged by the recall provisions of the 2003 Act reflect the intention underpinning the savings provisions. Whilst his directions cannot determine the true meaning of the legislation, they are completely inconsistent with the legislation having been drafted deliberately to achieve the construction contended for. They are, however, consistent with a drafting error and two others have already been identified in paragraph 23(2). The rationale underpinning paragraph 19 is reasonable and logical whereas to suggest that the release and licence provisions for prisoners serving a sentence for an offence committed before 4 April 2005 should remain governed by the 1991 Act before recall but not after recall is neither reasonable nor logical. As Mr Starmer points out, a recalled prisoner serving a sentence for an offence committed before 4 April 2005 would not have had the benefit of the early release provisions of the 2003 Act (the release at the mid point of the sentence) but would attract the burden of a licence until the very end of his sentence. Further, the 1991 Act including s.37(1) would apply for a prisoner recalled before 4 April 2005 (even where not immediately re-released) but a prisoner recalled after that date and re-released (even where the recall was unjustified) would remain on licence for the whole of the rest of his sentence. There is no reason why Parliament should single out a small group of 1991 Act prisoners and render them liable to licence (and consequently recall) for the last quarter of their sentence. Search as one may, it is not possible to find any other group of prisoners treated by the legislation in the same manner. It is interesting to note that paragraph 19 saves ss.34A and 38A of the 1991 Act. S.38A(1) is a recall provision applicable to prisoners released under s.34A(3). Once recalled s.34A(1) and (2) continue to govern release. This, it is submitted, cuts across the Secretary of State's argument that the 2003 Act and 2005 Order were intended to create one regime and not just one procedure for recalled prisoners. Finally, Mr Starmer makes what in my judgment is a most telling submission. It is that the Secretary of State's approach to construction conflicts with the principle in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586. He submits that in order to give paragraph 19 the effect contended for by the Secretary of State the provision has to be significantly re-written by reading words into it along the lines I have already mentioned, see para 26(4) and 34 supra. The principle in Inco is that the courts will only re-write a provision by reading words into it where it is clear about three matters (i) the intended purpose of the statute or provision in question (ii) that by inadvertence the draftsmen failed to give effect to that purpose in the provision in question and (iii) the substance of the provision Parliament would have used had the error in the Bill been noticed. In Inco Lord Nicholls of Birkenhead said at page 592c: "It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross's admirable opuscule, Statutory Interpretation, 3rd ed. (1995), pp. 93-105. He comments, at p. 103: "In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role." This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation." Approach to the solution. My starting point is that there is no obvious reason why Parliament should have sought to disadvantage this small group of prisoners. To do so would in any event involve running contrary to the long established principle that prisoners are not to be adversely affected by changes to the sentencing regime occurring after their conviction. It was, of course, open to Parliament to depart from this longstanding principle had it wished to do so, but I would have expected such a change to have been clearly and expressly stated rather than to have been brought about in a statutory instrument in a paragraph that contains two admitted drafting errors and whose heading gives the reader no clue of the change. Further, the Secretary of State's construction involves reading words into paragraph 19 that are not there. I can see the logic of the path along which Mr Pannick has taken us through the maze of this tortuous legislation. However, as both members of the Divisional Court observed, clarity is not a word that any court would associate with these provisions. In my judgment Mr Pannick's submission cannot be accepted primarily for the reason that to do so would contravene the principle in Inco. Whilst the likely difficulties with the 2005 Order were in all probability caused by an error on the part of the draftsman, the intended purpose of the statute does not I think include putting the small group of prisoners to which the appellant belongs in a more disadvantageous position than those 1991 Act prisoners released before 4 April 2005, or indeed those released after 4 April 2005 who were not being released after a previous recall. It is the Secretary of State's argument that paragraph 19 should be construed as applying only to existing prisoners who have not been recalled after 4 April 2005. If that is correct then s.37(1) does not apply to recall cases. For the reasons I have already explained the Divisional Court was in error as to its understanding of the operation of s.37(1). The Secretary of State's submission is in my judgment not compatible with the ordinary meaning of the 2005 Order. It involves reading words into paragraph 19 along the lines I have already indicated (see para 34). In my view the title and content of paragraph 19 suggests it should not be so limited. In my judgment the Inco test is not met in the present case for reading words into paragraph 19. It may be that the Divisional Court's misapprehension that s.37(1) of the 1991 Act did not cover re-release after recall led them to accept the Secretary of State's submissions on the true construction of the 2005 Order. Be that as it may, for the reasons I have given Mr Pannick's argument cannot be accepted. The appellant was released unconditionally at the three quarter point of his sentence. He should not have been subject to any licence conditions thereafter. Consequently the contention that he was in breach of licence is unsustainable and he should not have been recalled to prison. In my judgment the appellant's release following his recall to prison was governed by the 1991 Act and not the 2003 Act. In my view this is to be concluded from paragraph 19 of Schedule 2 to the 2005 Order. Paragraph 23 was never intended to bite on the situation. True it is that the position would have been clearer had there been reference to s.33(3) of the 1991 Act in paragraph 23(1)(b) of the 2005 Order but I am able to reach the conclusion nonetheless. I would allow the appeal. Lord Justice Hughes: I agree. Lord Justice Longmore: I agree but since we are differing from a considered decision of the Divisional Court, I will put my reasons into my own words. The question in this appeal is whether a long-term offender sentenced for an offence committed before 30 September 1998[1] and thus, on the face of it, entitled to the benefit of the provisions for release on licence contained in the Criminal Justice Act 1991 ("the 1991 Act") continues to be so entitled, if his licence is revoked and he is recalled to prison after 4 April 2005 when the provisions of the Criminal Justice Act 2003 ("the 2003 Act") came into force. The reason why that is important is that under the 1991 Act the offender was entitled to be released on licence after he had served two-thirds of his sentence such licence expiring after he had served three-quarters of his sentence, so that after that time he was released unconditionally; there was a separate provision dealing with any future offences committed during the remainder of the sentence period. By contrast under the 2003 Act, although an offender is entitled to be released on licence after serving half his sentence, that licence (with its conditions) continues until the end of the sentence during which period he can be recalled to serve the remainder of his sentence. The appellant was initially released on 17 February 2005 after he had served two-thirds of his sentence but has had his licence revoked three times in all since that date. He was first recalled to prison on the same day as his release for failing to reside in the hostel designated by the probation service. That was before the 2003 Act came into effect on 4 April 2005. On 16 June 2005 he was re-released and it is common ground that any question of licence revocation and recall to prison was then to be governed by the 2003 Act. On 1 August his licence was revoked because he failed to comply with the hostel's curfew arrangements; he was returned to custody on 11 August but again applied for release on licence. The Parole Board considered that application on 3 October and decided that he should not be released at that time. The Board originally intended to review the matter in April 2006, but recorded the appellant's assertion that, since he was a 1991 Act prisoner, he would have to be released in any event at the three-quarter stage of his sentence viz 27 December. The Board decided that they had better take up that point with the Home Office and recorded in an amended decision of 24 October 2005 that the Home Office had confirmed that the appellant's view of the matter was correct. In the circumstances they decided to recommend release on 27 December 2005, being the notional licence expiry date. This may be thought to have conformed to the guidance already given in Parole Guidance Manual PSO 6000 of 31 March 2005 in which it was stated that prisoners sentenced under the 1991 Act "cannot be disadvantaged by the recall provisions" of the 2003 Act (Appendix 1 p. 36)." The appellant was in fact released on 23 December. By that time the Home Office appears to have changed its mind. On 9 January 2006 the Secretary of State asserted that the appellant was still on licence and was again in breach of that licence. He was accordingly returned to prison and there he remains, the Divisional Court having decided that the Secretary of State's second thoughts were correct. The resolution of the question depends on the Transitional Provisions contained in Schedule 2 to the Criminal Justice Act 2003 (Commencement No 8 and Transitional and Saving Provisions) Order 2005. Without those provisions, the provisions of the 2003 Act would no doubt have taken immediate effect, unless any point could have been taken pursuant to the Human Rights Act. As it is, paragraph 19 states that there are to be: "Savings for prisoners convicted of offences committed before 4th April 2005." These savings include the saving that certain provisions of the 2003 Act (including the duration of licence provisions (s. 249)) and the repeal of various provisions of the 1991 Act (including the provision for release after two-thirds of the sentence and the provision for licences to expire after three-quarters of the sentence have been served (ss. 33 and 37)) are to be of no effect in relation to a prisoner (such as the appellant) serving a sentence of imprisonment imposed in respect of an offence committed before 4 April 2005. On the face of it nothing could be much clearer than that. It would moreover accord with the principle, hitherto observed by Parliament, that serving prisoners should not be disadvantaged by subsequent changes of sentencing and licensing regimes; see the provisions of the Crime and Disorder Act 1998 which likewise preserve the 1991 Act regime for prisoners already sentenced. One would think that if Parliament's intention had been to disadvantage prisoners who had committed offences before the coming into force of the 2003 Act that would have been clear on the face of the Order. The argument to the contrary is based on the fact that it was undoubtedly the intention of Parliament to change the provisions in relation to recall of prisoners whether their offences were committed before or after 4 April 2005. The 1991 Act had provided for the revocation of licence and recall of the prisoner at the instigation of either the Parole Board or the Secretary of State but provided also that any recall by the Secretary of State should be referred to the Parole Board. This was changed by the 2003 Act to provide for revocation and recall by the Secretary of State alone, albeit with an obligation to refer the matter to the Parole Board. No doubt this was because it was thought better that the Parole Board should confine itself to adjudications rather than becoming involved in the essentially executive actions of initial revocation and recall. That this intention of Parliament was to apply immediately to all prisoners is made clear by the fact that the provision of the 2003 Act relating to recall (s. 254) and the repeal of the corresponding provision of the 1991 Act (section 39) were not numbered among the provisions which were not to come into force in paragraph 19 of Schedule 2 of the Order. It is then said, on behalf of the Secretary of State, that it inexorably follows from this state of affairs that, in respect of those prisoners whose licences are revoked and who are recalled to prison after 4 April 2005, the provisions as to the duration of their licence are to be governed by the 2003 Act rather than the 1991 Act. That does not seem to me to follow at all, especially since paragraph 19 expressly provides that the provisions of the 2003 Act which deal with licence duration and the repeal of the provisions of the 1991 Act dealing with licence duration are to be of no effect in relation to prisoners serving a sentence imposed in respect of an offence committed before 4th April 2005. For the Secretary of State's argument to be correct it would have to be made clear that, although paragraph 19 applied in general to those prisoners who had committed pre-4 April offences, it did not apply to those of such prisoners whose licences had been revoked and who had been recalled to prison after 4 April 2005. There is just no indication of that in the paragraph. The Divisional Court reached a different conclusion as a matter of construction of paragraph 23 of Schedule 2 of the Order headed "Transitional arrangements for recall after release". It has, of course, already been provided (albeit by inference) in paragraph 19 of the Schedule that recall arrangements are to be the same for 1991 Act prisoners as for 2003 Act prisoners. Paragraph 23 makes explicit what has already been implicit from paragraph 19 and provides in sub-paragraph 1(a) that, when section 254(1) of the 2003 Act refers to release on licence for recalled prisoners, such release on licence is to include release on licence under the provisions of the 1991 Act. This can hardly mean that the duration of the licence is to be changed when paragraph 19 of the Schedule expressly preserves the relevant provision of the 1991 Act relating to duration of licences. Sub-paragraph 1(b) of paragraph 23 then deals with the parallel concept of revocation of licences and provides that certain references to revocation in the 1991 Act are to be treated as revocations under section 254 of the 2003 Act. One of the references to revocation in the 1991 Act is contained in section 33(3) of that Act. That reference to revocation is not singled out as a revocation to be treated as revocation under section 254 of the 2003 Act. Since 33(3) is one of the sections of the 1991 Act which refers to the duration of the licence under that Act as being for three-quarters of the sentence, the Divisional Court decided that what I may call "the three-quarters provision" no longer applied to prisoners who were recalled after 4 April 2005. With respect I cannot agree. The fact that the particular reference to revocation in section 33(3) of the 1991 Act has not been identified as a reference which is to be treated as a reference to revocation under section 254 of the 2003 Act does not mean that for a (possibly substantial) number of prisoners the duration of licence provision in the 1991 Act has been swept aside. The whole thrust of the relevant provisions of Schedule 2 of the Order is that prisoners who committed offences before 4 April 2005 are not to be disadvantaged. If it was intended that 1991 Act prisoners who happened to have been recalled after 4 April 2005 should be subjected to the more onerous requirement that their licence was to extend to the end of their sentence, that would have been expressed with much greater clarity. In short the Home Office's first thoughts on being consulted by the Parole Board in October 2005 were correct and their second thoughts of January 2006 were not. For these reasons and the reasons given by Scott Baker LJ I would allow this appeal. One can only sympathise with Prison Governors, the Parole Board and indeed Home Office officials and judges in having to interpret these almost intractable provisions. Note 1    Not April 2005, by reason of s. 104 of the Crime and Disorder Act 1998    [Back]

CRIMINAL APPEAL NO. 527 OF 2007 Arising out of SLP Crl. No. 2047 of 2007 Dr. ARIJIT PASAYAT, J. Leave granted. Challenge in this appeal is to the order passed by a learned Single Judge of the Kerala High Court allowing the revision filed by the respondent number2 in the present appeal who was the petitioner before the High Court. He had questioned companyrectness of the order passed by the Inquiry Commissioner and Special Judge, Trichoor, by which the prayer for his impleadment as accused in terms of Section 319 of the Code of Criminal Procedure, 1973 in short the Code was accepted. By the said order the Trial Court had held that Section 319 of the Code overrides the provisions of Section 19 of the Prevention of Corruption Act, 1988 in short the Act and for exercise of power under the former provision, the only companyditions required to be fulfilled are set out in sub-section 4 of Section 319 itself. The High Court felt that the view was number sustainable in view of what has been stated by this Court in Dilawar Singh v. Parvinder Singh alias Iqbal Singh and Anr. 2005 12 SCC 709 . Accordingly, the order was set aside. In support of the appeal, learned companynsel submitted that the view taken by the High Court is number companyrect as the effect of sub-sections 3 and 4 of Section 19 of the Act has been lost sight of. There was numbermaterial to show that absence of sanction in any way occasioned failure of justice. It was also submitted that it is a case where numbersanction was necessary because the alleged act did number form part of any official duty. There is numberappearance on behalf of respondent number2 in spite of service of numberice. As has been rightly held by the High Court in view of what has been stated in Dilawar Singhs case supra , the Trial Court was number justified in holding that Section 319 of the Code has to get preference primacy over Section 19 of the Act, and that matter stands companycluded. But the other stand of Mr. Colin Gonsalves, learned companynsel, deserves companysideration. It appears that by order dated 22.3.1999 the Trial Court had impleaded two persons as accused number. 2 and 3. We are companycerned with accused number2 i.e. respondent number2. It appears from the order of the High Court that accused number3 has expired and so there is numberneed for companysidering his case. While impleading the persons as accused number. A2 and A3, the Trial Court had directed the Additional Legal Advisor to obtain sanction from the companypetent authority to prosecute them. When the matter was taken up on 12.4.1999, the Vigilance Legal Advisor took the stand that numbersanction was necessary. The investigating officer had submitted a report recommending prosecution of accused number. 2 and 3, but the sanctioning authority decided to sanction for prosecuting only A1, and names of A2 and A3 were deleted. During trial, material came to light showing alleged involvement of two other persons i.e. A2 and A3. In view of that situation, Section 319 of the Code was resorted to. The broader question as to whether sanction was at all necessary was number gone into. At this juncture it would be appropriate to take numbere of what has been stated by this Court in Central Bureau of Investigation v. V.K. Sehgal and Anr. 1999 8 SCC 501 . At para 10 it was stated, inter alia, as follows A Court of appeal or revision is debarred from reversing a finding or even an order of companyviction and sentence on account of any error or irregularity in the sanction for the prosecution, unless failure of justice had been occasioned on account of such error or irregularity. For determining whether want of valid sanction had in fact occasioned failure of justice the aforesaid Sub-section 2 enjoins on the Court a duty to companysider whether the accused had raised any objection on that score at the trial stage. Even if he had raised any such objection at the early stage it is hardly sufficient to companyclude that there was failure of justice. It has to be determined on the facts of each case. But an accused who did number raise it at the trial stage cannot possibly sustain such a plea made for the first time in the appellate Court. In Kalpnath Rai v. State through CBI 1997 8 SCC 732 , this Court has observed in paragraph 29 thus Sub-section 2 of Section 465 of the Code is number a carte blanche for rendering all trials vitiated on the ground of the irregularity of sanction if objection thereto was raised at the first instance itself. The sub-section only says that the Court shall have regard to the fact that objection has been raised at the earlier stage in the proceedings. It is only one of the companysiderations to be weighed but it does number mean that if objection was raised at the earlier stage, for that very reason the irregularity in the sanction would spoil the prosecution and transmute the proceedings into a void trial. In State by Police Inspector v. T. Venkatesh Murthy 2004 SCC 763 , it was observed as follows In the instant case neither the Trial Court number the High Court appear to have kept in view the requirements of sub-section 3 relating to question regarding failure of justice. Merely because there is any omission, error or irregularity in the matter of according sanction that does number affect the validity of the proceeding unless the companyrt records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same logic also applies to the appellate or revisional companyrt. The requirement of subsection 4 about raising the issue, at the earliest stage has number been also companysidered. Unfortunately the High Court by a practically number-reasoned order, companyfirmed the order passed by the learned trial judge. The orders are, therefore, indefensible. We set aside the said orders. It would be appropriate to require the trial Court to record findings in terms of clause b of sub-section 3 and sub-section 4 of Section 19. The effect of sub-sections 3 and 4 of Section 19 of the Act is of companysiderable significance as numbered in Parkash Singh Badal and Anr. v. State of Punjab and Ors. 2007 1 SCC 1 . In Sub-Section 3 the stress is on failure of justice and that too in the opinion of the Court. In sub-section 4 , the stress is on raising the plea at the appropriate time. Significantly, the failure of justice is relatable to error, omission or irregularity in the sanction. Therefore, mere error, omission or irregularity in sanction is companysidered fatal unless it has resulted in failure of justice or has been occasioned thereby. Section 19 1 is a matter of procedure and does number go to root of jurisdiction. Sub-section 3 c of Section 19 reduces the rigour of prohibition. In Section 6 2 of the Prevention of Corruption Act, 1947 hereinafter referred to as the Old Act companyresponding to Section 19 2 of the Act, question relates to doubt about authority to grant sanction and number whether sanction is necessary. Whether sanction is necessary or number has to be companysidered on the factual scenario. The question of sanction involves two aspects i.e. one relating to alleged lack of jurisdiction and the other relating to prejudice. It may be numbered that Section 197 of the Code and Section 19 of the Act operate in companyceptually different fields. In cases companyered under the Act, in respect of public servants the sanction is of automatic nature and thus factual aspects are of little or numberconsequence. Conversely, in a case relatable to Section 197 of the Code, the substratum and basic features of the case have to be companysidered to find out whether the alleged act has any nexus to the discharge of duties. Position is number so in case of Section 19 of the Act.

OPINION OF MR ADVOCATE GENERAL VERLOREN VAN THEMAAT DELIVERED ON 21 JANUARY 1982 ( ) Mr President, Members of the Court, 1. Introduction The Fromme case before us today displays a number of features which will not satisfy everyone's sense of justice. The court which made the reference for a preliminary ruling manifestly found in the claim for interest in question a number of factors repugnant to its own sense of justice. However, not every offence against one's sense of justice can be removed by means of Community law. At the hearing even the plaintiff in the main action admitted that the court which made the reference for a preliminary ruling drew too heavily on Community law in its questions and explanations of them. The point for consideration in cases of this kind, in which our sense of justice may be offended against, is the sharp distinction made between: (a) The breach of legal principles of national law on which this Court cannot rule in proceedings under Article 177 of the Treaty; (b) The breach of written rules and unwritten principles of Community law, including the restrictions which Community law places on the validity or substance of national legal rules. The Court's answers to the questions raised must cover this aspect in particular. Not only the plaintiff in the main action but also the Commission have urged the Court to provide precise answers to the questions raised so that the national court can on the basis of those answers come to a decision on all relevant questions of Community law which are raised ; (c) The aspects of the case which our legal sense finds unsatisfactory and which only the national or Community legislature can resolve in the future. The most important of the relevant facts before the Court are as follows: In 1970 the merchant Fromme received from the Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets, hereinafter referred to as “The Bundesanstalt”] a premium amounting to DM 128497.62. The premium was paid under Regulation (EEC) No 172/67 of the Council (Official Journal, English Special Edition 1967, p. 139) in which the basic rules for the denaturing scheme were laid down. After an inspection of books had disclosed that for the purpose of such denaturing Fromme had added less blue colorant than implementing Regulation (EEC) No 1403/69 of the Commission (Official Journal, English Special Edition 1969 (II), p. 345) required, a demand was made at the end of 1977 for the payment of the premium. It is not contested that the aim of that provision on denaturing — the denatured wheat was to be used solely for cattle-feed — was fulfilled in this case. Nevertheless, by decision of 8 December 1967 Fromme was required to repay the premium and it did so. The proceedings which led to the present reference to the Court do not therefore relate to the principal claim. In 1980, however, the Bundesanstalt also claimed interest on the wrongly-paid premium which, according to the plaintiff in the main action, owing to the time which had elapsed, amounts in total to 70 to 80% of the principal sum. The questions referred to this Court by the national court relate only to that claim for interest. The claim for interest is based on the second sentence of Article 11 (1) of the Order of the German Federal Minister of Agriculture of 8 August 1968 concerning premiums for the denaturing of cereals, as amended by Order of that Minister of 14 February 1973 concerning the adjustment of the rules on interest contained in orders implementing the common organizations of the markets. The legal basis for the last order is the Gesetz zur Duchführung der Gemeinsamen Marktorganisationen [Law on the Implementation of the Common Organization of the Markets] of 31 October 1972. The question for this Court in these proceedings is whether rules of this kind which apply in the Federal Republic of Germany are in conformity with Community law. In a case such as this one, in which premiums which have been wrongly paid are reclaimed, the abovementioned interest order provides for a fixed rate of interest to be charged in respect of the period from the date on which the premium was paid to the date on which it was repaid (approximately seven years in this case), the rate being 3% above the prevailing discount rate of the German Federal Bank and not less than 6.5%. The relevant German rules are in their turn based upon or must at any rate be examined in the light of Regulation (EEC) No 729/70 of the Council (Official Journal, English Special Edition 1970 (I), p. 218). In particular Article 8 of that regulation provides: “(1) The Member States in accordance with national provisions laid down by law, regulation or administrative action shall take the measures necessary to: — Satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly; — Prevent and deal with irregularities; — Recover sums lost as a result of irregularities or negligence. The Member States shall inform the Commission of the measures taken for those purposes and in particular of the state of the administrative and judicial procedures. (2) In the absence of total recovery, the financial consequences of irregularities or negligence shall be borne by the Community, with the exception of the consequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States. The sums recovered shall be paid to the paying authorities or bodies and deducted by them from the expenditure financed by the Fund. (3) The Council, acting by a qualified majority on a proposal from the Commission, shall lay down general rules for the application of this article.” Implementing measures of the kind referred to in Article 8 (3) have not yet been adopted, a fact which, from the point of view of effective, unified action against fraud in each Member State, is cenainly to be regretted. I shall return to (his point when I consider certain aspects of the rules on interest in question. Regulation (EEC) No 1403/69 of the Commission (Official Journal, English Special Edition, 1969 (II), p. 345) does however implement the Council regulation on matters other than those now at issue. The Verwaltungsgericht [Administrative Court] Frankfurt am Main stayed the main proceedings in order to refer the following questions to the Court: “1. Is it compatible with the Treaty establishing the European Economic Community for the Federal Republic of Germany to charge on undue payments of denaturing premiums interest calculated from the day of payment at 3% above the prevailing discount rate of the German Federal Bank but in any event of not less than 6.5%, without being authorized to do so by any provision of Community law? 2. If the answer to the foregoing is in the negative: Does Article 8 (1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the Common Agricultural Policy (Official Journal, English Special Edition 1970 (I), p. 218) confer any authority entitling the Federal Republic to charge interest of the kind mentioned in Questioni? 3. If the answer to the foregoing is in the negative: Is there any other provision or general principle of Community law from which such authority may be deduced?” 2. Analysis of the questions put to the Court In their written observations the plaintiff in the main action, the Federal Republic of Germany and the Commission are at one in agreeing that the questions raised by the national court and the legal reasoning behind them, which is set out in the Report for the Hearing, reveal a fundamental misunderstanding of the general relationship between Community law and national law in the field of the organization of the agricultural markets. In the present state of Community law it is not possible to sum up that general relationship by stating that national legislatures alone have power in this field in so far as they are expressly empowered by Community law in that respect. When answering the questions that misunderstanding will need to be borne in mind. Since the misunderstanding underlies each of the questions raised, the interpretative guidelines of relevance for the national court will have to be framed more or less independently of those questions. In this regard, however, all the questions of Community law which have emerged during these proceedings and which are relevant for the national court will have to be examined. To enable a useful answer to be given to the national court the questions may therefore be reframed as follows: “Is the power of a Member State to charge interest on reclaiming wrongly-paid denaturing premiums calculated from the date on which the premium was paid at a rate of 3o/o above the prevailing discount rate of the central bank concerned but in any event at not less than 6'/:o/c restricted by: (1) The Treaty establishing the European Economic Community; (2) Article 8(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970(1), p. 218) or (3) Other provisions or general principles of Community law?” I shall deal with those questions in the following order. Because of the misunderstanding which each question reveals on this point I shall first consider some fundamental principles of Community law concerning the implementation of the common agricultural policy by national authorities. Next I shall consider how far Article 8 of Regulation (EEC) No 729/70 leads to different conclusions in this regard. I shall then consider the two most important restrictions which, albeit with varying results for the purposes of this case, are inferred in all the written observations from the Court's case-law. Finally, with reference to the third question, I shall also consider whether other restrictions on national authorities arise from provisions or general principles of Community law other than those which figured in the Court's decision previously dealt with. In so doing I shall devote particular attention to the question of the applicability in this case of the principle of proportionality developed in other decisions of the Court. 3. Basic principles of Community law concerning the implementation of the common agricultural policy by national authorities The point is made in all the written observations that it appears from the way in which the questions are framed that the national court which referred them for a preliminary ruling wrongly assumed that Member States may charge interest, in cases of the reclaiming of wrongly-paid premiums, only if they are expressly authorized to do so by Community law. In very general terms it may be inferred from the first sentence of Article 5 of the EEC Treaty that Member States have the obligation to take appropriate measures, whether general or particular, to ensure the implementation of the regulations in the field of the common agricultural policy. To that extent authorization is not necessary. However, the Court had already made it clear in its judgment in Case 40/69 Bollmann [1970] ECR 69 and Case 74/69 Krohn [1970] ECR 451 that such national implementing measures may not adversely affect, alter or expand the scope of the Community regulation. In its judgment in Case 118/76 Balkan -Import-Export [1977] ECR 1177 the Court reaffirmed that restriction on national powers which may be considered to be an elaboration of the second paragraph of Article 5 of the EEC Treaty. As regards the present problems, the Court gave substance to that principle in Joined Cases 119 and 126/79 Lippische Hauptgenossenschafi [1980] ECR 1863 by ruling that as far as the grant of premiums is concerned it is the duty of the national authorities to require the repayment of any premium paid without justification (paragraph 7 of the decision). It may be inferred from subsequent passages of that judgment that that power of the Member States relates not only to the adoption of procedural measures for reclaiming of sums mistakenly paid, whilst the laying down of substantive conditions would be reserved to the Community. The Court merely stated that in such matters the national authorities must proceed with the same care and attention as they exercise in implementing corresponding national laws, in order to prevent any weakening of the effectiveness of Community law (paragraph 8 of the decision). In that connexion the laying down of limitation periods or timelimits expressly held to be permissible by Court. Referring to the principle i tained in Article 5 of the Treaty that national implementing measures must not undermine Community law, the Court stated in its judgment in Case 265/78 Ferwerda [1980] ECR 617 that it is for the Member States to determine the courts having jurisdiction and to fix the procedural rules but such rules may not be less favourable than those governing similar national claims and may in no case be laid down in such a way as to render it impossible in practice to exercise the rights which the national courts must protect (paragraph 10 of the decision). In paragraph 17 of its judgment in the Express Dairy Foods case (Case 130/79 [1980] ECR 1887) the Court held in the same line that it is for the Member States, and particularly for national courts, to settle ancillary questions, such as the payment of interest, relating to the problem of undue payments. However, besides imposing the requirement of effectiveness and prohibiting the scope of Community law from being adversely affected, altered or extended, the previous decisions of the Court also enunciated a prohibition of discrimination. This prohibition is clearly more specific in nature than the prohibition, contained in the second paragraph of Article 4C (3) of the EEC Treaty, of “any discrimination between producers or consumers within the Community”. That prohibition of discrimination which is designed to give legal protection to all traders in the Community certainly also applies to national measures implementing the common organization of the market. However in the decisions of the Court now under consideration the prohibition of discrimination was formulated in such a way as to assimilate implementing measures of Community law to other comparable provisions of national law. That was expressed by the Court in paragraph 12 of its judgment in Ferwerda (Case 265/78 [1980] ECR 617) in the following terms: “...the express reference to national laws is subject to the same limits as those affecting the implied reference, the need for which has been acknowledged in the absence of Community provisions, inasmuch as the application of national legislation must be effected in a nondiscriminatory manner having regard to the procedural rules relating to disputes of the same type, but purely national ...”. Earlier, in paragraph 8 of the same judgment, the Court had also stated that there must be no discrimination in respect of procedural and substantive conditions on which the authorities of the Member States may levy the said charges and, if necessary, recover financial benefits which were wrongly granted. In the Express Dairy Foods case (Case 130/79 [1980] ECR 1887) the Court likewise held in paragraph 12 that: “... the application of national legislation must be effected in a non-discriminatory manner having regard to the procedural rules relating to disputes of the same rype, but purely national...”. Finally, the Court held in Lippische Hauptgenossenschaft (Joined Cases 119 and 126/79 [1980] ECR 1863) that: “It is for the national authorities to assess a situation such as that which has been brought before the Verwaliungsgericht on the basis of the rules and principles of their national laws, provided that they do not make a distinction between situations governed by Community law and similar situations subject to the application of national law alone”. I therefore infer from the decisions of this Court first that the method of application of Community law adopted by Member States may not undermine the effectiveness of that law and may not therefore be less effective than the method of applying comparable national rules. That follows in particular from paragraph 8 of the Court's decision in the Lippische Hauptgenossenschaft cases. Secondly, it appears to me to follow from the passages which I later cited from the Ferwerda, Express Dairy Foods and Lippische Hauptgenossenschafi cases that individuals too, may not be treated less favourably than is the case where comparable, purely national provisions are applied. Since opinion is sharply divided on the exact meaning of the prohibition of discrimination in this case, I shall, when considering the third question put to the Court, also examine the extent to which further clarification is possible here. Furthermore, 1 shall then also return to the question of effectiveness which I shall consider in the light of the arguments submitted during the proceedings. 4. The rules governing the allocation of powers contained in Article 8 of Regulation (EEC) No 729/70 The abovementioned principles emerging from the Court's decisions apply of course only so far as Community law does not provide otherwise. I shall therefore now consider to what extent Article 8 of Regulation (EEC) No 729/70 enables conclusions to be drawn which constitute anything more than a refinement of the principles established so far. In Cases 146, 192 and 193/81 Baywa and Raiffeisenbankgenossenschafi, one of the questions put by the same national court as that which made the reference to the Court in this case is: “Does Article 8 of Regulation (EEC) No 729/70 ... require Member States in every case to recover unlawfully granted denaturing premiums or does the regulation allow Member States to leave individual cases of recovery to the discretion of the competent authorities, in accordance with national legal provisions?”. Since the hearing in those more recent cases had not yet taken place when this opinion was being prepared it is not possible to take account in this opinion of what emerges from that hearing. The judgment in this case may perhaps be able to do so, however. The question raised in regard to Article 8 in this case is based on the misunderstanding of the allocation of powers which I have already pointed out. The point is not whether Article 8 contains an enabling provision but whether it contains restrictions on the powers of Member States which depart from the abovementioned general principles which emerge from the decisions of the Court. In any event Article 8 provides further elaboration of the abovementioned general obligation contained in Article 5 of the EEC Treaty. According to Article 8 Member States must, in accordance with their national legislation, take inter alia“the measures necessary” to: “... ... Recover sums lost as a result of irregularities or negligence”. Article 8 (2) further provides inter alia that the sums recovered are to be paid to the paying authorities or bodies and deducted by them from the expenditure financed by the fund. The Council has not used the power provided for by Article 8 (3) to adopt general rules for the application of Article 8 in spite of a Commission proposal made on the very issue of the calculation of interest. Like the Commission I can find nothing in the wording of Article 8 which would exclude the power of Member States, as inferred from the decisions which I have just cited, to lay down rules for the payment of interest on recovery claims as well. The Commission also rightly observes that Regulation (EEC) No 283/72 of the Council of 7 February 1972 concerning irregularities and recovery which is also applicable in this case, does not contain any restrictive provisions either. Therefore it may be inferred from the decisions of the Court, in particular from the judgments in Case 26/74 Roquette [1976] ECR 677 and Case 131/77 Express Dairy Foods [1980] 1887, that in principle Member States have the power to adopt rules on the question of the payment of interest. But in this respect, too, the restrictions which I mentioned earlier, namely that such rules may not adversely affect, alter or expand the scope of the Community regulation, in this case Article 8 of Regulation (EEC) No 729/70, apply. I share the Commission's view that in this respect the plaintiff in the main action and the national court, in its judgment, are wrong to place a restrictive, literal interpretation on Article 8. According to their interpretation only the actual sums wrongly paid may be reclaimed. The Court has already held in Case 11/76 Netherlands v Commission [1979] ECR 245 that: “The text of Article 8 in the different language versions contains too many contradictory and ambiguous elements to provide an answer to the questions at issue. In order to interpret that provision, therefore, it is necessary to consider its context and the objective of the rules in question” (paragraph 6 of the decision). In the next paragraph the Court stated that: “Article 8 defines the principles in accordance with which the Community and the Member States are to organize measures to combat fraud and other irregularities in connexion with the operations financed by the EAGGF. It makes provision both for measures for the recovery of sums wrongly paid and for administrative and judicial procedures against the persons responsible.” In this regard the Commission is. in my view, right in its submission that the first consideration in assessing the national implementing measures is whether they are effective from the point of view of the aims of Article 8 (as defined by the Court). Finally, the plaintiff in the main action has stressed, in particular in the course of the hearing, the importance of the national court's finding that the interest claimed is not paid to the Community but accrues to the budget of the Federal Republic. It might well be asked whether that is in accordance with the provisions of Article 8 (2). Nevertheless, I share the view of the Federal Republic of Germany and the Commission that this point is not relevant to the relationship between the plaintiff in the main action and the Bundesanstalt. So far as that relationship is concerned only the first part of Article 8 (2) is relevant, and not in addition the relationship between the national implementing bodies and the Fund, which is governed by the last part of Article 8 (2). Article 8 does not throw any new light on the two general restrictions which Community law places on national implementing measures (the scope of Community law must not be affected and there must be no discrimination) and which are in principle acknowledged in all the written observations. To that extent Article 8 does not change the general principles contained in the case-law of the Court. As I indicated earlier, I shall now return to the question to what extent must those general principles be further defined in a situation such as the one in this case. When considering the third question of the Verwaltungsgericht, in the form in which I have recast it, I shall also examine separately the problem of the extent to which it may be inferred from Article 8 that the principle of proportionality expressed in other branches of the case-law of the Court must also be applied in this case and the meaning which might then be given to it. 5. Further definition, for the purposes of the situation in this case, of the general restrictions laid down in the case-law of the Court 5.1. With regard to the question whether the German implementing measures adversely affect, alter or expand the scope of Article 8 of Regulation (EEC) No 729/70, which is the provision applicable in this case, I now propose, in view of what I have already said on this subject, to examine the only outstanding question of relevance, namely whether any upper limit on the interest to be charged may be inferred from Article 8. At the hearing the representative of the Federal Republic of Germany denied this in no uncertain terms. He said that from the point of view of prevention the interest could not be high enough. The Commission confined itself to stating that the rules on interest must be effective (“wirksam”) and that, whichever form they take, they are indispensable if Article 8 is to be effectively applied. However, at the end of the hearing the Commission's representative agreed that the interest rate may not be fixed at an unrestrictedly high level, for example at 30%. In my view, too, an interest rate which differed too much from the general level of interest rates prevailing in the Member State concerned would entail the danger of widespread litigation and might cause traders to give up denaturing because of the excessive degree of risk. To that extent the rate of interest is thus limited, in my view, by the prohibition of discrimination on which I have yet to speak. The plaintiff in the main action took a different view, namely that interest may only be claimed where the recipient of the premium which was irregularly paid to him made some gain from it and that it is then necessary to take account of other specific circumstances in each individual case. For example, consideration should be given to the absence of intention or the trifling and purely formal nature of the irregularity in question. In the Balkan-Import-Export case the Court did in fact recognize as permissible a hardship provision of national law and, in the Ferwerda case, the application of a principle of legal certainty according to which payments received in good faith may not be reclaimed. In paragraph 10 of the judgment in the Lippische Hauptgenossenschaft cases the Court also stated with reference to the principle of limitation that Community law does not restrict the freedom of the national authorities competent in the matter to apply, when recovering benefits which have been mistakenly granted under the Community rules ... such limitation periods as may be drawn from the application of general principles recognized in the law of the country concerned. In view of the decisions in the Balkan and Ferwerda cases, the passage to which I have just referred could in my opinion perfectly well be given a more general meaning, and one not confined to the field of the limitation of actions. All those earlier cases, however, involved decisions declaring that national rules were permissible. Should German law have similar general principles, it might be possible to rule upon them by virtue of the principle of nondiscrimination. However, in the judgments in question those principles were not principles of Community law but principles of national law which were judged to be permissible. What remains to be examined in the present case, besides the significance to be attributed to the prohibition of discrimination in this instance, is the question whether the principle of proportionality developed by the Court in other branches of the Common Agricultural policy might also be relied upon in this case. As I have indicated, I shall also come back to that question in the following parts of this section of my opinion. 5.2. With regard to the principle of nondiscrimination I have drawn from the decisions of the Court the inference that, when Community law is applied and therefore when payments wrongly made are claimed back under Community law, individuals may not be treated either more favourably or less favourably than they normally are when purely national law is applied. It is certainly not the task of the Court to give further guidance to the national court on the question, which was debated during the proceedings, which other national rules should be used for the purpose of the comparison in this instance. That is a question which musi be answered in accordance with national law. All the same I feel that it is perfectly possible, by using the systematic approach developed by the Commission in its written and oral obsenations to provide further abstract explanation on the basis of the decisions of the Court First of all the Commission's view that the specific nature of Commumtv la and the special problems of control which arise in this field justify more stringent rules on the matter of interest strikes me as being at odds with the rule against discrimination the clearest formulation of which is to be found in the Court's judgments in the Express Dairy Foods and Lippische Hauptgenossenschaft cases. At the hearing the Commission's representative presented a more detailed account of its point of view by making four points. First, Community law would undoubtedly be opposed to being put in a worse position than national law applicable to (comparable) national cases. For the purposes of Community law, however, no objection could made if Community law were placed in a better position than comparable national rules on interest. As I have said, the first point of the Commission's argument seems to me to be incompatible with the judgments in the Express Dairy Foods and Lippische Hauptgenossenschaft cases. The supporting argument to the effect that harmonization with the laws of other Member States could thereby be promoted seems to me to be untenable as well. First of all, in one judgment concerning Article 92, namely in Joined Cases 6 and 11/69 (French rediscount rate) [1969] ECR 523, the Court rejected such harmonization of interest rates because it distons competition. Although in those cases it was a question of harmonizing downwards, the same principle applies to the adjustment of interest rates to higher rates prevailing in other Member States. Differences in specific interest rates which depart from the general differences in interest rates between the Member States lead to distortion of competition within the meaning of either Article 92 of the EEC Treaty (if they are adjusted downwards) or Article 1Ö1 (if they are adjusted upwards). Moreover, in so far as it is desired to harmonize rules on interest, it appears from the information given in the proceedings by the Federal Republic and the Commission concerning the absence of any clear general guidelines that the Member States are not in a position to harmonize them. Nor is it their task. Only the Council, by virtue of Article 8 (3) of the regulation in question would be in a position and have the power to harmonize them. I would also refer on that point to paragraph 12 of the decision in the Express Dairy Foods case. If the specific interest rates at issue in this case were harmonized the Council, too, would have to avoid specific distonions caused by the divergencies, varying from one Member State to another, from the general interest rate. The extent of a uniform increase in the normal national rate of interest, which might be deemed to be necessary in the case of demands for repayment of this kind, would be limited by the requirements of the Community interest. The second point made by the Commission at the hearing was that one reason for an objective difference in interest rates might be that the application of Community law is appreciably more difficult and creates greater problems of control than the implementation of national administrative law because it requires two bodies constituted under two different legal systems to operate in conjunction with one another. As to that point, I doubt first of all whether reclaiming denaturing premiums which have been paid contrary to Community law is in fact more difficult than reclaiming much higher subsidies which have been paid to industrial undertakings contrary- to Community or national law. Nevertheless the file on the case seems to show that in the Federal Republic of Germany less stringent interest rules apply to the reclaiming of irregular payments of subsidies of the last-mentioned kind. That apan, the notion that, for those institutional reasons, compliance with Community law should be enforced by means of more stringent penalties than are necessary for ensuring compliance with national economic law governing comparable matters appears to me to be unsound in principle and not conducive to the acceptance of Community law in the Member States. Again, in so far as substantive differences or special Community interests might require more stringent penalties for irregularities, that requirement would have to be expressed in an implementing regulation adopted pursuant to Article 8 (3). The third point made by the Commission at the hearing, namely that it would be permissible to adjust the rate of interest to one of the rates which Community law itself lays down in other fields and which vary from 8 to 12%, appears to me to be equally incompatible with the principles formulated in the decisions of the Court. Finally, the same holds true, so it seems to me, as regards the fourth factor discerned by the Commission in the prohibition of discrimination formulated in the Court's decisions, in so far as that factor adds something new to the other three. The Commission considers that a fixed or fictitious rate of'interest which is adopted in a special law enacted to implement Community law and is different from the rest of national law does not constitute discrimination. Therefore each and every one of the points which the Commission has submitted for the purpose of the Court's answer to the Verwaltungsgericht Frankfun strike me as being incompatible with the decisions of the Court. What is more. 1 feel that such precise formulations in the Court's answer are neither necessary nor desirable. Since, however, the decisions of the Court seem to make such questionable interpretations possible, I feel that some sharpening of the Court's previous formulations is necessary. The Court could provide this by making it clear that where sums irregularly paid to individuals are reclaimed and interest thereon is calculated, those individuals may not be treated either more favourably or less favourably than would be the case under provisions of national law and general principles of law applying to substantively comparable cases in the purely national legal framework. 5.3. As I indicated previously, I shall now examine the question whether the principle of proportionality evolved in the decisions of the Court in many branches of Community law may, as a general principle of Community law. also be relevant to the present issue. Besides having been developed in numerous judgments in the field of agricultural policy the principle has been developed in particular in the application of safeguard clauses. It is also regularly applied by the Commission in matters of competition policy conducted on the basis of Article 83 (3) (a) and Article 92 (3) of the EEC Treaty. In such cases it was always a matter of applying provisions of Community law the wording of which, or the interpretation placed on it by the Court in its decisions or by the Commission in its practice, contained the restriction that the action undertaken must be “required” (first subparagraph of Article 40 (3)), “indispensable” (Article 85 (3)) or “justified and necessary for the objective in view” (safeguard provisions of public policy). The opening words of Article 8 of Regulation (EEC) No 729/70 of the Council, which is applicable in this case, constitutes such a clause. I accordingly consider that the principle of proportionality, as developed in many decisions of the Court, also constitutes a general principle of Community law in this case which restricts the national application of that article by Member States. In my view it follows in particular from that principle of proportionality that there must be sufficient proportionality between the interest claimed and the advantage attained though the application of a hardship provision of national law or other means of mitigation applicable in similar kinds of cases might be justified where it is made apparent that the aim of the denaturing scheme (the use of the relevant quantity of common wheat for cattle-feed) has actually been attained in a specific case despite a minor infringement of the relevant Community provisions. Furthermore, since the principle of proportionality under consideration has not been discussed, at any rate not explicitly, in these proceedings, I do not propose that the Court should include such farreaching considerations in its answer. Perhaps, however, the hearing in Cases 146, 192 and 193/81 Baywa and Others will provide a greater degree of clarity in this respect so that it may well be possible for the Court to be more specific in its judgment in this case. In particular the discussion of the third question raised in those cases might throw more light on this point. 6. Proposals for answering the questions put to the Court I now come to my specific proposals for the answers to be given to the questions put to the Court in this case. The answers may run parallel, as indicated in the introduction to my opinion, with the three questions put to the Court and in my view provide the national court with ample guidelines for interpreting all questions of Community law which have emerged during the proceedings. I recall that I reframed the questions raised to read as follows: “Is the power of a Member State to charge interest on reclaiming wrongly-paid denaturing premiums calculated from the date on which the premium was paid at a rate of 3% above the prevailing discount rate of the central bank concerned but in any event at not less than 61/2% restricted by: (1) The Treaty establishing the European Economic Community; (2) Article 8(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970(1), p. 218) or (3) Other provisions or general principles of Community law?” I propose the following answers to the question as reformulated above: 1. Inasmuch as Community law does not contain any provisions by way of derogation or restrictions Member States not only have the power but are also required by virtue of the first sentence of Article 5 of the EEC Treaty to adopt all appropriate measures, whether general or particular, to ensure the fulfilment of the obligations arising out of that Treaty or resulting from the common organization of the agricultural markets. It results from the present general state of Community law that in principle this is also the case as regards rules on interest in the case of reclaiming wrongly-made payments such as those in question in this case. 2. Although the obligation resulting from the first sentence of Article 5 of the EEC Trearv itself is amplified by Article 8 of Regulation (EEC) No 729/70 (Official Journal, English Special Edition 1970 (I), p. 218) it is not restricted as regards rules on interest of the kind at issue in this case, at any rate so long as Article 8 (3) is not implemented and without prejudice to the principles of interpretation stated below. 3. A Member State's powers to adopt and apply rules on interest such as those at issue in this case are restricted in particular by the following general principles of Community law which emerge inter alia from the case-law of the Court of Justice: (a) National implementing measures may not adversely affect, alter or expand the scope of the Community regulations in question; (b) When sums wrongly received by individuals are reclaimed or the interest to be charged on such sums is calculated individuals may not be treated more favourably or less favourably than would be the case under national legislation and general principles of national law applicable to substantively comparable cases in the purely national legal field; (c) The principle of proportionality embodied in Community law and developed in Community legal practice. ( ) Translated trom the Dutch

1. LORD JUSTICE STANLEY BURNTON: The remaining issue before us is whether the court should subject the permission to appeal, which it has provisionally decided should be granted in this case, to a condition requiring all or part of the amount of the judgment debt entered under section 66 to be brought into court. There is an undoubted jurisdiction and discretion, which is accepted, and the Court of Appeal in the well-known case of Hammond Suddards v Agrichem International Holdings Limited set out the considerations relating to the exercise of that discretion. The reasons given in that case are set out essentially in paragraph 41 of the judgment. It is said on behalf of the respondent that those factors are equally applicable in this case and, therefore, a condition should be imposed and there is a compelling reason to do so. What is said essentially is the following. The appellant is effectively a company with one asset. That asset is the indebtedness due from its parent company, a company of very considerable size and means, resulting from the on-lending by the appellant of monies borrowed in Luxembourg by way of loan notes. Those loan notes are shortly repayable. On the face of it once execution can be obtained against the appellant, if there were no other considerations there could be enforcement by the liquidator of the subsidiary as against the parent of that indebtedness, although of course the company would be insolvent because an equal amount would be due on the loan notes. Since this award has been obtained and since judgment was given by Mr Justice Burton, there have been patently steps taken to avoid the satisfaction of the judgment debt. Those steps clearly have been taken, on the evidence, at the instance of the parent company, and by the parent company. What they consist of is the reduction of the indebtedness due from the parent to the subsidiary by the parent directly paying the holders of loan notes. That, assuming that there is a set-off, reduces the liability of the parent to the subsidiary by an equal amount. It is also apparent that the subsidiary, the appellant, has no intention of meeting the award or the judgment debt, having regard to the proceedings that have been taken and the way in which proceedings have been taken, not only in this jurisdiction but also elsewhere. In those circumstances it seems to me that the respondent is justified in saying that this is an attempt by the appellant, in pursuing this appeal, to have it both ways. If it succeeds in the appeal of course there will be no enforcement. If it fails in the appeal the position will be the same as at present, where there is an ongoing refusal to meet the judgment of the court. It is said on behalf of the appellant that the appeal would be stifled. Therefore, no order by imposition of a condition should be made and reference is made to article 6, quite apart from article 6 if it were right that the appeal would be stifled by imposition of a condition, it would be wrong to impose one. However, the stifling in this case would result not from any impecuniosity of the group or unavailability of the money within the group to pay the judgment debt. It would result from the decision of the parent not to put the subsidiary into funds to meet the judgment debt. In my judgment that is not the kind of stifling to which the authorities refer. The group, in particular the parent, is fully able to finance the subsidiary appellant to meet the judgment debt, but it chooses not to do so. In those circumstances it seems to me that the jurisdiction of the court as envisaged in Hammond Suddards should be exercised, and I would require the appellant, if it is to have the benefit of the discretion exercisable by the court in granting permission to appeal, to bring into court the amount of the judgment debt. LORD JUSTICE WARD: I agree. When granting permission to appeal we endeavour to follow the authorities and to give the proper meaning to the words, "A real prospect of success." Now it seems to me we must follow the authorities on this question of requiring the judgment sum to be brought if court as a condition of allowing that appeal to proceed. The leading authority is Hammond Suddards, although that case was different in that there the defendant may have been hiding assets and there is no suggestion that this appellant is, nonetheless, the observations of the court, in the last sentence of subparagraph 4 of paragraph 41, seems equally applicable: "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 outstanding orders for costs." Paragraph 6 which emphasises that orders of the court should be obeyed and here the judgment debt, which there is at the moment by virtue of Mr Justice Burton's order, has not been paid. I can see no reason not to follow Hammond Suddards and I too would therefore require as a condition of proceeding with the appeal that the arbitration award now confirmed by the judgment of Mr Justice Burton be paid into court.

COURT OF APPEAL FOR ONTARIO CITATION: 2363523 Ontario Inc. v. Nowack, 2016 ONCA 951 DATE: 20161216 DOCKET: C62035 Strathy C.J.O., LaForme and van Rensburg JJ.A. BETWEEN 2363523 Ontario Inc. Plaintiff (Respondent) and Stephen Nowack , Melissa Frishling, John Doe 1 to 10, Jane Doe 1 to 10, and Doe Corporations 1 to 10 Defendants ( Appellant ) J. Thomas Curry and Laura E. Robinson, for the appellant Norman Groot, for the respondent Heard: October 14, 2016 On appeal from the orders of Justice Sean F. Dunphy of the Superior Court of Justice, dated January 8, 2016 and April 18, 2016, with reasons reported at 2016 ONSC 2518. van Rensburg J.A.: A. Overview [1] The appellant, Steven Nowack, appeals an order dated January 8, 2016, finding him in contempt and an order dated April 18, 2016, finding he had not purged his contempt and sentencing him to 30 days in prison. The contempt proceedings arose out of the efforts of the respondent, 2363523 Ontario Inc. (“236”), to enforce a default judgment. Mr. Nowack contends that the motion judge:  failed to direct himself as to the required test for contempt and the associated burden of proof; erred in how he dealt with Mr. Nowack’s documents that had been included in the Crown brief in his criminal proceedings (referred to here as the Wagg issue); and failed to provide Mr. Nowack with certain procedural safeguards. [2] For the reasons that follow, I would dismiss the appeal. As I will explain, the motion judge did not err in principle or law in finding Mr. Nowack in contempt. The elements of contempt were clearly made out on the evidence beyond a reasonable doubt. The motion judge did not err in dealing with the Wagg issue, which did not excuse Mr. Nowack’s failure to produce documents and to perform the accounting required by the orders. Finally, there was no procedural unfairness: indeed, the procedure the motion judge adopted permitted Mr. Nowack, after 236 had made out a prima facie case of contempt, the full opportunity to explain himself. The motion judge also afforded Mr. Nowack the opportunity to purge his contempt before he was sentenced. B. Facts and decisions below [3] 236 obtained default judgment against Mr. Nowack on September 16, 2015 in an action for fraud, conversion, and breach of fiduciary duty (the “Judgment”). The Judgment, which was obtained in Mr. Nowack’s presence, ordered him to pay 236 $3,000,000 in damages and $22,000 in costs. Paragraph 6 also required Mr. Nowack, within 30 days, to provide 236 with an accounting: of any and all financial transactions completed by him using or in any way relating to [236’s] funds, including producing bank statements, FXCM statements, and transaction documents including copies of wire transfers, cheques or other forms of transaction, from any of his accounts into and from which [236’s] funds were deposited. [4] Mr. Nowack brought a motion to set aside the Judgment and was examined further to that motion on October 9, 2015. He ultimately abandoned the motion, but gave a number of undertakings during his examination. [5] In early November 2015, 236 brought a motion for contempt. 236 argued that Mr. Nowack had failed to comply with para. 6 of the Judgment and failed to answer the undertakings given at his examination. On November 26, 2015, when the contempt motion was initially returned before the motion judge, he ordered Mr. Nowack to attend at a judgment debtor examination on December 1, 2015, to bring with him the documents listed at para. 6 of the Judgment as described in 236’s notice of examination, and to comply with the undertakings given at his October 9 examination in advance of the December examination. This order was made on Mr. Nowack’s consent, and the motion judge seized himself of any further motions arising from his order. [6] Mr. Nowack was late for his examination on December 1, 2015, and he did not bring any documents with him or answer any of his undertakings. [7] On January 8, 2016, 236’s contempt motion was returned before the motion judge based on Mr. Nowack’s failure to comply with para. 6 of the Judgment and the requirements of the motion judge’s order of November 26, 2015. [8] Mr. Nowack attended the hearing with his criminal counsel, Anthony Moustacalis, who explained that Mr. Nowack was due in another courtroom that day in respect of his criminal charges. He referred briefly to Mr. Nowack’s position that certain documents he was required to produce may be part of the Crown’s brief and subject to a deemed undertaking not to be produced. He then withdrew. [9] Mr. Nowack then brought in civil counsel, David Sloan, and the contempt hearing proceeded. 236 relied on affidavit evidence attaching the orders in question and stating that Mr. Nowack had failed to comply. Mr. Nowack gave evidence under oath, led by Mr. Sloan. He stated that he was the accused in a criminal prosecution for fraud arising from the same facts giving rise to the civil proceeding commenced by 236. He stated that the only financial documents he had in his possession were those that had been seized by the police as part of the prosecution and returned to him as part of the Crown’s disclosure. He claimed that his criminal counsel (not Mr. Moustacalis) told him he was not permitted to produce such documents to third parties. This was his excuse for failing to produce documents to 236 in compliance with the underlying orders. He stated that he had provided authorizations to the plaintiffs in other judgment enforcement proceedings (the “Greenberg Litigation”), allowing them to seek transaction records from the relevant financial institutions. He then provided those authorizations to counsel for 236 during the hearing, stating that he did not have the money to obtain the records himself. [10] Mr. Nowack also provided the motion judge with a document purporting to be his answers to undertakings from the October 9 examination. In each case, the “answer” provided was a short refusal claiming that the question was not relevant. [11] The motion judge found Mr. Nowack in contempt and gave brief oral reasons. He rejected Mr. Nowack’s claim that he could not produce the financial documentation that he was ordered to produce because it had formed part of the Crown disclosure for his criminal prosecution. The motion judge stated that the procedure Mr. Nowack should have taken to comply with the underlying orders was to collect the documents within his power, possession, or control and to supply them to the court under seal if necessary to get a ruling. The motion judge observed that Mr. Nowack was not prevented from using the information he had to provide an accounting even if it referenced documents he was unable to produce. The motion judge went on to find that Mr. Nowack failed to produce any of the documents he was ordered to produce, including income tax returns, bank books, statements of assets and liabilities, and statements of employment and other sources of income, in a timely way. The motion judge concluded that the orders were “fairly straightforward and explicit”. He found they had not been complied with, that excuses and promises of future compliance were not good enough, and that the contempt alleged had been made out on the evidence. [12] The motion judge scheduled a sentencing hearing for February 8, 2016 to give Mr. Nowack time to purge his contempt. The day before, on February 7, Mr. Nowack delivered to 236 an electronic disc containing extensive financial information (which had been in his possession for several months and had already been provided to counsel in the Greenberg Litigation). He also provided a sworn declaration of his assets and income to show that he owned nothing and had no income of any kind. The sentencing hearing was adjourned to permit 236 to review the information Mr. Nowack supplied. [13] 236 examined Mr. Nowack again on March 23 and April 7, 2016. He gave a number of refusals at these examinations. [14] The sentencing hearing was returned before the motion judge on April 11, 2016. The motion judge assessed whether Mr. Nowack had made a bona fide effort to purge his contempt. After hearing submissions from counsel for 236 and Mr. Nowack, who was self-represented, the motion judge adjourned the proceeding until April 18, at which point he delivered written reasons finding Mr. Nowack had not purged his contempt and sentencing him to 30 days in prison. His reasons expanded upon the oral reasons for finding Mr. Nowack in contempt and provided reasons for his sentence. [15] While it was agreed that Mr. Nowack had purged his contempt regarding the undertakings given at his October 9, 2015 examination, the motion judge found that he had only partially complied with the orders requiring him to produce relevant financial information and to provide an accounting. The motion judge concluded that his efforts had been “belated and half-hearted”: at para. 46. The motion judge found that, while providing account authorizations to 236 was a mitigating factor regarding sentencing, Mr. Nowack had been ordered to perform an accounting himself. This obligation was therefore not discharged by telling 236 to complete an accounting instead. Moreover, the accounting Mr. Nowack claimed to have provided was “utterly inadequate”: at para. 59. [16] The motion judge concluded that incarceration was the only remedy that would adequately meet the sentencing objectives for civil contempt, namely coercion and punishment. A fine would have no impact on Mr. Nowack given his failure to pay outstanding judgments and costs awards. As he claimed to have no assets or income, a fine would be the equivalent of imposing no penalty at all. [17] Mr. Nowack had already served a 15-day sentence for contempt pursuant to an order of Morgan J. in the Greenberg Litigation. Nevertheless, Mr. Nowack had continued to resist disclosing his financial affairs. A sentence greater than 15 days was therefore required to compel Mr. Nowack to perform his obligations. In all of the circumstances, the motion judge concluded that a custodial sentence of 30 days was appropriate. He further ordered that, within 45 days of Mr. Nowack’s release, he was to perform an accounting and to produce all documents received through Crown disclosure in his criminal proceedings. Finally, the motion judge ordered Mr. Nowack to attend an examination and answer questions based on the financial records he produced. [18] The motion judge declined to stay the sentence to permit Mr. Nowack to appeal to this court. He was immediately incarcerated and served ten days of his sentence between April 18 and April 28, 2016. On April 28, this court stayed the warrant of committal pending this appeal. C. Issues [19] Mr. Nowack asserts that the motion judge erred in: 1. Failing to direct himself as to the elements of the legal test and the reasonable doubt standard of proof for civil contempt, and failing to properly apply these elements; 2. Requiring Mr. Nowack to produce documents that were included in the Crown’s brief in his criminal proceedings; and 3. Conducting the contempt proceeding in a manner that violated the principles of fundamental justice. (1) Did the Motion Judge Properly Consider and Apply the Test for Civil Contempt? [20] A party seeking to establish civil contempt must prove that: (a) the order alleged to have been breached states clearly and unequivocally what should and should not have been done; (b) the party alleged to have breached the order had actual knowledge of it; and (c) the party allegedly in breach intentionally did the act the order prohibits or intentionally failed to do the act the order compels: Carey v. Laiken , 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 33-35. A judge retains an overriding discretion to decline to make a contempt finding where the foregoing factors are met where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order: Carey v. Laiken , at para. 37. The burden on a party seeking a contempt order is to establish the above elements by proof beyond a reasonable doubt: Carey v. Laiken , at para. 32; Bell ExpressVu Limited Partnership v. Torroni , 2009 ONCA 85, 94 O.R. (3d) 614, at para. 29; Chiang (Re) , 2009 ONCA 3, 93 O.R. (3d) 483, at paras. 11 and 50. [21] Mr. Nowack contends that the motion judge erred in failing to specifically articulate this three-part test in his brief oral reasons. He says that, because of the serious consequences flowing from a finding of contempt and the onus of proof beyond a reasonable doubt, it was necessary for the motion judge to specifically advert to the test and the burden of proof in his reasons. [22] Further, Mr. Nowack says that the motion judge erred by failing to make the necessary findings on each of the three elements. In that regard, he relies on a passage in the transcript of the contempt hearing where the motion judge, after hearing submissions from the moving party, stated: THE COURT: Okay. So this is your contempt motion. MR. GROOT: Yes. THE COURT: We’re just – we’re pointing to the three aspects of the order that said do X, Y and Z. MR. GROOT: Yes. THE COURT: And you’re saying that he hasn’t done them. MR. GROOT: Yes. THE COURT: So, as far as that’s concerned, that’s your case. MR. GROOT: That is my case. THE COURT: So, do we need more? MR. GROOT: No. THE COURT: So let’s hear why he hasn’t done them and what he’s proposing to do about it. Mr. Nowack says that this excerpt demonstrates that the motion judge believed it was only necessary to find that he had violated the orders, and that the motion judge did not turn his mind to the first two elements of the test. [23] I would not give effect to these submissions. As Mr. Nowack’s counsel acknowledged in argument on appeal, there was no real issue as to the first two elements of the test – that the orders in question were clear and unambiguous and that Mr. Nowack had notice of what he was required to do. [24] Thus, what the motion judge had to decide was whether Mr. Nowack intentionally failed to do what the orders compelled. This requirement is distinct from proving whether an alleged contemnor intended to disobey the order in question. Contumacy, or lack thereof, is not an element of civil contempt: Carey v. Laiken , at para. 38. Additionally, it was for the motion judge to determine if it was appropriate to exercise his discretion to decline to make a contempt order in the circumstances: Carey v. Laiken , at para. 37. [25] In Torroni , this court held that the reasons for a contempt order need not analyze the application of the three-part test to the facts of the case in great detail, but that the judge “must at a minimum turn his or her mind to the test and apply the elements of the test properly”: at para. 23. This court set aside a finding of contempt because the motion judge had failed to consider whether the terms of the underlying order were clear and unequivocal and whether the record established a finding of contempt beyond a reasonable doubt: at paras. 27-29. The motion judge’s consideration of whether the alleged contemnor “deliberately and wilfully” disobeyed the order was not sufficient to ground a finding of contempt in the absence of considering the other elements of the test for civil contempt: at para. 30. [26] Mr. Nowack says that Torroni mandates that a judge deciding a contempt motion must explicitly set out the three elements for contempt as well as the burden of proof. I disagree. While a judge deciding a contempt motion must turn his or her mind to the test for contempt and apply the elements correctly, Torroni does not require the judge to set out the test expressly in his or her reasons. In Torroni , the orders at issue were not clear. They permitted the plaintiff to enter the premises of the defendant to access computer files. The parties engaged in an email debate as to what specific premises the orders referred to and where the computer access should take place: at para. 25. In the motion judge’s reasons finding contempt, there was no indication that he dealt with this ambiguity, or considered the part of the test for contempt requiring the order to be clear. [27] By contrast, in this case, there was no dispute about the clarity of the orders and what they required. Nor was there any dispute that their terms had come to Mr. Nowack’s attention. The only issue was whether Mr. Nowack had intentionally failed to perform the acts the orders compelled, or whether he had a reasonable explanation for his non-compliance. His counsel acknowledged that Mr. Nowack had no explanation or excuse for his failure to answer undertakings. As for the balance of what he was required to do, Mr. Nowack had the opportunity to explain his non-compliance and offered only the excuse (that he had made without success in the Greenberg Litigation) that he was unable to produce or use documents that had been seized and were part of the Crown disclosure in his criminal proceedings. [28] Reasons must be understood in context: R. v. R.E.M. , 2008 SCC 51, [2008] 3 S.C.R. 3. The motion judge gave brief oral reasons at the conclusion of the contempt hearing, as Mr. Nowack was due in another courtroom to deal with his criminal case. A reading of the oral reasons and the record of the contempt hearing demonstrates that the motion judge understood the test for contempt and that he applied the test correctly. Indeed, in his oral reasons, the motion judge stated: “I have a motion for contempt alleging non-compliance with some fairly straightforward and explicit orders.” At the contempt hearing, the motion judge also stated: “[Mr. Nowack] was ordered to [do] a number of not vague and general things, but very specific things.” Shortly thereafter, he stated: “Convicted means that I am being asked to find that [Mr. Nowack] was ordered to do X, Y and Z, knowing that he was ordered to do it, he didn’t do it, and so that’s the issue before me today.” [29] Further, the motion judge expanded upon his brief oral reasons for finding Mr. Nowack in contempt in his sentencing reasons. In paras. 18 and 21 he stated: Mr. Nowack’s breaches of the two orders…were clear. He had fully understood his obligations…There was no serious question of the non-compliance being inadvertent or due to a misunderstanding. I concluded [at the contempt hearing] that Mr. Nowack had knowingly and deliberately breached both orders and was in contempt. Later in his sentencing reasons, at para. 90, the motion judge stated: “A finding of guilt requires that the thing required to be done was clear and the breach was both knowing and deliberate beyond a reasonable doubt. In finding Mr. Nowack guilty, I have found all of that to be true.” [30] These additional reasons supplemented the brief oral reasons the motion judge initially provided and leave no doubt that he understood and correctly applied the test for contempt. [31] Mr. Nowack’s counsel also argued that the motion judge failed to consider Mr. Nowack’s partial compliance with the requirements of the orders in determining whether the third element – that Mr. Nowack had failed to comply – was met. There is no merit to this argument. At the time the contempt was found, Mr. Nowack had not complied with the specific paragraphs relied upon by 236 from the Judgment and the motion judge’s order of November 26, 2015. There was no question that Mr. Nowack had failed to answer undertakings, that no excuse was offered, and that his only explanation for failing to comply with the balance was his Wagg excuse. In these circumstances, there was nothing by way of partial compliance for the motion judge to assess. At the sentencing hearing, it was acknowledged that Mr. Nowack complied with some terms of the orders, and had therefore purged certain aspects of his contempt. This was taken into consideration in his sentence. (2) Did the Motion Judge Err in Requiring Mr. Nowack to Produce Documents from the Crown Brief? [32] In his appeal, Mr. Nowack reiterates the argument made at his contempt hearing that he was unable to comply with the orders because the documents were part of the Crown’s brief in his criminal proceedings. He says that documents he had received through Crown disclosure, even if they were his own documents that had been seized from him, ought not to have been ordered to be produced. He relies on this court’s decision in P.(D.) v. Wagg (2004), 71 O.R. (3d) 229 (C.A.), at para. 17, which outlines a three-step procedure to be followed before a litigant produces documents in his possession or control that form part of a Crown disclosure brief. [33] Mr. Nowack contends that the motion judge’s finding of contempt based on his failure to produce documents contained in a Crown brief was premised on a misapprehension of the obligations imposed on Mr. Nowack as a recipient of Crown disclosure. He says the motion judge erred in stating, in response to his Wagg concerns, that he ought to have produced the documents to the court under seal. Instead, he says it was incumbent on 236 to bring a motion to obtain the Crown’s consent to have the documents produced. [34] In argument on appeal, Mr. Nowack’s counsel acknowledged that it was possible for Mr. Nowack to have brought any Wagg motion that was required. He argued, however, that it was sufficient for Nowack to signal to 236 that he had documents that were part of the Crown brief. [35] I would not give effect to any of these arguments. The motion judge did not accept the bona fides of Mr. Nowack’s excuse for failing to comply with his obligations. He referred to the fact that Mr. Nowack had raised the same arguments in the Greenberg Litigation without success. The motion judge was correct to note that Mr. Nowack had been ordered to produce documents and to use documents to prepare an accounting, irrespective of their source. Mr. Nowack was not a litigant involved in a discovery process, but a judgment debtor who had been ordered to produce documents that were in his possession and to use the documents to prepare an accounting. As the motion judge noted, if Mr. Nowack had concerns, he could have provided the documents to the court under seal. In other words, it was incumbent on Mr. Nowack to do something himself to address the concern, assuming it was legitimate, rather than to simply raise the argument as an excuse for his non-compliance. Indeed, as Mr. Nowack notes in his factum, after he was found in contempt and sentenced, he promptly sought and obtained the Crown’s consent to release documents. [36] There was no error in the motion judge’s treatment of the Wagg issue, and I therefore would not give effect to this ground of appeal. (3) Were the Contempt Proceedings Consistent with the Principles of Fundamental Justice? [37] Section 7 of the Charter of Rights and Freedoms applies to civil contempt proceedings because they are penal in nature: R. v. Cohn (1984), 48 O.R. (2d) 63 (C.A.), at p. 76, leave to appeal refused, [1985] 1 S.C.R. vii. Contempt proceedings must therefore afford an alleged contemnor “all necessary safeguards”: Toronto Transit Commission v. Ryan (1998), 37 O.R. (3d) 266 (Ct. J. (Gen. Div.)), at p. 270; Torroni , at para. 20. The proceeding must preserve the principles of fundamental justice by safeguarding the right to be presumed innocent and the right to make full answer and defence: R. v. B.E.S.T. Plating Shoppe Ltd. and Siapas (1987), 59 O.R. (2d) 145 (C.A.), at p. 150. [38] Mr. Nowack says that the contempt proceedings were inconsistent with these principles because he was denied the presumption of innocence. [39] Mr. Nowack points to the transcript of the hearing, just before he stepped into the witness box, and says that the circumstances were “less than ideal” because the motion judge communicated an expectation he would testify. Mr. Nowack says that he was denied the right to remain silent. [40] By the time Mr. Nowack entered the witness box, the evidence 236 had put forward was sufficient to meet all three prongs of the test for contempt: there was compelling evidence of Mr. Nowack’s failure to comply with the orders that were clear and known to him. The motion judge was simply stating the obvious when he observed “let’s hear why he hasn’t done [these things] and what he’s proposing to do about it.” While Mr. Nowack had the right to remain silent, as a practical matter some explanation was required if he had any chance of raising a doubt on the question of his contempt. Mr. Nowack had legal counsel. He was not forced to testify, nor did he indicate any unwillingness to do so. Rather, he used the available opportunity, in response to his counsel’s questions, to attempt to explain his conduct. [41] Mr. Nowack also asserts that the motion judge had already determined Mr. Nowack’s non-compliance with the underlying orders in advance of the contempt proceeding. He points to the motion judge’s endorsement on November 26, 2015, adjourning the proceeding to January 8, 2015, in which he stated that Mr. Nowack had been unable to provide any evidence of his compliance with the underlying orders or any valid excuse for failing to attend a judgment debtor examination. To reinforce this conclusion, the motion judge made other comments at the January 8 hearing to the effect that Mr. Nowack had to purge the contempt that he already committed. [42] There was no prejudging of the issue of contempt in this case. Contempt proceedings not infrequently involve multiple attendances, as their purpose is to secure compliance with an order. While a motion judge must tread carefully when expressing views regarding a party’s contempt prior to having the benefit of evidence in a contempt hearing, the November 26 endorsement accurately reflected the absence of any evidence of Mr. Nowack’s compliance before the judge at that time. Indeed, the adjournment provided Mr. Nowack further time to demonstrate his compliance. The motion judge clearly began the contempt hearing with the premise that he had to be satisfied of Mr. Nowack’s contempt beyond a reasonable doubt, and he afforded him the full opportunity to explain his conduct. [43] Mr. Nowack also contends that the motion judge did not properly assess the relevance of the evidence that he attempted to adduce at his sentencing hearing. He argues that the contempt proceedings denied him the right to make full answer and defence. This right includes the right to submit or call evidence: GM Textiles Inc. v. Sidhu , 2016 ONSC 667, at para. 81. Mr. Nowack attempted to introduce emails exchanged between counsel for 236 and counsel for the plaintiffs in a related proceeding, and Mr. Nowack attempted to call the latter as a witness. He now argues that the motion judge erred in rejecting the relevance of this evidence based only on Mr. Nowack’s submissions and without the motion judge’s own analysis as to admissibility after reviewing the emails and the proposed witness’s testimony. [44] I disagree. Mr. Nowack, even with the motion judge’s probing, was unable to explain how the emails or witness would be relevant to sentencing and whether he had purged his contempt. The motion judge concluded that the evidence Mr. Nowack sought to advance pertained to 236’s alleged motives, which was not relevant to the purpose of the hearing. On appeal, Mr. Nowack did not attempt to put forward any other explanation of how the excluded evidence might have been relevant to the sentencing hearing. [45] Finally, I note that counsel for Mr. Nowack on appeal took issue with the motion judge sitting on a motion for contempt of his own order. He said that, as a general rule, a judge should not be permitted to hear a motion for contempt of his or her own order, as there could be a reasonable apprehension of bias. He relied on Central Capital Corp. v. 819187 Ontario Ltd. , 1993 CarswellOnt 4447 (C.A.). I do not propose to address this argument in any detail except to say that I am not aware of any principled basis to adopt such a general rule. [46] In Central Capital a judge, in her reasons for summary judgment, expressed the view that the appellant was in contempt of an order of Eberle J.  This court held that the same judge ought not to have heard a subsequent motion for contempt of the order of Eberle J. There was a reasonable apprehension of bias in the circumstances, as a reasonable person might think that the judge had prejudged the issue of contempt. The conclusion was based on the particular facts of the case. [47] Central Capital did not involve a judge sitting on a contempt motion from her own order, and the court did not articulate a general rule that a judge should never sit on a contempt motion from his or her own order. In my view, such a rule would be both impractical and inconsistent with the overall objective of contempt motions in securing compliance with orders. And the procedure adopted here, as well as in the Greenberg Litigation, where a judge seized himself with contempt proceedings, and then made a series of orders that gave Mr. Nowack the opportunity to avoid a finding of contempt could only serve to enhance the fairness of the process and did not in itself give rise to a reasonable apprehension of bias. D. Disposition [48] For these reasons, I would dismiss the appeal. I would extend the stay of the warrant of committal until December 27, 2016. I would award costs of the appeal to 236 on a partial indemnity basis. If the parties are unable to agree on costs, they may make written submissions to this court. 236 shall have ten days from the date of release of these reasons to serve and file its submissions, and Mr. Nowack shall have ten days from receipt of such submissions to serve and file responding submissions. There shall be no reply submissions. Written submissions are to be limited to three pages in length, not including a bill of costs. Released: “K.M.v.R.” December 16, 2016 “K. van Rensburg J.A.” “I agree G.R. Strathy C.J.O.” “I agree H.S. LaForme J.A.”

CITATION: R. v. Wills, 2011 ONCA 468 DATE:  20110706 DOCKET: C48195 COURT OF APPEAL FOR ONTARIO Moldaver, Simmons and Rouleau JJ.A. BETWEEN Her Majesty The Queen Respondent and Richard Charles Wills Appellant Richard Wills, in person Delmar Doucette, amicus curiae Michal Fairburn, for the respondent Heard and released orally: June 15, 2011 On appeal from conviction by Justice Michelle Fuerst of the Superior Court of Justice, sitting with a jury, dated October 31, 2007. ENDORSEMENT [1] The appellant appeals from his conviction for first degree murder. The trial was conducted before Fuerst J. and a jury. It lasted for approximately 18 months. [2] The charge against the appellant related to the death of Ms. Linda Mariani, a woman with whom the appellant had been romantically involved for some years. [3] On June 7, 2002, the appellant turned himself in to the police and revealed that Ms. Mariani’s body was in his basement and had been there since mid-February of that year. In his testimony at trial, he claimed that she had died accidentally in a fall and that he had entombed her body as an act of love with a view to removing it to his cottage in Wasaga Beach where she had requested that she be buried. [4] The Crown presented a different theory, namely that Ms. Mariani was in the process of exiting the relationship and the appellant would have none of that. As a result, he decided to kill her. To that end, he bought a garbage pail and other supplies and planned to entomb her body after killing her in the hopes of escaping detection. Following Ms. Mariani’s death, the appellant took steps to mislead the police and others both as to his knowledge of her death and the whereabouts of her body. In addition, he tried to point the finger of suspicion at Ms. Mariani’s husband. [5] By its verdict, it is apparent that the jury rejected the appellant’s evidence and accepted the position put forward by the Crown. [6] The appellant’s appeal came on for hearing today. The appellant claimed he was unable to make submissions on account of his mental state. He provided no supporting medical evidence and has never provided the court with proper supporting medical evidence, despite having raised his alleged mental difficulties as far back as September 2010. In the face of the appellant’s bald and unsubstantiated claims, we refused to grant his adjournment request and invited him to make submissions. He refused to do so, claiming that he was unable to make submissions. He was told by the court and amicus that this was his final opportunity to say what he wished in support of his appeal and he declined to make submissions. [7] The appeal was filed in 2007 and the appellant has appeared before the court many times. In his Notice of Appeal, the appellant has raised some 35 grounds of appeal. Some relate to evidentiary rulings; some to the conduct of the Crown and the trial judge; some to the charge to the jury; and others relate to the overall fairness of the trial. Some of the grounds allege ineffective assistance of counsel but the appellant has not filed any material to support his allegations despite being advised of this court’s protocol for doing so.  Accordingly, the grounds relating to ineffective assistance must fail. [8] The appellant has not filed written submissions regarding any of the grounds of appeal raised. Ms. Fairburn on behalf of the Crown has filed a factum and done her best to address the various issues advanced by the appellant in his Notice of Appeal. We have reviewed her factum which includes excerpts from the trial proceedings and various rulings made by the trial judge. We have also reviewed other aspects of the record in preparation for today’s appeal. Having done so, we do not propose to address the various grounds on an individual basis. Suffice it to say that we can detect no errors in the evidentiary or other rulings that would warrant appellate intervention, nor can it be said that the appellant did not receive a fair trial. [9] On our view of the record, the appellant viewed the court process with disdain and did everything he could to subvert it and make a mockery of the proceedings. He was not interested in receiving a fair trial or indeed any trial. His strategy from start to finish was to delay and obstruct the course of justice and derail the trial if possible. To that end, he hired and fired lawyers at will; he engaged in obstructive trial tactics that turned the trial process into an 18-month ordeal; he brought on countless motions that were largely devoid of merit and in many instances, frivolous and vexatious; he engaged in appalling courtroom antics and he did his best at every turn to bait the trial judge into declaring a mistrial or committing reversible error. [10] Fortunately, the learned trial judge saw through the appellant’s strategy and was able to rise above it. Although she was firm when necessary, and correctly so, she treated the appellant with respect and dignity throughout and did everything in her power to ensure that he received a fair trial. This took admirable restraint on her part for which she is to be commended. [11] As indicated, we are satisfied that the trial judge’s rulings on process were fair to both sides and her evidentiary rulings, which were largely discretionary in nature, disclose no reversible error. Her charge was a model of clarity, fairness and balance and we are satisfied that the jury was properly equipped to carry out its duty. [12] In our view, the verdict is entirely reasonable and amply supported by the evidence. There has been no miscarriage of justice here. As we have said, the appellant received a fair trial and we see no basis for appellate intervention. [13] Accordingly, the appeal is dismissed. Signed:           “M. J. Moldaver J.A.” “Janet Simmons J.A.” “Paul Rouleau J.A.”

Leave granted. The High Court rejected an application for reference of question of law arising from the order of the CEGAT and the High Court agreed with the view taken by the Tribunal and disposed of the matter stating that the question of law does number arise from the order of the CEGAT. That was number the stage at which the High Court companyld have expressed its views on merits of the matter and the appropriate companyrse for the High Court was to call for a statement and then decide the matter in an appropriate manner as provided under the law.

The Hon. Mr Justice Langley : Introduction This judgment relates to the Claimant (EA)'s application for interim injunctions and declarations against the Defendant (Temple) the substance of which is to restrain Temple from continuing to conduct the run-off of after the event insurance which Temple wrote with EA as carrier under the authority granted by a Binding Authority Agreement effective from 1 January 2003, which, as is not disputed, was terminated as regards the issue of new policies on 31 December 2005 and to which I will refer as the BAA. At the end of the hearing I said I had concluded that I would not grant EA the relief claimed but would seek or impose certain obligations on Temple in relation to the run-off and would give my reasons in writing when I could. Those reasons follow. It was rightly accepted that if the court did not grant the injunctions the claims for interim declaratory relief must also fail. Background EA is a wholly-owned subsidiary of the well-known and substantial Italian insurance company, Assurazioni Generali SpA. Temple is an underwriting agency which works exclusively in the field of legal expense insurance and has done so since 1999. Under the BAA, EA granted Temple very wide powers to underwrite legal expense insurance. Temple was authorised to bind insurances, process and settle claims, calculate and collect premiums (to be paid into a separate account) and authorised to delegate its authority to others, which Temple did, largely to firms of solicitors ("coverholders") who were acting for claimants in personal injury litigation. EA became the capacity provider in place of various Lloyds' syndicates. Temple was entitled to 35% commission on the net premium. Temple entered into coverholder agreements with those to whom it delegated authority to bind EA and the coverholders issued policies to individual claimants (insureds). It is, for the purposes of the present issues, accepted that EA were aware of the terms of the coverholder agreements and the entry into them on those terms was within the authority granted to Temple under the BAA. EA were not parties to the coverholder agreements and Temple did not enter into them as agent for EA, but as principal. The coverholder agreements required the submission of monthly bordereaux and claims information to Temple as well as payments of premium to Temple. They also provided that: "Temple will administer all claims matters arising from declarations under this Agreement. Any payments due to the Insured shall be made by Temple and the Coverholder must not set off such claims payments against Premiums due to Underwriters." The policies, subject to their terms, provided cover for insured claimants both for opponents' costs and their own costs in the litigation. Premiums were adjusted according to the stages when a claim was disposed of (the later, the higher) and were generally payable only upon disposal of the claim. Termination of the BAA with effect on 31 December 2005 did not affect accrued rights and liabilities and Temple remained obliged and entitled to conduct the run-off of existing insurances at that date under section 7 of the BAA. The business written is currently profitable for EA. Temple is confident that the run-off will also prove to be profitable; EA is not so sure. There remain some 7000 policies in force. The Dispute EA's original claim in these proceedings alleges that Temple was in breach of the BAA, negligent and in breach of fiduciary duty in a number of serious respects including claiming "hundreds of thousands of pounds of commission to which it was not entitled", failing to account for premiums received, and failing to collect premiums from coverholders. Whilst these are serious allegations there are also serious defences to them. It is not suggested (rightly) that on the present application the court could or should attempt to assess the merits. EA's submissions have stressed that they have lost all trust and confidence in Temple to administer and monitor the policies. That may well be true; but insofar as it derives from these issues (as it largely does) it therefore may or may not be justified. It was these matters, the subject of the original claim, which led EA, by a letter dated 13 April 2007, to write purporting to revoke Temple's authority to act in any way as EA's agent. EA also wrote to coverholders on the same day to advise them that Temple was no longer authorised to act for EA and requiring them in effect to provide to EA the information which they were obliged under the coverholders' agreements to provide to Temple, and to account to EA not to Temple for premium, again contrary to their obligations in the coverholders' agreements. Temple's response was to assert that EA had no right to terminate its authority, to assert, by letter dated 20 April, that EA had repudiated the BAA and to accept that repudiation as bringing an end to the BAA. Temple also wrote to the coverholders setting out its contentions and asking them to continue to honour the coverholder agreements. Thus both parties have asserted that the BAA is at an end. That, submits Mr Railton QC for EA, is effectively that, whoever is right about repudiation. There is no agency left, no right for Temple to conduct the run-off, and EA must be allowed to administer the covers for which it is the risk carrier. Not so, submits Mr Saloman, for Temple. He submits the agency is irrevocable and the existing arrangements whereby insured claimants deal with the coverholders (usually their solicitors for the claims) and the coverholders deal with Temple and Temple deals with EA, are all the subject of legal obligations expressly authorised by EA at the time they were entered into and which run until the covers have expired and/or the claims are finally disposed of. Mr Saloman referred to Section 12.4 of the BAA which provided that in the event the BAA was cancelled or terminated each insurance bound or coverholders agreement granted by Temple "shall run to its contractual expiry date" unless cancelled in accordance with its individual cancellation provisions. These are also issues which this is not the occasion to resolve. On the evidence before the court the great majority of coverholders have continued to honour their agreements with Temple. It is Temple's conduct in continuing to seek to operate the coverholders agreements and collect premiums and pay claims which is said to give rise to the causes of action (pleaded by amendment) on which the present applications for interlocutory injunctive and declaratory relief are founded. The causes of action The causes of action said to justify the relief are: causing loss by unlawful means, unlawful interference, and breach of trust in failing to pay over monies in the bank account used by Temple to hold premiums and pay claims. The unlawful means relied upon are, in my judgment, inventive but thin. They seem to come to little, if anything, more than a re-assertion of EA's alleged right to step into Temple's shoes and so of Temple's "unlawful" conduct in contending the contrary to the coverholders. The allegation, necessary to found the first two causes of action, of an intention to cause loss to EA is, I think, even thinner. The reality, as the evidence stands, seems to me to be that the parties have a genuine commercial dispute in which EA first sought to involve and make demands upon the coverholders and Temple, unsurprisingly to my mind, refused to lie down and asserted what Temple contends remain binding obligations to be found in the coverholder agreements. The allegation of breach of trust is, again on the present evidence, also not compelling. On 11 May 2007 EA's solicitors demanded payment forthwith of all monies in the account. Temple refused. Temple asserted a right to use the funds to pay claims and its own commission and acknowledged (and says it has discharged) the obligation to account to EA for the balance. That was the way the account was operated under the BAA which entitled Temple to a "float" of £50,000 to be held in the account to meet claims but otherwise was to be paid out 65% to EA and 35% to Temple. EA's claim simply asserts that Temple, as trustee, was bound to pay the whole contents of the account to EA on demand and, again reprising the underlying dispute, that Temple is no longer authorised to pay claims and EA would be under no obligation to reimburse Temple if it did so. Discretion There is, unsurprisingly, no dispute both that the determination of the application is a matter of discretion nor that the exercise of that discretion turns on the adequacy of damages as a remedy, the balance of convenience more generally, and, at least where those considerations produce an even balance, conservation of the status quo. Damages The relevant damage to EA would be such loss as it might suffer from the unlawful conduct (or breach of trust) upon which the claims for interim relief depend. Yet in general terms (that is apart from genuine disputes about claims by Temple to commission) historically Temple has discharged its duties under the BAA without criticism of claims handling or failing to account properly for monies in the bank account. If, which I think is improbable, and can be at least partially managed by the requirements referred to below, Temple were to cause and be liable for losses of that type they would be quantifiable and recoverable. There is no evidence of any loss since April 2005 and it is in Temple's interest to conduct the business efficiently to achieve its profit commission and to maintain its commercial reputation with coverholders. EA has no continuing interest in the business. Temple is not a large company, but it is a profitable one, and has significant reserves. On the other hand, and in contrast, the "business" is Temple's business. The commercial and goodwill relationship with solicitors is Temple's relationship. Temple created and implemented the scheme. EA has had no personal relationship with and indeed only knows who the coverholders are from access to Temple's records. If Temple is unable to continue the scheme, or participating coverholders are compelled to work with EA, there is a real risk of damage to Temple's business which will be difficult both to prove and to quantify. The loss of cash flow could also be damaging to the business in ways difficult to prove and quantify. Although there were suggestions that EA would not be able to meet a claim for damages or to satisfy a claim on a cross-undertaking I am satisfied on the evidence that it would. Other Factors There are, I think, a number of other factors which militate against the grant of relief to EA. They are: (1) If EA were to be granted the relief it seeks, without qualifications, the consequence would be that Temple would be deprived of all knowledge of the progress of claims and payment of premiums on the business written. It would be wholly dependent on EA accounting to it for commission. No doubt recognising the unfairness of such an outcome, EA, in the course of submissions, offered various undertakings to provide information and make payments to Temple, albeit contending for a set-off and that any payments should be held in an escrow account. Nonetheless, the offer demonstrates that EA's essential submission that it should not be compelled to work with an "agent" it no longer trusts must be subject to some qualification. (2) If the relief were granted, Temple would be placed in breach of the coverholder agreements which EA authorised Temple to conclude and which require Temple to provide claims services to the coverholders and to pay claims. So, too, coverholders would be in breach of the agreements in failing to provide bordereaux, other information and claims notifications to Temple. (3) Very arguably, in my judgment, policyholders also would have claims against Temple and would also be placed in an invidious position. The certificate of insurance requires notification of claims to Temple. Temple's name and logo appear on each page of the certificate and policy wording. The definition of "Insurer" in the wording is "Temple…are specialist underwriters with authority to underwrite and manage (my emphasis) this insurance on behalf of [EA]." The wording contains nothing which expressly requires the insured or anyone else to report to EA. On the other hand, EA's concerns are, I think, capable of being addressed pending a trial: (1) Under the BAA, Section 22, Temple was obliged to provide monthly bordereaux to EA as set out there. There is no reason why that should not continue and, as raised during the hearing, and in prior correspondence, be supplemented by Temple providing to EA the claims files, the bordereaux and other information it receives from coverholders within a reasonable period following receipt. That should enable EA to monitor claims perhaps more closely than the existing arrangements permit. (2) The obligation of Temple under Section 28 of the BAA, to maintain a separate bank account for premiums and claims, and upon EA to provide funds in advance to meet claims as well as to maintain the £50,000 float can continue, including the 65/35 distribution from the account. Relevant bank statements should be provided to EA on a regular basis. (3) Under Section 30 of the BAA, now to be found in Endorsement 3, EA has extensive unrestricted rights to inspect and audit Temple's records of and to receive information about the insurances bound under it. Those rights have been exercised and can be retained pending a trial. In summary, in my judgment, the effect of the relief sought would be to place third parties and Temple in a state of confusion and probably breach of contract. EA would have to seek new rights of reporting from insureds and/or coverholders. Policy terms would probably require variation. It may well be factors of this kind which explain why so few coverholders have been willing to respond positively to EA's demands upon them. In contrast, if substantially the present arrangements continue, third parties will be protected and, with the safeguards to which I have referred, I think EA will also be protected in a context which, it must be remembered, EA itself expressly authorised Temple to create. Status Quo This is, in my judgment, a case where the status quo has perhaps more than its usual significance because of the concerns and rights of third parties, insureds and coverholders. That factor also, I think, points in favour of not granting the relief sought. Timing At the end of the hearing there was discussion about directions for the trial. In the event the trial is to take place in February 2008. It is, of course, in the period between now and then that this judgment will be effective. Hand-down The precise terms of the order to be made and any other ancillary matters which cannot be agreed should be addressed when this judgment is formally handed down. It was supplied to the parties in draft on 23 July 2007. In particular the parties were to discuss and seek to agree the terms which should apply in the interim to which I have referred in paragraph 20.

Case C-385/07 P Der Grüne Punkt – Duales System Deutschland GmbH v Commission of the European Communities (Appeal – Competition – Article 82 EC – System for the collection and recovery of used packaging in Germany – ‘Der Grüne Punkt’ logo – Fee payable under a trade mark agreement – Abuse of dominant position – Exclusive right of the proprietor of a trade mark – Excessive duration of the proceedings before the Court of First Instance – Reasonable time – Principle of effective legal protection – Articles 58 and 61 of the Statute of the Court of Justice) Summary of the Judgment 1. Appeals – Grounds – Inadequate or contradictory grounds (Art. 225 EC; Statute of the Court of Justice, Art. 58, first para.) 2. Approximation of laws – Trade marks – Directive 89/104 – Right of the trade mark proprietor to prevent third parties from using an identical sign for identical goods – Enforcement against the proprietor’s contractual partner using the trade mark under a licence agreement – Excluded (Council Directive 89/104, Art. 5(1)(a)) 3. Appeals – Grounds – Review by the Court of Justice of the assessment by the Court of First Instance of the need to supplement the information before it – Possible only where the clear sense of the evidence has been distorted (Rules of Procedure of the Court of First Instance, Art. 64) 4. Appeals – Grounds – Procedural irregularity – Infringement of the principle that proceedings should be adjudicated within a reasonable time to the detriment of an applicant challenging a decision which obliged it to adapt its commercial policy 5. Community law – Principles – Fundamental rights – Observance ensured by the Court – Right of every person to fair hearing – Acting within a reasonable time (Charter of Fundamental Rights of the European Union, Art. 47) 6. Procedure – Duration of the proceedings before the Court of First Instance – Reasonable time – Criteria for assessment 7. Procedure – Duration of the proceedings before the Court of First Instance – Reasonable time – Proceedings concerning an infringement of the competition rules – Failure to act within a reasonable time – Consequences (Arts 235 EC and 288, second para., EC; Statute of the Court of Justice, Art. 61, first para.) 1. The duty to state reasons does not require the Court of First Instance to provide an account which follows exhaustively and one by one all the arguments put forward by the parties to the case and the reasoning may therefore be implicit on condition that it enables the persons concerned to know why the Court of First Instance has not upheld their arguments and provides the Court of Justice with sufficient material for it to exercise its power of review. (see para. 114) 2. By virtue of Article 5(1)(a) of Directive 89/104 on trade marks, a registered trade mark confers on the proprietor exclusive rights therein, entitling the proprietor to prevent all third parties not having his consent from using in the course of trade any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered. It is apparent from the wording itself of Article 5 of Directive 89/104 that that provision does not cover circumstances in which a third party uses a trade mark with the consent of its proprietor. That is the case, in particular, where the proprietor has authorised its contractual partners to use its mark under the terms of a licence agreement. Therefore, an undertaking cannot validly rely on the exclusive right conferred on it by a logo, duly registered as a trade mark, as regards the use of that logo by manufacturers and distributors who have entered into the Trade Mark Agreement with it. (see paras 125, 128-129) 3. The Court of First Instance is the sole judge of any need to supplement the information available to it in respect of the cases before it. Whether or not the evidence before it is sufficient is a matter to be appraised by it alone and is not subject to review by the Court of Justice on appeal, except where that evidence has been distorted or the substantive inaccuracy of the findings of the Court of First Instance is apparent from the documents in the case. Therefore, the Court of First Instance cannot be criticised for having put, before and at the time of the hearing, a series of detailed questions to the parties in order to supplement the information already available to it and for having drawn certain conclusions from the replies given by the parties to those questions. (see paras 163-164) 4. The Court of Justice has jurisdiction in an appeal to verify whether a breach of procedure adversely affecting the appellant’s interests was committed by the Court of First Instance and must satisfy itself that the general principles of Community law have been observed. An undertaking which brings proceedings for the annulment of a decision which has obliged it to adapt the standard form of contract which it enters into with its customers will have, on self-evident commercial policy grounds, a clear interest in having a line of argument, by which it submits that that decision is unlawful, adjudicated upon within a reasonable period. (see paras 176, 180) 5. Article 6(1) of the European Convention on Human Rights provides that, in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. As a general principle of Community law, such a right is applicable in the context of proceedings brought against a Commission decision. That right has, moreover, been reaffirmed in Article 47 of the Charter of Fundamental Rights of the European Union, which relates to the principle of effective judicial protection. (see paras 177-179) 6. The reasonableness of the period for delivering judgment is to be appraised in the light of the circumstances specific to each case, such as the complexity of the case and the conduct of the parties. In that regard, the list of relevant criteria is not exhaustive and the assessment of the reasonableness of a period does not require a systematic examination of the circumstances of the case in the light of each of them, where the duration of the proceedings appears justified in the light of one of them. Thus, the complexity of the case or the dilatory conduct of the applicant may be deemed to justify a duration which is prima facie too long. (see paras 181-182) 7. In the case of proceedings concerning infringement of competition rules, the fundamental requirement of legal certainty on which economic operators must be able to rely and the aim of ensuring that competition is not distorted in the internal market are of considerable importance not only for an applicant himself and his competitors but also for third parties, in view of the large number of persons concerned and the financial interests involved. In the case of proceedings relating to the abuse of a dominant position by an undertaking demanding a fee for the extremely widespread use of its logo, and having regard to the possible effects of the outcome of that dispute, proceedings before the Court of First Instance which lasted approximately five years and ten months, where that cannot be justified by any of the particular circumstances of the case, whether it be the complexity of the dispute, the conduct of the parties or by supervening procedural matters raised by the parties, or the adoption by the Court of First Instance of measures of organisation of procedure, fails to have regard to the requirement that the case be dealt with within a reasonable time. While it is true that failure on the part of the Court of First Instance to adjudicate within a reasonable time constitutes a procedural irregularity, it none the less remains the case that the first paragraph of Article 61 of the Statute of the Court of Justice should be interpreted and applied purposively. Since there is nothing to suggest that the failure to adjudicate within a reasonable time may have had an effect on the outcome of the dispute, the setting aside of the judgment under appeal would not remedy the infringement of the principle of effective legal protection committed by the Court of First Instance. In addition, having regard to the need to ensure that Community competition law is complied with, the Court of Justice cannot allow an appellant to reopen the question of the existence of an infringement, on the sole ground that there was a failure to adjudicate within a reasonable time, where all of its pleas directed against the findings made by the Court of First Instance concerning that infringement and the administrative procedure relating to it have been rejected as unfounded. Conversely, the failure on the part of the Court of First Instance to adjudicate within a reasonable time can give rise to a claim for damages brought against the Community under Article 235 EC and the second paragraph of Article 288 EC. (see paras 176-188, 191-195) JUDGMENT OF THE COURT (Grand Chamber) 16 July 2009 (*) Table of contents Legal context German legislation DSD’s exemption system, the Trade Mark Agreement and the Service Agreement Directive 89/104/EEC Background The decision at issue The proceedings before the Court of First Instance and the judgment under appeal Procedure before the Court The appeal The first plea in law, alleging infringement of the duty to state reasons arising from the contradictory grounds set out in the judgment under appeal Arguments of the parties Findings of the Court The second plea in law, alleging distortion of the meaning of the Trade Mark Agreement and other evidence in the file Arguments of the parties Findings of the Court The third plea in law, alleging an insufficient statement of reasons, distortion of the facts and errors of law concerning the exclusive rights relating to the DGP logo Arguments of the parties Findings of the Court The fourth plea in law, alleging infringement of Community trade mark law Arguments of the parties Findings of the Court The fifth plea in law, alleging infringement of Article 82 EC Arguments of the parties Findings of the Court The sixth plea in law, alleging infringement of Article 3 of Regulation No 17 and the principle of proportionality Arguments of the parties Findings of the Court The seventh plea in law, alleging a procedural irregularity Arguments of the parties Findings of the Court The eighth plea in law, alleging infringement of the fundamental right to have the case dealt with within a reasonable time Arguments of the parties Findings of the Court Costs Appeals – Competition – Article 82 EC – System for the collection and recovery of used packaging in Germany – ‘Der Grüne Punkt’ logo – Fee payable under a trade mark agreement – Abuse of dominant position – Exclusive right of the proprietor of a trade mark – Excessive duration of the proceedings before the Court of First Instance – Reasonable time – Principle of effective legal protection – Articles 58 and 61 of the Statute of the Court of Justice) In Case C‑385/07 P, APPEAL under Article 56 of the Statute of the Court of Justice, brought on 8 August 2007, Der Grüne Punkt – Duales System Deutschland GmbH, established in Cologne (Germany), represented by W. Deselaers, E. Wagner and B. Meyring, Rechtsanwälte, applicant, the other parties to the proceedings being: Commission of the European Communities, represented by W. Mölls and R. Sauer, acting as Agents, with an address for service in Luxembourg, defendant at first instance, supported by: Interseroh Dienstleistungs GmbH, established in Cologne, represented by W. Pauly, A. Oexle and J. Kempkes, Rechtsanwälte, intervener on appeal, Vfw GmbH, established in Cologne, represented by H. Wissel, Rechtsanwalt, Landbell AG für Rückhol-Systeme, established in Mainz (Germany), represented by A. Rinne and M. Westrup, Rechtsanwälte, BellandVision GmbH, established in Pegnitz (Germany), represented by A. Rinne and M. Westrup, Rechtsanwälte, interveners at first instance, THE COURT (Grand Chamber), composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas, K. Lenaerts, M. Ilešič (Rapporteur), J.-C. Bonichot and T. von Danwitz, Presidents of Chambers, J.N. Cunha Rodrigues, R. Silva de Lapuerta, A. Arabadjiev, C. Toader and J.-J. Kasel, Judges, Advocate General: Y. Bot, Registrar: H. von Holstein, Deputy Registrar, having regard to the written procedure and further to the hearing on 9 December 2008, after hearing the Opinion of the Advocate General at the sitting on 31 March 2009, gives the following Judgment 1 By its appeal, Der Grüne Punkt – Duales System Deutschland GmbH (‘DSD’) seeks to have set aside the judgment of the Court of First Instance of the European Communities of 24 May 2007 in Case T-151/01 Duales System Deutschland v Commission [2007] ECR II-1607 (‘the judgment under appeal’), by which that court rejected its application for the annulment of Commission Decision 2001/463/EC of 20 April 2001 relating to a proceeding pursuant to Article 82 of the EC Treaty (Case COMP D3/34493 – DSD) (OJ 2001 L 166, p. 1) (‘the decision at issue’). Legal context German legislation 2 On 12 June 1991, the German Government adopted the Ordinance on the avoidance of packaging waste (Verordnung über die Vermeidung von Verpackungsabfällen, BGBl. 1991 I, p. 1234); the revised version, which is applicable in the present proceedings, entered into force on 28 August 1998 (‘the Packaging Ordinance’). The ordinance is intended to reduce the environmental impact of packaging waste and to that end requires manufacturers and distributors of packaging to take back and recover used sales packaging outside the public waste disposal system. 3 In particular, manufacturers and distributors are obliged to take back free of charge used sales packaging covered by the Packaging Ordinance at or in the immediate vicinity of the actual point of sale and to recover it (‘the self‑management solution’). The consumer’s attention must be drawn to that possibility by means of clearly visible signs. 4 However, the Packaging Ordinance exempts manufacturers and distributors from the obligation to collect and recover individual waste where they participate in a system which guarantees the regular collection, throughout the distributor’s sales territory, of used sales packaging from the final consumer or in the vicinity of the final consumer’s home in order for it to be recovered (‘the exemption system’). Manufacturers and distributors participating in an exemption system are exempted from their collection and recovery obligations in respect of all packaging covered by that system and must make it known that they are participating in such a system by marking packaging or by other suitable means. They can thus make such participation known on the packaging or use other measures, such as informing customers at the point of sale or by means of a package leaflet, for example. 5 Exemption systems must be approved by the competent authorities in the Länder concerned. In order to be approved, those systems must, inter alia, cover the territory of at least one Land, provide regular collections in the vicinity of consumers’ homes and be based on a written agreement entered into with the local bodies responsible for waste management. Any undertaking which satisfies those conditions in a Land may organise an exemption system in that Land. 6 Since 1 January 2000, both exemption systems and manufacturers and distributors who have opted for a self-management solution have been subject to the same recovery rates. Those rates, which are laid down in Annex I to the Packaging Ordinance, vary depending on the packaging material. Compliance with the collection and recovery obligations is ensured, in the case of self-management solutions, by certificates issued by independent experts and, in the case of exemption systems, by the provision of data on the quantities of packaging collected and recovered. DSD’s exemption system, the Trade Mark Agreement and the Service Agreement 7 DSD is a company which has operated an exemption system throughout Germany since 1991 (‘the DSD system’). For that purpose, DSD was approved by the competent authorities of all the Länder in 1993. 8 The relationship between DSD and the manufacturers and distributors which participate in its system is governed by an agreement which covers the use of the ‘Der Grüne Punkt’ logo (‘the Trade Mark Agreement’). By entering into that agreement, the participating undertaking is authorised, in return for a fee, to affix the ‘Der Grüne Punkt’ logo (‘the DGP logo’) to packaging included in the DSD system. 9 DSD registered the DGP logo, which appears below, as a trade mark in 1991 with the German Patents and Trade Marks Office: 10 As regards the use of the DGP logo outside Germany, in particular in the other Member States of the European Community, DSD has assigned its rights to use the logo in the form of a general licence in favour of Packaging Recovery Organisation Europe SPRL (ProEurope), whose seat is in Brussels (Belgium). 11 Within Germany, clause 2 of the Trade Mark Agreement provides that DSD is to be responsible on behalf of the undertakings which participate in its system for the collection, sorting and recovery of the packaging which those undertakings decide to have processed by the DSD system, thereby relieving them of their obligation to collect and recover that packaging. To that end, clause 3(1) of the agreement provides that the participating undertakings are required to notify the types of packaging which they wish to process through the DSD system and to affix the DGP logo on each item of packaging belonging to those types and intended for domestic consumption in Germany. 12 Under the provisions of the Trade Mark Agreement in force at the date of the facts which gave rise to the present case, users of the DGP logo paid DSD a fee for all packaging carrying that logo which they distributed in Germany pursuant to that agreement. Clause 4(1) of the agreement provided that exceptions to that arrangement were to be the subject of a separate written agreement. Clause 5(1) of the agreement also stated that a fee was payable in respect of all packaging bearing the DGP logo and distributed by the user of that logo in Germany. 13 The amount of that fee was determined on the basis of two factors, namely (i) the weight of the packaging and the type of material used and (ii) the volume or surface area of the packaging. By virtue of clause 4(2) and (3) of the Trade Mark Agreement, the fees did not include any profit element and were intended solely to cover the costs of collection, sorting and recovery and the associated administrative costs. 14 Under the DSD system, packaging bearing the DGP logo may be collected either in special bins and divided into metal, plastic and composite materials, or in containers placed close to private households (in particular for paper and glass), while residual waste must be put into the bins provided by the public waste disposal system. 15 However, DSD neither collects nor recovers used packaging itself, but sub-contracts that service to local collection undertakings. The relationship between DSD and those undertakings is governed by a standard-form agreement, amended on a number of occasions, which aims to create and operate a system to collect and sort packaging (‘the Service Agreement’). Under that agreement, which has been entered into between DSD and 537 local undertakings, each of those undertakings has the exclusive power to carry out, in a particular area, the collection of packaging on DSD’s behalf. Once sorted, that packaging is transported to a recycling centre for it to be recovered. 16 The Service Agreement was the subject of Commission Decision 2001/837/EC of 17 September 2001 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Cases COMP/34493 – DSD, COMP/37366 – Hofman + DSD, COMP/37299 – Edelhoff + DSD, COMP/37291 – Rethmann + DSD, COMP/37288 – ARGE and five other undertakings + DSD, COMP/37287 – AWG and five other undertakings + DSD, COMP/37526 – Feldhaus + DSD, COMP/37254 – Nehlsen + DSD, COMP/37252 – Schönmakers + DSD, COMP/37250 – Altvater + DSD, COMP/37246 – DASS + DSD, COMP/37245 – Scheele + DSD, COMP/37244 – SAK + DSD, COMP/37243 – Fischer + DSD, COMP/37242 – Trienekens + DSD, COMP/37267 – Interseroh + DSD) (OJ 2001 L 319, p. 1). By judgment of the Court of First Instance of 24 May 2007 in Case T-289/01 Duales System Deutschland v Commission [2007] ECR II-1691, which was not the subject of an appeal before the Court of Justice, DSD’s action for annulment of Decision 2001/837 was dismissed. Directive 89/104/EEC 17 Article 5(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1) provides: ‘The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered; (b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark.’ 18 Article 8 of that directive states: ‘1. A trade mark may be licensed for some or all of the goods or services for which it is registered and for the whole or part of the Member State concerned. A license may be exclusive or non-exclusive. 2. The proprietor of a trade mark may invoke the rights conferred by that trade mark against a licensee who contravenes any provision in his licensing contract with regard to its duration, the form covered by the registration in which the trade mark may be used, the scope of the goods or services for which the licence is granted, the territory in which the trade mark may be affixed, or the quality of the goods manufactured or of the services provided by the licensee.’ 19 Directive 89/104 was repealed by Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (OJ 2008 L 299, p. 25), which came into force on 28 November 2008. Having regard to the date of the facts, however, the present case continues to be governed by Directive 89/104. Background 20 On 2 September 1992, DSD notified the Trade Mark Agreement and the Service Agreement to the Commission of the European Communities with a view to obtaining negative clearance or, failing that, a decision granting exemption. 21 Following publication in the Official Journal of the European Communities of 27 March 1997 (OJ 1997 C 100, p. 4) of the notice in which it announced its intention to take a favourable view of the agreements notified, the Commission received observations from third parties concerning, in particular, various aspects of the application of the Trade Mark Agreement. In particular, those third parties complained of the distortion of competition which might arise if an undertaking were charged twice as a consequence of participating in the DSD system and the system of another service provider. 22 On 15 October 1998, DSD submitted to the Commission a series of commitments aimed at preventing manufacturers and distributors of packaging which participated in the DSD system from having to pay twice where they participated in a different exemption system operating at regional level. In particular, DSD envisaged the situation in which exemption systems, restricted to one or more Länder, were set up alongside the DSD system. In that case, packaging of the same type and of the same distributor or manufacturer could be taken back, in those Länder, by one of the new exemption systems and, in the other Länder, by the DSD system. DSD gave the following commitment in that regard: ‘On condition that regional alternative systems to [the DSD system] are created and are formally approved by the highest authorities of the Land [in accordance with the] Packaging Ordinance, [DSD] is prepared to apply the Trade Mark Agreement in such a way that licensees are able to participate in such a system as regards some of their packaging. [DSD] will not charge a licence fee under the Trade Mark Agreement for packaging that can be shown to be covered by such an alternative system. A further condition for release from the licence fee obligation in respect of packaging bearing the [DGP logo] is that protection of the [DGP trade mark] should not be impaired.’ 23 On 3 November 1999, the Commission expressed the view that the series of commitments given by DSD on 15 October 1998 should also include self-management solutions used for the processing of some of the packaging and not be restricted only to exemption systems. 24 On 15 November 1999, certain manufacturers of packaging addressed a complaint to the Commission. They claimed that the Trade Mark Agreement prevented the setting up of a self-management solution for taking back packaging. They considered that the use of the logo, where the waste processing service has not actually been provided by DSD, constituted an abuse of a dominant position on the part of DSD. 25 By letter of 13 March 2000, DSD submitted two further commitments to the Commission. The first concerned the case where manufacturers and distributors of packaging opted for a self-management solution for some of their packaging and participated in the DSD system for the remainder. In that case, DSD undertook not to charge a fee under the Trade Mark Agreement for the part of the packaging taken back by the self-management solution, on condition that it was provided with evidence in respect of the latter type of collection. 26 On 3 August 2000, the Commission sent a statement of objections to DSD, to which DSD responded by letter of 9 October 2000. 27 On 20 April 2001, the Commission adopted the decision at issue. The decision at issue 28 Recital 20 to the decision at issue states that it was apparent from the observations of the German authorities that a combination of a self-management solution and an exemption system is possible with participation in an exemption system applying only to a certain quantity of a packaging product (‘mixed systems’). The decision also notes, at recital 23, that it was clear from a reply of the German authorities that the Packaging Ordinance does not mean that the establishment of only one system is possible. It was not the legislature’s intention that only one system should be created in Germany or in each Land. 29 At recital 95, the decision at issue also takes as its starting point the fact, not disputed by DSD, that that undertaking holds a dominant position which, at the time of the adoption of the decision, consisted in the fact that it was the only undertaking to offer an exemption system throughout Germany and that the DSD system collected some 70% of sales packaging in Germany and some 82% of sales packaging collected from final consumers in Germany. 30 According to recitals 100 to 102 to the decision at issue, the abuse of a dominant position is based on the fact that the fee charged by DSD to manufacturers and distributors who participate in the DSD system is tied not to the actual use of that system but is calculated on the basis of the number of packages bearing the DGP logo which those manufacturers and distributors put into circulation in Germany. Manufacturers and distributors participating in the DSD system are required to affix the DGP logo to all packaging notified to DSD and intended for consumption in Germany. The investigation carried out by the Commission led to the conclusion that the method of calculation of the fee paid to DSD constitutes an obstacle to the desire of certain packaging manufacturers who are customers of the DSD system to be able to make use of their own self-management solution or of another exemption system in respect of some of the packaging put into circulation by them. 31 According to recitals 103 to 107 to the decision at issue, the solution proposed by DSD, namely not to affix the DGP logo to packaging that is not covered by the DSD system, is economically unrealistic. Such a solution would require selective labelling of packages (with, or without, the DGP logo), which would lead to considerable additional costs. In addition, such a solution would require packaging manufacturers and distributors using mixed systems to ensure that packaging carrying the DGP logo was disposed of at outlets where it would be collected by the DSD system and that packaging without that logo was disposed of at outlets where it would be collected by other systems, something which would be impossible in practice. Lastly, having regard to the fact that often it is only after having bought the packaged product, or sometimes after using it, that the final consumer will decide whether to dispose of the packaging in an exemption system close to his home or to bring it back to the place where he bought it in order to deposit it in a self-management solution, it would be impossible to determine correctly whether sub-quantities should be marked with the DGP logo or not. 32 At recitals 111 to 115 to the decision at issue, the Commission states that the effects of the abuse of a dominant position are twofold. First, by making the licence fee dependent solely on the use of the DGP logo, DSD imposes unreasonable prices and unfair commercial terms on undertakings which do not use its service or which use it in respect of only some of their packaging. The excessive difference between the cost of supplying the service and the price charged gives rise to the exploitative abuse of a dominant position within the meaning of point (a) of the second paragraph of Article 82 EC. Secondly, given the fee system laid down by the Trade Mark Agreement, it is of no interest to undertakings subject to the collection and recovery obligation to participate in a competing self-management solution or a competing exemption system, because those undertakings would either have to pay a licence fee to DSD in addition to the remuneration paid to the competitor, or to establish separate packaging and distribution channels. The fee system thus makes it more difficult for competitors of the DSD system to enter the market. 33 At recitals 143 to 153 to the decision at issue, the Commission states that the finding that a dominant position has been abused is not invalidated by the need to preserve the distinctive character of the DGP logo. In that regard, the decision at issue states that the essential function of the logo is fulfilled when it signals to the consumer that he has the option of having the packaging processed by DSD. 34 At recitals 155 to 160 to the decision, the Commission states that trade between Member States is likely to be appreciably affected by the abuse of a dominant position as a result of the licence fee terms at issue, having regard to the particular circumstances in which packaging is collected and recovered in Germany and in the common market. 35 The result of the Commission’s appraisal of the case under Article 82 EC is set out in Article 1 of the decision at issue, which is worded as follows: ‘The conduct of [DSD], in requiring, under the first sentence of Article 4(1) and the first sentence of Article 5(1) of the Trade Mark Agreement, payment of a licence fee for the total quantity of sales packaging carrying the [DGP logo] and put into circulation in Germany is incompatible with the common market even where undertakings subject to the obligations arising out of the Packaging Ordinance: (a) either use DSD’s exemption service as referred to in Article 2 of the Trade Mark Agreement only for partial quantities or, instead of using the said service, put into circulation in Germany uniformly designed packaging which is also in circulation in another member country of the European Economic Area and participates in a take-back system using the [DGP logo], and (b) prove that, in respect of the quantity or partial quantity for which they do not use the exemption service, they fulfil their obligations under the Packaging Ordinance through competing exemption systems or through self-management solutions.’ 36 Having established that an abuse of a dominant position existed, in recitals 161 to 167 to the decision at issue and in Articles 2 to 7 of that decision, the Commission specified, pursuant to Article 3(1) of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles [81 EC] and [82 EC] (OJ, English Special Edition 1959-62, p. 87), the way in which DSD was to put an end to the infringement that had been established. 37 The principal measure imposed on DSD was the requirement not to charge any licence fee for quantities of packaging put into circulation in Germany carrying the DGP logo for which the exemption service is not used and for which the obligations imposed by Packaging Ordinance have demonstrably been fulfilled in another way. The measure in question is laid down in Article 3 of the decision at issue, which provides: ‘DSD shall undertake vis-à-vis all parties to the Trade Mark Agreement not to charge any licence fee for such partial quantities of sales packaging carrying the [DGP logo] as are put into circulation in Germany for which the exemption service referred to in Article 2 of the Trade Mark Agreement is not used and for which the Packaging Ordinance obligations have demonstrably been fulfilled in another way. The commitment in the first paragraph shall replace a derogation under the second sentence of Article 4(1) of the Trade Mark Agreement.’ 38 In Article 5 of the decision at issue, the Commission specifies the evidential requirements to be satisfied in the following cases: ‘1. Where there is partial or complete participation in a competing exemption system, the system operator’s confirmation that the relevant quantity of packaging is covered by the competing system shall constitute sufficient proof that the Packaging Ordinance obligations under Articles 3 and 4 have been fulfilled in another way. 2. Where there is partial or complete participation in a self-management solution, the subsequent presentation of an independent expert’s certificate stating that the take-back and recovery requirements for the relevant amount of packaging have been fulfilled shall be sufficient. The certificate may be issued either to the individual manufacturer or distributor or to an association of self-managers. … 4. Irrespective of the version of the Packaging Ordinance in question, the fact that the certificate confirms to the contractual partner that the take-back and recovery requirements, related to a specific quantity of packaging, have been fulfilled shall suffice for the proof to be furnished to DSD. …’ 39 Article 4 of the decision at issue states: ‘1. In the case of packaging which is collected and recovered in another Member State under a system using the [DGP logo] and which is put into circulation using the [logo] in the territory covered by the Packaging Ordinance, DSD shall not charge a licence fee if the requirements of the Packaging Ordinance have demonstrably been met otherwise than through participation in the system set up by DSD … …’ The proceedings before the Court of First Instance and the judgment under appeal 40 By application lodged at the Registry of the Court of First Instance on 5 July 2001, DSD brought proceedings for the annulment of the decision at issue. 41 By a separate document, lodged on the same day, the applicant also submitted an application under Article 242 EC to suspend the operation of Article 3 of that decision, and Articles 4 to 7 thereof in so far as they refer to Article 3, until the Court of First Instance gave a ruling on the substance. 42 By order of 15 November 2001 in Case T-151/01 R Duales System Deutschland v Commission [2001] ECR II-3295, the President of the Court of First Instance rejected the application to suspend the operation of the decision at issue. 43 By order of 5 November 2001, the Court of First Instance granted the applications of Vfw AG (since renamed Vfw GmbH) (‘Vfw’), Landbell AG für Rückhol-Systeme (‘Landbell’) and BellandVision GmbH (‘BellandVision’) for leave to intervene in support of the form of order sought by the Commission. Those undertakings, which are competitors of DSD, submitted their observations on 7 February 2002. 44 The final written submissions were lodged on 27 May 2002. The parties were notified of the end of the written procedure on 9 September 2002. 45 In June 2006, the Court of First Instance decided to open the oral procedure. By way of measures of organisation of procedure, it sent the parties a number of questions, to be replied to orally at the hearing. Those questions related to the different stages of the process for collecting and recovering packaging and to the conditions in which competition between self-management solutions and exemption systems might exist. The Court also invited the Commission to produce a document provided by the German authorities during the administrative procedure. On 26 June 2006, the Commission lodged that document. 46 The parties presented oral argument and answered the questions put by the Court at the hearing on 11 and 12 July 2006. 47 By the judgment under appeal, the Court of First Instance dismissed the action before it and ordered DSD to bear its own costs and those incurred by the Commission, Landbell and BellandVision, including those relating to the interlocutory proceedings. It ordered Vfw, which had not applied for DSD to bear the costs, to bear its own costs, including those relating to the interlocutory proceedings. 48 DSD had put forward three pleas in law alleging, first, infringement of Article 82 EC, secondly, infringement of Article 3(1) of Regulation No 17 and of the principle of proportionality and, thirdly, infringement of Article 86(2) EC. 49 By its first plea, DSD maintained that the disputed provisions of the Trade Mark Agreement had been necessary in order to ensure the attainment of the objectives of the Packaging Ordinance, that is to say, preserving the different functions of the Der Grüne Punkt trade mark (‘the DGP mark’) and to enable the DSD system to function properly. 50 In reply to the various arguments put forward by DSD under this plea, the Court of First Instance held in particular at paragraphs 139 and 154 of the judgment under appeal that it was possible for a manufacturer or a distributor of packaging to use a number of systems at the same time in order to comply with the recovery rates: ‘139 … the manufacturer or distributor of packaging does not transfer to DSD a set number of items of packaging intended to bear the [DGP logo], but rather a quantity of material which that manufacturer or distributor is going to market in Germany and whose taking back and recovery he intends to entrust to the DSD system. It is therefore possible for a manufacturer or distributor of packaging to use mixed systems in order to comply with the recovery rates laid down in the [Packaging Ordinance]. … 154 In that regard, it should be pointed out that it is not stated in the [Packaging Ordinance] that the [DGP logo] may not be affixed to packaging collected in the context of a competitor exemption system or a self-management solution if they comply, in addition, with the conditions laid down in the [Packaging Ordinance] to identify the system used in conjunction with the DSD system. Such indications may be cumulative and the same piece of packaging may thus be covered by several systems at the same time. It is with that in mind that the Commission rightly interprets the transparency requirement defined by the German authorities in their observations, namely that it is necessary to clearly define, in the interests of the consumer and of the authorities, which packaging is subject to the take-back obligation at or in the immediate vicinity of the points of sale and which is not. …’ 51 The Court of First Instance also held at paragraph 156 of the judgment under appeal that ‘the fact that, in the case of shared use of two exemption systems, the [DGP logo] and the indication by a “suitable means” of another exemption system … feature on the same packaging, and the fact that, in the case of shared use of the DSD system and a self-management solution, the [DGP logo] and an indication that it is possible to return the packaging to the shop appear on the same packaging, does not adversely affect the essential function of [the DGP mark]’. 52 At paragraph 163 of its judgment, the Court of First Instance added that ‘as regards the arguments concerning the need to respect the proper functioning of the DSD system …, … the proper functioning of that system is not called into question in the case of mixed systems. In any event, the specific needs of the functioning of the DSD system cannot justify the applicant’s conduct, described in the BäKo judgment of the Bundesgerichtshof and the Hertzel judgment of the Oberlandesgericht Düsseldorf, cited by the Commission …, the various complaints put forward by the Commission … and DSD’s initial submission in its application …, whereby it requires payment of a fee for all packaging carrying the [DGP logo] and put into circulation in Germany, even where it is proved that some of that packaging has been taken back and recovered by another exemption system or a self-management solution’. 53 The Court of First Instance held at paragraph 164 of the judgment under appeal that ‘neither the Packaging Ordinance, nor trade mark law or the specific needs of the functioning of the DSD system authorise [DSD] to require undertakings which use its system to pay a fee for all packaging carrying the [DGP logo] and put into circulation in Germany, where those undertakings show that they do not use the DSD system for some [or all] of that packaging’. 54 By its second plea, DSD submitted that selective marking of packaging depending on the system used would have been more appropriate than the obligation imposed by the decision at issue. Articles 3 and 4 of that decision are disproportionate, because they oblige DSD to grant third parties a licence. 55 The Court of First Instance rejected that plea. At paragraph 173 of the judgment under appeal, it held that ‘the fact that it may theoretically be possible to affix the [DGP logo] to packaging selectively cannot entail the annulment of [the measures imposed by the decision at issue], since that solution is more expensive and difficult to implement for manufacturers and distributors of packaging than the measures laid down in Articles 3 to 5 of [that] decision …’. 56 The Court of First Instance also stated at paragraph 181 of the judgment under appeal that the object of the obligations laid down in the decision at issue was not ‘to force DSD to grant a licence to use the [DGP logo] without any restriction in time, but merely to require it to not charge a fee on the total amount of packaging bearing the [DGP logo] where it is shown that all or only some of that packaging has been taken back or recovered through another system’. 57 At paragraph 196 of the judgment under appeal, the Court of First Instance stated that the decision at issue must be interpreted as not precluding the possibility for DSD to levy an adequate fee for merely using the DGP mark where it is shown that the packaging bearing the DGP logo has been taken back and recovered by another system. 58 In support of that finding, the Court of First Instance stated at paragraphs 193 and 194 of the judgment under appeal: ‘193 The Court observes that the obligation imposed on DSD, in Article 3 of [the decision at issue], enables manufacturers and distributors which use its system for only some of their packaging not to pay the fee to DSD where it is proved that the packaging bearing the [DGP logo] has not been collected and recovered by the DSD system but by a competitor system. 194 However, even in that case, it cannot be excluded that the [DGP mark] affixed to the packaging at issue may have economic value as such, since it can inform the consumer that the packaging at issue may be brought to the DSD system, as is also stated in the contested decision ... Such a possibility offered to the consumer for all the packaging put into circulation with the [DGP logo], whether part of the DSD system or not, after checking the quantities collected, is likely to have a price which, even if it cannot represent the actual price of the collection and recovery service, as could be the case under the provisions in dispute of the Trade Mark Agreement, should be able to be paid to DSD in consideration for the service offered in the present case, namely the making available of its system.’ 59 By its third plea, DSD claimed that an infringement of Article 82 EC was ruled out because it was entrusted with the operation of services of general economic interest within the meaning of Article 86(2) EC, namely waste management for environmental purposes. 60 The Court of First Instance stated at paragraph 208 of the judgment under appeal that, even supposing that DSD was entrusted with such a service, the fact remained that the risk of that task being called into question as a result of the decision at issue had not been shown. Procedure before the Court 61 DSD brought the present appeal on 8 August 2007. 62 By application lodged at the Court Registry on 16 November 2007, Interseroh Dienstleistungs GmbH (‘Interseroh’), which has operated an exemption system throughout Germany since 2006, sought leave to intervene in support of the form of order sought by the Commission. By order of 21 February 2008, the President of the Court granted leave to intervene. 63 DSD claims that the Court should: – set aside the judgment under appeal; – annul the decision at issue; – in the alternative, refer the case back to the Court of First Instance, and – in any event, order the Commission to bear the costs. 64 The Commission, Vfw, Landbell, BellandVision and Interseroh contend that the Court should: – dismiss the appeal, and – order DSD to bear the costs. The appeal The first plea in law, alleging infringement of the duty to state reasons arising from the contradictory grounds set out in the judgment under appeal Arguments of the parties 65 DSD claims that the Court of First Instance infringed its obligation to state reasons in the judgment under appeal by making contradictory findings in relation to the alleged abuse of a dominant position. 66 In support of that plea, DSD draws a comparison between the manner in which that abuse was presented by the Commission in recitals 101, 102, 111 and 115 to the decision at issue, as set out by the Court of First Instance at paragraphs 48, 50, 58, 60, 119, 163 and 164 of the judgment under appeal, and the grounds set out at paragraph 194 of that judgment. 67 First, the Court of First Instance took as a basis the fact that DSD requires undertakings which prove that they do not use its system or that they use the system for only some of the sales packaging bearing the DGP logo to pay the full fee under the Trade Mark Agreement. 68 Secondly, the Court of First Instance stated at paragraph 194 of the judgment under appeal that, for packaging which is not subject to the DSD system, DSD does not necessarily require payment of the price of the collection and recovery service. The findings of the Court of First Instance are thus manifestly contradictory. 69 The Commission states that the fee is intended to cover the expenses arising from the collection, sorting and recovery of the packaging, together with the administration costs and accordingly does not represent consideration for the use of the mark. Consequently, the decision at issue and the judgment under appeal do not concern a fee for the use of the DGP mark. 70 Like the Commission, Vfw, Landbell and BellandVision do not accept that the contradiction alleged by DSD exists. There is nothing in paragraph 194 of the judgment under appeal which relates to the findings of the Court of First Instance concerning the abuse of a dominant position. It concerns only the question whether the mere affixing of the DGP logo to packaging may have a price, even where DSD does not provide any service for the processing of that packaging. Findings of the Court 71 According to settled case-law, the question whether the grounds of a judgment of the Court of First Instance are contradictory or inadequate is a question of law which is amenable, as such, to judicial review on appeal (see, inter alia, Case C‑185/95 P Baustahlgewebe v Commission [1998] ECR I-8417, paragraph 25; Joined Cases C-403/04 P and C-405/04 P Sumitomo Metal Industries and Nippon Steel v Commission [2007] ECR I-729, paragraph 77; and Joined Cases C‑120/06 P and C-121/06 P FIAMM and Others v Council and Commission [2008] ECR I‑0000, paragraph 90). 72 In the present case, DSD considers that there is a contradiction between the finding set out at paragraph 194 of the judgment under appeal and the findings by which the Court of First Instance confirmed the existence of the abuse of a dominant position described by the Commission. 73 It is apparent from paragraphs 193 and 194 of the judgment under appeal that they concern the fact that, as a result of the obligations laid down by the Commission in the decision at issue, DSD may no longer charge the licence fee provided for in the Trade Mark Agreement for packaging notified to it which bears the DGP logo and in respect of which it is proved that it was not taken back and recovered by the DSD system. 74 At paragraph 194 of the judgment, the Court of First Instance held that, notwithstanding that fact, the possibility cannot be ruled out that manufacturers and distributors of such packaging must pay a sum to DSD in consideration only for the affixing of the DGP logo to the packaging, since affixing the logo in that way implies that the DSD system is available to consumers and therefore represents a use of the DGP mark which is capable of having a price. 75 As the Court of First Instance itself stated in that paragraph, the sum which DSD might receive in consideration for the affixing of the DGP mark is separate from the fee which is due in respect of the packaging that is actually taken back and recovered by DSD under the Trade Mark Agreement. 76 It follows, first, that the Court of First Instance made no finding at paragraph 194 of the judgment under appeal that DSD might receive, in consideration merely for making its system available, a sum corresponding to the price of the collection and recovery service. 77 It follows, secondly, that paragraph 194 of the judgment under appeal concerns the consequences of the measures laid down in the decision at issue and not the finding that an abuse of a dominant position existed. Its purpose is merely to record, contrary to what DSD had argued before the Court of First Instance, that the decision at issue does not make it impossible for DSD to charge a fee that relates only to the affixing of the DGP mark to packaging. 78 Accordingly, DSD’s claim that the judgment under appeal contains contradictory grounds cannot be considered well founded and the first plea in law must therefore be rejected. The second plea in law, alleging distortion of the meaning of the Trade Mark Agreement and other evidence in the file Arguments of the parties 79 DSD claims that the essence of the dispute involves the finding set out at recital 111 to the decision at issue that ‘DSD can be deemed to impose unreasonable prices whenever the quantity of packaging bearing the [DGP logo] is greater than the quantity of packaging making use of the exemption service’. In that respect, the Court of First Instance found that under the Trade Mark Agreement DSD granted a separate licence for the use of the DGP logo, that is to say, a licence to place the mark on packaging for which the DSD system was not used. 80 That finding represents a distortion of the meaning of the Trade Mark Agreement, since that agreement merely grants a right to use the DGP logo in connection with the performance of the obligations arising under the Packaging Ordinance. 81 That finding also amounts to a distortion of other evidence in the file. In that regard, DSD states that the correspondence exchanged between the Commission and DSD during the administrative procedure shows that it did not grant a licence having the scope described by the Court of First Instance, but that it merely refused to implement the Commission’s proposal to accept that packaging intended for competitor processing systems could carry the DGP logo. 82 In addition, the finding of the Court of First Instance relating to the existence of a ‘separate licence’ distorts the evidence in the file on which that Court expressly relied, in particular at paragraph 163 of the judgment under appeal, such as certain judgments of the German courts and the complaints made to the Commission. 83 The Commission, Vfw, Landbell, BellandVision and Interseroh contend that the Court of First Instance simply did not make the finding as to the existence of a ‘separate licence’ which DSD imputes to it. 84 Vfw, Landbell et BellandVision also argue that that plea is inadmissible in so far as DSD’s appeal must be based not on what the appellant alleges is an incorrect appraisal of the facts, but only on the infringement of legal provisions by the Court of First Instance. Findings of the Court 85 Contrary to what Vfw, Landbell and BellandVision contend, this plea, alleging distortion of the meaning of the Trade Mark Agreement and other evidence in the file, is admissible. 86 The error for which DSD criticises the Court of First Instance concerns the distortion of the scope of the licence granted under the Trade Mark Agreement. 87 As was stated at paragraph 11 of this judgment, the object of the Trade Mark Agreement is to allow DSD’s contractual partners to be relieved of their obligation to collect and recover packaging which they notify to DSD. The agreement provides that undertakings participating in the DSD system must affix the DGP logo to all packaging notified to DSD and intended for domestic consumption in Germany. 88 It follows that the Trade Mark Agreement which DSD’s customers entered into concerns the affixing of the DGP logo to all packaging notified to DSD and intended for domestic consumption in Germany. 89 As is apparent, in particular, from Article 1 of the decision at issue, the abuse of a dominant position established by the Commission arises from the fact that the Trade Mark Agreement requires DSD’s customers to pay a fee in respect of all packaging notified to DSD, even where it is proved that some of it has been taken back and recovered through competing exemption systems or self-management solutions. 90 It is clear that the Court of First Instance did not distort that part of the evidence on the file. 91 Thus, at paragraph 141 of the judgment under appeal, the Court of First Instance correctly stated that ‘only the provisions of the Trade Mark Agreement concerning the fee are regarded as abusive in [the decision at issue] [and], thus, [the decision at issue] does not criticise the fact that … the [Trade Mark Agreement] requires the manufacturer or distributor wishing to use the DSD system to affix the [DGP logo] to each piece of notified packaging which is intended for domestic consumption’. 92 As regards, specifically, the extent of the licence granted under the Trade Mark Agreement, DSD has been unable to identify the passages of the judgment under appeal in which the Court of First Instance incorrectly referred to the scope of that licence. With respect to the passages setting out the legal and factual assessment undertaken by the Court of First Instance, DSD merely refers under this plea to paragraphs 119, 163 and 164 of the judgment under appeal, at which the Court of First Instance noted the terms of the decision at issue and held that, notwithstanding DSD’s arguments relating to the need to maintain the proper functioning of its system, the Commission had been right to find that it was abusive to require payment of a licence fee for all packaging notified to DSD and bearing the DGP logo, even where it was proved that some of that packaging had been taken back and recovered by another exemption system or a self-management solution. 93 It follows that the second plea in law must also be rejected. The third plea in law, alleging an insufficient statement of reasons, distortion of the facts and errors of law concerning the exclusive rights relating to the DGP logo Arguments of the parties 94 According to DSD, the finding set out at paragraph 161 of the judgment under appeal that the DGP logo does not benefit from the exclusivity claimed by DSD, with the result that it could not restrict the grant of its licence to packaging processed by its system, is insufficiently reasoned. That finding is essentially based on the conclusions drawn by the Court of First Instance, at paragraph 130 et seq. of the judgment under appeal, from the pleadings and the replies given by the parties at the hearing, without it being possible to determine what was the true purpose of that oral argument. 95 Next, the finding set out at paragraph 139 of the judgment under appeal that ‘the manufacturer or distributor of packaging does not transfer to DSD a set number of items of packaging intended to bear the [DGP logo], but rather a quantity of material which that manufacturer or distributor is going to market in Germany and whose taking back and recovery he intends to entrust to the DSD system’ is manifestly contrary to the provisions of the Trade Mark Agreement concerning the notification of packaging and the grant of the licence, the provisions of the Packaging Ordinance relating to compliance with the obligation to process waste, the requirement of transparency arising from that ordinance and the requirement arising under trade mark law that packaging covered by the DSD system must be identifiable. 96 In the same way, paragraphs 129 and 154 of the judgment under appeal, according to which packaging entrusted to the DSD system may be covered by another processing system at the same time, distort the evidence in the file, in particular the Packaging Ordinance. 97 Paragraph 137 of the judgment, according to which a distributor which has participated in an exemption system may subsequently assume responsibility for the taking back and recovery of packaging in person, and vice versa, also distorts the meaning of the Packaging Ordinance. Under that ordinance, participation in an exemption system entails exemption from processing obligations. Consequently, for packaging covered by an exemption system, it is not possible subsequently to use a self-management solution. 98 The findings of the Court of First Instance are, moreover, incompatible with trade mark law. The situation described by that Court, in which packaging that was not processed under the DSD system could bear the DGP logo, would deprive the logo of its distinctive character. DSD states that that logo, as a registered trade mark, refers exclusively to its system and thus to its services. 99 The Commission contends that in the grounds of the judgment under appeal criticised by DSD the Court of First Instance set out its analysis of the distinctive character of the DGP logo and of the functioning of mixed systems, that is to say, a combination of the DSD system and another exemption system or a self-management solution. 100 As regards paragraph 154 of the judgment under appeal, the Commission maintains that in that paragraph the Court of First Instance correctly set out the observation of the German Government that the same item of packaging may be subject to several systems at the same time. DSD wrongly attributes to the Packaging Ordinance an approach focused on individual items of packaging, which does not correspond with the economic conditions applicable to mixed solutions. 101 As regards paragraph 137 of the judgment under appeal, the Commission argues that this paragraph involves an obiter dictum concerning the implementation of possible correction mechanisms should the recovery rates not be achieved. Furthermore, and in any event, DSD’s criticism of that paragraph of the judgment is unfounded. 102 With respect to paragraph 161 of the judgment under appeal, the Commission states that the DGP logo merely indicates the possibility that packaging may be taken back and recovered by DSD. It observes that that logo is designed to inform traders and final consumers that the packaging on which it is affixed may be processed by the DSD system. 103 According to Vfw, DSD is wrong to argue that an item of packaging cannot be covered by two different systems. 104 Landbell and BellandVision submit that, to the extent that it seeks to justify the abuse of a dominant position by making reference to the Packaging Ordinance and trade mark law, this plea is manifestly unfounded. Contrary to what DSD claims, mixed systems are permissible, as, moreover, the German Government has stated. 105 According to Interseroh, DSD’s argument that the exemption service applies to specific items of packaging misconstrues the Packaging Ordinance. Findings of the Court 106 As a preliminary point, it must be stated that DSD’s arguments that the affixing of the DGP logo to packaging that is not processed under its system constitutes an infringement of trade mark law are essentially the same as those put forward under the fourth plea in law. They will therefore be examined under that plea. 107 As to the remainder, by this plea DSD essentially argues that the findings of the Court of First Instance at paragraphs 139, 154 and 161 of the judgment under appeal are insufficiently reasoned and distort some of the evidence on the file. 108 At paragraph 139 of the judgment under appeal, the Court of First Instance deduced from the information and the considerations referred to at paragraphs 129 to 138 of the judgment that it is possible for manufacturers and distributors of packaging to use mixed systems in order to comply with their obligations as to collection and recovery laid down in the Packaging Ordinance. 109 As is apparent, in particular, from paragraphs 129 and 154 of the judgment under appeal, that finding of the Court of First Instance relating to mixed systems concerns the fact, which is disputed by the appellant, that packaging entrusted to DSD and bearing the DGP logo may be covered at the same time by a collection and recovery system other than the DSD system. 110 It is clear beyond doubt from the grounds set out at paragraphs 131 to 138 of the judgment under appeal that the Court of First Instance founded its reasoning on the consideration that the question whether an item of packaging does, or does not, bear the DGP logo is not determinative. According to that Court, the only point at issue is whether the quantities of material for recovery put into circulation by the manufacturer or distributor are actually taken back and recovered and whether the rates laid down in the Packaging Ordinance are thereby achieved. 111 In that context, at paragraph 137 of the judgment under appeal, the Court of First Instance gave as an example the collection and recovery of plastic waste by a fast‑food chain. 112 As the Commission has rightly pointed out, paragraph 137 constitutes an obiter dictum. For the purposes of the analysis to be undertaken on appeal, it is the finding made by the Court of First Instance at paragraphs 139, 154 and 161 of the judgment under appeal, that there is no exclusive tie between the DGP logo and DSD’s take-back and recovery services, that is determinative. 113 In the first place, the Court of First Instance has set out in sufficient detail the reasons which led it to that conclusion. 114 It should be noted in that regard that the duty to state reasons does not require the Court of First Instance to provide an account which follows exhaustively and one by one all the arguments put forward by the parties to the case and that the reasoning may therefore be implicit on condition that it enables the persons concerned to know why the Court of First Instance has not upheld their arguments and provides the Court of Justice with sufficient material for it to exercise its power of review (see, inter alia, Joined Cases C-204/00 P, C-205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P Aalborg Portland and Others v Commission [2004] ECR I-123, paragraph 372; judgment of 25 October 2007 in Case C-167/06 P Komninou and Others v Commission, paragraph 22; and FIAMM and Others v Council and Commission, paragraph 96). 115 The judgment under appeal replies in detail to the line of argument put forward by DSD as regards the alleged exclusivity attached to the DGP logo and allows the Court of Justice to exercise its power of review. At paragraphs 131 to 138 and paragraphs 150 to 154 of the judgment under appeal, the Court of First Instance set out in full the reasons for which it considered that the Packaging Ordinance and other evidence in the file led to the conclusion that packaging bearing the DGP logo is not necessarily covered by the DSD system alone. 116 In the second place, and contrary to what DSD claims, the findings made by the Court of First Instance do not distort the meaning of either the Packaging Ordinance or the Trade Mark Agreement. 117 Suffice it to hold in that regard that DSD has not identified provisions or passages of the Packaging Ordinance which show that an item of packaging may be processed under one system alone and, accordingly, that an item of packaging bearing the DGP logo must necessarily be processed under the DSD system. Nor has it established that the Trade Mark Agreement contains any indication to that effect. 118 As regards, lastly, the requirement of transparency, DSD has provided no concrete evidence that the interpretation adopted by the Commission and the Court of First Instance, set out at paragraph 154 of the judgment under appeal, according to which it is necessary to define clearly, in the interests of the consumer and of the authorities, which packaging is subject to the take-back obligation at or in the immediate vicinity of the points of sale and which is not, distorts the evidence in the file. Furthermore, DSD has not established that the affixing of the DGP logo to packaging which is processed under a system other than the DSD system runs counter to that objective of transparency. The affixing of that logo to packaging notified to DSD indicates clearly to consumers and to the relevant authorities, irrespective of the question whether that packaging will actually be processed under that system or under another system, that the packaging in question is no longer covered by the obligation that it be taken back at points of sale or in the immediate vicinity of them but has been notified to DSD. 119 It follows from all of the above that the third plea in law must be rejected. The fourth plea in law, alleging infringement of Community trade mark law Arguments of the parties 120 DSD claims that the finding set out at paragraph 161 of the judgment under appeal that the DGP logo cannot be accorded the exclusivity claimed by its proprietor, since such exclusivity ‘would have no other effect than to prevent manufacturers and distributors of packaging from using a mixed system and to legitimise the possibility, for the applicant, of being paid for a service which the interested parties have nevertheless shown that it did not actually provide’ is incompatible with Article 5 of Directive 89/104, which confers on the proprietor of a trade mark exclusive rights therein. That finding accordingly constitutes an infringement of Community trade mark law. 121 According to the Commission, the exclusivity described in Article 5 of Directive 89/104 is not the same as the type of exclusivity described at paragraph 161 of the judgment under appeal. In that passage of the judgment under appeal, the Court of First Instance merely drew the consequences from the reasoning set out at paragraphs 156 and 157 of that judgment, according to which the DGP logo merely indicates a possible processing option and its function as an indicator of origin is not affected where packaging bearing that logo is also subject to other processing options. 122 The Commission adds that the decision at issue does not entail improper use of the mark, that is to say, use by persons with whom DSD has not entered into an agreement. 123 Vfw submits that the logo is not a trade mark in the classic sense. It argues that a trade mark characterises goods and services which are identical with or similar to those in respect of which the mark was registered. The DGP logo serves only to indicate participation in a collection system and not to identify identical or similar goods or services. Findings of the Court 124 It must be held, first of all, that Vfw’s argument that the DGP logo is not truly a trade mark cannot be accepted. It is not disputed that the logo has been registered as a trade mark by the German Patents and Trade Marks Office in relation to waste collection, sorting and recovery services. 125 As regards, next, the alleged failure by the Court of First Instance to have regard to Article 5 of Directive 89/104, it must be noted that, by virtue of Article 5(1)(a), a registered trade mark confers on the proprietor exclusive rights therein, entitling the proprietor to prevent all third parties not having his consent from using in the course of trade any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered. 126 It follows that, by claiming that at paragraph 161 of the judgment under appeal the Court of First Instance failed to have regard to the exclusive right to the use of the logo of which it is the proprietor and by invoking Article 5 of Directive 89/104 in that context, DSD is arguing that the Court of First Instance should have held that the decision at issue had unlawfully stopped it preventing third parties from using a sign which was identical with its logo. DSD placed considerable emphasis on this argument at the hearing and claimed that the result of the obligations laid down by the decision at issue and of their approval by the Court of First Instance is that the DGP logo has, in practice, become available to be used by all. 127 In order to respond to that line of argument, it is necessary to draw a distinction between the use of the DGP logo by DSD’s contractual partners and the possible use of that logo by other third parties. 128 As regards the use of the DGP logo by DSD’s contractual partners, it is apparent from the wording itself of Article 5 of Directive 89/104 that that provision does not cover circumstances in which a third party uses a trade mark with the consent of its proprietor. That is the case, in particular, where the proprietor has authorised its contractual partners to use its mark under the terms of a licence agreement. 129 It follows that DSD cannot validly rely on the exclusive right conferred on it by the DGP logo as regards the use of that logo by manufacturers and distributors who have entered into the Trade Mark Agreement with it. It is true that Article 8(2) of Directive 89/104 provides that a proprietor of a trade mark may invoke the rights conferred by that mark against a licensee who contravenes any of the terms in his licensing contract referred to in that provision. However, as the Advocate General stated at point 192 of his Opinion, in the present case, DSD itself set up a system which requires that the DGP logo be affixed to all packaging, even where some of the packaging is not taken back by the system. It is accordingly a matter of agreement between the parties that the use of the DGP logo on all packaging notified to DSD is required by the Trade Mark Agreement and is therefore compatible with it. 130 In so far as DSD argues that the measures imposed by the Commission have the effect that the use of the DGP logo by its licensees is, in part, to be free of charge, suffice it to note that the sole object and sole effect of the decision at issue is to prevent DSD from receiving payment for collection and recovery services where it is proved that they have not been provided by that company. Such measures are not incompatible with the rules laid down by Directive 89/104. 131 Furthermore, as the Court of First Instance correctly held at paragraph 194 of the judgment under appeal, the possibility cannot be ruled out that the affixing of the DGP logo to packaging, whether part of the DSD system or not, may have a price which, even if it cannot represent the actual price of the collection and recovery service, should be able to be paid to DSD in consideration for the use of the mark alone. 132 As regards the possible use of the DGP logo by third parties other than DSD’s contractual partners, neither the decision at issue nor the judgment under appeal state that such use would be permitted under trade mark law. In that regard, the Court of First Instance correctly found at paragraph 180 of the judgment under appeal that the obligations laid down by the decision at issue concerned only relations between DSD and ‘manufacturers and distributors of packaging which are either contractual partners of DSD in the context of the Trade Mark Agreement …, or holders of a licence to use the [DGP] mark in another Member State in the context of a take-back and recovery system using the logo corresponding to that mark …’. 133 Therefore, any use of the DGP logo by third parties other than DSD’s contractual partners is not a matter for which either the Commission or the Court of First Instance bear any responsibility. Moreover, there is nothing to prevent DSD from bringing proceedings against such third parties before the national courts having jurisdiction in that regard. 134 It follows from all of the above considerations that the fourth plea in law must also be rejected. The fifth plea in law, alleging infringement of Article 82 EC Arguments of the parties 135 The appellant submits that, by holding without stating sufficient reasons for its analysis and by distorting the evidence in the file, that DSD acted abusively in issuing licences to use the DGP logo independently of the use of the DSD system and in requiring payment of a fee for the licence even where the licensee proved that it did not use that system, the Court of First Instance infringed Article 82 EC. 136 According to DSD, had the Court of First Instance analysed the legal situation correctly, it would have been bound to find that DSD does not grant a licence for the use of its logo independently of the use of the DSD system, with the result that the decision at issue must be interpreted as meaning that the refusal to grant such a licence constitutes an abuse. The effect of the decision is therefore to oblige DSD to grant a licence. The Court of First Instance thus failed to have regard to the fact that the conditions necessary in order for such an obligation to be justified were not satisfied. That failure constitutes an error of law. 137 DSD adds that the judgment under appeal has the result that partial participation in the DSD system would be possible (even, for example, to the extent of only 0.1% of packaging bearing the DGP logo), without DSD being able to verify the plausibility or legitimacy of such a low level of participation. In particular, DSD would be unable to verify whether the reasons which, according to the decision at issue, make it necessary to affix the DGP logo to all packaging when only part of the packaging is covered by the DSD system were satisfied. The example of participation in the DSD system which may be weak and arbitrary in nature, while the DGP logo is affixed to all the packaging concerned, makes it all the more clear that the decision at issue imposes an obligation to grant a licence for the use of that logo. 138 The Commission, Landbell and BellandVision maintain that the decision at issue and the judgment under appeal are not based on the hypothesis of a licence to use the DGP logo independently of the use of the DSD system, but are concerned with the amount of the fee attaching to the services provided. Similarly, the decision at issue and the judgment under appeal do not mean that DSD is obliged to grant a licence for the use of the DGP logo to manufacturers and distributors to which it does not wish to do so. 139 In Vfw’s submission, this plea is based on a misunderstanding of the subject-matter of the dispute, as it is not the Commission’s intention to impose on DSD an obligation to grant such a licence, but solely to prevent DSD from using its dominant position to exclude competition from other systems. 140 Interseroh also observes that at no part of the judgment under appeal does the Court of First Instance suggest that DSD should offer a licence to use the DGP logo independently of the use of the DSD system. Nor does that judgment place DSD under any obligation to grant such a licence. Findings of the Court 141 As the Court of First Instance stated at paragraph 121 of the judgment under appeal, it is apparent from point (a) of the second paragraph of Article 82 EC that the abuse of a dominant position may consist, inter alia, in directly or indirectly imposing unfair prices or other unfair trading conditions. 142 In the same paragraph of the judgment under appeal, the Court of First Instance noted the settled case-law, according to which an undertaking abuses its dominant position where it charges for its services fees which are disproportionate to the economic value of the service provided (see, inter alia, Case 226/84 British Leyland v Commission [1986] ECR 3263, paragraph 27, and Case C-340/99 TNT Traco [2001] ECR I-4109, paragraph 46). 143 As the Court of First Instance held at paragraph 164 of the judgment under appeal, following its analysis set out at paragraphs 119 to 163 of that judgment, the conduct of DSD which is objected to in Article 1 of the decision at issue and which consists in requiring payment of a fee for all packaging bearing the DGP logo and put into circulation in Germany, even where customers of the company show that they do not use the DGP system for some or all of that packaging, must be considered to constitute an abuse of a dominant position within the meaning of the provision and the case-law referred to above. It is also apparent from paragraphs 107 to 117 and 126 to 133 of this judgment that the findings made by the Court of First Instance are sufficiently reasoned and are not vitiated by the errors of fact or law invoked by DSD as regards the exclusive rights attached to the DGP logo. 144 The Court of First Instance also correctly held at paragraph 91 of the judgment under appeal that where there is an abuse of a dominant position the Commission has the power, under Article 3(1) of Regulation No 17, to require DSD to put an end to the infringement that has been established. 145 As the Court of First Instance observed in the same paragraph of the judgment under appeal, the obligation imposed on DSD by Article 3 of the decision at issue to undertake vis-à-vis all parties to the Trade Mark Agreement not to charge any licence fee for such partial quantities of sales packaging bearing the DGP logo as are put into circulation in Germany for which the exemption service is not used, and for which the obligations imposed by the Packaging Ordinance have demonstrably been fulfilled in another way, is nothing other than the consequence of the finding of an abuse of a dominant position and of the exercise by the Commission of its power to oblige DSD to put an end to the infringement. 146 Moreover, contrary to what DSD submits, the obligation imposed by Article 3 of the decision at issue does not amount in any way to an obligation to grant a licence to use the DGP logo. There is nothing in the decision which affects DSD’s freedom of choice as to the persons with which it is to enter into a Trade Mark Agreement and to which, consequently, it is to grant that licence. The decision at issue merely obliges DSD not to claim payment from its contractual partners for take-back and recovery services which it has not provided. 147 In the light of all of the above considerations, it must be held that the Court of First Instance did not fail to have regard to Article 82 EC and the fifth plea in law must accordingly be rejected. The sixth plea in law, alleging infringement of Article 3 of Regulation No 17 and the principle of proportionality Arguments of the parties 148 DSD submits, first, that the Packaging Ordinance and trade mark law preclude its being required to grant a licence to use the DGP logo; yet the measures imposed by Article 3 et seq. of the decision at issue amount to imposing such an obligation on it. By failing to accept that these measures are unlawful, the Court of First Instance infringed Article 3 of Regulation No 17, which provides that, where the Commission finds that there is infringement of Article 81 EC or Article 82 EC, it may by decision require the undertakings concerned to bring such infringement to an end. 149 Secondly, DSD submits that the Packaging Ordinance and trade mark law preclude its being prevented from requiring its customers to affix to packaging which bears the DGP logo, but is not processed by the DSD system, a notice which enables the distinctive effect of that logo to be neutralised. By rejecting, at paragraph 200 of the judgment under appeal, DSD’s essential argument that packaging bearing the DSD logo and processed by the DSD system must be capable of being distinguished from packaging bearing the same logo but not processed by that system, the Court of First Instance disregarded the fact that Article 3 of the decision at issue constitutes a breach of Article 3 of Regulation No 17 and of the principle of proportionality. 150 According to the Commission, Landbell and BellandVision, the first argument put forward under this plea is based on the incorrect premiss that the Court of First Instance relied on the hypothesis of a separate licence to use the DGP logo. 151 With respect to DSD’s second argument, the Commission maintains that neither the Packaging Ordinance nor trade mark law require the identification of the different types of packaging for allocation to the DSD system or to another service provider. Landbell and BellandVision share that view and add that an explanatory note to the effect that the packaging is not part of the DSD system would not be capable of remedying DSD’s abusive conduct. Findings of the Court 152 As was held at paragraph 146 of this judgment, the decision at issue does not impose any obligation on DSD to grant the licence to use the DGP logo. 153 The first argument relied on in support of the sixth plea in law therefore cannot be accepted. 154 As regards DSD’s argument that the packaging bearing the DGP logo and processed by the DSD system must be capable of being distinguished from packaging on which that logo is affixed but which is not processed by that system, the Court of First Instance held at paragraph 200 of the judgment under appeal that, having regard to the existence of mixed systems, it is not possible to make the distinction which DSD wishes to draw. 155 That finding is not incorrect. As was stated at paragraph 129 of the present judgment, DSD itself requires its contractual partners to affix the DGP logo to all packaging which is notified to it. As the Advocate General stated at point 240 of his Opinion, it is not possible to determine in advance what route will be taken by an item of packaging. It is therefore not possible, at the time at which a product bearing the packaging is packaged or sold, to distinguish products bearing the DGP logo and actually processed by the DSD system and those which bear the same logo but which will be processed by another system. 156 Consequently, the second argument put forward in support of the sixth plea in law is also unfounded. 157 That plea in law must therefore be rejected. The seventh plea in law, alleging a procedural irregularity Arguments of the parties 158 DSD objects that the Court of First Instance substituted its own reasoning for that of the Commission and that it failed to have regard to the rules governing the administrative procedure, in particular the right to be heard. 159 The Court of First Instance made new findings, based on the submissions made by the parties at the hearing. DSD refers to answers given to detailed questions which the Court of First Instance had put, either barely three weeks before the hearing or during the hearing, without indicating what consequences it proposed to draw from those answers or in what way those questions were connected with the findings made in the decision at issue. 160 Those findings of the Court of First Instance are also new by reason of the fact that their subject-matter appears neither in the decision at issue nor in the written pleadings of DSD or the Commission. 161 DSD refers, in particular, to two findings, namely the finding set out at paragraphs 139 and 154, in particular, of the judgment under appeal that packaging entrusted to DSD may come under an exemption system and at the same time under a self-management solution, and the finding set out in paragraphs 137 and 139, in particular, of that judgment that the Packaging Ordinance provides numerous correction mechanisms allowing manufacturers and distributors to assume the obligations arising under that ordinance by attributing packaging ex post facto to a self-management solution or an exemption system. 162 According to the Commission, Vfw, Landbell and BellandVision, the judgment under appeal contains nothing new as regards the matters already considered during the administrative procedure and during the written procedure before the Court of First Instance. Findings of the Court 163 It must be recalled that the Court of First Instance is the sole judge of any need to supplement the information available to it in respect of the cases before it. Whether or not the evidence before it is sufficient is a matter to be appraised by it alone and is not subject to review by the Court of Justice on appeal, except where that evidence has been distorted or the substantive inaccuracy of the findings of the Court of First Instance is apparent from the documents in the case (see, inter alia, Case C-315/99 P Ismeri Europa v Court of Auditors [2001] ECR I-5281, paragraph 19, and Joined Cases C-75/05 P and C-80/05 P Germany and Others v Kronofrance [2008] ECR I-0000, paragraph 78). 164 Therefore, the Court of First Instance cannot be criticised for having put, before and at the time of the hearing, a series of detailed questions to the parties in order to supplement the information already available to it and for having drawn certain conclusions from the replies given by the parties to those questions. 165 It is also clear that the Court of First Instance had regard to the subject-matter of the dispute, as set out in DSD’s application, and refrained from introducing issues which were not covered by the decision at issue. As regards, in particular, the possibility of combining a number of take-back and recovery systems, it is apparent in particular from recitals 20 and 23 to that decision that the question of mixed systems was examined by the Commission in its investigation and that that question does not, as a result, constitute a new element added to the file by the Court of First Instance. 166 It follows that the seventh plea in law must be rejected. The eighth plea in law, alleging infringement of the fundamental right to have the case dealt with within a reasonable time Arguments of the parties 167 DSD maintains that the Court of First Instance committed a procedural irregularity and adversely affected its interests by failing to have regard to the fundamental right to have a case dealt with within a reasonable time, as recognised by Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, and by Article 47 of the Charter of Fundamental Rights of the European Union, proclaimed in Nice on 7 December 2000 (OJ 2000 C 364, p. 1). 168 DSD points out that the proceedings before the Court of First Instance started on 5 July 2001 and ended on 24 May 2007. Even allowing for the constraints that are inherent in proceedings before the Community judicature, that period is excessively long. Between the notification of the end of the written procedure on 9 September 2002 and the decision taken on 19 June 2006 to open the oral procedure and to ask the parties to reply to certain questions at the hearing, more than 45 months passed without any measure being adopted. 169 DSD also states that the excessive duration of the proceedings constitutes a serious infringement of its interests, since, inter alia, its contractual and business model were adversely affected and it was deprived of the possibility of receiving an adequate fee simply for the use of the DGP logo. 170 According to DSD, it is clear from a reading of Article 58, in conjunction with Article 61, of the Statute of the Court of Justice that where a plea, relied on in support of an appeal and alleging a breach of procedure before the Court of First Instance which has adversely affected the interests of the appellant, is well founded, the judgment of the Court of First Instance must be set aside by the Court of Justice. That rule is justified, as was recognised by the Court of Justice in Baustahlgewebe v Commission, for reasons of economy of procedure and in order to ensure an immediate and effective remedy regarding a procedural irregularity of that kind. 171 Again relying on Articles 58 and 61 of the Statute of the Court of Justice, DSD claims that such a procedural irregularity before the Court of First Instance justifies the setting aside of the judgment of that Court, irrespective of whether that irregularity has affected the outcome of the proceedings. 172 The Commission, Landbell and BellandVision contend that there is nothing in the present case which allows it to be concluded that there was a relationship between the length of the proceedings and their outcome. Furthermore, setting aside the judgment under appeal would only further prolong the proceedings. 173 In any event, the length of the proceedings was justified by the complexity of the dispute, for which DSD itself was responsible, inasmuch as its written pleadings were voluminous and were accompanied by numerous annexes. The same was true of Case T-289/01 Duales System Deutschland v Commission, where judgment was delivered on 24 May 2007 and which the Court of First Instance dealt with in parallel with Case T-151/01, in which the judgment under appeal was delivered. 174 As regards DSD’s assertions regarding the adverse effect on its interests, the Commission considers these to be incorrect. With respect, in particular, to DSD’s contractual model, the Commission states that every provision adopted under Article 82 EC which requires that an abuse be terminated necessarily requires that the commercial policy of the undertaking concerned be changed. 175 Vfw contends that DSD has suffered no disadvantage by reason of the length of the proceedings, in so far as it has been able to continue its activities and its position on the market has not been significantly weakened. Moreover, even if it were to be accepted that the appellant’s interests had been affected, the setting aside of the judgment under appeal would be disproportionate. Findings of the Court 176 As is apparent from the first paragraph of Article 58 of the Statute of the Court of Justice and from the case-law, the Court of Justice has jurisdiction to verify whether a breach of procedure adversely affecting the appellant’s interests was committed by the Court of First Instance and must satisfy itself that the general principles of Community law have been complied with (Baustahlgewebe v Commission, paragraph 19, and Case C-13/99 P TEAM v Commission [2000] ECR I-4671, paragraph 36). 177 With respect to the irregularity relied on in the present plea, Article 6(1) of the European Convention on the Protection of Human Rights and Fundamental Freedoms provides that, in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. 178 As a general principle of Community law, such a right is applicable in the context of proceedings brought against a Commission decision (Baustahlgewebe v Commission, paragraph 21, and Joined Cases C-341/06 P and C-342/06 P Chronopost and La Poste v UFEX and Others [2008] ECR I-0000, paragraph 45). 179 That right has, moreover, been reaffirmed in Article 47 of the Charter of Fundamental Rights of the European Union. As the Court of Justice has held on several occasions, that article relates to the principle of effective judicial protection (Case C-432/05 Unibet [2007] ECR I-2271, paragraph 37; Joined Cases C-402/05 P and C-415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR I-0000, paragraph 335; and Case C-47/07 P Masdar (UK) v Commission [2008] ECR I-0000, paragraph 50). 180 In so far as the Commission and Vfw dispute the existence of a link between the length of the proceedings and the interests of DSD and thus raise the question whether this plea in law truly concerns a breach of procedure adversely affecting the interests of the appellant within the meaning of the first paragraph of Article 58 of the Statute of the Court of Justice, it must be held that an undertaking which brings proceedings for the annulment of a decision which has obliged it to adapt the standard form of contract which it enters into with its customers will have, on self-evident commercial policy grounds, a clear interest in having a line of argument, by which it submits that that decision is unlawful, adjudicated upon within a reasonable period. The fact that the Court of Justice has, in other cases, examined the question of the length of the proceedings in actions brought against Commission decisions imposing fines for the infringement of competition law (see, inter alia, Baustahlgewebe v Commission, paragraph 21; Case C-194/99 P Thyssen Stahl v Commission [2003] ECR I-10821, paragraph 154; and Sumitomo Metal Industries and Nippon Steel v Commission, paragraph 115), whereas no such fine was imposed on DSD in the present case, is irrelevant in that regard. 181 It must also be borne in mind that the reasonableness of the period for delivering judgment is to be appraised in the light of the circumstances specific to each case, such as the complexity of the case and the conduct of the parties (see, to that effect, Sumitomo Metal Industries and Nippon Steel v Commission, paragraph 116 and the case-law cited, and order of 26 March 2009 in Case C-146/08 P Efkon v Parliament and Council, paragraph 54). 182 The Court has held in that regard that the list of relevant criteria is not exhaustive and that the assessment of the reasonableness of a period does not require a systematic examination of the circumstances of the case in the light of each of them, where the duration of the proceedings appears justified in the light of one of them. Thus, the complexity of the case or the dilatory conduct of the applicant may be deemed to justify a duration which is prima facie too long (Joined Cases C-238/99 P, C-244/99 P, C-245/99 P, C-247/99 P, C-250/99 P to C-252/99 P and C-254/99 P Limburgse Vinyl Maatschappij and Others v Commission [2002] ECR I-8375, paragraph 188, and Thyssen Stahl v Commission, paragraph 156). 183 In the present case, it must be stated that the length of the proceedings before the Court of First Instance, which amounted to approximately 5 years and 10 months, cannot be justified by any of the particular circumstances of the case. 184 It appears, in particular, that the period between the notification, in September 2002, of the end of the written procedure and the opening, in June 2006, of the oral procedure lasted for 3 years and 9 months. The length of that period cannot be explained by the circumstances of the case, whether it be the complexity of the dispute, the conduct of the parties or by supervening procedural matters. 185 As regards, in particular, the complexity of the dispute, the proceedings brought by DSD against the decision at issue and Decision 2001/837, while requiring a detailed examination of the Packaging Ordinance, DSD’s contractual links, the Commission decisions and the arguments relied on by DSD, were not of a difficulty or scope which prevented the Court of First Instance from scrutinising the documents in the case and preparing for the oral procedure within a period of less than 3 years and 9 months. 186 Moreover, as the Court of Justice has already held, in the case of proceedings concerning infringement of competition rules, the fundamental requirement of legal certainty on which economic operators must be able to rely and the aim of ensuring that competition is not distorted in the internal market are of considerable importance not only for an applicant himself and his competitors but also for third parties, in view of the large number of persons concerned and the financial interests involved (Baustahlgewebe v Commission, paragraph 30). In the present case, having regard to DSD’s dominant position, the size of the market for services on which DSD and its competitors were carrying on business, the possible effects of the outcome of the dispute on the practice to be followed and the fees to be paid by manufacturers and distributors of packaged products and the questions raised by the dispute as regards the extremely widespread use of the DGP logo, the period of time between the end of the written procedure and the next phase of the procedure was excessive. 187 Furthermore, as the Advocate General stated at points 293 to 299 of his Opinion, that period of time was not interrupted either by the adoption by the Court of First Instance of measures of organisation of procedure or by procedural issues raised by the parties. 188 In the light of the above, it must be held that there was a failure, in the proceedings before the Court of First Instance, to have regard to the requirement that the case be dealt with within a reasonable time. 189 As regards the consequences that arise where proceedings before the Court of First Instance fail to be completed within a reasonable time, DSD invokes the rule laid down in the first paragraph of Article 61 of the Statute of the Court of Justice that where an appeal is well founded the Court is to quash the decision of the Court of First Instance. Since the present plea alleges that judgment was not delivered within a reasonable time and that the failure to do so constitutes a breach of procedure which adversely affects the interests of the appellant within the meaning of Article 58 of the Statute, a finding that such a breach occurred must necessarily lead, in DSD’S view, to the setting aside of the judgment under appeal, irrespective of whether that breach of procedure had an effect on the outcome of the dispute. Were the judgment not to be set aside, the Court of Justice would not be acting in compliance with Article 61 of the Statute. 190 By that argument, DSD proposes that the Court should reconsider its case-law, according to which failure to deliver judgment within a reasonable time will lead to the setting aside of the judgment under appeal only where there are indications that the excessive length of the proceedings affected their outcome (see, to that effect, Baustahlgewebe v Commission, paragraph 49). In the present case, DSD has not established that such indications exist. 191 Admittedly, it is true, as DSD has pointed out, that failure to adjudicate within a reasonable time constitutes a procedural irregularity (see, to that effect, Baustahlgewebe v Commission, paragraph 48). 192 It none the less remains the case that the first paragraph of Article 61 of the Statute of the Court of Justice should be interpreted and applied purposively. 193 In so far as there is nothing to suggest that the failure to adjudicate within a reasonable time may have had an effect on the outcome of the dispute, the setting aside of the judgment under appeal would not remedy the infringement of the principle of effective legal protection committed by the Court of First Instance. 194 In addition, as the Advocate General stated at points 305 and 306 of his Opinion, having regard to the need to ensure that Community competition law is complied with, the Court of Justice cannot allow an appellant to reopen the question of the existence of an infringement, on the sole ground that there was a failure to adjudicate within a reasonable time, where all of its pleas directed against the findings made by the Court of First Instance concerning that infringement and the administrative procedure relating to it have been rejected as unfounded. 195 Conversely, as the Advocate General stated at point 307 et seq. of his Opinion, the failure on the part of the Court of First Instance to adjudicate within a reasonable time can give rise to a claim for damages brought against the Community under Article 235 EC and the second paragraph of Article 288 EC. 196 Consequently, DSD’s argument that, where a reasonable period is exceeded, that fact must, in order for that procedural irregularity to be remedied, lead to the judgment under appeal being set aside, is unfounded. Consequently, the eighth plea in law must be rejected. 197 As none of the pleas in law put forward by DSD has been upheld, the appeal must be dismissed. Costs 198 Under Article 69(2) of the Rules of Procedure, applicable to the procedure on appeal pursuant to Article 118 thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the Commission, Interseroh, Vfw, Landbell and BellandVision have applied for costs against DSD, and the latter has been unsuccessful, the appellant must be ordered to pay the costs of these proceedings. On those grounds, the Court (Grand Chamber) hereby: 1. Dismisses the appeal; 2. Orders Der Grüne Punkt – Duales System Deutschland GmbH to bear its own costs, together with the costs of these proceedings incurred by the Commission of the European Communities, Interseroh Dienstleistungs GmbH, Vfw GmbH, Landbell AG für Rückhol-Systeme and BellandVision GmbH. [Signatures] * Language of the case: German.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 536 of 1962. Appeal from the judgment and decree dated March 26. 1958, of the High Court at Patna in First Appeal No. 340 of .1951. Niren De, Additional Solicitor-General, N.D. Karkhanis and B.R.G.K. Achar, for the appellant. Bishan Narain, P. D. Himmatsinghka s. Murthy and B.P. Maheshwari, for the respondent. The judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Patna High Court. The respondent sued the Union of India as representing G.I.P. Railway, Bombay and E.I.R. Calcutta for recovery of damages for number-delivery of 31 bales of piece goods, out of 60 bales which had been companysigned to Baidyanathdham from Wadibundar. This companysignment was loaded in wagon No. 9643 on December 1. 1947. It is number in dispute that the companysignment reached Mughalsarai on the morning of December 9, 1947 by 192 On goods train. After reaching Mughalsarai, the wagon was kept in the marshaling yard till December 12, 1947. It wag sent to Baidyanadham by 214 On goods train from Mughalsarai at 6- 40 p.m. on December 12, 1947 and eventually reached Baidyanathdham on December 21, 1947. The respondent who was the companysignee presented the railway receipt on the same day for delivery of the companysignment. Thereupon the railway delivered 29 bales only to the respondent and the remaining 31 bales were said to be missing and were never delivered. Consequently on August 31. 1948, numberice was gyen under s. 80 of the Civil Procedure Code and this was followed by the suit out of which the present appeal has arisen on November 20, 1948. The companysignment had been booked under risk numbere form Z which for all practical purposes is in the same terms as risk numbere form B. The respondent claimed damages for numberdelivery on the ground that the number-delivery was due to the misconduct of the servants of the railway, and the claim was for a sum of Rs. 36,461/12/-. The suit was resisted by the appellant and a number of defences were taken. In the present appeal we are only companycerned with two defences. It was first companytended that the suit was barred by s. 77 of the Indian Railways Act, No. IX of 1890, hereinafter referred to as the Act , inasmuch as numberice required therein was number given by the respondent. Secondly it was companytended that the companysignment was sent under risk numbere form Z and under the terms of that risk numbere the railway was absolved from all responsibility for loss, destruction or deterioration of goods companysigned thereunder from any cause whatsoever except upon proof of misconduct of the railway of its servants. and that the burden of proving such misconduct subject to certain exceptions was on the respondent and that the respondent had failed to discharge that burden. Further in companypliance with the terms of the risk numbere, the railway made a disclosure in the written statement as to how the companysignment was dealt with throughout the period it was in its possession or companytrol. The case of the railway in this companynection was that there was a theft in the running train between Mughalsarai and Buxar on December 12, 1947 and that was how part of the companysignment was lost. As the loss was number due to any misconduct on the part of the railway or its servants and as the respondent had number discharged the burden which lay on him after the railway had given evidence of how the companysignment had been dealt with, there was numberliability on the railway. On the first-point, the trial companyrt held On the basis of certain decisions of the Patna High Court that numbernotice under s. 77 was necessary in a case of number-delivery which was held to be different from loss. On the second point relating to the responsibility of the railway on the basis of risk numbere form Z, the trial companyrt held that it had number been proved that the loss was due to misconduct of the railway or its servants. It therefore dismissed the suit. Then followed an appeal by the respondent to the High Court. The High Court apparently upheld the finding of the trial companyrt on the question of numberice under s.77. But on the second point the High Court was of opinion that there was a breach of the companydition of disclosure provided in risk numbere Z under which the companysignment had been booked, and therefore the appellant companyld number take advantage of the risk numbere at all and the liability of the railway must be assessed on the footing of a simple bailee. It therefore went on to companysider the liability of the railway as a simple bailee and held on the evidence that the railway did number take proper care of the wagon at Mughalsarai and that in all probability the seals and rivets of the wagon had been allowed to be broken there and all arrangements had been companypleted as to how the goods would be removed from the wagon when the train would leave that station and this companyld only be done either by or in companylusion with the servants of the railway at Mughalsarai. In this view of the matter the High Court allowed the appeal and decreed the suit with companyts As the judgment was one of reversal and the amount involved was over rupees twenty thousand, the High Court granted a certificate. and that is how the matter has companye up before us. We .shall first deal with the-question of the numberice. We are in this case companycerned with the Act as it -was in 1947 before its amendment by Central Act 56 of 1949 and-Central Act No. 39 of 1961 and all references in this judgment must be read as applying to the Act as it was. in 1947. Now s. 77 inter alia provides that a person shall number be entitled to companypensation for the loss, destruction or deterioration of animals or goods delivered to be carried by railway, unless his claim to companypensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery of the animals or goods for carriage by railway. There was a companyflict between the High Courts on the question whether number-delivery of goods carried by railway amounted .to less within the meaning of s. 77. Some High Courts including the. Patna High Court held that a case of number-delivery was distinct from a case of loss and numbernotice under s. 77 was necessary .in-the case of number-delivery. Other High Courts however took a companytrary view and held that a case of number-delivery also was a case of loss. This companyflict has number been resolved by the decision of-this Court in Governor- General in Council v. Musaddilal 1 and the view taken by the Patna High Court has been overruled. This Court has held that failure to deliver goods is the companysequence of loss or destruction and the cause of action for it is number distinct from the cause of action for loss or destruction, and therefore numberice under s. 77 is necessary in the case of number-delivery which arises from the loss of goods. Therefore numberice under s. 77 was necessary in the present case. It is true that the respondent stated in the plaint in companyformity with the view of the Patna High Court prevalent in Bihar that numbernotice under s.77 was necessary as it was a case of number-delivery. But we find in actual fact that a numberice was given by the respondent to the railway on April 10, 1948 to the Chief Commercial Manager, E.I.R. in which it was stated that 60 bales of-cloth were booked for the respondent but only 29 bales had been delivered and the balance of 31 bales had number been delivered. Therefore the respondent gave numberice that if the bales were number delivered to him within a fortnight, he would file a suit for the recovery of Rs. 36,461/12/-, and the details as to how the amount was arrived at were given in this numberice. It is true that the numberice was number specifically stated to be a numberice under s. 77 of the Act but it gave. all the particulars necessary in a numberice under that section. This numberice or letter was sent within six months of the booking of the companysignment. A similar case came up before this. Court in Jetmull Bhojraj v. The Darjeeling Himalayan Railway Co. Ltd. 2 and this Court held that .the letter to the railway in that case was sufficient numberice for the .purpose of s. 77 of the Act. Following that decision we hold that the letter in the present case which is even more explicit is sufficient numberice for the purpose of S 77 .of the Act. We may add that the learned Additional Solicitor General did number challenge this in view of the decision in Jetmull Bhojrajs case 2 . This brings us to the second question raised in the appeal. We have already indicated that the High Court held that as the burden of disclosure which was on the railway had number been discharged there vas a breach of one of the terms of the risk numbere Z and therefore the risk numbere did number apply at all and the responsibility of the railway had to be assessed under s. 72 1 of the Act. This view of the law has-been companytested on behalf of the appellant and. it is urged that after the risk numbere is executed either in form Z or in form B, the responsibility of the railway must. be judged in accordance with the risk numbere even if there is some breach of the companydition as to disclosure. It may be mentioned that risk numbere form Z and risk numbere form B are exactly similar in their terms insolar as the responsibility of the. railway is .concerned for. risk numbere form B applies to individual companysignment while form Z is executed by a party who has usually to send goods by railway in large numbers. Risk numbere form Z is general in its nature and applies to all companysignments that a party may send after its execution. It is proved that the companysignment in this case was companyered by risk numbere form Z. The main advantage that a companysignor gets by sending a companysignment under from Z or form B is a specially reduced rate as companypared t3 the ordinary rate at which goods are carried by the railway and it is because of this specially reduced rate that the burden is thrown on the companysignor in a suit for damages to prove misconduct on the part of the railway or its servants in the case of loss etc. of the goods, subject to one exception. On the other hand the argument on behalf of the respondent is that the view taken by the Patna High Court is right and it is the duty of the railway administration under the risk numbere, as soon as there is number-delivery and a claim is made on the railway for companypensation, to disclose how the companysignment was dealt with throughout while it was in its possession or companytrol and that its failure to do so results immediately in breach of the companytract with the result that the responsibility of the railway has to be judged solely on the basis of s. 72 1 of the Act ignoring the risk numbere altogether. Section 72 1 defines the responsibility of the railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway to be the same as that of a bailee under ss. 152 and 161 of the Indian Contract Act, 1872, subject to other provisions of the Act. Sub-section 2 of s. 72 provides that an agreement purporting to limit the responsibility under s. 72 1 can be made subject to two companyditions, namely, i that it is in writing signed by or on behalf of the person sending or delivering to the railway administration the animals or goods, and ii that it is in a form approved by the Governor-General. Sub-section 3 of s. 72 provides that numberhing in the companymon law of England or in the Carriers Act 1865 regarding the responsibility of companymon carriers with respect to carriage of animals or goods shall affect the responsibility as in this section defined of the railway administration. So the responsibility of the railway for loss etc. is the same as that of a bailee under the Indian Cantract Act. But this responsibility can be limited as provided in s. 72 2 . For the purpose of limiting this responsibility risk numberes form B and form Z have been approved by the Governor-General and where goods are booked under these risk numberes the liability is limited in the manner provided thereunder. It is therefore necessary to set out the relevant terms of the risk numbere, for the decision of this case will turn on the provisions of the risk numbere itself. The risk numbere whether it is in form B or form Z provides that where goods are carried at owners risk on specially reduced rates, the owner agrees or undertakes to hold the railway administration harmless and free from all responsibility for any loss, deterioration or destruction of or damage to all or any of such companysignment from any cause whatever, except upon proof that such loss, destruction, deterioration or damage arose from the misconduct on the part of the railway administration or its servants. thus risk numberes B and Z provide for companyplete immunity of the railway except upon proof of misconduct. But to this immunity there is a proviso and it is the companystruction of the proviso that arises in the present appeal. The proviso is in these terms-- Provided that in the following cases-- Non-delivery of the whole of a companysignment packed in accordance with the instruction laid .down in the tariff or where there are numberinstructions, protected otherwise than by paper or other packing readily removable by hand and fully addressed, where such number-delivery is number due to accidents to train or to fire b The railway administration shall be bound to disclose to the companysignor how the companysignment was dealt with throughout the time it was in its possession or companytrol, and if necessary, to give evidence thereof before the companysignor is called upon to prove misconduct, but, if misconduct on the part of the railway administration or its servants cannot be fairly inferred from such evidence, the burden of proving such misconduct shall lie upon the companysignor. It is number in dispute that the present case companyes under cl. a of the risk numbere. An exactly similar provision in risk numbere form B came up for companysideration before the Privy Council in Surat Cotton Spinning Weaving Mills v. Secretary Of State for India in Council, and the law on the subject was laid down thus at pp.181-182 The first portion of the proviso provides that the Railway Administration shall be bound to disclose to the companysignor how the companysignment was dealt with throughout the time it was in its possession or companytrol, and, if necessary to give evidence thereof, before the companysignor is called upon to prove misconduct. In their Lordships opinion, this obligation arises at once upon the occurrence of either of cases a or b , and is number companyfined to the stage of litigation. Clearly one object of the provision is to obviate, if possible, the necessity for litigation. On the other hand, the closing words of the obligation clearly apply to the litigious stage. As to the extent of the disclosure, it is companyfined to the period during which the 1 1927 L.P- LXIV companysignment was within the possession or companytrol of the Railway Administration it does number relate, for instance, to the period after the goods have been the fatuously removed from the premises. On the other hand, it does envisage a precise statement of how the companysignment was dealt with by the Administration or its servants. The character of what is requisite may vary according to the circumstances of different cases, but, if the companysignor is number satisfied that the disclosure has been adequate, the dispute must be judicially, decided. As to the accuracy or truth of the information given, if the companysignor is doubtful or unsatisfied, and companysiders that these should be established by evidence, their Lordships are of opinion that evidence before a Court of law is companytemplated, and that. as was properly done in the present suit, the Railway Administration should submit their evidence first at the trial. At the close of the evidence for the Administration two questions may be said.to arise, which it is important to keep distinct. The first question is number a mere question of.procedure, but iS whether they have discharged their obligation of disclosure, and, in regard to this, their Lordships are of opinion that the terms of the Risk Note require a step in procedure, which may be said to be Unfamiliar in the practice of the Court if the companysignor is number satisfied with the disclosure made their Lordships are clearly of opinion that is for him tO say so, and to call on the Administration to fulfill their obligation .Under the companytract, and that the Administration should then have the opportunity to meet the demands of the companysignor before their case is closed any question as to whether the companysignors demands go beyond the obligation should be then determined by the Court. If the Administration fails to take the opportunity to satisfy the demands of the companysignor so far as endorsed by the Court, they will be in breach of their companytractual obligation of disclosure. The other question which may be said to arise at this stage is whether misconduct may be fairly inferred from the evidence of the Administration if so, the companysignor is absolved from his original burden of proof. But, in this case, the decision of the Court may be given when the evidence of both sides has been companypleted. It is .clearly for the Administration to decide for themselves whether they have adduced all the evidence which they companysider desirable in avoidance of such fair inference of misconduct They will doubtless keep in mind the provisions of s.114 of the Indian Evidence Act.- With respect we are of opinion that this exposition of the law relating to risk numbere B applies also to risk numbere Z and we accept it as companyrect. Thus the responsibility of the railway. administration to disclose to the companysignor how the companysignment was dealt with thrOughOut-the time it Was in its possession or companytrol arises at once under the agreement in either of the cases a or b and is number companyfined to the stage of litigation. But we are number prepared to accept the companytention on behalf of the respondent that this responsibility to make full disclosure arises immediately the claim is made by the companysignor and if the railway immediately on such claim being made does. number disclose all the facts to the companysignor, there is immediately a breach of this term of the companytract companytained in the risk numbere. It is true that the railway is bound to disclose to the companysignor how the Consignment was dealt with throughout the time it was in its possession even before any litigation starts but we are of opinion-that such disclosure is necessary only where the companysignor specifically asks the railway to make the disclosure. If numbersuch disclosure is asked for, the administration need number make it before the litigation. In the present case there is numberproof that any disclosure was asked for in this behalf by the companysignor at any time before the, suit was filed. Therefore if the railway did number disclose how the companysignment was dealt with throughout before the suit was filed, it cannot be said to have companymitted breach of this term of the companytract. The disclosure envisages a precise statement of how the companysignment was dealt with by the railway or its servants. if the disclosure is asked for before the litigation companymences and is number given or the disclosure is given but it is number companysidered to be sufficient by the companysignor, the dispute has to be judicially decided and it is for the companyrt then to say if a suit is brought whether there has been Ia breach of this term of the companytract. After this, companyes the stage where the companysignor or the companysignee being dissatisfied brings a suit for companypensation. At that stage evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation to the Consignor or which might have been made in the written statement in reply to the suit. When the railway administration. has given its evidence in proof of the disclosure and the plaintiff is number satisfied with the disclosure made in the evidence, the plaintiff is entitled to ask the companyrt to call upon the railway to fulfil its obligation under the companytract and the railway should then .have the opportunity of meeting the demands of the plaintiff before its case is closed. Thus in addition to the evidence that the railway may adduce on its own and in doing so the railway has necessarily to keep in mind the provisions of s. 114 of the Indian Evidence Act, the plaintiff can and should draw .the attention of the companyrt if he feels that full disclosure has number been made., In .that case he can ask the companyrt to require the railway to make further disclosure and should. tell the companyrt what further disclosure he wants. It is then for the companyrt to decide whether the further disclosure .desired by the plaintiff should be made by the railway, and if the companyrt decides that such further disclosure should be made the railway has to make such further disclosure as the companyrt orders it to make on the request of the plaintiff. If the railway fails to take the opportunity so given to satisfy the demands of the plaintiff, endorsed by the companyrt, the railway would be in breach of its companytractual obligation of disclosure. It is at this stage therefore that the railway can be truly said to be in breach of its companytractual obligation of disclosure, and that breach arises because the railway failed to disclose matters which the companyrt on the request of the plaintiff asks it to disclose. The question then is what is the effect of this breach. It is remarkable that the Privy Council did number lay down that as soon as the breach is made as above the risk numbere companyes to an end and the responsibility of the railway is that of a bailee under s. 72 l of the Act. In the observations already quoted, the Privy Council has gone on to say that after this stage is over, the question may arise whether misconduct may be fairly inferred from the evidence of the railway. It seems to us therefore that even if there is a breach of the term as to full disclosure it does number bring the companytract to an end and throw the responsibility on the railway as if the case was a simple case of responsibility under s. 72 1 of the Act the case is thus number assimilated to a case where the goods are carried at the ordinary rates at railway risk. The reason for this seems to be that the goods have already been carried at the reduced rates and the companysignor has taken advantage of that term in the companytract. Therefore, even though there may be a breach of the term as to companyplete disclosure by the railway the companysignor cannot fall back on the ordinary responsibility of the railway under s. 72 1 of the Act as if the goods had been carried at railways risk at ordinary rates, for he has derived the advantage of the goods having been carried at a specially reduced rates. The risk numbere would in our opinion companytinue to apply and the companyrt would still have to decide whether misconduct can be fairly inferred from the evidence of the railway, with this difference that where the railway has been in breach of its obligation to make full disclosure misconduct may be more readily inferred and s. 114 of the Indian Evidence Act more readily applied. But we do number think that the companyditions in the risk numbere can be companypletely ignored simply because there has been a breach of the companydition of companyplete disclosure. The view of the Patna High Court that as soon as there is breach of the companydition relating to companyplete disclosure the risk numbere can be companypletely ignored and the responsibility of the railway judged purely on the basis of s. 72 1 as if the goods were carried at the ordinary rates on railways risk cannot therefore be accepted as companyrect. We may point out that in Surat Cotton Spinning and Weaving Mills Limiteds case, I the plaintiffs wanted the guard of the train to be examined and he was undoubtedly a material witness. Even so the witness was number examined by the railway. Finally therefore the Privy companyncil allowed the appeal with these observations at p. 189- While their Lordships would be inclined to hold that the respondent, by his failure to submit the evidence of Rohead, was in breach of his companytractual obligation to give the evidence necessary for disclosure of how the companysignment was dealt with, they are clearly of opinion that the failure to submit the evidence of Rohead, in the circumstances of this case, entitles the companyrt to presume, in terms of s. 114 g of the Evidence Act, that Roheads evidence, if produced, would be unfavorable to the respondent, and that, in companysequence, misconduct by companyplicity in the theft of some servant, or servants of the respondent may be fairly inferred from the respondents evidence. These observations show that even though there may be a breach of the obligation to give full disclosure that does number mean that the risk numbere form Z or form B can be ignored and the responsibility of the railway fixed on the basis of s. 72 1 as a simple bailee. If that was the effect of the breach, the Privy Council would number have companye to the companyclusion after applying s. 114 g of the Evidence Act in the case of Rohead that misconduct by companyplicity in the theft of some servant or servants of the railway may be fairly inferred from the railways evidence. The appeal was allowed by the Privy Council after companying to the companyclusion that misconduct by the servant or servants of the railway might be fairly inferred from the evidence including the presumption under s. 114 g of the Evidence Act. It seems to us clear therefore that even if there is a breach of the obligation to make full disclosure in the sense that the railway does number produce the evidence desired by the plaintiff in the suit even though the request of the plaintiff is endorsed by the companyrt, the effect of such breach is number that the risk numbere is companypletely out of the way, the reason for this as we have already indicated being that the companysignor has already taken advantage of the reduced rates and therefore cannot be allowed to ignore the risk numbere altogether. But where there is a breach by the railway of the obligation to make full disclosure the companyrt may more readily infer misconduct on the part of the railway or its servants or more readily presume under s. 114 g of the Evidence Act against the railway. This in our opinion is the effect of the decision of the Privy Council in Surat Cotton Spinning and Weaving Mills Limiteds case 1 . As we have already said we are in respectful agreement with the law as laid down there. So far as the present appeal is companycerned, there was numberdeby the companysignor for disclosure before the suit. Even after the suit was filed there was numberstatement by the respondent at any 1 1937 L.R. 64 I.A. 176. stage that the disclosure made by the appellant in the evidence was in any way inadequate. The respondent never told the companyrt after the evidence of the railway was over that he was number satisfied with the disclosure and that the railway be asked to make further disclosure by producing such further evidence as the respondent wanted. In these circumstances it cannot be said in the present case that there was any breach by the railway of its responsibility to make full disclosure. In the circumstances we are of opinion that the risk numbere would still apply and the companyrt would have to decide whether misconduct on the part of the railway can be fairly inferred from the evidence produced by it. If the companyrt cannot fairly infer misconduct from the evidence adduced by the railway, the burden will be on the respondent to prove misconduct. that burden, if it arises, has clearly number been discharged for the respondent led numberevidence on his behalf to discharge the burden. We therefore turn to the evidence to see whether from the evidence produced by the railway a fair inference of misconduct of the railway or its servants can be drawn on the facts of this case. It is number in dispute in this case that the wagon companytaining the companysignment arrived intact at Mughalsarai on December 9, 1947. Besides there is evidence of Damodar Prasad Sharma, Assistant Trains Clerk, Mughalsarai, P.W. 14, who had the duty to receive trains at the relevant time that 192 Dn. goods train was received by him on line No. 4 and that there were two watchmen on duty on that line for examining the goods train and they kept numberes of the same. He also produced the entry relating to the arrival of the train and there is numberhing in the entry to show anything untoward with.this wagon when the train arrived at Mughalsarai. His evidence also shows that the train was sent to the marshaling yard on December 11, 1947. Finally there is the evidence of Chatterji P.W. 8 who is also an Assistant Trains Clerk. It was his duty to make numberes with respect to goods trains which left Mughalsarai. He stated that this wagon was sent by train No. 214 on December 12, 1947 in the evening. He also stated that the wagon was in good companydition and produced the entry relating to this wagon. It appears however from his evidence that rivets and seals are examined by the watch and ward staff and they keep record of it. Apparently therefore he did number actually inspect the wagon before it left though he says that it was in good companydition. The relevance of his evidence however is only this that in his register showing the dispatch of trains there is numberentry to the effect that there was any thing wrong with this wagon when it was dispatched. The most important evidence however is of the guard of the train, Ram Prasad Ram P.W. 2 . He stated that before the train started from Mughalsarai he patrolled both sides of it and the place from where the train started was well lighted and watch and ward staff also patrolled the area. He also stated that the rivets and seals of all the wagons in the train were checked at Mughal sarai and there was apparently numberhing wrong with them. Now if the evidence of the guard is believed it would show that the wagon companytaining the companysignment was intact at Mughalsarai upto the time 214 goods train including this wagon left Mughalsarai. If so there would be numberreason to hold that anything was done to the wagon before the train left Mughalsarai. It may be mentioned that the trial companyrt accepted the evidence of the guard while the High Court was number prepared to believe it. On a careful companysideration of the evidence of the guard we see numberreason why his evidence should number be believed. It is obviously the duty of the guard to see that the train was all right, when he took charge of it. It appears that in discharge of his duty the guard patrolled the train on both sides and looked at rivets and seals to see that they were intact. It is, however, urged that the guards evidence does number show that the seals which he found intact were the original seals of Wadibundar and the possibility is number ruled out that the original seals might have been tampered with and new seals put in while the train was in the marshaling yard at Mughalsarai for two days, as the evidence of the watch and ward staff had number been produced. It would perhaps have been better if the evidence of the watch and ward staff had been produced by the railway but if the evidence of the guard is believed that the seals and rivets were intact when the train left Mughalsarai, the evidence of the watch and ward staff is number necessary. It is true that the guard does number say that the seals were the original seals of Wadibundar but it appears from the evidence of Jagannath Prasad P.W. 9 who was the Assistant Station Master at Dildarnagar that he found when the train arrived there that the numberthern flapdoors of the wagon were open while southern flapdoors were intact with the original seals. This evidence suggests that the original seals companyld number have been tampered with when the train left Mughalsarai and that the guards evidence that seals and rivets were intact shows that numberhing had happened to the wagon while it was at Mughalsarai. Further it is also in evidence that there is ample light in the marshalling yard at Mughalsarai and that watch and ward staff is posted there as well. So the chances of tampering with the seals and rivets in the marshalling yard in the circumstances are remote. As such the evidence of the guard that the seals and rivets were intact when he left with the train on the evening of December 12, would apparently exclude the possibility that there was any tampering with the wagon before it left Mughalsarai. It is true that on the last day when the evidence for the railway was recorded and the guard had been recalled for further cross-examination it was suggested to him that the railway servants at Mughalsarai had removed the bales and were responsible for the theft. He however denied that. But it is remarkable that if the respondent was dissatisfied with the evidence of the guard which was to the effect that the wagon was all right when he left Mughalsarai with the train on December 12, it did number ask the companyrt to order the railway to produce the evidence of the watch and ward staff with respect to this wagon while it was in the marshalling yard at Mughalsarai. The respondent companyld ask for such disclosure. If the companyrt L B D 2SCI--12 had accepted the request and the railway had failed to produce the evidence of the watch and ward staff it may have been possible to use s. 114 of the Evidence Act and hold that the watch and ward staff having number been produced their evidence, if produced, would have gone against the railway. But in the absence of any demand by the respondent for the production of the watch and ward staff which he companyld ask for, we see numberreason why the statement of the guard to the effect that seals and rivets of the wagon were intact when he left Mughalsarai with the train should number be accepted. In the absence of any demand by the respondent for the production of watch and ward staff his mere suggestion that the railway servants at Mughalsarai might have companymitted the theft cannot be accepted. There is the further evidence of the guard as to what happened between Mughalsarai and Buxar. It appears between these two stations the train stops only at Dildarnagar. The evidence of the guard however is that the train suddenly stopped between the warner and home signals before it reached Dildarnagar. He therefore got down to find out what the trouble was. He found that the hosepipe between two wagons had got disconnected and this resulted in the stoppage of the train. The evidence further is that the hosepipe was intact when the train started from Mughalsarai. He made a numbere of this in his rough memo book which was produced. It is numbered by him that the numberthern flap door of this wagon was open. He reconnected the hosepipe and went up to Dildarnagar. There he reported the matter to the station staff. His further evidence is that there were three escorts with the train and that they were guarding the train when the train was standing between the warner and the home signals before it reached Dildarnagar. Nothing untoward was reported to him by these escorts. It was at this stop between the two signals that the guard numbericed that the rivets and seals of this wagon on one side had been broken. The case of the railway is that there was theft in the running train between Mughalsarai and Buxar and that is how part of the companysignment was lost. The evidence of the guard does suggest that something happened between Mughalsarai and Dildarnagar and then between Dildarnagar and Buxar. In addition to this the evidence of the station staff at Dildarnagar is that the flapdoors of this wagon were found open when the train arrived at Dildarnagar. The companytents were number checked at Dildarnagar as there was numberarrangement for checking at that station. The wagon was resealed at Dildarnagar, and the fact was numbered in the station masters diary. It may be mentioned that the evidence of the station staff was that the wagon was resealed though the guard says that it was riveted also at Dildarnagar. The entry in the guards rough memo. however is only that the wagon was resealed. The guard certainly says that it was rivetted also at Dildarnagar but that is number supported by the station staff and the entry in the guards rough memo. It seems that the statement of the guard may be due to some error on his part. That may also explain why, when the train arrived at Buxar, the flapdoor again was found open, for it had number been rivitted at Dildarnagar. Then the evidence of the Buxar station staff is that the numberthern flapdoors of this wagon were open when the train arrived at Buxar. It was then resealed and rivetted and was detached for checking. The checking took place on December 14th at Buxar.It was then found that one side had the original seals of Wadibun dar while the other side had the seals of Buxar. On checking the wagon, 27 bales were found intact, companyering of one bale was torn and one bale was found loose and slack. This evidence asto what happened between Mughalsarai and Buxar thus makes it probable that there was theft in the running train between Mughalsarai and Buxar and that may account for the loss of part of the companysignment. It is however companytended on behalf of the respondent that numberevidence was produced from Mughalsarai asto what happened while the wagon was in the marshalling yard and that the seal book which is kept at every railway station companytaining entries of resealing when a wagon is resealed was number produced from Mughalsarai and an adverse inference should be drawn from this numberproduction. We are however of opinion that the evidence of the guard to the effect that the seals were intact when he left Mughalsarai with the train is sufficient to show that the wagon was in-tact with the original seals when it left Mughalsarai and there-fore it is number possible to draw any adverse inference from the number-production of the watch and ward staff or the seal book of Mughalsarai in the circumstances of this case. It would have been a different matter if the respondent had asked for the production of the seal book as well as the evidence of the watch and ward staff. But the respondent companytented itself merely with the suggestion that a theft might have taken place at Mughalsarai which was denied by the guard and did number ask the companyrt to order the railway to produce this evidence. In these circumstances in the face of the evidence of the guard and the fact that one seal on the southernside of the door was of the original station. we do number think that it is possible to draw an adverse inference against the railway on the ground that the evidence of the watch and ward staff and the seal book at Mughalsarai were number produced. The seal book would have been of value only if the wagon had been resealed at Mughalsarai but there is in our opinion numberreason to think that the wagon had been resealed at Mughalsarai after the evidence of the guard that he found the seals and rivets intact when he left Mughalsarai with the train. On a careful companysideration of the evidence therefore we are of opinion that a fair inference cannot be drawn from the evidence of the railway that there was misconduct by the railway or its servants at Mughalsarai during the time when the wagon was there. If the evidence of the guard is accepted, and we do accept it, there can be numberdoubt that the loss of the goods took place be-case of theft in the running train between Mughalsarai and Buxar. There is numberevidence on behalf of the respondent to prove misconduct and as misconduct cannot fairly be inferred from the evidence produced on behalf of the railway, the suit must fail. We therefore allow the appeal, set aside the judgment and decree of the High Court and restore that of the Additional Subordinate Judge.

ORIGINAL JURISDICTION Writ Petition No. 139 of 1957. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental rights. V. S. Mani, for the petitioner. K. Daphtary, Solicitor-General of India, B. Sen and R. Dhebar, for respondent No. 2. 1961. March 30. The Judgment of the Court was delivered by WANCHOO, J.-This petition challenges the companystitutionality of a provision in the Constitution Application to Jammu and Kashmir Order, 1954 hereinafter called the Order , made by the President under Art. 370 1 of the Constitution. The case of the petitioner is that he is registered as an elector in the Parliamentary Constituency of Delhi. As such he has a right to stand for election from any Parliamentary companystituency in India. Six seats are allotted to the State of Jammu and Kashmir in the House of the People Lok Sabha . Ordinarily, the election to these seats should have been by direct election from the territorial companystituencies in the States as provided by Art. 81 l but the President modified that Article in so far as it relates to the State of Jammu and Kashmir by Para. 5 c of the Order in these words- Article 81 shall apply subject to the modification that the representatives of the State in the House of the People -,hall be appointed by the President on the recommendation of the Legislature of the State. The petitioner companytends that the President had exceeded his powers when he made this modification, for he thereby substituted direct election to the House of the People by numberination which he companyld number do. This, it is said, was alteration in Art. 81 as applied to the State of Jammu and Kashmir and was number justified as a modification under Art. 370 l . He therefore prays that the modification made may be declared unconstitutional and a writ of quo warranto be issued against the persons numberinated to the House of the People on the recommendation of the Legislature of the State of Jammu and Kashmir prohibiting them from acting as members of Parliament. Apart from the question whether the petitioner has any fundamental right to maintain this petition under Art. 32, we are of opinion that there is numberforce in it. The relevant part of Art. 370 with which we are companycerned is in these words- Notwithstanding anything in this Constitution,- d such of the other provisions of this Constitution shall apply in relation to that State i.e., the State of Jammu and Kashmir subject to such exceptions and modifications as the President may by order specify. Article 370 clearly recognises the special position of the State of Jammu and Kashmir and that is why the President is given the power to apply the provisions of the Constitution to that State subject to such exceptions and modifications as the President may by order specify. The President thus has power to say by order that certain provisions of the Constitution will be excepted from application to the State of Jammu and Kashmir and on such order being made those provisions would number apply to that State. Besides this power of making exceptions by which certain provisions of the Constitution were number to apply to that State the President is also given the power to apply the provisions of the Constitution with such modifications as he thinks fit to make. The companytention on behalf of the petitioner is that the modification envisaged in Art. 370 l did number mean amendment of the Constitution for the purpose of application to that State and would number certainly include such amendment as would make a radical alteration in the provisions of the Constitution. In this companynection he relies on the observations of Kania, C.J., and Mahajan, J., in In re The Delhi Laws Act, 1912 1 . Kania, C.J., after dealing with the meaning of the word modify seems to have held that the word modify as used in the companytext in which he was speaking only implied alteration without radical transformation. Mhajan, J., also said that the word modification Use in the companytext before him did number involve any material or substantial alteration. The petitioner therefore urges 1 1951 S.C.R. 747. that as the Order substituted direct election by numberination there has been a radical alteration in Art. 81 by the President in its application to the State of Jammu and Kashmir and therefore is number justified by the word modification used in Art. 370 l and the President had exceeded his power under that Article in making this radical alteration. Before we companysider what the word modification means in the companytext of Art. 370 l , let us see what the President has actually done in the matter of modification of Art. 81. The modification prescribes that the six seats in the House of the People from the State of Jammu and Kashmir would be filled by numberination by the President on the recommendation of the Legislature of that State. Now in form the seats will be filled by numberination by the President but in reality what the modification provides is indirect election in place of direct election to these seats in the House of the People. The modification lays down that the President will numberinate members to these six seats on the recommendation of the Legislature of the State. The President must therefore numberinate only those who have been recommended by the Legislature of the State, which is elected on adult suffrage. Now the only way the Legislature can make a recommendation for this purpose is by voting. Therefore, in effect the modification made by the President is that the six seats to the House of the People from the State of Jammu and Kashmir will be filled by indirect election and number by direct election. The element of election still remains in the matter of filling these seats, though it has been made indirect. In these circumstances it may number be possible to say that there has been a radical alteration in Art. 81 by the modification effected by the Order. But even assuming that the introduction of indirect election by this modification is a radical alteration of the provisions of Art. 81 l , the question still remains whether such a modification is justified by the word modification as used in Art. 370 1 . We are here dealing with the provision of a Constitution which cannot be interpreted in any narrow or pedantic sense The question that came for companysideration in In re Delhi Laws -Act case was with respect to the power of delegation to a subordinate authority in making subordinate legislation. It was in that companytext that the observations were made that the intention of the law there under companysideration when it used the word modification was that the Central Government would extend certain laws to Part C States without any radical alteration in them. But in the present case we have to find out the meaning Of the word modification used in Art. 370 l in the companytext of the Constitution. As we have said already the object behind enacting Art. 370 l was to recognise the special position of the State of Jammu and Kashmir and to provide for that special position by giving power to the President to apply the provisions of the Constitution to that State with such exceptions and modifications as the President might by order specify. We have already pointed out that the power to make exceptions implies that the President can provide that a particular provision of the Constitution would number apply to that State. If therefore the power is given to the President to efface in effect any provision of the Constitution altogether in its application to the State of Jammu and Kashmir, it seems that when he is also given the power to make modifications that power should be companysidered in its widest possible amplitude. If be companyld efface a particular provision of the Constitution altogether in its application to the State of Jammu and Kashmir, we see numberreason to think that the Constitution did number intend that he should have the power to amend a particular provision in its application to the State of Jammu and Kashmir. It seems to us that when the Constitution used the word modification in Art. 370 l the intention was that the President would have the power to amend the provisions of the Constitution if he so thought fit in their application to the State of Jammu and Kashmir. In the Oxford English Dictionary Vol. VI the word modify means inter alia to make partial changes in to change as object in respect of some of its qualities to alter or vary without radical transformation. Similarly the word modification means the action of making changes in an object without altering its essential nature or character the state of being thus changed partial alteration. Stress is being placed on the meaning to alter or vary without radical transformation on behalf of the petitioner but that is number the only meaning of the words modify or modification. The word modify also means to make partial changes in and modification means partial alteration. If therefore the President changed the method of direct election to indirect election he was in essence making a partial change or partial alteration in Art. 81 and therefore the modification made in the present case would be even within the dictionary meaning of that word. But, in law, the word modify has even a wider meaning. In Words and Phrases by Roland Burrows, the primary meaning of the word modify is given as to limit or restrict but it also means to vary and may even mean to extend or enlarge. Thus in law the word modify may just mean vary, i.e., amend and when Art. 370 l says that the President may apply the provisions of the Constitution to the State of Jammu and Kashmir with such modifications as he may by order specify it means that he may vary i.e., amend the provisions of the Constitution in its application to the State of Jammu and Kashmir. We are therefore of opinion that in the companytext of the Constitution we must give the widest effect to the meaning of the word modification used in Art. 370 l and in that sense it includes an amendment. There is numberreason to limit the word modifications as used in Art. 370 1 only to such modifications as do number make any radical transformation. We are therefore of opinion that the President had the power to make the modification which he did in Art. 81 of the Constitution.

IMr. Justice Field: This is an appeal from the decision of the Senior Master given on 12 November 2004 whereby he dismissed the appellant's application to have the respondent's claim for breach of contract struck out under CPR 3.4 and /or dismissed by way of summary judgement under CPR Part 24. The appellant ("Rugby") manufactures cement at sites in various locations including Rugby and Southam. The respondent ("ProForce") is an employment and recruitment agency based in Rugby. Since 1997 Rugby has used ProForce and a predecessor company, Sterling Resources, to supply temporary workers for work at both sites, especially the Rugby site ("the site"). On 31 July 1991, ProForce's Managing Director, Mr. Allen Bloor and Rugby's Works Manager at the Rugby site, Mr. Derek Bell, signed a document on behalf of their respective companies. It is on this document ("the agreement") that ProForce bases its claim for breach of contract. The relevant parts of the agreement are as follows: Introduction ProForce have pleasure in submitting the following proposals for a service cleaning contract between Rugby Cement and ProForce. Terms and Conditions In addition to the normal terms and conditions that exist between Rugby Cement and ProForce, it is also agreed that, subject to contract, the following conditions will apply. [Italics supplied] ProForce will purchase from Rugby Cement the following equipment for the better performance of this contract:- 8 x 4 rigid 'E' Series Vac Press 5000 at £71,000 Volvo FL 6 Road Sweeper at £1,500 …….   Rugby Cement will have the option to purchase back both vehicles at book value or at a figure assessed by an independent valuer. ProForce guarantee that the above equipment will be maintained at a satisfactory level to perform the services required … All personnel supplied by ProForce will be carefully screened before being submitted, not only to ensure current availability and an accurate skills match – but to ascertain whether they have the right attributes for the role. ProForce Service Team Charges ProForce will supply the following personnel in pursuance of this contract. Vac Press 5000 Operators Weekly Hours Hourly Rate Cost Per Week 168 hours x 2 men   £12.75 £4,284.00 Road Sweeper Operator Weekly Hours Hourly Rate Cost Per Week 50 hours (Operative) £12.75 £637.50   50 hours (Supervisor) £12.75 £637.50   Volvo Shovel Operators Weekly Hours Hourly Rate Cost Per Week 168 hours days £12.75 £2,142.00   168 hours nights £12.75 £2,142.00   All shifts are 4 on 4 off pattern as enclosed Total for ProForce Service Team = £9,843.00p per week Any additional hours worked in excess of the above will be charged at the normal hourly rate. No additional charge will be made for the use of machinery…. Equipment Charges Equipment Cost per week Vac Press 5000 £1,200.00 Road Sweeper £275.00 Water Bowser ... £69.00 Volvo Shovel (For loading Oxide Materials) £4,450.00 Total for Machinery = £1,994.00 Grand Total for Contract = £11,837.00 per week This contract will be of a minimum two-year period and will be re-negotiable at the end of that period. During that period ProForce will hold preferred supplier status. [Italics supplied] The sums expressed to be due for the Vac Press (£71,000) and the Roadsweeper (£1,250) were paid in August 2001, although the invoices for these payments were raised on 24 July 2001 before the agreement was signed. The personnel identified in the agreement were provided and paid for throughout the stipulated period of two years. Indeed, ProForce began supplying these personnel from 16 July 2001. They also provided other labour to the site for which they invoiced increasing amounts but from November 2001 the amounts due for this additional labour fell away because Rugby had begun to use other employment agencies to satisfy their requirements over and above those provided for in the agreement. ProForce contend that Rugby's failure after November 2001 to look to them to provide their additional personnel requirements at the site was in breach of that part of the agreement that reads: "This Contract will be of a minimum 2 year period and will be re-negotiable at the end of that period. During that period ProForce will hold preferred supplier status." It is common ground none of the additional personnel that Rugby took through other suppliers of labour were employed to do cleaning work. The Senior Master construed the agreement against the whole of the background deposed to by Mr. Bloor in his first witness statement and found that ProForce were a preferred supplier with respect to all categories of labour and personnel and not just cleaning personnel. He found that the conferral of preferred supplier status was "the sweetener" to induce ProForce to provide cleaning staff and to buy the machinery. In his view ProForce's claim was not one that had no real prospect of success or for which there were no reasonable grounds. He accordingly dismissed Rugby's applications. In support of the judgement of the Senior Master, Mr. Derek Sweeting QC for ProForce contends that the words "preferred supplier status" mean that during the two year period Rugby were obliged: (a) to offer ProForce the opportunity to supply contract labour and hire equipment at the Rugby site in preference to other suppliers; and (b) not to engage other suppliers of contract labour and hire equipment without first having offered ProForce a reasonable opportunity of meeting Rugby's requirements in such respects. In the alternative Mr. Sweeting argues that in order to give the agreement commercial efficacy there were implied terms whose effect was the same as if the words were to be construed as he contended. Mr. Sweeting supports this construction by reference to what he submits was the factual matrix of the agreement. He says that the factual matrix is made up of the matters deposed to in the first witness statement of Mr. Bloor dated 21 October 2004 which must be accepted as being true for the purpose of this appeal. In his first witness statement Mr. Bloor says that in 1999 Rugby abruptly terminated a contract with ProForce to supply security staff in breach of a condition in the contract requiring 90 days's notice of termination. When Mr. Bloor threatened legal proceedings he was invited to discuss the matter with Rugby's General Manager, Mr. Stephen Eastwood. At a meeting on 10 November 1999 Mr. Eastwood told Mr. Bloor that he should not be hasty in bringing legal proceedings. Rugby were opening a new site at Rugby (the site) and there would be an opportunity for ProForce to supply a large amount of skilled and non-skilled labour under a Preferred Supplier Agreement. The following day Mr. Bloor received a letter from a member of Rugby's Contract Engineering Sourcing Team stating that it was Rugby's intention "to move to Approved Supplier Lists for the majority of our goods and services …. [A]pproved suppliers will be asked to consider partnershipping (sic) based upon an open approach to commercial issues leading to significant rewards for both." The letter enclosed a tender pro-forma that had to be received no later than 19th November 1999. The letter also made clear that not all current suppliers would be invited to meet the team. As requested at the meeting of 11 November 1999 Mr. Bloor wrote to Mr. Eastwood on 17 November 1999 indicating what personnel and services ProForce were in a position to supply. Mr. Eastwood replied on 23 November 1999 stating that he was awaiting the outcome of the tendering exercise and would write further in relation to the termination of the security personnel contract. Mr. Bloor does not say in his statement whether ProForce submitted a tender. Mr. Bloor sent a chasing letter in March 2000 to which he received no reply. However, he did not pursue the breach of contract complaint or the question of a tender because during the rest of 2000 ProForce were supplying increasing numbers of personnel to Rugby to the extent that by the end of 2000 ProForce had 90 long-term personnel working at the new site. In 1991 Ms. Emma Gough, the assistant Works Manager at the site, raised with Mr. Bloor the possibility of ProForce supplying labour to a company called Hansons which was providing cleaning machinery at the site. Rugby were having difficulties with Hansons and it was thought that the situation could be alleviated if Hansons took on a number of ProForce workers. This idea was not proceeded with, however, on grounds of cost and Mr.Bloor was then asked by Mr. Bell to consider the possibility of ProForce purchasing cleaning and other machinery from Rugby to allow it to provide both the machinery and the operatives as a package. The machinery in question was both large and expensive but Mr. Bell suggested that if ProForce bought it ProForce might be given a "Preferential Agreement". In Mr. Bloor's words: "discussions continued in that vein until about May when Emma Gough offered ProForce "Preferred Supplier Status" explaining that we would have the opportunity to supply all labour and additional plant at the Rugby site." Mr. Bloor insisted on something in writing and was asked to provide a draft. This he did and the document after various amendments became the document that was signed on 31 July 2001. In the course of the hearing I was told that invoices for the sale price of the Vac Press and the Roadsweeper had been raised on 24 July 2001 and paid sometime in August 2001. It was agreed that I would be provided with copies of the invoices and more precise details of when they were paid. After the hearing copies of the invoices were forwarded to me by Rugby and ProForce served a second statement of Mr. Bloor. However, that statement deals with a number of matters over and beyond the payment of the invoices and I have decided that it came too late to be admitted save to the extent that it states that the invoices were paid after the agreement was signed. Mr. Tager QC for Rugby contends that by virtue of the words "subject to contract" under the heading "Terms and conditions", the agreement is not an enforceable contract and therefore ProForce's claim must fail. In the alternative, he contends that the words "ProForce will hold preferred supplier status" mean no more than that to the extent that Rugby might maintain a list of preferred suppliers, ProForce will be on that list. Alternatively, he argues that any opportunity to supply labour and hire equipment that might be conferred by the words is limited to supplying cleaning requirements. Mr. Tager accepts that the events related in Mr. Bloor's first witness statement down to the conversations he had with Mr. Bell and Ms Gough in 2001 are capable of being part of the factual matrix. Indeed he himself relies on a letter dated 23 September 1998 sent to Mr. Bloor's predecessor labour supply business, Sterling Resources, announcing a move towards approved supplier lists based on an appraisal of suppliers. However, Mr. Tager contends that the conversations in 2001 between Mr. Bloor and Ms. Gough relied on by Mr. Sweeting and anything said to Mr. Bloor thereafter leading up to the signing of the agreement cannot be part of the factual matrix because such statements are to be regarded as forming part of the pre-contractual negotiations and also because of the effect of Clause 9.2 of ProForce's standard terms. These standard terms are expressly incorporated into the agreement. Clauses 9.2 and 9.3 provide: 9.2 This Agreement together with any other document expressed to being operated herein constitutes the entire contract[1] between the parties and supersedes all prior representations, agreements, negotiations or understandings whether oral or in writing. 9.3 These terms and conditions are to prevail over any terms and conditions sought to be included herein by the Client. I deal first with the contention that the agreement is not an enforceable contract because it contains the words "subject to contract". In general, except in a very strong and exceptional case, the effect of these words in an agreement is to prevent an executory contract from coming into existence because they are taken to mean that until a further contract has been executed neither party is to owe the other any contractual obligation. However, in this case, save for the alleged breach, the agreement cannot be regarded as being executory because after it was signed the parties did those things that the agreement contemplated that each should do for the benefit of the other. Thus after 31 July 1991 ProForce paid for the Vac Press and the Roadsweeper and supplied the personnel and equipment defined in the agreement and Rugby paid the stipulated monthly charges for personnel and equipment. This being the case it is my view that the parties are to be taken to have entered into an implied binding contract on the terms of the agreement. I turn then to the rival contentions as to the meaning and effect of the words: "This contract will be of a minimum 2 year period and will be re-negotiable at the end of that period. During that period ProForce will hold preferred supplier status." I say at once that I consider Mr. Sweeting's alternative implied term argument to be hopeless. The agreement is substantially efficacious even if the words mean what Mr. Tager contends they mean. Nor can it begin to be said that the postulated implied terms are obviously stipulations that the parties must have intended to form part of the contract. The question therefore is whether Mr. Tager's construction argument is such as to establish that there are no reasonable grounds for bringing the claim and/or ProForce has no real prospect of succeeding on the claim. In ICS Ltd. v West Bromwich Building Society [1998] 1 WLR 896 at 912 F-G, Lord Hoffmann observed that there has been a fundamental change in the courts' approach to the construction of documents as a result of the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381, 1384-1386 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, 995-997. As is well known, in both of these speeches Lord Wilberforce said that when a document is being construed it must be placed in the matrix of facts in which it is set. In support of this approach he cited Utica City National Bank v Gunn (1918) 118 N.E. 607 where Cardozo J., referring to Stephen's Digest of the Law of Evidence and Wigmore on Evidence, said that the "the genesis and aim of the transaction" may rightly guide the court's choice between the primary or strict meaning that renders the whole transaction futile or the secondary meaning which gives it efficacy and purpose. In the recent case of Sirius International Insurance Company (Publ) v FAI General Insurance Limited and others [2004] UKHL 54, para 18, Lord Steyn said that the aim of the enquiry when a commercial instrument is construed "is not to probe the real intentions of the parties but to ascertain the contextual meaning of the relevant contractual language. The inquiry is objective: the question is what a reasonable person, circumstanced as the actual parties were, would have understood the parties to have meant by the use of specific language. The answer to that question is to be gathered from the text under consideration and its relevant contextual scene." What then is the factual matrix or contextual scene of the agreement? Does it include the statements alleged to have been made to Mr. Bloor by Mr. Bell and Ms. Gough in 2001? In ICS Ltd. v West Bromwich Building Society Lord Hoffmann said that the matrix of fact does not include the negotiations of the parties or their subjective declarations of intent, but subject to this and subject to the requirement that it should have been reasonably available to the parties it includes absolutely everything which would have affected the way in which the language of the document would have been understood by a reasonable man (912H-913A). In BCCI v Ali [2001] UKHL8, para 39, Lord Hoffmann said that in expressing himself as he did in the ICS he meant anything that a reasonable man would have regarded as relevant. The reason why the parties' negotiations are excluded from the factual matrix was explained by Lord Wilberforce in Prenn v Simmonds as follows: The reason for not admitting evidence of these exchanges is not a technical one or even mainly one of convenience … It is simply that such evidence is unhelpful. By the nature of things, where negotiations are difficult, the parties' positions, with each passing letter, are changing and until the final document, though converging, are still divergent. It is only the final document that records a consensus. …..The words used may, and often do, represent a formula which means different things to each side, yet may be accepted because that is the only way to get "agreement" and in the hope that disputes will not arise. The only course then can be to try to ascertain the "natural" meaning. Far more, and indeed totally, dangerous is to admit evidence of one party's objective --- even if this is known to the other party. However strongly pursued this may be, the other party may only be willing to give it partial recognition, and in a world of give and take, men often have to be satisfied with less than what they want. So, again, it would be a matter of speculation how far the common intention was that the particular objective should be realised. In my judgement, the statement alleged to have been made by Mr. Bell that ProForce might be given a Preferential Agreement if ProForce were prepared to take the machinery, the discussions that continued in that vein and the alleged statement made by Ms. Gough that "Preferred Supplier Status" meant that ProForce would have the opportunity to supply all labour and additional plant at the site all constitute negotiations and form no part of the factual matrix to be used in construing the agreement. Even if I were wrong about this, in my view these statements are "prior representations, negotiations or understandings" within clause 9.2 of the standard terms and by virtue of that clause cannot be relied on by ProForce in seeking to establish their claim for breach of the agreement. Mr. Sweeting argues that the effect of clause 9.2 was limited to barring reliance on pre-contract statements that are later said to be terms of the agreement. Whilst the clause may not exclude liability for misrepresentation (cf Thomas Witter Ltd. v TBP Industries Ltd. [1996] 2 All E R 573) in my opinion the effect of the words "This agreement ….supersedes all prior representations, agreements, negotiations or understandings" is that the things superseded are to have no bearing on the meaning of the agreement. The 1991 representations of Mr. Bell and Ms Gough apart, the factual matrix of the agreement for construction purposes is constituted by all of the pre-contract facts and matters deposed to by Mr. Bloor. What happened after the execution of the agreement is irrelevant to the issue of construction. Thus the fact that between July and November 2001 ProForce supplied non-cleaning personnel to Rugby under increasingly remunerative arrangements can have no bearing on the meaning of the agreement. In my opinion, construed against the relevant background, the words "ProForce will hold preferred supplier status" mean that if Rugby choose to operate a system of contracting only with preferred suppliers in respect of the Rugby site, ProForce are to be treated as being one of those preferred suppliers for all categories of personnel, not just cleaners. The words do not mean that Rugby areobliged during the term of the agreement to contract only with preferred suppliers and that throughout the term of the agreement Rugby must operate a preferred supplier system. Mr. Sweeting submits that if the words did not oblige Rugby to contract only with preferred suppliers they would be effectively meaningless because they would confer no benefit on ProForce and yet the parties must have intended that a substantial benefit was to be conferred because ProForce were agreeing to buy and provide expensive machinery. ProForce were the only preferred supplier during the relevant period and he contends that the effect of the words was to oblige Rugby to look to ProForce to satisfy all their personnel requirements at the site so long as ProForce's terms were reasonable. I reject Mr. Sweeting's submissions. At the time the agreement was signed it was possible that Rugby would introduce a preferred supplier system in respect of the site over the next two years. If Rugby were to have introduced such a system, as they were planning to do at the end of 1999, the conferral of preferred supplier status on ProForce would have constituted a very real benefit because ProForce would then have been in the inner ring of suppliers and ahead of their competitors that were outside the ring. The price paid for the machinery by ProForce was £72,500 and ProForce were under an obligation to maintain it and provide it at the site. However, over the term of the agreement ProForce were due to be paid £153,400 by way of equipment charges and at the end of the term if it was not purchased back by Rugby, it would have had some residual value. It is not possible to tell if ProForce's equipment obligations would be covered by the equipment charges but the figures in the agreement show in my view that the parties were not contracting on the basis that the conferral of supplier status was intended materially to off-set ProForce's equipment obligations. As it happened, Rugby did not adopt a preferred supplier system for the site during the contractual term. Instead they looked to a number of suppliers of labour who did not have the status of preferred supplier to satisfy their non-cleaning requirements. In my judgement, in acting in this way Rugby were not in breach of the agreement. It follows that I respectfully disagree with the judgement of the Senior Master. Rugby's appeal is allowed and I shall strike out ProForce's claim and give judgement for Rugby under CPR Part 24. Note 1   Instead of “contract” the word “control” is appears in 9.2 but it is common ground that “control” was a clerical error for “contract”.     [Back]

Case T-70/08 Axis AB v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (Community trade mark – Opposition proceedings – Application for Community word mark ETRAX – Earlier national figurative marks containing the word elements ETRA I+D – Relative ground for refusal – Admissibility of the appeal before the Board of Appeal – Rule 49(1) of Regulation (EC) No 2868/95 and Article 59 of Regulation (EC) No 40/94 (now Article 60 of Regulation (EC) No 207/2009)) Summary of the Judgment 1. Community trade mark – Appeals procedure – Time-limit and form of appeal – To be brought in writing and within a period of two months – Payment of the amount corresponding to the fee for appeal – Act insufficient of itself (Council Regulation No 40/94, Art. 59) 2. Community trade mark – Appeals procedure – Actions before the Community judicature – Procedural role of the Office (Rules of Procedure of the General Court, Art. 134(3)) 3. Community trade mark – Appeals procedure – Actions before the Community judicature – Jurisdiction of the General Court – Review of the legality of decisions of the Boards of Appeal (Council Regulation No 40/94, Art. 63(3)) 1. Under Article 59 of Regulation No 40/94 on the Community trade mark, the notice of an appeal against the decision of the bodies of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) must be filed in writing at OHIM within two months of the date of notification of the decision under appeal. While Article 59 of Regulation No 40/94 provides that the appeal is deemed to be filed only when the fee for appeal has been paid, the mere payment of the corresponding amount cannot be considered to be equivalent to the notice required under that provision. (see paras 22-23) 2. Although Article 134(3) of the Rules of Procedure of the General Court provides that an intervener may, in his response, seek an order annulling or altering the decision of the Board of Appeal on a point not raised in the application, it follows from that provision – by dint of a contrario reasoning – that the Office for Harmonisation in the Internal Market (Trade Marks and Designs) is not entitled, for its part, to seek such a form of order. (see para. 27) 3. The General Court reviews the legality of the decisions of the bodies of the Office for Harmonisation in the Internal Market (Trade Marks and Designs). If it holds that such a decision, called into question in an action brought before it, is vitiated by illegality, it must annul it. It may not dismiss the action while substituting its own reasoning for that of the competent OHIM body which is the author of the contested act. (see para. 29) JUDGMENT OF THE GENERAL COURT (Fifth Chamber) 9 September 2010 (*) (Community trade mark – Opposition proceedings – Application for Community word mark ETRAX – Earlier national figurative marks containing the word elements ETRA I+D – Relative ground for refusal – Admissibility of the appeal before the Board of Appeal – Rule 49(1) of Regulation (EC) No 2868/95 and Article 59 of Regulation (EC) No 40/94 (now Article 60 of Regulation (EC) No 207/2009)) In Case T‑70/08, Axis AB, established in Lund (Sweden), represented by J. Norderyd, lawyer, applicant, v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), represented by A. Folliard-Monguiral, acting as Agent, defendant, the other party to the proceedings before the Board of Appeal of OHIM being Etra Investigación y Desarrollo, SA, established in Valencia (Spain), ACTION brought against the decision of the Second Board of Appeal of OHIM of 27 November 2007 (Case R 334/2007-2) relating to opposition proceedings between Etra Investigación y Desarrollo, SA and Axis AB, THE GENERAL COURT (Fifth Chamber), composed of M. Vilaras, President, M. Prek and V.M. Ciucă (Rapporteur), Judges, Registrar: N. Rosner, Administrator, having regard to the application lodged at the Court Registry on 12 February 2008, having regard to the response lodged at the Court Registry on 9 June 2008, further to the hearing on 29 April 2010, gives the following Judgment Background to the dispute 1 On 17 June 2004, the applicant – Axis AB (‘Axis’) – filed an application for registration of a Community trade mark at the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), pursuant to Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1), as amended (‘Regulation No 40/94’; replaced by Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (OJ 2009 L 78, p.1)). 2 The mark for which registration was sought is the word mark ETRAX. 3 The goods and services in respect of which registration was sought fall, following the restriction made during the proceedings before OHIM, within Classes 9 and 42 of the Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks of 15 June 1957, as revised and amended. 4 The Community trade mark application was published in Community Trade Marks Bulletin No 31/2005 of 1 August 2005. 5 On 14 October 2005, Etra Investigación y Desarrollo, SA filed a notice of opposition under Article 42 of Regulation No 40/94 (now Article 41 of Regulation No 207/2009) to registration of the trade mark applied for in respect of the goods and services referred to in paragraph 3 above. 6 The opposition was based on the following earlier marks: – Spanish figurative mark No 2 194 122, filed on 5 November 1998 and registered on 22 November 1999 in respect of goods in Class 9 (‘Scientific, nautical, surveying, electrical, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; automatic vending machines and mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment and computers; fire-extinguishing apparatus’), represented as follows: – Spanish figurative mark No 2 413 572, filed on 9 July 2001 and registered on 8 January 2002 in respect of goods in Class 9 (‘Scientific, nautical, surveying, electrical, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; automatic vending machines and mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment and computers; fire-extinguishing apparatus’), represented as follows: – Spanish figurative mark No 2 413 574, filed on 9 July 2001 and registered on 22 April 2002 in respect of services in Class 42 (‘Engineering services; industrial, electrical and electronic analysis and research services’), represented as follows: 7 The ground relied on in support of the opposition was the likelihood of confusion within the meaning of Article 8(1)(b) of Regulation No 40/94 (now Article 8(1)(b) of Regulation No 207/2009). 8 On 11 December 2006, the Opposition Division rejected the opposition in its entirety, holding that the differences between the signs were such as to preclude a likelihood of confusion between the earlier marks and the mark applied for. 9 An undated notice of appeal, filed against the Opposition Division’s decision, was received by OHIM on 21 February 2007. 10 By decision of 27 November 2007 (‘the contested decision’), the Second Board of Appeal of OHIM upheld the appeal, annulling the Opposition Division’s decision and refusing the application for registration in its entirety. 11 In particular, the Board of Appeal first of all examined the issue of admissibility and held that, although the undated notice of appeal had been received by OHIM on 21 February 2007, that is to say, after the time allowed for filing an appeal had expired on 12 February 2007, the payment of the appeal fee by bank transfer ‘[had] fulfilled the role of the Appeal Notice for admissibility purposes’, since it had been made in time and contained the details required under Rule 48(1) of Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Regulation No 40/94 (OJ 1995 L 303, p. 1). Forms of order sought 12 Axis claims that the Court should: – annul the contested decision; – order OHIM to pay the costs. 13 OHIM contends that the Court should: – dismiss the action; – order Axis to pay the costs. 14 At the hearing, following a question put by the Court, OHIM stated that it was requesting the Court either to dismiss the action on its merits or to vary the contested decision on the basis of the fax transmission report sent by the other party to the proceedings before the Board of Appeal. Law 15 In support of its action, Axis relies, in essence, on two pleas in law, alleging (i) infringement of Rule 49(1) and (2) of Regulation No 2868/95 and (ii) infringement of Article 8(1)(b) of Regulation No 40/94. 16 The first plea in law, alleging infringement of Rule 49(1) and (2) of Regulation No 2868/95, should be examined first. Arguments of the parties 17 Axis submits that the Board of Appeal infringed Rule 49(1) and (2) of Regulation No 2868/95. In particular, it submits that the Board of Appeal erred in finding that the appeal was admissible in accordance with Rule 49(1) of Regulation No 2868/95, when the bank transfer note in settlement of the appeal fee was in Spanish, contrary to Rule 48(2) of Regulation No 2868/95, which provides that the notice of appeal must be filed in the language of the proceedings in which the decision under appeal was taken, which in the present case was English. 18 OHIM acknowledges that the Board of Appeal infringed Rule 49(1) and (2) of Regulation No 2868/95. However, it maintains that, in accordance with a principle of European Union law, the error made by the Board of Appeal is not sufficient to warrant annulment of the contested decision, because that ‘procedural irregularity’ could not have had a ‘decisive effect’ on the admissibility of the appeal before the Board of Appeal. 19 OHIM contends that the appeal before the Board of Appeal was admissible on the ground that, on 21 February 2007, the opponent had submitted a fax transmission report showing that a notice of appeal satisfying all the requirements under Rule 48 of Regulation No 2868/95 had been sent on 8 February 2007. Although OHIM could not trace having received that fax, case-law exists (Joined Cases T-380/02 and T-128/03 Success-Marketing v OHIM – Chipita (PAN & CO) [2005] ECR II‑1233) to the effect that the date of receipt of a document may be established by a fax transmission report. Findings of the Court 20 It is appropriate, first of all, to consider the plea in law alleging infringement of Rule 49(1) of Regulation No 2868/95. 21 Under Rule 49(1) of Regulation No 2868/95, if the appeal does not comply, inter alia, with the conditions laid down in Article 59 of Regulation No 40/94 (now Article 60 of Regulation No 207/2009), the Board of Appeal is to reject it as inadmissible, unless those deficiencies have been remedied before the period laid down in that provision has expired, that is to say, within two months of the date of notification of the contested decision. 22 Under Article 59 of Regulation No 40/94, notice of appeal must be filed in writing at OHIM within two months of the date of notification of the decision under appeal, and is to be deemed to have been filed only when the fee for appeal has been paid. 23 In that connection, it is clear from the case-law of the General Court that, while Article 59 of Regulation No 40/94 provides that the appeal is deemed to be filed only when the fee for appeal has been paid, the mere payment of the corresponding amount cannot be considered to be equivalent to the notice required under that provision (Case T-373/03 Solo Italia v OHIM – Nuova Sala (PARMITALIA) [2005] ECR II‑1881, paragraph 58). 24 In the present case, the Board of Appeal held that, although the undated notice of appeal had been received by OHIM on 21 February 2007, that is to say, after the time allowed for filing an appeal had expired on 12 February 2007, the payment of the appeal fee by bank transfer ‘[had] fulfilled the role of the Appeal Notice for admissibility purposes’, since it had been made in time and contained the details required under Rule 48(1) of Regulation No 2868/95. 25 Thus, the Board of Appeal failed to have regard to the condition concerning the existence of a notice of appeal within the meaning of Article 59 of Regulation No 40/94, as interpreted by the above case-law, and therefore failed to have regard to Rule 49(1) of Regulation No 2868/95. 26 As regards OHIM’s contention that that error on the part of the Board of Appeal must be regarded as an irregularity which does not entail annulment of the contested decision, because, even without that irregularity, the contents of the decision would not have been different, it must be observed that, in its response, OHIM contended only that the action brought by Axis should be dismissed. It was not until the hearing that OHIM stated that it was requesting the Court either to dismiss the action or to vary the contested decision on the basis of the fax transmission report sent by the other party to the proceedings before the Board of Appeal. 27 If that statement falls to be construed as the submission – made for the first time at the hearing – of a head of claim seeking variation of the decision, that head of claim must be dismissed as inadmissible, regardless even of whether it may be out of time. Although Article 134(3) of the Rules of Procedure of the General Court provides that ‘[a]n intervener … may, in his response …, seek an order annulling or altering the decision of the Board of Appeal on a point not raised in the application’, it follows from that provision – by dint of a contrario reasoning – that OHIM is not entitled, for its part, to seek such a form of order (Case C‑106/03 P Vedial v OHIM [2004] ECR I‑9573, paragraph 34). 28 Additionally, in so far as, by such an argument, OHIM is calling on the Court to dismiss the action and thus to uphold the contested decision, while substituting other grounds for the reasons stated, that argument cannot succeed. 29 It should be borne in mind that the General Court reviews the legality of the decisions of OHIM bodies. If it holds that such a decision, called into question in an action brought before it, is vitiated by illegality, it must annul it. It may not dismiss the action while substituting its own reasoning for that of the competent OHIM body which is the author of the contested act (Case T-402/07 Kaul v OHIM – Bayer (ARCOL) [2009] ECR II-737, paragraph 49). 30 In the present case, it has already been noted that the Board of Appeal’s finding that the action brought before it was admissible was based exclusively on the bank transfer note, which it assimilated to a notice of appeal. It has also been noted that that finding on the part of the Board of Appeal in the contested decision was vitiated by an error of law (see paragraph 25 above). 31 By contrast, the Board of Appeal did not in any way base its findings on the fax transmission report, relied on by OHIM in its arguments. In paragraph 9 of the contested decision, the Board of Appeal confined itself to stating the following in that regard: ‘The opponent maintains that the appeal was filed on 8 February 2007, within the time limit, and provides a fax report in support of this argument; however, [OHIM] can find no trace of such a document being received on that day.’ 32 In those circumstances, the contested decision must be annulled. It is for the Board of Appeal, where appropriate, to assess whether – and, if so, to what extent – the above document, relied on by OHIM in its arguments, is likely to have an effect on the admissibility of the opponent’s appeal before it. 33 In the light of the above considerations, Axis’s first plea in law must be upheld and the contested decision fall to be annulled on that basis, it being unnecessary to examine the plea in law alleging infringement of Rule 49(2) of Regulation No 2868/95, or the second plea in law, alleging infringement of Article 8(1)(b) of Regulation No 40/94. Costs 34 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since OHIM has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by Axis. On those grounds, THE GENERAL COURT (Fifth Chamber) hereby: 1. Annuls the decision of the Second Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) of 27 November 2007 (Case R 334/2007-2) relating to opposition proceedings between Etra Investigación y Desarrollo, SA and Axis AB; 2. Orders OHIM to bear its own costs and to pay those incurred by Axis AB. Vilaras Prek Ciucă Delivered in open court in Luxembourg on 9 September 2010. [Signatures] * Language of the case: English.

Opinion of Mr Advocate General Jacobs delivered on 4 December 1997. - A. Racke GmbH & Co. v Hauptzollamt Mainz. - Reference for a preliminary ruling: Bundesfinanzhof - Germany. - EEC/Yugoslavia Cooperation Agreement - Suspension of trade concessions - Vienna Convention on the Law of Treaties - Rebus sic stantibus clause. - Case C-162/96. European Court reports 1998 Page I-03655 Opinion of the Advocate-General 1 The present case is a reference from the German Bundesfinanzhof (Federal Finance Court). That court has doubts about the validity of the regulation by which the Council suspended, at the time of the war in the former Yugoslavia, the trade concessions provided for by the Cooperation Agreement between the Community and Yugoslavia. The plaintiff and appellant in the main proceedings, A. Racke GmbH & Co. (`Racke'), is a wine importer which imported wine from Serbia and thus benefited from tariff preferences on imports of wine from Yugoslavia until the Council adopted the disputed regulation. Racke claims that the Cooperation Agreement with Yugoslavia did not permit the Council to suspend its operation, and that the decision to do so was not in conformity with certain rules of general international law. The Council Regulation (1) suspending the trade concessions was therefore, according to Racke, invalid. The arguments focus in particular on rules of customary international law which are also contained in the Vienna Convention on the Law of Treaties, including the principle of pacta sunt servanda and the rule that a treaty may under certain conditions be terminated by reason of a fundamental change of circumstances (the doctrine of rebus sic stantibus (2)). Thus the present case raises the novel issue whether it is possible for a private claimant to invoke rules of general international law against a decision to suspend the operation of an international agreement. Legal framework The Cooperation Agreement 2 The Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia (hereafter `the Cooperation Agreement') was signed in Belgrade on 2 April 1980 and concluded on behalf of the Community by Council Regulation (EEC) No 314/83 of 24 January 1983. (3) It was a so-called mixed agreement, to which the Member States were also parties alongside the Community. 3 According to Article 1 of the Cooperation Agreement its object was to promote overall cooperation between the contracting parties with a view to contributing to the economic and social development of the Socialist Federal Republic of Yugoslavia (hereafter `SFRY') and helping to strengthen relations between the parties. To that end provisions and measures were to be adopted and implemented in the field of economic, technical and financial cooperation, and in the trade and social fields. 4 Title I of the Cooperation Agreement dealt with economic, technical and financial cooperation, Title II with trade, Title III with provisions relating to the Free Zone established by the agreements signed at Osimo, and Title IV with cooperation in the field of labour. Title V consisted of general and final provisions. 5 On the trade side, Article 22 of the Cooperation Agreement provided for preferential tariff treatment of imports of wine of fresh grapes originating in Yugoslavia. The basic provision, as amended by an Additional Protocol to the Cooperation Agreement dating from 1987, (4) was Article 22(4): `Customs duties on imports into the Community of wine of fresh grapes falling within subheadings 22.05 C I or C II of the Common Customs Tariff, originating in Yugoslavia, shall be dismantled in accordance with the rules laid down in Article 2(1) and (2) of the Additional Protocol establishing new trade arrangements. This provision shall apply within the limits of an annual Community tariff quota of 545 000 hectolitres. The Community shall apply the duties of the Common Customs Tariff to imports in excess of the quota.' 6 Of relevance among the general and final provisions of the Cooperation Agreement is Article 60, which provided: `This agreement is concluded for an unlimited period. Either Contracting Party may denounce this Agreement by notifying the other Contracting Party. This Agreement shall cease to apply six months after the date of such notification.' By contrast, the Cooperation Agreement did not contain provisions on the suspension of its operation. The suspension and termination of the Cooperation Agreement 7 During the course of 1991 war broke out in Yugoslavia. The Community and its Member States attempted to play an active role in putting an end to the conflict. In November that led to Decision (91/586/ECSC, EEC) of the Council and the Representatives of the Governments of the Member States, meeting within the Council, of 11 November 1991 suspending the application of the Agreements between the European Community, its Member States and the Socialist Federal Republic of Yugoslavia (hereafter `the Suspension Decision'). (5) 8 The preamble to the Suspension Decision refers to declarations of the European Community and its Member States, meeting within the framework of European Political Cooperation, taking note of the crisis in Yugoslavia. The preamble also refers to Resolution 713 (1991) of the United Nations Security Council, which expressed concern that the prolongation of the crisis constituted a threat to international peace and security. The preamble further states that the appeal launched by the European Community and its Member States on 6 October 1991, calling for compliance with the cease-fire agreement reached in The Hague on 4 October 1991, was not heeded. That declaration of 6 October 1991 announced the decision to terminate the Agreements between the Community and Yugoslavia if the agreements reached on 4 October 1991 between the parties to the conflict were not observed. 9 The preamble further states that: (6) `the pursuit of hostilities and their consequences on economic and trade relations, both between the Republics of Yugoslavia and with the Community, constitute a radical change in the conditions under which the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia and its Protocols, as well as the Agreement concerning the European Coal and Steel Community, were concluded; ... they call into question the application of such Agreements and Protocols'. 10 Paragraph 1 of the Suspension Decision provides: `The application of the abovementioned Agreements is hereby suspended with immediate effect.' The decision was published in the Official Journal on 15 November 1991 and should therefore be regarded as taking effect on that date. 11 The Council also adopted on 11 November 1991 Regulation (EEC) No 3300/91 suspending the trade concessions provided for by the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia (hereafter `the Suspension Regulation'). (7) 12 The preamble to the Suspension Regulation is almost identical to the preamble to the Suspension Decision. The preamble to the Suspension Regulation adds, however, that the trade concessions granted by, or pursuant to, the Cooperation Agreement shall be suspended with immediate effect, and that provision should be made for the Regulation to avoid affecting exports to the Community of products originating in Yugoslavia made before its entry into force. 13 Article 1 of the Suspension Regulation provides: `The trade concessions granted by, or pursuant to, the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia are hereby suspended.' 14 Article 2 provides: `Article 1 shall not apply to products originating in Yugoslavia which are exported before the date of entry into force of this Regulation.' 15 The Suspension Regulation entered into force on the day of its publication in the Official Journal, i.e. on 15 November 1991. 16 On 25 November 1991 the Council adopted Decision 91/602/EEC denouncing the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia. (8) The preamble refers to the provisions of Article 60 of the Cooperation Agreement, and states that the situation prevailing in Yugoslavia no longer permits the Cooperation Agreement to be upheld. Article 1 provides that the Cooperation Agreement and all related protocols and instruments are denounced. Article 2 provides that the decision shall be published in the Official Journal and notified by the President of the Council to the Socialist Federal Republic of Yugoslavia, and that it shall take effect on the day of its publication. The decision was published on 27 November 1991. 17 On 2 December 1991 the Council adopted Regulation (EEC) No 3567/91 concerning the arrangements applicable to the import of products originating in the Republics of Bosnia-Herzegovina, Croatia, Macedonia and Slovenia. (9) The preamble states that the European Community and its Member States have decided to apply selective positive measures in favour of those parties which contribute to progress towards peace, and that those parties should therefore be granted, by an autonomous decision taken by the Community, the benefit of trade provisions which are equivalent in essence to those of the Cooperation Agreement suspended by the Community. The regulation thus granted the Republics of Bosnia-Herzegovina, Croatia, Macedonia and Slovenia trade concessions equivalent to those of the Cooperation Agreement with effect from 15 November 1991, but those concessions did not cover imports of wine. 18 Similar arrangements were made in 1992, through the adoption of Council Regulation (EEC) No 545/92 of 3 February 1992 concerning the arrangements applicable to the import into the Community of products originating in the Republics of Croatia and Slovenia and the Yugoslav Republics of Bosnia-Herzegovina, Macedonia and Montenegro. (10) The preamble to the regulation again refers to selective positive measures, consisting of the benefit of trade provisions which are equivalent in essence to those of the Cooperation Agreement. It further states that those measures should be maintained for 1992, amplified in respect of certain industrial products and extended to cover certain agricultural products. Article 6 of the regulation provides for the reduction in import duties for wines of fresh grapes, within the limit of an annual tariff quota of 545 000 hectolitres. The regulation was implemented by Council Regulation (EEC) No 547/92 of 3 February 1992 opening and providing for the administration of Community tariff quotas for certain products originating in the Republics of Croatia and Slovenia and the Yugoslav Republics of Bosnia-Herzegovina, Macedonia and Montenegro. (11) 19 On 1 June 1992 the Council adopted Regulation (EEC) No 1432/92 prohibiting trade between the European Economic Community and the Republics of Serbia and Montenegro. (12) The Vienna Convention on the Law of Treaties 20 The Vienna Convention on the Law of Treaties (hereafter `Vienna Convention' or `Convention') (13) was opened for signature at Vienna on 23 May 1969, following the successful conclusion of the United Nations Conference on the Law of Treaties. The Convention entered into force on 27 January 1980, following the deposit by Togo of the 35th instrument of ratification or accession. (14) The Community is not a party to the Convention, and indeed could not become a party since accession is open only to States (Articles 81 and 83 of the Convention). Accession by the Community would in any event be fruitless since the Convention applies only to treaties between States (Article 1). It is argued, as will be seen below, that the Convention is none the less relevant as it expresses rules of customary international law binding on the Community. There is a second Vienna Convention, on the Law of Treaties between States and International Organisations, or between International Organisations. (15) That convention has not yet entered into force, and the Community has not signed it. The provisions of that convention are largely identical to those of the 1969 Convention, to which I will mainly confine myself in what follows. 21 Instruments of ratification of or accession to the Vienna Convention have been deposited by all the Member States of the Community except France, Ireland, Luxembourg and Portugal. Of those four Member States only Luxembourg has signed the Convention (but has not yet ratified it). 22 The basic principle of international treaty law is stated in Article 26 of the Vienna Convention, under the heading `Pacta sunt servanda': `Every treaty in force is binding upon the parties to it and must be performed by them in good faith.' 23 Part V, Section 3, of the Convention contains provisions on termination and suspension of the operation of treaties. The primary rule is that treaties are terminated or suspended in conformity with their provisions or by consent of all the parties (Articles 54 and 57). Of relevance among the other provisions of that section are Article 61, on `Supervening impossibility of performance', Article 62, on `Fundamental change of circumstances', and Articles 65 to 67, on procedural issues. 24 Article 61(1) provides: `A party may invoke the impossibility of performing a treaty as a ground for terminating or withdrawing from it if the impossibility results from the permanent disappearance or destruction of an object indispensable for the execution of the treaty. If the impossibility is temporary, it may be invoked only as a ground for suspending the operation of the treaty.' 25 Article 62 provides: `Fundamental change of circumstances 1. A fundamental change of circumstances which has occurred with regard to those existing at the time of the conclusion of a treaty, and which was not foreseen by the parties, may not be invoked as a ground for terminating or withdrawing from the treaty unless: (a) the existence of those circumstances constituted an essential basis of the consent of the parties to be bound by the treaty; and (b) the effect of the change is radically to transform the extent of obligations still to be performed under the treaty. 2. A fundamental change of circumstances may not be invoked as a ground for terminating or withdrawing from a treaty: (a) if the treaty establishes a boundary; or (b) if the fundamental change is the result of a breach by the party invoking it either of an obligation under the treaty or of any other international obligation owed to any other party to the treaty. 3. If, under the foregoing paragraphs, a party may invoke a fundamental change of circumstances as a ground for terminating or withdrawing from a treaty it may also invoke the change as a ground for suspending the operation of the treaty.' 26 Article 65 contains the `Procedure to be followed with respect to invalidity, termination, withdrawal from or suspension of the operation of a treaty'. Article 65(1) provides that a party invoking a ground for terminating, withdrawing from, or suspending the operation of a treaty, must notify the other parties of its claim. The notification shall indicate the measure proposed to be taken with respect to the treaty and the reasons therefor. Article 65(2) provides for a waiting period of not less than three months (except in cases of special urgency), after which the notifying party may, if no party has raised any objection, carry out the proposed measure. If objection is raised, the parties shall seek a solution through the means indicated in Article 33 of the Charter of the United Nations (Article 65(3)). 27 Article 66 contains further rules on `Procedures for judicial settlement, arbitration and conciliation'. Article 67(1) lays down that the notification provided for under Article 65(1) must be made in writing. 28 I should also refer to Article 73 of the Convention, on `Cases of State succession, State responsibility and outbreak of hostilities', which provides: `The provisions of the present Convention shall not prejudge any question that may arise in regard to a treaty from a succession of States or from the international responsibility of a State or from the outbreak of hostilities between States.' 29 It is generally agreed that many provisions of the Vienna Convention codify rules of customary international law. There is however also agreement that to some extent the Convention constitutes a progressive development going beyond established custom. And there appears to be no agreement on precisely which provisions are customary international law and which are not. (16) Both the principle of pacta sunt servanda and the doctrine of rebus sic stantibus (which makes allowance for a fundamental change of circumstances) are however universally recognised as forming part of customary international law. In the Fisheries Jurisdiction cases (17) the International Court of Justice, referring to the principle of termination of a treaty by reason of a fundamental change in circumstances, stated: `This principle, and the conditions and exceptions to which it is subject, have been embodied in Article 62 of the Vienna Convention on the Law of Treaties, which may in many respects be considered as a codification of existing customary law on the subject of the termination of a treaty relationship on account of change of circumstances.' The main proceedings 30 Racke imported wines from the Kosovo wine-growing region in the period from 6 November 1990 to 27 April 1992. It had those imports cleared for warehousing in its private customs warehouse and on 7 May 1992 declared the consignments released into free circulation. On that occasion Racke calculated the customs duty at the preferential rate provided under the Cooperation Agreement, which in the meantime had been suspended. The Hauptzollamt (Principal Customs Office) Mainz then raised a supplementary assessment consisting of the difference between the third-country rate of customs duties and the preferential rate, since the wine had been imported from Serbia (tax amendment decision of 27 May 1992, confirmed by decision of 27 August 1993 on the complaint by Racke). Racke disputed that decision before the Finanzgericht (Finance Court) Rheinland-Pfalz. Its action succeeded as regards the supplementary assessment for the wines exported from Yugoslavia before 15 November 1991, but was dismissed as to the remainder. The Finanzgericht based its dismissal of the action on the Suspension Regulation and stated that the suspension by that regulation of the agreed trade concessions, even before the denunciation of the Cooperation Agreement, gave rise to no legal doubt. On the contrary, the unilateral suspension was lawful since a fundamental change of the material circumstances in the former Yugoslavia had taken place. The war in Yugoslavia was a valid ground for the suspension; that ground as a matter of international law permitted withdrawal from a treaty, at least by means of suspension, which appears a lesser interference than the subsequent termination. 31 Racke then appealed against the judgment of the Finanzgericht, on a point of law, to the Bundesfinanzhof. It contested the validity of the Suspension Regulation and asked that the provisions of the Cooperation Agreement be applied until 27 May 1992, the day on which the denunciation of the Cooperation Agreement became effective. 32 In the order for reference the Bundesfinanzhof sets out its doubts about the validity of the Suspension Regulation. It points out that that regulation constituted, at the material time, the legal basis for the supplementary assessment by the Hauptzollamt, since the denunciation of the Cooperation Agreement was not yet effective and trade with Serbia and Montenegro not yet prohibited. It admits that it inclines to the view that the binding character of the Suspension Regulation cannot be called into question on grounds of international law. However, the doubts which exist in that respect, in particular on the lawfulness under international law of the unilateral suspension of the Cooperation Agreement, cannot be brushed aside. 33 The Bundesfinanzhof further reasons as follows. Under the Court's case-law, the incompatibility of a Community act with a provision of international law can affect the validity of that act only if the Community is bound by that provision and if the provision is capable of conferring rights on citizens of the Community which they can invoke before the courts. Those conditions appear to be fulfilled with respect to the tariff concessions defined in Article 22 of the Cooperation Agreement, in issue in the present proceedings. That raises the question whether the Cooperation Agreement was validly suspended, a question which cannot be answered in the affirmative without reservations. The Community is bound by the rules of general international law, as they are expressed for example in the Vienna Convention. The Cooperation Agreement did not provide for the possibility of suspension, and suspension on account of a fundamental change, not foreseen by the parties, of the circumstances obtaining when the agreement was concluded (the rebus sic stantibus doctrine) is permissible only under narrow conditions: namely that the presence of those circumstances constituted an essential basis for concluding the treaty and that the change of circumstances would radically alter the extent of the obligations still to be fulfilled under the treaty. 34 The Bundesfinanzhof considers the first condition to be satisfied, but has doubts about the second condition. It is not obvious that the change which occurred through the dismembering of Yugoslavia and the outbreak of hostilities could radically change the extent of the obligations under an agreement which is essentially economic. Moreover, international law also prescribes procedural formalities, including notification and the observance of a waiting period, except in case of special urgency. It may therefore be asked whether an immediate suspension with no notice period is permissible, whether there was special urgency and whether any procedural defects could be cured by the lapse of time until the customs clearance date material here. 35 If the Suspension Regulation is invalid, the question arises of how to treat imports which would have been covered by a Community tariff quota opened for 1992 if the Cooperation Agreement had continued to apply. Since the last annual quota for Yugoslavia was already exhausted for imports at the end of 1991, it might be possible to take as a basis the quota rules in Regulations Nos 545/92 and 547/92 relating to products originating in Croatia, Slovenia, Bosnia-Herzegovina, Macedonia and Montenegro. (18) 36 Accordingly, the Bundesfinanzhof referred the following questions to the Court: `1. Is Council Regulation (EEC) No 3300/91 of 11 November 1991 suspending the trade concessions provided for by the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia ... valid? 2. If not, what are the consequences of invalidity ... for the charging of customs duty in early May 1992 on wines originating in Serbia which were imported in the period from mid-November 1991 to April 1992 and cleared for warehousing in a customs warehouse? Are the quota-related preferential customs duties granted in 1992 for wines from the territory of the former Yugoslavia other than Serbia applicable in that respect?' 37 Before I turn to consider the first question it may be appropriate, in view of the novelty of the issues which are raised and in view of the fact that the validity of a regulation is in issue, to summarise the principal arguments put forward in the observations submitted in the present proceedings. Written and oral submissions were made by Racke, the Council and the Commission. The principal arguments 38 Racke refers to the universally recognised principle of pacta sunt servanda which, under international law, is limited by the rebus sic stantibus exception. It is clear from the Suspension Regulation, which refers to a radical change in conditions, that the Council sought to have recourse to that exception. The rebus sic stantibus doctrine is expressed in Article 62 of the Vienna Convention, which imposes strict limits and has to be interpreted restrictively and objectively. The burden of proof rests on the contracting party invoking the exception. The Vienna Convention further contains procedural provisions. 39 Racke argues that the Community is bound by the provisions of the Vienna Convention, since they reflect customary international law. It refers to judgments of the International Court of Justice in the Fisheries Jurisdiction cases, cited above. Racke also contends that, according to international law practice and doctrine, the suspension of a treaty must be preceded by attempts to find an agreement. 40 Racke claims that the Suspension Regulation satisfies neither the procedural requirements of the Convention (Articles 65 and 67) nor its substantive requirements (Article 62). 41 At the procedural level Racke submits that the Council suspended the tariff concession without first notifying the SFRY, and suspended it with immediate effect. There was no case of `special urgency', as required by Article 65(2) of the Convention for an immediate suspension. The Security Council of the United Nations had not yet imposed a trade embargo, and there were no other reasons of special urgency. One can assume that, if the Community had notified its intention to suspend the Cooperation Agreement, the SFRY would have resisted that. Further, it is difficult to see why the Council and the Member States did not confine themselves to denouncing the Cooperation Agreement (and thus further applying the Cooperation Agreement until the end of the six months' notice). Racke stresses that the procedural provisions of the Vienna Convention are essential rules of international law, whose violation is sufficient to invalidate the Suspension Regulation. 42 Also at the substantive level Racke maintains that there was no justification for recourse to rebus sic stantibus. 43 The Bundesfinanzhof in the order for reference refers to the `dismembering' of Yugoslavia. However, under international law, according to Racke, there is no dismembering of Yugoslavia since it continues to exist in reduced form (Serbia and Montenegro). In any event, the Council did not refer to any dismembering in the Suspension Regulation. 44 The regulation does refer to `the pursuit of hostilities' in Yugoslavia, but that cannot, according to Racke, constitute a fundamental change of circumstances. There are many States in which hostilities occur, including Member States of the Community. The absence of such hostilities did not constitute `an essential basis of the consent of the parties' (Article 62(1)(a) of the Vienna Convention). There was no war with Yugoslavia, indeed there was not even a war inside Yugoslavia, but only conflicts between ethnic groups claiming self-determination. 45 The Suspension Regulation refers to the consequences of the pursuit of hostilities on economic and trade relations between the Republics of Yugoslavia. For the Community, however, those consequences could not constitute a fundamental change of circumstances. 46 Next, the Suspension Regulation refers to the consequences on trade and economic relations with the Community. Racke argues that those consequences were very limited at the time. Trade was still possible, as is demonstrated by the imports of wine in issue. The Suspension Regulation does not specify those `consequences', and it is for the Council to show what those objective consequences were, bearing in mind that they should constitute a fundamental change of circumstances which, in turn, constituted an essential basis of the consent of the parties. 47 In Racke's submission the Cooperation Agreement was suspended for political reasons: it was a means of exercising pressure on the parties to the conflict to observe ceasefire agreements. Although understandable from a political point of view, the suspension does not thereby meet the conditions of rebus sic stantibus. The latter also requires that `the effect of the change is radically to transform the extent of obligations still to be performed under the treaty'. Racke claims that no such change occurred. The Cooperation Agreement was in the first place a trade agreement, serving the interests of economic factors, and trade with Yugoslavia continued at the time. 48 Racke thus concludes that none of the procedural and substantive requirements for recourse to rebus sic stantibus were satisfied. 49 The Council argues that the Suspension Regulation is valid. It first recalls the relevant legal framework. The Suspension Regulation was accompanied by the Suspension Decision, adopted by the Council and the Representatives of the Governments of the Member States. That decision precedes the regulation from both a logical and a juridical point of view. The adoption of the Suspension Regulation was required because the tariff concessions provided for in the Cooperation Agreement had been implemented by way of regulations. Thus, the legal framework is not that of an international agreement still in operation and a Community regulation unilaterally suspending the tariff concessions. Rather, it is that of an international agreement whose operation was suspended at international level; its provisions had therefore ceased to create rights for individuals when the Suspension Regulation was adopted. 50 The Council contends that Racke and the Bundesfinanzhof err in their conception of the relationship between international law and Community law. Even if the Suspension Decision were invalid under international law, it would not follow that the Cooperation Agreement continued to operate. International law does not impose a specific form of reparation; it does not, in particular, impose resumption of the agreement in question. An alleged violation of international law may set in motion a procedure between the parties which may result in a resumption of the agreement, but it may also result in compensation for the injured party, or retorsion by the injured party in the form of retaliatory measures. In the present case, no such procedure was started and, even if it had been, the re-application of the Cooperation Agreement would have been an unlikely outcome. Where there is a serious deterioration in the relations between the parties to a treaty, those parties have a measure of legitimate political choice between the various solutions offered by international law. It is therefore not necessary for the Court, when reviewing the validity of the Suspension Regulation, to consider the question whether the suspension of the operation of the Cooperation Agreement was in conformity with international law: the Agreement ceased to apply in any event. 51 In the alternative, the Council argues that the Suspension Decision was lawful under international law. It considers that the requirements of rebus sic stantibus, as expressed in Article 62 of the Vienna Convention, were satisfied. There was a fundamental change in the circumstances whose existence constituted an essential basis for the consent of the parties. It is clear from the preamble to and Article 1 of the Cooperation Agreement that the existence of the SFRY as a federal, sovereign and peaceful State was an essential condition for initiating and pursuing the cooperation envisaged by the Cooperation Agreement. It is therefore obvious that the events at the time - the seriousness of the situation in Yugoslavia consisting of the breaking-up of the internal order and organisation through the use of armed forces, which the Security Council had characterised as a threat to international peace and security - constituted a change of circumstances affecting the very basis of the cooperation with the Community and its Member States. It is wrong to say that the Cooperation Agreement was a mere trade agreement. The Cooperation Agreement was comparable to other agreements with Mediterranean countries (`association' or `cooperation' agreements based on Article 238 of the Treaty). It was concluded both by the Community and by the Member States. It contained essential provisions on financial assistance. It contained important social provisions. And it was situated in a broader political framework expressed in the Final Act of the Conference on security and cooperation in Europe, thus instituting privileged political relations between the Community and the Member States, of the one part, and Yugoslavia, of the other. 52 As to the condition that `the effect of the change is radically to transform the extent of obligations still to be performed under the treaty' (Article 62(1)(b) of the Vienna Convention), the Council refers to the de facto dissolution of Yugoslavia, with the birth of new political entities with effective control over their territories. Because of that situation many provisions of the Cooperation Agreement (on trade and on financial assistance) could no longer be applied. As an example the Council refers to the controversy between Slovenia and the federal authorities on the receipt of customs duties. A potential adaptation of the Cooperation Agreement to the new situation could only be based on negotiation between the parties. The Community sought such a solution, but it could not be achieved. The Council concludes that the Suspension Regulation is valid. 53 The Commission first expresses doubts as to the admissibility of the reference. The Bundesfinanzhof questions the validity of the Suspension Regulation on the basis of the Vienna Convention and rules of customary international law. But the Community is not a party to the Vienna Convention and there is nothing in the Treaty which suggests that general principles of international law are part of the Community legal order. It is true that in Poulsen and Diva Corp. (19) the Court stated that the Community must exercise its competences in conformity with international law, but for the Commission it is not certain that that statement covers the wide powers of review sought by Racke. The Commission is reluctant to acknowledge those powers as they charge the Court with a function that is normally performed by international tribunals, under dispute resolution rules which are fundamentally different from those governing the procedures before the Court. 54 Next, the Commission doubts whether the answer to the first question is relevant to the second question, which concerns the practical consequences of the alleged invalidity of the Suspension Regulation. The Commission takes the view that such invalidity cannot affect the answer to be given to the second question. The Suspension Regulation concerned the tariff concessions for 1991, and Racke released the goods in issue into free circulation only on 7 May 1992. In 1992, however, there was no tariff quota for wines originating in Serbia. A declaration of invalidity of the Suspension Regulation cannot have the effect of extending the 1992 tariff quota applying to imports from other Republics of the former Yugoslavia to imports from Serbia. The Commission further emphasises that the Bundesfinanzhof does not raise the issue whether Racke could claim a right to the preferences in issue directly on the basis of the Cooperation Agreement. The Court cannot therefore address the latter issue. 55 On the substance, the Commission first expresses its views on the direct effect of the Cooperation Agreement, and in particular of Article 22 providing for the tariff quota for wines. That is a point to which I will revert when considering the second question. 56 The Commission then addresses the question whether it is possible for Racke to rely on rules of general international law. It favours a negative reply to that question. The Commission recalls that the Community is not a party to either of the Vienna Conventions. Those conventions are therefore not an act of the institutions in the sense of Article 177 of the Treaty. Even if one takes the view that the Community is bound by certain principles of the Vienna Convention, inasmuch as they express rules of customary international law, it is questionable whether, and to what extent, that is the case for specific provisions of the Convention. 57 If that problem were to be overcome, there would remain the fact that, by its nature, the Vienna Convention is not apt to create rights in favour of individuals questioning the validity of a Community act. The Commission derives that from the spirit, scheme and provisions of the Convention. The principal objective of the Convention is to regulate contractual relations between subjects of international law. The Convention is further subsidiary in that States can always agree to depart from its rules and in that State practice may create new rules of customary international law superseding those of the Convention. Lastly, the Convention is not exhaustive as questions arising from State succession, State responsibility and the outbreak of hostilities are not covered (Article 73 of the Convention) and as the Convention is without prejudice to rules of customary international law in fields not covered by it (such as the right to retorsion). 58 In that context, Articles 61 and 62 of the Convention regulate the matter only partly. It emerges for example from the preparatory documents to the Convention that the disappearance of a subject of international law was considered as an essential reason for the impossibility of performing a treaty (Article 61), but that it was decided not to address that issue in Article 61 in order not to prejudge further negotiations on State succession. (20) 59 The Commission thus concludes that the Vienna Convention is not an instrument such as to create rights in favour of individuals disputing the validity of an act of the institutions. In support, the Commission refers to Faust v Commission (21) and Germany v Council, (22) where the Court also refused to examine arguments based on legal relations between the Community and third countries. 60 The Commission subsequently defends the validity of the Suspension Regulation, in the event that the Court were to consider that the legality of the regulation should be reviewed on the basis of rules of general international law. The Commission argues that the Council did not rely on rebus sic stantibus alone when adopting the Suspension Regulation, but also on the impossibility of continuing the performance of the treaty and to the right to retorsion. Taking into account the delicate political assessment which needs to be undertaken where an international agreement is suspended, the Commission contends that the Court should confine itself to examining whether the Community institutions abused their powers. Given that the Community is not bound by the Vienna Convention under Article 228(7) of the Treaty, and given that certain rules of customary international law are decidedly more flexible than the provisions of the Convention, the Community is not obliged to respect each specific provision of the Convention. That also applies to the procedural provisions, whose violation does not under international law render the disputed act void or invalid but only engages the international responsibility of the international law subject involved. 61 The Commission points out that a state of war is not required for reliance on rebus sic stantibus, the impossibility of performance or the right to retorsion. In line with the UN Security Council, (23) the Community took into account the existence of an armed conflict giving rise to bloodshed and destruction. The Security Council considered the conflict a threat to international peace and security, and that justified the Community's action. 62 As regards the conditions for recourse to rebus sic stantibus, it is clear from the preamble to and Article 1 of the Cooperation Agreement that the continued peaceful existence of Yugoslavia constituted an essential basis for the Community's consent to be bound by the Agreement. It is also clear that the conflict in Yugoslavia was such as radically to transform the extent of the Community's obligations towards the SFRY: the Community was no longer in a position to contribute towards the economic and social development of the SFRY (see again Article 1 of the Agreement). 63 At the time it was impossible to continue to perform the Cooperation Agreement, not necessarily because of `the permanent disappearance or destruction of an object indispensable for the execution of the treaty' (Article 61(1) of the Vienna Convention), but because of the disappearance of the SFRY itself. In that respect the Commission notes that the declarations of independence of Croatia and Slovenia took effect on 8 October 1991. 64 The Commission further submits that at the procedural level also the spirit of the Vienna Convention was respected. As early as 28 August 1991 the Community announced that it would take measures against the parties to the conflict not participating in the peace process. (24) In the declarations of 5, 6 and 28 October, cited in the Suspension Regulation, the Community left no doubt that it would take action against the parties not respecting, at the latest on 7 October 1991, the ceasefire agreement of 4 October 1991, which was signed in the presence of the Presidency of the Council and the President of the Conference on Yugoslavia. Then, too, the Community announced that it would terminate the Cooperation Agreement in the event of non-compliance. (25) The Community also fully informed the international community of its intentions, and it notified the suspension of the tariff preferences to the GATT. 65 Lastly, there is the right to retorsion, which the Commission defines as the right to take action, in itself contrary to international law, but justified by previous illegal action by the other party and intended to incite that other party to revoke its action. Retorsion is limited by the following principles: it shall be announced, it shall observe the principle of proportionality and it shall be such as to permit the return to the pre-existing situation. Applying those principles to the suspension of the Cooperation Agreement, the Commission maintains that the Community was in a position to consider the following acts, on the part of the SFRY, as violations of international law. First, there was the coup in October 1991 by the four pro-Serb members of the collective presidency of the SFRY. Secondly, the Yugoslav federal army had abandoned neutrality by participating in attacking Croat towns (including Dubrovnik). Thirdly, even at that time the Community insisted on having the perpetrators of war crimes punished on the basis of international humanitarian law; and the mandate of the International Tribunal for the Prosecution of Persons Responsible for Serious Violations of International Humanitarian Law Committed in the Former Yugoslavia since 1991 goes back to 1 January 1991. (26) The Commission thus concludes that the conditions for retorsion were fulfilled. 66 Before examining the validity of the Suspension Regulation I will briefly consider the admissibility of the reference, on which the Commission has expressed doubts. Admissibility 67 The Commission's doubts as to whether it is possible for an individual to dispute the validity of a Community act on grounds of general international law may have some justification, but it is plainly wrong to suggest that the reference is inadmissible on that basis. Article 177 of the Treaty permits national courts to refer questions concerning the validity of acts of the institutions of the Community. It is not disputed that the Suspension Regulation is such an act and that the Bundesfinanzhof has genuine doubts on its validity. No other requirements are imposed by Article 177, which does not define the concept of validity, and therefore all other issues concerning the alleged invalidity go to the substance of the case. There is nothing in the terms of Article 177 or in the Court's case-law which supports the view that an issue as to whether the validity of a Community act can be reviewed in the light of a particular type of rule or legal provision is an issue of admissibility. On the contrary, in those cases where the Court has declined to review the validity of a Community act in the light of certain types of rules it did not hold the reference inadmissible, but simply decided that no invalidity was established. Examples are Internationale Handelsgesellschaft v Einfuhr- und Vorratsstelle Getreide, where the Court held that recourse to the legal rules or concepts of national law in order to judge the validity of measures adopted by the institutions of the Community would have an adverse effect on the uniformity and efficacy of Community law, (27) and International Fruit Company v Produktschap voor Groenten en Fruit, where the Court held that the GATT could not affect the validity of Community regulations because it was not capable of conferring rights on individuals. (28) 68 The second limb of the Commission's doubts on the admissibility of the reference concerns the relevance of the question on the validity of the Suspension Regulation for the proceedings before the Bundesfinanzhof. (29) It is true that in exceptional circumstances the Court can declare a reference inadmissible because the questions referred are manifestly irrelevant to the main proceedings. (30) There is however no such manifest irrelevance in the present case. The Commission merely argues that the consequences of a ruling of invalidity on Racke's claims cannot be of the kind envisaged in the second question referred by the Bundesfinanzhof, namely to extend the 1992 tariff quota applying to imports from other Republics of the former Yugoslavia to imports from Serbia. Again it is clear that the argument goes to the substance of the case. It concerns the reply to be given to the second question, which inquires in general terms about the consequences of the alleged invalidity of the Suspension Regulation. It is of course obvious that the two questions are closely linked. If the invalidity of the Suspension Regulation were found to have no effect whatsoever on Racke's claim, there would be no point in considering the question of validity. That would still not render that question inadmissible, however; the Court would simply not need to answer it. 69 For the reasons set out below, (31) I consider that the invalidity of the Suspension Regulation would affect Racke's claim. I therefore now turn to examine the validity of the Suspension Regulation. The validity of the Suspension Regulation 70 I will state at the outset that I am not convinced by Racke's arguments as to the invalidity of the Suspension Regulation on grounds of breach of rules of general international law, essentially for the following reasons. 71 First, although I do not wholly exclude the possibility that under certain circumstances individuals could base a Community law claim on rules of customary international law on treaties, I take the view that that should be exceptional in the light of the overall purpose and nature of such rules. I will thus suggest that only manifest violations of the law of treaties can give rise to a ruling of invalidity. 72 Second, in the present case no such manifest violation has been demonstrated. It has not in my view been shown that the Community made an improper use of the rebus sic stantibus doctrine, and it has not been shown that there were no other international law grounds on which the Community could base the decision to suspend the Cooperation Agreement. Also, I do not think that the Suspension Regulation is invalid on procedural grounds that Racke could rely upon (i.e. the alleged lack of prior notification to the SFRY and the suspension with immediate effect). The status of the Vienna Convention and rules of customary international law 73 The Community is not a party to either of the Vienna Conventions, which are therefore not binding on the Community on the sole basis of Article 228(7) of the Treaty, which refers to agreements concluded by the Community. However, it is generally recognised that both Conventions, which in respect of termination and suspension of treaties contain identical provisions, are at least partly an expression of general international law in that they aim to codify rules of customary international law. 74 There are only a few cases where the Court has had occasion to refer to the rules of the Vienna Convention or to rules of general international law. The most significant case is Poulsen and Diva Corp., (32) which concerned the scope of a fisheries regulation. There the Court held, as a preliminary point, that the Community must respect international law in the exercise of its powers and that, consequently, the regulation had to be interpreted, and its scope limited, in the light of the relevant rules of international law. (33) The Court subsequently referred to various international conventions, including the United Nations Convention on the Law of the Sea, many of whose provisions were considered to express the current state of customary international maritime law, as confirmed by several judgments of the International Court of Justice. (34) The interpretation given to the regulation in issue was substantially affected by those rules of general international law. 75 In a recent judgment the Court of First Instance also based its reasoning partly on the binding character of rules of customary international law. In Opel Austria v Council (35) the Court had to rule on the lawfulness of a Council regulation withdrawing tariff concessions granted to the Republic of Austria (before accession). The regulation was adopted a few days before the Agreement on the European Economic Area entered into force, and the applicant argued that it violated the provisions of that agreement. The Court of First Instance held that the legality of the contested measure had to be assessed on the basis of the facts and the law as they stood at the time when the measure was adopted. It then referred to the principle of good faith, according to which, pending the entry into force of an international agreement, the signatories to an international agreement may not adopt measures which would defeat its object and purpose. The Court held that that principle is a rule of customary international law, recognised by the International Court of Justice and codified by Article 18 of the Vienna Convention. It then stated that the principle of good faith is the corollary in public international law of the principle of protection of legitimate expectations which forms part of the Community legal order. (36) The Court concluded that: (37) `In a situation where the Communities have deposited their instruments of approval of an international agreement and the date of entry into force of that agreement is known, traders may rely on the principle of protection of legitimate expectations in order to challenge the adoption by the institutions, during the period preceding the entry into force of that agreement, of any measure contrary to the provisions of that agreement which will have direct effect on them after it has entered into force.' The Court went on to examine whether the Council regulation in issue was adopted in breach of the EEA Agreement, and found that that was the case. The regulation was consequently annulled. 76 The present case however raises more generally the issue as to the effects of customary international law in Community law. In that respect, the Court is largely in uncharted waters. Poulsen and Opel Austria may provide some indications, but I do not regard those judgments as fully covering the field: in Poulsen the Court went no further than interpreting a Community regulation in the light of rules of customary international law, and in Opel Austria the international law principle of good faith was married to the Community law principle of protection of legitimate expectations. Those are two specific types of effect, but the sort of effect which is sought in the present case is much stronger. Racke is seeking to have a Community regulation declared invalid on the sole basis of an alleged violation of rules of customary international law. It is difficult to envisage any stronger type of effect. 77 In its landmark judgment in International Fruit Company the Court held that there are two preconditions for review of the validity of an act of the institutions on the basis of a provision of international law: the Community must be bound by the provision, and the provision must be capable of conferring rights on citizens. (38) The second condition is crucial for the present case. Are the rules of customary international law such as to create rights in favour of individuals? Are they such as to permit an individual to challenge a political decision by the Community (and the Member States) to suspend the operation of an international agreement? 78 I see two sources of inspiration for finding an appropriate answer to those questions. One is, for obvious reasons, the Court's own case-law on direct effect of international agreements concluded by the Community. The second is the approach in the legal systems of the Member States towards the effect of customary international law. It seems to me that, if there were some common ground in national legal systems on this question, the Court should take that into account. 79 Turning first to the legal systems of the Member States, it appears that there is little guidance in the case-law of national courts applying provisions of the Vienna Convention. There are some decisions applying the provisions of the Convention to questions of interpretation of treaties, but there appear to be no decisions directly applying the provisions on termination and suspension. In France, which is not a party to the Convention, there is a decision on the doctrine of rebus sic stantibus in relation to the suspension of an agreement with Morocco concerning visa requirements. According to that decision the act of suspending an agreement is an act of government which is not subject to review by the courts. (39) The latter can only check whether the decision to suspend was taken by the competent authority, whether there is such a genuine decision and whether it was published in the Journal officiel. (40) 80 As to the status of customary international law generally in the legal systems of the Member States, the picture is rather complex and the results diverse. (41) Nearly all Member States appear to regard customary international law as a source of law. In some Member States that is based on constitutional provisions. In others it is accepted in case-law and legal writing. As to the effects which customary international law may produce, some Member States, for example the Federal Republic of Germany, appear to have a doctrine under which rules of customary international law may override domestic legislation. Article 25 of the German Basic Law states that the general rules of public international law shall be an integral part of federal law, and that they shall take precedence over the laws and shall directly create rights and duties for the inhabitants of the federal territory. However, there are few if any court decisions in those Member States giving that sort of effect to customary international law. A recurring objection is that most rules of customary international law do not create rights for individuals and therefore do not have direct effect. In other Member States, for example the United Kingdom, it is accepted that customary international law cannot override domestic legislation. Thus in England a leading decision states: `The courts acknowledge the existence of a body of rules which nations accept among themselves. On any judicial issue they seek to ascertain what the relevant rule is, and, having found it, they will treat it as incorporated into the domestic law, insofar as it is not inconsistent with rules enacted by statutes or finally declared by their tribunals.' (42) 81 At the expense perhaps of over-simplifying, one could say that national legal systems do attempt to give some effect to rules of customary international law but that they are cautious as to the effect of such rules on the validity of domestic legislation. There is no case, so far as can be seen, in any national court where an effect similar to that claimed by Racke has been recognised. 82 Turning now to this Court's approach to the direct effect of international agreements, it is settled case-law that a provision in an agreement concluded by the Community with non-member countries must be regarded as having direct effect when, regard being had to its wording and the purpose and nature of the agreement itself, the provision contains a clear and precise obligation which is not subject, in its implementation or effects, to the adoption of any subsequent measure. (43) In general the Court has been ready to acknowledge the direct effect of specific provisions of agreements concluded by the Community, but there are exceptions, the most notable one being the GATT. With respect to that agreement the Court has consistently held, on the basis of an analysis of its purpose, spirit, general scheme and terms, that it is incapable of conferring on citizens of the Community rights which they can invoke before the courts. (44) Essentially, the Court takes the view that the provisions of the GATT are characterised by great flexibility, which precludes direct effect. 83 I do not think that the above case-law should be directly transposed to the Vienna Convention. Again it has to be emphasised that that Convention is relevant only in so far as it codifies customary international law - which it does only partly. It would therefore be inappropriate to analyse the purpose, the spirit, the general scheme and the terms of that convention as such. However, the above case-law does make it clear that there are limits to the direct effect of international agreements, and that an obstacle may lie in the overall purpose and nature of international law provisions. It is also clear that the provisions in issue must contain a clear and precise obligation. 84 In the light of those principles, there must also be limits to the effect of rules of customary international law relating to treaties. The overall nature and purpose of the law of treaties is to lay down rules applying in the relations between States (and international organisations). The law of treaties is clearly not intended to create rights for individuals. It is true that its application may have the effect of creating such rights, namely in those cases where a domestic legal system accepts that international agreements concluded in conformity with the law of treaties are capable of conferring rights on individuals. However, that is but an indirect effect, by no means intended at the level of international law. It is the provision of the agreement (lawfully concluded) which has direct effect. The overall nature and purpose of the law of treaties would therefore seem not to be conducive to direct effect. (It may be noted in passing that there may be other types of rules of customary international law which do intend to confer rights on individuals, for example rules of international humanitarian law.) 85 In addition, the particular rules in issue must contain clear and precise obligations. In the circumstances of the present case, it is not obvious that that condition is satisfied. The notion of rebus sic stantibus is notoriously difficult and contested; indeed it has often been described as the enfant terrible of international law. (45) Its scope has perhaps been formulated more clearly in Article 62 of the Vienna Convention, but even that provision contains concepts which easily lend themselves to widely diverging interpretations. What is a `fundamental change' of circumstances? What are circumstances which `constituted an essential basis of the consent of the parties'? And when does the change in circumstances `radically ... transform the extent of obligations still to be performed'? (46) It may therefore be doubted whether the conditions for the application of the doctrine of rebus sic stantibus are sufficiently clear and precise to confer rights on individuals. 86 There are thus good reasons for not allowing individuals to challenge decisions such as the one in issue here on the basis of the law of treaties. I would none the less not wholly exclude such challenges, for the following reasons. 87 A number of agreements concluded by the Community have direct effect, thus creating rights for individuals. Where that is the case, the beneficiaries of such rights may have legitimate expectations as to the correct and proper implementation of the agreement in issue, as was recognised by the Court of First Instance in Opel Austria. (47) To some extent those expectations will extend to the life itself of the agreement. Where, as in this case, an agreement is concluded for an indefinite period, subject to denunciation with six months' notice, it might be legitimate for an individual to expect that the agreement will not suddenly be suspended without due cause. Or, to take the facts of Opel Austria, where an agreement is due to enter into force in the next few days an individual may legitimately expect that a party to the agreement will not adopt a measure which violates the terms of that agreement. 88 The individual's entitlement to some measure of protection of legitimate expectation is further supported by the strength of the principle of pacta sunt servanda, the fundamental tenet of the law of treaties. As the Court has stated: (48) `According to the general rules of international law there must be bona fide performance of every agreement'. Under international law, exceptions to that principle, such as rebus sic stantibus, are in any event, as Racke has correctly emphasised, to be narrowly construed. That is confirmed by the very recent judgment of the International Court of Justice of 25 September 1997 in the Hungary/Slovakia case, which makes it clear that, both under customary law and under Article 62 of the Vienna Convention on the Law of Treaties, the stability of treaty relations requires that the plea of fundamental change of circumstances be applied only in exceptional cases. (49) 89 In conclusion, I am of the opinion that individuals can challenge Community acts on the basis of customary international law rules concerning the law of treaties, but that such a challenge can be successful only if there is a manifest violation of such rules to the detriment of the individual concerned. In such cases, there may be a breach of the Community law principle of the protection of legitimate expectations, and the breach of that principle, comporting at the same time a manifest violation of the law of treaties, may give rise to annulment of the Community act in issue, to a declaration of invalidity, or to a claim for damages. 90 I consider that by allowing such limited review an appropriate balance is struck between the rights of the individual and the decision-making powers of the Community institutions. There must be a relatively wide margin of discretion for those institutions to take decisions concerning the life of an agreement, in accordance with their powers under the Treaty. It is only logical that the life of an international agreement should be primarily in the hands of the contracting parties. There is moreover an important political dimension to the conclusion and termination of international agreements which does not lend itself readily to judicial review. (50) 91 I therefore now turn to examine whether the Suspension Regulation was adopted in manifest violation of the rules of customary international law concerning the suspension and termination of international agreements. No manifest violation 92 It seems to me that the Council's and the Commission's arguments in defence of the decision to suspend the operation of the agreement are convincing. At the time there was clearly a prima facie case for having recourse to the rebus sic stantibus doctrine. As the Council points out, the existence of the SFRY as a federal, sovereign and peaceful State was an essential condition for developing the cooperation envisaged by the Cooperation Agreement. In the light of that, the events of 1991 would indeed seem a fundamental change of circumstances affecting the very basis for the cooperation between the Community and the SFRY. I am further satisfied that the Community institutions could reasonably consider that the effect of that change of circumstances was such as radically to transform the extent of obligations still to be performed by the Community and its Member States. In view of the political position adopted towards the breaking-up of Yugoslavia - a position confirmed and supported by the international community through the resolutions of the UN Security Council - there was clearly no point in continuing the economic, financial and trade cooperation provided for in the Cooperation Agreement. 93 Even if one takes the view that the Cooperation Agreement was essentially a trade agreement, I am satisfied that it was not unreasonable to have recourse to rebus sic stantibus. It is true that, as Racke states, some trade with Yugoslavia continued, and that the Community could therefore have continued to grant tariff concessions. However, rebus sic stantibus does not require an impossibility to perform obligations. Again, it seems to me that there was no point in continuing to grant preferences, with a view to stimulating trade, in circumstances where Yugoslavia was breaking up in a way which was strongly disapproved by the international community. 94 Moreover, in those circumstances, I do not consider that traders based in the Community could reasonably expect, in November 1991, that the Community would continue to grant tariff preferences for imports from Serbia and Montenegro. Indeed, only half a year later, all trade with Serbia and Montenegro was prohibited, (51) in implementation of a decision by the UN Security Council and thus in full compliance with international law. 95 In any event, Racke has not explicitly invoked the principle of protection of legitimate expectations. I will therefore merely note that in my view any justified hopes created by the conclusion and implementation of the Cooperation Agreement did not extend to the type of situation prevailing in 1991. Moreover, under Community law the protection of legitimate expectations may be limited by some overriding public interest, (52) which was undeniably present. 96 As to the procedural elements of the suspension of the Cooperation Agreement, including in particular the alleged lack of prior notification to the SFRY, I do not consider that any violation of those requirements of international law, if established, could be of assistance to Racke's claim. Article 65 of the Vienna Convention lays down the relevant procedural requirements but those requirements do not seem precisely to reflect the requirements of customary international law. It seems that, as might be expected, the provisions of the Vienna Convention concerning procedural requirements are more specific and more concrete than the rules of customary international law. (53) 97 However, even on the assumption that the Community was under an obligation under international law to notify the other party of its intention to suspend the operation of the Agreement, I do not see how any infringement of that obligation could be relied upon by Racke. A procedural illegality of that kind, committed by a party to a treaty, could be invoked only by another party. 98 Article 65(2) of the Vienna Convention lays down a minimum waiting period of three months but provides for a dispensation from that requirement in cases of special urgency. In my view it was not unreasonable for the Community institutions to consider that there was such urgency. It must be emphasised that the circumstances were very exceptional, since the SFRY was in effect breaking up and the Community was - not unreasonably - unwilling to accept that the so-called rump Yugoslavia lawfully represented all of the Yugoslav republics. Further, the Community was aiming to put pressure on the parties to the Yugoslavia conflict so as to prevent further bloodshed and destruction, an objective surely of manifest urgency. 99 It is thus unnecessary to consider the Commission's arguments concerning other international law grounds for suspending the Cooperation Agreement, such as the impossibility of continuing to perform the agreement and the right to retorsion. I will merely note that those arguments, too, have some force. 100 I therefore conclude that the examination of the issues raised in this case has not revealed any factor of such a kind as to affect the validity of the Suspension Regulation. The consequences of invalidity 101 By its second question the Bundesfinanzhof inquires about the consequences of the alleged invalidity of the Suspension Regulation for the charging of customs duties in early May 1992. Since I take the view that the Suspension Regulation has not been shown to be invalid, that question need not be answered. I will however briefly consider the reply to be given if the view were to be taken that the Regulation was invalid. 102 If the Suspension Regulation was invalid for breach of rules of customary international law that would entail that there was no lawful decision in November 1991 to suspend the operation of the Cooperation Agreement. Consequently, the agreement remained in force until 27 May 1992, the day on which its denunciation by the Community became effective. I do not see what other consequences could be drawn. 103 However, there were no Community regulations in 1992 implementing the tariff concessions provided for in the Cooperation Agreement, at least not in so far as imports from Serbia and Montenegro were concerned. The question thus arises whether Racke could claim those preferences directly on the basis of the provisions of the Cooperation Agreement. The reply to that question depends on whether those provisions had direct effect. 104 There is to my mind no doubt that those provisions could have direct effect. The Cooperation Agreement is comparable to many other agreements which have already been recognised as having direct effect. (54) And the provisions on preferential tariff treatment in issue in the present case were sufficiently precise and unconditional. The fact that there were no regulations, laying down rules for the implementation of the tariff quota for imports of wine, cannot in my view bar Racke's rights under the Cooperation Agreement. 105 However, for the reasons given above, I do not consider that the second question calls for a reply. Conclusion 106 Accordingly in my opinion the questions referred by the Bundesfinanzhof should be answered as follows: Examination of the questions referred has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) No 3300/91 suspending the trade concessions provided for by the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia. (1) - Council Regulation (EEC) No 3300/91, OJ 1991 L 315, p. 1. (2) - Akos Toth, `The doctrine of rebus sic stantibus in international law', Juridical Review 1974, pp. 56, 147 and 263. (3) - OJ 1983 L 41, p. 1. (4) - See Council Decision 87/605/EEC of 21 December 1987 concerning the conclusion of an Additional Protocol to the Cooperation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia establishing new trade arrangements, OJ 1987 L 389, p. 72. (5) - OJ 1991 L 315, p. 47. (6) - See the third recital. (7) - Cited in note 1. (8) - OJ 1991 L 325, p. 23. (9) - OJ 1991 L 342, p. 1. (10) - OJ 1992 L 63, p. 1. (11) - OJ 1992 L 63, p. 41. (12) - OJ 1992 L 151, p. 4. (13) - United Nations Treaty Series, Vol. 1155, p. 331. (14) - See I. Sinclair, The Vienna Convention on the Law of Treaties, Second edition, Manchester University Press, 1984, at p. 1. (15) - UN General Assembly Document A/Conf. 129/15 of 20 March 1986. (16) - See generally Sinclair, op. cit., pp. 5 to 24. (17) - Fisheries Jurisdiction (United Kingdom v Iceland), Jurisdiction of the Court, Judgment, I.C.J. Reports 1973, p. 3, paragraph 36 and Fisheries Jurisdiction (Federal Republic of Germany v Iceland, Jurisdiction of the Court, Judgment, I.C.J. Reports 1973, p. 49 at paragraph 36. See also now the judgment of 25 September 1997, Gab$íkovo-Nagymaros Project (Hungary/Slovakia), at paragraphs 46, 99 and 104. (18) - Cited above in notes 10 and 11 respectively. (19) - Case C-286/90 [1992] ECR I-6019. (20) - The Commission refers to Wetzel/Rauning, Die Wiener Vertragsrechtskonvention - Materialien zur Entstehung der einzelnen Vorschriften, 1978, at p. 419. (21) - Case 52/81 [1982] ECR 3745. (22) - Case C-280/93 [1994] ECR I-4973. (23) - See Resolution 713 (1991), adopted on 25 September 1991. (24) - See EC Bulletin 7/8-1991, paragraph 1.4.25. (25) - See EC Bulletin 10-1991, paragraphs 1.4.6, 1.4.7 and 1.4.16. (26) - See Article 1 of the Statute of the International Tribunal, adopted by UN Security Council Resolution 827 (1993) of 25 May 1993. (27) - Case 11/70 [1970] ECR 1125, paragraph 3 of the judgment. (28) - Joined Cases 21/72 to 24/72 [1972] ECR 1219. (29) - See paragraph 54 above. (30) - See most recently, Case C-304/96 Hera v USL, judgment of 16 October 1997, paragraph 11. (31) - See paragraphs 102 to 104. (32) - Cited in note 19. (33) - At paragraph 9 of the judgment. (34) - At paragraph 10. (35) - Case T-115/94 [1997] ECR II-39. (36) - See paragraphs 87 to 92 of the judgment in Opel Austria. (37) - At paragraph 94 of the judgment. (38) - Cited in note 28, paragraphs 7 and 8 of the judgment. (39) - See Benedetto Conforti and Angelo Labella, `Invalidity and termination of treaties: the role of national courts', European Journal of International Law, 1990, p. 44, at 50 et seq. (40) - Conseil d'Etat, judgment of 18 December 1992, Préfet de la Gironde v Mahmedi, Recueil des décisions du Conseil d'Etat (1992), p. 446 (see in particular the Opinion of Mr Lamy, Commissaire du Gouvernement). (41) - For a survey of the law of 12 of the Member States see L'intégration du droit international et communautaire dans l'ordre juridique national: étude de la pratique en Europe/The Integration of International and European Community Law into the National Legal Order: a Study of the Practice in Europe, edited by Pierre Michel Eisemann (1996), and for an overview see Christian Dominicé and François Voeffray, `L'application du droit international général dans l'ordre juridique interne', at p. 51. (42) - Chung Chi Cheung v The King [1939] AC 160 at p. 168 (Privy Council); see further F.A. Mann, Foreign Affairs in English Courts (1986), p. 120 et seq.; H. Fox, P. Gardner and C. Wickremasinghe, in Eisemann (op. cit.) at p. 517 et seq. (43) - Case 12/86 Demirel v Stadt Schwäbisch Gmünd [1987] ECR 3719, paragraph 14 of the judgment. (44) - International Fruit Company, cited in note 28, paragraphs 20 to 27 of the judgment. (45) - A. Vamvoukos, Termination of Treaties in International Law: the Doctrines of Rebus Sic Stantibus and Desuetude, Oxford, 1985, p. ix. (46) - See further Vamvoukos, op. cit., and Oliver J. Lissitzyn, `Treaties and changed circumstances (rebus sic stantibus)', American Journal of International Law, 1967, p. 895, at p. 915. (47) - Cited in note 35. (48) - Case 104/81 Hauptzollamt Mainz v Kupferberg [1982] ECR 3641, paragraph 18 of the judgment. (49) - See the judgment of the International Court of Justice (cited at note 17 above), at paragraph 104. (50) - Compare my Opinion in Case C-120/94 Commission v Greece [1996] ECR I-1513, paragraph 50 and following. (51) - By Regulation No 1432/92, cited in note 12. (52) - Case 74/74 CNTA v Commission [1975] ECR 533, paragraph 44 of the judgment, Case C-183/95 Affish, judgment of 17 July 1997, paragraph 57. (53) - See Francesco Capotorti, `L'extinction et la suspension des traités', Académie de Droit International, Recueil des Cours, 1971 III, p. 431 and p. 562 ff. (54) - See, for example, Case 87/75 Bresciani v Amministrazione Italiane delle Finanze [1976] ECR 129 and Case C-18/90 Kziber [1991] ECR I-199.

Opinion of Mr Advocate General Jacobs delivered on 15 November 2001. - Kingdom of the Netherlands v Commission of the European Communities. - Dangerous substances - Marketing and use - Directives 76/769/EEC, 91/338/EEC and 1999/51/EC - Derogation - Adaptation to technical progress - Legal basis - Limitations on the use of cadmium in Austria and Sweden. - Case C-314/99. European Court reports 2002 Page I-05521 Opinion of the Advocate-General 1. In this case, the Netherlands has brought an action under Article 230 EC seeking annulment of Point 3 of the Annex to Commission Directive 1999/51 (the contested provision) which provides that Austria and Sweden may continue to apply - until 31 December 2002 - restrictions on the use of cadmium going further than those laid down in Point 24 of Annex I to Council Directive 76/769/EEC of 27 July 1976 on the approximation of laws, regulations, and administrative provisions of the Member States relating to restrictions on the marketing and use of certain dangerous substances and preparations. 2. The essential legal issue is whether the contested provision was adopted on the correct legal basis. In that context the question arises whether the contested provision may be regarded as an amendment required to adapt Annex I to Directive 76/769 to technical progress. The relevant legislative provisions 3. Directive 76/769 lays down rules restricting the marketing and use of certain dangerous substances and preparations. According to Article 1(1), the Directive applies to the substances and preparations listed in Annex I. Article 2 provides, as far as is relevant: Member States shall take all necessary measures to ensure that the dangerous substances and preparations listed in the Annex may only be placed on the market or used subject to the conditions specified therein. ... 4. Article 2a, which was inserted by Directive 89/678, provides: Amendments required to adapt the Annexes to technical progress, with regard to substances and preparations already covered by [Directive 76/769], shall be adopted in accordance with the procedure laid down in Article [29] of Directive 67/548/EEC, [] as last amended by Directive [92/32/EEC ]. 5. The procedure laid down in Article 29 of Directive 67/548 as amended follows the system set out in Council Decision 87/373 of 13 July 1987 laying down the procedures for the exercise of implementing powers conferred on the Commission. In accordance with that Decision, Article 29 provides that the Commission is assisted by a committee composed of representatives of the Member States and chaired by a representative of the Commission. The Commission submits to the committee a draft of the measures to be taken and adopts them if they are in accordance with the opinion of the committee. If the measures envisaged are not in accordance with the opinion of the committee, or if no opinion is delivered, the Commission submits a proposal to the Council which then acts by qualified majority. 6. Directive 76/769 has been amended on several occasions. A number of dangerous substances and preparations have been added to Annex I, and further restrictions have been placed on the use of substances and preparations covered by that Annex. 7. By Directive 91/338, the Community legislature included the substance cadmium under Directive 76/769, adding a new Point 24 to Annex I. Point 24 prohibits, with regard to a number of specifically mentioned products, the use of cadmium to give colour to finished products (Section 1); to stabilise finished products manufactured from polymers or copolymers of vinyl chloride (PVC, Section 2); and for surface treatment (plating) of metallic products or components (Section 3). For example, under Point 24, Section 2.1, cadmium may not be used as a stabiliser in office or school supplies manufactured from PVC. 8. Article 2 of Directive 91/338 provides: Owing to the development of knowledge and techniques in respect of substitutes less dangerous than cadmium and its compounds, the Commission shall, in consultation with the Member States, reassess the situation for the first time within three years of the date referred to in Article 3(1) and subsequently at regular intervals in accordance with the procedure laid down in Article 2a of Directive 76/769/EEC. 9. Under Article 3(1) of Directive 91/338, the Member States were to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive no later than 31 December 1992. 10. Austria and Sweden acceded to the European Union on 1 January 1995. The Act of Accession lays down transitional provisions concerning the use and marketing of cadmium in those States. Article 69(1) provides that during a period of four years from the date of accession, the provisions referred to in Annex VIII of the Act shall, in accordance with that Annex and subject to the conditions set out therein, not apply to Austria. Article 112(1) grants to Sweden, in identical terms, a derogation from the rules contained in Annex XII of the Act. 11. Annex VIII of the Act of Accession - applicable to Austria - mentions Point 2.1 of the Annex to Directive 91/338, concerning the use of cadmium as stabiliser in products manufactured from PVC, which inserted Section 2.1 of Point 24 of Annex I to Directive 76/769. 12. Annex XII of the Act of Accession - applicable to Sweden - mentions Directive 91/338 and provides that Sweden shall, however, maintain throughout the transitional period, with regard to china and ceramic products, including ceramic tiles, the free circulation provided by the provision of its current "ordinance" relating to exemptions from the ban on the use of cadmium for surface treatment or as a stabiliser or as a colouring agent. 13. Articles 69(2) and 112(2) of the Act of Accession provide, with respect to Austria and Sweden: The provisions referred to in paragraph 1 shall be reviewed within that period in accordance with EC procedures. Without prejudice to the outcome of that review, at the end of the transitional period referred to in paragraph 1, the EC acquis will be applicable to the new Member States under the same conditions as in the present Member States. 14. On 26 May 1999 the Commission adopted Directive 1999/51 adapting to technical progress, for the fifth time, Annex I to Directive 76/769. Directive 1999/51 was adopted on the basis of Article 2a of Directive 76/769, in accordance with the committee procedure set out in Article 29 of Directive 67/548 as amended. 15. The first recital of the preamble to Directive 1999/51 recalls that within the framework of the Act of Accession ... in particular in Articles 69 ... and 112 respectively, it is foreseen that during a period of four years from 1 January 1995 certain provisions of Annex I to Directive 76/769/EEC do not apply to Austria ... and Sweden and shall be reviewed in accordance with the procedures laid down in the EC Treaty. 16. The fifth recital of the preamble states that the Council resolution of 25 January 1988 [] calls for an overall strategy to combat environmental pollution by cadmium, including measures to restrict the use of cadmium and stimulate development of substitutes; whereas the risks posed by cadmium are being assessed under Council Regulation (EEC) No 793/93 [] and the Commission will review the restrictions on cadmium in [the] light of the results; whereas as an interim measure Sweden and Austria which apply more far reaching restrictions may retain these. 17. In accordance with those recitals, Point 3 of the Annex to Directive 1999/51 - the provision challenged by the Netherlands in this case - added the following Section to Point 24 of Annex I to Directive 76/769: 4. Austria and Sweden, which already apply restrictions to cadmium going further than those prescribed in Sections 1, 2 and 3 may continue to apply these restrictions until 31 December 2002. The Commission will review the provisions on cadmium in Annex I to Directive 76/769/EEC before this date in [the] light of the results of risk assessment for cadmium and of development of knowledge and techniques in respect of substitutes for cadmium. 18. As is apparent from its wording, the new Section 4 did not amend in substance the rules concerning the use of cadmium laid down in Point 24, Sections 1 to 3, of Annex I to Directive 76/769. It had the effect of extending - until the end of 2002 - the validity of the derogations granted to Austria and Sweden in the Act of Accession, thus enabling those States to continue to apply restrictions on the use of cadmium going further than those laid down in Point 24, Sections 1 to 3. 19. Pursuant to Article 3, Directive 1999/51 entered into force on 25 June 1999. The factual and legislative background 20. Before examining the claims and arguments put forward in the present case, it is useful to set out briefly the circumstances which led to the adoption of Directive 1999/51. 21. It will be recalled that in the Act of Accession Austria and Sweden were granted derogations, valid for five years, from the Community rules on the use and marketing of cadmium laid down in Directive 76/769. In view of those derogations the Commission decided, in accordance with Article 2 of Directive 91/338, to assess whether the use and marketing of that substance should be restricted to a greater extent than provided for by Point 24 of Annex I to Directive 76/769 and to commence the work of drawing up detailed draft proposals for amendment of those provisions. 22. In that context, the Commission designated, pursuant to Regulation No 793/93, cadmium as a priority substance requiring attention in 1997, and made Belgium responsible for carrying out an evaluation of the risk posed by its use. According to information supplied to the Court, that assessment has not yet been completed. In September 1998 a consultancy firm produced, at the request of the Commission, a report on the risks posed by the use of cadmium (hereafter the Atkins Report). It is common ground between the parties that that report provides support for the view that the use of cadmium should be restricted to a greater extent than provided for by Directive 76/769. However, it also appears to be agreed that the Atkins Report was not suited to serve as a basis for new Community measures in this area, since its scope was too limited and the results presented not sufficiently final and complete. Moreover, the Scientific Committee on Toxicity and the Environment, which advises the Commission in this context, abstained from adopting a final view on the conclusions to be drawn from the Report. 23. In 1998 the Commission placed before the Working Group on Limitations on Marketing and Use of Dangerous Substances and Preparations (hereafter the Working Group) two draft proposals for amendment of Point 24 of Annex I to Directive 76/769. Those draft proposals envisaged, in particular, the adoption of new restrictions on the use of cadmium as a colorant in certain products such as polyamide. Considering however that the results of the pending risk assessment were not yet sufficiently complete, the Commission did not adopt those draft proposals. It placed instead before the Working Group a third draft proposal. That draft proposal did not envisage any new restrictions on the use of cadmium, but provided in effect for an extension until 31 December 2002 of the derogation granted to Austria and Sweden in the Act of Accession. That draft proposal was, with certain changes aimed at meeting objections raised by the Netherlands, submitted for the opinion of the committee under Article 29 of Directive 67/548 as amended. While the representatives of Belgium, Denmark and the Netherlands voted against, the majority of the committee voted in favour of the proposal. Pursuant to Article 29 of Directive 67/548, the proposal was thus adopted by the Commission as Directive 1999/51. The action for annulment 24. The Netherlands has challenged the validity of Point 3 of the Annex to Directive 1999/51 which added Section 4 to Point 24 of Annex I to Directive 76/769. The Commission contends that the application should be dismissed. The Commission is supported by Sweden. At the hearing, the Netherlands and the Commission presented oral argument. 25. The Netherlands puts forward four pleas in law. In the application those pleas are presented as follows. First, the Commission exceeded its powers by adopting that provision on the basis of Article 2a of Directive 76/769. Second, the contested provision is contrary to the substantive provisions of Directive 76/769, since it implies that Point 24 of Annex I to the Directive entails an exhaustive harmonisation of the uses to which cadmium may be put. Third, it violates the principle of legal certainty. Fourth, it fails to fulfil the requirements of reasoning, contrary to Article 253 EC. 26. At the hearing the Netherlands Government placed most emphasis on the second of those pleas. However, as the Netherlands Government itself accepted at the hearing, it is appropriate for the Court to examine the pleas in the order in which they were presented in the application. The first plea: incorrect legal basis 27. The Netherlands presents, essentially, two arguments in favour of its contention that the Commission exceeded its powers when adopting the contested provision. First, it maintains that the contested provision cannot be regarded as an amendment of Annex I to Directive 76/769 required to adapt the Annex to technical progress within the meaning of Article 2a of that Directive. Second, the Netherlands claims that the contested provision touches on the essential aspects of the regulation of the use of cadmium. It therefore goes beyond what can be adopted pursuant to a provision - such as Article 2a - which delegates to the Commission power to lay down rules in cooperation with a committee under the procedure laid down in Article 29 of Directive 67/548 as amended. The contested provision should, for those reasons, have been adopted by the Community legislature on the basis of Article 95 EC. The first argument 28. The Netherlands Government recalls that under Article 2a the Commission has the power to adopt amendments required to adapt Annex I of Directive 76/769 to technical progress, with regard to substances and preparations already covered by the Annex, in accordance with the procedure laid down in Article 29 of Directive 67/548. In its view, the essential purpose of that provision is to enable the Community authorities to react immediately when damage to the public and the environment is detected, and in particular when cases which have serious consequences for human health are observed, by imposing restrictions on existing uses of dangerous substances and preparations. In the context of cadmium, however, the Netherlands Government submits that Article 2a must be interpreted in the light of Directive 91/338. It follows from Article 2 and the third recital of the preamble to that Directive that amendments to adapt Annex I to technical progress within the meaning of Article 2a must be understood as such amendments as are made necessary, in particular, by advances in knowledge and techniques regarding substitutes for cadmium. 29. According to the Netherlands Government, it follows that the contested provision cannot be regarded as an amendment required to adapt Point 24 of Annex I to technical progress within the meaning of Article 2a. On the one hand, the contested provision is not based on advances in knowledge and techniques regarding substitutes for cadmium since, as is clear from the fifth recital of the preamble to Directive 1999/51, the assessment of the risk to the environment and to human health posed by cadmium had not been completed at the time the contested provision was adopted by the Commission. On the other hand, advances in knowledge and techniques regarding substitutes for cadmium must by their nature affect equally all of the Member States. The contested provision created, however, a special regime for Austria and Sweden. 30. Moreover, the Netherlands Government maintains that the contested provision aims essentially to prevent the practical difficulties which would have arisen in Austria and Sweden if those countries had been forced, following the expiry of the derogations laid down in Articles 69 and 112 of the Act of Accession, to change their legislation shortly before the introduction of new Community restrictions on the use of cadmium. In those circumstances, the contested provision must be regarded as an amendment of Annex I to Directive 76/769 anticipating a future adaptation of the Annex to technical progress within the meaning of Article 2a. 31. Finally, the Netherlands Government points out that the legislation of certain Member States, including the Netherlands, lays down more severe restrictions on the use of cadmium than provided for by Point 24 of Annex I to Directive 76/769. Those Member States are in a comparable situation to Austria and Sweden and the Commission should therefore, in any event, have granted derogations also to those Member States. 32. The Commission resists those arguments. 33. In its view, Article 2a gives it the power to adopt, in compliance with the committee procedure, amendments of minor significance (modifications mineures) of Annex I to Directive 76/769. Contrary to what the Netherlands Government contends, the Commission is not precluded from exercising that power in the absence of final and complete scientific studies regarding the risk posed by cadmium and the possibility of replacing it by substitutes. When adopting the contested provision, the Commission took account of the preliminary results of the pending risk evaluation of cadmium, which indicated that there was a need for additional restrictions on its use and that a legislative proposal to that effect was imminent. It cannot therefore be argued that the contested provision was not based on advances in knowledge and techniques and therefore not an adaptation to technical progress within the meaning of Article 2a. 34. The Commission maintains moreover that it would have disappointed the legitimate expectations of Austria and Sweden, and breached the principles of sound administration (les principes de bonne gestion), if it had not adopted the contested provision: had it not done so, those States would have been forced - following the expiry of the transitional regime laid down in the Act of Accession on 31 December 1998 - to repeal the restrictions provided for by their legislation, although similar restrictions would most probably be introduced at the Community level within a short period of time. In those circumstances, the Commission cannot be reproached for adopting the contested provision pursuant to the flexible committee procedure laid down in Article 2a. 35. Finally, the Commission argues that in the particular circumstances a special regime for Austria and Sweden, equivalent to that laid down in the transitional provisions of the Act of Accession, was justified. That regime simply reflects the fact that Austria and Sweden are ahead in the area of protection against the risk to health posed by cadmium, and that the strict rules on the use of cadmium laid down in the legislation of those States will, in all likelihood, be adopted at the Community level within the foreseeable future. 36. The Swedish Government puts forward arguments which are substantially similar to those of the Commission. 37. As is clear from the arguments put forward, the essential question is whether a provision which grants to certain Member States a derogation from the provisions laid down in Annex I to Directive 76/769, enabling those States to maintain in force stricter rules on the use and marketing of one of the substances covered by the Annex, can be regarded as an amendment required to adapt the Annex to technical progress within the meaning of Article 2a. 38. An interpretation of Article 2a taking into account its wording and purpose leads in my view, inescapably, to a negative reply to that question. 39. First, it will be recalled that the text of Article 2a grants the Commission the power to adopt amendments required to adapt [Annex I] to technical progress. To my mind, it is clear that a provision cannot be regarded as an adaptation of Annex I to technical progress unless it effects a substantive change in the rules on the use and marketing of dangerous substances and preparations laid down in Annex I. The contested provision did not however in any way change the substantive rules restricting the use and marketing of cadmium laid down in Sections 1 to 3 of Point 24 of Annex I. It is difficult, for that reason alone, to accept the Commission's contention that the contested provision falls within the scope of its competence under Article 2a. 40. Secondly, the notion of adaptation to technical progress must, as the Netherlands Government points out, be interpreted in the light of the purpose of Article 2a, which was introduced by Directive 89/678. The first recital of the preamble to that Directive states: Whereas the public and the environment are constantly exposed to new risks resulting from the use of chemical products; whereas when damage is detected and in particular when cases which have serious consequences for human health are observed, immediate action is required for the prohibition or limiting of the marketing or use of certain dangerous substances and preparations at Community level. 41. The third recital states: Whereas technical progress makes it necessary to adapt the provisions contained in the Annex to Directive 76/769/EEC promptly; ... 42. On the basis of those statements, it seems clear that the essential purpose of Article 2a is to enable the Community authorities to adapt Annex I by restricting the marketing or use of certain dangerous substances and preparations at Community level and, through the committee procedure, to do so more easily and swiftly than would be the case if the restrictions were to be adopted on the basis of Article 95 EC. However, the contested provision did not introduce any new restrictions on the marketing or use of cadmium at Community level. On the contrary, that provision granted to Austria and Sweden a derogation enabling them to maintain, at the national level, already existing restrictions on the marketing and use of cadmium. It is, also for that reason, difficult to accept the Commission's defence in this case. 43. According to the Netherlands Government the contested provision is, furthermore, unlawful because it was not based on technical progress in the field of cadmium substitutes. 44. In my view, that argument rests on an unduly restrictive interpretation of Article 2a. The preamble to Directive 89/678 refers to situations where damage is detected (first recital) and to situations where there has been technical progress (third recital). It seems, therefore, that the Community legislature intended to confer upon the Commission the power to act on the basis of Article 2a not only where knowledge in the field of substitutes has progressed to such an extent that new restrictions on the use of dangerous substances appear to be justified, but also where scientific research reveals that substances covered by Annex I pose a greater danger to the environment and public health than previously assumed and that new restrictions are therefore required. 45. However, it must be accepted that the Commission cannot exercise its powers under Article 2a unless the measures adopted have some basis in science - either in the field of substitutes or in research suggesting that substances covered by Annex I pose new dangers to health or the environment. As the Commission has itself stated in its written pleadings, measures are not and cannot normally be adopted under Article 2a in the absence of complete and final scientific results. It is perhaps possible - and here I again disagree with the Netherlands Government - to envisage circumstances in which it would be appropriate for the Commission to take action in the absence of final scientific results. The essential purpose of Article 2a, which is the protection of the environment and public health against the risks of dangerous substances and preparations, might be jeopardised if the Commission were entirely precluded from taking action, for example, if preliminary scientific results revealed a close connection between a common form of cancer and the use of cadmium in particular products. However, the Commission's power to act on the basis of preliminary results cannot be unlimited. In my view, such action might be justified where the preliminary results in question reveal that there is a pressing need for urgent action at Community level. 46. In the present case, it is common ground that the contested provision was not based on final and complete scientific results. At the time Directive 1999/51 was adopted, the Belgian authorities had not yet completed the risk evaluation for which they had been made responsible by Regulation No 143/97, nor had the Scientific Committee on Toxicity and the Environment taken a final view on the matter. Moreover, there is no suggestion that the preliminary results relied upon by the Commission - including the Atkins Report - had revealed a pressing need for urgent action at Community level. As the Commission has itself stressed to the Court, it always took the view that new Community restrictions on the use and marketing of cadmium could not be adopted prior to the completion of the risk assessment being carried out by the Belgian authorities. 47. For those reasons the contested provision cannot in my view be regarded as an adaptation of Annex I to technical progress within the meaning of Article 2a of Directive 76/769. 48. I am encouraged in that view by the fact that in the third draft proposal for Directive 1999/51 the Commission stated: It is the view of DG III that ... there is no basis at this time for adapting the cadmium provisions to technical progress. The new draft [proposal for a directive amending Annex I to Directive 76/769], therefore, proposes no change other then to prolong the derogations of Sweden and Austria for cadmium. While that statement in the draft proposal is not conclusive, I consider none the less that some weight may be given to it. As the Netherlands Government points out, the statement confirms that the contested provision is in essence a measure which anticipates an adaptation of Annex I to Directive 76/769 to technical progress within the meaning of Article 2a. 49. That conclusion is in no way affected by the Commission's assertion that it would have disappointed the expectations of Austria and Sweden, and breached the principle of sound administration, had it not adopted the contested provision. The Community legislature is competent, pursuant to Article 95 EC, to adopt measures in the field of dangerous substances and preparations. Measures capable of resolving the problems caused by the expiry of the transitional regime laid down in Articles 69 and 112 of the Act of Accession could, I consider, have been adopted in that way. 50. It may be noted in that context that the Community legislature has already adopted, on the basis of Article 95 EC, a number of other Directives aimed at resolving problems caused by the fact that the review of Community legislation on dangerous substances could not be completed by 31 December 1998, and that the various derogations granted in the Act of Accession to Austria and Sweden thus expired before new and stricter Community measures in the field of dangerous substances were adopted. For example, by Directive 1999/33 the European Parliament and the Council, acting on the basis of Article 95 EC, in effect extended a derogation granted in the Act of Accession to Austria and Sweden, thereby enabling those States to maintain in force until 31 December 2000 stricter rules than those laid down in Directive 67/548 on the labelling of certain dangerous substances. 51. I would, for all of the above reasons, uphold the first argument of the Netherlands Government and annul the contested provision. The second argument and other pleas 52. In the light of the conclusion I have reached on the first argument under the first plea in law, I do not propose to express an opinion on the second argument or on the other pleas in law invoked by the Netherlands. The temporal effects of the Court's judgment 53. At the hearing, the Netherlands Government stressed that it does not in any way seek to challenge the right of Austria and Sweden to maintain in force restrictions on the use of cadmium going further than those laid down in Directive 76/769, and it asked the Court, in the event of the annulment of the contested provision on the grounds of incorrect legal basis, to limit the temporal effects of such annulment. The Commission has not stated whether it has objections to any such limitation. 54. It is settled case-law that the Court may, for reasons of legal certainty, indicate which effects of a directive which has been annulled are to be maintained. 55. In the present case, the annulment of the contested provision might cause serious legal uncertainty for Austria and Sweden. I therefore agree with the Netherlands Government that the Court should maintain all the legal effects of the contested provision pending the adoption of new Community measures on a correct legal basis. 56. I would add that such new measures should of course apply to all Member States without discrimination; thus if for example derogations accorded to certain new member States were to be extended, so as to enable them to continue to maintain more restrictive measures, then in principle the same option should be available to other Member States who are in the same situation. Different treatment of Member States will be lawful only if there are valid reasons for the difference. Thus although the Commission's measure should in my view be annulled on a formal ground, the outcome may also meet the Netherlands' concerns about the substance of the measure. Conclusion 57. In the light of the foregoing observations, I am of the opinion that the Court of Justice should: (1) declare Point 3 of the Annex to Commission Directive 1999/51/EC of 26 May 1999 adapting to technical progress for the fifth time Annex I to Council Directive 76/769/EEC on the approximation of laws, regulations, and administrative provisions of the Member States relating to restrictions on the marketing and use of certain dangerous substances and preparations (tin, PCP and cadmium) void; (2) declare that the effects of that provision shall be maintained pending the adoption of new Community measures on a correct legal basis; (3) order the Commission to pay the costs of the Netherlands; (4) order Sweden to bear its own costs.

FOURTH SECTION CASE OF MELNIC v. MOLDOVA (Application no. 6923/03) JUDGMENT STRASBOURG 14 November 2006 FINAL 14/02/2007 This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Melnic v. Moldova, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: SirNicolas Bratza, President,MrJ. Casadevall,MrG. Bonello,MrM. Pellonpää,MrK. Traja,MrS. Pavlovschi,MrJ. Šikuta, judges,and F. Elens-Passos, Deputy Section Registrar, Having deliberated in private on 24 October 2006, Delivers the following judgment, which was adopted on the last‑mentioned date: PROCEDURE 1. The case originated in an application (no. 6923/03) against the Republic of Moldova lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 30 December 2002 by Mrs Galina Melnic. 2. The Moldovan Government (“the Government”) were represented by their Agent, Mr Vitalie Pârlog. 3. The applicant alleged, in particular, that her right to a fair hearing was breached as a result of the failure of the Court of Appeal to give any reasons for extending the time-limit for lodging an appeal. She also complained about a violation of her rights under the Convention as a result of the quashing of the judgments in her favour following a request for annulment lodged by the Prosecutor General with the Supreme Court of Justice. 4. On 29 March 2005 the Court communicated the application to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility. 5. The applicant and the Government each filed observations on the merits and on the claims for just satisfaction under Article 41 of the Convention. 6. The Government submitted two unilateral declarations and invited the Court to strike out the application, in accordance with Article 37 of the Convention. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 7. The applicant was born in 1948 and lives in Rezina. 8. The applicant is the widow of the former President of the Rezina District Court. On 7 June 1998, after the death of her husband, the applicant lodged several requests with the Ministry of Finances (“the Ministry”) and Ministry of Justice, seeking the lump sum to which she was entitled in accordance with the “Law on the Status of Judges”. When she was refused on the ground of lack of resources, the applicant brought an action against the Ministry. 9. On 2 March 1999 the Buiucani District Court awarded the applicant 345,491 Moldovan lei (MDL, the equivalent of 35,987 euros (EUR) at the time), to which it found she was entitled following the death of her husband. The Ministry appealed. By judgments of 11 May 1999 and 17 August 1999 the Chişinău Regional Court and the Court of Appeal, respectively, dismissed the Ministry’s appeals. 10. The applicant lodged numerous complaints about the failure of the Ministry to comply with the judgment and pay her compensation. On 13 January 2000 the Ministry paid the compensation. 11. Since the applicant considered that the late enforcement of the judgment had significantly reduced the value of her compensation due to inflation, she requested the Ministry to make good the diminished value. The Ministry refused to comply with the applicant’s request and she brought an action against it, seeking compensation for the late enforcement. 12. On 14 September 2001 the Buiucani District Court ruled in favour of the applicant and ordered the Ministry to pay her MDL 244,953 (EUR 21,007 at the time) in compensation. The Ministry appealed. 13. On 5 February 2002 the Chişinău Regional Court dismissed the Ministry’s appeal and upheld the judgment of 14 September 2001. The judgment of the Chişinău Regional Court stated specifically that the Ministry’s representative had been present and had addressed the court. Since the Ministry did not lodge an appeal in cassation within fifteen days, the judgment of 5 February 2002 became final. 14. On 8 April 2002, 47 days after the expiry of the legal time-limit for lodging the appeal in cassation, the Ministry lodged an appeal in cassation with the Court of Appeal and requested an extension of the legal time-limit for lodging it, without providing any reasons for the failure to observe it. 15. On 9 July 2002 the Court of Appeal examined the Ministry’s appeal in cassation. The Court of Appeal requested, ex-officio, a report from the Statistics Department on the level of inflation and relied on it in its judgment. The applicant alleged that she had not been given the possibility either to familiarise herself with the document or to challenge it before the court. The applicant also alleged that she had expressly requested the Court of Appeal to dismiss the Ministry’s appeal in cassation since it had been lodged out of time. 16. By a judgment of 9 July 2002 the Court of Appeal upheld the Ministry’s appeal in cassation, quashed the judgments in favour of the applicant and reduced the amount of compensation for inflation to MDL 118,848 (EUR 8,766 at the time). The Court of Appeal did not give any reason for accepting the appeal in cassation lodged out of time. 17. On 16 September 2002 the Prosecutor General lodged with the Supreme Court of Justice a request for annulment of the judgments in favour of the applicant and asked for the reduction of the amount of compensation awarded. 18. On 9 October 2002 the Supreme Court of Justice upheld the Prosecutor General’s request for annulment, quashed the judgments in favour of the applicant and dismissed her claims for compensation. II. RELEVANT DOMESTIC LAW 19. The relevant provisions of the Code of Civil Procedure, in force between 26 December 1964 and 12 June 2003, read as follows: Section 114. Extension of a time-limit “Where a person has failed to comply with a legal time-limit for reasons considered by a court to be plausible, that time-limit may be extended by the court. A request for the extension of the time-limit shall be lodged with the court concerned and shall be examined at a court hearing.... A court judgment dismissing a request for extension of a time-limit may be challenged by way of an appeal.” Section 284. The extension of the time-limit “The time-limit for lodging an appeal may be extended in accordance with the provisions of section 114 of the present Code. If a court does not have reasons to extend the time-limit, it shall dismiss the appeal as time-barred.” Section 305. The time-limit for lodging an appeal in cassation “The legal time-limit for lodging an appeal in cassation is fifteen days, unless the law provides otherwise.” Section 314. The judgment of the cassation instance and the procedural provisions “The issuance of the judgment as well as other procedural provisions before the appeal instance should be applicable to the proceedings before the cassation instance.” Section 316. Irrevocable judgments (Hotărârile irevocabile) “Irrevocable judgments are: ... 3) non-appealed judgments, issued by the appeal instances.” THE LAW I. THE GOVERNMENT’S REQUEST TO STRIKE OUT THE APPLICATION UNDER ARTICLE 37 OF THE CONVENTION 20. The Government, in their additional observations of 7 December 2005 and 28 March 2006, submitted two unilateral declarations similar to that in the case Tahsin Acar v. Turkey ((preliminary objection) [GC], no. 26307/95, ECHR 2003‑VI) and informed the Court that they were ready to accept that there had been a violation of the applicant’s rights under Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention as a result of the quashing of the judgments in her favour. In respect of pecuniary damage, the Government proposed to reinstate the applicant in the position in which she found herself prior to the quashing of the judgment of the Court of Appeal of 9 July 2002, by lodging a revision request with the Supreme Court of Justice in accordance with relevant provisions of the domestic law. In respect of non-pecuniary damage, the Government proposed to award the applicant the equivalent in MDL of EUR 1,800. They also proposed to award her compensation for her reasonable and proven costs and expenses incurred before the Court. The Government invited the Court to strike out the application in accordance with Article 37 of the Convention. 21. The applicant did not agree with the Government’s proposal. She considered that she was entitled to receive a higher amount of compensation and requested the Court to continue the examination of the application. She claimed that in accordance with the judgment of the Chişinău Regional Court she was entitled to receive MDL 244,953 (EUR 21,007 at the time). She also requested MDL 150,000 (EUR 8,785.39) in respect of non-pecuniary damage. 22. The Court observes, as it has previously stated in Tahsin Acar (cited above, §§ 74-77), that a distinction must be drawn between, on the one hand, declarations made in the context of strictly confidential friendly-settlement proceedings and, on the other, unilateral declarations – such as the present declarations – made by a respondent Government in public and adversarial proceedings before the Court. In accordance with Article 38 § 2 of the Convention and Rule 62 § 2 of the Rules of Court, the Court will proceed on the basis of the Government’s unilateral declarations and the parties’ observations submitted outside the framework of friendly-settlement negotiations, and will disregard the parties’ statements made in the context of exploring the possibilities for a friendly settlement of the case and the reasons why the parties were unable to agree on the terms of a friendly settlement. 23. The Court considers that, under certain circumstances, it may be appropriate to strike out an application under Article 37 § 1 (c) of the Convention on the basis of a unilateral declaration by the respondent Government even if the applicant wishes the examination of the case to be continued. It will, however, depend on the particular circumstances whether the unilateral declaration offers a sufficient basis for finding that respect for human rights as defined in the Convention does not require the Court to continue its examination of the case (Article 37 § 1 in fine). 24. Relevant factors in this respect include the nature of the complaints made, whether the issues raised are comparable to issues already determined by the Court in previous cases, the nature and scope of any measures taken by the respondent Government in the context of the execution of judgments delivered by the Court in any such previous cases, and the impact of these measures on the case at issue. It may also be material whether the facts are in dispute between the parties, and, if so, to what extent, and what prima facie evidentiary value is to be attributed to the parties’ submissions on the facts. In that connection it will be of significance whether the Court itself has already taken evidence in the case for the purposes of establishing disputed facts. Other relevant factors may include the question of whether in their unilateral declaration the respondent Government have made any admission(s) in relation to the alleged violations of the Convention and, if so, the scope of such admissions and the manner in which they intend to provide redress to the applicant. As to the last-mentioned point, in cases in which it is possible to eliminate the effects of an alleged violation (as, for example, in certain categories of property cases) and the respondent Government declare their readiness to do so, the intended redress is more likely to be regarded as appropriate for the purposes of striking out the application, the Court, as always, retaining its power to restore the application to its list as provided in Article 37 § 2 of the Convention and Rule 44 § 5 of the Rules of Court. 25. The foregoing list is not intended to be exhaustive. Depending on the particular circumstances of each case, it is conceivable that further considerations may come into play in the assessment of a unilateral declaration for the purposes of Article 37 § 1 (c) of the Convention. 26. As to whether it would be appropriate to strike out the present application on the basis of the unilateral declarations made by the Government, the Court notes in the first place that the applicant mainly complained about the fact that the Court of Appeal had quashed the judgment of the Chişinău Regional Court following the examination of the Ministry’s appeal in cassation lodged outside the time-limit, without providing any reason for extending that time-limit. The Government did not comment on that issue, either in their observations or in the unilateral declarations. 27. Secondly, although the Government accepted in their unilateral declarations that the upholding by the Supreme Court of Justice of the Prosecutor General’s request for annulment and the quashing of the judgments in favour of the applicant constituted violations of Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention, they did not, however, offer her an adequate redress, but proposed to initiate further proceedings before the Supreme Court of Justice in order to discontinue the request for annulment proceedings. 28. Thirdly, the Court notes that in accordance with the judgment of the Chişinău Regional Court the applicant would be entitled to receive MDL 244,953 (EUR 21,007 at the time), while under the Government’s unilateral declarations the applicant would receive only MDL 118,848 (EUR 8,766 at the time), (MDL 126,105 (EUR 12,241) less). The Court can but note the substantial difference in the amount awarded to the applicant by the judgment of the Chişinău Regional Court and by that of the Court of Appeal. 29. As to the Government’s proposal to lodge a request with the Supreme Court of Justice in order to discontinue the request for annulment proceedings and to place the applicant in the situation prior to the initiation of those proceedings, even assuming that the Government’s proposed revision request was successful (see paragraph 20 above), that would not lead to a reinstatement of the applicant in the position in which she found herself prior to the quashing of the final judgment of the “original” court, namely the judgment of the Chişinău Regional Court of 5 February 2002. Finally, the Court considers that the sum proposed in declarations made by the Government in respect of non-pecuniary damage suffered by the applicant as a result of the alleged violations of the Convention does not bear a reasonable relationship with the amounts awarded by the Court in similar cases for non-pecuniary damage. 30. On the facts and for the reasons set out above, the Court finds that the Government failed to submit a statement offering a sufficient basis for finding that respect for human rights as defined in the Convention does not require the Court to continue its examination of the case (see, by contrast, Akman v. Turkey (striking out), no. 37453/97, §§ 23-24, ECHR 2001‑VI). 31. This being so, the Court rejects the Government’s request to strike the application out under Article 37 of the Convention and will accordingly pursue its examination of the admissibility and merits of the case. II. ADMISSIBILITY OF THE APPLICATION 32. The applicant complained that her right to a fair trial, as guaranteed by Article 6 § 1 of the Convention, was violated by the fact that the Court of Appeal examined the Ministry’s appeal in cassation even though it was out of time. She also complained that her right to a fair trial was violated by the refusal of the Court of Appeal to allow her time to read and challenge evidence relied on by the Court of Appeal. Finally, the applicant complained that her rights under Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention were violated by the fact that the Supreme Court of Justice upheld the Prosecutor General’s request for annulment and quashed the judgments in her favour. The relevant part of Article 6 § 1 reads as follows: “In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ...” The relevant part of Article 1 of Protocol No. 1 to the Convention reads as follows: “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.” 33. The Government did not comment on the complaint about the quashing of the judgment, which became final through failure to appeal within the legal time-limit, and mentioned that the Ministry had requested an extension of the time-limit. The Government submitted that the applicant’s other complaints should be dismissed either as being manifestly ill-founded or on the ground that the applicant could have sought redress for the alleged violations before the domestic courts. 34. The Court considers that the application as a whole raises questions of law which are sufficiently serious that their determination should depend on an examination of the merits. No other ground for declaring it inadmissible has been established. The application must therefore be declared admissible. Pursuant to Article 29 § 3 of the Convention, the Court will now consider the merits of the applicant’s complaints. III. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION CONCERNING THE APPEAL OUT OF TIME 35. The applicant complained under Article 6 § 1 of the Convention about the quashing by the Court of Appeal of the judgment of the Chişinău Regional Court of 5 February 2002, without providing any reasons for upholding an appeal in cassation which had been lodged out of time. 36. The Government submitted that since the Ministry in its appeal in cassation had expressly requested the extension of the time-limit, the applicant’s complaint should be rejected as manifestly ill-founded. 37. The Court reiterates that Article 6 § 1 of the Convention obliges the courts to give reasons for their judgments. In Ruiz Torija v. Spain, (judgment of 9 December 1994, Series A no. 303‑A), the Court found that the failure of a domestic court to give reasons for not accepting an objection that the action was time-barred amounted to a violation of that provision. 38. The right to a fair hearing before a tribunal as guaranteed by Article 6 § 1 of the Convention must be interpreted in the light of the Preamble to the Convention, which, in its relevant part, declares the rule of law to be part of the common heritage of the Contracting States. One of the fundamental aspects of the rule of law is the principle of legal certainty, which requires, among other things, that where the courts have finally determined an issue, their ruling should not be called into question (see Brumărescu v. Romania [GC], no. 28342/95, § 61, ECHR 1999‑VII; Roşca v. Moldova, no. 6267/02, § 24, 22 March 2005). 39. In the present case, the Court notes that an appeal in cassation should be lodged by a party in the domestic proceedings in accordance with the provisions of the Moldovan Code of Civil Procedure (the “CCP”). The Court’s task is to determine whether this procedure was applied in a manner which is compatible with Article 6 of the Convention, including respect for the principle of legal certainty. The Court shall do so while bearing in mind that it is in the first place the responsibility of national courts to interpret provisions of national law (see Waite and Kennedy v. Germany [GC], no. 26083/94, 18 February 1999, § 54). 40. It is to be noted that according to Article 316 of CCP, in force at the time, a judgment delivered by the appeal instance became final once the time-limit for the lodging of an appeal had expired. According to Article 305 of the same Code, “the legal time-limit for lodging an appeal in cassation is fifteen days”. Articles 314, 284 and 114 of CCP provide that when a party has failed to observe the legal time-limit for lodging an appeal in cassation, the cassation instance should either dismiss it as statute-barred, or provide reasons for extending the time-limit. 41. In the present case, the Court notes that since the Ministry’s representative had been present during the proceedings before the Chişinău Regional Court on 5 February 2002 (see paragraph 13 above), the legal time-limit for lodging the appeal in cassation expired on 20 February 2002. Thus, the judgment of 5 February 2002 became final through the failure to appeal within the time-limit. The Court also notes that although the appeal in cassation was lodged only on 8 April 2002, that is 47 days after the expiry of the legal time-limit for lodging it, the Ministry’s representative did not provide any reasons for the failure to observe the legal time-limit and nor did the Court of Appeal examine the issue of the extension of the time-limit or at least give reasons for its decision (see, mutatis mutandis, Ruiz Torija, cited above). 42. The Court observes that a similar situation has already been examined in the case of Popov v. Moldova (no. 2), (no. 19960/04, § 53, 6 December 2005), in which the Court found that by not giving any reasons for extending the defendant’s time-limit for lodging a procedural act, the domestic courts breached the applicant’s right to a fair hearing. 43. There has accordingly been a violation of Article 6 § 1 of the Convention. 44. With regard to the complaint about defects in the proceedings before the Court of Appeal, the Court finds that, having concluded that there has been a violation of the applicant’s right under Article 6 § 1, it is not necessary to consider whether other procedural guarantees were observed in those proceedings. IV. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION AND OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION CONCERNING THE REQUEST FOR ANNULMENT 45. The applicant also complained that her rights under Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention were violated by the fact that the Supreme Court of Justice had upheld the Prosecutor General’s request for annulment and subsequently quashed the judgments in her favour. 46. In their observations the Government requested the Court to dismiss the applicant’s complaints on the ground that she could have obtained redress for the alleged violations with the domestic courts. 47. Having regard to the fact that the Court has found a violation of the applicant’s rights under Article 6 § 1 of the Convention prior to the upholding by the Supreme Court of Justice of the Prosecutor General’s request for annulment, the Court does not consider it necessary to rule on the question whether there has been a violation of Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention in the circumstances alleged. V. APPLICATION OF ARTICLE 41 OF THE CONVENTION 48. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 49. The applicant claimed MDL 244,953 (EUR 21,007 at the time) in respect of pecuniary damage, as awarded by the Chişinău Regional Court in its judgment of 5 February 2002. The applicant also claimed the sum of MDL 150,000 (approx. EUR 8,800) in compensation for non-pecuniary damage arising from suffering and anxiety caused by the alleged violations of her rights. 50. The Government considered that the applicant was not entitled to receive compensation in respect of pecuniary damage and disagreed with the amount of non-pecuniary damage claimed by the applicant. 51. The Court reiterates that a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see Former King of Greece and Others v. Greece [GC] (just satisfaction), no. 25701/94, § 72). In the present case, the reparation should aim at putting the applicant in the position in which she would have found herself had the violation not occurred, namely prior to the quashing of the judgment of the Chişinău Regional Court of 5 February 2002 by the Court of Appeal. 52. Therefore, the Court awards the applicant EUR 21,007 in respect of pecuniary damage. 53. The Court also considers that the applicant must have been caused a certain amount of stress and frustration as a result of the quashing of the judgment of 5 February 2002. The particular amount claimed is, however, excessive. Making its assessment on an equitable basis, the Court awards the applicant EUR 2,000 for non-pecuniary damage. B. Costs and expenses 54. The applicant claimed no costs and expenses for the Convention proceedings. The Court therefore makes no award under this head. C. Default interest 55. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Rejects the Government’s request to strike the application out of the list; 2. Declares the application admissible; 3. Holds that there has been a violation of Article 6 § 1 of the Convention in respect of the quashing of the judgment of the Chişinău Regional Court of 5 February 2002; 4. Holds that there is no need to examine the applicant’s other complaints under Article 6 and under Article 1 of Protocol No. 1 to the Convention; 5. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 21,007 (twenty-one thousand and seven euros) for pecuniary damage, EUR 2,000 (two thousand euros) in respect of non-pecuniary damage, to be converted into the national currency of the respondent State at the rate applicable at the date of settlement, plus any tax that may be chargeable; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 6. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 14 November 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Françoise Elens-PassosNicolas BratzaDeputy RegistrarPresident

JUDGMENT OF THE COURT (Fifth Chamber) 7 March 2013 ( *1 ) ‛Social security for migrant workers — Article 46a of Regulation (EEC) No 1408/71 — National rules against overlapping — Old-age pension — Increase in the amount paid by a Member State — Survivor’s pension — Reduction in the amount paid by another Member State’ In Case C-127/11, REQUEST for a preliminary ruling under Article 267 TFEU from the arbeidshof te Antwerpen (Belgium), made by decision of 3 March 2011, received at the Court on 11 March 2011, in the proceedings Aldegonda van den Booren v Rijksdienst voor Pensioenen, THE COURT (Fifth Chamber), composed of M. Ilešič, acting as President of the Fifth Chamber, J-J. Kasel (Rapporteur) and M. Safjan, Judges, Advocate General: P. Cruz Villalón, Registrar: A. Calot Escobar, having regard to the written procedure, after considering the observations submitted on behalf of: — the Belgian Government, by L. Van den Broeck and C. Pochet, acting as Agents, assisted by P. Vanagt and E. Pools, advocaten, — the European Commission, by V. Kreuschitz and M. van Beek, acting as Agents, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment This request for a preliminary ruling concerns the interpretation of Article 46a of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996 (OJ 1997 L 28, p. 1), as amended by Regulation (EC) No 1386/2001 of the European Parliament and of the Council of 5 June 2001 (OJ 2001 L 187, p. 1), (‘Regulation No 1408/71’) and of Article 4(3) TEU and Articles 45 TFEU to 48 TFEU. The request has been made in proceedings between Mrs van den Booren and the Rijksdienst voor Pensioenen (Belgian National Pensions Office; ‘NPO’) concerning the application of the Belgian rules against overlapping of benefits at the time of determination of the amount of the Belgian survivor’s pension received by Mrs van den Booren. Legal context European Union law Under Article 12(2) of Regulation No 1408/71: ‘Save as otherwise provided in this Regulation, the provisions of the legislation of a Member State governing the reduction, suspension or withdrawal of benefits in cases of overlapping with other social security benefits or any other form of income may be invoked even where such benefits were acquired under the legislation of another Member State or where such income was acquired in the territory of another Member State.’ Articles 44 to 51a are contained in Chapter 3, entitled ‘Old age and death (pensions)’, of Regulation No 1408/71. Article 45 of Regulation No 1408/71 relates to consideration of periods of insurance or of residence completed under the legislation to which an employed person or self-employed person was subject with regard to the acquisition, retention or recovery of the right to benefits. Article 46 of Regulation No 1408/71, defines, in paragraph 1, the rules which apply where the conditions required by the legislation of a Member State for entitlement to benefits have been satisfied without having to apply Article 45 of that regulation. Paragraph 2 of Article 46 sets out the rules which apply where the conditions required by the legislation of a Member State for entitlement to benefits are satisfied only after application of Article 45. Article 46a of Regulation No 1408/71, which concerns the general provisions relating to reduction, suspension or withdrawal applicable to benefits in respect of invalidity, old age or survivors under the legislation of the Member States, provides: ‘1. For the purposes of this Chapter, overlapping of benefits of the same kind shall have the following meaning: all overlapping of benefits in respect of invalidity, old age and survivors calculated or provided on the basis of periods of insurance and/or residence completed by one and the same person. 2. For the purposes of this Chapter, overlapping of benefits of different kinds means all overlapping of benefits that cannot be regarded as being of the same kind within the meaning of paragraph 1. 3. The following rules shall be applicable for the application of provisions on reduction, suspension or withdrawal laid down by the legislation of a Member State in the case of overlapping of a benefit in respect of invalidity, old age or survivors with a benefit of the same kind or a benefit of a different kind or with other income: (a) account shall be taken of the benefits acquired under the legislation of another Member State or of other income acquired in another Member State only where the legislation of the first Member State provides for the taking into account of benefits or income acquired abroad; (b) account shall be taken of the amount of benefits to be granted by another Member State before deductions of taxes, social security contributions and other individual levies or deductions; (c) no account shall be taken of the amount of benefits acquired under the legislation of another Member State which are awarded on the basis of voluntary insurance or continued optional insurance; (d) where provisions on reduction, suspension or withdrawal are applicable under the legislation of only one Member State on account of the fact that the person concerned receives benefits of a similar or different kind payable under the legislation of other Member States or other income acquired within the territory of other Member States, the benefit payable under the legislation of the first Member State may be reduced only within the limit of the amount of the benefits payable under the legislation or the income acquired within the territory of other Member States.’ Article 46b(1) of Regulation No 1408/71, concerning special provisions applicable in the case of overlapping of benefits of the same kind under the legislation of two or more Member States, reads as follows: ‘The provisions on reduction, suspension or withdrawal laid down by the legislation of a Member State shall not be applicable to a benefit calculated in accordance with Article 46(2).’ Belgian law Article 52(1) of the Royal Decree of 21 December 1967 on the general regulation of the retirement and survivor’s pension scheme for employed workers (Belgisch Staatsblad of 16 January 1968), as amended by the Royal Decree of 9 July 1997 (Belgisch Staatsblad of 9 August 1997), (‘the Royal Decree of 21 December 1967’) provides: ‘Where the surviving spouse can claim both a survivor’s pension under the pension scheme for employed workers and one or more retirement pensions, or any other benefit taking the place thereof under the pension scheme for employed workers or under one or more other pension schemes, the survivor’s pension may be aggregated with those retirement pensions only up to a sum equal to 110% of the amount of the survivor’s pension which would have been awarded to the surviving spouse for a complete contributions record. ...’ The dispute in the main proceedings and the questions referred for a preliminary ruling Mrs van den Booren, who was born on 18 August 1920, resides in Maastricht (Netherlands). Her husband, Mr Bartels, who died on 1 March 1982, worked as an underground miner in Belgium, inter alia during the period from 1951 to 1961. By administrative decision of 11 July 1986, the NPO granted Mrs van den Booren a Belgian survivor’s pension retroactively with effect from 1 August 1985 in the annual amount of EUR 1 879.03 gross (index 319.78). From that same date Mrs van den Booren also received a Netherlands old-age pension under the Algemene Ouderdomswet (General Law on Old-Age Insurance; ‘AOW’) in the amount of EUR 827.13 per month. By decision of 20 May 2003, Mrs van den Booren’s Netherlands old-age pension was increased to EUR 869.24 per month (or EUR 10 430.88 per annum) with retroactive effect from 1 January 2002. That increase resulted from the fact that, at the end of 2002, the Netherlands legislature had filled the legal lacuna affecting certain married women who were resident in the Netherlands and whose spouses had not been insured under the AOW on the ground that they had worked outside the Netherlands during the period from 1 January 1957 to 1 January 1980. On 23 January 2004 the Bureau voor Belgische Zaken (Office for Belgian Affairs) sent a copy of the decision of 20 May 2003 to the NPO. By registered letter of 12 August 2004, the NPO notified Mrs van den Booren that the decision of 11 July 1986 had been revised, to the effect that, as a result of the increase in her Netherlands old-age pension as from 1 January 2002, her Belgian survivor’s pension, which on that same date had amounted to EUR 2 845.49 gross, was being reduced to EUR 1 866.18 gross (index: 107.30) per annum. By the same letter, the NPO also requested reimbursement by Mrs van den Booren of the benefits overpaid in respect of the period from 1 March 2004 to 31 July 2004, an amount totalling EUR 506.45. Mrs van den Booren brought an action against the decision revising her survivor’s pension and against the reimbursement decision before the arbeidsrechtbank te Tongeren (Labour Court, Tongeren), which, by a decision of 21 October 2009, declared that action to be unfounded. As regards, more specifically, the argument raised by Mrs van den Booren relating to Article 46a of Regulation No 1408/71, that court found that there had been no infringement of that article. As the Netherlands old-age pension had to be considered to be a benefit taking the place of a retirement pension, it was necessary to proceed, in accordance with Article 46a(3)(a) of Regulation No 1408/71, with a reduction of the Belgian survivor’s pension (see Case C-107/00 Insalaca [2002] ECR I-2403). The arbeidsrechtbank te Tongeren further found that there had also been no infringement of the fundamental freedom of movement of workers. In its view, the judgments cited in that regard by Mrs van den Booren (Case C-165/91 van Munster [1994] ECR I-4661 and Case C-262/97 Engelbrecht [2000] ECR I-7321) concerned different situations. According to that court, Article 52(1) of the Royal Decree of 21 December 1967 applied without distinction both to Belgian nationals who have always remained in Belgium and to migrant workers, and the application of the rule contained in that Article 52 did not lead to any reduction in Mrs van den Booren’s overall income. On 27 November 2009, Mrs van den Booren lodged an appeal against that decision before the arbeidshof te Antwerpen (Higher Labour Court, Antwerp). She claims that the application of Article 52(1) of the Royal Decree of 21 December 1967 infringes Article 46a of Regulation No 1408/71 and that it constitutes, in any event, a barrier to the right to free movement of persons, set out in Articles 39 EC to 42 EC. Mrs van den Booren refers in this regard to the above judgments in van Munster and Engelbrecht, according to which it is for the national court to interpret national law in a manner which accords with the requirements of European Union law and to refrain from applying that national law in cases where this would lead, in combination with the legislation of another Member State, to a result which is contrary to those requirements. It is in those circumstances that the arbeidshof te Antwerpen decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Is Article 52(1) of the Royal Decree of 21 December 1967 …, under which a survivor’s pension is reduced as a result of the increase in an old-age pension awarded under [the AOW] pursuant to the implementation of the equal treatment of men and women by the Law of 28 March 1985, compatible with [European Union] law, in particular with Article 46a of Regulation (EEC) No 1408/71 …? (2) Is Article 52(1) of the Royal Decree of 21 December 1967 … compatible with [European Union] law, in particular with Articles [4(3) TEU and 45 TFEU to 48 TFEU], if that provision is interpreted in such a way that an old-age pension awarded under [the AOW] is to be included under the retirement pensions or equivalent benefits referred to in that provision, and, in case of incompatibility, should Article 52(1) of the Royal Decree of 21 December 1967 … then be disapplied?’ Consideration of the questions referred Admissibility In its written observations, the Belgian Government disputed, as a preliminary point, the admissibility of the present request for a preliminary ruling on the ground that the referring court had not adequately set out either the legal and factual context of the case or demonstrated the need to refer the questions for a preliminary ruling. In that respect, it should be noted that it is for the national courts alone, which are seised of a case and which must assume responsibility for the judgment to be given, to determine, having regard to the particular features of each case, both the need for a preliminary ruling in order to enable them to deliver judgment and the relevance of the questions which they refer to the Court. Consequently, where the questions submitted concern the interpretation of European Union law, the Court is, in principle, bound to give a ruling (Case C-169/07 Hartlauer [2009] ECR I-1721, paragraph 24 and the case-law cited, and Case C-393/08 Sbarigia [2010] ECR I-6337, paragraph 19). It follows that questions relating to European Union law enjoy a presumption of relevance. Accordingly, the Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of European Union law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, to that effect, Joined Cases C-94/04 and C-202/04 Cipolla and Others [2010] ECR I-11421, paragraph 25, and Sbarigia, paragraph 20). Such is not, however, the position in the case in the main proceedings. The decision making the reference contains a sufficient description of the legal and factual context of the dispute in the main proceedings to enable the Court to give a useful answer to the questions referred. In addition, it should be noted that the Belgian Government has been in a position to comment on the questions raised, as is apparent from its written observations lodged pursuant to Article 23 of the Statute of the Court of Justice of the European Union. It follows that the present request for a preliminary ruling is admissible. Substance It should be borne in mind, as a preliminary point, that, although it is not for the Court, in proceedings brought under Article 267 TFEU, to rule on the compatibility of rules of domestic law with European Union law, it is none the less competent to give the national court full guidance on the interpretation of European Union law in order to enable that court to determine whether those rules are so compatible (see, inter alia, Case C-292/92 Hünermund and Others [1993] ECR I-6787, paragraph 8). The two questions referred to the Court, which it is appropriate to examine together, must be understood as seeking, in essence, to ascertain whether the provisions of Regulation No 1408/71, and more specifically Article 46a thereof, must be interpreted as precluding the application of legislative rules of a Member State containing a provision under which a survivor’s pension received in that Member State is reduced as a result of the increase in an old-age pension received under the legislation of another Member State, and whether, in the event of a negative reply, the primary law of the European Union, and more specifically Article 4(3) TEU and Articles 45 TFEU to 48 TFEU, prevents the application of such legislative rules. From the outset, it must be borne in mind that, according to settled case-law, a national rule must be regarded as a provision on reduction of benefit, within the meaning of Regulation No 1408/71, if the calculation which it requires to be made has the effect of reducing the amount of the pension which the person concerned may claim by reason of the fact that he receives a benefit from another Member State (Insalaca, paragraph 16). In that regard, it follows from Article 12(2) of Regulation No 1408/71 that provisions on reduction laid down in the legislation of a Member State may, unless that regulation provides otherwise, be invoked against persons who receive a benefit from that Member State if they can claim other social security benefits, even when those benefits are acquired under the legislation of another Member State (Insalaca, paragraph 22). An exception to the principle laid down in Article 12(2) of Regulation No 1408/71 is contained in Article 46b(1) of that regulation, which provides that, in the case of overlapping of benefits of the same kind, provisions on reduction laid down by the legislation of a Member State do not apply to benefits calculated in accordance with Article 46(2) of that regulation (Insalaca, paragraph 23). In that regard, the Court has consistently held that social security benefits must be regarded as being of the same kind, within the meaning of Article 12(2) of Regulation No 1408/71, when their purpose and object, as well as the basis on which they are calculated and the conditions for granting them, are identical (Case 197/85 Stefanutti [1987] ECR 3855, paragraph 12; Case C-98/94 Schmidt [1995] ECR I-2559, paragraph 24; and Insalaca, paragraph 24). Article 46a(1) of Regulation No 1408/71 states that overlapping of benefits of the same kind is defined as the overlapping of benefits in respect of invalidity, old age and survivors ‘calculated or provided on the basis of periods of insurance and/or residence completed by one and the same person’. In accordance with Article 46a(2) of Regulation No 1408/71, benefits calculated or provided on the basis of the careers of two different persons cannot be treated as being benefits of the same kind within the meaning of Article 46a(1) (see, to that effect, Stefanutti, paragraph 13, and Case C-366/96 Cordelle [1998] ECR I-583, paragraphs 20 and 21). In so far as it transpires, regard being had to the written observations submitted to the Court, that the Belgian survivor’s pension received by Mrs van den Booren was calculated on the basis of the professional career of her late husband and that she receives the Netherlands old-age pension in her own right, those two benefits cannot be considered to be benefits of the same kind coming within the exception provided for under Article 46a(1) of Regulation No 1408/71. Consequently, Regulation No 1408/71 does not prevent the application of a national rule against overlapping such as that referred to by the national court, provided that the limits imposed by Regulation No 1408/71 are observed. In that regard, Regulation No 1408/71 provides, in particular in Article 46a(3)(d), that, if a rule against overlapping is applicable under the legislation of only one Member State on account of the fact that the person concerned receives benefits of the same kind or of a different kind payable under the legislation of another Member State, the benefit payable under the legislation of the first Member State may be reduced only within the limit of the amount of the benefits payable under the legislation of the other Member State (Cordelle, paragraph 14). Accordingly, pursuant to that rule, the Belgian survivor’s pension of the person concerned may be reduced only within the limit of the amount of the Netherlands old-age pension (Cordelle, paragraph 15). In those circumstances, the conclusion on that point must be that Article 46a of Regulation No 1408/71 does not preclude the application of legislative rules of a Member State containing a provision under which a survivor’s pension received in that Member State is reduced as a result of the increase in an old-age pension received under the legislation of another Member State, provided, in particular, that the conditions set out in Article 46a(3)(d) are observed. However, the interpretation of Regulation No 1408/71 thus provided must be understood without prejudice to the solution which might flow from the potential applicability of provisions of primary law. The finding that a national measure may be consistent with a provision of a secondary law measure, in this case Regulation No 1408/71, does not necessarily have the effect of removing that measure from the scope of the Treaty’s provisions (Case C-208/07 von Chamier-Glisczinski [2009] ECR I-6095, paragraph 66 and case-law cited). It is in that context that the referring court raises the question more specifically of whether, in the case before it, there is a barrier to the right of free movement, as found by the Court in the above judgments in van Munster and Engelbrecht. However, from the outset, it must be borne in mind that the above judgments in van Munster and Engelbrecht concerned the situation of a reduction of the Belgian pension of one of the spouses by reason of the application of the single rate, instead of the household rate, following the award of a pension or an advantage in lieu thereof to the other spouse, and not, as in the case in the main proceedings here, of overlapping of a Belgian survivor’s pension and a Netherlands old-age pension in respect of one and the same person. Consequently, the solution adopted in those judgments is not transposable to a situation such as that here at issue in the main proceedings. Furthermore, although it is true that, in the absence of harmonisation at European Union level, it is for the legislation of each Member State to determine the conditions for granting social security benefits in kind, the Member States must, when exercising that power, comply with European Union law (see, to that effect, inter alia, von Chamier-Glisczinski, paragraph 63 and the case-law cited). In that regard, as regards the provisions of primary law to which the national court refers, it is sufficient to bear in mind that Article 45 TFEU gives effect to a fundamental principle under which, in particular, the activities of the European Union are to include the abolition, as between Member States, of obstacles to freedom of movement for persons (Case C-18/95 Terhoeve [1999] ECR I-345, paragraph 36 and the case-law cited). As a result, European Union law militates against any national measure which, even though applicable without discrimination on grounds of nationality, is capable of hindering or rendering less attractive the exercise by Member State nationals of the fundamental freedoms guaranteed by the Treaty (Case C-212/06 Government of Communauté française and Gouvernement wallon [2008] ECR I-1683, paragraph 45 and the case-law cited). According to settled case-law, national measures of that kind may be allowed only if they pursue a legitimate objective in the public interest, are appropriate to ensuring the attainment of that objective, and do not go beyond what is necessary to attain the objective pursued (Government of Communauté française and Gouvernement wallon, paragraph 55 and the case-law cited). Accordingly, it is for the national court to assess the compatibility of the rules of national legislation at issue with the requirements of European Union law by determining whether the Belgian rule against overlapping, which admittedly applies without distinction to Belgian nationals and to nationals of other Member States, does not in fact lead, in respect of the person concerned, to an unfavourable situation in comparison with that of a person whose situation has no cross-border element, and, if such a disadvantage is established in the present case, whether the national rule at issue is justified by objective considerations and is proportionate to the legitimate objective pursued by national law. In the light of all of the foregoing, the answer to the questions referred for a preliminary ruling is as follows: — Article 46a of Regulation No 1408/71 must be interpreted as meaning that it does not preclude the application of legislative rules of a Member State containing a provision under which a survivor’s pension received in that Member State is reduced as a result of the increase in an old-age pension received under the legislation of another Member State, provided, in particular, that the conditions set out in Article 46a(3)(d) are observed; — Article 45 TFEU must be interpreted as meaning that it likewise does not preclude the application of such national legislative rules in so far as they do not lead, in respect of the person concerned, to an unfavourable situation in comparison with that of a person whose situation has no cross-border element, and, if such a disadvantage is established, in so far as it is justified by objective considerations and is proportionate in relation to the objective legitimately pursued by national law, this being a matter for the referring court to ascertain. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Fifth Chamber) hereby rules: Article 46a of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, as amended by Regulation (EC) No 1386/2001 of the European Parliament and of the Council of 5 June 2001, must be interpreted as meaning that it does not preclude the application of legislative rules of a Member State containing a provision under which a survivor’s pension received in that Member State is reduced as a result of the increase in an old-age pension received under the legislation of another Member State, provided, in particular, that the conditions set out in Article 46a(3)(d) are observed. Article 45 TFEU must be interpreted as meaning that it likewise does not preclude the application of such national legislative rules in so far as they do not lead, in respect of the person concerned, to an unfavourable situation in comparison with that of a person whose situation has no cross-border element, and, if such a disadvantage is established, in so far as it is justified by objective considerations and is proportionate in relation to the objective legitimately pursued by national law, this being a matter for the referring court to ascertain. [Signatures] ( *1 ) Language of the case: Dutch.

Judge Raynor: I can give judgment straightaway, because I have reached the firm conclusion, for reasons that I shall state, that this action is not statute barred. In order to understand that, however, I am going to have to state the chronology in some detail. The Claimant is a company engaged in the manufacture of precision springs, and it has premises at Ruscombe Industrial Estate, Tywford in Berkshire. In the early 1990s the Claimant decided that it would have built an extension to those premises and it engaged architects known as Danks Reed Denby & Badnell in connection with the design of the extension. Those architects engaged a firm of consulting engineers named Broad & Gloyens, and at all material times the Defendant, Mr David Howes, a consulting structural engineer, was a partner in Broad & Gloyens. There have been various changes in the partnerships of which the Defendant has been a member since that time, but of crucial importance in this case is the fact that at all times after 1993 until the end of 2003 the Claimant obtained and relied upon the structural engineering advice of the Defendant, Mr. Howes, in whatever partnership he was a member of at the particular time. Mr. Howes designed the foundations of the extension, and for the purpose of the preliminary issue which I have to determine it has been agreed between the parties that the question I must determine is upon what date did the Claimant first have the knowledge required for bringing an action for damages in respect of the relevant damage under section 14A(5)-(10) of the Limitation Act 1980, it being accepted that for the purpose of the primary statutory limitation period damage to the factory extension did occur more than six years before the issue of proceedings. Further, for the purpose only of determining the above preliminary issue the following assumptions are to be made by the court: 1. that the Defendant owed to the Claimant a duty of care at common law at all times to exercise reasonable professional skill and care; 2. that he was negligent in the respects set out in paragraph 11 of the Particulars of Claim; and 3. that such negligence caused the damage set out in paragraphs 5-10 of the Particulars of Claim. In essence what is alleged is that the Defendant, in designing the foundations for the extension, was negligent in that he failed to take any sufficient note of the particular soil conditions of the site and of the presence of trees on adjacent land, with the result (so it is alleged) that the foundations were inadequate for their purpose and as a result there has been structural movement of the building causing damage which is particularised in the Particulars of Claim. The actual drawings and calculations for the foundations were prepared by the Defendant in the early part of 1994. Work commenced in May or early June 1994 and in July 1994 there was first noted slight movement of an adjacent building, but that is a red herring because that movement is in no way material for present purposes. In November 1994 the construction of the extension was completed. At about the end of August 1995 what was referred to as a "potential problem with the floor in the extension of the production area" was identified. What had been noted was that a gap that formed the perimeter expansion joint had become wider. That had been noted by the Claimant's works manager, Mr. Michael Ansell, and that is what brought the Defendant first back to the Claimant's premises. What happened thereafter is well documented. At the end of August 1995 the Defendant visited the Claimant's premises to look at the widening of the gap that I have mentioned. By letter dated 1st September 1995 sent to the builder the architect stated that he had visited the premises together with Mr Howes, looking at the potential problem and "On inspection we found that the relationship between the main floor and the perimeter strip against the external wall adjacent to the railway boundary had changed since construction, there is a difference in level of approximately 10mm. along the joint between the two areas of concrete." It was stated that the Defendant, Mr. Howes, was considering what form of investigation should be undertaken. The Defendant in fact went on to propose that the slab movement be monitored for about three months, using tell-tales. That was done and there is a record of the tell tale findings both at that time and on later dates in the bundle at A26. On 2nd November 1995 there was a meeting at the Claimant's premises attended by the Works Manager, Mr. Ansell, Mr. Smith of the builder, Forum Construction, the Defendant, Mr. Howes, and Mr. Badnell of the architects. There is a minute at page A27. It was noted (among other things) that the purpose of the meeting was "To inspect the crack in the floor of the factory extension close to the east gable end wall and assess what action should be taken." (par 1.03). It is important to note that that minute is misleading because it is common ground between the parties that the reference to a crack in the floor does not refer to a crack in the floor slab but to the movement in the expansion joint previously mentioned. In section 4 of the minute there is then a recital of what was noted and agreed. There was first of all a description (in par 4.01) of where the expansion joint gap was noted and mention of the installation of tell-tales and of further movement having been found during monitoring. Mr. Howes in paragraph 4.3 was noted as stating that the perimeter strip was out of level with the main floor slab and that he was keeping dimensioned notes. He said that there appeared to have been a 0.5mm movement in the last month. The question was then raised as to whether the perimeter step was sinking or the edge of the main floor slab lifting, and Mr. Howes stated that he had speculated along the same lines and that he had laid a builder's level which appeared to suggest that the perimeter concrete strip was dropping relative to the slab, but that was not conclusive. It was pointed out that cracks had appeared in two other bays of the gable end. An inspection was made of the facing brick outer skin of the gable wall, but no obvious cracking was seen. The brickwork at the junction of the east and south elevations was considered and no obvious cracking seen there. Then in paragraph 4.09 it was "agreed that although movement had taken place it did not appear to be dramatic." In paragraph 4.10 the architect stated that he was concerned "that there did not seem to be sufficient evidence at the moment to warrant opening up the work. This was agreed. It was therefore agreed that the Defendant should monitor the tell-tales for a further three months." It is clear that at the meeting the Defendant expressed no concern about any possible inadequacy of the foundations. The Claimant's works manager, Mr Ansell, gave evidence before me and he told me (and I accept) that the impression that he obtained as a result of that meeting and from what the Defendant said was that the Defendant at that stage was not unduly concerned and was fairly convinced that what had occurred had been due to climatic seasonal movement, and that, on at least two occasions, the Defendant had stated that he could live with "minor wall cracking" but if and when the main floor slab cracked "things would be getting serious". The Defendant himself gave evidence and he agreed that he did indeed make the comment, the gist of which I have quoted above. The management structure of the Claimant at the material time was that the managing director and majority shareholder was Mr. Brian Harris. His fellow director and assistant was his son, Mr Philip Harris, who gave evidence before me. Mr Ansell, the works manager, was not a director but it was he who kept a (layman's) eye on the movement. The monitoring by way of tell-tales continued, and in January and February 1996 there were written letters by the Defendant to the architect which as I see the matter represent the high point of the Defendant's case on knowledge. By letter dated 23rd January 1996 the Defendant wrote to the architects saying: "With reference to the apparent movement of the gable end foundations, which we understand from the Works Manager has seen a slight recovery, since we have been monitoring only the movement and not carried out any investigation work, we consider it may be prudent to ask the Contractors if they would dig a trial pit to establish the actual depth of foundation, on condition that you would release their retention. Since we cannot establish why there is structural movement it seems rather unfair not to release their money. We would propose to take soil samples for testing and seek the advice of a geotechnical engineer……." If matters stopped there, there would be legitimate criticism as to why the Defendant's proposal was not followed up. But matters did not stop there. On 31st January 1996 the Defendant carried out a further site visit, and on 5th February 1996 he wrote a further letter to the architect, saying: "With reference to our site visit on Wednesday 31st January 1996 to inspect the tell-tales at the far gable end of the building, we confirm that there has been a slight recovery rather than a continuation of the movement. What is difficult to establish is, whether the gable end foundations are moving relative to the floor slab, or whether the situation is the reverse, because of not being able to fix a suitable reference point. … As usual, we carried out a visual inspection of both the internal blockwork and the external brickwork, and could not detect any significant cracking in either the mortar bed joints or perpends. As you are aware, because of the sloping nature of the original site, the front part was lower than the rear, therefore the amount of compacted fill under the slab was greater at the front than the rear. … Although there are trees along the rear boundary, as far as we aware during construction all foundations were taken down below the level of all tree roots found within the excavation. Therefore the sub-soil towards the rear of the site is more susceptible to climatic seasonal variations, which directly affect the moisture content of clay. Any change in moisture content will cause either expansion or contraction of the clay and consequently structural movement will occur. We are satisfied on the evidence collected to date, the amount and direction of movement has not caused any instability to the building. We consider that it would be sensible to replace the mastic sealer in the ground slab adjacent to the end gable wall that has pulled apart, so that it will be immediately obvious if the movement continues to be ongoing." That letter was sent as I say to the architect. There is no evidence before me to suggest that it was communicated by the architect to the managing director, Mr. Brian Harris, and it is clear that it was not communicated to Mr. Philip Harris. However, the Claimant, it seems to me, is to be imputed with knowledge that the architect obtained from the correspondence because the architect was the agent of the Claimant for the purposes of the building project. Of significance though is the fact that in the letter of 5th February the Defendant no longer made the recommendations contained in the earlier letter of 23rd January. The only recommendation that he made in the later letter was for the replacing of mastic sealer in the ground slab so that it would be immediately obvious if the movement continued to be ongoing. In my judgment, a reasonable interpretation of that letter (as the Defendant accepted in the course of his evidence) was that the structure of the building was not defective and that rather the building was responding to seasonal changes in soil moisture content and was not unstable. I do not know why the mastic sealer in the ground slab adjacent to the end gable wall was not replaced, as had been recommended by the Defendant, but it seems to me that there can be no reasonable criticism of the Claimant, in the light of the February letter, for failing to follow what had been originally recommended in the letter of 23rd January. What then next occurred was that in the middle of 1998 Mr. Ansell, looking at the building, as he did in the course of his work, noted that cracking had occurred through a brick in the wall. When he gave evidence he said, although he is not an expert, that the question of settlement at that stage went through his mind. He did not, however, say or suggest -- quite the contrary in fact, as will appear -- that any question of foundation problems went through his mind. As a result of the noting of the crack the Defendant was asked to attend and did so and took measurements. He did not express any concern to Mr. Ansell. All he advised Mr. Ansell to do was to carry on monitoring the situation, nothing else being suggested at that stage. In August and then September 1998 the architect asked the Defendant for the results of the monitoring and any conclusions, and does not appear to have received a reply. In the middle of 2001 there was then further contact between the Defendant and the Claimant. This is because the Claimant had to find new insurers following the demise of the Independent Insurance Company. The insurers they approached were AXA who noted cracking on their inspection and expressed concern. Through brokers instructed by the Claimant the Defendant was asked to report on movement since 1995. On 14th August 2001 the Defendant inspected again and he noted that there had been 3mm. of movement in 3 years. In evidence before me he made it clear that he did not regard that degree of movement as significant. On 1st October 2001 the Defendant wrote to the Claimant's brokers about the movement, and that letter was copied to Mr. Phillip Harris and is at page 34 of the bundle. What he stated was that the factory extension was designed by Broad & Gloyens, and completed on site during the latter part of 1994. He went on to say "Movement was originally noted about a year after the building was completed, and at the time it was assumed to be shrinkage of the masonry walls. There was an attempt to monitor the movement, but the tell-tales were dislodged and were unable to be used. Tell-tales were refixed in June 1998. To date, there has not been any significant movement along the back wall. However, there has been a slight increase in movement along the side wall, more noticeably on the external wall where a maximum of 2mm. has been recorded to date. It is not immediately apparent why the movement has occurred, but it would appear to confirm that it is the masonry cladding and not the structural frame." He concluded: "We assume that the policy is renewed annually and would suggest that the movement is monitored during this period to establish whether it is ongoing or has stabilized. Should you require any further information, please do not hesitate to contact the writer" AXA were sufficiently reassured by that letter as to remove what had been a larger than usual excess (namely £5,000 rather than the usual excess of £1,000) that they proposed to put on the policy cover for subsidence. Not only was AXA reassured but so was Mr. Phillip Harris, who, as I say, obtained a copy of that letter and was reassured that there was no cause for concern. However, Mr. Ansell had been told by the Defendant that there would be cause for concern if the floor slab cracked, and indeed by reason of an incident that occurred according to the Defendant "very suddenly" a pencil thick crack appeared in the floor slab, which was reported to Mr Ansell by an operative in 2003. Mr Ansell immediately reported the cracking to Mr Philip Harris, who asked him to contact Mr Howes, which he did in October 2003. In his witness statement Mr. Ansell was not definite as to when precisely the cracking was first reported to him, but in evidence he was confident that it must have been within a month or two before Mr. Howes re-inspected (on 19 November 2003), and I am satisfied that on the evidence the probable date when it was reported to Mr. Ansell was not earlier than about the beginning of October 2003. Mr. Howes inspected and his first reaction was to say that at this stage, there being floor slab cracking, there was a conflict of interest so that he could not act further for the Claimant. But for whatever reason he did accept a brief to inspect and report on structural movement and did report to the Claimant in a document dated December 2003. In that document he noted that during October 1995 and February 1996 movement was detected along the isolation joint that I have mentioned and was monitored during that period with the result that movement appeared to be not ongoing, and even showed signs of recovery, as was reported back to the architects in his letter of 5th February 1996. He went on to say that "Since the movement was not significant [my emphasis] and was only related to the floor slab, monitoring was not continued." This was thus how the Defendant had seen things at the time he wrote his letter. He reported that a further inspection during August 2001 revealed only a slight increase in the previously reported movement. After reporting what he had seen on his November 2003 inspection, he concluded as follows: "It would appear from the pattern of movement, that the rear right hand corner is gradually moving outwards and the foundations along Grid Line 1 are tending to rotate. Since the bearing strata is a medium shrinkable clay, it is most probable that movement is being caused by drying out of the subsoil, because of the previous long dry summer period….. In our opinion the present structural movement has developed very suddenly, and shall need remedial work to restore stability, but before recommendations can be made, it will be necessary for the following investigation work [which he went on to specify] to be carried out" Those proposals for investigative works are reminiscent of those that he had made in the letter of 23rd January 1996 but not pursued in the February letter when, as stated, he had not considered the movement significant. When they gave evidence both Mr. Philip Harris and Mr. Ansell stated, as I accept, that at no stage prior to becoming aware of the cracking of the floor slab did they either know or suspect that there was or might be any problem with the foundations. I am not surprised by this given their communications with the Defendant. Proceedings in this case were commenced on 28 July 2006 and would be statute barred if prior to three years before that date the Defendant had the knowledge required or should have had the knowledge required for bringing an action for damages in respect of the relevant damage. After that recital of the facts it is necessary now to consider the law. It is necessary for me to set out in full the relevant provisions of sects. 14A(3) – (10) of the Act. (3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below. (4) That period is either -- (a) six years from the date on which the cause of action accrued; or (b) three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above. (5) For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the casue of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action. (6) In subsection (5) above 'the knowledge required for bringing an action for damages in respect of the relevant damage' means knowledge both -- (a) of the material facts about the damage in respect of which damages are claimed; and (b) of the other facts relevant to the c urrent action mentioned in subsection (8) below. (7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment. (8) The other facts referred to in subsection (6)(b) above are -- (a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; … (9) Knowledge that any acts or omissions did or did not, as a mattaer of law, involve negligence is irrelevant for the purposes of subsection (5) above. (10) For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire -- (a) from facts observable or ascertainable by him; or (b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek; but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice." I have been referred to abundant authority on section 14A. The knowledge that the Claimant was required to have for the purpose of sect 14A(8)(a) is agreed by the Defendant to be knowledge that the foundations were inadequate and that the damage was attributable in whole or part to this. There is, however, disagreement as to the level of certainty of knowledge that is required by the authorities for this purpose. The Defendant submits that it is sufficient if the Claimant believes that it is a real possibility that cracking in the building was due to some problem with the foundations. However, for reasons I shall state I consider that this disagreement is probably academic in the light of my findings of fact regarding the Claimant's actual state of knowledge. The leading case on actual knowledge is the decision of the House of Lords in Haward and Others v. Fawcetts [2006] 1 WLR 682. There are various statements of the law in the various speeches in that case which I must confess that I have not found easy to reconcile. However, I start with the proposition that what is required, leaving aside constructive knowledge for the moment, is "knowledge" of the material facts. The Act does not refer to "suspicion". The speech of Lord Nicholls in the Haward case provide support for the Defendant's submission. I refer in particular to paragraphs 9 – 11 and paras 20 – 21. In the latter paragraphs, Lord Nicholls stated: "20. … This feature is the very essence of Mr. Haward's claim. Stated in simple and broad terms, his claim is that Mr. Austreng did not do his job properly. Time did not start to run against Mr. Haward until he knew enough for it to be reasonable to embark on preliminary investigations into this possibility. 21. There may be cases where the defective nature of the advice is transparent on its face. It is not suggested that was so here. So, for time to run, something more was needed to put Mr. Haward on inquiry. For time to start running there needs to have been something which would reasonably cause Mr. Haward to start asking questions about the advice he was given." However, in paragraph 49 of his speech, Lord Scott says that: "the requisite knowledge is knowledge of the facts constituting the essence of the complaint of negligence." That seems to me to require knowledge of more than just there is a "real possibility" of the existence of the facts constituting the essence of the complaint of negligence. Similarly with regard to the speech of Lord Walker: I refer to paras 57 and 58, to the approval of the passages in the judgment of the Court of Appeal in Hallam-Eames v Merrett Syndicates Ltd [2001] Lloyd's Rep PN 178, and to para 66. Further, read as a whole I do not consider that the speech of Lord Mance (and I refer to paras 112 – 114 -- para 126 seems to me to add nothing to para 112) supports the Defendant's submission. Indeed, in para 113 Lord Mance repeats Lord Scott's statement as set out above and moreover approves the statement of principle of Brooke LJ in Spargo v North Essex DHA (1997) 37 BMLR 99, 106-107, which includes the following propositions: "'(3) A plaintiff has the requisite knowledge when she knows enough to make it reasonable for her to begin to investigate whether or not she has a case against the defendant. Another way of putting this is to say that she will have such knowledge if she so firmly believes that her condition is capable of being attributed to an act or omission which she can identify (in broad terms) that she goes to a solicitor to seek advice about making a claim for compensation. '(4) On the other hand she will not have the requisite knowledge if she thinks she knows the acts or omissions she should investigate but in fact is barking up the wrong tree; or if her knowledge of what the defendant did or did not do is so vague or general that she cannot fairly be expected to know what she should investigate; or if her state of mind is such that she thinks her condition is capable of being attributed to the act or omission alleged to constitute negligence, but she is not sure about this, and would need to check with an expert before she could be properly said to know that it was.'" It seems to me that there is a tension between the two propositions in para (1). Moreover, I do not find the final proposition in para (4) easy to reconcile with paras 20 and 21 of the speech of Lord Nicholls. Mr Haward at least knew that the investment he had made on the Defendant's advice was lost and that the outcome was very different from what he had been led to expect. It seems to me in the present case that if all that the Claimant has is a suspicion that there might be a problem with the foundations then that would not constitute actual knowledge for the purpose of the Act. For my part (and doing the best I can to reconcile the speeches in Haward) I would also say that if all that the Claimant knows is that there is a real possibility of a problem with the foundations and that damage may have resulted from this, but would need the further help of an expert before coming to a more definite view, then there is not actual knowledge for the purposes of the Act, but the question will then arise as to whether in the circumstances it was reasonable for the Claimant to take further steps so as to obtain the requisite knowledge as envisaged by s.14A(10). However, as I have already mentioned, on the facts of this case it seems to me this is academic, because I am quite satisfied that the Claimant --and by this I mean for the moment Mr. Philip Harris and the works manager Mr. Ansell -- neither knew nor suspected that there was or might be any problem with the foundations at any time prior to the floor slab crack being seen in the autumn of 2003. Mr. Whitting, counsel for the Defendant, points out that I have not heard from the managing director at the material time, Mr. Brian Harris. That is correct, but it seems to me wrong to infer in this case that he is likely to have had any greater knowledge than that possessed by Mr Ansell or Mr Philip Harris. On the evidence before me, it does not seem to me that there is any reasonable basis on which I could find that he suspected prior to the autumn of 2003 that there might be a problem with the foundations. Further, even if knowledge of the January and February 1996 letters be imputed to the Claimant, there would not in my judgment thereby be communicated to the Claimant knowledge anywhere near sufficient to justify the investigation of whether there was a claim against the Defendant as envisaged in the speeches in the Haward case: I refer to what I have stated in para 13 above. Not even the Defendant regarded the movement as significant at that stage; nor in my view should the Claimant. I thus find that the Claimant did not actually have the knowledge required for bringing an action prior to 3 years before its commencement. The remaining question is whether or not more than three years before the commencement of proceedings the Claimant might reasonably have been expected to acquire such knowledge from facts ascertainable by him with the help of appropriate expert advice which it was reasonable for him to seek, in other words whether or not there was constructive knowledge more than three years before the commencement of these proceedings. I have been referred in this context to statements in the Haward case on constructive knowledge and also to the decision of the House of Lords in Adams v. Bracknell Forest Borough Council [2005] 1 AC 76 where it is stated, reading the headnote: "In determining under the corresponding provision of the Act whether a claimant had knowledge which he might reasonably have been expected to have acquired the court must consider how a reasonable person in the situation of the claimant would have acted." Regardless of on whom lies the burden of proving constructive knowledge or the lack of the same (on which there is a difference of judicial opinion: see Clerk & Lindsell on Torts, 19th ed, par 33-03n25), I am satisfied on the evidence before me that the Claimant cannot reasonably have been expected to acquire the requisite knowledge sooner than it did. I find that it would not have been reasonable for the Claimant to have sought expert engineering advice from somebody other than the Defendant at any time before becoming aware of the floor slab cracking mentioned in para 20. The Defendant was perfectly content to continue to provide such advice and input at all times until he mentioned the conflict of interest in late 2003, and indeed thereafter Mr. Trotman, counsel for the Claimant, submits it is of key importance in the circumstances of this case that the structural engineer to whom it resorted for help was the Defendant and that the Defendant was prepared to advise. I agree. It is clear that the Claimant relied on his advice as to structural engineering matters at all times until the end of 2003, and in my view it was reasonable for them to do so at least up to the time when the cracking in the floor slab was noticed. I repeat the Defendant's own statement that he did not see the pre-2003 movement as significant, and in those circumstances I fail to see how the Claimant should reasonably have been expected to take a different view or to question his advice. I have stated already my view as to the letters of January and February 1996. But it may make for clarity if I summarise my views as to what a reasonable person in the position of the Claimant might have been expected to have done at each of various dates that arise in the chronology. 2nd November 1995, the date of the meeting previously mentioned. In my view, the Claimant cannot reasonably have been expected to do anything other than concur in the agreed course of action, namely monitoring. Mr. Ansell was reassured by what the Defendant stated as mentioned in para 9 and I do not think that it would have been reasonable to expect the Claimant at that stage to go elsewhere. The high point of the Defendant's case, as mentioned, comprise the January and February 2006 letters, which I believe I have sufficiently dealt with. True it is that the mastic was not replaced as recommended, but there is no evidence to suggest that anything of significance would have been revealed had it been replaced, and indeed Mr Howes, when he gave evidence, accepted that he could not say that anything would have been. The next date is May 1998 when there was the cracking through the brick. I have said already that all that the Defendant advised Mr. Ansell to do was to carry on monitoring. Mr. Ansell said that he was told that in effect nothing had changed. I do not believe that the Claimant ought reasonably to have sought other advice at that stage. Then there was the period from August to October 2001. The Defendant's letter of 1 October 2001 reassured not only Mr Harris but also AXA. It was not suggested to Mr Harris that he should have sought alternative advice at that stage, nor do I think he should. The position only changed with the cracking of the floor slab. So I find that the Claimant did not have the knowledge required under section 14A within the period of three years prior to 28th July 2006. MR. TROTMAN: Your Honour, in those circumstances I ask for the Claimant's costs. JUDGE RAYNOR: We are now coming to formalities. The first thing I should say presumably, It is declared that the -- is it sufficient for me to say that the claim is not barred by the Limitation Act or shall I in fact say it is declared he has not had the knowledge, etc.? MR. TROTMAN: Truthfully, I do not care, but it may be that one simply answers the agreed question -- I cannot remember precisely how it is phrased. JUDGE RAYNOR: The agreed question may require me to actually specify a date, which I do not think I am going to be prepared to do other than to say … MR. TROTMAN: I am happy with whatever formulation. JUDGE RAYNOR: It is declared that the Claimant did not have the knowledge required for bringing an action for damages earlier than three years before 28th July 2006. That is sufficient, is it not? MR. TROTMAN: Yes, your Honour. JUDGE RAYNOR: Second is now the question of costs. MR. TROTMAN: Yes, I seek the Claimant's costs of the trial of the preliminary issue on the standard basis. JUDGE RAYNOR: Can you resist that? MR. WHITTING: No. JUDGE RAYNOR: The Defendant do pay the Claimant's costs of the trial of the preliminary issue to be the subject of detailed assessment on the standard basis in default of agreement. MR. TROTMAN: Thank you. Can I also ask that a direction be made for a telephone CMC. JUDGE RAYNOR: Do you want me to make further directions today? (Counsel took instructions) MR. TROTMAN: Yes, I think we would prefer to put it over to a telephone CMC. JUDGE RAYNOR: Could I just say that I am unhappy to have a telephone CMC if it appears that there will be any substantial argument that will require recourse to bundles of documents and the like, that is all. But I cannot imagine there will be at this stage. MR. TROTMAN: I do not think there will be at this stage, no. JUDGE RAYNOR: Could I just ask when you would like a CMC because I can fix it now. MR. TROTMAN: Half an hour on the next available date after 14 days. MR. WHITTING: That would certainly be acceptable to us. JUDGE RAYNOR: That is acceptable. 14 days is 16th October. MR. TROTMAN: I do not know whether we should build some reading time into that. JUDGE RAYNOR: If I need to do any reading I would be very unhappy to allow only three-quarters of an hour. MR. TROTMAN: Say half an hour. If it is obvious that there are any disputed issues arising we will notify the court. JUDGE RAYNOR: I will say Monday, 22nd October 2007, 9.45 a.m. for 45 minutes, CMC, Harris v. Howes. I am happy to do that by telephone provided it is clear there is no substantial dispute. MR. WHITTING: One final matter which may not come as a surprise. I do seek permission to appeal. This was a matter of application of law and quite difficult law to more or less agreed facts with which the Defendant does disagree. We say that the agreed evidence or the evidence as it emerged did show that the trigger for the date of knowledge was long before 2003 regardless of any subsequent reassurance, and therefore it is a matter which should fairly be considered by the appellate court. JUDGE RAYNOR: I do not consider on the material before me in the light of my findings that there is any real prospect of success. Therefore I refuse permission to appeal.

COURT OF APPEAL FOR ONTARIO CITATION: Jeff Day Hospitality Inc. v. Heritage Conservation Holdings, Canada, Inc., 2022 ONCA 201 DATE: 20220311 DOCKET: C69601 Simmons, Harvison Young and Zarnett JJ.A. BETWEEN Jeff Day Hospitality Inc. Applicant (Respondent) and Heritage Preservation Holdings, Canada, Inc. Respondent (Appellant) Jonathan Chen and Aoife Quinn, for the appellant Charles Hammond, for the respondent Heard: February 24, 2022 by video conference On appeal from the judgment of Justice Robert F. Scott of the Superior Court of Justice, dated June 10, 2021. REASONS FOR DECISION [1] The appellant appeals from a judgment that requires it to perform its obligations under an Agreement of Purchase and Sale (“APS”) dated January 20, 2020. In the APS, the appellant agreed to sell a hotel property in Jones Falls, Ontario to the respondent for a purchase price of $1,375,000. The judgment requires the appellant to close the sale in accordance with the terms of the APS; it also authorizes the respondent to hold back $500,000 from the purchase price pending determination of the cost of rectifying certain deficiencies, which the application judge held were the responsibility of the appellant. [2] The appellant raises three grounds of appeal: (i) that the application judge erred in finding that the parties had actually concluded an agreement on all terms in the APS (the “contract formation issue”); (ii) that the application judge erred in failing to find the respondent was in breach of the APS on the agreed closing date because the first mortgage it had arranged exceeded a limit on such financing found in an implied term of the APS (the “implied term issue”) ; and (iii) that the application judge erred in finding the repair of certain deficiencies to be the appellant’s responsibility under the APS (the “deficiencies issue”). [3] For the reasons that follow, we allow the appeal as to an aspect of the deficiencies issue. Otherwise, we dismiss the appeal. (i) The Contract Formation Issue [4] Between January 8 and 20, 2020, the parties exchanged written offers relating to the purchase of the appellant’s hotel. [1] [5] The respondent first made an offer to purchase on January 8, 2020, which the appellant rejected. On January 10, 2020, the respondent made a revised offer; it made changes to its first offer and initialled them. On January 16, 2020, the appellant made a counteroffer; it made changes to the respondent’s revised offer and initialled those changes. On January 20, 2020, the respondent made a further revised offer, making certain changes to the terms proposed in the appellant’s January 16 counteroffer and initialling those changes. [6] On January 20, 2020, the appellant initialled the changes in the respondent’s further revised offer, except for the change to one term relating to the septic system. [7] The appellant argues that because it did not initial one of the respondent’s changes in the January 20, 2020 further revised offer, it did not accept all of the terms of that offer. It submits that the parties’ course of conduct indicates that changes were accepted by initialling. Accordingly, it submits that the application judge erred in finding that a binding agreement – namely the APS – had been reached on January 20, 2020 by the acceptance of the respondent’s further revised offer. [8] We disagree, and did not call on the respondent to address this issue in oral argument. [9] Although on January 20, 2020, the appellant did not initial one of the changes in the respondent’s further revised offer, the appellant did sign a “Confirmation of Acceptance” contained in it which stated: “Notwithstanding anything contained herein to the contrary, I confirm this Agreement with all changes both typed and written was finally accepted by all parties at 2:50 p.m. this 20th day of January, 2020”. [10] The application judge concluded that the appellant accepted the terms in the APS in their entirety. In our view, that finding was open to him. [11] Acceptance is constituted by conduct of the recipient that a reasonable person, in the position of the offeror, would consider constituted an acceptance: Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. , 2020 SCC 29, 450 D.L.R. (4th) 105, at para. 33. [12] The “Confirmation of Acceptance” unequivocally communicated that all of the terms in the further revised offer presented on January 20, 2020 were accepted, thus forming the APS. [13] Moreover, both parties and their agents acted on the basis that a binding APS had been reached on January 20, 2020. For example, on June 16, 2020, the parties executed an amendment, which stated: “Per Agreement of Purchase and Sale mutually executed and accepted on January 20, 2020”. The position that no agreement had been reached on January 20, 2020 was not taken by the appellant until after there was a failure to close on February 3, 2021 and litigation had ensued. [14] We therefore reject this ground of appeal. (ii) The Implied Term Issue [15] The APS provided that the respondent would pay a purchase price of $1,375,000. As part of the purchase price, the appellant agreed to take back a second mortgage in the amount of $500,000. The APS provided: The Seller agrees to take back a 2nd Charge/Mortgage in the amount of Five Hundred Thousand Dollars ($500,000.00), bearing interest at the rate of 5.5% per annum, calculated semi-annually not in advance, repayable interest only, and run for a term of 2 years from the date of completion of this transaction. [16] The APS was silent on the amount of the first mortgage that could originally be placed on the property by the respondent ahead of the second mortgage to the appellant. It did contain terms about what would happen if that first mortgage were later replaced during the term of the second mortgage: This Charge/Mortgage [i.e. the second mortgage to be taken back by the appellant] shall contain a clause permitting the removal or replacement of the existing first Charge/Mortgage at any time, provided that any increase in the principal amount of the new first Charge/Mortgage over the amount of principal owning under the first Charge/Mortgage at the time of renewal or replacement shall be applied in reduction of the principal amount of this Charge/Mortgage; and the Chargee/Mortgagee hereunder shall execute and deliver to the Chargor/Mortgagor such postponement agreement, Charge/Mortgage Statement, or other documents as the new first Chargee/Mortgagee may reasonably require, forthwith upon request. [17] When the respondent tendered on February 3, 2021, it indicated that it proposed to place a first mortgage on the property of $1,000,000. The appellant argues that this constituted a breach of an implied term of the APS, the implied term being that the combined amount of the first and second mortgages could not exceed the purchase price as that would leave the second mortgage in part unsecured. In other words, there was an implied term that the first mortgage could not exceed $875,000. [18] The application judge refused to find such an implied term. As the Supreme Court affirmed in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. , [1999] 1 S.C.R. 619, at para. 27, courts may imply terms in a contract: (1) based on custom or usage; (2) as the legal incidents of a particular class or kind of contract; or (3) based on the presumed intention of the parties where the implied term must be necessary “to give business efficacy to a contract or as otherwise meeting the ‘officious bystander’ test as a term which the parties would say, if questioned, that they had obviously assumed”. The application judge considered the evidence led by each party as to whether there was a regular custom in mortgage and sale transactions to support such an implication. He concluded that this was not a case where the term could be implied based on custom or usage, nor to give business efficacy to the APS, nor based on the officious bystander test. Moreover, he noted that the APS contained an entire agreement clause limiting the agreement to the terms expressed in it. [19] We see no basis to interfere with the application judge’s conclusion. It was open to him to find on the evidence that no custom or usage supporting the implication of such a term had been established, and that no other basis for implying such a term existed. [20] The narrow circumstances under which terms may be implied based on business efficacy or the officious bystander test are concerned with the presumed intentions of the actual parties. They are not an invitation for a court to revise an agreement to make it accord with what reasonable parties might have done: M.J.B. Enterprises , at para. 29. Although it may have been wise for the appellant to have sought such a term before agreeing to the APS, it did not do so, despite having been professionally advised. The APS does not lack business efficacy without such a term, nor is it obvious that the respondent, if asked by the officious bystander, would have answered that such a term was included. The parties’ express terms indicate a contrary answer. The parties included specific provisions about the second mortgage and its relationship to the first without including the limit the appellant says should now be implied. [21] Nor do we see any error in the application judge having referred to the entire agreement clause as a factor in deciding whether the implied term contended for here accords with the presumed intentions of the parties, who stated that their entire agreement was to be found in the express terms of the APS: Perkins v. Sheikhtavi , 2019 ONCA 925, 16 R.P.R. (6th) 42, at para. 22. [22] We therefore reject this ground of appeal. (iii) The Deficiencies Issue [23] The application judge dealt with three main categories of deficiencies and held that each was the responsibility of the appellant under the APS. [24] The first category was a foundation wall below the kitchen that was in a state of disrepair. The application judge found this to be covered by para. 5(f) of the APS, which provided: To the best of the knowledge, information and belief of the Seller, all structural components of the Buildings and shoreline elements (Seawall, docks, etc) including any renovations/ additions/ improvements, are sound and in good and substantial repair, and meet all appropriate technical and safety codes; [25] The appellant does not contest that the wall was in a state of disrepair, and that this was known to the appellant. It argues that para. 5(f) only applies to matters within its “knowledge, information and belief”, and that this requires the appellant to have known, believed or been informed not only of the disrepair, but also that the wall was structural. The appellant submits that its principal gave evidence that it was not so aware, and that the application judge thus erred in finding that para. 5(f) applied. [26] We disagree. [27] The application judge described the wall as a “foundation wall”. He concluded, after reviewing photographs that the “collapsed wall is… structural”. Implicit in the application judge’s approach is that whether the wall was structural is an objective issue – the knowledge/belief/information limit in para. 5(f) pertains to the wall’s state of repair. That interpretation is free of any extricable error, is reasonable, and is entitled to deference. The application judge was entitled to find that the wall was structural, based on its location and the photographic evidence. Given the appellant’s knowledge that the wall was in a state of disrepair, the application judge was therefore entitled to find that para. 5(f) of the APS made it the appellant’s responsibility. [28] The second category of deficiency related to the dining room fire separation, the kitchen exhaust, and the fire suppression system in the kitchen. [29] The application judge held that the appellant was responsible for each of these items under para. 5(h) of the APS, which provides: The Seller has not received written notice of any work orders, deficiency notices or other similar notices from any municipality, public authority, or board of fire insurance underwriters, or from any tenant, or anyone else advising of any breach of any by-law, code regulation or standard or suggestion that any repair is necessary to the Properties or any part thereof (except as disclosed in writing to the Buyer within the Sellers Deliveries package and anything else prior to the end of the Buyer’s Inspection Period). The Seller agrees to remedy such items which currently exist or which may arise on or before the Close Date at the Seller’s sole expense; The buyer acknowledges there is a work order on the ventilation and fire suppression [2] system on the kitchen commercial stove issued by the Rideau Lakes Township. [30] More specifically, the application judge found that para. 5(h) applied because it stated that the appellant was aware of a work order that required each of these deficiencies to be corrected. [31] In our view, although the application judge’s interpretation of the APS must be reviewed on a deferential standard, he made palpable and overriding errors in forming his interpretation of para. 5(h) as it pertains to this category of deficiency, justifying appellate intervention. [32] First, the application judge appears to have read para. 5(h) as though it referred to a specific work order that addressed the dining room fire separation concern. However, the work order specifically referenced in the last sentence of para. 5(h) refers to the ventilation and fire suppression system, not to the dining room separation issue. The application judge did not identify any other basis upon which remedying this deficiency would be the appellant’s responsibility under the APS. Second, the application judge appears to have read the paragraph as saying that the appellant was aware of the work order referred to in its last sentence, but not to say that the respondent was aware of the order, which is what the last sentence expressly acknowledges. [33] The interpretive question raised by the paragraph is who bears responsibility for this disclosed and acknowledged work order. The application judge did not address that question. [34] Paragraph 5(h) begins by stating the appellant has not received notice of work orders, except those disclosed to the respondent. It then refers to the appellant’s obligation to remedy “such items”. And it contains the respondent’s express acknowledgment that it has been advised of the work order mentioned in the last sentence. To read the paragraph as the respondent suggests, that the appellant’s obligation to remedy “such items” refers to items required under any work order – whether undisclosed or disclosed and acknowledged in the paragraph itself – does not accord with the interpretive principle that all the words of the agreement must be given meaning. This reading would give no effect to the respondent’s acknowledgement of its awareness of the specific work order. In our view, the appellant’s obligation to remedy under para. 5(h) does not extend to the work order that the respondent acknowledged had been disclosed to it. The application judge erred in so concluding. [35] The final category of deficiency relates to work to be done on the septic system under a Director’s Order made by the Ministry of the Environment, Conservation and Parks on September 23, 2019. That Order virtually froze all sewage works at the hotel’s site and would have forced its closure until the system was brought into compliance with s. 53 of the Ontario Water Resources Act , R.S.O. 1990, c. O.40. The Director’s Order also required that the appellant register a Certificate of Requirement on title to alert any potential purchaser to the non-compliance issues. Despite receiving the Director’s Order in September 2019, the appellant did not register the Certificate of Requirement until February 25, 2020, after the parties had executed the APS, and never provided a copy of it to the respondent. [36] The application judge found that, on these facts, para. 5(h) applied to make this deficiency the appellant’s responsibility. We see no error in that conclusion. Conclusion [37] We allow the appeal in part, and vary the decision of the application judge to delete the requirement that the appellant is responsible for remedying deficiencies in the dining room fire separation and in the kitchen exhaust and fire suppression system under the work order acknowledged by the respondent in para. 5(h) of the APS, as noted above. The appeal is otherwise dismissed. Due to the limited nature of the variation of the application judge’s decision, we would not change the holdback requirement he imposed since only the actual repairs for which the appellant is responsible will be charged against it. [38] The respondent requested costs of the appeal if completely successful in the sum of $11,593. The respondent enjoyed the greater measure of, but not complete, success on the appeal. Costs of the appeal shall be to the respondent in the sum of $7,500, inclusive of disbursements and applicable taxes. “Janet Simmons J.A.” “Harvison Young J.A.” “B. Zarnett J.A.” [1] The buyer in the offers was “Jeff Day & Core Lee or Assignee”. On October 15, 2020, the APS was assigned to the respondent, and notice of the assignment was subsequently given to the appellant. For ease of reference, we refer to the respondent throughout, as each offer and the executed APS provided that upon assignment, “the Assignee shall be deemed to be the party hereinbefore originally named as the Buyer”. [2] This paragraph comprises typed text and handwritten additions. The paragraph has been reproduced above to reflect the way both parties interpret the handwriting.

Monday 24th November 2014 SIR STEPHEN SILBER: Kamil Kosowski appeals against an order of Senior District Judge Riddle made on 22nd September 2014 at the Westminster Magistrates' Court by which he ordered that the appellant be extradited to Poland. It had been sought pursuant to a conviction European Arrest Warrant issued by the Regional Court in Kielce, Poland, on 30th April 2014, certified by the National Crime Agency on 16th June 2014 and which seeks enforcement of the order of the Regional Judge in Kielce on 19th June in ordering execution of a sentence of one year ten months and ten days' imprisonment imposed on 14th April 2011. The extradition was contested on the basis of its alleged incompatibility with Article 8. The appellant adopted his proof of evidence and was cross-examined. Evidence from his partner was admitted, and the District Judge found that the appellant was aged 19 at the time of the offence; that he was one of two men who were jointly responsible for a robbery in which the victim was beaten and had his phone and watch stolen. The appellant pleaded guilty in April 2011 and a sentence of two years' imprisonment, suspended for five years was imposed. During the period of the suspension, the appellant committed a further offence. The result was that the sentence of two years' imprisonment was activated. The appellant has a 2 year old daughter and a partner. Prior to his remand in custody he was the sole provider. He was otherwise of good character and had been in employment since his arrival in the United Kingdom. The principles of law are not in dispute. They were first considered by the Supreme Court in Norris v Government of the United States of America (No 2) [2010] UKSC 9, and were revisited by the same court in HH v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, [2013] 1 AC 338. In that case the Supreme Court had been asked to consider the extent to which the approach in Norris should be modified, where the interests of children were involved. The basic principles are set out in paragraphs 8, 30, 82 and 83. The case for the appellant is that the District Judge failed to take account of the circumstances of the appellant's private and family in England which had subsisted for three years and which showed a record of employment and good character. It was suggested that this was a case where the appellant's partner and young child would suffer as a result of his extradition. To my mind, this is a case in which it is necessary to carrying out the balancing exercise. The appellant committed a serious offence in which the victim was beaten and knocked to the ground. Second, the appellant was given the benefit of a suspended sentence, which was activated only after he committed a further offence. Third, the appellant's fugitive status was confirmed by the fact that he was hiding in the loft when an attempt was made to arrest him. An additional factor is that although the appellant has been in custody since 9th July (four and a half months), his partner and the child have been able to cope without him. They have family both here and in Poland. In my view, the Senior District Judge's assessment of the evidence and his application of the law are unimpeachable. It would be wholly proportionate in this case to dismiss the appeal, so that the appellant will be extradited.

Lady Justice Arden : INTRODUCTION Shorthand expressions are often very useful to communicate ideas quickly. But they are also often ambiguous, and they are not always accurate. On these appeals, the principal question we have to consider is the effect of what are called "one-stop" notices, or warnings, pursuant to section 120 of the Nationality Immigration and Asylum Act 2002 ("the 2002 Act") on appeals in immigration cases. The appellants say that the effect of a one-stop notice is that the appeal covers not only any ground before the Secretary of State when he made the decision under appeal but also any grounds raised in response to a "one-stop notice" even if they had not been the subject of any decision by the Secretary of State and does not relate to the decision under appeal. This is the wider interpretation of the relevant provisions. The Secretary of State contends that one-stop notices have a far narrower effect on appeals. His case is that the only grounds that can be put in issue on appeal are grounds placed before the Secretary of State when he made his decision or grounds raised in answer to a "one-stop notice" which relate to that decision. This is the narrower interpretation of the relevant provisions. The Asylum and Immigration Tribunal ("the AIT") in both cases before us agreed with the submissions of the Secretary of State. We are concerned with grounds other than human rights grounds or grounds for seeking asylum. It is accepted that they can be raised in any event. The expression "one-stop notice", or "one-stop warning", is not used in the 2002 Act but the latter expression can be found in the explanatory notes to the Act. The expression "one-stop appeals" does not appear in the 2002 Act or the explanatory notes but is in common currency: see, for example, Macdonald's Immigration Law and Practice (7 ed. 2008, para. 18.42), which states among other things that the basic idea of one-stop appeals is that "all the grounds relied on to remain in the UK should be considered in the course of a single appeal, so as to avoid delay and abuse." The phrase "one-stop appeals" has received judicial recognition: Laws LJ in JM (Liberia) [2006] EWCA Civ 1402 at [23] observed that: "It is clear that [the 2002 Act] leans in favour of what are called one-stop appeals". But this dictum does not determine how far the 2002 Act "leans in favour of" such appeals. So far as the principal question is concerned, the course I propose to take is (1) to examine the background in each of the cases to show the setting in which the principal issue arises, (2) to explain the similarities between the appeals, (3) to outline the relevant statutory provisions (at the same time explaining the procedure adopted following service of a one-stop notice), and then (4) to analyse the principal question and to state my conclusions on it. There is a separate subsidiary issue (5), with which I will deal at the end of my judgment. This subsidiary issue is directed to whether the Immigration Judge was entitled to reach certain findings of fact. Finally, I set out the order which in my judgment should be made on these appeals. The principal issue is one of statutory interpretation: thus the precise terms of the statutory provisions are central to resolving it. We have been shown other documents such as White Papers and instructions by the Immigration Directorate. I do not propose to refer to these as they are not admissible for the purposes of interpreting the relevant legislation in this case. What follows in this section of the judgment is an outline of the relevant statutory provisions. The relevant legislation is set out in the Appendix to this judgment for ease of reference. Save as stated, the legislation as set out in the Appendix is in the form in which it is now in force, including any amendments to date that have come into force. (2) BACKGROUND AS (Afghanistan) The appellant is a citizen of Afghanistan. She was born on 4 May 1974. On 15 December 2005 she was granted a student visa valid until 31 August 2007. She then re-entered the United Kingdom and was granted further leave to remain as a student until 1 January 2008. In December 2007 she was awarded a degree in international relations by Middlesex University. On 16 January 2008, that is, before the expiry of her leave to remain, she submitted an application to leave to remain as a person intending to establish herself in business under Immigration Rule 206E (set out, so far as relevant, in the appendix to this judgment). This application was refused on 19 February 2008, and the notice of decision included a one-stop notice. On 10 March 2008 she submitted an application to leave to remain under the International Graduate Scheme ("IGS"). On 10 March 2008 she lodged a notice of appeal with the AIT against the refusal of the Secretary of State dated 19 February 2008. On 20 March 2008 the Secretary of State sent a letter to the appellant confirming that her documents regarding her application under the IGS had been forwarded to the AIT to be considered as part of her existing appeal. On her appeal, Immigration Judge James concluded that the AIT had no jurisdiction to consider her second application and in addition dismissed her appeal under Rule 206E. Reconsideration was ordered. On 13 August 2009 Senior Immigration Judge Waumsley decided that the decision of Immigration Judge James should stand. On this appeal, there is a subsidiary issue as to whether the Immigration Judge was wrong to say that the appellant had not qualified under the Immigration Rules. NV (Sri Lanka) The appellant on this appeal was born in Sri Lanka on 19 March 1976. She has entered the United Kingdom with leave to enter several occasions since January 1997. Her leave was due to expire on 30 September 2007. On 25 September 2007, the appellant, acting without legal advice, submitted an application for leave to remain on the basis of 10 years' residence in United Kingdom. This application was refused by the Secretary of State on 16 October 2007. The Secretary of State also served a one-stop notice. On 1 November 2007, the appellant appealed against the Secretary of State's refusal on the grounds (among other grounds) that the decision was not in accordance with the law and the Immigration Rules. On 13 November 2007, the appellant served a statement of additional grounds. This raised the grounds specified above and sought a variation of her leave to remain on the basis that she was a student. Since entering United Kingdom, the appellant has undertaken several courses at different universities. On 29 November 2007, the AIT (Immigration Judge Knowles) decided that the AIT had no jurisdiction to hear her appeal on the student basis. Reconsideration was ordered. On 6 August 2008, Senior Immigration Judge Perkins promulgated a determination finding no material error of law in the determination of the Immigration Judge. (3) THE POINTS OF SIMILARITY BETWEEN THE TWO APPEALS In both cases, the appellants had limited leave to remain in the United Kingdom. Both applied for an extension and both were refused an extension by the Secretary of State. The Secretary of State refused the application of both appellants. They then had a right of appeal against his decision under s 82 of the 2002 Act (set out in the appendix to this judgment). The Secretary of State also served both appellants with one-stop notices. Both appellants, having been refused leave to remain in the United Kingdom and served by the Secretary of State with a one-stop notice, appealed against the decisions made on their application for leave to remain, and in addition put forward grounds in response to the one-stop notice served on them which were not related to the grounds on which they had been refused leave to remain. In both cases, the AIT held that they were not required to determine the new grounds put forward in response to a one-stop notice. (1) STATUTORY PROVISIONS The relevant statutory provisions are s 3C of the Immigration Act 1971 ("the 1971 Act") and various sections of the 2002 Act dealing with appeals and one-stop notices. The former deals with applications to vary leave to enter or remain. Appeals from decisions on such applications are governed by 2002 Act and thus it is appropriate to proceed on the basis, until the contrary appears, that Parliament intended those provisions to be coherent and to work as a harmonious whole. s 3C of the 1971Act This section was recently considered the decision of this court in JH (Zimbabwe) [2009] EWCA Civ 78. The effect of s 3C is that the person with limited leave to remain can make an application for variation of his leave before his leave expires. If he does so, his leave will be extended until that application is determined. However, he can make no further application to vary his leave to enter or remain until that happens: he may only apply to vary the application that he has already made (s 3C(4)). Richards LJ, with whom Laws and Wall LJJ agreed, held in JH (Zimbabwe) that this was true interpretation of s 3C and that its purpose was to prevent abuse of the system by the making of successive applications "leading to a successive extension of the original leave to remain." ([35]). Relevant provisions of the 2002 Act Against the backdrop of s 3C of the 1971 Act, the 2002 Act deals with immigration procedure and the procedure for appeal. The relevant provisions may be summarised as follows: i) S 120 on "one-stop" notices falls within Part 6 of the 2002 Act dealing with immigration procedure. It enables the Secretary of State to issue a notice with a "one-stop warning" on the persons mentioned in s 120(1), including a person in respect of whom a relevant decision has been taken. That person is required to state all his reasons for wishing to enter or remain in the United Kingdom. S 120 does not itself contain any requirement to give any warning about failure to comply with the notice. In practice a warning about the effect of s 96 is given. Nor does s 120 set out the sanction of a failure to comply with a notice under s 120. The consequences of non-compliance can, however, be found in s 96 (see (vii) below). ii) The sections other than s 120 which are relevant, namely s 84, 85, 86 and 96 all appear in Part 5 of the 2002 Act, dealing with immigration and asylum appeals. iii) S 82 lists the various immigration decisions against which there is a right of appeal. Appeals under s 82 of the 2002 Act are subject to ss 84 and 85 of that Act. S 84 limits the grounds on which an appeal may be brought. For the purposes of these appeals, the critical ground is that the decision was not in accordance with the Immigration Rules. Those rules set out the conditions for a successful application for leave to remain under the IGS (under which the appellant in AS applied) and the student scheme (under which the appellant in NV applied). The relevant question is then whether the tribunal had to have regard to those applications. That question is governed by s 85 of the 2002 Act. iv) The structure of s 85 is important. It is the pivotal section that we have to examine. It is this section, which deals with matters to be considered, and thus sets the framework within which appeals must take place. The very first provision of s 85 provides that all appealable decisions are brought under the umbrella of a single appeal (s 85(1)). S 85(2) deals with statements made in response to a one-stop notice. It is a matter of some significance in relation to the arguments on this appeal that s 85(2) states the the AIT's obligation is to consider any matter raised in response to a one-stop notice which constitutes a ground of appeal "against the decision appealed against". An appeal in which grounds raised for the first time in response to a s 120 notice fall be decided is a "one-stop appeal". v) S 85(4) is facultative. It enables the AIT to consider evidence about any matter that it thinks relevant "to the substance of the decision, including evidence which concerns a matter arising after the date of the decision". vi) S 86 then deals with the matters which the Tribunal must determine. Under s 86(2)(b) it must determine any matter which it is obliged to consider under s 85. That provision emphasises that the critical question on this appeal is the meaning of s 85. vii) S 96 then deals with certification and restrictions on appeals. This does not provide that there can be no other appeals once there has been a "one-stop appeal". It applies where there is a new decision against which there is a new appeal. What s96 provides is that if a one-stop notice has been served and the new decision relates to a claim which should have been raised in response to that notice and the Secretary of State does not consider that there is any satisfactory reason for not having raised the matter in response to that notice, the Secretary of State may give a certification under this section. This will apply to prevent that further ground being raised on the new appeal. It is of some assistance to understanding the issue in this case to know how responses to one-stop notices are dealt with in practice. I set out the position in the next paragraph of this judgment. Procedure following service of a one-stop notice A person served with a one-stop notice who wishes to adduce additional grounds ordinarily serves a statement of additional grounds. MacDonald's Immigration law and Practice (para. 18.43) states: "There is no statutory time limit for the making of a statement [of additional grounds] nor are there any statutory provisions as to the form in which such a statement is to be made. The IDI [Immigration Directorate Instruction] says, however, that when a person is served with a one-stop notice, the caseworker should tell him or her when a decision is likely to be made and that the obligation to state additional grounds in response to the warning is a continuing one. There is no statutory requirement for the Secretary of State or immigration officer to respond to a statement of additional grounds, but there is a statutory obligation on the tribunal hearing an appeal to consider any further grounds relied on in such a statement. The additional grounds could be further grounds for leave to enter or remain under the Immigration Rules, under a relevant Home Office policy, asylum or human rights or discrimination grounds." (4) ANALYSIS AND CONCLUSIONS ON THE PRINCIPAL ISSUE The arguments on the principal issue fall to be considered into three groups: i) textual arguments based on the wording of the relevant provisions (meaning by the word "textual" arguments which remain within the four corners of the 2002 Act); ii) contextual arguments based on the function of the AIT on an appeal against a decision of the type described in s 82(2); and iii) arguments addressing the coherence of s 85 of the 2002 Act and s 3C of the 1971 Act. Textual arguments I have already noted that the expression " one-stop appeal" is not to be found in the Act or the explanatory notes. It seems to be a phrase that has sprung into use primarily to describe an appeal in which a response to a one-stop notice is relevant. As I have already also noted, the consequences of failing to comply with a one-stop notice are not set out in the section which provides for such notices: namely, s120. The effect of such notices on an appeal has to be found by looking at s 85. The essence of the case for the wider interpretation is this: it is said that the clear purpose of these various provisions is to bring as many decisions as possible within a single appeal, and to require all relevant matters to be determined within that single procedure. The scheme of the relevant provisions is more fully achieved if the wider interpretation contended for by the appellants is correct. If the narrower interpretation contended for by the Secretary of State is correct, the one-stop procedure would not include claims arising out of subsequent events, for example, a marriage contracted subsequent to the decision of the Secretary of State. Additional claims could not be put in issue in the appeal even if the appellant had made a mistake in identifying the proper basis of his application for leave to enter or remain To test which interpretation is correct, it is necessary to descend to the detail of the relevant provisions. On this, counsel have focused on the concluding words of s 85(2) ("against the decision appealed against"), the words "ground of appeal" also in s 85(2), the expression " the substance of the decision" in s 85(4) and the terms of s 96(2). What is the function and meaning of the concluding words of s 85(2) ("against the decision appealed against")? By way of introduction to this point, as I see it, s 85 draws a distinction between decisions and material produced in response to a one-stop notice. So far as decisions are concerned, s 85(1) makes it clear that any decision in respect of which an appellant has a right of appeal is treated as included in any subsisting appeal. That is a provision, and as far as I can see, the only unambiguous provision in the 2002 Act in terms of a comprehensive "one-stop" procedure. It clearly provides for all decisions to be appealed at the same time. This is not as narrow a provision as it might at first sight appear because, when an appellant puts forward, in response to one-stop notice, a fresh ground for leave to enter or remain, the Secretary of State can investigate the matter and make a decision on it. He does not have to wait until the appeal from his earlier decision is concluded. The provisions of s 85(2), which deal with material produced in response to a one-stop notice, are in stark contrast to s 85(1). The AIT does not have to consider every matter raised in response to a one-stop notice. It is only obliged to consider any such matter if two requirements are fulfilled: namely, (i) that the ground of appeal is of a kind listed in s 84(1), and (ii) that the ground of appeal is against the decision appealed against. The argument of the appellants, put forward in the case of NV by Mr Scannell and in the case of AS by Mr Malik, is that the second requirement is satisfied in the case of a decision to refuse leave to enter or remain by showing that there is some other basis under the Immigration Rules on which leave to enter or remain could have been granted. In other words, a wholly new ground for leave to enter or remain can constitute a basis on which it can be said that the decision already made was not in accordance with Immigration Rules. In support of this point, it can be seen that the first requirement of s 85(2) is cast in terms directed to a generic analysis of the ground of appeal. So the question is whether the ground of appeal at that level of abstraction falls within one of the subparagraphs of s 84(1). The satisfaction of this requirement does not turn on any communality of the facts in issue in the matter raised in response to the one-stop notice and the decision under review. On the same reasoning, it would be odd if the second requirement of s 85(2) fell to be determined at a wholly different level of abstraction. These are formidable arguments. However, simply looking at the matter on a textual basis, I do not consider that that approach to the concluding words of s 85(2) is correct. If that is what Parliament had intended, it would have said "against a decision of a kind listed in s 82(2)" or omitted the second requirement altogether. The insertion into s 85(2) of the words "against the decision appealed against" must be assumed to have been the result of a deliberate decision by Parliament and the only purpose of such insertion can have been to limit the circumstances in which a matter raised in response to a one-stop notice would be required to be considered by the AIT. As against this, the appellants draw attention to the reference to "substance of the decision" in s 85 (4). They say this is an indication that references to "the decision" in s 85(2) do not include the detailed grounds on which the decision was made. They say that a decision to refuse leave to remain on (say) the student basis is simply a decision to refuse leave to remain and that accordingly it can be shown that such decision is not in accordance with the Immigration Rules if in fact there is a ground on which the contrary decision could have been made. Mr Scannell thus submits that Senior Immigration Judge Waumsley had wrongly relied on SZ (Applicable immigration rules) Bangladesh [2007] UKAIT 00037 to reach the contrary conclusion. Mr Scannell submits that SZ is distinguishable because it was a decision under Immigration Rule 310 (adoption). In that case, the AIT observed that: "11. It is important to bear in mind that the Tribunal is not the primary decision-maker in immigration cases. It hears appeals against decisions taken (see, EA (s 85(4) explained) Nigeria [2007] UKAIT 00013 at [7] clarifying the relevance in appeals of post-decision facts and the application of s 85(4) of the 2002 Act). Consequently, the focus of enquiry by the Tribunal must always be the basis upon which the application was made. It is that application, which leads the decision which is the subject of any appeal before the Tribunal. If an appellant seeks to assert a different basis from that put forward in his application upon which he should have been granted entry clearance or leave under the immigration rules, that is properly a matter for a fresh application, or possibly a variation of the existing application. It is not a matter for the tribunal to consider on an appeal against a decision made on the existing application." (emphasis added) Later in its decision, the AIT accepted that there would occasionally be situations where the basis of the application, or the scope of the decision, or the grounds themselves, would require it to go beyond the self-evidently applicable immigration rule in issue in that particular case, for example, where was an obvious link or connection with another rule. But that qualification is too narrowly drawn to have any bearing on the issue of interpretation on these appeals. I do not accept Mr Scannell's argument on this point. In my judgment, it is not correct to say that the decision was not in accordance with the Immigration Rules if the new ground raises a fresh basis for leave to enter or remain and does not undermine the correctness of the decision appealed against. A ground of appeal is not a ground of appeal "against the decision appealed against" if it would not, if accepted, lead to its reversal, as opposed to its being superseded by a new decision on the new evidence that leave to enter or remain should be granted. SZ affords some support for this conclusion in so far as it is dealing with the general position about appeals to the AIT. My conclusion on this point is also supported by the holding of the AIT in EA (s 85(4) explained) Nigeria [2007] UKAIT 00013 (a decision already referred to in the citation from SZ, above) where the AIT held: " …it is thus not open to an appellant to argue simply that, on the date of the hearing, he meets the requirements of the Immigration Rules. He can succeed only if he shows that the decision that was made was one that was not in accordance with the Immigration Rules… The correct interpretation of s 85(4) is perhaps best indicated by saying that the appellant cannot succeed by showing that he would be granted leave if he made an application on the date of the hearing: he can succeed only by showing that he would be granted leave if he made, on the date of the hearing, the same application as that which resulted in the decision under appeal." ([7]) Moreover, s 85(4) supports the wider interpretation. That provision is limited to empowering the AIT to accept new evidence relevant "to the substance of the decision". In its decision in EA, the AIT held that these words meant that the new evidence had to be relevant to the decision actually made. It added that: "…a decision on a matter under the Immigration Rules is a decision on the detailed eligibility of an individual by reference to the particular requirements of the Rule in question in the context of an application that that person has made." ([6]) In my judgment, this interpretation of s 85(4) is plainly correct. I accept that, if the effect of s 85(2) is that the AIT must consider all matters raised in response to a one-stop notice, without limitation, power to direct the service of evidence and skeleton arguments on the new grounds would be found in the case management powers of the AIT under rule 43 of the Asylum and Immigration Tribunal (Procedure) Rules 2005. But that does not diminish the point that it is odd, if that is the case, that the power to receive further evidence contained in s 85(4) does not extend to new evidence on all matters which might be brought forward by a one-stop notice. Mr Malik points out that there was no one-stop notice in EA but s 85(4) applies whether or not there is a one-stop notice. On the basis that this decision is correct in its interpretation of that provision, the wider interpretation faces the substantial difficulty that the express power to admit further evidence does not apply to grounds for leave to enter or remain on some new basis adduced in response to a one-stop notice. The appellants will not be prejudiced if s 85(2) is limited to the grounds which relate to the grounds on which the Secretary State has refused permission. The Secretary of State accepts that the new claims, which do not relate to decisions of the Secretary of State would fall outside s 96(2). That provision requires, however, closer examination. I have not overlooked the fact that the appellants' argument is on the face of it supported by the terms of s 96(2). Logically, s 96(2) should mirror s 85(2): In other words, if the AIT is not obliged to deal with a matter had it been raised in response to a one-stop notice, it ought to be excluded altogether from s 96(2). Yet that situation is not in terms excluded from the potential operation from s 96(2). The Secretary of State's submission has therefore to be that a Secretary of State could not reasonably form an opinion in that case that there was no satisfactory reason for the matter not having been raised earlier. However I accept that as a plausible approach because of the form of s 96(2). Parliament has not legislated by specifying a list of the conditions in which a s 96(2) certification can be made, but by conferring a discretion on the Secretary of State. While this is structured, this gives him considerable flexibility. In an area that is as complex in practice as immigration it is reasonable to suppose that it might have been felt that this was a more sensible way to proceed. For the reasons given above, I conclude the textual indications support the narrower interpretation. I will now look at the contextual position. Contextual arguments based on the function of the AIT on an appeal against a decision of the type described in s 82(2) In their decisions in each of the cases before us, the AIT was particularly concerned with the effect on the appellate function of the AIT if all matters raised by a one-stop notice had to be considered on an appeal. As is already apparent from the citation above from SZ, the AIT is not, in general, at least, a primary decision-maker. If new matters are raised in response to one-stop notice, the Secretary of State might by the date of the hearing of the appeal have made a decision on some of those matters himself. However, he may not be in a position to make such a decision in the time between the response to one-stop notice (for which there is no stipulated time) and an appeal. This may be due to shortage of time or other reasons such as the difficulty of making enquiries. As a result, I would observe that the cases in which the AIT has on the wider interpretation to act as a primary decision-maker could be quite random, and their selection could be unsystematic. In addition, given the well-known pressure of immigration applications to the Secretary of State, it seems reasonable to conclude that there would be a substantial number of cases in which new grounds would be raised but which would not have been the subject of a decision by him and by the time of the hearing of the appeal to the AIT. On the wider interpretation they have to be decided by the AIT as a primary decision-maker. This would not be consistent with the usual role of the AIT, which is one of hearing appeals against decisions actually made. Mr Jason Beer, for the Secretary of State, submits that the AIT would not necessarily have all the documents it needed to be a primary decision-maker, and that the AIT might also be called on to exercise the discretions conferred on the Secretary of State. He submits that it would be inappropriate for the AIT to become a primary decision-maker, or to exercise discretions conferred on the Secretary of State. Moreover, he points out that the applicant would lose one tier of appeal. There are a number of possible answers to these objections. First, if a new matter is raised in response to a one-stop notice, the Secretary of State can, if appropriate, pre-empt any decision by the AIT and himself make a fresh decision. If this happens, the Secretary of State will retain his role as primary decision-maker. Secondly, even on the Secretary of State's case, the AIT becomes to some extent a primary decision-maker because it is obliged under s 85(2) to deal with at least some new grounds raised in response to a one-stop notice. Thirdly, the Secretary of State has issued statements of his policy in a number of areas and so the scope for the exercise of discretion has been narrowed. Fourthly, in answer to the point that the applicant loses one tier of appeal, it may be said that it is often open to Parliament to restrict the tiers of appeal available to an applicant. Fifthly, although it was suggested in argument that the wider interpretation would mean that the AIT would have to conduct a wide-ranging enquiry to elicit whether any other ground for leave to enter or remain might be available to the applicant, there would be no need on the authorities for the AIT to consider grounds that had not been raised (see Uddin v IAT [1991] Imm AR 134). There is one qualification to be made to this, namely "Robinson obvious" grounds, including human rights grounds (see R v Secretary of State for the Home Department, ex parte Robinson [1998] QB 929). In that case this court held that although in seeking to appeal an immigration decision a claimant was required to state the grounds of his appeal, the appellate authorities were neither limited by the arguments actually advanced nor required to engage in a search for new grounds. Since the appellate authorities were obliged to ensure that the claimant's removal would not contravene the United Kingdom's obligations under the Refugee Convention, where there was a readily discernible and obvious point in his favour, which had not been taken on his behalf, they, and the High Court exercising its supervisory jurisdiction by way of judicial review, should nevertheless apply it. An "obvious" point is one that has a strong prospect of success (see per Lord Woolf MR at 946). In the case of NV, Senior Immigration Judge Perkins considered that it was significant that s 120(2)(c) required the recipient of a one-stop notice to state any ground on which he should not be removed. The Senior Immigration Judge deduced from this that the primary function of a one-stop notice is to require an appellant to raise human rights grounds when they appeal an immigration decision. Mr Beer adopts this line of argument and submits that the narrower interpretation fulfils the intention of Parliament which, on his submission, is to give effect to human rights and asylum grounds only, in accordance with the United Kingdom's treaty obligations. In my judgment, these answers to the point that the AIT would on the wider interpretation become a primary decision-maker merely qualify the result: they do not dispose of the point completely. The AIT on the wider interpretation must be taken to be a primary decision-maker in a greater number of cases. In my judgment, having regard to the normal role of the AIT, it is unlikely that Parliament intended that the AIT would become a primary decision-maker on the substantial scale that the wider interpretation necessitates for all the reasons that the Secretary of State gives. That is not its normal role and there are obvious difficulties in its assuming this wider role. The more natural primary decision-maker would be the Secretary of State. For the reasons given in this part of the judgment, I consider that the fact the wider interpretation would result in the AIT becoming a primary decision-maker in a significant number of appeals is in reality a further indication against the wider interpretation. Arguments addressing the coherence of s 85 of the 2002 Act and s 3C of the 1971 Act. Mr Beer puts these arguments at the forefront of his argument. His contention is that it would be unlikely to be the true construction of s 85(2) that the AIT should consider all matters raised a one-stop notice, because this would enable an appellant by the back door to raise new grounds when by virtue of s 3C (see [6] above) he would be out of time if he tried to make a new application for leave to enter or remain based on it. In my judgment, this is a compelling argument. What reason would there be for Parliament, in a case to which s 3C applies, to require the AIT to consider a new ground for leave to enter or remain when it had already legislated in s 3C that such an application could not be made? Mr Beer submits that by the time of the second application made by each appellant, s 3C(4) applied so that no such application lay. In effect, the raising of additional grounds in response to the one-stop notice constituted an abuse of s 3C because it amounted to the making of an application for variation after the time for doing so had expired. In their response to this point, Mr Scannell and Mr Malik rely on the provisions of the 2002 Act. However, the critical provisions are ambiguous. In my judgment, this court should interpret them consistently with the clear policy in s 3C so as to produce a coherent whole of all these related provisions. The policy of s 3C has been considered and declared by this court to be to prevent successive extensions of applications for leave to enter or remain. Successive applications are likely to prolong the period in which a person's status is uncertain and undetermined. The wider interpretation is simply inconsistent with this policy. For these reasons, I consider that the inconsistency between the wider interpretation and s 3C of the 1971 Act is a strong reason for rejecting the wider interpretation. Every appellant for leave to remain who is seeking to extend their leave will have to make an application for variation of their leave to remain, and thus s 3C will be applicable to appellants in a substantial proportion of appeals to which s 85 applies. Conclusion on the principal issue It follows that I consider that the grounds for accepting the narrower interpretation are stronger than those for accepting the wider interpretation in relation to the textual indications, the contextual indications and the coherence of the statutory scheme when read with s 3C of the 1971 Act. In my judgment, the narrower interpretation represents a true interpretation of the obligation imposed on the AIT by virtue of s 85(2) of the 2002 Act. The court has no discretion to modify the effects of s 3C(4), and so the narrower interpretation may have harsh results where an appellant makes an application for a variation of leave to enter or remain on a mistaken basis. In my judgment, that is a result of the true interpretation of the statutory scheme. Again there is no express provision for the situation where there is a change in circumstances because of an event subsequently occurring and resulting in a wholly different ground for leave to enter or remain. But of course the Secretary of State would be able to make a fresh decision if he thought fit. S 96(2) would be unlikely to apply in this situation. In the case of AS, the second application was not one which the applicant could make: see s 3C(4) of the 1971 Act and the decision of this court in JH (Zimbabwe). The Secretary of State treated the matters that AS raised in her new application as if they had been made in a statement of additional grounds in response to a one-stop notice. The AIT then considered whether it was obliged to deal with the matters. In my judgment, this was the correct course of action. Contrary to the appellants' submissions on the facts, the AIT was not in my judgment wrong to reject AS's further submission that the new grounds were sufficiently connected with those on which the Secretary of State had determined the application to fall within s 85(2). The ground raised in response to the one-stop notices was entirely separate from the grounds for leave to remain previously relied on. The application under the IGS was obviously different in substance from an application by AS to establish herself in business. Therefore, the AIT had no obligation to consider it. Similarly, in the case of NV, her additional grounds seeking leave to remain on the student basis was an entirely different basis from her previous application for leave to remain on the basis of ten years' residence in United Kingdom. (5) SUBSIDIARY GROUND OF APPEAL RAISED BY AS Essentially, this issue asks whether the Immigration Judge was entitled in law to reach certain findings of fact. AS relied on Immigration Rule 206E. This sets out the requirements for an extension of stay as a person intending to establish himself in business in the United Kingdom. So far as relevant they require that the applicant: "(ii) has obtained a degree qualification…; and (iv) meets each of the requirements in paragraph 201(i) to (x)." Under rule 201, the requirements to be met by a person seeking leave to enter the United Kingdom to establish themselves in business include requirements: "(ii) that he has not less than £200,000 of his own money under his control and disposable in the United Kingdom which is held in his own name…. (v) that his level of financial investment will be proportional to his interest in the business." Certain matters decided by the Immigration Judge were successfully appealed or are no longer in issue, but those matters did not lead to the decision being set aside on reconsideration. As a result, a challenge to the decision is made based on what is submitted to be the consequence of her success on appeal. The Immigration Judge held that AS was outside Immigration Rule 206E because she had not set up in business by the date of the decision. The Secretary of State conceded before the Senior Immigration Judge that the Immigration Judge was in error in this regard. Likewise, the Senior Immigration Judge also found that the Immigration Judge had wrong to hold that AS had not obtained a degree. The Senior Immigration Judge was satisfied that she had done so. In those circumstances, the finding of the Immigration Judge on credibility had to be set aside. The Immigration Judge went on in her decision to make detailed adverse findings about the business plan and intentions of AS that were not upset on reconsideration. Those findings are contained in a lengthy passage which I must set out in full. The Immigration Judge held at paragraphs 16 to 18 of her decision: "16. Even if this were not the case, the representative for the Appellant confirmed that there were no company books or company premises or certificate of incorporation in existence as no company had yet been set up by the Appellant. This is an embryonic business arrangement at the most early stages of start up. However, there are a number of apparent contradictions and concerns that are raised, which the Appellant does not satisfactorily answer in the submission of her written evidence and testimony. The copy agreements submitted are apparently signed by both the Appellant and her husband, and the funds apparently provided for this enterprise have been solely provided by her husband. There is no company in existence either in the UK or abroad in regard to this proposed business, there is no partnership deed executed by the Appellant and her husband, she is not a director in a company, and she is not a sole trader. It is not known on what formal basis she holds her husband's assets, although she states in her witness statement she will be a sole trader who holds 100% of the assets, which contradicts the agreements submitted which are signed by her husband or herself. Clause 26.1 of the franchise agreement states that the Appellant is not a partner or agent of the franchisor and nor are they joint venturers. So the Appellant is also not in the position of joining an existing business. This also raises concerns about the Appellant's right to control and dispose of the funds held in her account, and whether this is a disguised employment or whether the Appellant can meet her liabilities, due to the lack of information submitted. 17. The business plan and financial projections for the proposed business appear not to relate to or be informed by the business accounts of work2go. The work2go accounts state that Mr Leung had a turnover of £305,000 for that financial year. However the financial projections of the Appellant refer to an income of £37,000-£40,000 per month, such that this would be in significant excess of the franchisor's declared income and profit. In her testimony this discrepancy is explained away by stating that work2go accounts do not include all their businesses. This is not accepted. The accounts refer to the franchising business of the owner, Mr Leung, and refers to a profit for the financial year ending April 2007 as £279 after tax of £67. Bearing in mind the significant figure to be paid by all franchisees to the franchisor, it is questionable whether there is currently any franchisee operating in anything other than nominal profit based on Mr Leung's accounts. The Appellant's business plan refers to work2go stating that there are 3 stores in Manchester, although the oral evidence of the Appellant believes there is also a restaurant, despite the documentary evidence that this is a takeaway business. Furthermore in her testimony the Appellant confirmed that the figures in wok2go's accounts did not represent 1,000s of pounds. Therefore it is of serious concern that work2go's accounts refer to an extremely modest profit of 3 figures. It is of even more concern that the Appellant despite her apparent qualifications both her and abroad, does not know the difference between net and gross profit, yet is proposing to set up a business here. Once Mr Leung's modest accounts are contrasted with the financial forecast for the proposed business in the Appellant's business plan, referring to a revenue of £37,000 per month leading to a total revenue of £450,000 and a net income of £270,000, this lends serious weight to the finding that the figures submitted to the court cannot be relied on, on the balance of probabilities. The viability of this proposed business is seriously doubted in the face of such information. 18. The Appellant's business plan states that a start up figure of £200,000 is required for this embryonic proposed business. However she only has just over £1000 in her current account as at December 2007 and although holding £201,000 in her savings account for January 2008, this appears not to provide her sufficient money for accommodation and maintenance for herself and her son during the start up period. It is highly probable that this sum is insufficient for the Appellant to start up this business without resorting to employment or public funds. Furthermore, the source of the larger sum is not known. The Appellant states this has been provided by her husband but that she has lost the relevant documents to show this. The Appellant states she has no income from other sources other than her husband. However she has failed to show the source of this money to show that she has control over it and can apply it in the proposed business. Again this raises serious and doubts about the share profit arrangements entered into and whether the Appellant has control over the disposal of the funds in her accounts, such that the appeal is fatally undermined." (emphasis added) Mr Malik submits that the adverse finding on credibility also infected the adverse findings that the Immigration Judge made in the passage cited in the preceding paragraph about the lack of clarity in AS's business plan and intentions, the various discrepancies referred to by the Immigration Judge and other unexplained matters. In my judgment, the various findings were not based on the credibility but on various matters relating to the documents and other evidence produced by AS. Her reasons for rejecting AS's case included what might be called structural reasons related to the way the business was set up and financial reasons relating to the funding for the business and AS's participation in it. There is only one reference to AS's evidence and I have italicised that reference. It can be seen from that italicised passage that the Immigration Judge in fact dealt with this evidence by holding that AS had not produced evidence to support her contention that she had control over certain sources of income and could invest her income in the business. The contention made was one which ought to have been supported by documentation and thus the Immigration Judge's rejection of her evidence was not the result of the adverse finding on credibility but the result of her failure to produce documentation which it would have been reasonable for her to produce. Those reasons, I reject AS's appeal on this ground. (6) DISPOSITION For the reasons given above, I would dismiss AS's appeal. As to NV, we were informed by the parties after these judgments were circulated in draft that NV had left the United Kingdom on 14 or 15 September 2009. Her appeal must therefore be taken to have been abandoned as from that date: s 104(4) of the 2002 Act. Had that not been the case, I would have dismissed her appeal also for the reasons given above in relation to the principal issue. The shorthand expression "one-stop appeals" does not mean that every ground raised by an appellant for leave to enter or remain in the United Kingdom in response to a one-stop notice served pursuant to s 120 of the 2002 Act must be considered by the AIT. Unless there has been a further decision by the Secretary of State, or human rights grounds or grounds for granting asylum are raised, only those grounds raised in response to a one-stop notice that relate to the decision under appeal need to be considered by the AIT. Since writing this judgment I have had the privilege of reading the judgments of Lord Justice Moore-Bick and Lord Justice Sullivan and note that they have reached a different conclusion from me on the true interpretation of s 85(2). For the reasons given above, I respectfully disagree with their conclusion. It may be helpful if I note the principal grounds of my disagreement with what they say in their judgments: a. In my judgment, the words "against the decision appealed against" at the end of section 85 (2) cannot be read as meaning "against an immigration decision of a kind described in 82(2)" (cf per Lord Justice Moore-Bick at [81] and per Lord Justice Sullivan at [113]). Those are not the words that Parliament has used. b. My interpretation achieves the statutory purpose if, as I infer from the statutory language used, what Parliament wished to happen was that there should be a mechanism for removing the incentive in the system for successive disclosure of grounds for leave to enter or remain, with consequent delays. c. In my judgment, it is not correct to hold that Parliament intended that the Secretary of State should have to exercise a choice between relying on s 3C of the 1971 and s 120 of 2002 Act, and I am not persuaded that it matters that not all appellants will be subject to s 3C (cf per Lord Justice Moore-Bick at [86]). d. So far as coherence of the system is concerned, in my judgment, a statutory scheme that preserves the Secretary of State's role as primary decision maker in all cases apart from asylum and human rights cases is a coherent one (cf per Lord Justice Sullivan at [99] et seq). e. As I see it, the function of s 120 is to give the Secretary of State a new and additional power to elicit further grounds for leave to enter or remain. While a court is bound to have sympathy for the unrepresented applicant who makes a mistake and inadvertently misses the time limit in s 3C, s 120 has not been inserted so as to give such an applicant a means of rectifying mistakes in his original application (cf per Lord Justice Sullivan at [106]). Accordingly, I adhere to my conclusion explained above. APPENDIX Immigration Act 1971 Continuation of leave pending variation decision [(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)     the application for variation is made before the leave expires, and (c)     the leave expires without the application for variation having been decided. (2)     The leave is extended by virtue of this section during any period when— (a)     the application for variation is neither decided 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), or (c)     an appeal under that section against that decision[, brought while the appellant is in the United Kingdom,] is pending (within the meaning of section 104 of that Act). (3)     Leave extended by virtue of this section shall lapse if the applicant leaves the United Kingdom. (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). Nationality Immigration and Asylum Act 2002 Right of appeal: general (1)     Where an immigration decision is made in respect of a person he may appeal [to the Tribunal]. (2)     In this Part "immigration decision" means— (a)     refusal of leave to enter the United Kingdom, (b)     refusal of entry clearance, (c)     refusal of a certificate of entitlement under section 10 of this Act, (d)     refusal to vary a person's leave to enter or remain in the United Kingdom if the result of the refusal is that the person has no leave to enter or remain, (e)     variation of a person's leave to enter or remain in the United Kingdom if when the variation takes effect the person has no leave to enter or remain, (f)     revocation under section 76 of this Act of indefinite leave to enter or remain in the United Kingdom, … Grounds of appeal (1)     An appeal under section 82(1) against an immigration decision must be brought on one or more of the following grounds— (a)     that the decision is not in accordance with immigration rules; (b)     that the decision is unlawful by virtue of section 19B of the Race Relations Act 1976 (c 74) [or Article 20A of the Race Relations (Northern Ireland) Order 1997] (discrimination by public authorities); … (c)     that the decision is unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Human Rights Convention) as being incompatible with the appellant's Convention rights; Matters to be considered (1)     An appeal under section 82(1) against a decision shall be treated by [the Tribunal] as including an appeal against any decision in respect of which the appellant has a right of appeal under section 82(1). (2)     If an appellant under section 82(1) makes a statement under section 120, [the Tribunal] shall consider any matter raised in the statement which constitutes a ground of appeal of a kind listed in section 84(1) against the decision appealed against. (3)     Subsection (2) applies to a statement made under section 120 whether the statement was made before or after the appeal was commenced. (4)     On an appeal under section 82(1), 83(2) or 83A(2) against a decision the Tribunal may consider evidence about any matter which it thinks relevant to the substance of the decision, including evidence which concerns a matter arising after the date of the decision… Determination of appeal (1)     This section applies on an appeal under section 82(1), 83 or 83A. (2)     The Tribunal must determine— (a)     any matter raised as a ground of appeal (whether or not by virtue of section 85(1)), and (b)     any matter which section 85 requires it to consider. (3)     The Tribunal must allow the appeal in so far as it]thinks that— (a)     a decision against which the appeal is brought or is treated as being brought was not in accordance with the law (including immigration rules), or (b)     a discretion exercised in making a decision against which the appeal is brought or is treated as being brought should have been exercised differently. (4)     For the purposes of subsection (3) a decision that a person should be removed from the United Kingdom under a provision shall not be regarded as unlawful if it could have been lawfully made by reference to removal under another provision. (5)     In so far as subsection (3) does not apply, the Tribunal shall dismiss the appeal. (6)     Refusal to depart from or to authorise departure from immigration rules is not the exercise of a discretion for the purposes of subsection (3)(b). Earlier right of appeal (1) … (2)     An appeal under section 82(1) against an immigration decision ("the new decision") in respect of a person may not be brought if the Secretary of State or an immigration officer certifies— (a)     that the person received a notice under section 120 by virtue of an application other than that to which the new decision relates or by virtue of a decision other than the new decision, (b)     that the new decision relates to an application or claim which relies on a matter that should have been, but has not been, raised in a statement made in response to that notice, and (c)     that, in the opinion of the Secretary of State or the immigration officer, there is no satisfactory reason for that matter not having been raised in a statement made in response to that notice.] Requirement to state additional grounds for application (1)     This section applies to a person if— (a)     he has made an application to enter or remain in the United Kingdom, or (b)     an immigration decision within the meaning of section 82 has been taken or may be taken in respect of him. (2)     The Secretary of State or an immigration officer may by notice in writing require the person to state— (a)     his reasons for wishing to enter or remain in the United Kingdom, (b)     any grounds on which he should be permitted to enter or remain in the United Kingdom, and (c)     any grounds on which he should not be removed from or required to leave the United Kingdom. (3)     A statement under subsection (2) need not repeat reasons or grounds set out in— (a)     the application mentioned in subsection (1)(a), or (b)     an application to which the immigration decision mentioned in subsection (1)(b) relates. Lord Justice Moore-Bick: The main question raised by these two appeals concerns the effect of sections 85 and 120 of the Nationality, Immigration and Asylum Act 2002 ("the Act"), sometimes referred to as the "one stop" appeal provisions. The statutory provisions Section 82(1) of the Act provides a person in respect of whom an immigration decision has been made with a right of appeal to the Asylum and Immigration Tribunal ("the Tribunal") against that decision. An immigration decision is defined in subsection (2) as including a wide range of decisions affecting a person's right to enter or remain in the United Kingdom. The grounds on which an appeal may be made are set out in section 84(1). They include "(a) that the decision is not in accordance with the immigration rules; and (e) that the decision is . . . not in accordance with the law." Section 85 of the Act deals with the matters to be considered by the Tribunal when hearing such an appeal. The material parts provide as follows: "(1) An appeal under section 82(1) against a decision shall be treated by the Tribunal as including an appeal against any decision in respect of which the appellant has a right of appeal under section 82(1). (2) If an appellant under section 82(1) makes a statement under section 120, the Tribunal shall consider any matter raised in the statement which constitutes a ground of appeal of a kind listed in section 84(1) against the decision appealed against." Section 120 gives the Secretary of State the power to require a person in respect of whom an immigration decision has been or may be taken to state any additional grounds on which he should be permitted to enter or remain in the United Kingdom. It provides as follows: "(1) This section applies to a person if— (a) he has made an application to enter or remain in the United Kingdom, or (b) an immigration decision within the meaning of section 82 has been taken or may be taken in respect of him. (2) The Secretary of State or an immigration officer may by notice in writing require the person to state— (a) his reasons for wishing to enter or remain in the United Kingdom, (b) any grounds on which he should be permitted to enter or remain in the United Kingdom, and (c) any grounds on which he should not be removed from or required to leave the United Kingdom. (3) A statement under subsection (2) need not repeat reasons or grounds set out in— (a) the application mentioned in subsection (1)(a), or (b) an application to which the immigration decision mentioned in subsection (1)(b) relates." Finally, it is necessary to refer briefly to section 96 of the Act which sets out the consequences of failing to respond to a notice given under the provisions of section 120. Subsection (2) provides as follows: "(2) An appeal under section 82(1) against an immigration decision ("the new decision") in respect of a person may not be brought if the Secretary of State or an immigration officer certifies– (a) that the person received a notice under section 120 by virtue of an application other than that to which the new decision relates or by virtue of a decision other than the new decision, (b) that the new decision relates to an application or claim which relies on a matter that should have been, but has not been, raised in a statement made in response to that notice, and (c) that, in the opinion of the Secretary of State or the immigration officer, there is no satisfactory reason for that matter not having been raised in a statement made in response to that notice." The appeal of NV The first appeal concerns NV, a young woman of Sri Lankan origin, who between January 1997 and October 2002 spent various periods of time in this country as a student pursuant to leave to enter granted from time to time for that purpose. She returned to this country on 27th September 2002 with leave to remain here until 31st August 2004. Subsequently pursuant to various applications her leave to remain was extended until 30th September 2007. On 25th September 2007 the appellant submitted an application for indefinite leave to remain on the grounds that she had been lawfully resident in this country for ten years. On 16th October 2007 the Secretary of State refused her application on the grounds that she was unable to show that she had at least ten years continuous lawful residence and served on her a notice of decision to remove her, together with a notice under section 120 of the Act which included the following: "You must now make a formal statement about any reasons why you think you should be allowed to stay in this country. This includes why you wish to stay here and any grounds why you should not be removed or required to leave. . . . You do not have to repeat any reasons you have already given us but if you do have any more reasons you must now disclose them. If you later apply to stay here for a reason which you could have given us now, you may not be able to appeal if the application is refused If after you have completed this form the reasons why you think you should be allowed to stay in this country change, or new reasons arise, you must tell us as soon as possible. Do not wait until your appeal has been heard. If you later apply to stay here for a reason which you could have raised earlier, you may not be able to appeal if the application is refused." On 1st November 2007 the appellant, then unrepresented, appealed against the Secretary of State's decision on the grounds that the decision was "not in accordance with the law and the Immigration Rules." On 13th November she produced a statement of additional grounds repeating the ground referred to in her notice of appeal and adding that she had been in this country as a student, that her leave to remain had been extended for that purpose and that she was entitled to a further extension because she continued to fall within the relevant provisions of the Immigration Rules. On 29th November 2007 there was a hearing before Immigration Judge Knowles at which the Secretary of State submitted that the Tribunal did not have jurisdiction to consider the appellant's argument that she should be permitted to remain in this country as a student and on 11th December 2007 he promulgated a decision to the effect that that argument was well-founded. Following an application to the High Court Lloyd Jones J. directed that the Tribunal reconsider its decision and that led to the decision of Senior Immigration Judge Perkins upholding the decision of Immigration Judge Knowles against which this appeal is brought. At the hearing before Senior Immigration Judge Perkins the appellant, who was represented by solicitors and counsel, was constrained to accept that she was unable to bring herself within the provisions of the Immigration Rules relating to lawful residence, having been out of the United Kingdom for more than eighteen months during the period on which she relied in support of her application. The senior immigration judge emphasised that she had made no attempt to conceal the true position; her application had been misconceived, but not dishonest. However, he concluded that the Tribunal had no jurisdiction to consider the appellant's case that she should not be removed from this country, basing himself on the decision of the Tribunal in EA (Nigeria) v Secretary of State for the Home Department [2007] UKAIT 00013. His reasoning may be summarised as follows: section 85(4) entitles the Tribunal to consider evidence relevant to the substance of the decision; the substance of the decision was that the appellant had not been continuously resident in this country for ten years; the tribunal could not consider evidence relating to different grounds on which leave to remain might have been sought and granted; therefore it did not have jurisdiction to consider any such grounds. The appeal of AS The second appeal concerns a young woman, AS, of Afghan origin. She entered this country as a student in December 2005 and was subsequently granted leave to remain until 31st January 2008. On 5th December 2007 she graduated as a Master of Arts at the Middlesex University. On 16th January 2008 the appellant applied for leave to remain as a graduate intending to establish herself in business, but on 19th February 2008 her application was refused by the Secretary of State, who also served on her a notice under section 120 of the Act. (That notice was in terms similar, but not identical, to that served on NV, but the differences are immaterial for present purposes.) On 10th March 2008 she made a second application for leave to remain under the International Graduate Scheme and on the same day she lodged an appeal against the rejection of her first application. On 20th March the Secretary of State wrote to the appellant informing her that her second application had been sent to the Appeals Directorate for consideration as part of her existing appeal. The appeal was heard by Immigration Judge James on 8th April 2008. On 21st April 2008 she promulgated a decision in which she held that the Tribunal had no jurisdiction to consider the appellant's second application and dismissed the appeal relating to her first application. That decision was the subject of reconsideration by Senior Immigration Judge Waumsley, who held that the original decision should stand. It is his decision against which AS now appeals. Several grounds were advanced on behalf of the appellant for challenging Immigration Judge James's decision. I shall come to consider the others at a later stage, but for the moment I propose to deal only with the first of them, namely, that Immigration Judge James had been wrong to hold that the Tribunal had no jurisdiction to consider the second application. As to that, Senior Immigration Judge Waumsley rejected the submission on the grounds that the point had not been raised until the hearing itself and had not been the subject of any application to the Secretary of State, who had therefore made no decision on it. He emphasised that the Tribunal was not the primary decision-maker in immigration cases and held there had been no decision by the respondent that could form the basis of an appeal. Jurisdiction Section 85(2) of the Act imposes a duty on the Tribunal to consider any matter raised in a statement made by an appellant in response to a notice given under section 120 which constitutes a ground of appeal of a kind listed in section 84(1) against the decision the subject of the appeal. On behalf of NV Mr. Scannell submitted that the relevant "decision" to which section 85(2) refers is a decision of a kind mentioned in section 82(2), in this case the decision to refuse to vary the appellant's leave to remain in the United Kingdom as contemplated by paragraph (d). He submitted that the Tribunal had confused the substance of the decision (the refusal to vary the appellant's leave) with the reasons for the decision (the appellant's inability to establish ten years' lawful residence) and that as a result it had misinterpreted the statutory provisions. Similar submissions were made by Mr. Malik on behalf of AS. Mr. Beer for the Secretary of State accepted that the critical issue in this appeal is the meaning of the expression "the decision appealed against" in section 85(2). He submitted that the effect of the appellants' submissions was to require the Tribunal to consider in each case whether the appellant met the requirements of any of the immigration rules, even if they had not previously been raised in the course of the proceedings. That was said to follow from the terms of section 86(3), which requires the Tribunal to allow the appeal if the decision against which it is brought was not in accordance with the law. He submitted that that would undermine the primary decision-making role of the Secretary of State. He also submitted that it would undermine the detailed provisions of the rules governing the procedure before the Tribunal, which require the appellant to set out his case, including his grounds of appeal, and restrict his right to vary them without permission. As to the construction of the statutory provisions, Mr. Beer submitted that the purpose of section 82(2) was simply to identify in summary terms the classes of decision that attract a right of appeal and that a distinction is to be drawn between the expression "the decision" as used in section 85 (1) and (2) and "the substance of the decision" as used in section 85(4). He also relied on the effect of section 3C of the Immigration Act 1971, which, he submitted, was inconsistent with the interpretation of the Act put forward by the appellants. In common with Arden LJ I do not think that any reliance can be placed on expressions such as such as "one stop notice", "one stop appeal" or "one stop process", the use of which has now become widespread. Such shorthand expressions have their uses, but are apt to mislead and in any event are no substitute for a proper analysis of the statutory provisions. However, the language of those sections of the Act to which I have referred, in particular sections 85(2), 96(2) and 120, does in my view demonstrate that they are intended to form constituent parts of a coherent procedure designed to avoid a multiplicity of applications and appeals. Section 82 establishes a general right of appeal against an "immigration decision" and provides the context in which the word "decision" in sections 84 and 85 is to be interpreted. In my view it is clear that the expression "immigration decision" in section 84(1) has the same meaning as in section 82(1) and that the word "decision" in that subsection must bear the same meaning. Sections 82 and 84 provide the context for the interpretation of section 85. Here again, the word "decision" in subsection (1) must in my view mean an immigration decision of the kind identified in section 82(1); and the word "decision" in subsection (2) must have the same meaning. Section 85(2) imposes a duty on the Tribunal to consider any matter raised in a statement made under section 120 insofar as it constitutes a ground of appeal of a relevant kind against the decision under appeal. Thus far, it seems to me, the natural meaning of these provisions is to impose on the Tribunal a duty to consider matters raised by the appellant insofar as they provide grounds for challenging a substantive decision of a kind identified in section 82 that affects his immigration status. On the face of it they do not restrict that duty to considering grounds that relate to the reasons for that decision or to the original grounds of appeal. The terms of sections 120 and 96(2) reinforce that interpretation. Section 120 applies to a person in respect of whom an immigration decision has been or may be taken. That harks back to section 82. Section 120(2) allows the Secretary of State to require that person to state any grounds on which he should be permitted to enter or remain in this country (or should not be removed), but subsection (3) expressly provides that such a statement need not repeat any grounds set out in the application to which the decision relates. That seems to me to contemplate that the statement provided under section 120 will generally contain new grounds for challenging the decision rather than additional evidence or material supporting the original grounds. Section 96(2) reinforces that interpretation, because it contemplates a decision made in respect of a new application based on grounds which the applicant could have raised in response to a notice under section 120. That indicates that the matters intended to be raised in response to such a notice are of a kind that would be capable of supporting a fresh application and that the purpose of the notice is to impose on the appellant a duty to put forward in response to it any grounds he may have for challenging the substance of the decision made against him, rather than simply the grounds on which it was made. It is interesting (but no more) to note that the terms of the notices served on the two appellants whose appeals are before us were consistent with that interpretation. All these provisions point towards a procedural scheme under which the appellant is required to put forward all his grounds for challenging the decision against him for determination in one set of proceedings and the Tribunal is placed under a corresponding duty to consider them. To that extent they may fairly be described as comprising a "one stop process". It follows, however, that the notice is not intended to be restricted to matters relating to the original grounds of application or that the decision being challenged can be defined by reference to the particular facts on which it was based. In my view the provisions only make sense if the decision to which section 85(2) refers is understood to be an immigration decision of a kind described in section 82(2). In the case of NV Senior Immigration Judge Perkins reached the opposite conclusion, relying in part on what he considered to be the anomaly of allowing an appellant to challenge the decision on grounds quite different from those on which the original application was based and in part on what he understood to be the effect of certain passages in EA (Nigeria) relating to the effect of section 85(4). In the case of AS Senior Immigration Judge Waumsley rejected the appellant's argument because her additional grounds were unconnected with the grounds of her original application and because the Tribunal was not intended to be a primary decision-maker: SZ (Bangladesh) (Applicable Immigration Rules) [2007] UKAIT 00037. I do not find any of those reasons persuasive. There would be little point in requiring a person to put forward all the grounds on which he says he should be allowed to enter or remain in this country if he were not able to add to those on which he had previously relied. The whole tenor of the legislation points to the conclusion that the purpose of section 120 is to flush out all the grounds on which the applicant may seek to rely so that they can be considered at the same time. Section 85(4) itself, in my view, has little bearing on the present case, being concerned only with the evidence that the Tribunal may consider when hearing an appeal. The argument that an appellant will be unable by reason of section 85(5) to adduce evidence in support of a completely new ground of challenge and that therefore the interpretation of subsection (2) favoured by the appellant must be wrong goes far too far. It may be that in a limited class of cases the prohibition on hearing evidence of matters that post-date the decision under appeal will prevent the appellant from effectively pursuing an additional ground, but that is not the case with either of the present appeals, in which the matters relied on all pre-date the decision, and it is unlikely to be so in the majority of cases. Nor do I consider that there is a great deal of force in the argument that the effect of the appellants' argument is to make the Tribunal the primary decision-maker in relation to any additional grounds. Of course, the Secretary of State is normally the primary decision-maker in immigration matters, but in practice the Tribunal makes many decisions which are indistinguishable from those made by the Secretary of State and is quite capable of carrying out that function and it is the responsibility of the appellant to ensure that it has all the material it needs to make a decision. Ultimately, however, the question must be whether the Act was intended to impose on the Tribunal a responsibility of that kind in relation to matters raised in response to a notice under section 120. There is no deeply entrenched presumption that such matters are the exclusive responsibility of the Secretary of State and therefore no strong presumption that that is not what Parliament can have intended. It must be borne in mind that the service of a notice under section 120 is in the discretion of the Secretary of State. He is not obliged to take that step and will presumably do so only if he is content that the Tribunal should consider any matters put forward in response to it. In any event, the language of the statutory provisions is in my view quite clear. Mr. Beer submitted that section 3C(4) of the Immigration Act 1971 ("the 1971 Act") pointed strongly against the interpretation for which the appellants contend. Section 3C operates in favour of a person who has applied for a variation of limited leave to enter or remain in this country to extend that leave while the application is pending. However, subsection (4) prohibits a further application for variation being made while leave is extended under the statutory provisions: see the decision of this court in JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78. Mr. Beer therefore submitted that to interpret the provisions of section 85(2) as requiring the Tribunal to consider entirely new grounds of challenge to the Secretary of State's decision would be inconsistent with the provisions of that subsection. The point is potentially of some importance to appellants in that situation because their leave to remain will lapse on the determination of the original application and they will be liable to immediate removal. Any new application to enter and remain in this country would then have to be made from abroad. If the interpretation of section 85(2) put forward by the appellants were invariably at odds with the provisions of section 3C(4) Mr. Beer's argument would have more force, but section 3C(4) only applies to those whose existing leave to enter or remain is extended by statute and has no application to those who make their applications well before their existing leave expires. More important, however, is the fact that the service of a notice under section 120 is entirely in the option of the Secretary of State. He can choose not to serve a notice, in which case the appellant who falls within section 3C(4) is restricted to the scope of his original application. If, however, the Secretary of State chooses to serve a notice under section 120, he invites and requires the appellant to put forward any additional grounds that may be available to him. I do not think that section 3C(4) of the 1971 Act is inconsistent with the appellants' interpretation of section 85: taken as a whole the statutory scheme gives the Secretary of State the power either to rely on the restrictive effect of section 3C(4), with the prospect of further proceedings at a later date, or to ensure that grounds for seeking the same relief that would otherwise have to be pursued in those further proceedings can be swept up into, and considered as part of, the existing proceedings. For these reasons I have reached the conclusion that the decision of the Tribunal on this point was wrong and would allow each of these appeals on this ground alone. The appeal of AS – other grounds AS relied on two other grounds in support of her appeal against the Tribunal's decision: that it had misinterpreted the provisions of 201 and 206 of the Immigration Rules; and that it had wrongly held that certain errors of law identified in the original decision were immaterial and did not provide grounds for reaching a contrary decision. The principal ground advanced under this head related to the nature of the business which the appellant proposed to establish in this country. As a person seeking leave to remain in this country under paragraph 206E of the Immigration Rules it was necessary for her to satisfy the requirements of paragraph 201. These include: that she held at least £200,000 in her own name in this country which she would be investing in the proposed business; that she had sufficient additional funds to support herself and any dependants without recourse to employment or public funds until such time as the business produced an income; that she would have a controlling or equal interest in the business; and that her share of the profits would be sufficient to maintain herself and any dependants without recourse to employment or public funds. Immigration Judge James found that the business that the appellant proposed to set up based on a franchise for take-away food was at best at an embryonic stage. The structure of the business was unclear: the appellant's husband had provided the capital and was a party to certain agreements relating to the franchise, but the appellant herself said that she was proposing to act as a sole trader. That caused the Tribunal to doubt whether she did in fact control the funds in her name and to think that she might in fact be a disguised employee. Moreover, the immigration judge did not consider that the funds available to the appellant were sufficient to maintain her during the start-up period as well as to finance the business. She also found that the business plan and financial projections provided by the appellant were not supported by the franchisor's accounts and that it was doubtful whether the business would be profitable, let alone produce sufficient income to support the appellant and any dependants. For all those reasons she held that the appellant was unable to satisfy the requirements of paragraph 201. On reconsideration Senior Immigration Judge Waumsley held that, insofar as the decision proceeded on the basis that the appellant had not already established her business, there had been an error of law, but one that was immaterial. Mr Malik submitted that Immigration Judge James had wrongly approached the matter on the basis that in order to bring herself within the rules the appellant had to show that she had already established a business. That, he submitted, was an error or law and the fact that the appellant's business was at an embryonic stage was irrelevant. He submitted that the error was significant and not one that could properly be dismissed as immaterial. Mr. Malik may be right in saying that Immigration Judge James was wrong to proceed on the basis (if she did) that in order to satisfy paragraph 201 the proposed business must be more than embryonic, but in my view his submission did not do justice to her decision. It is true that she did draw attention to the fact that little had been done to set it up and did describe it as "embryonic", but as I read her decision she did so in the context of giving rather broader consideration to whether the various aspects of paragraph 201 were satisfied. The substance of her finding is that, taken in the round, the material before her did not support the conclusion that the proposed business was capable of being established successfully or, if it were established, would be viable. Nor was she satisfied that the appellant had sufficient assets to support herself during the start-up stage or thereafter. I doubt whether she did commit any error of law, but if she did she was entitled to make those findings and the error was immaterial. In these circumstances I do not think it can sensibly be argued that the other errors of law identified by Senior Immigration Judge Waumsley, relating to the date on which the appellant obtained her degree and her original intention to leave this country following graduation, were material to her decision. For these reasons I do not think that there is any merit in either of the additional grounds. In principle, therefore, I would allow these appeals and in each case remit the matter to the Tribunal for consideration of the additional grounds raised by the appellant in response to the notice given under section 120. However, we have been informed that since the conclusion of the hearing NV has left the United Kingdom for Sri Lanka and accordingly by virtue of section 104(4) of the Nationality, Immigration and Asylum Act 2002 her appeal is to treated as abandoned.  It is therefore agreed that no order should be made on her appeal, save in relation to costs. Lord Justice Sullivan: Introduction   Arden LJ has set out the factual background to these two appeals, explained the similarities between them, and outlined the relevant statutory provisions. I agree with her view that it is appropriate to proceed on the basis that Parliament intended those provisions to be coherent and to work as a harmonious whole. For the reasons set out below, I do not agree with her conclusion that the narrower interpretation produces such a result. I readily accept the proposition that, since the principal issue is one of statutory interpretation, the precise terms of the statutory provisions are of central importance, and the other documents to which we have been referred are not admissible for the purpose of interpreting the relevant legislation. However, I think that it is instructive to examine in a little more detail how the Secretary of State's "One-stop" procedure operates in practice, to see whether the procedure fairly reflects the narrower interpretation of the primary legislation contended for on behalf of the Respondent in these appeals. The "One-stop" procedure The procedure is largely governed by subordinate legislation made under the 2002 Act. The Notice of Immigration Decision dated 17th October 2007 given to NV in compliance with the Immigration (Notices) Regulations 2003 made under section 105 of the 2002 Act told her that she was entitled to appeal under section 82(1) of the 2002 Act, enclosed a Notice of Appeal in the prescribed form, and contained the following, standard form "One-stop" warning: "One-Stop Warning – Statement of additional grounds You must now make a formal statement about any reasons why you think you should be allowed to stay in this country. This includes why you wish to stay here, and any grounds why you should not be removed or required to leave. The statement should be made on the form NOTICE OF APPEAL if you are appealing this decision. If you are not appealing but have further reasons you wish us to consider you should send them to reach us within the next 10 working days (5 working days if you are detained). You do not have to repeat any reasons you have already given us but if you do have any more reasons you must now disclose them. If you later apply to stay here for a reason which you could have given us now, you may not be able to appeal if the application is refused. If, after you have completed the form, the reasons why you think you should be allowed to stay in this country change, or new reasons arise, you must tell us as soon as possible. Do not wait until your appeal has been heard. If you later apply to stay here for a reason which you could have raised earlier, you may not be able to appeal if the application is refused. This ongoing requirement to state your reasons is made under section 120 of the Nationality, Immigration and Asylum Act." The notice served on AS was in similar terms. The Notice of Appeal for in-country appeals to the AIT – Form AIT-1 – approved by the President of the AIT pursuant to rule 8 of the Immigration Tribunal (Procedure) Rules 2005 tells Appellants by way of introduction that: "It is in your interest to complete this form as thoroughly as possible, and state all your grounds in order for your appeal to be dealt with efficiently." Section 4 of AIT-1, headed "Grounds of Appeal", requires the Appellant to: "set out the grounds for your appeal and give the reasons in support of these grounds – that is, why you disagree with the decision. You must do this now because you may not be allowed to mention any further grounds at a later date…..You should include in this section any parts of your claim that you think have not been addressed in the refusal letter. You must say if you have raised these issues before." Section 5 of AIT-1 is headed "Statement of additional grounds". The Appellant is told: "If your notice of decision requires you to make a Statement of additional grounds, you should make the statement in this box. This section refers to any other reasons why you think: You should be allowed to stay in the United Kingdom, including any reasons relating to the European Convention on Human Rights You should not be removed or required to leave. Do not repeat here any grounds and reasons that you have already given in Section 4. You must give all these additional grounds and reasons now because you may not be able to make any other applications to appeal if this current application is refused. You should explain why you did not give these reasons before." It will be noted that the "One-stop" warning and Form AIT-1 tell Appellants that their Statements of additional grounds must contain "any" or "any other" reasons why they think that they should be allowed to stay in the UK. These "other reasons" may include but, implicitly in the case of the One-stop warning, and explicitly in the case of Form AIT-1 are not limited to human rights grounds. The express purpose of the Statement of additional grounds is not to amplify, or repeat the Appellant's reasons for disagreeing with the decision appealed against. Section 4 of AIT-1, when read in the light of the introductory advice to Appellants, makes it clear that they must set out in Section 4 all, and not merely some, of the reasons why they disagree with the decision, including any issues, not raised before; and having done so they should not repeat those reasons in Section 5 of the Notice. Compliance with a paragraph or paragraphs of the Immigration Rules ("the Rules") not previously relied upon by the Appellant, perhaps in error because of a lack of legal advice, or because of a change of circumstances, such as marriage to a UK citizen, after the making of the application would, on the face of it, appear to fall squarely within the many and various "other" reasons why Appellants might think that they should be allowed to stay in the UK. Having been told that they must raise such an additional ground, on pain of not being able to appeal against a later application on that ground if they fail to mention it in Section 5 of their Notice of Appeal to the AIT, it seems to me that Appellants would have good reason to question the coherence of the statutory scheme if they were then to be told by the AIT that it had no jurisdiction to consider the additional ground that they had been ordered by both the Secretary of State and the AIT to put forward. In referring to these features of the statutory "One-stop" procedure I do not suggest that it is permissible to use forms prescribed by subordinate legislation as an aide to interpreting the primary legislation. It should, however, be recognised that there is a marked discrepancy between the contents of the statutory notices served by the Respondent on Appellants, many of whom are not legally represented, and the Respondent's narrower interpretation of the primary legislation. The terms of the notices served by the Respondent are consistent with the wider interpretation contended for by the Appellants. Primary Legislation – Analysis I gratefully adopt Arden LJ's three-fold grouping of the arguments on the principal issue, but find it convenient to consider them in reverse order, as follows: i) the coherence arguments; ii) the contextual arguments; and iii) the textual arguments. Coherence arguments The effect of section 3C of the 1971 Act as interpreted by this Court in JH (Zimbabwe) [2009] EWCA Civ 78, is set out in paragraph 14 of Arden LJ's judgment. I do not consider that the wider interpretation of the relevant statutory provisions in the present case produces any inconsistency, or lack of coherence with section 3C as interpreted in J H (Zimbabwe). Section 3C prevents Appellants from making, of their own volition, new applications for leave to enter or remain, thereby giving themselves the benefit of successive extensions of their original leave to remain. The position under section 120 is quite different. If an Appellant is served with a section 120 notice he is given no choice in the matter: he must state any reasons he may have for wishing to enter or remain in the UK, and any grounds on which he should be permitted to do so. The Secretary of State is not required to elicit those reasons if he does not wish to do so. Section 120 provides that he "….may by notice in writing require…" a Statement of additional grounds. If the Secretary of State chooses to exercise his discretion to impose such a requirement on an Appellant there is no obvious reason why these additional grounds – which are not limited to human rights grounds – should not be considered in the appeal process. It is clear that the underlying legislative policy is to prevent successive applications which, as Arden LJ says, are likely to prolong the period in which a person's status is uncertain and undetermined. In my judgment, that policy is better served by a "One-stop" procedure that enables all, rather than merely some, of an Appellant's "other grounds" for remaining in the UK to be considered by the AIT at one appeal hearing. The inconsistency between the narrower interpretation and the underlying policy objective – to prevent successive applications – is a powerful reason for preferring the wider, rather than the narrower, interpretation, since the latter encourages a "Multi-stop" appeal process. Contextual arguments Adopting the wider interpretation would result in the AIT having to take on the role of primary decision-maker in an increased number of cases. There is no material before the Court which would indicate what the extent of that increase might be, but in any event I do not consider that the prospect of some increase is a significant argument in favour of adopting the narrower interpretation. It is common ground that section 85(2) requires the AIT to consider additional asylum and human rights grounds if they are raised by an Appellant in response to a "One-stop" notice. The issues raised by such grounds – whether an Appellant would face a real risk of persecution on return, whether any interference with his family life would be disproportionate – tend to be much more open-textured than the issues raised by Appellants under the Rules. The Rules comprise a very comprehensive, detailed and for the most part highly prescriptive, code. Although the code does leave some scope for the exercise of discretion, since in practice very few decisions are taken by Ministers and the great majority of decisions are taken by, often relatively junior, officials on their behalf, there is a great deal of very detailed, non statutory, guidance in the form IDIs and other published material as to how the various discretionary powers under the Rules should be exercised. The role of primary decision-maker in respect of any additional grounds based on alleged compliance with the Rules is likely to be more straightforward, and require a lesser element of discretionary judgement, than the role of primary decision-maker in respect of additional asylum and human rights grounds. Moreover, there is in practice often a degree of overlap between additional grounds based on compliance with the Rules and asylum and human rights grounds. By way of example, an unrepresented Appellant who mistakenly applied for leave to remain on the wrong basis and failed to mention their marriage to a UK citizen, or who married after making their application, and who raised the issue in response to a section 120 "One-stop" notice would be able on appeal to the AIT to rely on the marriage as an "other" reasons for being allowed to stay in the UK insofar as it was the basis of additional grounds relying on Article 8 of the European Convention on Human Rights, but would not, on the narrower interpretation, be able to rely on the marriage for the purpose of demonstrating compliance with the Rules, unless, presumably, the Appellant's compliance with the Rules was a "Robinson obvious" point which the AIT should take of its own motion in any event. Long residence is another example where the evidence of long residence may well be relevant for the purposes of both the Rules and Article 8. An Appellant who erroneously failed to rely on 10 years residence in the UK in his rejected application could rely in his additional grounds of appeal on his length of residence for the purposes of Article 8, but not as demonstrating compliance with the Rules. A coherent "One-stop" appellate system would enable the AIT to consider all, and not merely some, of an Appellant's potentially overlapping grounds. If there is a concern that the AIT would be overburdened by an increased role as primary decision-maker, the remedy lies in the hands of the Secretary of State: having chosen to require the Appellant to state any additional grounds the Secretary of State should make the necessary administrative and procedural arrangements to enable him to make a decision or decisions on them. Although section 120 does not stipulate a time limit for responding to a "One-stop" notice, Mr Beer accepted that the power to make Rules under section 106 of the 2002 Act is broad enough to enable the imposition of a time limit for raising additional grounds. In practice, there is such a time limit because of the very tight deadlines within which Notices of Appeal, incorporating section 5 in AIT-1, must be received by the AIT: 5 or 10 working days depending upon whether the recipient of the Secretary of State's decision is, or is not, detained under the Immigration Acts. For these reasons I consider that the contextual arguments tend to support the wider rather than the narrower interpretation. Textual arguments The starting point is section 120. Bearing in mind the provisions of section 96(2), the reference in paragraph (a) of subsection 120 (2) to "his reasons" means all, not merely some of the applicant's reasons. "Any grounds" in paragraphs (b) and (c) of subsection 120 (2) means what it says: any grounds, not "any human rights or asylum grounds". When Parliament wishes to refer to the human rights or refugee conventions in the 2002 Act it does so expressly: see for example section 84(1)(c) and (3). The consequences of a failure to state all of the reasons or any grounds in response to a section 120 notice are spelt out in section 96(2). No appeal may be brought against the Secretary of State's rejection of another application which relies on those reasons or grounds if the Secretary of State or an immigration officer certifies that the application: "relies on a matter which should have been, but has not been raised in a statement made in response to [the section 120] notice." Bearing these provisions in mind it would, in my judgment, be the antithesis of a coherent and harmonious statutory scheme if the AIT had jurisdiction to consider on appeal only some, but not all, of the additional grounds which the Appellant had been required to state on pain of being prevented from basing any further appeal upon them. Since that would be the consequence of adopting the narrower interpretation, I would adopt that interpretation only if compelled to do so by very clear words in section 85. The words "against the decision appealed against" at the end of subsection 85 (2) would appear to be the only justification for the narrower interpretation. Is "the decision appealed against" the decision to refuse to vary the appellant's leave to remain in the UK, or the decision to refuse to vary leave to remain under paragraph X of the Rules? I accept that, looking at the words in isolation, in ordinary speech practitioners referring to "the decision appealed against" would be referring to the Secretary of State's decision in response to the particular application made by the applicant: not simply a refusal to vary leave to remain, but a refusal to vary leave to remain under paragraph X of the Rules. However, section 84 (2) does not stand alone. It must be construed in the context of a statutory scheme which requires the appellant to state any additional grounds, which are not confined to the merits of the Secretary of State's decision in respect of paragraph X of the Rules, but which challenge the refusal of leave to remain: "his reasons for wishing to….remain…" "any grounds on which he should be permitted to remain". The 2002 Act defines those decisions in respect of which an appeal may be made to the AIT and the grounds on which such an appeal may be brought in sections 82 and 83 respectively. It is readily understandable that the AIT should not be required to consider a matter raised in a statement of additional grounds if it does not constitute one of the grounds on which an appeal may be brought under section 83, or if it seeks to challenge either a different category of immigration decision as defined by subsection 82(2) to that which has been taken (e.g. refusal to vary leave where entry clearance has been refused), or some other decision against which there is no right of appeal under section 82. Since section 85 (2) is concerned with Statements of additional grounds which must include any reasons why an appellant should be allowed to remain, and which are expressly not confined to the reasons why he should be allowed to remain under Rule X of the Rules, I am not persuaded that the reference to "the decision appealed against" must be a reference to the decision to refuse to vary leave to remain under Rule X, rather than the decision to refuse to vary leave to remain, being one of the immigration decisions as defined by section 82 (2). Such an approach to section 85 (2) would be consistent with the reference in section 85 (4) to "the substance of the decision". I note the Tribunal's Determinations in SZ (Applicable immigration rules) Bangladesh [2007] UKAIT 00037 and EA (section 85 (4) explained) Nigeria [2007] UKAIT 00013, referred to in the judgment of Arden LJ, but the AIT in those cases did not consider how section 85 (2) should be interpreted so as to be coherent, and work in harmony with sections 96 and 120, bearing in mind the statutory purpose underlying those provisions. Subsidiary Ground of Appeal I agree with Arden LJ that the subsidiary ground of appeal raised by AS must be dismissed for the reasons given in her judgment. Conclusion For the reasons set out above I would allow both appeals on the principal issue. Since NV has left the United Kingdom, the only order in respect of her appeal should be an order as to costs.

Order of the President of the Court of First Instance of 7 July 1994. - Geotronics SA v Commission of the European Communities. - PHARE Programme - Invitation to tender - Procedure for interim relief - Suspension of operation of a measure - Interim measures. - Case T-185/94 R. European Court reports 1994 Page II-00519 Summary Parties Grounds Operative part Keywords ++++ Application for interim measures ° Suspension of operation of a measure ° Interim measures ° Conditions for granting ° Serious and irreparable damage ° Financial damage (EC Treaty, Arts 185 and 186; Rules of Procedure of the Court of First Instance, Art. 104(2)) Summary The urgency of an application for interim measures under Article 104(2) of the Rules of Procedure of the Court of First Instance must be assessed in relation to the necessity for an interim order to prevent serious and irreparable damage to the party applying for the interim measure. It is for that party to prove that it cannot wait for the outcome of the main proceedings without suffering damage that would entail serious and irreparable consequences. Damage of a purely financial nature, such as that suffered by an applicant for interim measures as a result of being denied the possibility of obtaining a contract under a Community programme, cannot in principle be regarded as irreparable, or even as being reparable only with difficulty, if it can ultimately be the subject of financial compensation. Parties In Case T-185/94 R, Geotronics SA, a company incorporated under French law, with its registered office at Lognes (France), represented by Tommy Pettersson, of the Swedish Bar, with an address for service in Luxembourg at the Chambers of Messrs Arendt and Medernach, 8-10 Rue Mathias Hardt, applicant, v Commission of the European Communities, represented by Karen Banks, of its Legal Service, acting as Agent, with an address for service in Luxembourg at the office of Georgios Kremlis, a representative of the Commission' s Legal Service, Wagner Centre, Kirchberg, defendant, APPLICATION for, first, suspension of the operation of the Commission decision of 10 March 1994 rejecting the applicant' s tender for the supply of "total stations" (electronic tachometers) under the PHARE programme, and, second, by way of other interim measures, an order that the Commission take such measures as may be necessary to prevent the award of a contract, or, if such a contract should already have been awarded, to cancel such contract, THE PRESIDENT OF THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES makes the following Order Grounds Facts 1 By application lodged at the Registry of the Court of First Instance on 29 April 1994 the applicant applied under Articles 173 and 174 of the Treaty Establishing the European Community (hereinafter referred to as "the EC Treaty") for the annulment of the decision addressed by the Commission to the applicant on 10 March 1994 and rejecting its tender for the supply of "total stations" made pursuant to a restricted tender issued under the PHARE programme, and, in the alternative, applied under Articles 178 and 215 of the EC Treaty for compensation for the losses the applicant considers it has suffered as a result of that decision. 2 By a separate document lodged at the Registry of the Court of First Instance on the same day the applicant also applied, under Articles 185 and 186 of the EC Treaty, for suspension of the operation of the decision at issue in the main proceedings and for an order that the Commission take such measures as might be necessary to prevent the award of a contract, or, if such a contract should already have been awarded, to cancel such contract. 3 The Commission submitted its written observations on the application for interim measures on 24 May 1994. 4 Before considering whether the application for interim measures is well founded, it is appropriate to summarize the background to the dispute, as evidenced by the pleadings and documents lodged by the parties. 5 This case concerns a restricted tender issued jointly on 9 July 1993 by the Commission and the Romanian Ministry of Agriculture and Food Industry through the intermediary of the "EC/PHARE Programme Management Unit-Bucharest" (hereinafter "PMU-Bucharest") for the supply of "total stations" (electronic tachometers) to the Romanian Ministry of Agriculture and Food Industry for use in the Romanian land reform programme. Under the conditions specified in the invitation to tender, the goods to be supplied had to originate in a Member State of the European Community or in one of the beneficiary countries of the PHARE programme. 6 The PHARE programme is the means by which the European Community channels financial aid to the countries of Central and Eastern Europe. It is based on Council Regulation (EEC) No 3906/89 of 18 December 1989 on economic aid to certain countries of Central and Eastern Europe (OJ 1989 L 375, p. 11), as last amended by Council Regulation (EEC) No 1764/93 of 30 June 1993 (OJ 1993 L 162, p. 1). 7 Following the submission of the applicant' s tender on 16 July 1993, PMU-Bucharest informed the applicant in a fax letter of 18 October 1993 that it had been successful in its application and that the contract would shortly be submitted to the Contracting Authority for approval. 8 On 19 November 1993 the Commission informed the applicant that the evaluation committee had recommended that the contract be awarded to it. The Commission did, however, express doubts as to whether the requirement concerning the origin of the goods had been complied with and asked the applicant for further information in that respect. 9 By a fax message of 2 March 1994 the applicant informed the Commission that it had heard that its tender would be rejected because its products were not of Community, but of Swedish, origin. However, the applicant took the view that the legal requirements as to origin of the products had changed following the entry into force on 1 January 1994 of the Agreement on the European Economic Area signed in Oporto on 2 May 1992 (OJ 1994 L 1, p. 3, hereinafter "the EEA Agreement"), and asked the Commission to re-issue the invitation to tender. 10 By a fax message to the applicant of 10 March 1994 the Commission rejected its tender on the ground that, contrary to the conditions set out in the invitation to tender, the products in question were not of Community origin. At the same time, the Commission informed the applicant that, because another technically and financially acceptable offer had been made which was in line with the rules as to origin of equipment laid down in the invitation to tender, it did not intend to re-issue the tender. 11 By letter of 11 March 1994 the Commission informed PMU-Bucharest that the offer made by the only other tenderer, the German company Carl Zeiss (hereinafter "Zeiss"), was acceptable and requested it to contact Zeiss to finalize the contract. 12 By a fax message of 17 May 1994 PMU-Bucharest informed the Commission that, by a decision of 15 April 1994, the Romanian Ministry of Agriculture and Food Industry had awarded the contract to Zeiss. Law 13 Under the combined provisions of Articles 185 and 186 of the Treaty and Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1), as amended by Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 (OJ 1993 L 144, p. 21), the Court of First Instance may, if it considers that circumstances so require, order that application of contested acts be suspended or prescribe any necessary interim measures. 14 Article 104(2) of the Rules of Procedure of the Court of First Instance provides that applications for interim measures as envisaged under Articles 185 and 186 of the Treaty must state the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the interim measures applied for. Such measures must be provisional in the sense that they do not prejudge the decision on the substance of the case (see the order of the President of the Court of First Instance in Case T-543/93 R Gestevisión Telecinco v Commission [1993] ECR II-1409). The arguments of the parties 15 As regards the existence of a prima facie case for its action, the applicant argues, essentially, that by rejecting its tender for the sole reason that the products in question did not have EC origin but originated within the EEA, the Commission has acted in breach of Articles 6 and 228(7) of the EC Treaty and of Articles 4, 8, 11 and 65(1) of the EEA Agreement. 16 As regards the requirement of urgency, the applicant considers that, without the interim measures applied for, there is a great risk that the Commission will award the contract to another supplier, thus depriving it of the opportunity to sell its products within the PHARE programme. It is therefore urgent that suspension be ordered by the Court so that serious and irreparable damage to the applicant can be avoided. 17 For its part, the defendant challenges the admissibility of the main action and thus of the application for interim measures also. It considers that the Commission' s letter of 10 March 1994 was not capable of producing legal effects, since it was the Romanian authorities, and not the Commission, which were in a position to accept or reject the applicant' s tender. 18 In any case, the Commission argues, the EEA Agreement (which had not even entered into force when the applicant submitted its tender in July 1993) did not require a re-opening of the invitation to tender. In the Commission' s opinion, the EEA Agreement does not concern the Romanian authorities, which were alone competent to make a decision on the award of the contract, nor does it cover external Community aid programmes. The Commission considers, moreover, that none of the articles of the EEA Agreement referred to by the applicant are relevant to the present case, since they are concerned only with the scope of the Agreement and the relations between the Contracting Parties. It follows, in the Commission' s opinion, that the applicant has failed to establish a prima facie case for its main action. 19 As regards the risk of serious and irreparable damage, the Commission argues that the applicant has not established the urgency of its application for interim measures. It does not explain why it could not be adequately compensated in damages, were its claim in the main action to succeed. The Court of Justice has consistently held that damage of a financial nature is not in principle considered to be serious and irreparable unless it could not be wholly made good if the applicant were to be successful in the main action (see the order of the President of the Court of Justice in Case C-358/90 R Compagnia Italiana Alcool v Commission [1990] ECR I-4887, paragraph 26). Findings of the President of the Court of First Instance 20 It is settled case-law that the urgency of an application for interim measures must be assessed in relation to the necessity for an interim order to prevent serious and irreparable damage to the party applying for them. It is for the party seeking suspension of operation to prove that it cannot wait for the outcome of the main proceedings without suffering damage that would entail serious and irreparable consequences (see the order in Gestevisión Telecinco v Commission, cited above). 21 In its application for interim relief the applicant confines itself to putting forward, as a circumstance establishing urgency, the fact that it will suffer serious and irreparable damage if the contested decision is put into operation, because such operation will permanently deprive it of the contract in question and thus of the opportunity to sell its products within the PHARE programme. 22 For the applicant, denial of the opportunity to obtain the contract in question constitutes damage of a purely financial nature. On that point, it has been consistently held (see, in particular, the order in Compagnia Italiana Alcool v Commission, cited above) that damage of a purely financial nature cannot in principle be regarded as being irreparable, or even as being reparable only with difficulty, if it can ultimately be the subject of financial compensation. 23 In the present case the applicant has not established, or even alleged, that its financial loss could not be wholly made good if the Court were to annul the contested decision at the conclusion of the main proceedings. 24 In that regard, it should be noted that in its main application the applicant seeks compensation for all the losses which it considers it has suffered as a result of the contested decision and which it quantifies at ECU 500 400 together with interest from the date on which it was notified of the Commission' s decision. At the same time, in its application for interim measures, the applicant makes no reference to the risk of any loss other than that referred to in its main application. 25 Accordingly, and without there being any need to consider whether the applicant' s pleas in support of its main action disclose a prima facie case, the application for interim measures does not satisfy the requirement of urgency and must be dismissed. Operative part On those grounds, THE PRESIDENT OF THE COURT OF FIRST INSTANCE hereby orders: 1. The application for interim measures is dismissed. 2. Costs are reserved. Luxembourg, 7 July 1994.

TARUN CHATTERJEE, J. Leave granted. This is an appeal by special leave against the judgment and final order dated 8th of February, 2006 of the High Court of Punjab Haryana at Chandigarh in Civil Revision No. 4231 of 2004, whereby the High Court in the exercise of its revisional power had interfered with the findings of fact arrived at by the Appellate Authority which was the final authority on fact and set aside the order of the Appellate Authority, Chandigarh dated 5th of August, 2004 directing the eviction of the respondent only on the ground of subletting, which affirmed the order of eviction passed by the Rent Controller on a different ground namely, on the ground of sub-letting. The appellants are father and son and the appellant No.1 son is the owner of a shop being Shop No. 142, Village Badheri, U.T. Chandigarh hereinafter referred to as the said shop on the basis of a family partition dated 26th of August, 1998 and the appellant No.2 is the landlord of the said shop. Prior to the family partition dated 26th of August, 1998 the father, namely, appellant No.2 was the owner and landlord of the said shop. Respondent Nos.1 and 2 are also father and son. The father, namely, respondent No.1 was inducted as a tenant in respect of the said shop at a monthly rental of Rs.500/- per month excluding the electricity charges. The appellants filed an eviction petition against the respondents for evicting them from the said shop inter alia on the ground of subletting, for number payment of rent and also for bonafide requirement for the personal use and occupation of the appellant No.1. According to the appellants, the respondent No.1 had sub-let the said shop to respondent No.2, his own son, who is in possession of the same and has been running the said shop under the name of M s. New Paris Furniture without the companysent of the appellants. It was further alleged that the respondent No.1 neither paid the rent of the said shop number tendered the same as such was in arrears of payment of rent since 1st of October, 1995 till the filing of the application for eviction. The appellants further alleged in the eviction petition that the said shop was required for the personal use and occupation of the appellant No.1. Accordingly, the appellants were companystrained to file the eviction petition against the respondents in respect of the said shop when it was found that in respect of the numberice, the respondents had failed to vacate and deliver peaceful possession of the said shop to the appellants. The respondents entered appearance and filed a written statement inter alia companytending that the eviction petition against them was number maintainable and the personal necessity of the said shop for the use and occupation of the appellant No.1 was also number available and that the Rent Controller had numberjurisdiction to try and entertain the eviction petition. Accordingly, the respondents prayed for rejection of the eviction petition. On the basis of the pleadings of the parties, as numbered herein above, the Rent Controller framed the following issues - Whether the respondents were in arrears of rent w.e.f. 01-10-95 and as such were liable to be evicted from demised premises on the ground of number-payment of rent? II Whether the rent tendered by the respondent was short and insufficient? III Whether the said shop was sublet by the respondent number 1 to respondent number2 without the companysent of the appellants? IV Whether the appellant No1 for his personal use and occupation required the said shop? Whether this companyrt has numberjurisdiction to try and entertain the eviction petition? VI Whether the ground of personal necessity was number available to the appellants as the shop in dispute was number a companymercial property? VII Whether the respondents are entitled for companynter claim as prayed for? VIII Relief. The Rent Controller decided issue Nos. 1, 2 and 7 together and held that the respondents were number defaulters in payment of rent number they were entitled to get refund of any amount from the appellant as the case made out by them that they have paid the appellant in excess. This finding arrived at by the Rent Controller by holding that the appellant had failed to produce any credible and reliable evidence, accordingly, Issue Nos. 1, 2 and 7 were held against the appellant and, therefore, numberorder for ejectment companyld be passed on the ground of number-payment of rent. Issue No.4 and 6 were also taken up together. Issue No.4 was decided against the appellants and Issue No.6 was decided in favour of the respondents. Accordingly, the Rent Controller held that the ground for personal necessity was number made out and therefore, on that issue, the appellants were number entitled to evict the respondents from the said shop. So far as Issue No.5 was companycerned, before the Rent Controller the said issue was number pressed. It may be mentioned here that the Rent Controller, however, held that there was relationship of landlord tenant between the parties as the respondents in their examination-in-chief admitted that the appellant No.2 was the owner of the said shop who had given the same to the appellant No.1 by way of family settlement dated 26th of August, 1998. Accordingly, the Rent Controller held that the appellants were entitled to evict the respondents only on the ground of sub-letting as the said shop was sub-let by respondent No.1 to respondent No.2 without the companysent of the appellants. Upon the issues being decided in the manner indicated above, the Rent Controller finally passed the order of eviction against the respondents in respect of the said shop only on the ground of sub-letting. Feeling aggrieved by the order of eviction passed by the Rent Controller, the respondents filed an appeal before the Appellate Authority under the East Punjab Urban Rent Restriction Act, 1949 in short the Rent Act . The Appellate Authority by its judgment and final order dated 5th of August, 2004 allowed the appeal and also the cross objections of the appellants and directed the eviction of the respondents from the said shop on the ground of personal necessity by the appellants. Feeling aggrieved and dissatisfied with the order of the Appellate Authority directing eviction on a finding that the appellants required the said shop for their own use and occupation, the respondents filed a civil revision petition in the High Court which, by the impugned order, was allowed and the High Court, as numbered herein earlier, in the exercise of its revisional power had set aside the order of eviction passed by the Appellate Authority on the ground that appellant No.2 was the landlord of the said shop but they had failed to prove the ingredients as required under Section 13 3 a ii of the Rent Act. It was held by the High Court that the averments made in the eviction petition would evidently show that such averments were made only to the extent of the personal requirement of the appellant No.1, Ajit Singh, but such pleadings did number relate to the personal requirement of the appellant No.2, who was also the landlord of the said shop and, accordingly, in the absence of any pleading or averment made in the eviction petition to the extent of the personal requirement of the said shop of the appellant No.2, the High Court held that the order of eviction passed by the Appellate Authority companyld number be sustained in law. Feeling aggrieved and dissatisfied with the order of the High Court allowing the revision petition, the appellants filed a special leave petition which on grant of leave was heard in presence of the learned companynsel for the parties. Having heard the learned companynsel for the parties and after examining the impugned order of the High Court as well as the order of the appellate authority and the Rent Controller and the materials on record including the averments made by the appellants in their petition for eviction, we are of the view that the High Court in the exercise of its revisional power under the Rent Act was number entitled to interfere with the findings of fact arrived at by the Appellate Authority on the question of bonafide requirement of the said shop at the instance of the appellants. Since the findings arrived at by the Appellate Authority on the question of bonafide requirement was set aside by the High Court in the exercise of its revisional power under the Rent Act and the eviction of the respondents from the said shop therefore rests only on the ground whether the pleadings made by the appellants in their eviction petition would satisfy the requirement of Section 13 3 a ii of the Rent Act. The pleadings made by the appellants in the eviction petition must therefore be looked into in depth and in detail. It is an admitted position that the said shop is at Village Badheri, Chandigarh. Since the eviction granted by the appellate authority and reversed by the High Court in revision was on bonafide requirement of the appellants, it will be fit and proper that Section 13 3 a of the Rent Act should number be referred to, which runs as under Eviction of tenant - 3 a A landlord may apply to the companytroller for an order directing the tenant to put the landlord in possession i in the case of number-residential building or rented land, if a he requires it for his own use b he is number occupying in the urban area companycerned for the purpose of his business any other such building or rented land as the case may be and c he has number vacated such a building or rented land without sufficient cause after the companymencement of this Act, in the urban area companycerned A plain reading of the aforesaid provision, namely, Section 13 3 a ii of the Rent Act would show that in order to get an order of eviction on the aforesaid ground, the landlord had to aver and prove that the landlord required the said shop for his own use as the said shop was a number-residential building. In Joginder Pal vs. Naval Kishore Behal 2002 5 SCC 397, this Court companysidered the aforesaid provision in detail and interpreted the words his own use in regard to a numberresidential building. In that view of the matter, it would be appropriate for us to refer to the aforesaid companysideration by this Court in the aforesaid decision which crystallised the question as under The words for his own use as occurring in Section 13 3 a ii of the Act must receive a wide, liberal and useful meaning rather than a strict or narrow companystruction. The expression - landlord requires for his own use is number companyfined in its meaning to actual physical user by the landlord personally. The requirement number only of the landlord himself but also of the numbermal emanations of the landlord is included therein. All the cases and circumstances in which actual physical occupation or user by someone else, would amount to occupation or user by the landlord himself, cannot be exhaustively enumerated. It will depend on a variety of factors such as interrelationship and interdependence - economic or otherwise, between the landlord and such person in the background of social, socioreligious and local customs and obligations of the society or region to which they belong. The tests to be applied are i whether the requirement pleaded and proved may properly be regarded as the landlords own requirement and, whether on the facts and in the circumstances of a given case, actual occupation and user by a person other than the landlord would be deemed by the landlord as his own occupation or user. The answer would, in its turn, depend on i the nature and degree of relationship and or dependence between the landlord pleading the requirement as his own and the person who would actually use the premises ii the circumstances in which the claim arises and is put forward and iii the intrinsic tenability of the claim. The companyrt on being satisfied of the reasonability and genuineness of claim, as distinguished from a mere ruse to get rid of the tenant, will uphold the landlords claim. While casting its judicial verdict, the companyrt shall adopt a practical and meaningful approach guided by the realities of life. In the present case, the requirement of the landlord of the suit premises for user as office of his chartered accountant son is the requirement of landlord for his own use within the meaning of Section 13 3 a ii . This judgment is the answer to the question posed before us. Here also, the requirement is made for the son who is admittedly the owner of the shop room and also the landlord, after the said shop was, by a family partition dated 26th of August, 1998, given to the son who also became the landlord after family partition and also he became the owner of the said shop by such family partition. From the aforesaid decision of this Court, it is therefore, clear that this Court has laid down authoritatively that a number-residential premises, if required by a son for user by him would companyer the requirement of words used in the Section, i.e. for his own use in reference to a landlord. Therefore, if his own use has been interpreted by this Court in the above-said manner, then the requirements as laid down in Section 13 3 a ii b and c of the Act has to be interpreted in the same manner to hold that a the son of the landlord has to plead in the eviction petition that, b he is number occupying in the urban area companycerned for the purpose of his business any other such building or rented land as the case may be and c he has number vacated such a building or rented land without sufficient cause after the companymencement of the Rent Act, in the urban area companycerned. In the present case, it was pleaded and proved that the said shop was required for the use of the son and, therefore, the pleadings of the son in regard to the aforesaid requirement, being mandatory, were satisfied, otherwise it would make the requirement laid down under the said provisions nugatory in view of the interpretation given by this Court in the aforesaid decision, with which we are in full agreement. Applying the principles as laid down by the aforesaid decision namely, Joginder Pal Supra which also deals with companymercial premises, as in the present case, we are of the view that a plain reading of Section 13 3 a ii a to c in companyjunction with Section 13 3 a iv a b of the Rent Act, would make it ample clear when the said shop is being got vacated on the ground of user for the son of the landlord, then in the eviction petition, the son appellant No. 1 must plead that he was number occupying any other building and that he had number vacated such a building without sufficient cause. It is well settled that while interpreting a provision of a statute, the same has to be interpreted taking into companysideration the other provisions of the same statute. In the aforesaid decision, namely, Joginder Pal Supra , this Court has clearly laid down that a balanced interpretation has to be given in regard to the rent legislation and the provisions itself companytemplate a case in regard to user of number-residential building by a professional and the statute itself lays down requirement in that regard within the same requirements will have to be read in regard to shop required to be used by the son of the landlord for business purpose. Accordingly, we are of the view that the impugned decision of the High Court is in direct companyflict with the Judgment of this Court in Joginder Singhs case supra and therefore, the said Judgment cannot be sustained. There is another aspect of this matter. While making an interpretation of Section 13 of the Act, the High Court did number deal with Section 13 of the Rent Act companypletely but it dealt with only that part of Section 13 which deals with residential building only and has number dealt with portion of Section 13, which deals with numberresidential building. It is true that while reversing the order of eviction passed by the Appellate Authority, the High Court in the impugned order had also taken numbere of the decision in Joginder Pals case supra , but in view of our discussions made herein above, the ratio of the aforesaid decision was number applied in the present case. There is yet another angle in which the High Court was number justified in interfering with the order of eviction passed by the Appellate Authority which was the final companyrt of fact. The Appellate Authority while directing eviction to the respondents companysidered the oral and documentary evidence on record and also the pleadings of the parties and then came to a finding that the appellants had successfully averred and proved their case of personal requirement as made out by them under Section 13 3 a ii of the Rent Act. It is true that the High Court in its revisional jurisdiction companyld have interfered with such findings of fact arrived at by the Appellate Authority, if the High Court had found that the findings of the Appellate Authority on the question of bonafide requirement were either perverse or arbitrary. On a close examination of the impugned order of the High Court, we do number find any ground to hold that the findings of fact, regarding the bonafide requirement of the appellants, were perverse or arbitrary or the pleadings made by the appellants in their eviction petition companyld be said to be number in companyformity with the requirement of Section 13 3 a of the Rent Act. Therefore, we are also of the view that the High Court was in error in interfering with the order of eviction passed by the Appellate Authority on the ground of bonafide requirement. At this stage, an argument advanced by the learned companynsel for the respondents may be companysidered. The learned companynsel for the respondents relied on a decision of this Court in Hasmat Rai Anr. Vs. Raghunath Prasad 1981 3 SCC 103 and companytended that a portion of the demised premises may also be used as a residential premises, which cannot be companysidered to be a companymercial premises for the purpose of evicting the tenant under Section 13 3 a ii of the Rent Act. We are unable to accept this submission of the learned companynsel for the respondents, for the simple reasons, first, the decision in Hasmat Rais case supra was based on P. Accommodation Control Act, 1961 which companyfers on the authority to pass order of eviction on the ground of bonafide requirement on a different wording from the words used in East Punjab Urban Rent Registration Act, 1949. Furthermore, it may be reiterated that in order to obtain an order of eviction under Section 13 3 a ii of the Rent Act, the landlord has to prove, as numbered herein earlier, that he required the said shop for his own use and the said shop was a number-residential building. In this case, admittedly the said shop is used for companymercial purposes and therefore there was numberquestion of the said shop being used as residential purposes or being used for a portion of residential purposes for residential use.

With C.A.Nos.6152/99 6157/99 SANTOSH HEGDE,J. The sole question for our companysideration in these appeals is whether the Central Excise Gold Control Appellate Tribunal the Tribunal was justified in accepting the companytention of the respondent Department that the three appellants herein are so inter-connected and have mutuality of interest among themselves, as to club their production for the purpose of either denying them the benefit of the exemption limit or to assess them as one unit for the purpose of levy of central excise duty. The tribunal while dismissing the appeals of the appellants herein agreed with the companylector of Central Excise, Pune that the three units the appellants herein procured raw materials together, they had companymon credit facilities from the suppliers, had companymon stock accounting and planning, they are inter-dependents in manufacturing operations, had companymon stock of raw materials and semi furnished goods, were having companymon use of the machinery between the three units, were having companymon marketing arrangements and free flow of finance between themselves. On these basis, the tribunal companycurred with the Collector that the three units in fact are so inter-related that the Department was justified in clubbing their total production as production from one unit for the purpose of Central Excise Act. In these appeals, Shri Joseph Vellapally, Learned Senior Advocate appearing for the appellants companytended, even according to the material relied upon by the respondents, it is clear that the three units are independent units, though, may be having certain companymon facilities for the sake of companyvenience, which does number make the unit inter-related. At any rate, it was argued on behalf of M S. Supreme Washers P Ltd., the appellants in Civil Appeal No.6161 of 1999 that it being a limited companypany, by virtue of the Circular Nos. CER 5 - Central Excise dated 1.3.1956, the said appellants companyld number have been clubbed with the two other appellants, because the said circular being a statutory circular is binding on the Department. Learned Attorney General, appearing for the respondent companyntering the first part of the argument of the learned companynsel for the appellants submitted on the basis of the factual material that was available before the Tribunal, the Tribunal has companye to the just companyclusion that there was mutuality of the interest between all the three units. And it being a pure question of fact, the said finding does number call for interference by this companyrt. In regard to the applicability of the Circular referred to herein above, the Learned Attorney General submitted, since this point was number urged before the Tribunal, then for that limited purpose, the matter may be remanded back to the Tribunal. Having heard the learned companynsel for the parties and perusing the records, we are in agreement with the finding of the Tribunal that there is mutuality of interest between the appellants. The reliance placed by the Tribunal on facts like the three companypanies having companymon management under Shri S.L. Raheja, having companymon procurement of raw material, having companymon stock accounting and planning, having interdependence in manufacturing operations, having companymon stock of raw materials and semi finished goods, having companymon use of machinery between the three units, having companymon marketing arrangements and free flow of finance between three units cumulatively indicates inter-dependence of the three units with each other as also inter-relationship, cumulatively establishes the appellants inter-relationship and interdependence with each other, hence, the arguments of the appellants on this factual score must fail. In regard to the second companytention of the appellant in Civil Appeal No.6161 of 1999, it is seen from the Circular dated 1.3.1956, which according to the appellants have been reiterated by another subsequent Circular No.6/82 dated 29th of May, 1992 by the Central Board of Excise Customs, New Delhi that a limited companypany should be treated as a separate entity for the purpose of exemption limit. If that be the position in law, then there may be some justification for the appellant to urge, so far as M S. Supreme Washers P Ltd. is companycerned, it being a limited companypany, its production can number be clubbed with the other units.

Mrs Justice Gloster, DBE: Introduction On 1 April 2011, I handed down judgment in this action[1] ("the First Judgment"), following Pioneer's application for summary judgment on its claim. The definitions used in that judgment are used in this judgment. The result of the First Judgment, on the basis of the parties' pleaded cases as they stood at that date, was that Pioneer was entitled to judgment against TMT in the sum of US$ ("$") 26,088,865.94. Most of the necessary background facts for the purposes of this judgment are set out in the First Judgment, and I do not repeat them here. Following the handing down of the First Judgment, I gave TMT permission to amend its defence so that it could argue a new point, the effect of which, TMT claimed, was to reduce Pioneer's claim to $ 16,557,594.10. I considered it appropriate that TMT should have the opportunity to argue this new point of law and construction, notwithstanding that it had been raised so late, and that it could have been raised earlier, following the decision of Briggs J in Lomas v JFB Firth Rixson [2010] EWHC 3372 (Ch) ("Lomas"), in relation to which I had given the parties an opportunity to present further argument prior to the delivery of the First Judgment. My reasons for allowing this late amendment included the facts that: i) there are a number of cases where similar issues arise, which are of wider importance to the market, than this case alone; ii) I was told that the appeal in Lomas was going to be heard sometime in the Michaelmas term 2011; and iii) I had, in any event, granted TMT permission to appeal the First Judgment. Accordingly, on 1 April 2011, I gave an immediate interim judgment in the sum of $16,557,594.10, pending argument in relation to the new point on quantification. I heard detailed oral argument on the new point on 7 April 2011. For the purposes of that hearing, the parties presented a further 30 pages of written arguments, together with a bundle of further authorities. The parties were told by me that there would be some delay in the preparation of my further judgment because of my absences on leave, and that it was likely that judgment would be handed down in the Trinity term. On 3 June the parties informed me by letter that they had agreed to resolve their disputes in accordance with the terms of a confidential settlement dated 27 May 2011. However, I was told that both parties had agreed that the proceedings would be formally withdrawn upon the handing down of my further judgment. I was told that that was because Pioneer had various cases where similar issues arose and it was hoped that my judgment in relation thereto might enable the parties to settle those further disputes. In particular, I was told that similar issues arose in a case that was due to be heard in the Commercial Court in June 2011, namely Pioneer Freight Futures Company Ltd v COSCO Bulk Carriers Company Ltd[2]. In the event, however, due to priority that had to be afforded to other cases, I was not in a position to deliver this judgment before Flaux J handed down his judgment in that case: Pioneer Freight Futures Company Ltd v COSCO Bulk Carriers Company Ltd [2011] EWHC 1692 (Comm) ("COSCO"). That judgment addresses some of the same issues that arise in this case. I am informed that COSCO is also being appealed to the Court of Appeal, Flaux J having granted leave. Because Pioneer and TMT had settled this case, I did not consider it appropriate to invite counsel to make further submissions in relation to Flaux J's decision. Some of the arguments which found favour with him, were not arguments which counsel had presented in argument to me. I have given anxious consideration as to whether, in the circumstances, it is appropriate for me to give any judgment in this case at all, given that, in the light of the parties' settlement, the issues raised are moot. In effect the Court is being asked to give an advisory opinion, in order to assist Pioneer and the market (not merely limited to the FFA market, but also the wider financial market), in relation to the construction and application of important provisions of ISDA 92. Although, no doubt, I have a discretion to do so in the particular circumstances of this case, where I have heard argument on the relevant issues and they are of such obvious concern to the market, I nonetheless have to bear in mind that the Court's resources have to be deployed as effectively as possible. I have to consider the overriding objective set out in Part 1 of the Civil Procedure Rules.[3] That consideration is particularly pertinent in circumstances where at least two of the three issues raised in this case are likely to be determined by the Court of Appeal in both the Lomas and COSCO appeals later this year in any event. Were I to agree with the views taken by Briggs J and/or Flaux J in relation to the second and third issues, the utility of a further judgment from me arriving at the same result would be questionable. Were I to disagree with their views (the result sought by Pioneer), again, the utility and status of a judgment from me on an advisory basis, and without hearing argument in relation to Flaux J's reasoning, would also be questionable, although it might of course provide Pioneer or other parties with a useful negotiating tool in the context of other disputes. Two further factors are also relevant. First, the first issue (as defined below), if it were to be decided in Pioneer's favour, would be determinative of the only question left in the action prior to settlement (viz. the quantification of TMT's liability), without the need to resolve the second and third issues. Second, the pressure of work in the Commercial Court is such that the efficient deployment of its judges in the interests of all its users is critical to the effective functioning of that court. It is these considerations which have resulted in the approach which I have adopted to this judgment, as appears below. TMT's new point The Amended Defence, so far as relevant, now pleads as follows: "13A. Alternatively, the amount of the claim is in any event overstated. The contracts numbered 5, 6, 7, 8, 11, 12, 13, 15 and 16 in Schedule 1 to the Amended Particulars of Claim ('the 2008 Contracts') all terminated according to their terms at the end of December 2008. In the premises set out in paragraphs 6.6 and 6.7 above, and on the true construction of the ISDA Master Agreement – 13A.1 no Settlement Sums fell due for payment from the Defendant to the Claimant under any of the 2008 Contracts in respect of the Contract Months of November or December 2008, and 13A.2 on the termination of the 2008 Contracts, any liability on the Defendant to pay any Settlement Sums to the Claimant in respect of the 2008 Contracts was extinguished once and for all. 13B. In the premises pleaded in paragraph 13A above, the amount that should be credited to the Defendant is understated by a sum of US$4,568,754.39 in respect of November 2008 and by US$4,962,517.47 in respect of December 2008. Even if the Claimant is otherwise entitled to judgment against the Defendant, the correct sum would accordingly be US$16,557,594.10, not US$26,088,856.94." Thus TMT's position, as a result of the Amended Defence, is that it denies that it is liable to Pioneer in respect of sums which it would have had to pay Pioneer in respect of three of the 2008 Contracts[4] had Pioneer not, in November and December 2008, been subject to an Event of Default. That, TMT claims, is because Pioneer's inability to satisfy the conditions precedent in section 2(a)(iii) of ISDA 92 was not rectified, nor was it affected by the Event of Default which occurred in December 2009 and which gave rise to Automatic Early Termination of other relevant FFAs. TMT contend that is so for two reasons: i) First, the 2008 Contracts were not subject to Automatic Early Termination because by December 2009 they had already expired, in the sense that the last Contract Month in respect of which payments had to be made, had passed. Under section 1(c) of ISDA 92, Automatic Early Termination applies to "all outstanding Transactions"[5]. Where Transactions are no longer "outstanding" they cannot be the subject of Early Termination (whether automatic or elective). ii) Secondly, and similarly, as held by Briggs J in paragraphs 75-79 of his judgment in Lomas, where the conditions precedent to payment under section 2(a)(iii)(1) of ISDA 92 remain unsatisfied at the natural expiry of the contract, any liability to pay the Defaulting Party is extinguished. As a result, and based on the decision in Lomas, TMT contended that, if the 2008 Contracts were not the subject of Automatic Early Termination, then Pioneer was only entitled to the judgment entered on 1 April 2011, in the sum of US$16,557,594.10, and nothing more. This calculation involves, in effect, stripping from the section 6 closing calculation of "Loss" that occurred on Automatic Early Termination in December 2009, sums ostensibly due to Pioneer in respect of Contract Months November and December 2008 relating to three of the 2008 Contracts (Contracts 5, 6 and 11), on the grounds that, by the date of Automatic Early Termination, they had expired. TMT contends that its re-quantification produces the following result: Contract Month Contract No Sum ostensibly due to Pioneer $ November 2008 5 1,582,918.13   6 1,582,918.13   11 1,402,918.13 TOTAL   4,568,754.39 plus net amount due to TMT as per Table A of the Amended Particulars of Claim in respect of all other contracts 5,340,359.06 5,340,359.06 Total net amount due to TMT for November 2008 9,909,113.45 9,909,113.45 December 2008 5 1,716,172.49   6 1,716,172.49   11 1,530,172.49 TOTAL   4,962,517.47 plus net amount due to TMT as per Table A of the Amended Particulars of Claim in respect of all other contracts 4,799,978.76 4,799,978.76 Total net amount due to TMT for December 2008 9,762,496.23 9,762,496.23 However, if (contrary to TMT's arguments) the amounts ostensibly due to Pioneer under contracts 5, 6 and 11 were available on the due dates for payment in relation to Contract Months November and December 2008 to be taken into account for netting purposes under section 2(c) of ISDA 92, then gross sums owed to TMT in relation to Contract Months November and December 2008 would have been pro tanto reduced by such amounts, and thus TMT's attempt at re-quantification of its claim would fail. As at the due dates for payment in relation to Contract Months November and December 2008, the relevant 2008 Contracts (5, 6 and 11) under which Pioneer was in the money had not yet "expired", in the sense that there was still, technically at least, the possibility that relevant conditions precedent could be satisfied. Thus TMT's newly-formulated quantification of its liability assumes in its favour that the decision of Flaux J in Marine Trade SA v Pioneer Freight Futures Co Ltd BVI [2009] EWHC 2656 (Comm), [2010] 1 Lloyd's Reports 631 ("Marine Trade") - namely that a Non-defaulting Party does not have to give credit by way of netting under section 2(c) for an amount that was not payable by the Non-defaulting Party because of a failure to satisfy a condition precedent under section 2(a)(iii) - is correct. The issues raised by TMT's amended quantification of its liability Accordingly, the issues raised by TMT's suggested re-quantification of its liability may be summarised as follows: i) Are payment obligations which are suspended by virtue of section 2(a)(iii) of ISDA 92 nonetheless taken into account for netting purposes under section 2(c) ("the Netting Issue")? (This first issue raises the correctness of the decision in Marine Trade). ii) Can Automatic Early Termination apply at all to an FFA after the last Contract Month specified in that FFA has passed, prior to the Automatic Early Termination date ("the AET issue")? (This second issue raises the correctness of the decisions in Lomas and COSCO.) iii) Is a suspended debt obligation extinguished once and for all at the end of the last Contract Month specified in the relevant FFA, such that it cannot be taken into account upon Automatic Early Termination ("the Expiry Issue")? (This third issue raises the correctness of the decisions in Lomas and COSCO.) Relevant terms of the FFAs and ISDA 92 Before turning to consider the respective issues, it is relevant to note that, although in the First Judgment I used the definition "Contract Period" to denote the total period in respect of which the parties under a FFA agree to pay the Settlement Sum (as defined in the FFA) on a monthly basis, the only definition of "Contract Period" is that appearing in the FFA, which is as follows: "5. Contract Period Average of all BPI Index days of the contract month(s) up to and including the settlement date(s)." "Contract Months" are defined in a FFA as the relevant months in respect of which a party has to pay a "Settlement Sum" (as also defined in a FFA). Issue i): the Netting Issue Logically, this issue arises first, since, it requires consideration of the position whether, as at a time when the 2008 contracts had not expired (namely on the payment date[6] specified in clause 9 of the relevant FFAs in relation to Contract Months November 2008 and December 2008), the automatic netting provisions of section 2(c) of ISDA 92 applied, so as to enable Pioneer to contend that the gross sums which it owed TMT were automatically netted off as against the gross sums which TMT owed Pioneer, thereby pro tanto discharging Pioneer's obligations to TMT. Section 2 of ISDA 92 and clause 10(a) of the FFA So far as here material, section 2 of ISDA 92 provides: "2. Obligations (a) General Conditions (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. ... (c) Netting. If on any date amounts would otherwise be payable (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries." (emphasis added) In the present case, by virtue of clause 10(a) of the FFABA 2007[7] terms, Pioneer and TMT elected that section 2(c)(ii) would not apply, so that, as stated in clause 10(a) of all the relevant FFAs: "… a net amount due will be determined in respect of all amounts payable on the same date in the same currency in respect of two or more Transactions." The decision of Flaux J in Marine Trade One of the questions raised in the Marine Trade case was whether, in circumstances where one of the parties to an FFA is affected by an Event of Default, such that the condition precedent in section 2(a)(iii) is not satisfied, the Settlement Sums which would be due to the Defaulting Party but for the Event of Default can be taken into account for the purposes of netting under section 2(c). Flaux J held that, in these circumstances, the Settlement Sums owed to the Defaulting Party could not be taken into account under section 2(c). In other words, the Non-defaulting Party was entitled to claim Settlement Sums due to it on a gross or aggregate basis, without giving credit for sums which would otherwise (but for section 2(a)(iii)) have been payable to the Non-defaulting Party. At paragraphs 22 - 27 of his judgment, Flaux J said as follows: "22. I have no doubt that Mr Baker's construction of the provision in section 2(c) is the correct one. As a matter of ordinary language, 'payable' clearly means now due and owing, for immediate payment and not only payable if and when some suspensive condition for which Mr Tselentis contends is satisfied. Quite apart from the ordinary meaning of language, when the agreement is considered as a whole, the word 'payable' in section 2(c) clearly means that there is a current enforceable obligation to pay. This is clear from the fact that, having talked about 'amounts which would otherwise be payable', the provision goes on to talk about 'each party's obligation to make payment' being 'automatically satisfied and discharged' by payment of the balance after netting. However, where Pioneer is affected by an Event of Default, as a consequence of section 2(a)(iii), Marine Trade has no obligation to make payment to Pioneer at all. 23 That 'payable' connotes an immediately enforceable obligation to pay is also clear from the definition of 'Unpaid Amounts' for the purposes of the calculation of the payment due on Early Termination. This refers to such unpaid amounts being 'the amounts that became payable (or that would have become payable but for section 2(a)(iii))' which demonstrates that the effect of non-compliance with the conditions precedent in section 2(a)(iii) is that the amounts have not become payable. That is only consistent with 'payable' meaning immediately due for payment and wholly inconsistent with Mr Tselentis' construction of 'payable' as somehow covering a situation where the payment obligation has been suspended. Mr Tselentis accepted that if his construction of 'payable' was wrong (which I do consider it to be), his argument on Issue 2 could not run. 24 Given what I consider to be the clear construction of section 2(c), it is not necessary to consider in any great detail the various arguments about the commercial purpose of the provision with which Pioneer sought to bolster its construction. The main thrust of those arguments was the alleged absurdity of a situation such as would obtain if Marine Trade were right, where a Non-Defaulting Party could insist that the Defaulting Party paid sums gross to it without netting off, even if, were the Non-Defaulting Party to designate an Early Termination Date under section 6 (which ex hypothesi it would not do) the calculation of the payment on such Early Termination would result in a substantial balance in favour of the Defaulting Party, because the Settlement Sums which would have become payable to the Defaulting Party but for section 2(a)(iii) fall to be considered in arriving at the eventual figure. 25 However, it seems to me that there is an obvious difference between what is to happen whilst the contract is subsisting and how the parties resolve their differences on early termination by way of 'wash-out'. As Mr Baker pointed out, in what might be described as orthodox contractual analysis, if one party is in default and that amounts to a repudiatory breach of contract, the other party can accept that repudiation as bringing the contract to an end and thereby terminate any of its own obligations for the future. To that extent, some of the Early Termination provisions of the Master Agreement might be said to be unorthodox, in the sense that they seek to balance the current and future obligations of the Non-Defaulting Party under the relevant futures transactions against those of the Defaulting Party. They are no doubt designed at least in part to ensure a 'wash-out' between the parties on termination which strikes a fair balance to reflect that transactions which by definition were going to continue for some time into the future have been terminated early. 26 However, it does not seem to me that what will happen on early termination necessarily has any connection with what happens when the relevant transactions are subsisting. Where the Non-Defaulting Party has chosen (as it is perfectly entitled to do) not to elect for early termination under section 6, I can quite see the commercial sense of being able to insist on 'gross' payment by a Defaulting Party. 27 In any event, even if it could be said that the commercial balance of the argument lay in favour of Pioneer, that is not enough to gainsay the clear meaning of section 2(c) as I have held it to be. This is not a case in which Pioneer has suggested that the construction for which Marine Trade contends is so unreasonable commercially that the court should endeavour not to construe the agreements in that way, applying Lord Reid's famous dictum in Schuler v Wickman Machine Tools [1974] AC 235 at 251." Thus, according to Flaux J, if a party was affected by an Event of Default at a particular time such that the condition precedent to payment was not satisfied in relation to that party, it followed that any Settlement Sums which would, but for that Event of Default, be due to that party were not "otherwise ... payable" for the purpose of section 2(c), and could not be taken into account under that section. In particular, he held that, "as a matter of ordinary language", the word payable means "now due and owing, for immediate payment", and that a sum which was not immediately due for payment by virtue of section 2(a)(iii) was therefore not "payable" (see at paragraph 22). In support of that conclusion, Flaux J relied upon the definition of "Unpaid Amounts" in section 14 of ISDA 92, which referred to "the amounts that became payable (or that would have become payable but for section 2(a)(iii))". According to Flaux J, the definition of Unpaid Amounts confirmed that, in the context of ISDA 92 as a whole, the word "payable" connotes an immediately enforceable obligation to pay (paragraph 23). The approach taken in Lomas In Lomas, where the relevant agreements were fixed and floating interest rate swaps, all parties to the agreements invited the Court to proceed on the basis that, notwithstanding Flaux J's judgment in Marine Trade, at least so far as the interest rate swaps of the type in question in Lomas were concerned, section 2(a)(iii) could not be construed as preventing netting under section 2(c) despite the fact that one party was in default. It was apparently argued that, whilst the FFAs in Marine Trade were merely contracts for differences (see, for example, clause 8 of the FFAs) the interest rate swaps in Lomas contained inter-dependent payment provisions and therefore the non-defaulting party could not enforce the defaulting party's obligations without having its own reverse payment obligations taken into account. Accordingly, Briggs J was invited not to follow Flaux J's decision on the point[8]. (ISDA, which had intervened in the Lomas action, sought to distinguish Marine Trade). However, since the relevant ISDA 92 provisions were precisely the same in both cases, the parties were effectively proceeding on the basis that the conclusion reached by Flaux J should not be followed[9]. Briggs J indicated that he was prepared to proceed on the basis conventionally agreed by the parties, expressly stating that, in so doing, he was not casting any doubt and expressing no view one way or the other upon Flaux J's contrary conclusion in Marine Trade[10]. Flaux J's approach to the netting issue in COSCO The netting issue did not directly arise in COSCO.[11] However, Flaux J restated his earlier conclusions at paragraphs 92 – 98 as follows: "92. Briggs J in Lomas accurately summarised my conclusion as: 'His view was that the clear language, in particular of Section 2(c), meant that credit only had to be given, by way of netting, for an amount that was payable, and not for an amount that, because of an unfulfilled condition precedent under Section 2(a)(iii), was not payable.' This issue was one of the issues raised by the appeal of Pioneer in Marine Trade, which was not pursued. 93. In the present case, the issue does not arise directly, since, after November 2008, neither party made any payment, Pioneer because it did not have the financial means to do so and Cosco because it was under no obligation to do so because of Section 2(a)(iii). It follows that the question of netting did not arise after Section 2(a)(iii) took effect in November 2008. Whether netting would have been possible in other circumstances where Section 2(a)(iii) had taken effect is thus an academic question. It is of no more than marginal relevance to the issue of whether contingent payment obligations survive in the case of transactions which have reached their natural expiry. 94. In his Skeleton Argument, Mr Thanki recognised this and said that this point was not essential to his argument, but that the view of all the parties in Lomas was to be preferred. By the time of the hearing, perhaps goaded by Mr Jacobs' submissions in his Skeleton Argument as to why my decision on the point in Marine Trade was correct, Mr Thanki had put in a detailed written Supplementary Note as to why my decision was wrong. He pointed out that my analysis, that netting was only available if there was a current, enforceable obligation to pay and not if the particular Settlement Sum was not payable because of non-fulfilment of the conditions precedent in Section 2(a)(iii), had been disapproved by textbook writers. 95. He drew particular attention to the intense criticism my decision had received in Henderson on Derivatives, a textbook by Schuyler K Henderson, an eminent American academic and consultant on derivatives law. Mr Henderson describes my decision variously as 'remarkable', 'astonishing' and 'bizarre'. He suggests that the flaw in my reasoning is a failure to recognise that, because Section 2(a)(i) says that it is 'subject to the other provisions of this Agreement', one of which other provisions is Section 2(c), both Section 2(a)(iii) and Section 2(c) should be read as referring back to Section 2(a)(i) independently and there is no reason to give primacy to Section 2(a)(iii) (see para. 20.18 of the second edition at p 1074). 96. However, with respect to Mr Henderson and Mr Thanki, who adopted his reasoning, my analysis in Marine Trade did not depend upon giving Section 2(a)(iii) primacy over Section 2(c). Assuming for present purposes that Mr Thanki is right in his submission that Section 2(a)(iii) is subject to, and logically anterior to, Section 2(c), Section 2(c) still only applies where, before netting occurs, there is an amount which 'would otherwise be payable' and 'an obligation to make payment of any such amount', but for the netting process. In the light of Mr Henderson's criticisms and Mr Thanki's submissions, I have reconsidered the issue of what those phrases connote in Section 2(c). 97. Mr Thanki relied upon the definition of 'payable' in Black's Law Dictionary (9th edition 2009): '(Of a sum of money or a negotiable instrument) that is to be paid. An amount may be payable without being due. Debts are commonly payable long before they fall due.' He also submitted that 'payable' meant different things in different contexts in the ISDA Master Agreement, pointing to various references to payment being 'due' or 'due and payable' but it seems to me that he could not point to anything, at least in the 1992 Master Agreement with which the Court is concerned, which suggested that 'payable' is being used anywhere in the Master Agreement in a contingent sense of 'payable, although the payment obligation is suspended' or in the sense to which Black is referring. 98. As I said in Marine Trade, it seems to me from the internal references within Section 2(c) to 'each party's obligation to make payment' being 'automatically satisfied and discharged' by payment of the balance after netting, that 'payable' in Section 2(c) connotes an immediately enforceable obligation to pay. Furthermore, the 'Unpaid Amounts' definition, which refers to 'the amounts that became payable (or that would have become payable but for Section 2(a)(iii))', makes it clear that the effect of non-compliance with the conditions precedent in Section 2(a)(iii) is that amounts did not become 'payable' for the purposes of netting under Section 2(c). Thus, in so far as it is necessary to decide this point in the present case, I consider that, where the conditions precedent in Section 2(a)(iii) have not been satisfied, netting is not available to the Defaulting Party, for the same reasons as I gave in Marine Trade." TMT's submissions on the Netting Issue Mr. Jonathan Crow QC, leading counsel on behalf of TMT, submitted that Flaux J's decision in Marine Trade on this point was clearly correct for the reasons which he gave, and that I should follow it. He argued that the wording of section 2(c) could not be clearer as it used the word "payable", and, because of the operation of section 2(a)(iii), no sums were payable by Pioneer as the Defaulting Party. Pioneer's submissions on the Netting Issue Mr. Charles Kimmins QC, leading counsel on behalf of Pioneer, submitted as follows. Flaux J's decision on the Netting Issue in Marine Trade was wrong, and the approach taken by the parties in Lomas was correct. The decision had been subject to considerable criticism by market commentators: see for example Henderson on Derivatives (2nd Edition) at pp 918 and 1074, and various other commentators. Mr. Kimmins submitted that there were four principal reasons why Flaux J's decision was wrong: i) First, the construction supported by Pioneer was consistent with the commercial purpose of section 2(a)(iii). As was held in paragraph 69 of the First Judgment, the "commercial function or purpose of the condition precedent to payment as set out in section 2(a)(iii) is to mitigate counterparty credit risk during the currency of what may be numerous swap transactions under the umbrella of ISDA 92 and while they remain open." That commercial purpose would be entirely fulfilled if Pioneer's construction (and the common ground in Lomas) were correct. In particular, if, following the netting process, it turned out that a net sum were due to a Defaulting Party in respect of a particular Contract Month, the effect of section 2(a)(iii) was to ensure that the Non-defaulting Party did not have to pay that sum while the Event of Default was subsisting. By way of contrast, the commercial purpose could not explain or justify an interpretation of section 2 of ISDA 92 which enabled the Non-defaulting Party to claim against a Defaulting Party on a gross basis, as found by Flaux J. The effect of that construction was that the Non-defaulting Party obtained a substantial windfall as a result of the Event of Default (or Potential Event of Default) of the other party. There was no sensible commercial rationale for such a result, and clear words would be needed in order for ISDA 92 to be construed in such a way. The words of section 2(c) were nowhere near clear enough for this purpose. ii) Second, a debt could be "payable" even if it was not "due and owing for immediate payment". The word "payable" could mean different things in different contexts. Flaux J was wrong to say that it meant "now due and owing, for immediate payment" as a matter of ordinary language. Black's Law Dictionary (9th edition 2009) defines "payable" as follows: "(Of a sum of money or a negotiable instrument) that is to be paid. An amount may be payable without being due. Debts are commonly payable long before they fall due."[12] In ISDA 92, the word "payable" meant different things in different contexts. That was no surprise. Whilst ISDA 92 was a carefully drafted agreement, it was nevertheless clear that it was not in all respects internally consistent.[13] For example, in clauses within ISDA 92 where it was critical to refer to a debt which was actually due for payment, rather than merely accrued, ISDA 92 used the language of "due", or "due and payable", rather than merely "payable": see for example: (i) sections 5(a)(i) and (ii); section 5(a)(vii)(2); and section 5(a)(vi). The above provisions indicated that at times there was a distinction within ISDA 92, between the concept of a debt being "payable" and that of a debt being "due". In particular, if the word "payable", as used in ISDA 92, meant "due and owing for immediate payment", then that word could have been used in each of the examples listed above. It was noteworthy that it was not so used. The same distinction, between a debt being "due" and a debt being "payable" was inherent in the FFABA 2007 Terms: see clause 10(a). The later 2002 ISDA Master Agreement, by section 6(f), provided that an Early Termination Amount payable by one party to the other shall be set off against "other amounts payable by the Payee to the Payer (whether or not … matured or contingent)[14]". This was a further clear indication that, in the context of ISDA, the word "payable" was not ordinarily used in the narrow sense adopted by Flaux J, but in the broader sense suggested by Pioneer. Pioneer accepted that, in the definition of "Unpaid Amounts" in ISDA 92, the term "payable" was arguably used in the sense of "due and owing". However, even if that were right, the other provisions referred to above demonstrated that the word "payable" was not always used in that narrower sense in ISDA 92. Further and in any event, it was unrealistic to suppose that these words, used in parentheses in the context of an ancillary provision in ISDA 92, could themselves control the meaning of the word "payable" throughout the Master Agreement. That would be to allow the tail to wag the dog. Once it was seen that "payable" could be interpreted narrowly or broadly, depending on context, then much of the reasoning behind Flaux J's decision on the point was undermined. iii) Third, Flaux J's approach did not take account of the way in which section 2(a)(i) and section 2(c) interrelated. That approach assumed that, in applying section 2 of ISDA 92 it was first necessary to ascertain what sums were payable under section 2(a)(i), and only then, once those payment obligations were ascertained, to apply the netting process to the sums thus payable. But, that was the wrong way around. On a proper analysis of section 2 of ISDA 92, it was clear that section 2(a)(i) was subject to, and logically anterior to, section 2(c). That was clear from the fact that section 2(a)(i) was expressed to be "subject to the other provisions of this Agreement". Those other provisions included section 2(c). It followed that, in order to ascertain what sum was payable under section 2(a)(i) it was first necessary to apply the netting process under section 2(c). In other words, the obligation to make a payment under section 2(a)(i) was always and necessarily an obligation to pay a net amount. It also followed that, where the first limb of section 2(a)(iii) suspended an obligation to make a payment under section 2(a)(i), what was being suspended was the obligation to make a net payment, after section 2(c) had been applied. iv) Fourth, in addition, the construction adopted by Flaux J had the potential to offend the anti-deprivation rule. Thus, in holding that section 2(a)(iii) did not offend the anti-deprivation principle in Lomas, Briggs J emphasised that he might well have come to a different conclusion were it not for the common ground on the approach to netting[15]. The anti-deprivation rule could be shortly stated. House of Lords authority, as interpreted in subsequent cases such as Perpetual Trustee v BNY Corporate Trustee Services [2009] EWHC 1912 (Ch), [2009] EWCA Civ 1160, held that: "Where the effect of a contract is that an asset which is actually owned by a company at the commencement of its liquidation would be dealt with in the way other than in accordance with [the statutory provisions for rateable distribution to creditors] then to that extent the contract as a matter of public policy is avoided."[16] The provisions relied on by TMT, assuming they are to be interpreted in the manner relied upon by Flaux J, would have the result of depriving Pioneer of US$10 million in respect of the November and December 2008 Contract Months, by reason of Pioneer's insolvency. The very fact that the decision of Flaux J, if correct, led to the risk that the provisions might be struck down as contrary to the rule, indicated that his construction was wrong. As explained by Lord Hoffmann in BCCI v Ali [2002] 1 AC 251 at 269: "… the parties are unlikely to have intended to agree to something ... legally ineffective". Reference was also made to Lewison, The Interpretation of Contracts, 7.15: "Where two constructions of an instrument are equally plausible, upon one of which the instrument is valid, and upon the other of which it is invalid, the court should lean towards that construction which validates the instrument." Accordingly, if there were otherwise any doubt as to whether Pioneer's construction of section 2(c) were correct, the fact that the alternative construction would arguably offend the anti-deprivation principle should encourage the Court to lean in favour of Pioneer's approach. Decision to determine the Netting Issue notwithstanding settlement Taking into account the considerations I have outlined in paragraph 5 above, I consider it is appropriate to express my conclusions in relation to the Netting Issue, notwithstanding the fact that this case has settled. I consider that it is appropriate to do so, because of the uncertainty to which the decision in Marine Trade in relation to the Netting Issue ...and the fact that it was not applied in Lomas) has apparently given rise in the market and because I have, with the greatest respect to Flaux J's analysis in both Marine Trade and COSCO, firmly reached the opposite conclusion to him. Analysis of the Netting Issue The approach to the interpretation of commercial documents of this kind is not controversial. It was recently re-stated in paragraphs 9 and 10 of the Supreme Court judgment of Lord Mance in In re Sigma Finance Corporation (in administrative receivership) [2009] UKSC 2. As Lord Mance pointed out, after reference to a number of well-known cases, including Charter Reinsurance Co Ltd (In Liquidation) v Fagan [1997] AC 749: "In Charter Reinsurance Lord Mustill underlined the danger of focusing too narrowly on a critical phrase (in that case, a phrase defining the term 'net loss' as meaning 'the sum actually paid by the Reinsured in settlement of claims'), saying, at p.384G-H that: 'This is … an occasion when a first impression and simple answer no longer seem the best, for I recognise that the focus of the argument is too narrow. The words must be set in the landscape of the instrument as a whole. Once this is done the shape of the policy and the purpose of the terms … become quite clear' Adopting that approach, the House concluded that the words "actually paid" were in context not intended to introduce a pre-condition of pre-payment by the insurer to the original insured, but to ensure that the reinsurers' liability was measured precisely by reference to any settlement of liability as between the insurer and insured. Later (at p.387D) Lord Mustill said that the principle that the liability of a reinsurer is wholly unaffected by whether the insurer has in fact satisfied the claim under the inward insurance is one which 'can undoubtedly be changed by express provision, but clear words would be required; and it would to my mind be strange if a term changing so fundamentally the financial relationship were to be buried in a provision such as clause 2, concerned essentially with the measure of indemnity, rather than being given a prominent position on its own.'" Thus, I start my analysis by looking at the "landscape" of the instruments as a whole. One does not have to approach the canvas of the relevant FFABA 2007 terms and ISDA 92 very closely to see that the broad commercial scheme of the instruments (certainly where, as here, there is an election for Automatic Early Termination and for the "Second [payment] Method" under section 6(e)(i)(4)) is that aggregate or gross amounts in respect of all Transactions between the parties subject to the Master Agreement are to be netted off against each other, so that only one net sum is actually due from one party to the other. That is made clear by clause 10(a) of the relevant FFA (disapplying section 2(c)(ii) of ISDA 92) and by section 2(c) of ISDA 92. Moreover, the relevant commercial background is, of course, that the parties anticipate that they will, at any one time, have a number of similar transactions in place, all subject to one common ISDA 92 Master Agreement. Thus, during the life of a contract (disregarding, for the moment, the factual situation in issue here, where one party is in default, and therefore the section 2(a)(iii) condition precedent is not satisfied), clause 10(a) of the FFA, combined with section 2(c) of ISDA 92, operates to ensure that there is a monthly netting off of all aggregate or gross amounts payable in the same currency on the same day in respect of all Transactions between the parties. The same scheme also operates at the end of the contract's life on Early Termination or Automatic Early Termination. Where there has been an election for the Second Method of payment (whether the payment measure is "Market Quotation" or "Loss"), the relevant provisions of sections 6(a), 6(c), 6(d), 6(e) and the relevant definition provisions of section 14[17] require a closing or wash-out calculation that produces one final net figure which one or other party is obliged to pay the other. As held in the First Judgment[18], this wash-out calculation on Automatic Early Termination takes into account, retrospectively, payments which the Non-defaulting Party would have been required to make to the Defaulting Party during the Contract Months preceding Automatic Early Termination, had not the Defaulting Party been subject to a subsisting Event of Default, and thus could not, during that period, satisfy the condition precedent to the payment obligation in section 2(a)(iii) of ISDA 92. In other words, there is an across-the-board netting off of all past payment obligations on the assumption that the conditions precedent had been satisfied. Likewise, as Flaux J (in Britannia Bulk plc (supra) and I (in the First Judgment[19]) respectively decided, the wash-out calculation on Early Termination also has to take into account, when calculating the Non-defaulting Party's prospective "Loss", an estimate of the sums that would have been prospectively payable over the remaining life of the Transactions by the Non-defaulting Party, on the assumption that the conditions precedent had been satisfied by the Defaulting Party. This is because the Non-defaulting Party has to make an estimate of what (if any) loss he has suffered prospectively, as a result of the contracts not continuing for the rest of their contractual term, and also an estimate of any gain the Non-defaulting Party has made as a result of being relieved of further performance, in respect of which he has to account to the Defaulting Party[20]. In other words, on Early Termination or Automatic Early Termination, both parties' retrospective and prospective obligations have to be estimated and notionally set off against one another, so as to reach one figure for the Non-defaulting Party's "Loss", which may be a positive or a negative number. A similar approach is taken where the payment measure is Market Quotation. And, critically, this calculation has to be done on the basis that it is assumed that conditions precedent will have been satisfied. Although, in Marine Trade, Flaux J expressed the view that it did not seem to him that: "… what will happen on early termination necessarily has any connection with what happens when the relevant transactions are subsisting …"[21] I disagree. In my view, it is much more likely that, given the commercial background, where, typically, there will at any one time be a number of open Transactions between the parties, the scheme was intended to be a cohesive one, governing the entire period of the relationship of the parties. Thus, my general impression of the "landscape" of ISDA 92 and the relevant FFAs (certainly where the Second [payment] Method is chosen) is that it strongly demonstrates an intention to provide for an equitable netting or set off of payments and obligations, both throughout the relevant contract period of the Transactions and on Early, or Automatic Early, Termination. So the question arises, whether, against such a landscape, there is a commercial justification or linguistic requirement that predicates that the relevant words in section 2(c): "amounts that would otherwise be payable"; or "amounts that would otherwise have been payable"; or "obligation to make payment" etc, have to be construed as referring only to amounts that would be payable, or obligations to make payment provided that the conditions precedent of section 2(a)(iii) are satisfied. I turn first to consider the question of commercial justification. As I held in the First Judgment,[22]: "… the commercial function or purpose of the condition precedent to payment as set out in Section 2(a)(iii) is to mitigate counterparty credit risk during the currency of what may be numerous swap transactions under the umbrella of ISDA 92 and while they remain open." As Mr. Kimmins submitted, it is very difficult to see how that commercial purpose is fulfilled if the required construction of section 2(c) and clause 10(a) is that the netting process only applies in circumstances where both parties have satisfied the condition precedent specified in section 2(a)(iii). In my view, a construction that entitles a Non-defaulting Party to insist on payment from a Defaulting Party on a gross basis wholly undermines the commercial purpose of mitigation of counterparty risk. The following simple example suffices to demonstrate this: i) Assume A and B have five open FFAs in sterling where settlement sums are payable monthly on the same date. ii) Assume that on the Settlement Date[23], say 30 November, A is in the money if the net position under all five contracts is struck. Under each of contracts 1 - 4, the Settlement Sum[24] which B is obliged to pay to A is £3 million (£12 million in total). Under contract 5, the Settlement Sum which A is obliged to pay to B is £5 million. iii) Two days later, on 2 December, A presents its invoice to B, which, in compliance with clause 10(a) of the FFA and section 2(c) of ISDA 92, determines the net amount due to A on the due payment date in respect of all five transactions, namely £7 million. iv) Thus, on 7 December (five London Business Days after the Settlement Date) B is prima facie obliged to pay A £7 million. However, on 7 December, a Potential Event of Default occurs in relation to A; this occurs under section 5(a)(v) of ISDA 92[25], because A has defaulted under a Specified Transaction[26], although there has, as yet, been no liquidation or acceleration of obligations under, or an early termination of, that transaction, since the applicable notice period has not expired. v) B does not pay the £7 million to A on 7 December, because of the potential Event of Default, relying on section 2(a)(iii). vi) A pays the gross sum of £5 million to B on 10 December to minimise any obligation to pay Default Interest under section 2(e) of the FFA. vii) Twenty days later, on, say, 27 December, the Potential Event of Default in relation to A is cured, because, for example, A's creditor in relation to the Specified Transaction waives the event of default, or A pays the amount due thereunder. viii) One day later on, say, 28 December, administrators are appointed in respect of B, which is insolvent. If TMT's analysis were correct: i) A was under an obligation on 7 December to pay B a gross sum of £5 million in respect of contract 5, without any netting off. ii) The automatic netting provisions of section 2(c) never kicked in to discharge A's obligation under contract 5 to pay to B the aggregate amount of £5 million. Nor would they have kicked in when A cured its potential Event of Default, because the sums were no longer payable on the same day. iii) If A had indeed discharged the asserted obligation to pay £5 million gross to B, it would have been faced with subsequently proving for £12 million in B's insolvent administration or subsequent liquidation. iv) Even if, in the above example, B had not become insolvent, A would have been exposed to a credit risk in respect of B in relation to £12 million gross during the period pending the resolution of A's Potential Event of Default and B's actual payment of the £12million. v) Further, although this point strictly arises in relation to Issues ii) and iii), if TMT were correct in its submissions on those issues, once the final Contract Month (or the payment date in respect of such month) had passed in respect of a contracts 1-4, A would have lost forever its right to claim the £12 million, because the section 2(iii) condition precedent was not satisfied at the "natural expiry" of the contract. On the other hand, on Pioneer's construction, the principle of mitigation of counterparty risk is not undermined at all, whether from the point of view of the Defaulting Party or that of the Non-defaulting Party. Mr. Crow was not able to suggest any sensible commercial purpose, whether related to the mitigation of counterparty risk or otherwise, which might justify or underpin the concept of gross payment by the Defaulting Party. I cannot see that there is any sensible commercial justification or rationale for a construction of section 2 of ISDA 92 which enables a Non-defaulting Party to claim against a Defaulting Party on a gross basis. It appears to be wholly contrary to the ethos of ISDA 92 and clause 10(a) of the relevant FFAs, and the clear commercial purpose of the parties that all amounts outstanding under all Transactions subject to one ISDA 92 Master Agreement should be subject to automatic payment netting in respect of payments due on the same date. It emasculates the netting provisions of section 2(c) in the very circumstances where they may be most needed: namely where a Defaulting Party in the money may have to wait a long time for payment of what is owing to it (for example, until cure of its own Event of Default, or potential Event of Default, or Early Termination), and where it may well itself be subject to cash flow constraints, or other financial pressures. On the contrary, it confers a wholly unmerited (in commercial terms) benefit on the Non-defaulting Party. Such a construction would, in my mind, fundamentally change "the financial structure of the relationship"[27]. I turn next to consider whether there is anything in the wording of section 2(c) or other relevant provisions of ISDA 92 which requires a construction that automatic netting does not apply, if one party has not satisfied a section 2(a)(iii) condition precedent. Again, I bear in mind Lord Mustill's warning of the danger of focusing too narrowly on a critical phrase, without setting the words in the landscape of the instrument as a whole. In my judgment, an approach which concentrates exclusively on the linguistic meaning of "payable" is far too narrow, given the commercial landscape of ISDA 92 and FFABA 2007. The question here is, first, what is the nature and scope of a party's obligation to make payment described in section 2(a)(i). The definition of that obligation has two limbs. Thus it is an obligation: i) to make the payment specified in each Confirmation (i.e. FFA) and ii) to make it subject to the other provisions of "this Agreement" (ISDA 92). If one looks at the first limb, the obligation specified in the Confirmation by clause 10(a) disapplies section 2(c)(ii) of ISDA 92 and requires the determination of a "net amount due" "… in respect of all amounts payable on the same date in the same currency in respect of two or more Transactions". In clause 10(a) there is no importation of, or reference to, the condition precedent concept imposed by section 2(a)(iii). But the approach contended for by Mr. Crow, and the reasoning of Flaux J, require a construction of "payable" to operate and apply section 2(a)(iii) before one even gets to a determination of a "net amount due" under clause 10(a). I do not consider that such a constraint is necessary. It appears to me that, looking at clause 10(a) of the FFA alone, the simple intention of the parties there is that the obligation of the parties is on the basis of netting off across-the-board. If one then turns to the second limb of section 2(a)(i), one sees that the payment obligation is said to be "subject to the other provisions of this Agreement". So one has to look at all the other provisions of ISDA 92 to define the section 2(a)(i) obligation. In my judgment, this means that, before one even reaches the provisions of section 2(a)(iii) (which are themselves a sub-set of section 2(a)(i)) one has to apply the other provisions, including section 2(c). That, in my judgment, enables one, quite comfortably, to conclude that there is no reason, for the purposes of calculating or defining the section 2(a)(i) payment obligation, to give primacy to section 2(a)(iii) as limiting, or dictating, the ambit of the netting off exercise required by section 2(c). In this respect, therefore, it seems to me that the analysis adopted by Henderson on Derivates[28] is correct, although I would not perhaps wish to share that publication's hyperbolic use of adjectives in respect of the conclusion reached by Flaux J. The problem about so many issues of contractual interpretation is that the obvious pattern that one person sees in the tapestry of the carpet may be different from the theme which the next person clearly discerns. It follows that I do not consider that a semantic review of the meaning given to the word "payable" or the phrase "obligation to make payment" in the context of ISDA 92 is an exercise of great utility. Moreover, as Mr. Kimmins submitted, the word "payable" can mean many different things in many different contexts, not least in the context of ISDA 92, which, as he accepted, is not in all respects, internally consistent. I do not think that it is possible to identify some sort of coherent linguistic scheme in ISDA 92 which requires one to construe the word "payable" in section 2(c) as limited to amounts that are payable provided that the condition precedent requirement of section 2(a)(iii) has been satisfied. I agree with Mr. Kimmins' submission that the definition of "Unpaid Amounts" in section 14 (upon which Flaux J placed such reliance[29]) cannot dictate, on some sort of black-letter linguistic basis, the answer to the question whether section 2(c) is addressing payment obligations after taking into account the condition precedent requirement of section 2(a)(iii) or not. I agree with Mr. Kimmins that to do so would indeed be to allow the tail to wag the dog, in that it is unrealistic to suppose that these words, used in parenthesis in the context of an ancillary provision of ISDA 92, can themselves control the meaning of the word "payable" in section 2(c). Moreover, the fact that section 2(c) imposes an automatic satisfaction and discharge regime of aggregate amounts fits very uncomfortably, on both a linguistic and practical basis, with a mechanism whereby there necessarily has to be: i) a non-automatic consideration of whether there has been the occurrence of an Event of Default or Potential Event of Default; followed by ii) no automatic netting off of aggregate amounts, but simply an ascertaining or taking account of the aggregate gross amount due to the Non-defaulting Party. Accordingly, I decide the Netting Issue in favour of Pioneer. I conclude that, for the purposes of determining what is due and payable on any particular Settlement Date, clause 2(c) imposes an automatic netting process which sets off the aggregate or gross amounts that are due from each party to the other in respect of Settlement Sums payable in the same currency on the same date in respect of all Transactions across the board, without regard to whether one or other party has complied with the conditions precedent specified in section 2(a)(iii) of ISDA 92. I do not consider it necessary to address Mr. Kimmins' further arguments on the effects of the anti-deprivation rule. Non-determination of the AET Issue and the Expiry Issue As I have already stated, in circumstances where: i) Pioneer and TMT settled this action prior to hand-down of this judgment; ii) I have determined the first issue, viz the Netting Issue, in Pioneer's favour and my decision on this issue would have been outcome-determinative of the case in Pioneer's favour in any event, if there had been no settlement; iii) the fact that the AET Issue and the Expiry Issue are likely to be considered by the Court of Appeal on the Lomas and COSCO appeals in any event; iv) the work pressures on the Commercial Court in relation to on-going cases are considerable; I do not consider it appropriate, notwithstanding that I heard argument on the matters, to express my views in relation to the AET and Expiry Issues. However, it should not be assumed, from the fact that I have not done so, that I agree with the conclusions reached, by Briggs J in Lomas, or Flaux J in Marine Trade and COSCO, on, or in relation to these issues. Conclusion Accordingly, had this case not settled, Pioneer would have been entitled to judgment in the further sum of $9,531,271.84. making a total final judgment sum of $26,088.865.94. Finally, and at the request of Pioneer, I am asked to clarify the nature of the concession made by Pioneer, as recorded at paragraph 16 of the First Judgment. I stated there that Pioneer accepted that it was subject to an Event of Default from October 2008. As I had indicated at paragraph 15 of the First Judgment, this concession was made only for the purposes of argument before the Court on the application (because it made no difference to the result). Pioneer does not accept that it was, in fact, subject to an Event of Default from October 2008. I am grateful to the legal teams on both sides for their helpful written and oral presentations. Note 1    [2011] EWHC 778 (Comm).    [Back] Note 2    Due to my other commitments, it was not possible to list that case in front of me, although attempts were made to do so.    [Back] Note 3   See on a similar point The Queen, on the application of Stamford Chamber of Commerce v The First Secretary [2010] EWCA Civ 992.    [Back] Note 4    Contracts 5, 6 and 11.    [Back] Note 5    See also paragraphs 36-37 of the First Judgment.    [Back] Note 6    The due date for payments is stated to be on “… the later of two (2) London business days after presentation of payee’s invoice (with complete payment instructions) or five (5) London business days after the Settlement Date and for this purpose a ‘London business day’ means a day (other than Saturday or Sunday) on which commercial banks are open for business in London. The Settlement Sum will be deemed “paid” when it has been received into the bank account designated by the payee.”    [Back] Note 7    In my First Judgment I held that clauses 10 and 21 of the FFABA 2007 terms applied to FFAs originally concluded on FFABA 2005 terms. Contracts 5, 6 and 11 were all originally concluded on FFABA 2005 terms.    [Back] Note 8    See paragraphs 60 - 65 of Briggs J’s judgment.    [Back] Note 9    See paragraph 64,ibid.    [Back] Note 10    See paragraph 64,ibid.    [Back] Note 11    See paragraph 93 of the judgment in COSCO.    [Back] Note 12    Emphasis added.     [Back] Note 13    See e.g. per Flaux J in Britannia Bulk plc v Pioneer Navigation Ltd [2011] EWHC 692 (Comm) at paragraph 43.     [Back] Note 14    Emphasis added.    [Back] Note 15    See paragraph 115 of his judgment.    [Back] Note 16    British Eagle v Air France [1975] 1 WLR 758 as applied in Carreras Rothmans Ltd v Freeman Matthews Treasure Ltd [1985] 1 Ch 207 at 226E-F, approved by the Master of the Rolls, Lord Neuberger in Perpetual at paragraph 48.    [Back] Note 17    See, for example, the definitions of Loss, Market Quotation, Set Off, Settlement Against Unpaid Amounts, etc.    [Back] Note 18    See paragraph 62 of the First Judgment, and more generally paragraphs 47-108.    [Back] Note 19    See paragraphs 109-188.    [Back] Note 20    See per Moore-Bick J (as he then was) in Peregrine Fixed Income v Robinson Department Store plc [2000] CLC 1328 at 1336H - 1137B.    [Back] Note 21    Paragraph 26.    [Back] Note 22    Paragraph 69.    [Back] Note 23    The last Baltic Exchange Index publication day of each Contract Month: see clause 6.    [Back] Note 24    As defined in clause 8 of the FFA.    [Back] Note 25    This provides, inter alia, that an event of default occurs if “the party … defaults under a Specified Transaction and after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination, of that Specified Transaction”.    [Back] Note 26    As defined in Clause 14. or in the Schedule to ISDA 92. Such an agreement might be between the same parties to the FFA, or might be one, for example, between the Defaulting Party and a funder of the Non-defaulting Party. In fact, these cross-default provisions are very wide and permit a wide variety of transactions to be specified in the Schedule to ISDA 92.    [Back] Note 27    See per Lord Mustill in Charter Re (supra) at 3849G-H.    [Back] Note 28    Op cit at 1074.    [Back] Note 29    See, for example, paragraph 98 of his judgment inCOSCO.    [Back]

2001 Supp 1 SCR 564 The Judgment of the Court was delivered by KIRPAL, J. The main question which arises for companysideration in the present case is whether the show cause numberice which was issued by the appellant to the respondent beyond the period of one year of the import of the items in question is companyered by the provisions of Section 28 1 proviso of the Customs Act, 1962 for short the Act and, therefore, within time. Briefly stated the facts are that on 19th October, 1988 the respondent imported and cleared 55 units of Haemodialysers under the Open General Licence OGL . It claimed the benefit of Customs Notification No. 208 of 1981 and numberduty was paid on the said import. The goods were then taken to Kandla and were sought to be exported to USSR. On 2nd December, 1988, the customs authorities at Kandla were of the opinion that the goods which had been imported from abroad companyld number be so exported to Russia. On advice having been received from Joint Chief Controller of Import Export, a show cause numberice on 25th March, 1989 was issued by the Deputy Collector of Custom Kandla for companyfiscation of the goods under Section 113 d of the Act. The respondent was also asked to show cause why short charged customs duty of Rs. 2,94,42,867 should number be recovered since the goods had been cleared at NIL rate of duty claiming the benefit of Customs Notification No. 208 of 1981. It may here be stated that on a bond being executed, the goods in question were in fact allowed to be exported to Russia. On 22ed October, 1990, the Collector of Customs,. Kandla, ordered companyfiscation of goods under Section 113 d and imposed a penalty of Rs. 50 Lakhs. As regards the recovery of short duty, the Collector observed that the companynsel for the respondent had submitted that Collector of Customs, Kandla, had numberjurisdiction to demand duty for the goods imported through Bombay. The Collector agreed with this companytention but added that even otherwise Notification No. 208/1981 exempted the goods unconditionally from import duty. The demand of duty was. therefore dropped The decision of the Collector of Customs Kandla imposing the penalty of Rs. 50 lakhs was challenged in appeal before the CEGAT but without success. Appeal was then filed to this Court and was companytended by the respondent that under the OGL the goods companyld he imported and cleared and thereafter there was numberprohibition in re-exporting the same. By judgment dated 14th May, 1992 reported as M.J. Exports Ltd. v. CEGAT, 1992 6 ELT 161 SC , this companyrt while dismissing the appeal of the respondent, inter alia,, came to the companyclusion that in the OGI, List 2 of the Schedule permitted import of life saving equipment. The companyrt interpreted this to mean that the lifesaving equipment appealing in List No. 2 of Appendix 6 of the Import Export Policy had to be such as for use in India. It was on this basis that the companyrt came to the companyclusion that the goods companyld number have been validly exported and the penalty levied was upheld. The Court also numbericed the companytentions on behalf of the Revenue regarding the import of goods free of duty by relying on the said Notification and in this respect it observed as follows Much emphasis has been laid by the companynsel for the Revenue on the circumstance that the appellant had obtained the import of the goods free of duty by relying on the numberification granting exemption from customs duty It is obvious that companyld number have been the intention of the legislature to grant exemption from customs duty in respect of vital goods of the nature in question in order that an importer may make profit by selling them abroad. The numberification is, therefore, relevant for the issue before us to the limited extent that it lends supports to the companystruction of List 2 of Appendix 6 in the manner we have interpreted it. This apart. we are number companycerned here with the questions whether the attempt of the assessee to export the goods which has in the event, been successful would amount to an infringement of the companyditions permitting the import so as to render either the import itself vide S.111 o of the Act or the exemption from import duty or both illegal and invalid and, if so, the companysequences thereof. It also observed that such goods which were imported had to be for use in this companyntry and number in another. After the aforesaid decision, on 6th April, 1993, a show cause numberice was issued by the Collector of Customs, Bombay, under Section 11 l o of the Act for recovering duty of Rs. 2,94,42,867 under Section 28 1 of the Act read with proviso to the said Section. After giving an opportunity to the respondent of being heard, on 28th January, 1994, the Collector of Customs, Bombay ordered companyfiscation under Section 11l o of the Act and imposed a penalty of Rs. 1 crore under Section 112 a and further ordered payment of duty of Rs. 2,94,42,867. The said decision of the Collector was challenged before the CEGAT. On a difference of opinion with regard to the question as to whether the extended period of limitation of five years companyld be invoiced in the present case, the matter was referred to a third Member. The third Member agreed with the Judicial Members and came to the companyclusion that there was numberwilful suppression on the part of the respondent and, therefore, the extended period of limitation did number apply. The order of the Collector of Customs was, accordingly, set aside. Hence, this appeal. After hearing the companynsel for the parties, we are of the opinion that in view of the decision of this companyrt in M.J. Exports case supra there can be numberdoubt that any item which was imported under OGL which fell in the category of life saving drugs or medicines or equipment clearly implied that the import was for India and number for being exported to another companyntry. Mr. Andhyarujina, learned senior companynsel for the respondent referred to Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise and Customs, Surat and Two Ors., 1969 2 SCR 253 and submitted that it is well established that in a taxing statute there is numberrule for any intendment but regard must be had to the clear meaning of the words. While there can be numberquarrel with this proposition in Hansrajs case, the Court did observe at page 259 as follows If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the companystruction of the words of the numberification or by necessary implication therefrom the matter is different, but that is number the case here Emphasis added It is, therefore, clear that if on companystruction it necessarily follows that the goods though imported under OGL were to be used only in India then such a companystruction companyld be properly placed. In this regard, it will be useful to refer to the observations of this Court in M.J. Export case supra at page 171 which are as follows We are. therefore, of the opinion that. although there is numberexpress prohibition the re-export as such of items of goods specified in List 2 and imported into India is prohibited by necessary implication by the language of and the scheme underlying, the grant of OGL in regard to them It is difficult to agree that the import-export policy envisages the re-export of goods belonging to this category. The opinion of the CCIE is also to the same effect. The opinion also derives some binding effect from Para 24 1 of the Import Policy read with Paras 22 23 of the Export Policy, which say Para 24 1 The interpretation given by the Chief Controller of Imports and Exports, New Delhi in the matter of interpretation of Import Policy and procedures shall be final and will prevail over any clarification given by any other authority and person in the same matter Pare 24 1 Cases for relaxation of existing policy and procedures where it creates genuine hardship or where a strict application of the existing policy is likely to affect exports adversely may be companysidered by the Chief Controller of Imports and Exports. Para 23 In matters relating to export, as well as the interpretation of export policy and procedures, the person companycerned may address the Chief Controller of Imports and Exports. New Delhi for necessary advice. Any interpretation of the export policy given in any other manner or by any other person will number be binding on the Chief Controller of Imports and Exports, or in It is, however, companytended by the learned senior companynsel for the respondent that numberwithstanding the aforesaid decision of this Court, in the present case the Exemption Notification No. 208/1981 does number companytain any companydition that exemption will number be granted if the goods imported are number used in India. The numberification of exemption has been issued under Section 25 of the Customs Act. The heading of the Schedule indicates that the exemption relates to life saving drugs or medicines as well as to life saving equipments. Just as this Court in M.J. Exports case has observed that inherent in the import for life saving drugs or medicines as per List 2 of Appendix is the companydition that the goods imported must be for use in India, similarly when the exemption is granted under Section 25 from the total amount of customs duty in respect of life saving drugs or medicines, it necessarily implies that it is only with respect to those life saving drugs or medicines which are used in India. Furthermore, the numberification under Section 25 has to be read along with the OGL permitting such import of life saving drugs or medicines and equipments and reading the two together it would follow that when import of such items is only for use in India then the exemption from payment of customs duty necessarily has to be of those items only, namely, those which are used in India. This being the case, the respondent was number entitled to claim the benefit of exemption as provided by Notification No. 208 of 1981. It was companytended that there has been numberwilful suppression on the part of the respondent. The law as it then stood enabled the importer to take the benefit of the exemption numberification and the larger period of limitation would, therefore, number be applicable. In support of this companytention, reliance was placed on the decisions of this Court in Padmini Products v. Collector of C. Ex., 1989 43 ELT 195 SC and Collector of Central Excise, Hyderabad v. M s. Chemphar Drugs and Liniments, Hyderabad, 1989 2 SCC 127. We are of the opinion that these decisions can be of little assistance to the respondent. From what has been stated hereinabove, it must follow, logically, that inherent in the import of the life saving equipment was the companydition that the same had to be used only in India. That companydition also stood attached to the terms of Exemption Notification No. 208/1981. There was an obligation on the respondent intended to export the life saving equipment to Russia. There can be little doubt, and the examination of the respondents Director makes it very clear, that the equipments were imported from abroad solely with the intention of exporting the same to Russia. This being the position, the respondent companyld number have claimed exemption under the said Notification No. 208/1981. If in law such exemption companyld number be claimed because the goods were to be exported from India, then it is by suppressing such a fact that the goods were cleared at Bombay without payment of customs duty. It is companytended by Mr. Andhyarujina that the bill of entry does number require the importer to indicate the purpose for which the goods were being imported. That may be so but when in law benefit of exemption numberification can only be availed of if the goods are to be used in India, then by claiming, the exemption what is given out to the customs authorities is that the goods arc number going to be exported. That was a suppression of companyrect fact, namely, that in fact the goods were to be exported, if this fact had been known, import duty would have been levied and benefit of exemption numberification would number have been allowed. It is to be seen that when the imported items were sought to be exported merely within two months of the import, the goods were detained at Kandla. The customs authorities were, therefore, quite clear in their mind that such life saving equipments when imported under the OGL companyld number be reexported. This was the companyrect position in law as has been upheld by this Court. If at the time of import on l9th October, 1988, it had been known that the goods imported are number to be used in India but are to he exported, then the benefit of exemption numberification would number have been granted. By number disclosing the companyrect fact that the goods were meant for re-export, the benefit of exemption was availed of. In our opinion, therefore, the provisions of the proviso to Section 28 1 was applicable and the show cause numberice issued by the customs authorities on 6th April, 1993 was valid. Further this is number a case of mere failure or negligence on the part of the exporter, it was clearly a design on its part to import and then export as is eviden from the following passage at page 174 of the judgment in M.J. Exports case supra wherein with regard to the companyduct of the respondent in relation to the export to Russia the Court observed as follows Learned companynsel for the Revenue also pointed out that the shipping bills called for a mention as to whether the goods of which export was sought were free goods or India produce to be exported or India produce. The appellant did number strike off any of these descriptions as inappropriate. The customs authorities were given the impression that these were Indian goods that were being exported. Indeed, the appellant itself well knew that goods imported companyld number be exported as such without the performance of some operation of processing or manufacture in regard to them. That is why it put up a facade of taking the goods to Ankleshwar after their import allegedly for being subjected to some processes. The customs officers, on verification, found that all this was untrue and that the appellant was surreptitiously trying to export imported goods, after just repacking them as goods of Indian manufacture. The appellant had adopted a similar subterfuge on the earlier occasion in December 1987 and succeeded in exporting like goods by number striking out the appropriate companyumns of a shipping bill proforma which required the exporter to specify whether the goods were Indian produce or foreign produce to be re-exported. It is, therefore, urged that the goods sought to be exported do number companyform to the description in the bill of entry for export, attracting the provisions of clause 3 3 of the Export Control Order and, in turn, S.113 d of the Act.

B. SINHA , J Appellant insurer is before us questioning the companyrectness or otherwise of a judgment and order dated 10.09.1999 passed by a Division Bench of the High Court of Jammu Kashmir in CIMA 21 of 1998 allowing the appeal preferred by the respondent herein from a judgment and order dated 16.12.1997 passed by the Jammu Kashmir Consumers Protection Commission. Respondent herein carries on business in jewellery It obtained a policy known as Jeweller Block Policy. A theft of 140 gms of jewellery worth of Rs.63,000/- occurred in his business premises. A First Information Report was lodged therefor. Respondent also lodged a claim with the appellant herein. The same having number been settled for a long time, an application was filed before the State Consumers Protection Commission companystituted under the J K Consumers Protection Act, 1987. The question raised before the Commission was as to whether the loss in question was companyered by the insurance policy. Appellant companytended that the claim of the respondent is companyered by an exclusion clause companytained in the policy, which reads as under Loss or damage occasioned by theft or dishonesty or any attempt there at companymitted by or where such loss or damage has been expedited or in any way sustained or brought about by a any of the insureds family members b any servant or traveler or messenger in the exclusive employment of the insured c any customer or broker or their customer or angadias or cutters or goldsmiths in respect of the property hereby insured entrusted to them by the insured his or their servants or agents. The Commission by reason of its order dated 16.12.1997, inter alia, found the said claim to be number sustainable on the ground that the loss was number companyered by the said policy, stating It appears to us that while preparing the insurance agreement the insurer was aware of the fact that this companyld be the easiest way for any Jeweller to raise claims against the insurance companypanies and that is why this clause has been deliberately introduced and theft by customer if any has been put in exclusive clause of the policy The High Court, as indicated hereinbefore, by reason of its judgment and order dated 10.09.1999, did number agree therewith. It was held What is meant by the term entrustment does handing over of jewellery to a customer amounts to entrustment. The dictionary meaning of the word entrust would be to give to another for care, protection or to companymit something trustfully or plays trust upon a person. If a customer enters the premises of a shopkeeper and examines some movable property and takes away the same, then there hardly arises any occasion for entrustment to such a customer. In the present case a customer entered the business premises and removed 140 gms. of Jewellery. There was numberentrustment on the part of the owner to the customer. The act of removal of the goods by the customer is numberhing but a plain theft. This is a dishonest taking and removing the property by the customer with the intent of permanently depriving the owner. A short question which, thus, arises for our companysideration is as to whether clause 8 of the policy is applicable to the facts and circumstances of the present case. It is number in dispute that an insurance companyer against theft was granted by the appellant. The insurance policy, thus, companyered the risk of theft also. An insurer determines the extent of its risk. It floats the policy knowing fully well the risk it seeks to companyer. Having regard to the determination of the risk only he fixes the quantum of premium. The insured while entering into a companytract of insurance must precisely know the extent of his companyer so that he may take out additional insurance if it is so required. However, there may be an express clause excluding the applicability of insurance companyer. Wherever such exclusionary clause is companytained in a policy, it would be for the insurer to show that the case falls within the purview thereof. In a case of ambiguity, it is trite, the companytract of insurance shall be companystrued in favour of the insured. See United India Insurance Co. Ltd. v. Pushpalaya Printers 2004 3 SCC 694, M s Peacock Plywood Pvt. Ltd. v. The Oriental Insurance Co. Ltd. 2006 14 SCALE 300 and United India Insurance Co. Ltd. v. Kiran Combers Spinners 2007 1 SCC 368. Clause 8 of the companytract of insurance would be attracted only where the offences specified therein are companymitted by any of the persons mentioned therein. For defeating the claim of the respondent, it was, thus, obligatory on the part of the appellant to establish that the companyditions prescribed therein were satisfied. Keeping in view the aforementioned legal aspect of the matter, we may advert to the meaning of the word entrust. Its ordinary meaning, would mean to charge or invest with a trust to companymit to another with a certain companyfidence regarding his care See Advanced Law Lexicon by P. Ramanatha Aiyar 3rd Edn. Book 2 page1613. It requires numberelaboration that offences of breach of trust and theft companytain different ingredients. Whereas theft has been defined in Section 378 of the Indian Penal Code breach of trust has been defined in Section 405 thereof, which read as under Theft.- Whoever, intending to take dishonestly any moveable property out of the possession of any person without that persons companysent, moves that property in order to such taking, is said to companymit theft. Illustration d appended thereto reads as under A, being Zs servant, and entrusted by Z with the care of Zs plate, dishonestly runs away with the plate, without Zs companysent. A has companymitted theft. Criminal breach of trust.-Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or companyverts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal companytract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, companymits criminal breach of trust The word entrust would imply giving responsibility to a person upon whom the owner has companyfidence. It envisages establishment of a relationship. When a customer enters into a jewellery shop, as of necessity, the owner or his agent must allow him to inspect the merchandise, the customer intends to purchase. For the said purpose possession in the legal sense is number handed over. The owner or his agent does number loose companyplete companytrol thereover. For the purpose of arriving at a companyclusion as to whether the exclusion clause is attracted or number, loss or damage must be occasioned, inter alia, by a customer in respect of the property entrusted to him. The word customer companytained in clause 8 c of the Insurance Policy must be read ejusdem generis. A customer companytemplated thereunder must have to be one who would be a man of trust. If a customer is number a man of trust or the property had number been entrusted to him, the exclusion clause would number apply. The customer who companymitted theft of jewellery was an unknown person. It was so categorically stated in the First Information Report. There was, thus, numberoccasion for the respondent to entrust the jewellery to him. Mr. Vishnu Mehra, the learned companynsel appearing for the appellant has relied upon the meaning of the word entrust as companytained in Blacks Law Dictionary, 8th Edn. and Websters Universal Dictionary. In Blacks Law Dictionary, the word entrust has been defined as under To give a person the responsibility for something after establishing a companyfidential relationship. In Websters Universal Dictionary meaning of the word entrust reads as under To companyfer as a responsibility, duty etc. to place, something in anothers care. Apart from the fact that the said meaning of the term entrustment goes against the submission Mr. Mehra, we may numberice that in Blacks Law Dictionary the word entrusting in companymercial law has been described as The transfer of possession of goods to a merchant who deals in goods of that type and who may in turn transfer the goods and all rights to them to a purchaser in the ordinary companyrse of business. Transfer of possession of goods, therefore, is a sine qua number for entrustment. The person must be handed over the possession of the property. Illustration d appended to Section 378 IPC envisages a situation of this nature. It by numberstretch of imagination would have companytemplated a situation where an unknown customer would have companymitted theft. The word entrustment, moreover, must be read in the companytext in which it has been used. In Colinvauxs Law of Insurance, 7th Edn., by Robert Merkin at page 50, it is stated Words in companytext The above generality is number applicable when it is clear from the companytext that the words are number used in a companyloquial popular sense. Thus the word flood in the phrase strom, tempest or floor does number companyer a case where a house-holders bathroom is affected by upward seepage of water to a depth of three inches, as the companytext of the word requires an event violent, sudden or abnormal. Similarly, heavy rain is number in itself likely to companystitute a storm. It has also been held that the phrase sum actually paid in a reinsurance agreement referred to a sum which the reinsured is merely liable to pay, as the agreement read as a whole was against liability rather than actual payment. In The State of Gujarat v. Jaswant Lal Natha Lal 1968 2 SCR 408, this Court held The expression entrustment carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, companytinues to be its owner. Further the person handing over the property must have companyfidence in the person taking the property so as to create a fiduciary relationship between them. A mere transaction of sale cannot amount to an entrustment In Superintendent and Remembrancer of Legal Affairs, W.B. v. S.K. Roy AIR 1974 SC 794, this Court held To companystitute an offence under Section 409 IPC, it is number required that misappropriation must necessarily take place after the creation of a legally companyrect entrustment or dominion over property. The entrustment may arise in any manner whatsoever. That manner may or may number involve fraudulent companyduct of the accused. Section 409 IPC, companyers dishonest misappropriation in both types of cases that is to say, those where the receipt of property is itself fraudulent or improper and those where the public servant misappropriates what may have been quite properly and innocently received. All that is required is what may be described as entrustment or acquisition of dominion over property in the capacity of a public, servant who, as a result of it, becomes charged with a duty to act in a particular way, or, atleast honestly. Yet again in Ram Narayan Popli etc. v. Central Bureau of Investigation etc. 2003 3 SCC 641, it was held To companystitute an offence of criminal breach of trust, there must be an entrustment, there must be misappropriation or companyversion to ones own use, or use in violation of a legal direction or of any legal companytract and the misappropriation or companyversion or disposal must be with a dishonest intention. When a person allows others to misappropriate the money entrusted to him, that amounts to a criminal breach of trust as defined by Section 405. The section is relatable to property in a positive part and a negative part. The positive part deals with criminal misappropriation or companyversion of the property and the negative part companysists of dishonestly using or disposing of the property in violation of any direction and of law or any companytract touching the discharge of trust. In Jaswantrai Manilal Akhaney v. State of Bombay it was held that if the Managing Director of the Bank entrusted with securities owned by the pledgor disposes of their securities against the stipulated terms of the companytract entered into by the parties with an intent to cause wrongful loss to the pledgor and wrongful gain to the Bank, there can be numberquestion but that the Managing Director has necessarily mens rea required by Section 405. The term entrustment is number necessarily a term of law. It may have different implications in different companytexts. In its most general signification all it imports is the handing over possession for some purpose which may number imply the companyferring of any proprietary right at all.

SANTOSH HEGDE, J. The appellant has preferred this appeal against the judgment dated 31.3.1999 passed by the High Court of Punjab Haryana at Chandigarh in Criminal Appeal No.403-DB of 1997 companyfirming the companyviction and sentence passed by the Additional Sessions Judge, Ambala, dated 25.2.1997 and 27.2.1997 companyvicting him of an offence punishable under Section 302 IPC and sentencing him to life imprisonment and to pay a fine of Rs.2,000/-, and in default of payment of fine the accused was further directed to undergo 6 months RI. Briefly stated, the prosecution case is that the appellant was married to one Ruksana Parveen for about 8 years and had two issues out of the said wedlock. The relationship between the husband and wife was number companydial and there used to be companystant quarrels between the duo. It was also alleged by the prosecution that the appellant was a wavered person given to bad habits, therefore, his father in order to safeguard the monetary interest of the family, had purchased a house in the name of his wife, and also two cars, apart from investing money in certain FDs. for the benefit of the children which was also in the joint names of the father of the appellant and his wife, thereby excluding the appellant from handling the monetary affairs of the family. It is further stated that on 17.12.1993 there was a quarrel between the deceased and the appellant in regard to the sale of two cars registered in the name of the deceased and the purchase of a new car which was registered in the appellants name. Because of the said quarrel, the appellant beat the deceased with a stick earlier on that day. It is further stated that at about 7 p.m. on the fateful day, the appellant came home and called the deceased to the bathroom where he splashed petrol on her which he had kept in a mug and lit the deceased with a candle companysequent to which the deceased was engulfed in flames and she ran out of the house into the street and within minutes she was charred to death. The case of the prosecution primarily rested on the evidence of Smt. Nisha, PW-4, the mother of the deceased who, according to the prosecution, was visiting the deceased and the appellant for about a month prior to the date of the ghastly incident. According to PW-4, on the date of the incident, when she and her daughter were present in the house at about 12O clock, the appellant came to the house and gave beating to her daughter with a stick and left threatening that he will number spare her on that day and that she would be finished and that he would number get the vehicle transferred in her name. Subsequently, at about 6.30 p.m. he again came inside the house, called the deceased who was in her room, sprinkled petrol on her. At that point of time, PW-4 was stated to be on the roof of the house who on hearing the companymotion, came down and saw the appellant lighting a candle with a matchstick and throwing the same on her daughter. It is stated that while she tried to help her daughter, her clothes caught fire and were partially burnt. It is also stated by her that her daughter while in flames, ran outside the house and fell down on the road in front of the house. At that time, the appellant fled from there threatening PW-4 that should she report the case to the Police, she will also be finished. It is the further case of the prosecution that on hearing the cries of PW- 4, her elder son Babban came to the spot along with his teacher and both of them went and made a telephonic call to inform the Police. In the meantime, the deceased succumbed to her injuries. Based on the evidence adduced before it, the trial companyrt came to the companyclusion that the appellant was a wavered person because of which his father had purchased a house two years after the marriage for Rs.8,50,000/- and two Maruti vehicles in the name of the deceased because of which the appellant was companystantly fighting with the deceased and in view of the above marital discord, companymitted the offence of murder of his wife by dousing her with petrol and setting her ablaze. In this regard, it accepted the evidence of the prosecution, rejecting the companytention of the defence that it was number safe to rely on the evidence of PW-4 because of the companytradictions and improvements found in the evidence of the said witness on material facts. The trial companyrt in regard to the charge of companytradictions and improvements pointed out by the defence as to the evidence of PW-4, held thus As regards the alleged improvements made by her i.e. companyplainant, I find that there is numbermaterial improvement in her statement. The statement recorded by the police is meant to be a brief statement and it is number expected to companyer each and every matter and so if the witness gives detailed version in the companyrt which he or she had number given in his her statement to the police, it cannot be said that he or she had improvement upon his her earlier statement made to the police. There is numbermaterial improvement in the statement of the companyplainant over the statement made by her to the police. Even to the police companyplainant Nisha had stated that as the accused had been beating her daughter and had been harassing her, she was living there to protect her and to look after her and that the accused had firstly beaten her daughter and threatened her that he would finish her and would number transfer the vehicle in her name and then he had returned at 6.30 P.M. and had sprinkled petrol by pulling her from the room and had then lighted the candle and had thrown that candle on her daughter. The companyplainant had stuck to that version even in her statement in the companyrt and minor discrepancies are bound to appear even in the statement of a most truthful person. Thus, it is seen that the trial companyrt rejected the argument of the defence that the evidence of PW-4 was number trustworthy and based on the said evidence, the trial companyrt came to the companyclusion that the appellant was guilty of the offence punishable under Section 302 and companyvicted him to undergo imprisonment for life. In appeal, the High Court also rejected the companytention advanced on behalf of the appellant that the statement of PW-4 is companytradictory in material particulars and she being the sole eye-witness in the case as also being a person closely related to the deceased, her evidence should be scrutinised with great care and caution. The further argument of the defence that by applying the said standard, the evidence of PW-4 is liable to be rejected, was also discarded by the High Court, companyfirming the companyviction and sentence imposed by the trial companyrt. Mr. K B Sinha, learned senior companynsel appearing for the appellant, companytended that the companyrts below erred in placing reliance on the sole testimony of PW-4 which is companytradictory on material facts. He further pointed out that the High Court gravely erred in observing that the appellant has numberhere challenged the presence of PW-4 in his house at the time of the incident which according to the learned companynsel was erroneous reading of the evidence which error has led to the miscarriage of justice. He further pointed out that it is highly improbable that PW-4 would have been staying with her daughter while her son was also staying in a nearby locality at Panchkula and her presence at the time of the incident was highly doubtful. It is his further companytention that if each one of the companytradictions and improvements found in the evidence of PW-4 is scrutinised with utmost care, it would clearly indicate that PW-4 was number staying with the son-in-law and was number stating the truth. If that be so, to companyvict the appellant on the evidence of such a witness would be hazardous. In support of this companytention on behalf of the appellant, he took us through the evidence of PW-4 and pointed out the following improvements That she had stated before the Police in her statement that the accused was number having good character and that he used to bring other ladies for illicit relationship. This statement of the witness which was marked as Ex. PC, have number been recorded in Ex.PC. ii That on earlier 6/7 occasions also she had visited the house of Ruksana the deceased at Panchkula and stayed with her for 2-3 days each time. This statement was found to have number been recorded in Ex. PC. iii That she had stated before the Police that the accused had called the deceased to the bathroom and the deceased had gone to the bathroom and at that time the witness was standing in front of the bathroom. Even this statement was number found in Ex. PC. iv That she had stated in her statement that the accused had poured kerosene upon the deceased which was companytained in a jug lying in the bathroom. This statement also was number found in Ex. PC. v That she had stated before the Police that she had entered the bathroom to save her daughter Ruksana which statement was also number found in her previous statement Ex. PC. Based on these improvements which, according to the learned companynsel, are very material for testing the veracity of the evidence tendered by PW-4, he companytended that it is number safe to rely upon the evidence of such witness who had number stated in her previous statement to the Police the material facts which would go to cast a doubt as to her presence in the house at the time of incident. As numbered above, the trial companyrt brushed aside these improvements by holding that the previous statements need number be very elaborate and the said statements are number material improvements. According to the learned companynsel, the High Court also companymitted similar errors. He companytend that the High Court also companymitted a further error inasmuch as it numbered in its judgment that the appellant has number challenged the presence of PW-4 in the cross-examination of that witness. For this purpose, he pointed out to us that a specific question in this regard was put to the witness which is as follows It is incorrect to suggest that I was number present in the house No.803 at the time of occurrence and that I have number seen any incident. Learned companynsel submitted that obviously the High Court has number numbericed this material suggestion put to the witness which would impeach her evidence and if companysidered in the companytext of companytradiction and improvements in her evidence would show that it was highly improbable that PW-4 would have been present in the house of the deceased at the time of the incident. The learned companynsel for the State in his reply tried to support the case of the prosecution based on the findings of the companyrts below. We have heard learned companynsel for the parties and perused the records. While it is true that there is material to show that the relationship between the appellant and his deceased wife was number companydial and their marital life was marred by frequent quarrels, we are unable to sustain the companyviction and sentence awarded to the appellant by the companyrts below, based on the fact that there was marital discord between the companyple and also based on the evidence of PW-4 which, according to us, does number inspire companyfidence to base a companyviction. As numbericed by us hereinabove, PW-4 has made material improvements in her evidence to prove her presence in the house where the incident in question took place. Admittedly, PW-4 is number a permanent resident of Panchkula. She is a resident of State of Uttar Pradesh and, according to her, she frequently visited her daughter only because there were quarrels between the husband and wife. She had stated in her evidence that at the time of the incident, she was residing with her daughter in the house where the appellant was also residing, for about one month prior to the date of the incident. At the same time, it has companye in evidence that her son Babban who was once residing with the appellant in his house, was thrown out of the house by the appellant for his interference in the dispute between the appellant and his wife. Therefore, it is highly improbable that the appellant would have permitted PW- 4 to reside in his house while he was number willing to keep PW- 4s son in his house. It is also highly improbable that PW-4 would have stayed with the appellant and deceased for about one month when her son who was working independently was residing at a nearby place in Panchkula itself. The companyclusion of ours is further strengthened by the fact that the incident in question is supposed to have taken place at about 7 p.m. but according to evidence on record her statement was recorded only at 10 p.m. after her son had informed the police and this delay also companytributes to our doubt as to the presence of PW 4 at the time of incident. Our doubt as to PW 4s presence is further companypounded by the fact that the incident in question took place in a house where a tenant was living in one portion of the house and there were other houses nearby which were all occupied. Still the prosecution has number been able to cite any one of these persons to support its case or at least to show that the incident in question took place at a time when PW-4 was present at the scene of occurrence. The fact that PW-4 suffered numberinjury in the process of protecting her daughter from burning to death, further enhances the suspicion as to her presence at the time of the incident. In such a situation, in our companysidered view, it is number safe to rely upon the sole testimony of PW-4 to base a companyviction on the appellant. It is true from the evidence brought on record by the prosecution that the appellant was number a person with whom the finances of the family companyld be trusted with. We say this from the material on record which shows that the appellants own father when he purchased the house, he purchased the same in the name of the deceased and number in the name of the appellant. Even the FDs. made for the benefit of the children were made in the name of the deceased and number in the name of the appellant. This itself goes to show that even the father of the appellant did number trust the appellant with the monies which he wanted to companytribute for the benefit of the family, more particularly for that of the children, unfit as he is to look after his family. Even then the mere fact that the appellant is proved to be number a good husband or father would number ipso facto lead to the companyclusion that he would companymit the murder in question. No person other than PW-4 claims to have seen the appellant at the scene of occurrence. No incriminating evidence e.g. any material like burns or even soot from the burning of the body to which the appellant must have suffered standing close, was numbericed in the person or the clothes of the appellant.

JUDGMENT OF THE COURT (Third Chamber) 17 September 2015 ( *1 ) ‛Reference for a preliminary ruling — Electronic communications networks and services — Universal service and users’ rights — Directive 2002/22/EC — Article 28 — Access to numbers and to services — Non-geographic numbers — Directive 2002/19/EC — Articles 5, 8 and 13 — Powers of the national regulatory authorities — Price control — Call transit services — National legislation requiring providers of telephone call transit services not to charge higher tariffs for calls to non-geographic numbers than for calls to geographic numbers — Undertaking without significant market power — Relevant national authority’ In Case C‑85/14, REQUEST for a preliminary ruling under Article 267 TFEU from the College van Beroep voor het bedrijfsleven (Netherlands), made by decision of 12 February 2014, received at the Court on 18 February 2014, in the proceedings KPN BV v Autoriteit Consument en Markt (ACM), THE COURT (Third Chamber), composed of M. Ilešič, President of the Chamber, A. Ó Caoimh, C. Toader, E. Jarašiūnas (Rapporteur) and C. G. Fernlund, Judges, Advocate General: Y. Bot, Registrar: M. Ferreira, Principal Administrator, having regard to the written procedure and further to the hearing on 11 March 2015, after considering the observations submitted on behalf of: — KPN BV, by L. Mensink, T. van der Vijver and C. Schillemans, advocaten, — the Netherlands Government, by M. Bulterman and J. Langer, acting as Agents, — the Italian Government, by G. Palmieri, acting as Agent, assisted by A. De Stefano, avvocato dello Stato, — the European Commission, by F. Wilman, G. Braun and L. Nicolae, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 16 April 2015, gives the following Judgment This request for a preliminary ruling concerns the interpretation of Article 28(1) of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) (OJ 2002 L 108, p. 51), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 11), (‘the Universal Service Directive’). The request has been made in proceedings between KPN BV (‘KPN’) and the Autoriteit Consument en Markt (Authority for Consumers and Markets; ‘the ACM’) concerning an injunction, together with a financial penalty, requiring KPN to lower its tariffs for call transit services to non-geographic numbers. Legal context EU law The new regulatory framework applicable to electronic communications services The new regulatory framework applicable to electronic communications services (‘the NRF’) consists of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33), as amended by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 37), (‘the Framework Directive’), and specific directives accompanying it, namely Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive) (OJ 2002 L 108, p. 21), Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive) (OJ 2002 L 108, p. 7), the Universal Service Directive and Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (OJ 2002 L 201, p. 37). – The Framework Directive Article 2 of the Framework Directive provides: ‘For the purposes of this Directive: ... (g) “national regulatory authority” means the body or bodies charged by a Member State with any of the regulatory tasks assigned in this Directive and the Specific Directives; ... (l) “Specific Directives” means [the Authorisation Directive], [the Access Directive], [the Universal Service Directive] and Directive 2002/58 … ...’ Article 6 of the Framework Directive, entitled ‘Consultation and transparency mechanism’, provides for the implementation of national consultation procedures between the national regulatory authorities (‘the NRAs’) and the interested parties in cases where the NRAs intend to take measures, in accordance with that directive or the specific directives, which have a significant impact on the relevant market. Article 7 of the Framework Directive, entitled ‘Consolidating the internal market for electronic communications’, provides for, inter alia, the obligation on the NRA of a Member State to make the draft measure which it intends to take accessible to the European Commission and the NRAs in other Member States in the cases provided for in Article 7(3). Article 7a of that directive lays down the procedure for the consistent application of remedies concerning, inter alia, the imposition, amendment or withdrawal of various obligations on operators. Article 8 of the Framework Directive defines the policy objectives and regulatory principles which the NRAs must ensure are observed when carrying out their regulatory tasks specified in that directive and in the specific directives. Article 16 of that directive lays down the rules on the implementation of the market analysis procedure. – The Universal Service Directive Under Article 2(d) and (f) of the Universal Service Directive: ‘(d) “geographic number” means a number from the national numbering plan where part of its digit structure contains geographic significance used for routing calls to the physical location of the network termination point (NTP); ... (f) “non-geographic number” means a number from the national numbering plan that is not a geographic number. It includes, inter alia, mobile, freephone and premium rate numbers.’ Paragraph 1 of Article 28 of the Universal Service Directive, entitled ‘Access to numbers and services’, provides: ‘Member States shall ensure that, where technically and economically feasible, and except where a called subscriber has chosen for commercial reasons to limit access by calling parties located in specific geographical areas, relevant national authorities take all necessary steps to ensure that end-users are able to: (a) access and use services using non-geographic numbers within the [European Union]; and (b) access all numbers provided in the [European Union], regardless of the technology and devices used by the operator, including those in the national numbering plans of Member States, those from the [European Telephony Numbering Space; ‘the ETNS’] and Universal International Freephone Numbers (UIFN). …’ – The Access Directive Article 1 of Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive) (OJ 2002 L 108, p. 7), as amended by Directive 2009/140, (‘the Access Directive’) provides: ‘1. Within the framework set out in [the Framework Directive], this Directive harmonises the way in which Member States regulate access to, and interconnection of, electronic communications networks and associated facilities. The 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. 2. This Directive establishes rights and obligations for operators and for undertakings seeking interconnection and/or access to their networks or associated facilities. It sets out objectives for [NRAs] with regard to access and interconnection, and lays down procedures to ensure that obligations imposed by [NRAs] are reviewed and, where appropriate, withdrawn once the desired objectives have been achieved. Access in this Directive does not refer to access by end-users.’ Article 5 of the Access Directive, entitled ‘Powers and responsibilities of the [NRAs] with regard to access and interconnection’, reads as follows: ‘1. [NRAs] shall, acting in pursuit of the objectives set out in Article 8 of [the Framework Directive], encourage and where appropriate ensure, in accordance with the provisions of this Directive, adequate access and interconnection, and the interoperability of services, exercising their responsibility in a way that promotes efficiency, sustainable competition, efficient investment and innovation, and gives the maximum benefit to end-users. In particular, without prejudice to measures that may be taken regarding undertakings with significant market power in accordance with Article 8, [NRAs] 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; (ab) in justified cases and to the extent that is necessary, obligations on undertakings that control access to end-users to make their services interoperable; ... 2. Obligations and conditions imposed in accordance with paragraph 1 shall be objective, transparent, proportionate and non-discriminatory, and shall be implemented in accordance with the procedures referred to in Articles 6, 7 and 7a of [the Framework Directive]. 3. With regard to access and interconnection referred to in paragraph 1, Member States shall ensure that the [NRA] is empowered to intervene at its own initiative where justified in order to secure the policy objectives of Article 8 of [the Framework Directive], in accordance with the provisions of this Directive and the procedures referred to in Articles 6 and 7, 20 and 21 of [the Framework Directive].’ Article 8 of the Access Directive, entitled ‘Imposition, amendment or withdrawal of obligations’, provides: ‘1. Member States shall ensure that [NRAs] are empowered to impose the obligations identified in Articles 9 to 13a. 2. Where an operator is designated as having significant market power on a specific market as a result of a market analysis carried out in accordance with Article 16 of [the Framework Directive], [NRAs] shall impose the obligations set out in Articles 9 to 13 of this Directive as appropriate. 3. Without prejudice to: — … — the provisions of Articles 12 and 13 of [the Framework Directive], Condition 7 in Part B of the Annex to [the Authorisation Directive] as applied by virtue of Article 6(1) of that Directive, Articles 27, 28 and 30 of [the Universal Service Directive] … containing obligations on undertakings other than those designated as having significant market power, … — … [NRAs] shall not impose the obligations set out in Articles 9 to 13 on operators that have not been designated in accordance with paragraph 2. … 4. Obligations imposed in accordance with this Article shall be based on the nature of the problem identified, proportionate and justified in the light of the objectives laid down in Article 8 of [the Framework Directive]. Such obligations shall only be imposed following consultation in accordance with Articles 6 and 7 of that Directive. …’ Paragraph 1 of Article 13 of the Access Directive, entitled ‘Price control and cost accounting obligations’, provides: ‘A [NRA] may, in accordance with the provisions of Article 8, impose obligations relating to cost recovery and price controls, including obligations for cost orientation of prices and obligations concerning cost accounting systems, for the provision of specific types of interconnection and/or access, in situations where a market analysis indicates that a lack of effective competition means that the operator concerned may sustain prices at an excessively high level, or may apply a price squeeze, to the detriment of end-users. …’ Directive 2009/136 Under recital 46 in the preamble to Directive 2009/136: ‘A single market implies that end-users are able to access all numbers included in the national numbering plans of other Member States and to access services using non-geographic numbers within the Community, including, among others, freephone and premium rate numbers. … Cross-border access to numbering resources and associated services should not be prevented, except in objectively justified cases, for example to combat fraud or abuse … when the number is defined as having a national scope only … or when it is technically or economically unfeasible. …’ Netherlands law Article 6.5 of the Law on telecommunications (Telecommunicatiewet; ‘the Tw’), which transposed Article 28 of the Universal Service Directive into national law, provides as follows: ‘1. Providers of public electronic communications networks or publicly available electronic communications services which also control access to end-users shall ensure that end-users in the European Union are able to access all: (a) numbers from a national numbering plan allocated in the European Union, (b) numbers from the [ETNS], and (c) numbers allocated by the [International Telecommunication Union (ITU)], and are able to use services using the numbers referred to in paragraphs (a) to (c), except where this is not technically and economically feasible, or where a called subscriber has chosen to limit access by calling parties located within specific geographical areas. 2. By or pursuant to a general administrative order, more detailed rules may be laid down to safeguard the obligation referred to in the first paragraph. Those rules may relate to, inter alia, the fees payable for access to the numbers referred to in the first paragraph. 3. The rules referred to in the second paragraph may be different for categories, to be determined by those rules, of providers, as referred to in the first paragraph. Those rules may transfer duties and allocate powers to the [ACM].’ The decree on interoperability (Besluit Interoperabiliteit; ‘the BI’) was adopted on the basis of the Tw. Article 5 of the BI, in the version in force as from 1 July 2013, reads as follows: ‘1. Providers of public telephone services or associated providers of public electronic communications networks which also control access to end-users shall guarantee that end-users are able to use services using non-geographic numbers within the European Union. 2. The obligation referred to in paragraph 1 in any case means that, in respect of calls to numbers from the sequences 0800, 084, 085, 087, 088, 0900, 0906, 0909, 116, 14 or 18, the providers of public telephone services and of public electronic communications networks referred to in paragraph 1 must apply tariffs or other charges which are comparable to the tariffs or other charges levied by those providers for calls to geographic numbers, and that they may levy a different tariff or different charge only if that is necessary in order to cover the additional costs related to the calls to those non-geographic numbers. It may be provided, by ministerial decree, that that obligation is to apply to other categories of providers or to other categories of non-geographic numbers. 3. More detailed rules concerning the obligation referred to in paragraph 1 may be laid down by ministerial decree.’ The dispute in the main proceedings and the questions referred for a preliminary ruling KPN provides call transit services to non-geographic numbers in the Netherlands, which represent approximately 20% of its traffic to those numbers. Having found that KPN, contrary to Article 5 of the BI, was charging higher tariffs for call transit services to non-geographic numbers than for the same services to geographic numbers and that this difference was not justified on grounds of additional costs, the ACM, acting in its capacity as the NRA, by decision of 18 October 2013, ordered KPN to adjust its tariffs on pain of a per diem penalty of EUR 25000, up to a maximum of EUR 5 million. KPN lodged an appeal against that decision before the College van Beroep voor het bedrijfsleven (Administrative Court for Trade and Industry). In support of its action, KPN argues, inter alia, that Article 5 of the BI does not comply with the NRF, which allows price controls only in respect of operators which have significant market power and after a market analysis has been completed. KPN also submits that, as a provider of call transit services, it does not fall under Article 5 of the BI. However, that company claims that the ACM’s decision is disproportionate and based on inadequate reasoning in so far as the ACM took the view, incorrectly, that Article 5 of the BI must be interpreted as meaning that the additional costs relating to the provision of call transit services could not be higher than those based on a strict cost orientation. In that regard, KPN asserts that the tariff for call transit services which it provides has little effect on the overall tariff and that the price of call transit services to non-geographic numbers is reasonable. The ACM justifies the validity of its decision by contending that the rule of the equivalence of prices for call transit services is based on Article 28 of the Universal Service Directive, which requires Member States to take all necessary steps to ensure that end-users are able freely to access services using non-geographic numbers and which thus helps to counteract obstacles to such access resulting from the application of excessively high prices. The referring court is uncertain whether Article 5 of the BI complies with EU law, given that Article 5 is based on Article 6.5 of the Tw, which implements Article 28 of the Universal Service Directive. That court asks, in this regard, whether the fact that Article 5 of the BI does not provide for a market study to be completed prior to the adoption of tariff regulation is in accordance with Article 28 of the Universal Service Directive. The referring court takes the view that the words ‘all necessary steps’ contained in Article 28 of the Universal Service Directive indicate that the adoption of tariff regulation is, in principle, permitted. Noting that recital 46 in the preamble to Directive 2009/136 suggests that Article 28 of the Universal Service Directive refers only to necessary steps to safeguard cross-border telephone traffic between the Member States, it takes the view that the question arises as to whether that article may be interpreted as meaning that, since non-geographic numbers may technically be called across borders, it is possible for the relevant national authorities to take steps to remove obstacles represented by the tariffs. The referring court considers that the fact that tariffs are regarded as an obstacle to accessing services using non-geographic numbers may depend on the extent to which those tariffs exceed those charged to reach geographic numbers. That court states, in this regard, first, that the tariffs for call transit services to non-geographic numbers can be so high that end-users are compelled to abandon those services. Second, it can, in that court’s view, be assumed that every price increase for call transit services to non-geographic numbers will result in some drop in demand for such services. However, according to that court, charging higher tariffs for access to call transit services to non-geographic numbers than to geographic numbers may have a marginal effect. The referring court is unsure whether, in the latter case, it can be said that end-users will not be able to access services using non-geographic numbers. It also notes that the ACM’s decision concerns only tariffs levied by KPN in respect of call transit services to non-geographic numbers which it provides and which represent approximately 20% of its traffic to those numbers. Furthermore, the referring court expresses uncertainty as to whether Article 28(1) of the Universal Service Directive authorises tariff regulation to be enacted by an authority other than the NRA which exercises the power referred to in Article 13(1) of the Access Directive, with that latter authority merely having powers of enforcement. In those circumstances, the College van Beroep voor het bedrijfsleven decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Does Article 28 of the Universal Service Directive permit the imposition of tariff regulation, without a market analysis having indicated that an operator has significant market power in regard to the regulated service, although the cross-border selectability of non-geographic telephone numbers is entirely possible from a technical point of view and the only obstacle to access to those numbers lies in the fact that the tariffs charged mean that a call to a non-geographic number is more expensive than a call to a geographic number? (2) If Question 1 is answered in the affirmative, the following two questions arise …: (a) Does the power to regulate tariffs also apply in the case where the effect of higher tariffs on the call volume to non-geographic numbers is merely limited? (b) To what extent do the national courts still have scope to assess whether a tariff-related measure required under Article 28 of the Universal Service Directive is not unreasonably onerous for the transit provider, given the objectives which it seeks to attain? (3) Does Article 28(1) of the Universal Service Directive leave open the possibility that the measures referred to in that provision may be taken by an authority other than the [NRA] which exercises the powers referred to in Article 13(1) of the Access Directive, with the result that the latter authority would merely have enforcement powers?’ Consideration of the questions referred The first and second questions By its first and second questions, which should be considered together, the referring court asks, in essence, whether EU law must be interpreted as allowing a relevant national authority to impose a tariff obligation, such as that at issue in the main proceedings, under Article 28 of the Universal Service Directive, to remove an obstacle to calling non-geographic numbers within the European Union which is not technical in nature, but which results from the tariffs applied, without a market analysis having been carried out showing that the undertaking concerned has significant market power. If the answer is ‘yes’, the referring court then asks whether such an obligation may be imposed where the effect of the tariffs on the volume of calls to non-geographic numbers is limited and whether the national court has scope to assess whether such an obligation is not unreasonably onerous for the provider of the call transit services. It is apparent from the order for reference that the tariff obligation at issue in the main proceedings was imposed on KPN, which provides call transit services to non-geographic numbers. Those services route calls from the network of an electronic communications service provider to the network of another provider through an intermediate network of the company providing those transit services. That obligation was imposed in order to ensure equivalence of prices for call transit services to non-geographic numbers and of prices for the same services to geographic numbers and to attain the objective referred to in Article 28 of the Universal Service Directive. In that regard, Article 28 of the Universal Service Directive provides that Member States are to ensure that, where technically and economically feasible, and except where a called subscriber has chosen for commercial reasons to limit the access of callers located in specific geographical areas, relevant national authorities take all necessary steps to ensure, in particular, that end-users are able to access and use services using non-geographic numbers within the European Union. Neither Article 28(1)(a) of the Universal Service Directive nor any other provision of that directive specifies (i) what is meant by ‘all necessary steps’, (ii) the nature of those steps, or (iii) whether the NRAs have the powers to take such steps, with the result that the question arises as to whether a tariff obligation such as that at issue in the main proceedings can be imposed for the purposes of attaining the objective referred to in Article 28. In those circumstances, it is necessary to examine whether the Framework Directive and the other specific directives, which form a harmonised framework for the regulation of networks and services, contain information which makes it possible to answer that question. According to settled case-law of the Court, in interpreting a provision of EU law, it is necessary to consider not only the wording of that provision, but also its context and the objectives pursued by the rules of which it is part (judgment in T-Mobile Austria, C‑282/13, EU:C:2015:24, paragraph 32). In that regard, according to its Article 1(1) and (2), the Access Directive fits into the framework set out in the Framework Directive harmonising the way in which the Member States regulate access to electronic communications networks and associated resources as well as their interconnection. The aim of that directive is to establish a regulatory framework, in accordance with internal market principles, for the relationships between suppliers of networks and services that results in sustainable competition, interoperability of electronic communications services and consumer benefits. The Access Directive defines, in particular, the objectives assigned to NRAs as regards access and interconnection. The first subparagraph of Article 5(1) of the Access Directive refers to the powers and responsibilities of the NRAs in respect of access and interconnection. That provision provides that, acting in pursuit of the objectives set out in Article 8 of the Framework Directive, those authorities are to encourage and where appropriate ensure, in accordance with the provisions of that directive, adequate access and interconnection, and interoperability of services, while promoting efficiency, sustainable competition, encouraging effective investments and innovation and giving the maximum benefit to end-users (see, to that effect, judgment in Commission v Poland, C‑227/07, EU:C:2008:620, paragraph 64). It must be borne in mind that the Court has already held in this regard that it follows from the wording of the first subparagraph of Article 5(1) of the Access Directive that the NRAs are responsible for ensuring adequate access and interconnection and also interoperability of services by means which are not exhaustively listed there (see, to that effect, judgment in TeliaSonera Finland, C‑192/08, EU:C:2009:696, paragraph 58). In that context, in accordance with point (a) of the second subparagraph of Article 5(1) of that directive, and without prejudice to the steps which may be taken with regard to undertakings having significant market power under Article 8 thereof, those authorities must be able to impose ‘obligations on undertakings that control access to end-users, including in justified cases the obligation to interconnect their networks’ solely in order to ensure end-to-end connectivity (see, to that effect, judgment in TeliaSonera Finland, C‑192/08, EU:C:2009:696, paragraph 59). Article 5(3) of the Access Directive also concerns access and interconnection and requires that NRAs be empowered to intervene autonomously by providing that those authorities may, inter alia, intervene on their own initiative to ensure compliance with the objectives set out in Article 8 of the Framework Directive, in accordance with the provisions of the Access Directive and the procedures referred to in particular in Articles 6 and 7 of the Framework Directive. Accordingly, those provisions of the Framework Directive and the Access Directive allow NRAs to take steps with regard to an undertaking which does not have significant market power but which controls access to end-users (see, to that effect, judgment in TeliaSonera Finland, C‑192/08, EU:C:2009:696, paragraph 62). According to Article 8(1) of the Access Directive, Member States must ensure that NRAs are empowered to impose the obligations identified in Articles 9 to 13a of that directive, including the obligations related to price control under Article 13 of that directive. Under Article 8(2) of that directive, where an operator is designated as having significant market power on a specific market as a result of a market analysis carried out in accordance with Article 16 of the Framework Directive, NRAs are required to impose those obligations on that operator. In accordance with Article 8(3) of the Access Directive, without prejudice to certain provisions, including Article 28 of the Universal Service Directive, containing obligations on undertakings other than those designated as having significant market power, the NRAs may impose obligations relating to price control, as defined in particular in Article 13 of the Access Directive, only on operators designated as having significant power, in accordance with Article 8(2) of that directive. Consequently, as the Advocate General stated in point 47 of his Opinion, Article 8(3) of the Access Directive should be interpreted as meaning that, except under certain provisions, including in particular Article 28 of the Universal Service Directive, NRAs may not impose obligations related to price control such as those laid down in Article 13 of the Access Directive on operators which do not have significant power on a given market. Accordingly, Article 8(3) of the Access Directive does not preclude the imposition of obligations related to price controls, such as those referred to in Article 13(1) of that directive, on an operator which does not have significant market power on the relevant market under Article 28 of the Universal Service Directive, provided that the conditions for the application of that provision are met. It follows that NRAs may, under Article 28 of the Universal Service Directive, impose tariff obligations comparable to those referred to in Article 13(1) of the Access Directive on an operator which does not have significant market power but which controls access to end-users, if such an obligation constitutes a necessary and proportionate measure to ensure that end-users can access services using non-geographic numbers in the European Union, this being a matter for the national court to determine, having regard to all relevant circumstances, including the effect of the tariffs at issue on end-users’ access to such services. Such an interpretation is, moreover, consistent with the objective pursued by Article 28 of the Universal Service Directive, which is, inter alia, to ensure that end-users have access to services using non-geographic numbers within the European Union, as well as the objective of the Universal Service Directive, which seeks to establish a regulatory framework, in accordance with internal market principles, for the relationships between suppliers of networks and services that promotes sustainable competition, interoperability of electronic communications services and consumer benefits. Furthermore, Article 5(1) and (2) and Article 8(4) of the Access Directive set out the conditions which must be satisfied by the obligations imposed by NRAs on operators providing networks or electronic communication services in accordance with Article 5(1) and Article 8 of that directive. Accordingly, Article 5(2) of the Access Directive provides that the obligations and conditions imposed under Article 5(1) must be objective, transparent, proportionate and non-discriminatory, and must be implemented in accordance with the procedures referred to in Articles 6, 7 and 7a of the Framework Directive. According to Article 8(4) of the Access Directive, obligations imposed in accordance with that article must be based on the nature of the problem identified, proportionate and justified in the light of the objectives laid down in Article 8 of the Framework Directive, and those obligations may be imposed only following consultation in accordance with Articles 6 and 7 of the Framework Directive. It follows from all of those factors that a tariff obligation such as that at issue in the main proceedings, adopted under Article 28 of the Universal Service Directive, must also satisfy the conditions referred to in paragraphs 43, 46 and 47 of the present judgment, this being a matter for the referring court to determine. In the light of all the foregoing considerations, the answer to the first and second questions referred is that EU law must be interpreted as allowing a relevant national authority to impose a tariff obligation, such as that at issue in the main proceedings, under Article 28 of the Universal Service Directive, to remove an obstacle to calling non-geographic numbers within the European Union which is not technical in nature, but which results from the tariffs applied, without a market analysis having been carried out showing that the undertaking concerned has significant market power, if such an obligation constitutes a necessary step to ensure that end-users are able to access services using non-geographic numbers within the European Union. It is for the national court to determine whether that condition is satisfied and whether the tariff obligation is objective, transparent, proportionate, non-discriminatory, based on the nature of the problem identified and justified in the light of the objectives laid down in Article 8 of the Framework Directive and whether the procedures laid down in Articles 6, 7 and 7a of the Framework Directive have been followed. The third question By its third question, the referring court asks, in essence, whether EU law must be interpreted as meaning that a Member State may provide that a tariff obligation under Article 28 of the Universal Service Directive, such as that at issue in the main proceedings, is to be imposed by a national authority other than the NRA usually responsible for applying the NRF. Article 28 of the Universal Service Directive provides that the steps which it covers are to be taken by ‘relevant national authorities’. The concept of the ‘relevant national authority’ is, however, defined neither in the Framework Directive nor in the Universal Service Directive. It should, however, be recalled in this regard that Article 2(g) of the Framework Directive defines a NRA as the body or bodies charged by a Member State with any of the regulatory tasks assigned in that directive and in the specific directives referred to in Article 2(l) thereof. That definition applies, by virtue of the first paragraph of Article 2 of the Universal Service Directive, for the purposes of the latter directive, which is one of the specific directives referred to in Article 2(l) of the Framework Directive. According to the case-law of the Court, although the Member States enjoy institutional autonomy as regards the organisation and the structuring of their NRAs within the meaning of Article 2(g) of the Framework Directive, that autonomy may be exercised only in full compliance with the objectives and obligations laid down in that directive (see judgments in Comisión del Mercado de las Telecomunicaciones, C‑82/07, EU:C:2008:143, paragraph 24, and in Base and Others, C‑389/08, EU:C:2010:584, paragraph 26). In addition, the Court has already held that, under Article 3 of the Framework Directive, Member States must, in particular, ensure that each of the tasks assigned to NRAs be undertaken by a competent body, that the independence of those authorities be guaranteed by ensuring that they are legally distinct from and functionally independent of all organisations providing electronic communications networks, equipment or services and that they exercise their powers impartially and transparently at the appropriate time. In addition, under Article 4 of the Framework Directive, decisions of those authorities must be made subject to an effective right of appeal to a body independent of the parties involved (see judgment in Base and Others, C‑389/08, EU:C:2010:584, paragraph 29). In accordance with Article 3(2), (4) and (6) of the Framework Directive, the Member States must not only guarantee the independence of NRAs by ensuring that they are legally distinct from, and functionally independent of, all organisations providing electronic communications networks, equipment or services, but must also publish, in an easily accessible form, the tasks to be undertaken in accordance with the NRF by those authorities, in particular where the tasks are granted to several bodies, and notify to the Commission the names of the authorities entrusted with carrying out those tasks, and their respective responsibilities (see, to that effect, judgments in Comisión del Mercado de las Telecomunicaciones, C‑82/07, EU:C:2008:143, paragraph 25, and in UPC Nederland, C‑518/11, EU:C:2013:709, paragraph 52). As a consequence, where those functions are to be discharged, even partially, by a national authority other than the NRA usually responsible for applying the NRF, each Member State must ensure that that other authority is neither directly nor indirectly involved in ‘operational functions’ within the meaning of the Framework Directive (see, to that effect, judgment in Comisión del Mercado de las Telecomunicaciones, C‑82/07, EU:C:2008:143, paragraph 26). It follows that EU law authorises a Member State to assign tasks resulting from the application of the NRF to several bodies, provided that, in carrying out their functions, each of those bodies satisfies the conditions of competence, independence, impartiality and transparency required by the Framework Directive and that decisions which each of those bodies takes in the context of those functions can form the subject of an effective appeal to a body independent of the interested parties. It is for the referring court to determine whether the national authority which has imposed the tariff obligation at issue in the main proceedings meets all of those conditions. In the light of the foregoing, the answer to the third question is that EU law must be interpreted as meaning that a Member State may provide that a tariff obligation under Article 28 of the Universal Service Directive, such as that at issue in the main proceedings, be imposed by a national authority other than the NRA usually responsible for applying the NRF, provided that that authority satisfies the conditions of competence, independence, impartiality and transparency required by the Framework Directive and that the decisions which it takes can form the subject of an effective appeal to a body independent of the interested parties, this being a matter for the referring court to determine. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Third Chamber) hereby rules: 1. EU law must be interpreted as allowing a relevant national authority to impose a tariff obligation, such as that at issue in the main proceedings, under Article 28 of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009, to remove an obstacle to calling non-geographic numbers within the European Union which is not technical in nature, but which results from the tariffs applied, without a market analysis having been carried out showing that the undertaking concerned has significant market power, if such an obligation constitutes a necessary and proportionate step to ensure that end-users are able to access services using non-geographic numbers within the European Union. It is for the national court to determine whether that condition is satisfied and whether the tariff obligation is objective, transparent, proportionate, non-discriminatory, based on the nature of the problem identified and justified in the light of the objectives laid down in Article 8 of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive), as amended by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009, and whether the procedures laid down in Articles 6, 7 and 7a of Directive 2002/21, as amended by Directive 2009/140, have been followed. 2. EU law must be interpreted as meaning that a Member State may provide that a tariff obligation under Article 28 of Directive 2002/22, as amended by Directive 2009/136, such as that at issue in the main proceedings, be imposed by a national authority other than the national regulatory authority usually responsible for applying the European Union’s new regulatory framework for electronic communications networks and services, provided that that authority satisfies the conditions of competence, independence, impartiality and transparency required by Directive 2002/21, as amended by Directive 2009/140, and that the decisions which it takes can form the subject of an effective appeal to a body independent of the interested parties, this being a matter for the referring court to determine. [Signatures] ( *1 ) Language of the case: Dutch.

COURT OF APPEAL FOR ONTARIO CITATION: Iroquois Falls Power Corporation v. Ontario Electricity Financial Corporation, 2016 ONCA 616 DATE: 20160805 DOCKET: M46751 (C60286, C60287, C60288, C60289, C60290, C60291) Gillese J.A. (In Chambers) BETWEEN C60286 Iroquois Falls Power Corporation C60287 Cochrane Power Corporation C60288 N-R Power and Energy Corporation, Algonquin Power (Long Sault) Partnership and N-R Power Partnership C60289 Kirkland Lake Power Corporation C60290 Lake Superior Power Limited Partnership, Beaver Power Corporation, Carmichael Limited Partnership and Algonquin Power (Nagamami) Limited Partnership C60291 Cardinal Power of Canada, L.P. and MPT Hydro L.P. Applicants (Respondents/Responding Parties) and Ontario Electricity Financial Corporation Respondent (Appellant/Moving Party) J.D. Timothy Pinos and Emily Larose, for the appellant/moving party James D.G. Douglas, for the respondents/responding parties Iroquois Falls Power Corporation, Cochrane Power Corporation, N-R Power and Energy Corporation, Algonquin Power (Long Sault) Partnership and N-R Power Partnership and Kirkland Lake Power Corporation Crawford Smith and Nick Kennedy, for the respondents/responding parties Lake Superior Power Limited Partnership, Beaver Power Corporation, Carmichael Limited Partnership and Algonquin Power (Nagamami) Limited Partnership Glenn Zacher, for the respondents/responding parties Cardinal Power of Canada, L.P. and MPT Hydro L.P. Heard: July 28, 2016 ENDORSEMENT [1] Ontario Electricity Financial Corporation (“OEFC”) is a Crown agency whose objects include managing the former Ontario Hydro’s non-utility generator contracts.  OEFC brings this motion to stay those parts of the judgments of Wilton-Siegel J. dated March 12, 2015 (the “Judgments”) requiring it to pay approximately $160 million [1] to the responding parties, pending the outcome of its application for leave to appeal to the Supreme Court of Canada and, if leave is granted, a determination on the merits. OVERVIEW [2] The responding parties to this motion are privately-owned non-utility generators (“NUGs”) who entered into power purchase agreements with the former Ontario Hydro between 1989 and 1994, amended by term sheets executed by the parties between 2002 and 2008 (“PPAs”). [3] When Ontario Hydro was restructured in 1999, OEFC became Ontario Hydro’s successor on the PPAs. [4] On January 1, 2011, Ontario Regulation 398/10 (the “Regulation”) came into force. After the Regulation came into force, OEFC relied on it to amend the formula it used to calculate the payments it made to the NUGs (the “New Formula”). [5] The New Formula resulted in decreased payments to the NUGs.  The NUGs commenced six separate applications, which were heard together, alleging that the New Formula breached the PPAs.  In their applications, the NUGs asked for orders requiring OEFC to resume making payments in accordance with the way in which they had been calculated before the Regulation came into force (the “Go-Forward Payments”) and requiring OEFC to pay them the difference between what they had been paid during the relevant period and what they would have been paid had OEFC not paid according to the New Formula (the “Retroactive Payments”). [6] Wilton-Siegel J. heard the applications and found that the New Formula did not comply with the PPAs. In the Judgments, he granted the applications and ordered OEFC to make both the Go-Forward Payments and the Retroactive Payments. [7] OEFC appealed to this court. [8] On April 19, 2016, in a unanimous decision written by Doherty J.A., this court dismissed OEFC’s appeal (the “CA Judgment”). [9] OEFC has made the Go-Forward Payments in accordance with the Judgments since they were rendered.  The Retroactive Payments were automatically stayed until the CA Judgment was released. [10] On June 20, 2016, OEFC filed an application for leave to appeal the CA Judgment to the Supreme Court of Canada. In its leave application, OEFC proposes to raise the following two issues on appeal: 1. What is the test for determining when a judge at first instance has impermissibly decided a matter on the basis of a “new issue” and what are the procedural consequences thereof? 2.  How are the rules respecting the implication of contractual terms to be made consistent with the general principles of contractual interpretation and, if appropriate, the new approach to the implication of terms in other jurisdictions? [11] In the motion presently before the court, OEFC seeks an order staying those portions of the Judgments that oblige it to make the Retroactive Payments, pending the determination of its leave application and, if leave is granted, a determination on its appeal.   Alternatively, it asks for an order staying those portions of the Judgments that oblige it to make the Retroactive Payments to Cochrane Power Corporation, Lake Superior Power Limited Partnership, and Cardinal Power of Canada L.P. [12] The NUGs oppose the stay motion. [13] For the reasons that follow, the motion is dismissed. THE TEST FOR A STAY [14] The test for a stay pending appeal, including a motion for leave to appeal to the Supreme Court of Canada, is well-established.  For OEFC to obtain a stay pending the outcome of its leave application, it must establish the following: a) there is a serious issue to be adjudicated on its proposed appeal; b) it will suffer irreparable harm if the stay is not granted; and c) the balance of convenience favours granting the stay. [15] These three components are interrelated in that the overriding question is whether the moving party has shown that it is in the interests of justice that the court grant a stay: see BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust , 2011 ONCA 620, 283 O.A.C. 321, at para. 16. 1.      SERIOUS ISSUE – THE MERITS OF THE LEAVE MOTION [16] Ordinarily, the threshold for demonstrating a serious issue to be tried is low.  However, for a stay motion pending leave to appeal to the Supreme Court, when considering the serious issue component of the test, the court must take into account the stringent leave requirements imposed by the Supreme Court Act, R.S.C. 1985, c. S-26 .  As Laskin J.A. explained at para. 18 of BTR : [T]he criteria for granting leave to appeal to the Supreme Court of Canada adds another layer to this component of the test. Under s. 40(1) of the [ Supreme Court Act ] , the Supreme Court of Canada typically grants leave to appeal only in cases of public or national importance. Thus, a provincial appellate court judge hearing a motion for stay pending leave to appeal to the Supreme Court of Canada must take account of the stringent leave requirements in the Supreme Court Act .  [Citations omitted.] [17] Thus, I must make a preliminary assessment of the merit of the leave application, taking into consideration the stringent leave requirements in the Supreme Court Act .  Having made that assessment, in my view, there is little likelihood that the Supreme Court will grant OEFC leave to appeal. I reach this conclusion for two reasons. [18] First, the judgments have little or no precedential value.  Wilton-Siegel J.’s interpretation of the PPAs, and the CA Judgment affirming his interpretation, have little or no precedential value because of the highly fact-specific nature of the interpretative exercise.  Doherty J.A. recognized this in his reasons for the CA Judgment saying, at para. 99: It is difficult to imagine an exercise in contractual interpretation that would be more fact-specific than the one called for here.  Similarly, it is difficult to imagine a product of that interpretative process that could have less precedential value. [19] Second, this court considered and rejected the two issues that OEFC raised in its leave application, finding that they did not arise on the facts of this case.  In other words, the issues are hypothetical.  This, too, makes it very unlikely that leave will be granted: Henry S. Brown, Supreme Court of Canada Practice 2016 (Toronto: Carswell, 2016), at p. 14. [20] The first issue raised on OEFC’s leave application is based on its assertion that Wilton-Siegel J. impermissibly decided the applications on a fundamentally different basis than that advanced by the NUGs on the applications and argued by the parties at the hearing.  This court rejected that submission, expressly finding that Wilton-Siegel J. did not decide the applications on the basis of a new issue.  In paras. 65-69 of his reasons, Doherty J.A. states that the “battle lines were clearly drawn before the application judge”, nothing in the applications judge’s reasons suggest that he failed to appreciate the parties’ positions or that he saw the essentials of their dispute differently than the parties, and the alleged new issue “tracked the competing positions of the parties”. [21] The second issue raised in OEFC’s leave application is based on its assertion that Wilton-Siegel J. implied a contractual term into the PPAs.  Again, that issue was raised before this court and rejected.  Doherty J.A. explained, at para. 118 of his reasons, that rather than implying a term, Wilton-Siegel J. had interpreted the language in the PPAs in light of the context in which those words were used by the parties.  That is, what OEFC characterized as implying a contractual term was simply Wilton-Siegel J. engaging in contractual interpretation as mandated by the Supreme Court’s recent judgment in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 . [22] As the issues raised on the leave application are highly fact dependent, appear to be hypothetical, and are likely to be of little interest to others beyond the litigants, it is unlikely that the Supreme Court will grant leave. 2.       IRREPARABLE HARM [23] OEFC says that irreparable harm of two sorts will result if the stay is not granted. [24] First, OEFC submits that making the Retroactive Payments will have a significant impact on the electricity ratepayers of Ontario.  It contends that making the Retroactive Payments would necessitate a rate adjustment in the very month they were paid.  This would pass significant costs onto ratepayers, particularly industrial customers.  Further, if OEFC obtains leave and is ultimately successful on appeal, OEFC submits that the adjustments for monies overpaid will be difficult to calculate and/or repayment might not put individual ratepayers back into the position they would have been but for the making of the Retroactive Payments. [25] Second, OEFC submits that if the stay is not granted and it is ultimately successful on appeal, it might be unable to recover the Retroactive Payments from the NUGs. It would have to pursue each NUG and OEFC says there is no assurance that the NUGs would be able to repay the funds received by way of the Retroactive Payments.  The prospect of non-recovery, OEFC argues, is particularly significant in respect of the 3 PPAs that have already expired.  (The expired PPAs are with Cochrane Power Corporation, Lake Superior Power Limited Partnership, and Cardinal Power of Canada L.P.)  Given that there is no ongoing commercial relationship between it and those 3 NUGs, the Retroactive Payment could not be recovered through set off. [26] I accept neither submission. [27] The record does not satisfy me that the full amount of the Retroactive Payments must come from electricity ratepayers in Ontario nor that if the amount of the Retroactive Payments is collected from electricity ratepayers that it must be done in a single month.  I have no doubt that unique challenges might arise if recovery takes place and if the Retroactive Payments have been funded by the Ontario ratepayers.  However, as I have indicated, on the record, I am not satisfied that the payments must come from the ratepayers.  Nor am I satisfied that if they do, OEFC would be unable to manage a fair rebate process. [28] OEFC’s submission that recovery of the Retroactive Payments is uncertain (should that come to pass) also fails.  OEFC effectively admits that it could recover, through set off, from those NUGs with whom it has an ongoing contractual relationship.  As for the three NUGs in respect of which the PPAs have already expired, on the record before the court, OEFC’s assertion of repayment risk is nothing more than speculation.  The NUGs are sophisticated commercial entities whose well-established owners have long histories of doing business in Ontario and, absent evidence to the contrary, there is no reason to expect that they would not repay any Retroactive Payments if OEFC is granted leave and succeeds on appeal. 3. BALANCE OF CONVENIENCE [29] OEFC says that it has shown that it will suffer harm if the stay is not granted and that the responding parties have led no evidence of any harm they will suffer if the stay is granted.  In any event, OEFC says, any harm that the NUGs might suffer can be remedied through payment of interest on the amounts owing.  Thus, OEFC submits, the balance of convenience is in its favour. [30] As I have already explained, OEFC has not established that it will suffer irreparable harm if the stay is not granted.  Therefore, even if I accept that the NUGs will not suffer non-compensable harm, it matters not.  It is OEFC’s burden to establish that it will suffer greater harm if the stay is not granted and it has failed to discharge that burden. DISPOSITION [31] It will be evident from the foregoing reasons that I do not view a stay to be necessary in the interests of justice.  The motion is dismissed. [32] The parties have assured me that they can resolve the matter of costs among themselves. Accordingly, I make no order as to costs. “E.E. Gillese J.A.” [1] This is the responding parties’ preliminary figure.  On OEFC’s preliminary calculation, the payments total just under $180 million.

OPINION OF ADVOCATE GENERAL LENZ delivered on 2 December 1992 ( *1 ) Mr President, Members of the Court, A — Introduction 1. Case C-93/91 Evrard, which was joined for the hearing with Case C-46/90 Lagauche, in which the procedure was reopened, concerns the interpretation of certain provisions of the Treaty in their application to Belgian legal provisions regulating telecommunications and radiocommunications. The legal problem is in same as in Cases C-208/88 ( ) and C-18/88. ( ) 2. The main action is a criminal prosecution similar to other cases in which the Court has already been asked to give a preliminary ruling. ( ) The defendant in the main proceedings was charged with having possessed and offered for sale, between 1 January and 3 February 1989, a cordless telephone for which the RTT had not given type-approval and having possessed and offered for sale, on 23 January 1990, 11 radiocommunication sets which had similarly not been approved, namely two Carphone Plus sets, two MPT 1344 radio transmitters, three cordless telephones (one Betacom, one Betacom 7000 and one Answercall Ranger 2000), together with equipment consisting of a DNT personal call system and three DNT PRA 3000 receivers, without obtaining the authorization required under Article 3(1) of the Law of 30 July 1979. 3. In his defence the defendant pleaded, inter alta, that one item of equipment had already been approved by the Deutches Bundespost. 4. The national court was uncertain as to the compatibility of the applicable national provisions with Community law and therefore referred the following questions to the Court for a preliminary ruling: ‘Arc Articles 30 to 37 and 86 of the Treaty establishing the European Economic community, together with the European Commission directive of 16 May 1988 on competition in the markets in telecommunications terminal equipment, to be interpreted as prohibiting, in the field of radiocommunications, legal provisions such as the Law of 30 July 1979 and the Royal Decree of 15 October 1979 which impose penalties of imprisonment and/or fines, on persons who have: (1) possessed, within the Kingdom of Belgium or on board a vessel, boat, aircraft or any other structure governed by Belgian law, a radio transmitter or receiver or set up or operated in such place a radio station or network without having obtained the written, personal and revocable authorization of the minister or state secretary responsible for telegraphs and telephones, or; (2) offered for sale or hire a radio transmitter or receiver no model of which has been granted type-approval by the Régie des Télégraphes et des Téléphones as complying with the technical requirements laid down by the minister responsible, despite the possible existence of an official certification obtained under a procedure established by another Member State of the European Community?’ 5. For the details of the facts of the case, the applicable provisions and the submissions of the parties, reference is made to the Report for the Hearing. B — Analysis 6. To a large extent the present case shows parallels with Case C-46/90 Lagauche. Both sets of proceedings are based on the same national provisions. I therefore refer in full to my Opinions in that case, both the Opinion delivered on 11 July 1991 and that delivered today. 7. In so far as they relate, in time, to the incidents of 1 January to 3 February 1989 and, as regards their substance, to cordless telephones and other radio equipment, the legal problems are similar to the problems discussed in Lagauche. The situation in the present case differs from, and indeed is wider than, the situation to be assessed in Lagauche, first, as regards the question of the treatment in law of equipment which has already been approved in another Member State and, secondly, as regards the question whether for the period after 1 July 1989, that is to say from the time when Article 6 of Directive 88/301/EEC ( ) entered fully into force, a different legal assessment of the facts is called for. 1. The significance of the fact that one item of equipment was approved in another Member State 8. First of all I shall deal with the consequences of the fact that certain equipment has already been approved in another Member State in accordance with the conditions applicable there. The national court's questions seek to ascertain whether approval in the Member State in which the equipment is to be marketed may be unnecessary if equipment of that type has already been approved in another Member State. In those circumstances the continued requirement for approval in the Member State in which the equipment is to be marketed might constitute an abuse. 9. It must be assumed that — at least at present — the telecommunications systems in the individual Member States differ technically from one another. The aim is to bring about a technical approximation of the systems, so that in future general type-approval of equipment will also be recognized in other Member States. So far that aim has not been achieved. That is also shown by Directive 86/361/EEC on the initial stage of the mutual recognition of type approval for telecommunications terminal equipment. ( ) 10. In my Opinion in the Lagauche case I took the view that the approval of equipment is necessary on grounds of public security. In order to emphasize the requirement for type-approval, the Belgian Government pointed out that, for example, the general emergency services might be disrupted by unauthorized radio equipment. If we therefore assume that authorization as such is not unnecessary, it is necessary to ensure that equipment is compatible with the radio and telecommunications system in force in the Member State concerned. 11. If the technical examination in the type-approval procedure related to the same characteristics as in another Member State a fresh examination would indeed be superfluous and would therefore constitute an abuse. It is precisely for that case, however, that — as the Belgian Government has submitted — there is a simplified procedure for a certificate of conformity, in which no technical examination is carried out. 12. In my opinion, until the systems and legal provisions have been harmonized, it is impossible to object to the fact that a Member State requires authorization within the meaning of the abovementioned certificate of conformity. 2. The significance of the entry into force of Article 6 of Directive 88/301 13. It now remains to answer the question of what legal consequences are to be attached to the entry into force of Article 6 of Directive 88/301/EEC on 1 July 1989. Article 6 of Directive 88/301/EEC provides that: ‘Member States shall ensure that, from 1 July 1989, responsibility for drawing up the specifications referred to in Article 5, monitoring their application and granting type-approval is entrusted to a body independent of public or private undertakings offering goods and/or services in the telecommunications sector.’ 14. In my Opinion in the Lagaitche case I argued that the combination of public-authority and commercial functions in a public undertaking is contrary to Articles 86 and 90 of the EEC Treaty. In that respect the requirement in Article 6 of Directive 88/301/EEC docs not alter the existing legal position, but is merely an instance of the Commission specifying, pursuant to Article 90(3), the Member States' obligations arising under the Treaty. ( ) Any doubts which might have existed prior to 1 July 1989 as to whether the combination of tasks in a public undertaking infringed Community law can no longer be held since that date. 15. In my Opinion in Lagauche I also maintained that the requirement to obtain type-approval does not in itself become unlawful under Community law because of the combination of tasks. On the other hand, the entry into force of Article 6 of Directive 88/301/EEC might have the effect of rendering the type-approval procedure unlawful in such a way that an economic operator who is prosecuted because he has failed to comply with the approval requirements could avoid the consequences by relying on the direct applicability of the provisions. 16. To anticipate my conclusion, I am of the opinion that that is not possible. First, the grounds for retaining the type-approval procedure continue to be those which I indicated in the Lagauche case, even after the entry into force of Article 6 of Directive 88/301/EEC. 17. In my view, however, the decisive factor is that a provision of a directive on which an individual relies must be capable of direct application. According to the settled caselaw of the Court of Justice, the provision must be precise and unconditional, so that in the event of conflict between the law of a Member State and Community law the case can be resolved by the supremacy of Community law. 18. In the present case the infringement of Community law relates not to the content of the type-approval procedure but to the position granted to the public undertaking implementing it. If it is assumed that the requisite separation of public-authority and commercial functions was effected by a legal measure on 1 July 1989, the question remains how and by whom the different functions are carried out. The national rule which is to be disregarded because of the supremacy of Community law would leave a gap which Community law is quite incapable of filling. Legislative measures must be adopted to close that gap. 19. In my view, Article 6 of Directive 88/301/EEC codifies a legal obligation directed at the Member States which only indirectly confers rights on individuals. That way of looking at things does not imply that a Member State's failure to fulfil its obligation has no consequences. Indeed, it is possible to conceive legal consequences over and above the possible solutions mentioned in my Opinion in the Lagauche case. In addition to the possibility of an action against the Member State for failure to fulfil its obligations under the Treaty, it might be possible to establish direct responsibility on the part of the Member State, which where appropriate would give grounds for an action for damages. ( ) 20. For the purposes of the present case, however, that approach means that there is no objection on grounds of Community law to a prosecution for failure to comply with the requirement to obtain authorization. C — Conclusion 21. Accordingly, I suggest that the answer to the national court should be as follows: Articles 30 to 37 and 86 of the EEC Treaty and Directive 88/301/EEC on competition in the market in telecommunications terminal equipment are to be interpreted as meaning that they do not in themselves prohibit, in the field of radiocommunications, legal provisions such as the Law of 30 July 1979 and the Royal Decree of 15 October 1979 which impose penalties imprisonment and/or fines on persons who have: (1) possessed, within the Kingdom of Belgium or on board a vessel, boat, aircraft or any other structure governed by Belgian law, a radio transmitter or receiver or set up or operated in such place a radio station or network without having obtained the written, personal and revocable authorization of the minister or state secretary responsible for telephones and telecommunications; or, (2) offered for sale or hire a radio transmitter or receiver no model of which has been certified by the Régie des Télégraphes et des Téléphones as complying with the technical requirements laid down by the Minister responsible, if it is guaranteed that the authorities responsible for implementing such rules — as regards both their substance and their form — do not appear as competitors in the market for the marketing of such equipment. 22. That also applies in cases where approval has already been granted within the framework of a procedure regulated in another Member State of the European Communities if the national examination serves to establish the certificate of conformity and a repetition of an examination procedure already carried out is avoided. ( *1 ) Original language: German. ( ) Case C 2C2/88 Commission v Denmark [1990] 1.CR I 4445. ( ) Case C 18/88 RTT v GB Inno BM [1991] ECR I 5941. ( ) Case C 46/90 Lagauche. Casc C 6/91 Decoster (1993) ECR I 5335, and Casc C 92/91 Taillandcr (1993) I-ECR I 5383 ( ) Commission Directive 88/301/EEC of 16 May 1988 on competition in the markets in telecommunications terminal equipment (OJ 1988 L 131, p. 73). ( ) Council Directive 86/361/EEC of 24 July 1986 (OJ 1986 I 217. p 21). ( ) Sec Cmc C 202/88. cited above ( ) Joined Cases C-6/90 and C-9/90 Francovich and Others v Italian Republic [1991] ECR I-5357.

Neutral Citation Number: [2005] EWHC 151 (CH) Claim No. HC03C01257 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION B e f o r e : BERNARD LIVESEY QC SITTING AS A DEPUTY HIGH COURT JUDGE BETWEEN: NICHOLAS ADRIAN HARRIS Claimant and WILLIAM ROBERT CHARLES WILLIAMS-WYNNE Defendant _________________ Marc Dight, instructed by CKFT of London NW3, for the claimant J. K. Quirke, instructed by Evans Roberts, of Machynlleth, Powys for the defendant _________________ Judgment Bernard Livesey QC Deputy Judge of the High Court 11 February 2005 This is the trial of the claimant’s claim and the defendant’s counter claim for damages for breach of an Agreement dated 21st April 1988 (‘the Agreement’) for the sale of a piece of land (‘the Additional Land’). The claimant had already in April 1997 purchased from the defendant a property called Berthlwyd Farm, Bryncrug, Nr Tywyn, Gwynedd which comprised a farmhouse with a modest amount of land. The Agreement, which was specifically to provide additional amenity land adjacent to, and to be enjoyed with, the farmhouse, contained a covenant not to erect any buildings on the land the subject of the Agreement. The claimant erected a building and, when he came to sell the property comprised in both titles, the defendant required him to provide compensation for breach of the covenant before he would enable him to give good title to his purchasers. The claimant denies that the defendant is entitled to compensation on the grounds that he has expressly or impliedly consented to the building being constructed and is barred from recovering compensation by laches, acquiescence, waiver or estoppel. The property in question is a farmhouse in the Snowdonia National Park. The defendant’s family had owned land in rural Gwynedd for years and a part of that, known as the Peniarth Estate, which comprised both agricultural and other land was owned by the defendant. Over the years various parcels of land had been sold with the houses standing on the land. The defendant usually took the farms ‘in hand’ and sold those farmhouses and buildings for which he did not have further use. The claimant is a designer who lived and worked in London and occasionally abroad. He purchased the Berthlwyd Farmhouse in 1987 for the sum of £36,000 and thereafter used it for about 3 months per year for vacations for himself and his girlfriend. Very shortly after he arrived, he sought to purchase more land. The defendant was initially reluctant but eventually agreed to sell the Additional Land in circumstances which are in dispute. The Agreement was dated 21st April 1988 and contained the following covenants: 2. The Vendor ... undertakes that if notice in writing is given to the vendor within twenty-one years from the date hereof the Vendor at the Purchaser’s expense will execute any document required to transfer the said freehold interest in such land to the Purchaser or as the purchaser may direct and use his best endeavours to obtain the concurrence of any other necessary parties 3. The Purchaser ... in view of the land being within a National Park covenants for the benefit of the Vendor’s retained land not to erect any buildings on the land the subject of this agreement. At the request of the claimant the defendant’s then solicitors registered the Agreement at the Land Registry. It is probable that the claimant received a copy but promptly mislaid it and subsequently forgot about both the necessity for a formal transfer and registration of his own title and of the existence of the covenant. The defendant kept a copy of the Agreement in his study at his own home and retained, at the back of his mind, the terms of the covenant.. While in Berthlwyd the claimant indulged his passion for gardening and set about designing an unusual garden, which incorporated terraces, walls, other structures and follies. In 1991 he made application for planning permission for the construction of a two storey garage and studio in accordance with detailed plans which were lodged. The overall size of the building was in excess of 2000 square feet, which is the size of a modern four bedroom house. A formal consent was given, which was subject to seven planning conditions, two of which are material. The first was the requirement that the development should be commenced within five years of the date of the planning consent. The second was that “the building hereby permitted shall not be used otherwise than as an annexe to the adjacent dwellinghouse and, in particular, shall at no time be used as a separate self-contained unit of accommodation”. The reason given for this condition was that “the building is not regarded as adequate for use as a separate dwelling house having regard to the relationship of the building to the existing dwellinghouse and its curtilage”. The claimant contends, but the defendant disputes, that prior to the application for planning permission he had discussed his intentions with the defendant and the latter had supported him, suggesting that it would assist his case for obtaining planning consent if he were to say to the authorities that he was proposing to remove an old corrugated black garage on the land, which would be an improvement. The claimant also contends that be began implementing the planning consent, albeit on an ad hoc basis, towards the end of 1995, and that the defendant stood by while the building was being constructed until it was nearly finished. What is clear is that by the autumn of 1995 the defendant had demolished the black garage, cleared the land on which it had stood and built a substantial stone wall whose function at that time was to retain a mound of earth and prevent its collapse. It appears from later photographs that this wall was incorporated into the building. The defendant lived at that time across the valley in a house known as Talybont. As a hobby he piloted light and microlight aircraft from a landing strip in his grounds, sometimes to travel long distances and sometimes just to take a tour of his estate, flying out once per fortnight on average. On one of those trips on 29th October 1995 he took an aerial photograph of the claimant’s property which shows that the corrugated garage had been demolished, the land cleared and the wall built. There was however no trace of any foundations and no sign to suggest that the works were preparatory to the construction of any sort of building, rather than another gardening project of some sort. It is relevant that it was only on the 7th December 1995 that the Technical Services Department of the local authority granted ‘full plans’ approval under the building regulations, which approval was valid for 3 years from that date. The evidence of the claimant, supported by invoices for some of the work and the occasional photograph, demonstrates that the building work was carried out piecemeal in the following stages. The foundations were installed during the late summer of 1997. It was then not until the end of 1999 that further work began which resulted in the building rising from foundation level to first floor level by the Spring of 2000. The roof was not begun until 2002. Between April and June 2002 the rafters were installed and the roof was slated in December 2002. In early 2002 the claimant decided to sell the property and the Additional Land and the sale was handled by local estate agents called Welsh Property Services. By October 2002 a Mr and Mrs Johnson had agreed to buy at the price of £280,000. However, during the conveyancing process it was discovered that the Additional Land had not been registered. The estate agents contacted the defendant by fax in November 2002 and requested his help in resolving the matter. He did not reply. In December 2002 the claimant’s solicitors formally contacted the defendant and his solicitors in an attempt to obtain a transfer. The defendant’s solicitors did not reply until March 2003 when they supplied a copy of the Agreement. They then made it clear that they would not transfer the Additional Land to the claimant without a further payment to compensate for the breach of covenant. On 2nd April 2003 the claimant instituted proceedings claiming specific performance, a declaration and damages or equitable compensation. The defendant served a Defence disputing the claim for specific performance and counterclaiming for damages for breach of covenant. Following an application for summary judgment, the defendant consented to an order for specific performance of the Agreement and executed a transfer of the Additional Land on 1st October 2003. The sale to the Johnsons proceeded and exchange and completion took place on 20th and 28th November 2003 respectively. At that time the building was watertight but the interior remained unfinished. The claimant submits that by reason of the defendant’s refusal promptly to transfer the property he suffered financial loss which he is entitled to recover as damages for breach of the Agreement. The defendant counterclaims damages for breach of the covenant contending that the Additional Land had been sold as amenity land and that, by building on it, the claimant had made a development profit of about £62,000, which should be shared between them equally. The case has been argued over 3 days. I heard evidence from the claimant and from Miss Lucy Richardson who was his girlfriend from 1993 to 2002. I heard also from the defendant and from his wife, the Honourable Veronica Williams-Wynne. Expert evidence was given by specialist expert valuers whose evidence was not agreed. Much of the factual evidence related to events which happened in 1987, 1988 and in the period 1993 to 2002. It was predictable that the clarity of the memories of the witnesses would be affected by the passage of time, as indeed they were, and also in some instances by ‘wishful recollection’. Wherever it was possible to do so I looked for documentary support, but sadly that was rather less of that than one might hope to find. As regards the credibility of the witnesses, I much preferred the evidence of the defendant and his wife. She in particular played only a small part in relevant events and gave evidence about one conversation with the claimant in early 1988 and a social visit to the claimant’s property in the late summer of 1996. Her statement was obtained very late after her husband had spoken to her by telephone following his own cross-examination on the first day of the trial. I take this very much into account. However, I was able to judge from the manner in which she gave evidence that she had a very clear and vivid recollection particularly of the conversation about which she testified. As regards the defendant: he was a Fellow of the Royal Institution of Chartered Surveyors, though he had not ever been in private practice; he had served 5 as a Magistrate; his main activity was as a businessman, landowner and farmer. He struck me as being entirely honest, open and truthful. He readily conceded when his recollection failed him, as it did from time to time, and made other appropriate concessions. He struck me as modest and unassuming. As will be seen, I generally accepted his account of events, although there were occasions when his memory let him down and he was mistaken. As regards Miss Lucy Richardson I do not doubt that she was intending to be truthful but it seemed to me that her evidence was inaccurate as to some of the details, and showed some sign of wishful reconstruction. Not unnaturally she had discussed matters closely with the claimant before making her statement. I think it probable that her recollection was affected by those discussions to some extent. The claimant seemed to me to be uncomfortable in certain parts of the evidence he gave and his demeanour was not as open as I felt it should have been. There were also a number of instances in his evidence about which he was clearly not truthful. I will mention just three of them. The first concerned the location of the building ‘as built’ as compared with its position on the location plan for which the planning consent was given. In the plan the building was to be built mainly on the site of the demolished black shed and with a similar alignment; in this position it would be very much an adjunct to the main house. The ‘as built’ position was entirely on the Additional Land and on a different alignment, and both these features affected both its presentation in the landscape and seemingly its potential to be severable from the rest of the property, if only the planners would remove the planning restriction. Under cross-examination it was suggested to the claimant that he had relocated the building intending that it should be physically capable of being sold separately in due course. He denied this and suggested that the lodged plans were prepared by his architectural draftsman in that manner by mistake, that everyone including the planners knew of the mistake and that they had dispensed with the necessity to provide amended plans showing the true location and when granting permission knew that the real location of the building would differ from that shown on the plan. There was of course no documentation or other evidence to support this assertion. I do not believe for one moment that the planning authority would have behaved in this way. I do not believe that the claimant was telling me the truth on this aspect of the matter. I am satisfied that he did change the location for the reason suggested to him and did so surreptitiously so far as the planning authority was concerned. The second related to the position of the boundary of the Additional Land. The Agreement imposed the obligation on the defendant to construct the boundary fence. The claimant drew my attention to the position of the fence on the plans and to a slight ‘kink’ in it which, he told me, had been agreed with the defendant expressly to allow room for the positioning of the building ‘as built’. There are a number of reasons which lead me to think that this was a casual untruth, including the fact that at the date both of the Agreement and the construction of the fence, there were no plans for building on the site and, even when in 1991 the building was conceived and the plans were drawn, it was intended to be built in a different position from that in which it was ultimately built, as mentioned in the preceding paragraph, and there would have been no need at all for a ‘kink’ in the boundary. Thirdly, when a number of complaints had been made to the planners, he maintained that he had complied with the condition that the development was to be commenced within 5 years of the consent, on the basis that the work in 1995 involved the construction of the foundations when these were not constructed until 1997, outside the 5 year period. I do not accept that the fact that the new stone wall was incorporated into the building, upon the change in position of the building, meant that the building itself was commenced in 1995 when the wall was built. It was a specious argument as he must have known. In the result, I strongly prefer the evidence given to me by the defendant to that of the claimant. This has the consequence that I do not accept a number of the assertions which were made by the claimant and on which he built his case for acquiescence. The basis of the claimant’s case was that right at the start, when he was seeking to persuade the defendant to sell him more land, he had made it clear to him that part of the reason he wanted additional land was so that he could build on it. The defendant’s evidence was that the claimant approached him for the Additional Land to be used as a pony field. Mrs Williams-Wynne gave a similar account. She told me that the claimant had approached her saying that he wanted to buy the land as a pony field, and needed somehow to persuade Mr Williams-Wynne to sell him some land for the purpose. She said that she told her husband and persuaded him to agree to sell. He told me that he agreed a price appropriate for amenity land rather than a building plot. In his original statement the claimant said that when he raised the question of more land with the defendant, he told him that the reason he wanted it “was mainly for landscaping but I was also very keen to be able to park vehicles out of sight from the main house”. It is to be noted that his evidence went further than his original statement which did not mention the question of additional building. I am quite satisfied that the account given to me by the defendant and his wife is accurate and truthful and that the claimant latest elaboration on his original statement is untrue. When the formal Agreement containing the covenant was presented to the claimant for signature it is clear that both men had a short discussion. The claimant says that he was told by the defendant that the covenant “was simply a covenant from the old estate and nothing to worry about” and that “he was obliged to put the clause in by the terms on which he had acquired the estate”. He purported to have a clear recollection of this even though it was his case that he completely forgot about the existence of the covenant. The defendant told me that when the question of the covenant was queried by the claimant, the latter had said that he was not intending to build on the property and the defendant responded that in that case it would not matter if the Agreement contained the covenant. I accept the defendant’s evidence. I do not accept the claimant’s assertion that the defendant told him or implied that the covenant was something which the claimant could ignore with impunity. The claimant also asserted that after he had told the defendant that he intended to build on the land the defendant assisted him with advice as to how to present the planning application to best effect, in particular by suggesting that it should be presented as a replacement structure for the pre-existing “eyesore” shed. I do not accept this at all. I also find that the defendant was not ever shown the plans of the studio/garage. When he did see the building, he found the design was offensive to his eye and to his sense of what was appropriate for the National Park. I do not accept that he would have forgotten the experience of seeing the plans. It is accepted that he would not automatically have been sent notice of the application for planning permission. He worked a long week away from home attending to his business interests in the West Midlands and there was no reason why the planning consent would have come to his notice. It is however clear that in late 1995 or early 1996 when he presented to the claimant the aerial photograph, there was a short conversation between them. The defendant had thought that the claimant might be ‘up to something’ but he did not know what. Both the claimant and Miss Richardson speak about this conversation in virtually identical terms. I quote from her statement: “At this time Mr Williams-Wynne said words to the effect of:- ‘You can see all this work you are doing, I wondered what you were doing? Are you building a swimming pool’. [The claimant] said words to the effect of:- ‘No, I am building a new building, you remember when I applied for planning permission you suggested that I should say that I was going to replace the black garage as they were more likely to grant planning if they thought something ugly was going to go?’” Both of them assert that the defendant was shown the plans on this visit. The defendant said that he had no recollection of this alleged conversation. He explained why he thought it could not have taken place. He said I only went to deliver a photograph. I asked the question ‘are you building a tennis court or a swimming pool’ and my recollection is that they were undecided. I have a firm recollection that the specific answer put to me was not given. If they had said that they were going to build that would have generated a conversation. I would have been interested in what they were going to do. It was a substantial area - which is why I thought it was going to be a tennis court. I have never seen Mr Harris’ plans. I reject the contention that a conversation took place in the terms in which the claimant and Miss Richardson speak. As I have pointed out, it is clear that the presentation of the building in the plans was one which the defendant did not like at all and he would have remembered seeing them if he had been shown them. I reject the suggestion that he would have lied on oath about seeing the plans and about this or any other conversation. It is agreed by each of the witnesses that there was a further occasion in about the summer of 1996 when the defendant and his wife visited the property for a social drink and that they were both shown around. The claimant and Miss Richardson allege that the defendant and his wife were told about the intention to build and they contend that they were not. It is to my mind likely that the truth lies someway between these two extremes. The fact is that it was now over 5 years since the planning consent had been obtained; the foundations were not yet installed and the claimant did not have the funds to do the work. I think that it is quite possible that the claimant mentioned that he aspired one day seek to build a garage/studio in the area but in terms that were sufficiently imprecise and uncertain as not to convey a definite intention to build. The claimant says that the defendant did not point out that this would be a breach of covenant. Nor would I think he would do. It was after all a social event and I believe that in the circumstances the defendant would feel that it was inappropriate to make such a point on such an occasion, particularly in view of the unspecific nature of the intention. He would in any event not have thought it necessary to remind the claimant. I do not accept the assertion that the failure to make mention of the covenant was of any relevance to the question of acquiescence. The claimant also relied on an exchange of correspondence between September and November 1997 in which the claimant sought an easement for the construction of a septic tank overflow on the defendant’s field. However, the claimant did not proceed with the arrangement and the defendant thought no more about it. I do not regard these events as a matter of significance in the context of the arguments about acquiescence. By the end of 1999 or early 2000 it must have been quite apparent to the defendant that the claimant was engaging in some form of building work. That year saw the construction rise from the foundations to first floor level. The building work would have been visible across the valley and from the air. The defendant however took no action at all at that time. It was early 2002 before the construction of the house rose to eaves level and it was in May or June of that year that the defendant first expressed his concerns to his solicitor Martineau Johnson, although he did not at any time speak to the defendant about them. I will consider this period in a little greater detail later in this judgment. The questions for me to decide are whether, on the findings which I make, there was such acquiescence on the part of the defendant as will deprive him of all entitlement to damages for breach of covenant. If he is not prevented from making a recovery of damages, the question will then arise as to the measure of damages. The Law: I have been referred to a number of cases from which I draw the following principles. First, damages for breach of contract at common law are likely to be only nominal where the breach is of a negative covenant, such as the present, having regard to the difficulty of establishing actual damage to the land for the benefit of which the covenant was provided: Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361. Secondly, more substantial damages may be awarded for the same breach under s 2 of the Chancery Amendment Act 1858 (“Lord Cairns’s Act”), subject only to the proviso that the court “has jurisdiction to entertain an application for an injunction against a breach of ... covenant ...”. Thirdly, the court has such jurisdiction if at the date of the institution of proceedings it would then have had jurisdiction to grant an injunction, whether or not it would have been prepared to do so on the facts. Since the question is one of jurisdiction, it is not necessary for the claimant to include a claim for an injunction in order to found a claim for damages under the Act: see generally per Millett LJ in Jaggard v Sawyer [1995] 1 WLR at 284-5. Fourthly, the claimant may lose his entitlement to claim damages if he has been guilty of such acquiescence as to make it in all the circumstances unconscionable for him to rely upon his legal right: see e.g. Gafford v Graham [1999] 41 EG 159. Fifthly, damages should be awarded in such a sum as the claimants might reasonably have demanded as a quid pro quo for relaxing the covenant had the defendants applied to them for relaxation: see Wrotham Park v Parkside Homes [1974] 1 WLR The assessment assumes a hypothetical negotiation on the basis that each party is willing to agree a proper and not a ransom price. The proper price will have regard to the amount of profit which will predictably result to the person bound by the covenant as a consequence of its release. Sixthly, the correct date for assessing damages is normally the date before the building works in question are started: see Amec Developments Ltd v Jury’s Hotel Management (UK) Ltd per Anthony Mann QC 2000 Unreported; and Lane v. O’Brien Homes [2004] EWHC 303 (QB) per David Clarke J. Seventhly, in a suitable case damages may be measured by the benefit gained by the wrongdoer from breach, that is to say on a restitutionary rather than compensatory basis: see esp Attorney-General v Blake [2001] 1 AC 268 Awards of this kind will be made when they are “the just response to a breach of contract”: ibid at 284F. As regards the last point, if damages are to be awarded, I do not believe that this is an appropriate case for damages to be awarded on a restitutionary basis since the claimant himself has not been guilty of the sort of underhand dealings vis a vis the defendant which would be required before an award on that basis would constitute a ‘just response’. As regards the date of quantification, if damages are to be awarded, damages should in my judgment be assessed on the basis of values prevailing at about the end of July 1997. This is because it was just shortly after that date that the construction of the building commenced with the construction of the foundations. Any breach, for which damages are to be awarded, was constituted not by the application for, or grant of, either planning consent or building regulation approval or the clearing of the land. It was constituted only by the works of construction and the middle of 1997 was the date when they commenced. Acquiescence: In the light of my findings, the claimant argued that the defendant had clearly acquiesced in the construction of the building and that he is therefore entitled neither to an injunction nor to damages under Lord Cairns’s Act. He drew my attention to the cases which lay down the modern test, beginning with the observation of Oliver LJ in Habib Bank Ltd v Habib Bank A.G. [1981] 1 WLR at 1285, who said that the test requires a much broader approach which is directed at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment ... He argued that the test is supported by observations in similar terms by Buckley LJ in Shaw v Applegate [at p. 978D] who said The real test, I think, must be whether upon the facts of the particular case the situation has become such that it would be dishonest or unconscionable for the plaintiff, or the person having the rights sought to be enforced, to continue to seek to enforce it. and was applied by Nourse LJ in Gafford v Graham who said Thus here the enquiry must be whether, in all the circumstances, it would be unconscionable for the plaintiff to continue to seek to enforce the rights that he undoubtedly had in 1986 to complain of the conversion of the bungalow and the extension of the barn. Indeed he submitted that the facts of Gafford v Graham, were on all fours with the present case. Nourse LJ there said [at p 78H] The plaintiff knew what his rights were, He never made any complaint or objection to the defendant at the time. His objection to the application for planning permission in respect of the bungalow and his complaints to his solicitors can avail him nothing. He made no complaint to the plaintiff until his solicitors wrote their letter of 7 March 1989, about thee years after the acts complained of. He only complained of them then because of the much more serious threat presented by the proposed construction of the riding school. Before that he had effectively treated the conversion of the bungalow and the extension to the barn as incidents that were closed. The court therefore concluded that there had been such acquiescence on the part of the person who had the benefit of the covenant that he was barred from all relief, including damages for breach of the covenant. The claimant argued that the words of Nourse LJ could be applied verbatim to describe the behaviour of the defendant in the present case and should have the same result, that is to say that the defendant here should be held to have lost his right to relief of any sort, as was the case in Gafford v Graham. Counsel for the defendant however contends that it is still the case that at the heart of the defence of estoppel or acquiescence lies the necessity for an encouragement or allowance of the other party to believe something to his detriment and that it was simply not sufficient merely to establish delay in making a complaint: see Jones v Stones [1999] 1 WLR 1749 esp per Aldous LJ at 1745 A-B; see also Blackburn & Wall v David Alston (Suffolk) Ltd and Others Chancery Division 20th November 2001 (unreported) esp. at paragraph [35]. He argues that the delay did not have any effect on the claimant and in any event he has not suffered any detriment. In my judgment, counsel for the parties are arguing merely different sides of the same test. It seems to me that a person’s behaviour will not usually be regarded as having been unconscionable unless it has had also an effect on the other person and caused him to act to his detriment. It therefore is relevant for me to determine the extent to which any delay on the part of the defendant has caused the claimant to act to his detriment. Of importance also is the question whether acquiescence has the effect of preventing the defendant from obtaining all relief, that is to say not merely an injunction but damages as well. There is no question that the delay in the instant case has deprived the defendant of any possibility of obtaining injunctive relief. He has realistically not sought it. But has he lost also the right to damages? It seems to me the answer to this question will depend not merely on the nature of the conduct of the defendant and its effect on the claimant but also on the wording of the covenant. The covenant in the instant case differs from the covenant in Gafford v Graham which provided No building of any description shall be allowed on the land hereby conveyed or any part thereof until detailed plans thereof have been submitted to and approved in writing by the Vendors ... This contrasts with the covenant in the instant case that The Purchaser ... covenants ... not to erect any buildings on the land the subject of this agreement. That means that Mr Gafford was entitled to have an influence on the design but could not prohibit the building. The breach by Mr Graham was committed when he failed to submit the plans to Mr Gafford for approval. Had he done so and had they been approved he would not have had to pay for the release of the covenant. Mr Gafford knew what was contained in the plans and made an objection to the Local Authority but not to Mr Graham. By failing to express his disapproval before the building was built he lost his chance of disapproving the design. Looked at in this way, one can see why it is that acquiescence in those circumstances caused the court to rule that Mr Gafford’s acquiescence caused him to lose his right to any and all forms of relief. The covenant in the instant case is different. It is an absolute bar to any building. By standing by while the building was being erected the claimant loses his right to a mandatory injunction requiring it to be pulled down. He has realistically not asked for that form of relief. However, that in my judgment does not mean that he will necessarily have been guilty of such acquiescence as to lose his right to damages. It is implicit in my findings that the defendant must have been aware that there was some form of building being constructed at some time between the Autumn of 1999 and the middle part of 2000. At that time the foundations of the building were installed and it grew to first floor level. The defendant had in 1998 moved to Peniarth, a distance of about 3 miles from the Berthlwyd. There was not a direct view from Peniarth to Berthlwyd, but the building would have been visible from many points - including the main road and, of course, from the air. This was some 2 years before the claimant spoke to his solicitor about the problem. It is clear that he spoke to his solicitor at Martineau Johnson a number of times shortly prior to June 2002 and on 22nd June 2002 he wrote stating Berthlwyd: The new building is on the land that N. Harris purchased after he bought the house. I hope that this does not complicate matters ! It is quite close to my fence if it is meant to be a garage! By now the building had reached eaves level. The defendant took no action because, he told me, he recollected an earlier conversation with the claimant, after he had moved into Berth Lwyn, when the latter had said that he enjoyed litigation and made money out of it; he was so afraid of this professed love of litigation that he decided that ‘it was not worth the candle’ to complain or take action against him. I do not accept that the defendant’s memory is accurate as to this conversation. In any event, I do not accept that even if it were, it would give any grounds for justifying the failure to take action. However, in my judgment the inactivity of the defendant is not fatal to his entitlement to damages. It is quite clear that the claimant did not at any material time think that he was bound by a restrictive covenant; it has not been said by him that the failure by the defendant to take any active steps to draw this to his attention encouraged him to believe that he could breach the covenant with impunity. Had the defendant raised the point in correspondence or by action at an earlier stage, it is most unlikely that there would have been any result other than a payment of a proper sum for the release of the covenant. Finally, I accept the submission of the defendant that the claimant has profited from the construction of the building since this has enhanced the value of his land significantly and to an extent greater than the sum he would have to have paid for the release of the covenant. In circumstances such as these, it is not in my judgment appropriate to regard the obligation to pay a proper sum for this breach of covenant as a ‘detriment’ of the sort that would make it unconscionable for the defendant to raise the issue at the stage at which he did so.. In these circumstances, applying what I perceive to be the appropriate test, I do not accept that the delay (and other actions) of the defendant are such as to make it unconscionable for him to seek to pursue his right to claim damages for this breach of this covenant. Damages: Each party has adduced the expert evidence of a valuer in order to assist me in quantifying the amount of any damages to be awarded. I will summarise the case of each. The defendant relies on the evidence of Mr Roger Stone FRICS FAAV of Birmingham who carried out an inspection of the property in February 2004. His valuation assumes that the date of valuation is immediately before the breach took place ‘in April 2002 when the building works seriously commenced’. He has reached his valuation figure by two different methods. Each assumes that it is possible to regard the whole property comprised in the title as capable of division, at least notionally, into two separate plots with separate buildings capable of separate valuation, despite the planning restriction that the building “shall at no time be used otherwise as an annexe to the adjacent dwellinghouse and, in particular, shall at no time be used as a separate self-contained unit of accommodation”. By Method 1 he compares the value [£200,000]that the finished building would have, if it stood on a plot without the restriction, with the value that it would have subject to the restriction [£140,000] and by a series of deductions arrives at the residual value of the land, which in the former case would be £122,500 as compared with £62,500. However, he asserts that there needs to be added to the latter figure the sum of £20,000 to represent the ‘hope value that the planning restrictions might be lifted one day’. The resulting figure of £82,500 is, he says, the sum representing the value in 2004 terms to be apportioned by the court between the claimant and the defendant. This should finally be discounted to 2002 prices by reducing it by 20%, to reflect the rise in property market values between 2002 and the date of his inspection, giving a figure of £62,500. By Method 2 he reaches the same result by starting from the value of a building plot with no planning restrictions [£125,000] and reducing it by ‘say 1/3rd’ because of the planning restriction. This happens also to provide a figure of £82,500 which should be discounted to achieve a 2002 value. I can say at once that I did not find Mr Stones evidence helped me in any way. First of all, it was plain that, coming as he did from Birmingham, he was unfamiliar with the market in the Gwynedd area. To gain sufficient local knowledge for the purposes of this case he had spent a day in Wales, looking at estate agents’ windows and later obtained and studied particulars of properties exhibited for sale. Secondly, as I have indicated, the date for the assessment of value is 1997 and not 2002. There was no means offered by Mr Stone whereby anyone might convert his 2002 figures to values prevailing in 1997. Quite apart from this, in my judgment his whole approach is inappropriate to the property and the valuation issues which are raised in this litigation, because it proceeds on the assumption that it is possible to value the additional land and property as an independent freestanding unit, whereas the land simply cannot be divided owing to the conditions of planning. Finally, whenever pressed in cross examination he responded by saying in effect that valuation was not a science but an art and that ultimately he was right because he had great experience. I am quite prepared to accept that valuation is an art but it is not totally devoid of science and I do not find it acceptable to justify an expression of value only by reliance on ‘experience’. Mr Jones gave evidence for the claimant. He had the immediate advantage that he practised locally, had premises in Tywyn Gwynedd, had experience of relevant comparable figures from transactions over many years and had in 1994 provided an open market value of the whole property for the claimant for reasons which were not discussed in evidence. He approached the valuation in two different ways. He first sought to assess the estimated profit resulting from the development, having regard to the expected costs of the construction of the building. It was his view that there was not any profit attendant on the development in 1995 and only £5,000 in April 2002. Secondly, after offering the information that the price agreed by the defendant (for lifting a similar covenant on a farmhouse known as Ty Mawr) was £4,000 (a transaction in which he had himself been involved) and the ‘rebate’ on a second farmhouse called ‘Crynllwyn’ was £3,500, he proposed that ‘the value of lifting the covenant on Berthlwyd is fairly limited’. He assessed it at 2.4% of the value of the entire property: making a figure rounded down to £6,000 in all, that being the figure at April 2002. A cross- check of this figure was made with reference to the ‘horse trading’ figures achieved by the defendant in the two examples which he quoted as set out above. I found the approach of Mr Jones to be helpful, but in the end it seemed to me that it did not take proper account of four important factors. The first is that the appropriate date for the valuation is mid 1997. The second is that his method of valuation undervalued the benefit of the construction of the Additional Building because the method was always valuing an incomplete building, at all stages in the exercise. The third is that the true figure for the release of the covenant binding Crynllwyn was in fact £10,000 and not £3,500. And fourthly, the choice of 2.4% as the appropriate percentage for valuing the release of the covenant was purely arbitrary and unsupported in any valid manner. There is a final point, that it is clear to me that the presumed negotiation would have been carried out by the two men simply on a ‘horse-trading’ basis. The conclusion to which I have come is that the appropriate approach to valuation comes from considering how the two parties would have approached the presumed negotiation had it taken place in the middle of 1997. The best evidence of the sort of level that might have been properly paid for a relaxation of the covenant comes from the evidence given by the defendant as to the prices which he had himself agreed with others for the relaxation of an identical covenant on other farmhouse properties which he had sold out of the estate. In July 2001 the defendant had agreed to accept the sum of £4,000 for the relaxation of a covenant not to make any alterations of additions to a property known as Ty Mawr, LLanegryn. A conservatory had been added after planning permission to do so had been obtained in 1992. The conservatory had been constructed and the breach of covenant came to light only years later when a sale was about to take place. There was also the sum of £10,000 paid by the owners of Crynllwyn (Mr Jones was in error when he deduced, in paragraph 5.4 of his report, that the price was only £3,500). The owner of Crynllwyn had been in breach by the conversion of a number of existing outbuildings which had the effect of approximately doubling the area of accommodation. The breach was discovered when they were seeking to give title on sale. Factors influencing the different prices charged include the nature of the building, its size and the proportion by which the accommodation is thereby increased. The defendant told me that he assessed the price as about 50% of the increase in value to the property which he judged to result from the development. I do not however think that this was other than a rough and ready and fairly non-scientific exercise on his part and that, at the end of the day, the negotiation would come down to ‘horse trading’. I take into account that neither party would have been likely to have carried out the sort of calculations used by each expert valuer in this case. Nor would they have obtained expert professional assistance. Although the defendant was a qualified surveyor he had not been in private practice and I therefore regard him as an enlightened layman, rather than a professional for these purposes. He could be generous to his friends but I think would be more inflexible where, as here, there was not an underlying friendship, where the planned building was one which he genuinely thought to be unsympathetic to its surroundings and was located in a too prominent position overlooking the countryside. The claimant for his part would, I suspect, approach the transaction without much money, and could, I suspect, be equally difficult in negotiations. The characteristics of each man broadly cancel themselves out. If they did not, I would not in any event judge it to be appropriate give them much attention. At the end of the day the assessment of a proper price in the hypothetical negotiation should be carried out on a fairly objective basis and should be blind to the special personal characteristics of each party. I must bear in mind that the date for assessment is 1997 and that the notional price in the hypothetical negotiations should assume that each party is a willing negotiator at a proper price for the building which was eventually constructed in the actual location in which it was built. In the circumstances I have come to the conclusion that the figure which the parties would probably have agreed as a proper price for a release of the covenant in June 1997 so as to enable the claimant to build the property ‘as built’ thereafter is a figure of £8,000. The Claim: The claimant argues that by reason of the defendant’s delay in complying with the covenant to execute any document required to transfer the freehold interest in the Additional Land, the defendant has been guilty of breach of the Agreement and has caused loss, that is to say, loss of use of the money he would have received earlier had there not been the delay. By clause 2 of the Agreement the defendant had undertaken that he would execute any document required to transfer the freehold, if notice in writing was given to him. It is of necessary implication that would execute the transfer within a reasonable time of the request. The history of this matter is as follows. The first notice to the defendant that there any sort of problem was given by the vendor’s estate agents who sent to the defendant a fax in November 2002 stating that the claimant had not registered the land and that this was causing problems with the sale of the property; she added “I don’t know the history behind all this and quite frankly it s nothing to do with me I just want to get this sale back on track. Your kind co-operation would be greatly appreciated”. The defendant said he telephoned but the documents show that he did not otherwise reply. A facsimile letter dated 19th December 2002 was sent by the claimant’s solicitors to the defendant’s solicitor enclosing a plan of the Additional Land, setting out the history and stating “My client is anxious to formalise the transaction with all haste, as he is in the process of seeking to sell the property, and the buyer requires a title to the additional land. I should be grateful if you would seek instructions and come back to me as soon as possible”. There was no reply. On 9th January 2003 the claimant’s solicitor again wrote stating inter alia “I should be grateful if you would confirm that you hold the deeds to the surrounding land, in order that when the extent of the land to be conveyed is agreed, a transfer of part may be executed in my client’s favour”. Again there was no reply. The claimant’s solicitor tried to contact the defendant’s solicitor a number of times by telephone and by letters dated 17th February 2003, 5th, 10th, and 13th March 2003 (in which he made an open offer of £1,500 to speed up matters) and 17th March 2003, in the last of which he threatened legal proceedings. On 18th March 2003 the defendant’s solicitors responded saying “we have finally located the agreement dated 21st April 1988 and hasten to enclose a copy”. On 2nd April 2003 the claimant issued proceedings claiming, inter alia, specific performance of the Agreement. There were further exchanges of correspondence between the parties on mainly procedural issues. In a letter dated 6th June 2003 the defendant’s solicitors stated “Whilst our client is willing to proceed with the transfer of the land to your client, we do not consider that he should do so in isolation, and we expect to receive a realistic proposal from your client in relation to the continuing breach of covenant. ..... We consider that your client should pay to our client a sum equivalent to the value of the relaxation of the covenant based upon the ultimate value of the redevelopment. ... Your client may wish to make a realistic offer at this stage...” And by letter dated 8th July 2003 they made it clear that “... we shall not be submitting a draft Transfer of [the land] to our client [for execution] until every aspect of this dispute is resolved.” As I have earlier indicated, after an order for specific performance had been granted, the defendant executed a transfer of the Additional Land on 1st October 2003 and the sale to the Johnsons proceeded with an exchange of contracts and completion on the 20th and 28th November 2003 respectively. In my judgment the letter dated 19th December 2002 constituted a sufficient request pursuant to clause 2 of the Agreement. The defendant was entitled to a reasonable time for compliance with his obligations. A reasonable time for compliance, considering the extended holiday period, was up to the last day of January 2003. No reason has been advanced for the failure of the defendant’s solicitors to respond to the correspondence addressed to them until their first letter dated 18th April 2003. It is clear that until compelled to do so by the court the defendant’s solicitors were insisting on linking compliance with clause 2 with payment of damages for breach of the covenant in clause 3. In my judgment this was a stance which the defendant was not entitled to take on the terms of the Agreement. It follows that in my judgment he was in breach of the Agreement. It is clear that he must have known or foreseen that his delay would delay completion and that this was likely to cause loss to the claimant. The claimant contends that but for the breach, the purchasers were likely to have exchanged in December 2002 and completed in May 2003. I have heard the evidence and read the relevant documents. It seems to me that the contention is made out, but the defendant is in breach only from the last day of January 2003 until the 1St October 2003. It is clear that the defendant was not liable for any delay which took place thereafter. In these circumstances, the loss which the claimant has established is the loss of use of the money he would have had in hand (i) on the deposit from the 1st January 2003 to the end of May 2003 and (ii) on the whole purchase price from the end of May 2003 until 8th October 2003. The evidence shows that he would have applied these sums in the reduction and discharge of borrowings from a mortgagee and his bank. He is entitled to recover the actual cost of interest paid by him to those lenders in respect of the sums and during the periods specified in (i) and (ii) above. In my judgment he is also entitled to recover the costs of insurance and water rates incurred by him in respect of the same period. I should be grateful to counsel if the appropriate calculations can be made and agreed if possible. Bernard Livesey QC Deputy Judge of the High Court 11 February 2005

MR JUSTICE COULSON: Introduction. The applicant is 22. On 17th January 2008, at the Crown Court at Cardiff, he admitted being in breach of the requirements of a suspended sentence order, comprising 12 months' imprisonment suspended for two years. This order had been made on 17th November 2006 following the appellant's plea of guilty to charges of possession of ecstasy with intent to supply, possession of ecstasy, possession of cocaine, possession of amphetamine and possession of cannabis. The requirements of the order included 150 hours unpaid work, supervision and 20 days education, training and employment. In consequence of his breaches of that order, at the hearing on 17th January 2008 His Honour Judge Bidder QC ordered that the suspended sentence should take effect immediately, with its original custodial period, 12 months, unaltered. That order has been referred by the Registrar of Criminal Appeals to the Full Court because it raises an issue of principle in relation to the activation of suspended sentences. The Facts of the Offence The facts of the original offence were these. On 3rd February 2006 a search warrant was executed at the appellant's home address in Newport. Recovered from the address were the following items: (1) 20 MDMA tablets; (2) 126 grammes of powder containing MDMA; (3) 4.17 grammes of powder containing MDMA; (4) 13 milligrammes of powder containing MDMA and cocaine; (5) 3.41 gammes of powder containing MDMA and amphetamine; (6) a spoon containing traces of cocaine; (7) an unknown quantity of cannabis. During his interview the applicant claimed that the majority of the drugs found were for his personal use. However, he admitted an intention to sell items (2), (3) and (4) in the list that we have just outlined. The imposition of the suspended sentence The pre-sentence report, dated 13th November 2006, specified a low to medium risk of re-offending. It suggested that the appellant had been traumatised by the unexpected death of his older brother five weeks previously. It recommended a suspended sentence order. This was a recommendation that, on 17th November 2006, the sentencing judge accepted. There is some suggestion in the papers that this was a relatively lenient sentence given the quantities of drugs found. We certainly consider that the suspended sentence order represented a chance for the appellant. As we shall see, it was one of a number of chances which this appellant failed to take. The breaches The appellant was back before the court in April 2007 as a consequence of his breaches of the order. The breach was punished with the addition of ten further hours of unpaid work. The order was allowed to continue. The appellant was back before the court again in November 2007 as a result of further breaches of the order. Again, the suspended sentence order was allowed to continue and the breach was this time dealt with by the imposition of a new condition that the appellant attend ten sessions of drug counselling. It appears that on that occasion the judge made it plain to the applicant that this was his last chance. Again, he failed to take it. Almost immediately after that breach hearing, the applicant failed to attend two unpaid work appointments on 13th November and 3rd December. He failed to attend two supervision appointments on 12th and 19th December. He also failed to attend an ETE appointment on 6th December 2007. No reason or excuse has been offered as to why the applicant, who is currently out of work, missed any, let alone all, of those appointments. The imposition of an immediate custodial sentence This third series of breaches meant that the applicant was back before the court again on 17th January 2008. At that point, as His Honour Judge Bidder recorded in his sentencing remarks, the applicant had grudgingly done 87 hours of unpaid work over a 13 month period, which was an average of just over one hour a week. In sentencing the applicant on that occasion the learned judge said: "... the question for me is: is it unjust to activate the order? I unhesitatingly consider that it is not unjust to activate the order, nor do I consider it unjust that the term of the order be activated unchanged. You have had every opportunity offered to you; you are not prepared fully to comply with the full terms of the order. I have borne all these matters in mind but the order will be activated now, with its term unchanged, 12 months' imprisonment." In her attractive submissions to us this morning Miss Thomas realistically concedes, as she conceded before the learned judge, that the activation of a custodial term was inevitable given the history and extent of the breaches. Miss Thomas's principal complaint is that, because the appellant had complied with a part of the supervision order, it was wrong in law to impose the whole of the original custodial term. To that extent, she relies in her written advice upon a question which the judge posed to prosecuting counsel during the opening of the facts. The judge asked this: "As a matter of principle, why should the term of a suspended sentence be reduced just because half of the other punishment has been in fact performed? Is there a reason in principle why the term of sentence which has been suspended, which is a term that is shorter than would have been imposed for these very serious offences, had a suspended sentence not been imposed, is there authority that in principle I should reduce the term of the suspended sentence to reflect that some of the order has been done." It appears that the answer given to the judge was that no authority or other principle could be identified. The principles applicable to the activation of a suspended sentence As Miss Thomas rightly points out, the provisions dealing with breach of a suspended sentence order are set out in Part 2 Paragraph 8 of Schedule 12 of the Criminal Justice Act 2003, a series of provisions which are unnecessarily complex: "2. The court must consider his case and deal with him in one of the following ways -- (a) the court may order that the suspended sentence is to take effect with its original term and custodial period unaltered, (b) the court may order that the sentence is to take effect with either or both of the following modifications -- (i) the substitution for the original term of a lesser term complying with section 181(2), and (ii) the substitution for the original custodial period of a lesser custodial period complying with section 181(5) and (6), (3) The court must make an order under subparagraph (2)(a) or (b) unless it is of the opinion that it would be unjust to do so in view of all the circumstances, including the matters mentioned in subparagraph (4); and where it is of that opinion the court must state its reasons. (4) The matters referred to in subparagraph (3) are -- (a) the extent to which the offender has complied with the community requirements of the suspended sentence order." In addition, there are also guidelines issued by the Sentencing Guidelines Council on the question of breach and the reactivation of a suspended sentence order; they are in simpler and clearer terms. 2.2.16: "The presumption is that the suspended prison sentence will be activated either with its original custodial term or a lesser term unless the court takes the view that this would in all the circumstances be unjust. In reaching that decision the court may take into account the extent to which the offender has complied with the requirements." 2.2.17: "Where a court considers that the sentence needs to be activated, it may activate it in full or with a reduced term. Again, the extent to which the requirements have been complied with will be very relevant to this decision." It seems to us that the statutory provisions envisage a two stage test. First, where there has been a breach, the court must order that the suspended sentence take effect either in whole or in part unless it would be unjust to do so. The extent of compliance with the original order is relevant to that decision. So, for example, if 95 per cent of the order had been complied with, a court might conclude that it was unjust to order that any part of the custodial term take effect. Secondly, if it is not unjust to activate the suspended sentence, then the court must decide whether or not to impose the original sentence or modify the term. It seems clear from the Schedule that either of those options are available to the court and therefore either of them are available in circumstances where there has been part compliance. Part compliance is, of course, relevant again at this stage, because if there had been substantial and prompt compliance with the order then, even if a suspended sentence is to be activated, the court may be minded to impose a lesser term than that originally specified. Miss Thomas submits that there is some doubt as to whether the judge considered the two stage test. It seems to us by reference to the sentencing remarks, which we have quoted earlier, that the judge may well have followed the two stage test outlined above. It is, however, right that the question that he posed suggested that he considered the matter as raising one question only. In those circumstances, we consider the application made in relation to this sentence as if we were exercising afresh the discretion under the Criminal Justice Act. Applying, therefore, the two stage test, it is plain that in this case it was not unjust to impose a custodial sentence following the breaches of the order. Indeed, Miss Thomas does not suggest otherwise. As to the second stage, it is clear to us that such compliance as there has been on the part of the applicant has been dilatory, spasmodic and, to use the judge's word, grudging. The applicant has been repeatedly in breach of the terms of the order. In those circumstances, although we consider that his part compliance is a factor which should be taken into account in the exercise of the court's discretion, we have concluded that it should not, on the facts of this case, lead to any reduction in the 12 month term. The imposition of the full term, despite minor compliance Miss Thomas made extremely attractive submissions to us to the effect that, if there had been any compliance with the terms of a suspended sentence order, then some credit ought to be given almost as an automatic consequence. However, it seems to us that it is not appropriate for a sentencing court always to give credit and to reduce the suspended sentence in such circumstances. Community orders and suspended sentences are seen by some sections of the public as a soft alternative to prison. For the public to have confidence in them, they must be properly enforced by the courts. If there are repeated breaches, as there were in this case, then defendants must know that they will face the probability that the full sentence originally imposed will be reactivated. It is also right for us to note that the probation service spend a good deal of time and effort providing the services in respect of which community orders depend. It is important that the courts ensure that such time and resources are not wasted on those defendants who only comply with the terms of the orders when they feel like it. It is also important that the probation service knows that courts may well impose full terms when community service orders and suspended sentence orders are breached; they can then give a clear message to those who are subject to such orders. For all those reasons, although we are extremely grateful to Miss Thomas for her submissions to us this morning, we have concluded that this appeal against sentence should be dismissed.

Judgment of the Court of 15 June 1993. - Abertal SAT Ltda and others v Commission of the European Communities. - Aid measures for nuts and locust beans - Amendment of detailed rules for their application - Action for annulment brought by producers' organizations - Admissibility. - Case C-213/91. European Court reports 1993 Page I-03177 Summary Parties Grounds Decision on costs Operative part Keywords ++++ Actions for annulment ° Natural or legal persons ° Measures of direct and individual concern to them ° Regulation amending the detailed rules for applying aid measures for nuts and locust beans (EEC Treaty, Art. 173, second para.; Commission Regulation No 1304/91, Art. 1) Summary The possibility of determining more or less precisely the number or even the identity of the persons to whom a measure applies by no means implies that it must be regarded as being of individual concern to them within the meaning of the second paragraph of Article 173 of the Treaty as long as it is established that such application takes effect by virtue of an objective legal or factual situation defined by the measure in question. Therefore Article 1 of Regulation No 1304/91, which serves to amend for the future, for all producers' organizations, certain detailed rules for applying aid for the implementation of improvement plans in the nut and locust bean sector by laying down more stringent conditions for applications by producers to change their plans in the course of execution, to receive annual instalments of aid and to draw advances in respect of such aid, is not of individual concern to producers' organizations whose plans were approved before the regulation was adopted. In so far as the said Article 1 does not refer specifically to the aforementioned organizations, contains no concrete indication that the measures it introduces were adopted specifically taking account of the applicants' plans and it applies in the same way to all producers' organizations, whatever the date of approval of their plans, it is addressed in general terms to indeterminate classes of persons and applies to objectively determined situations. Parties In Case C-213/91, Abertal SAT Ltda, a company governed by Spanish law, established in Reus, Tarragona (Spain), and 18 other organizations of Spanish producers of nuts and locust beans established in Spain, represented by Fernando Pombo García, Ricardo García Vicente and Iñigo Igartua Arregui, of the Madrid Bar, with an address for service in Luxembourg at the Chambers of Claude Wassenich, 6 Rue Dicks, applicants, v Commission of the European Communities, represented by Francisco José Santaolalla and Eugenio de March, Legal Advisers, acting as Agents, with an address for service in Luxembourg at the office of Nicola Annecchino, of its Legal Service, Wagner Centre, Kirchberg, defendant, APPLICATION for the annulment of Article 1 of Commission Regulation (EEC) No 1304/91 of 17 May 1991 amending Commission Regulation (EEC) No 2159/89 laying down detailed rules for applying the specific measures for nuts and locust beans as provided for in Title IIa of Council Regulation (EEC) No 1035/72 (OJ 1991 L 123, p. 27), THE COURT, composed of: O. Due, President, C.N. Kakouris, G.C. Rodríguez Iglesias, M. Zuleeg and J.L. Murray, (Presidents of Chambers), G.F. Mancini, R. Joliet, F.A. Schockweiler, J.C. Moitinho de Almeida, F. Grévisse and P.J.G. Kapteyn, Judges, Advocate General: W. Van Gerven, Registrar: H. von Holstein, Deputy Registrar, having regard to the Report for the Hearing, after hearing oral argument from the parties at the hearing on 10 March 1993, after hearing the Opinion of the Advocate General at the sitting on 21 April 1993, gives the following Judgment Grounds 1 By application lodged at the Court Registry on 10 August 1991, Abertal SAT Limitada and 18 other organizations of Spanish producers of nuts and locust beans ("the applicants") brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of Article 1 of Commission Regulation (EEC) No 1304/91 of 17 May 1991 amending Commission Regulation (EEC) No 2159/89 laying down detailed rules for applying the specific measures for nuts and locust beans as provided for in Title IIa of Council Regulation (EEC) No 1035/72 (OJ 1991 L 123, p. 27). 2 By order of 18 October 1991, the President of the Court dismissed the application for interim relief seeking suspension of the operation of Article 1 of Regulation No 1304/91 pending the Court' s judgment on the main application. 3 Council Regulation (EEC) No 789/89 of 20 March 1989 instituting specific measures for nuts and locust beans and amending Regulation (EEC) No 1035/72 on the common organization of the market in fruit and vegetables (OJ 1989 L 85, p. 3), added Title IIa to Regulation No 1035/72 of 18 May 1972 (OJ, English Special Edition 1972 (II), p. 437), as subsequently amended. 4 Title IIa of Regulation No 1035/72 provides for certain aid measures in the nuts and locust beans sector and, in particular, aid for the implementation of quality and marketing improvement plans, submitted by the producers' organizations and approved by the national authorities (Article 14d of Regulation No 1035/72). 5 The plans referred to by this provision are intended to improve, by means of varietal conversion or cultural improvement, the quality of produce from orchards which are given over to producing one homogenous crop and are not scattered among other plantations and, where needed, to improve marketing. 6 Under Article 14d of Regulation No 1035/72 the approved improvement plans qualify for Community aid of 45% for their execution provided they are funded to a level of 45% by the producers' organizations and a level of 10% by the Member State. Funding from the Member State and aid from the Community are subject to a ceiling and are paid over a period of 10 years. The maximum level of aid decreases gradually. 7 The conditions for the approval of improvement plans and, inter alia, the detailed rules for the payment of aid for carrying out the plans were laid down by Commission Regulation (EEC) No 2159/89 of 18 July 1989 laying down detailed rules for applying the specific measures for nuts and locust beans as provided for in Title IIa of Council Regulation (EEC) No 1035/72 (OJ 1989 L 207, p. 19). 8 Regulation No 1304/91 amends Regulation No 2159/89 for the second time. 9 Article 1 of Regulation No 1304/91, which is the subject of this action, restricts the conditions under which producers' organizations in the nut and locust bean sector may apply to change plans which have already been approved in order to extend the surface area covered by the plan. It also restricts the payment of advances on the annual instalment of aid and brings in stricter requirements concerning the administrative information which producers' organizations must supply in order to receive Community aid for improvement plans. 10 Under Article 2 of Regulation 1304/91, these amendments entered into force on 21 May 1991. 11 By separate document lodged at the Court Registry on 23 October 1991, the Commission objected pursuant to Article 91(1) of the Rules of Procedure that the action was inadmissible. In accordance with Article 91(3) of the Rules of Procedure, the Court decided to open the oral procedure in order to examine the objection. 12 Reference is made to the Report for the Hearing for a fuller account of the facts and the legal context of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. 13 In support of the objection of inadmissibility, the Commission contends that the applicants are neither directly nor individually concerned by the contested regulation. 14 The applicants submit that, firstly, their position is directly affected by the contested regulation because the competent national authorities have no discretion in applying the amendments at issue. Secondly, the fact that the applicants had improvement plans which were presented and approved before the contested regulation was adopted differentiates them from all other producers in the nut and locust bean sector. Therefore they constitute a limited class of producers whose identity is said to have been known to the Community authorities in so far as, before a particular date, they carried out a particular formality, namely presentation of approved improvement plans before the contested amendments were adopted. In addition, the amendments made by the contested regulation to the aid scheme were due to the applicants' situation, in that the Commission intended to reduce the cost of the operation due to the number of producers' organizations set up and the amount of aid applied for. 15 In order to give a ruling on the Commission' s objection of inadmissibility, it must be observed that the second paragraph of Article 173 of the Treaty enables any natural or legal person to institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former. 16 Since the present action seeks the annulment of a provision in a regulation, it must be ascertained whether the contested measure is of direct and individual concern to the applicants. 17 As to the question whether applicants are individually concerned, the Court has consistently held that the possibility of determining more or less precisely the number or even the identity of the persons to whom a measure applies by no means implies that it must be regarded as being of individual concern to them as long as it is established that such application takes effect by virtue of an objective legal or factual situation defined by the measure in question (see, for example, Case 123/77 UNICME v Council [1978] ECR 845, and Case 26/86 Deutz und Geldermann v Council [1987] ECR 941). 18 The contested provision of Regulation No 1304/91 serves to amend for the future, for all producers' organizations, certain detailed rules for applying aid for the implementation of improvement plans in the nut and locust bean sector by laying down more stringent conditions for applications by producers to change their plans in the course of execution, to receive annual instalments of aid and to draw advances in respect of such aid. 19 Consequently this provision, far from affecting the applicants by reason of certain characteristics which are particular to them or a factual situation which differentiates them from all other producers, is addressed in general and abstract terms to indeterminate classes of persons and applies to objectively determined situations. 20 The contested regulation does not specifically relate to the applicants, but concerns them only in their objective capacity as producers' organizations in the sector in question, in the same way as any other producer who is, actually or potentially, in the same situation. 21 In particular, the applicants' allegation that their plans were approved without objections being raised by the Commission, which it would have been entitled to do, cannot distinguish them with regard to the contested provision of the regulation in question because that provision does not affect the applicants in a manner different from all the other traders in the sector. 22 The provision applies in the same way to all producers' organizations whose improvement plans were approved before the regulation was adopted or will be approved after that date. 23 Furthermore, there is no concrete indication in the contested regulation that the measures in question were adopted specifically taking account of the applicants' plans. 24 Therefore the contested provision is not of individual concern to the applicants within the meaning of the second paragraph of Article 173 of the Treaty and the action must be dismissed as inadmissible. Decision on costs Costs 25 Under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the applicants have been unsuccessful, they must be ordered to pay the costs, including those relating to the application for interim relief. Operative part On those grounds, THE COURT hereby: 1. Dismisses the application as inadmissible; 2. Orders the applicants to pay the costs, including those relating to the application for interim relief.

Lord Justice Moses: By a Decision Notice dated 26 May 2011 the Information Commissioner declined to order the disclosure of the names of three members of the staff of the Financial Services Authority in response to an information request by the appellant, Mr Edem. The First-Tier Tribunal decided that the names of the officials did not constitute personal data and ordered that they be disclosed. The Upper Tribunal (Administrative Appeals Chamber) reversed that decision on appeal. Mr Edem now appeals, in person, following the permission of the single judge. The background to this appeal lies in Mr Edem's request on 30 December 2009 of the Financial Services Authority for a copy of all information that the Authority held about him and "my complaint that the FSA had failed to correctly regulate Egg PLC". The FSA refused to provide some information on the ground that it was Mr Edem's own data which he could access under the Data Protection Act 1998. Although Mr Edem still seemed concerned as to that application it was not the subject matter of this appeal. This appeal is concerned with the Financial Services Authority's refusal to provide information on the ground that it was the personal data of its junior employees. Mr Edem complained to the Information Commissioner. Part of that complaint was upheld by the Commissioner in his notice of 26 May 2011. The Commissioner accepted that the complainant had a legitimate interest in information about the grade of staff who had handled his complaint. But the Commissioner continued:- "[21] The Commissioner notes that while the staff in question worked on the complainant's complaint, they did not correspond with him about it. He also notes that the public authority has confirmed that they were not in public-facing roles and that these individuals were of a grade below that of manager. It is the Commissioner's view that these members of staff would have had no expectation that their names would be released into the public domain. The Commissioner is also satisfied that disclosure of their names would not add anything further to the way in which the complainant's complaint had been dealt with. Therefore any legitimate interest in the disclosure of the names of these individuals is outweighed by the prejudice disclosure would cause to the rights and freedoms of the individuals concerned." The issue in this appeal is whether disclosure of the names of three junior officials could be withheld on the grounds that it was personal data and that disclosure of that information would contravene the first principle of the Data Protection Act 1998. I should record that the name of a fourth official involved in the same way as the three others had been disclosed by mistake. The legislative scheme is as follows. Section 40(2) of the Freedom of Information Act 2000 provides:- "(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 sub-section (1), and (b) either the first or the second condition below is satisfied. (3) The first condition is (a) in a case where the information falls within any of paragraphs (a)-(d) of the definition of 'data' in s.1(1) of the Data Protection Act 1998, that the disclosure of the information to a member of a public otherwise and under this Act would contravene – (i) any of the data protection principles, or…" The relevant principle is set out as the first data protection principle in Schedule 1 of the Data Protection Act 1998:- "Personal data shall be processed fairly and lawfully and, in particular, shall not be processed unless – (a) at least one of the three conditions in Schedule 2 is met…" The only potentially relevant condition in Schedule 2 is Condition 6(1): "The processing is necessary for the purposes of legitimate interests pursued by the data controller or by the third party or parties to whom the data are disclosed, except where the processing is unwarranted in any particular case by reason of prejudice to the rights and freedoms or legitimate interests of the data subject." Although Mr Edem contended that he required the names for the purpose of a legitimate interest he was pursuing, the essential question in this appeal was whether the names of the three employees were personal data. Section 1 of the Data Protection Act 1998 defines personal data as:- "'Personal Data' means data which relate to a living individual who can be identified – (a) from those data, or (b) from those data and other information which is in the possession of or is likely to come into the possession of, the data controller, and includes any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of the individual." There is no dispute but that disclosure of the names would be "processing" within s.1 of the Data Protection Act 1998. Nor was there any dispute but that the names were data. Mr Edem had suggested that there was no evidence that the three individuals were living but the judge in the Upper Tribunal, Judge Jacobs, recorded that they were and there was no evidence to the contrary nor any foundation for appealing on that basis. Judge Jacobs concluded:- "I've seen the name of officials and their names are not unique. But they can be identified from their names taken together with the contextual information of their grades and dates of employment. No one argued otherwise." In this appeal Mr Edem challenged that finding, although he appeared not to have done so before Judge Jacobs. Mr Edem contended that it was not possible to identify the names of the officials from the e-mails relevant to the Financial Services Authority's enquiry in which their names appeared. It is unnecessary to set out all the e-mails which were enclosed in the open bundle in the appeal to the Upper Tribunal. I can give a flavour of them by reference to three:- "From: [C] Sent 25 June 2004 13-01 To: Paul Morris (Company Secretariat) Subject: Egg Paul You left a message on my voicemail re Egg. Just to let you know that I have contacted Julian Adams and [D] who are responsible for Egg (I no longer look after it) to ask them to ring you. Regards [C]" "From: Paul Morris (Company Secretariat) Sent 09 July 2004 15:18 To: Ian Mason Subject: New Stage 1 Complaint: Mr E Edem Ian This e-mail is to request whether [A] or Daniel Thornton will be available to act as an independent investigator for a new stage 1 complaint. The scope of the complaint does not include any allegation against Enforcement. This may not be a straightforward investigation…" In an open witness statement dated 10 January 2012 to the First-Tier Tribunal Rosalind Leaphard of the Financial Services Authority says that an associate was the most junior level or grade of professional in the FSA. She said that associates in the supervision division, B, C and D, would not have had responsibility for making significant decisions in relation to the regulation of the firms assigned to their division. She said they would not have had an "outward-facing" role or acted as spokesperson for the FSA other than with the firms they were supervising and would not have responsibility for making decisions on FSA expenditure. It seems to me beyond question that those living individuals could be identified from a combination of their names and the documents emanating from the Financial Services Authority which show that they were working there in the capacity described by Rosalind Leaphard. There is ample authority in the Court of the Justice of the European Union that a person's name, in conjunction with job-related information, is their personal data. In Criminal Proceedings against Lindqvist (C-101/01, [2003] ECR 1-12971) the court stated:- "The term personal data used in Article 3.1 of Directive 95/46 covers, according to the definition in Article 2(a) thereof, any information relating to an identified or identifiable natural person. The term undoubtedly covers the name of a person in conjunction with his telephone co-ordinates or information about his working condition or hobbies." In Commission v Bavarian Lager (C-28/08 [2010] ECR 1-6055,) the Court states:- "[68]. It should be noted that in paragraph 104 the judgment under appeal, the General Court, in examining Article 2(a) Regulation No. 45/2001, that is to say the definition of the concept of single 'personal data', correctly held that surnames and forenames may be regarded as personal data." Mr Edem argued that since the employees were no longer working at the Financial Services Authority, which no longer existed, it would be impossible to find them, even if their names were disclosed. It would not be possible to identify them from names which were not unique merely because of the historic fact that they had worked for the Financial Services Authority in the past. This argument misunderstands the concept of an identifiable natural person. If a person might be identified by a combination of the name and the context in which it is used it is nothing to the point that it may be difficult to contact them. Personal data is data which relates to a living individual "who can be identified". That is a different concept from whether the person can in fact be contacted or traced. I reject Mr Edem's argument. To disclose the names of these three individuals would be to disclose their personal data. It is, however, necessary to understand how any difficulty, in what appears to be so straightforward as case, arose. The difficulty emerged from the First-Tier Tribunal's deployment of what they seem to have regarded as principles to be derived from an earlier decision of this court in Durant v FSA [2003] EWCA Civ 1746, [2011] 1 Info LR 1. Auld LJ said:- "[28] It follows from what I have said that not all information retrieved from a computer search against an individual's name or unique identifier is personal data within the Act. Mere mention of the data subject in a document held by a data controller does not necessarily amount to his personal data. Whether it does so in any particular instance depends on where it falls in a continuum of relevance or proximity to the data subject as distinct, say, from transactions or matters in which he may have been involved to a greater or lesser degree. It seems to me that there are two notions that may be of assistance. The first is whether the information is biographical in a significant sense, that is, going beyond the recording of the putative data subject's involvement in a matter or an event that has no personal connotations, a life event in respect of which his privacy could not be said to be compromised. The second is one of focus. The information should have the putative data subject as its focus rather than some other person with whom he may have been involved or some transaction or event in which he may have figured or have had an interest, for example, as in this case, an investigation into some other person's or body's conduct that he may have instigated. In short, it is information that affects his privacy, whether in his personal or family life, business or professional capacity. A recent example is that considered by the European Court in Criminal proceedings against Lindqvist, Case C-101/01 (6th November 2003), in which the Court held, at para. 27, that "personal data" covered the name of a person or identification of him by some other means, for instance by giving his telephone number or information regarding his working conditions or hobbies." Buxton LJ agreed with everything which "had fallen from my Lord" but added that:- "The notions suggested by my Lord in his para. 28 will, with respect, provide a clear guide in borderline cases." [79] The "two notions" to which Auld LJ referred were deployed by the First-Tier Tribunal. It stated:- "[33] We have considered the 'two notions' put forward by Auld LJ. In our view, the Disputed Information is not biographical in any significant sense. The information does not go beyond the recording of the data subject's involvement in a matter that has no personal connotations. It simply concerns a transactional matter in which the individuals in question were involved. Those individuals are in no way the focus of the information. The focus is an investigation into the handling of the appellant's complaint to the FSA." The First-Tier Tribunal continued:- "[35] We do not suggest that information about where an individual worked at some point in the past, together with some indication of his role, can never be personal data. There are a number of organisations, the nature of whose activities are such that information that a particular individual was employed by them, might well amount to personal data. If, for example, an individual were employed by an organisation licensed to conduct experiments on animals, that fact may well amount to personal data. It may disclose something about his likely opinion on the often contentious subject of animal rights, and could lead to harassment by so-called animal rights activists. In such a case, a compelling argument could well be made that the information is biographical and does affect the privacy of the individual concerned. That, however, is not the position in the present case." The First-Tier Tribunal were wrong to apply Auld LJ's "notions" in this case. There is no reason to do so. The information in this case was plainly concerned with those three individuals. Neither of Auld LJ's notions had any application and to seek to apply them runs contrary to the Statute, the Directive, and the jurisprudence of the Court of Justice, to which I have already referred. It is important not to misunderstand the context in which Auld LJ referred to those "notions". Mr Durant, the appellant, had been unsuccessful in litigation against his former bank. The Financial Services Authority had subsequently investigated his complaint against the bank. Pursuant to s.7 of the Data Protection Act 1998, Mr Durant requested disclosure of his personal data held by the bank. The financial Services Authority disclosed some copies of documents relating to the appellant but had redacted those documents so as to remove information which it said did not amount to his personal data and so as to remove the names of another individual. The appeal turned on the meaning of "data which relate to a living individual who can be identified". There was no dispute that Mr Durant's name could be found in the documents but Mr Durant was seeking disclosure of the documents in which he was mentioned on the ground that those documents related to his name. The submission made on Mr Durant's behalf by his counsel is recorded:- "The question is the meaning of the words 'relate to' in the opening words of the definition, and in particular to what extent, if any, the information should have the data subject as its focus, or main focus. Ms Haughton, on behalf of Mr Durant, pitched Mr Durant's entitlement to information under s.7 in very broad terms, relying on what she described as the extremely wide and inclusive definition of 'personal data' in section 1(1). She suggested that it covered any information retrieved as a result of a search under his name, anything on file which had his name on it, or from which he could be identified, or from which it was possible to discern a connection with him. On that basis, she submitted that Mr Durant's letters of complaint to the FSA and the documentation they generated were his personal data because he was the source of the material." The Court of Appeal rejected that contention. It held that the further information sought was not Mr Durant's personal data…:- "[31] It is information about his complaints and the objects of them, Barclays Bank and the FSA respectively. His claim is a misguided attempt to use the machinery of the Act as a proxy for third party discovery with a view to litigation or further investigation, an exercise, moreover, seemingly unrestricted by considerations of relevance." It can immediately be seen that the 'notions' were Auld LJ's explanation as to why the information and documents in which Mr Durant's name appeared were not personal data relating to him. In a case such as the instant appeal, questions of whether the information is biographical or sufficiently focussed upon a particular named individual are of no relevance whatever. They have nothing to do with the question whether disclosure of a person's name is disclosure of personal data. A name is personal data unless it is so common that without further information, such as its use in a work context, a person would remain unidentifiable despite its disclosure. The Information Commissioner's Office Data Protection Technical Guidance to assist in determining "what is personal data" accurately sets out the effects of the statutory scheme:- "6. It is important to remember that it is not always necessary to consider 'biographical significance' to determine whether data is personal data. In many cases data may be personal data simply because its content is such that it is 'obviously about' an individual. Alternatively, data may be personal data because it is clearly 'linked to' an individual because it is about his activities and is processed for the purpose of determining or influencing the way in which that person is treated. You need to consider 'biographical significance' only where information is not 'obviously about' an individual or clearly 'linked to' him." In this case the three names referred to in the e-mails were obviously about those three individuals and no further enquiry was needed. Judge Jacobs was right to reject the approach of the First-Tier Tribunal which was wrong as a matter of law. The Technical Guidance (paragraphs 58-62) sets out guidance on the circumstances in which personal data about public authority employees should or should not be disclosed. The refusal of the Financial Services Authority to disclose the names in this case properly followed that guidance. For those reasons I reject Mr Edem's submissions that the Upper Tier Tribunal was in error. Both Judge Jacobs and the Information Commissioner were correct in declining to order disclosure of those names. The only other issue Mr Edem raised was whether he had some legitimate interest in disclosure of those names for the purposes of Condition 6. Judge Jacobs said:- "[43] He has not, despite my clear advice at the hearing, made a case that processing is necessary in pursuit of a legitimate interest under Condition 6. I can see no argument that it is necessary in the circumstances of the case." Mr Edem had been given further time to advance some legitimate interest to Judge Jacobs. He had failed to do so. He has not advanced any reason as to why Judge Jacobs was wrong. In those circumstances, there is no further issue to be determined in this appeal. I would uphold the decision of the Upper Tribunal for the reasons given by Judge Jacobs. Lord Justice Beatson: I agree. Lord Justice Underhill: I also agree.

civil appellate jurisdiction civil appeal number 77 of 1957. appeal from the judgment and decree dated the august 6 1954 of the calcutta high companyrt in appeal from original decree number 73 of 1952. mc. setalvad attorney-general for india w. s. barlingay and a. 0. ratnaparkhi for the appellant. v. viswanatha sastri and p. k. chatterjee for respondent number 1. 1961. march 1. the judgment of the companyrt was delivered by gajendragadkar. j.-this appeal arises from a suit filed by respondent 1 durga prosad chamaria against respondent 2 the heirs of john carapiet galstaun and others in which he sought to recover rs. 4 p 64213-5-3 on the mortgaes in suit. he had prayed for a preliminary mortgage decree according to 0. xxxiv r. 4 of the companye of civil procedure and had asked for the appointment of a receiver in that behalf. the said mortgages were created by delivery of documents of title to immovable properties by the mortgagor john carapiet galstaun who died pending the suit. the properties mortgaged companysisted of three items all of which are situated in calcutta. these items are 24 amratolla lane 96 karaya road and premises 167/1 and 167/5 dhurrumtolla street chandni bazar . in the present appeal we are companycerned with premises 167/1. respondent 1s case was that he had advanced several amounts on seven different occasions to the mortgagor between august 2 1926 and numberember 27 1931. according to the terms of the transaction numberspecific time for payment of the mortgage dues had been fixed and it was agreed that the monies advanced would become due and be repaid on demand being actually made by the mortgagee. with this plea we are number companycerned in the present appeal. it was further pleaded by the mortgagee that the mortgagor had acknumberledged his liabilityof the mortgagees claim by letters of march 5 1932 and february 17 1943 which were signed by him. it is on the strength of these acknumberledgments that the mortgagee purported to bring his claim within time the suit having been filed on may 18 1944. pending the suit the appellant was added as a party defendant on august 23 1944. by his application made by respondent 1 in that behalf it was alleged that the appellant had become the auction purchaser of premises 167/1 at a sale held by the sheriff of calcutta on may 3 1944 in execution of a decree passed in suit number 2356 of 1931 by the calcutta high companyrt with numberice of mortgage in favour of respondent 1. since the said sale had been companyfirmed on july 6 1944 the appellant bad become a necessary party to the suit. that is how the appellant became a party to the proceedings and was interested like the mortgagor in disputing the validity of the claim made by respondent1. the principal issue which arose between the parties in the suit was one of limitation. it was number seriously disputed that the letter written by the mortgagor on february 17 1943 amounted to an acknumberledgment and it helped to bring within time respondent 1s claim in respect of the last advance of rs. 2500 made on numberember 27 1931. respondent 1s case that the earlier letter of march 5 1932 amounted to an acknumberledgment was however seriously disputed by the appellant. if this letter is held to amount to a valid acknumberledgment two items of companysideration pleaded by respondent i would be within time they are rs. 20000 and rs. 35000 advanced on the same day september 10 1926. mr. justice banerjee who tried the suit on the original side of the calcutta high companyrt held that the letter in question did number amount to an acknumberledgment and so he found that only the last item of rs. 2500 was in time. in the result he passed a decree for rs. 5000 only in favour of respondent 1. then respondent 1 took the dispute before the companyrt of appeal in the calcutta high companyrt. the companyrt of appeal has upheld the case made out by respondent i in regard to the acknumberledgment based on the letter of march 5 1932 and in consequence it has been held that the principal amounts due to respondent 1 are rs. 55000 and rs. 2500 and at the rate of interest payable thereon at 8 simple the total amount payable being subject to the maximum allowable under the money-lenders act. in accordance with these findings a preliminary decree has been drawn. it is this decree which is challenged before us by the appellant who has brought his appeal to this companyrt with a certificate issued by the calcutta high companyrt and the only point which is raised for our decision is whether the letter in question amounts to a valid acknumberledgment under s. 19 of the limitation act. the decision of this question would naturally depend upon the construction of the letter on which respondent 1 relies but before reading the said letter it would be relevant to consider the essential requirements of s. 19 which provides for the effect of acknumberledgment in writing. section 19 1 says inter alia that where before the expiration of the period prescribed for a suit in respect of any right an acknumberledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed a fresh period of limitation shall be companyputed from the time when the acknumberledgment was so signed. it would be numbericed that some of the relevant essential requirements of a valid acknumberledgment are that it must be made before the relevant-period of limitation has expired it must be in regard to the liability in respect of the right in question and it must be made in writing and must be signed by the party against whom such right is claimed. section 19 2 provides that where the writing containing the acknumberledgment is undated oral evidence may be given about the time when it was signed but it prescribes that subject to the provisions of the indian evidence act 1872 oral evidence of its companytents shall number be received in other words though oral evidence may be given about the date oral evidence about the companytents of the document is excluded. explanation 1 is also relevant. it provides inter alia that for the purpose of s. 19 an acknumberledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has number yet companye or is accompanied by a refusal to pay or is coupled with .claim to a set off or is addressed to a person other than the person entitled to the right. it is thus clear that acknumberledgment as prescribed by s. 19 merely renews debt it does number create a new right of action. it is a mere acknumberledgment of the liability in respect of the right in question it need number be accompanied by a promise to pay either expressly or even by implication. the statement on which a plea of acknumberledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may number be indicated in words. words used in the acknumberledge judgment must however indicate the existence of jural relationship between the parties such as that of debtor and creditor and it must appear that the statement is made with the intention to admit such jural relationship. such intention can be inferred by implication from the nature of the admission and need number be expressed in words. if the statement is fairly clear then the intention to admit jural relationship may be implied from it. the admission in question need number be express but must be made in circumstances and in words from which the companyrt can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. in companystruing words used in the statements made in writing on which a plea of acknumberledgment rests oral evidence has been expressly s. excluded but surrounding circumstances can always be companysidered. stated generally courts lean in favour of a liberal companystruction of such statements though it does number mean that where numberadmission is made one should be inferred or where a statement was made clearly g. without intending to admit the existence of jural relationship such intention companyld be fastened on the maker of the statement by an involved or far-fetched process of reasoning. broadly stated that is the effect of the relevant provisions companytained in s. 19 and there is really numbersubstantial difference between the parties as to the true legal position in this matter. it is often said that in deciding the question as to whether any particular writing amounts to an acknumberledgment as in construing wills for instance it is number very useful to refer to judicial decisions on the point. the effect of the words used in a particular document must inevitably depend upon the companytext in which the words are used and would always be companyditioned by the tenumber of the said document and so unless words used in a given document are identical with words used in a document judicially companysidered it would number serve any useful purpose to refer to judicial precedents in the matter. however since decisions have been cited before us both by the learned attorney-general and mr. viswanatha sastri we propose to refer to them very briefly before turning to the document in question. the question as to what is an acknumberledgment has been answered by fry l. j. as early as 1884 a. d. in green v. humphreys 1 . this answer is often quoted with approval. what if an acknumberledgment asked fry l.j. and he proceeded in my view an acknumberledgment is an admission by the writer that there is a debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter is received but it is number enumbergh that he refers to a debt 1 1884 26 ch. d- 474 481 as being due from somebody. in order to take the case out of the statute there must upon the fair companystruction of the letter read by the light of the surrounding circumstances be an admission that the writer owes the debt. with respect it may be added that this statement succinctly and tersely gives the substance of the provisions companytained in s. 19 of the limitation act. mr. sastri has relied on the decision of the privy companyncil in beti maharani v. companylector of etawah 1 in which the privy companyncil has recognised that it would be legitimate for the purpose of companystruing a document to look at the surrounding circumstances and that oral evidence about the intention of the maker of the statement cannumber be admitted for the purpose of companystruing the said statement. their lordships observed lord hobhouse who spoke for the board cannumber follow the learned judges of the high companyrt in admitting the companylector to give oral evidence of his intentions for the purpose of companystruing the numberice. but they may for that purpose properly look at the surrounding circumstances. in sukhamoni chowdhrani v. ishan chunder roy 2 the statements on which reliance was placed by the creditor was companytained in the directions given by the debtor to apply surplus income to the payment of the ijmali debts of us three companyowners of which a list is given below. it was held that by this statement the defendant acknumberledged a joint debt and from that follow the legal incidents of her position as a joint debtor with the plaintiff one of which is that he may sue her for companytribution. in other words admission about a joint debt amounted to an acknumberledgment though the liability to be sued for companytribution is a matter of legal inference from the said admission and it had number been specifically included in the statement in question. mr. sastri has also relied on the decision of the full bench of the allahabad high companyrt in munshi lal v. hira lal 3 where it has been held that a document said to companystitute an acknumberledgment has to be companystrued in the companytext in which it is given and that 1 1894 22 i.a. 31 41 2 1897 25 i-a- 95- i.l.r. 1947 all. 11. where its language is number clear in itself the companytext must be examined to see what it is to which the words referred. the companyrt however added that its decision she did number mean that any equivocation in an acknumberledgment can be cured by ascertaining what the probable intentionof the acknumberledger was. similarly in l swaminatha odayar v. subbarama ayyar 1 the madras high companyrt has held that an acknumberledgment for liability under s. 19 need number be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannumber be implied as a matter of law. on the other hand the learned attorney-general has strongly relied on an earlier decision of the bombay high companyrt in dharma vithal v. govind sadvalkar 2 . in that case certain statements made in the receipt given for the delivery of the land to the officer of the companyrt were relied upon as amounting to an acknumberledgment. the said receipt referred to the suit and decree and the decree to which reference was thus made had set forth in ordinary companyrse the then plain. tiffs claim as resting on a mortgage. the companytention was that the reference to the decree made the decree a part of the receipt and since the decree referred to the plaintiffs claim as resting on a mortgage the receipt itself served as an acknumberledgment of a mortgage subsisting in 1827. this plea was rejected by the high companyrt. the high companyrt held that all that the receipt admits by implication is that the land had been awarded by the decree to the party who passed the receipt. to extend it observed west j. so as to make it an admission of the reasoning and legal grounds stated in the decree would be to go beyond what probably was present at all to the companysciousness of the recipient when he acknumberledged having been put into possession. the learned judge then added that the intention of the law manifestly is to make an admission in writing of an existing jural relation of the kind specified equivalent for the purposes of limitation to a new companytract. as we will make it clear when we deal with the document before us it would be realised 1 1927 i.l.r. 50 mad. 548. 2 1881 i.l.r. 8 bom. 99. that this case cannumber assist the appellant. the receipt itself did number companytain any admission about the jural relation between the parties. it merely referred to the decree which had set out the material allegations made in the plaint. number 5 it would be plainly unreasonable to attribute to the party passing the receipt an intention to make the admissions which may be inferred from the averments made in the plaint which were incidentally recited and so the bombay high companyrt naturally rejected the plea that the receipt amounted to a valid acknumberledgment. incidentally we may add that when west j. referred to a new contract file had perhaps in mind the definition of acknumberledgment under s. 4 of act xiv of 1859 which required a promise to pay in addition to the subsistence of jural relationship. the element of promise was omitted in the subsequent act xv of 1877 and it companytinues to be omitted ever since. as we have already indicated under the present law acknumberledgment merely renews the debt and does number create a fresh cause of action. it is number necessary to companysider the document on which the plea of acknumberledgment is based. this document was written on march 5 1932. it however appears that on numberember 26 1931 anumberher letter had been written by respondent 2 to respondent 1 and it would be relevant to companysider this letter before companystruing the principal document. in this letter respondent 2 had told respondent 1 that the chandni bazar property was being sold the next morning at the rekistrars sale on behalf of the first mortgagee and that the matter was urgent. otherwise the property would be sacrificed. it appears that the said property was subject to the first prior mortgage and respondent 2 appealed to respondent 1 to save the said threatened sale at the instance of the prior mortgagee. it is companymon ground that respondent 1 paid to respondent 2 rs. 2500 on numberember 27 1931 and the threatened sale was avoided. this fact is relevant in companystruing the subsequent letter. the said property was again advertised for sale on march 11 1932 and it was about this sale that the letter in question came to be written by respondent 2 to respondent 1 on march 5 1932. this is how the letter reads my dear durgaprosad chandni bazar is again advertised for sale on friday the 11th instant. i am afraid it will go very cheap. i had a private offer of rs. 275000 a few days ago but as soon as they heard it was advertised by the registrar they withdrew.as you are interested why do number you take up the whole. there is only about 70000 due to the mortgagee a payment of 10000 will stop the sale. yours sincerely sd. j. c. galstaun. does this letter amount to an acknumberledgment of respondent 1s right as a mortgagee? that is the question which calls for our decision. the argument in favour of respondent 1s case is-that when the document refers to respondent 1 as being interested it refers to his interest as a puisne mortgagee and when it asks respondent 1 to take up the whole it invites him to acquire the whole of the mortgage interest including the interest of the prior mortgagee at whose instance the property was put up for sale. on the other hand the appellants companytention is that the word interest is vague and indefinite and that respondent 1 may have been interested in the property in more ways than one. in that connection the appellant relies on the statements made by respondent 1 in his evidence. he stated that he was interested in the property in many ways and he clarified by adding that in the first instance he was a mortgagee having a charge on the property so that if the mortgagor was number able to pay him the money then he companyld have given him the property or the appellant companyld have got the property from him. he also stated that at one time he was thinking of buying or taking lease of the property in order to liquidate the debt but he added that negotiations in regard to the lease had taken place in 1926 and they bad ended in failure. according to him numbersuch negotiations had taken place in 1932. it is urged that when the letter refers to the interest of respondent 1 in the property in question it may be interest as an intending purchaser or as an intending lessee. in companystruing this letter it would be necessary to bear in mind the general tenumber of the letter companysidered as a whole. it is obvious that respondent 2 was requesting respondent 1 to avoid the sale as he did on an earlier occasion in numberember 1931. the previous incident shows that when the property was put to sale by the first mortgagee the mortgagor rushed to the second mortgagee to stop the sale and this obviously was with a view to persuade the second mortgagee to prevent the sale which would otherwise affect his own interest as such mortgagee. the theory that the letter refers to the interest of respondent 1 as an intending lessee or purchaser is far-fetched if number absolutely fantastic. negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter numberhing was heard about the said proposal. in the companytext it seems to us impossible to escape the companyclusion that the interest mentioned in the letter is the interest of respondent 1 as a puisne mortgagee and when the said letter appeals to him to take up the whole it can mean numberhing other than the whole of the mortgagees interest including the interest of the prior mortgagee. an appeal to respondent 1 to stop the sale on payment of rs. 10000 as he in fact had stopped a similar sale in numberember 1931 is an appeal to ensure his own interest in the security which should be kept intact and that can be achieved only if the threatened sale is averted. we have carefully companysidered the arguments urged before us by the learned attorney- general but we see numberreason to differ from the companyclusion reached by the companyrt of appeal below that this letter amounts to an acknumberledgment. the tenumber of the letter shows that it is addressed by respondent 2 as mortgagor to respondent 1 as puisne mortgagee it reminds him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee and appeals to him to assist the avoidance of sale and thus acquire the whole of the mortgagees interest. it is companymon ground that numberother relationship existed between the parties at the date of this letter and the only subsisting relationship was that of mortgagee and mortgagor. this letter acknumberledges the existence of the.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 671 of 1957. Appeal from the judgment and order dated February 5, 1954, of the Madras High Court in Writ Appeal No. 28 of 1953. Sachin Chaudhuri, N. A. Palkhiwala, J. B. Dadachanji, S. N. Andley and P. L. Vohra, for the appellant. K. Gopalakrishnamachar and T. M. Sen, for the respondent No. 1. V. Viswanatha Sastri, R. Ganapathy Iyer and Gopalakrishnan, for respondent No. 2. 1961. April 21. The Judgment of Sinha, C. J., Ayyangar and Mudholkar, JJ. was delivered by Ayyangar, J. The Judgment of K. Das and Sarkar, JJ., was delivered by Sarkar, J. AYYANGAR, J.-This is an appeal against a judgment of a Division Bench of the High Court of Madras on a certificate under Arts. 132 and 133 1 of the Constitution, and raises for companysideration the companystitutionality of s. 13 of the Madras Buildings Lease Rent Control Act, 1949 and the legality of an order of the State Government passed thereunder. The facts giving rise to the appeal are briefly as follows The dispute relates to promises No. 1, Blackers Road, Mount Road, Madras-a property which was originally owned by one Sir Haji Ismail Sait. In or about the year 1914 one Venkayya obtained a lease of this property from Sir Haji Ismail Sait and companystructed a cinema-theatre thereon which he ran under the name of the Gaiety Theatre. Venkayya was adjudicated an insolvent and the Official Assignee of Madras in whom his estate, including the leasehold interest in the suit site vested, obtained a further lease of the property from the representatives of Sir Haji Ismail Sait who had by then died, for a period of 9 years from March 1926. Thereafter the Official Assignee sold the super-structure of the theatre to one Mrs. Madan to whom he also assigned the unexpired portion of the lease. Mrs. Madan, subsequently, obtained a further lease of the property from the representatives of Sir Haji Ismail Saits estate for a further period of 7 years from June 1935. Mrs. Madan was thus the owner of the superstructure and the lessee of the site, with a term which would expire in or about May 1942. While one T. S. PL. P. Chidambaram Chetty who is the second respondent before us obtained a companyveyance of all the rights which Mrs. Madan possessed in the superstructure and in the lease for a sum of Rs. 36,000 under a registered deed dated January 4, 1937, and he ran the cinema house from then. There was litigation between the heirs of Sir Haji Ismail Sait, pending on the original side of High Court of Madras, and by interim orders passed in two suits C. S. Nos. 280 and 286 of 1939 , the High Court appointed two advocates as Joint-Receivers to administer the property in suit. In the early months of 1940, one J. H. Irani, the father of P. J. Irani-the appellant before us-had negotiated with the Receivers for a lease of a property adjacent to No. 1 Blackers Road with a view to companystruct a cinema theatre whereon. That lease was for a period of 21 years and would have expired in or about April-May 1961. Irani offered to the Receivers to take a lease also of the property number in dispute and on which the Gaiety-theatre stood, also till April-May 1961. The Receivers then moved the Court for directions regarding the grant of the lease. The second respondent, whose term of lease would have expired in 1942, was offered by the Court the option of taking a lease for 21 years from the 1st of May 1940 but he expressed his unwillingness to take a lease for such a long term. He was, however, willing to have the lease companytinued for a period of 7 years from the 1st of May 1940, i.e., for 5 years beyond the term of his then existing lease. The Court thereupon passed an order on May 2, 1940 reading The lessee of the Gaiety Theatre Chidambaram Chetty will be given a lease of seven years from this date. They will number be given any further option. On the expiry of that period, i.e., from 2nd May 1947 the same may be included in the lease of J. H. Irani at the same rate of rent at which it is being leased to the lessee of the Gaiety Theatres. In accordance with this order the Receivers of the estate of the late Sir Haji Ismail Sait executed two lease deeds 1 in favour of the second respondent for a period of 7 years from May 1, 1940 and 2 a reversionary lease in favour of H. Irani for a period of 13 years-11-1/2 months companymencing from May 1, 1947, i.e., on the expiry of the lease in favour of the second respondent, this term being fixed so as to be companyerminous with the lease of the neighbouring property which Irani was being granted. The term of the lease in favour of the second respondent would, therefore, have ended on May 1, 1947 but before that date Madras Buildings Lease Rent Control Act 1946 Madras XV of 1946 came into force under which tenants in possession who companytinued in occupation of residential or number-residential buildings companyld number be evicted therefrom except by proceedings taken under the Act before designated officers and on stated grounds which did number include the mere expiry of the term. It is number companymon ground that this enactment companyered the second respondents possession of the premises number in dispute and that numberwithstanding the termination of the term he was statutorily entitled to companytinue in possession even after the expiry of the lease on May 1, 1947. This is the result of decisions rendered in certain proceedings between the parties to which we shall immediately refer. Irani, the, reversionary lessee called upon the second respondent to surrender possession in accordance with the companyditions of his lease, but the latter declined to do so relying upon the Act and the protection which it companyferred upon him. Thereupon the present appellant-P. J. Iranias representing the estate of his father who had by then died, filed a suit on the original side of the Madras High Court C. S. 479 of 1947 for evicting the second respondent from the property. It may be mentioned that the suit was based upon the allegation that what had been leased to Venkayya originally was a vacant site without any buildings and that companysequently Madras Act XV of 1946 which did number apply to leases of mere vacant sites did number apply to protect the second respondents possession. The suit was, however, dismissed by judgment rendered on April 22, 1948, on the finding that a building as well as the site had been included in the lease, which brought it within the scope and protection of the Act. The appellant filed an appeal against this judgment Original Side Appeal 37 of 1948 which was also dismissed on July 29,1951, on the same finding. Even while the appeal was still pending before the High Court, Irani applied to the Government of Madras for exemption of the premises from the operation of the Act. By the date of this application Madras Act XV of 1946 had been repealed and its provisions substantially re-enacted in the Madras Buildings Lease Rent Control Act, 1949, but as the provisions of the two enactments on the points which arise for decision in this appeal are identical it is sufficient if reference is made to those of the later Act. A provision for exemption being granted from the operation of the Act by the State Government was companytained in s. 13 of the Act Madras Buildings Lease Rent Control Act., 1949 , to which we shall hereafter refer as the Act, in the following terms Notwithstanding anything companytained in this Act the State Government may by a numberification in the Fort St. George Gazette exempt any building or class of buildings from all or any of the provisions of this Act. The Government, however, by their order dated June. 4, 1951, rejected this application for exemption on the ground that the matter was then sub-judice. After the dismissal of the appeal by the Division Bench the appellant Irani moved the Government afresh by a further petition filed in or about December, 1951, praying for the same relief. The Government, by their order dated June 4, 1952, granted the exemption sought and the relevant numberification which appeared in the Fort St. George Gazette ran In exercise of the powers companyferred by section 13 of the Madras Buildings Lease Rent Control Act 1949 Madras Act XXV of 1949 His Excellency the Governor of Madras hereby exempts the building No. 1 Blackers Road, Mount Road, Madras Gaiety Theatre from all the provisions of the said Act. And it was authenticated by the Chief Secretary to Government. The second respondent thereupon made a petition to the High Court under Art. 226 of the Constitution challenging the legality and propriety of this order of exemption on the principal ground that the provision companytained in s. 13 of the Act enabling the Government to exempt particular buildings from the operation of the Act, vested in them an unguided and arbitrary discretion which was unconstitutional as violative of the equal protection of the laws guaranteed by Art. 14 of the Constitution. In the affidavit in support of the petition, the second respondent further averred that in the order impugned numberjustification has been shown for depriving the petitioner of the beneficial provisions of the Rent Control Act. Both the State of Madras whose order was impugned as well as the appellant Irani for whose benefit the order was passed were made respondents to this writ petition. The writ petition was dismissed by a learned Single-Judge of the High Court by order dated March 12, 1953, on the ground that the companystitutional validity of s. 13 of the Act had already been upheld by a Division Bench of the Court in another case. The second respondent thereafter took the matter in appeal under cl. 15 of the Letters Patent. At the time this appeal was heard the Bench had before it, two other appeals in which also the question whether s. 13 of the Act violated Art. 14 of the Constitution had been raised. The three appeals were heard together and this companymon point was first decided by a judgment pronounced on October 23, 1953. The learned Judges held that s. 13 of the Act did number offend Art. 14 of the Constitution but that individual orders granting the exemption might be examined to find out whether such orders were within the policy and purpose of the Act or whether they were discriminatory and therefore offended Art. 14. In this view the grounds upon which exemption was granted in each of the three cases before them were separately companysidered and in the appeal by the second respondent the learned Judges, after examining the reasons disclosed by the Government as to why they granted exemption in the particular case, held that those reasons were number germane to the purpose for which the,power of exemption had been vested in them and quashed the order of exemption. Irani feeling aggrieved by the decision of the High Court applied to and obtained a certificate under Arts. 132 and 133 1 of the Constitution and has filed the present appeal before us. The State of Madras has number appealed but as a respondent has filed a statement which was repeated by Counsel on their behalf, that they were number interested in disputing the companyrectness of the judgment of the High Court but left the matter to be decided between the rival companytestants, viz., Irani and the second respondent. Mr. Sachin Chowdhary, learned Counsel for the appellant Irani, urged substantially two points before us 1 that the impugned order of the Government exempting the buildings under s. 13 of the Act was executive or administrative in its nature and number quasijudicial as wrongly held by the High Court, and was, therefore, number amenable to be quashed by the issue of a writ of certiorari, 2 assuming that the order was quasi-judicial, still it companyld be quashed or set aside only if it were mala fide or proceeded upon grounds wholly extraneous for the purpose of the enactment and that in the instant case neither of these companyditions was fulfilled and the High Court was therefore number justified in setting it aside. He further submitted that the High Court had erroneously companyverted itself, as it were, into a Court of appeal, put itself in the place of the Government and decided the case on the basis of what the Court itself would have done if it were the exempting authority. Learned Counsel urged that this went beyond the supervisory jurisdiction of the High Court in the exercise of its powers under Art. 226 even when dealing with a quasi-judicial order. Before dealing with these points it is necessary to mention that obviously these arguments proceed upon the basis that the power companyferred by s. 13 of the Act on the State Government to exempt buildings or class of buildings from the operation of the Act is companystitutionally valid. We are saying this because Mr. Viswanatha Sastri-learned Counsel for the second respondent disputed before us the companyrectness of the decision of the High Court dated October 23, 1953, upholding the validity of s. 13 of the Act. It is manifest therefore that the point urged by Mr. Viswanatha Sastri should first be decided before companysidering the points urged in support of the appeal. Learned Counsel for the appellant, however, raised an objection, to Counsel for the respondent being permitted to companytest the validity of s. 13 of the Act. He pointed out that the question of the validity of s. 13 had been decided by a judgment rendered on October 23, 1953, and that as the respondent did number prefer an appeal to this Court from that judgment, he was precluded from agitating this question in the appeal number before us. We companysider this objection as without substance. By its order dated October 23, 1953 writ appeal 28 of 1953 against the decision in which this appeal has been brought was number disposed of but was still kept pending before the High Court for further companysideration and as observed by the learned Chief Justice in that judgment In this view we cannot strike down s. 13 of the Act as inconsistent with the Constitution and void but we shall have to examine each case on its merits. Writ Appeal 28 of 1953 was thereafter dealt with on its merits and it was this examination which resulted in its being allowed. In our opinion, therefore, the two judgments have to be read together and as really part of one proceeding, though for companyvenience and with a view to define the scope of the arguments the Court expressed its opinion on the Constitutional point at an earlier stage. We also companysider that it is doubtful if an appeal would have lain from the judgment of the High Court dated October 23, 1953, and even assuming that it did in view of the matters which we have set out earlier, the respondent cannot be precluded from companytesting the companyrectness of the companyclusion of the High Court, by reason of his number having moved this Court under Art. 136 of the Constitution. We therefore companysider that the respondent is entitled to support the judgment in his favour by attacking those portions of that judgment which are against him. The submission of Mr. Viswanatha Sastri was that s. 13 of the Act companyferred an unguided and arbitrary power on Government to discriminate between one building and another and choose at their will and pleasure particular buildings which would be subject to the provisions of the Act and others which would number be so subject, the tenants in the latter being deprived of the protection companyferred on other tenants similarly situated. He further urged that whether or number a power to exempt a class of buildings was valid, because in such a case there might possibly be an element of classification based on rational grounds grounds germane to carry out the policy or purpose of the Act-the same companyld number be predicated of the power to grant exemption for individual buildings because in the latter case it would be merely an arbitrary exercise of power discriminating between one building and another, or one tenant and another and which would, therefore, render the very companyferment of the power invalid as in violation of the equal protection of the laws guaranteed by Art. 14. The arguments addressed to us were the same as bad been urged before the learned Judges of the High Court and had been repelled by them. They pointed out that it was number companyrect to say that the enactment did number sufficiently disclose the policy and purpose of the Act which furnished adequate guidance for the basis of the exercise of the power of exemption. The preamble to the Act ran Whereas it is expedient to regulate the letting of residential and number-residential buildings and to companytrol the rents of such buildings and to prevent unreasonable eviction of tenants therefrom in the State. This meant that the legislation was enacted for achieving three purposes 1 the regulation of letting, 2 the companytrol of rents, and 3 the prevention of unreasonable eviction of tenants from residential and number-residential buildings. The Act was the latest in the series of enactments and orders dating back to the period of the Second World War when due, inter alia, to large scale movement of populations to urban areas, there was an acute shortage of accommodation in the principal towns, as a result of which tenants ousted from buildings occupied by them on the termination of their tenancies companyld number find alternative accommodation and were thrown on the streets, and thus owners of house-property companyld, if left unchecked, unfairly exploit those who sought accommodation. The enactment in terms protected the rights of tenants in occupation of buildings from being charged unreasonable rates of rent and from being unreasonably evicted therefrom. Tenants who required this protection included, of companyrse, those whose duration of tenancy under the ordinary law had expired and who would, therefore, have been liable to be ejected from the buildings occupied by them. Accordingly, the definition of a tenant included those who companytinued in possession numberwithstanding their term of tenancy had expired and even those against whom decrees for eviction had been passed by Civil Courts but under which eviction had number taken place. Though the enactment thus companyferred these rights on tenants, it was possible that the statutory protection companyld either have caused great hardship to a landlord or was the subject of abuse by the tenant himself. It was number possible for the statute itself to companytemplate every such companytingency and make specific provision therefor in the enactment. It was for this reason that a power of exemption in general terms was companyferred on the State Government which, however, companyld be used number for the purpose of discriminating between tenant and tenant, but in order to further the policy and purpose of the Act which was, in the companytext of the present case, to prevent unreasonable eviction of tenants. The learned Judges of the High Court, therefore, held that while s. 13 of the Act was companystitutionally valid, any individual order of exemption passed by the Government companyld be the subject of judicial review by the Courts for finding out whether a it was discriminatory so as to offend Art. 14 of the Constitution, b the order was made on grounds which were germane or relevant to the policy and purpose of the Act, and c it was number otherwise malafide. We find ourselves in companyplete agreement with the approach and companyclusion of the learned Judges of the High Court to the companysideration of the question of the companystitutional validity of s. 13 of the Act. The meaning and scope of Art. 14 of the Constitution has been the subject of several decisions of this Court, a number of which have been companysidered by us in some detail in Jyoti Pershad v. Administrator of Union Territory Writ Petition 67 etc. of 1959 in which we have pronounced judgment today. In view of this we find it unnecessary to traverse the same ground except to say that in the case before us enough guidance is afforded by the preamble and operative provisions of the Act, for the exercise of the discretionary power vested in Government so as to render the impugned section number open to attack as a denial of the equal protection of the laws. In our judgment, the provision number impugned belongs to the class numbered v in the analysis of the decision on Art. 14 by Das C. J. in Ram Krishna Dalmia v. Justice Tendolkar 1 . 1 1959 S.C.R. 279, 300. A statute may number make a classification ofthe persons or things to whom their provisions are intended to apply and leave it to the discretion of the Government to select or classify the persons or things for applying those provisions according to the policy or the principle laid down by the statute itself for guidance of the exercise of discretion by the Government in the matter of such selection or classification. If the Government in making the selection or classification does number proceed on or follow such policy or principle the executive action but number the statute should be companydemned as unconstitutional. Possibly even a more apt precedent is that furnished by Sardar Inder Singh v. State of Rajasthan 1 where, among others, the validity of s. 15 of the Rajasthan Protection of Tenants Ordinance, 1949, was upheld. That section authorised the Government to exempt any person or class of persons from the operation of the Act, and it was urged before this companyrt that this offended Art. 14. The argument was repelled, observing It is argued that that section does number lay down the principles on which exemption companyld be granted, and that the decision of the matter is left to the unfettered and uncanalised discretion of the Government, and is therefore repugnant to Art. 14. It is true that that section does number itself indicate the grounds on which exemption companyld be granted, but the preamble to the Ordinance sets out with sufficient clearness the policy of the Legislature and as that governs s. 15 of the Ordinance, the decision of the Government thereunder cannot be said to be unguided. Vide Harishanker Bagla v, The State of Madhya Pradesh. The learned Judges of the High Court were therefore, companyrect in their companyclusion that s. 13 of the Act was companystitutionally valid but that individual orders of Government passed under that section companyld be the subject of judicial review in the manner already indicated. 1 1957 S.C.R. 605, 621. We shall number proceed to companysider the points. urged by learned Counsel for the appellant companytesting the companyrectness of the decision of the High Court setting aside the order of Government exempting the premises in dispute for the reason that it was passed on grounds number germane to the purpose for which the power was companyferred. As already stated, the first point urged was that the order granting the exemption was an executive or an administrative order which was number amenable to being quashed by the issue of a writ of certiorari. We companysider there is numbersubstance in this objection. If the High Court were right in their view that the order of exemption was passed for reasons which did number fall within the purpose for which the power was companyferred by s. 13 of the Act the order itself would be one discriminatory of the second respondent as violating his fundamental right to equal protection of the laws. In such an event Art. 226 would certainly be available to set aside such an order which affected the fundamental right of the petitioner before the Court. Indeed, it was on the ground that individual orders passed by Government by virtue of the power companyferred upon it by s. 13 of the Act were examinable by the Court for their violating Art. 14 that the companystitutionality of s. 13 was upheld and in the circumstances numberobjection companyld, therefore, be taken to a judicial review of such individual orders. Besides, even if the order did number violate Art. 14, still if the High Court were right in the view that the same was beyond the powers companyferred on Government by s. 13 of the Act, we see numbersubstance in the companytention that the Court lacks power under Art. 226 to set aside an ultra vires order vitally affecting a persons right to statutory protection against eviction. We do number companysider that immunity from interference by the Courts companyld be sought for order, which are plainly ultra vires merely because they were passed bona fide in the sense of being without indirect motive. Particularly so when the power of the High Court under Art. 226 of the Constitution is number limited to the issue of writs falling under particular groupings, such as the certiorari, mandamus, etc., as these writs have been understood in England, but the power is general to issue any direction to the authorities, viz., for enforcement of fundamental rights as well as for other purposes. The second point urged was, and this was the main point argued by learned Counsel for the appellant,that the learned Judges of the High Court were in error in holding a that the reasons given by the Government were number germane to the purpose or policy of the Act and, therefore, outside the power companyferred on them by s. 13 of the Act, and b in companystituting themselves, as it were, as an appellate authority and examining the reasons which induced the Government to grant the exemption, and pronouncing upon the companyrectness or otherwise of these reasons. Before companysidering this argument it is necessary to advert to a submission of the learned Counsel for the appellant suggesting that the High Court were in error in calling for the reasons which induced the Government to pass the orders of exemption, though when the reasons were before the Court it was in a position to examine the legality of the order. We do number companysider this submission well-founded. The entire basis for upholding the companystitutional validity of s. 13 of the Act and companysidering that it did number offend the equal protection of the law guaranteed by Art. 14 of the Constitution was, that the discretion or the power companyferred upon Government was number unguided, uncanalised or arbitrary, but that it had to be exercised in accordance with the policy and object of the enactment gatherable from the preamble as well as its operative provisions. The order itself might on its face have shown that it companyformed to this requirement, in which event it would have been for the party challenging the validity of the order to establish to the satisfaction of the Court that it was malafide or had been passed on grounds number companytemplated by or extraneous to, the object and purpose of the enactment or the principles which should have governed the exercise of the power. For instance, if the exemption had been in favour of a particular class of buildings, say those belonging to charities-religious or secular-the classification would have been apparent in the very order of exemption. Where, however, the exemption granted is number of any class of buildings which would ex facie disclose a classification, but the exemption is of a specified building owned by A or in which B is a tenant, then prima facie it would be discriminatory and when the legality of the order is challenged, its intra vires character companyld be sustained only by disclosing the reasons which led to the passing of the order. In the present case, when the matter was before the appellate Court the Advocate-General filed a memorandum setting out the reasons why exemption was granted in the three cases before the Court. In regard to the exemption which was the subject of companytroversy in writ appeal 28 of 1953 with which we are companycerned, the memorandum which the Government filed ran The Government exempted the building for the following reasons- When the High Court offered in 1940 to lease out the premises in question for a period of 21 years, Sri Chettiar elected to take it on lease only for a period of seven years, which expired in 1947. As per the High Courts order in C. S. Nos. 280 to 286 of 1939, Sri J. H. Irani, father of Sri P. J. Irani took a lease of the promises for a period of 13 years 11-1/2 months from 1947 and he deposited Rs. 10,000 towards the said lease. He is therefore entitled for the benefits from 1948 onwards. Had number the Rent Control Act companye into force, Sri P. J. Irani would have got possession in the ordinary companyrse as per High Courts order and the terms of the lease deed. The operation of the Act is therefore really a hardship to him. Sri Chettiar is only an absentee lessee and he is having several other business in South India. The companyduct of Sri Chidambaram Chettiar in refusing to surrender the possession of the building to Sri P. J. Irani who had taken a valid lease under the orders of the High Court is that of a hard litigant seeking to exploit the letter of the law without much regard to bona fides and Sri Chettiar had already managed to be in possession of the building for five more years than he was legitimately entitled to be. The learned Judges of the High Court held that the reasons which led the Government to grant the exemption were number those which were companyntenanced by the policy or purpose of the Act and that the order of exemption was, therefore, invalid. In doing so the learned Judges said Reasons 1, 2 and 4 go together and have reference to the order of the High Court in 1940 directing the Receivers to execute a lease for seven years to the appellant and after the expiry of that period to grant a lease for fourteen years to the second respondents father. It is undoubtedly true that but for the application of the Act, the second respondents father would have obtained possession of the premises after the expiry of lease in favour of the appellant. That companyld be said of thousands of cases in which the leases in favour of tenants have expired and, but for the Act the owners would be entitled to obtain possession of the demised premises. If this circumstance alone is sufficient to exempt any premises from the operation of the Act, then the Act itself should be repealed There is numberpolicy or principle involved in this circumstance. We agree with the learned Judges in the view here expressed. The mere fact that the tenant companytinued in possession after the termination of the tenancy is by itself numberground why he should be evicted from the premises, because it is the very policy of the Act to protect the right of tenants to companytinue in possession of the premises after the termination of their term because of the great difficulty of their obtaining alternative accommodation. The circumstance, therefore, of the termination of the second respondents tenancy cannot afford a justification for Government to say that he deserved to be evicted. If the term had number expired the tenant would have been entitled to companytinue in possession even if the exemption were granted. Learned Counsel for the appellant urged that the High Court had failed to numberice that the present case was one where there was a companytest between two tenants and number between a landlord and a tenant and that they erred in approximating the position of the appellant to that of the landlord. We Bee numberforce in this companytention, because a lessee of the reversion stands in the same position as a landlord and cannot have any higher rights, number can the appellant derive any assistance from the fact that the second respondent declined to be a lessee for any term longer than seven years when that option was offered to him by the High Court in April-May, 1940. The position of the second respondent cannot be worse than if he had taken a lease for a definite term of seven years with a companyenant to restore possession at the end of the period. The fact that in May 1940, the second respondent had an option to take a lease for a longer term, but of which he did number avail himself, does number make any difference or render that a ground for withdrawing from him the protection of the statute. We also agree with the learned Judges of the High Court that ground No. 3 is number germane for granting an exemption. As was pointed out, the important point to be companysidered by the Government was whether the appellant had number other theatres at which he companyld carry on the business which he was carrying on at the Gaiety theatre, and this they omitted to companysider. The reason why the possession of the tenant whose term had expired was afforded statutory protection was his inability to secure alternative accommodation in which either to reside in the case of residential buildings or to carry on the business which he was carrying on in the case of number-residential buildings. This was therefore a relevant matter which the Government had failed to take into account. The High Court characterised reason No. 5 as really number a reason at all and we agree with this observation. The statute had admittedly companyferred upon tenants, such as the second respondent the right to companytinue in possession after the termination of the lease in their favour, and the fact that such a tenant had exercised the rights companyferred upon him by statute was certainly number an improper companyduct meriting his being deprived of the statutory protection afforded by s. 7. The learned Judges further pointed out that the order of Government was defective, in that it had number taken into account several relevant matters as for instance the second respondent expending companysiderable sums to carry out improvements to the theatre in 1949 etc. which bore upon the exercise of their power, and which if taken into account would have weighed against the grant of the exemption. In view however of the companyclusion reached that the reasons assigned by Government for their order were number germane to the policy and purpose of the fact, we do number companysider it necessary to pursue the matter further. The further point urged regarding the learned Judges of the High Court having erroneously companystituted themselves into a Court of appeal need number detain us long. The short answer to it is that the learned Judges had number done so. The submission ignores the distinction between findings on facts which the Court in proceedings under Art. 226 must, save in very exceptional cases, accept as companyrect and the relevance of those facts for companysidering whether their establishment satisfied the grounds necessary for the exercise of the power vested in Government under s. 13 of the Act. For instance in the case on hand, numberfact found by the Government or stated by them as the reason or reasons which induced them to grant the exemption were even challenged before the High Court, the only companytention urged by the second respondent which was accepted by the High Court, being that these facts were irrelevant for justifying the order. The appeal accordingly fails and is dismissed with companyts to the companytesting second respondent. SARKAR., J.-In this judgment we propose to deal only with one of the two questions that arise in this appeal. Of these two questions, the first is whether s. 13 of the Madras Buildings Lease and Rent Control Act, 1949, offends Art. 14 of the Constitution. That Act makes provision, among other things, for companytrolling rents chargeable by landlords and for preventing unreasonable eviction of tenants. Section 13, the validity of which is challenged, gives the State Government power to exempt any building from all or any of the provisions of this Act. The companytention was that this section gave arbitrary power to the Government to apply the law with unequal band as it did number furnish any guidance as to how the power to exempt was to be exercised. This question has been discussed fully by our brother Ayyangar. We agree with the view taken by him that the section does number offend the article. We have numberhing further to add to what he has said on this aspect of the case. The other question is whether the power was duly exercised in the present case. On this question we have arrived at a companyclusion different from that which has found favour with our brother Ayyangar. This is the question that we propose to discuss in this judgment. The power was exercised by an order made by the Government on June 4, 1952. It exempted from the operation of the Act certain premises used as a cinema house and called the Gaiety Theatre. The second respondent who was a tenant of the premises, was thereby deprived of the protection from eviction which he would have otherwise had under the Act. He, therefore, moved the High Court at Madras for a writ to quash this order. The High Court while upholding the validity of s. 13 which also had been attacked by the second respondent, took the view that the order had been passed for,reasons number germane to the purpose for which the power of exemption under s. 13 had been vested in Government, and quashed that order. This appeal is against this decision of the High Court. The circumstances in which the order came to be made were these. One Sir Hajee Ismail Sait had a certain plot of land in the city of Madras. He granted a lease of that land sometime in 1914 to one Venkiah for companystructing a cinema house on it. It is number clear whether Venkiah himself companystructed any cinema house. It appears that he became insolvent and his assets, including the leasehold interest, vested in the Official Assignee who obtained an extension of the lease for a period of nine years from 1926 from the representatives of Sir Hajee Ismail Sait, who had died in the meantime. One Mrs. Madan purchased the lease-hold interest from the Official Assignee and she later obtained a fresh lease from the representatives of Sir Hajee Ismail Sait for a period of seven years from June 1935, expiring on May 30, 1942. This lease gave Mrs. Madan the first option of refusal in case the lessor desired to let out the land on lease after its expiry. On January 4, 1937, the second respondent purchased from Mrs. Madan the lease-hold right, including the superstructure of a cinema house which had by that time been companystructed on the land by one of the previous lessees. This is the cinema house which came to be known as the Gaiety Theatre. The term of the lease was due to expire on May 30, 1942. In or about 1939, certain suits appear to have been instituted in the High Court at Madras in its Original Jurisdiction for the administration of the estate of Sir Hajee Ismail Sait. In those suits, orders had been passed appointing Receivers of that estate and the estate was thereafter being administered by the High Court. It appears that by the side of the Gaiety Theatre premises there was another plot of vacant land belonging to the same estate which was number bringing in any income. The High Court passed orders that that land should also be let out on a long term lease. The father of the appellant offered to take a lease of that land at a rent of Rs. 450 per month for a period of twenty-one years with an option of renewal for another ten years, for the purpose of companystructing a showhouse on it. This was sometime in 1940. At that time the lease of the adjoining Gaiety Theatre bad only about two more years to run. The appellants father did number like a companypeting showhouse in close proximity to his own, and therefore, he suggested to the Receivers that he should be given the lease of the Gaiety Theatre premises also after the expiry of the second respondents lease on May 30, 1942, at the same rent which was being paid by the second respondent and for a term ending with his proposed lease in respect of the adjoining premises. The proposals were put up by the Receivers to the High Court for its companysideration. The High Court thereupon called upon the second respondent to elect whether he would take a fresh lease of the Gaiety Theatre premises for a period of twenty one years after the expiry of his lease then current. This was done as he had the option under his lease. The second respondent was number prepared to take a fresh lease for twenty-one years but he suggested that a lease for another seven years might be given to him on his agreeing to vacate the premises after the expiry of those seven years without claiming any extension or option. The proposals from the appellants father and the second respondent were then companysidered by the High Court and by companysent of parties orders were passed by it on March 21, 1940, and the 2nd and 3rd of May, 1940. By these orders the Receivers were directed to grant a lease of the land adjoining the Gaiety Theatre premises to the appellants father for twenty-one years companymencing from May 1, 1940, with option for ten more years. These orders further directed the Receivers to grant a lease of the Gaiety Theatre premises to the second respondent for a period of seven years from the same date without any option, and to grant a lease of these premises to the appellants father for a period of thirteen years and eleven months and a half companymencing from the expiry of the seven years for which a lease of them was going to be granted to the second respondent. The orders required the appellants father to deposit a security of Rs. 10,000 in respect of the leases to be granted to him and this he duly deposited. All these leases were then granted by the Receivers under the orders of the Court. Apparently, the second respondent surrendered the remaining term of his lease which was to have expired on May 30, 1942. Relying on the aforesaid orders and leases and also on the second respondents agreement to vacate the Gaiety Theatre premises on the expiry of his lease, the appellants father companystructed a showhouse on the land adjoining the Gaiety Theatre premises which came to be known as the Casino Theatre. On October 1, 1946, the Act came into force and in view of its provisions, the second respondent companyld number be evicted from the Gaiety Theatre premises even after the expiry of his lease. Taking advantage of the Act, the second respondent refused to vacate the premises after the expiry of his lease on April 30, 1947, which he had expressly agreed to do. On May 1, 1947, the appellants mother, his father having died in the meantime, deposited with the Receivers a further sum of Rs. 9,000 as rent in advance, as required by the terms of the lease. Thereafter the appellant ,seems to have succeeded to the estate of his father. He took various proceedings to eject the second respondent from the Gaiety Theatre premises but was unsuccessful. Thereupon he moved the Government and the Government after giving the second respondent a hearing, and fully companysidering the matter, passed the order of June 4, 1952. The High Court had called upon the Government to state the reasons. why it had exercised its power under a. 13 exempting the Gaiety Theatre premises from the operation of the Act. The Advocate General appearing for the Government, the first respondent in this appeal, filed a memorandum setting out these reasons. The reasons were as follows- 1 . When the High Court offered in 1940 to lease out the premises in question for a period of 21 years, Sri Chettiar elected to take it on lease only for a period of seven years, which expired in 1947. As per the High Courts order in C. S. No. 280-286/1939, Sri H. Irani took a lease of the premises for a period of 13 years and 11-1/2 months from 1947 and he deposited Rs. 10,000 towards the said lease. He is therefore entitled for the benefits from 1948 onwards. Had number the Rent Control Act companye into force, Sri P. J. Irani would have got possession in the ordinary companyrse as per High Courts order and the terms of the lease deed. The operation of the Act is therefore really a hardship to him. Sri Chettiar is only an absentee lessee and he is having several other businesses in South India. 4 The companyduct of Sri Chidambaram Chettiar in Sri Chettiar had already managed to be in refusing to surrender the possession of th building to Sri P. J. Irani who had taken a valid lease under the orders of the High Court is that of hard litigant seeking to exploit the letter of the law without much regard to bona fides and Sri Chettiar had already managed to be in possession of the building for five more years than he was legitimately entitled to be. The High Court having companysidered the reasons came to the companyclusion that they did number serve the purpose of the Act. We are unable to accept this view. It may be that some of the reasons given would number have justified the order but broadly, we think, they referred to facts which showed that the power had been exercised legitimately. Indeed, on the facts of this case which we have set out earlier, we think that it was unnecessary for the High Court to ask the Government to state the reasons for its order. In our view, these facts themselves sufficiently show that the order was within the objects of the Act and number extraneous to s. 13. We wish to observe before we proceed further, that in companysidering whether the reasons given by the Government are sufficient to bring the order within the objects of the Act, the High Court had numberpower to act as if it were sitting in appeal over the Governments decision. A companyrt cannot set aside an order under s. 13 on the ground that it would number itself have made the order for the reasons for which the Government had made it. All that the Court has to see is whether the power was used for any extraneous purpose, that is to say, number for achieving the object for which the power had been granted. When it is alleged that the power was used for a purpose other than achieving the object for which the power is granted, the initial onus must be on the party which alleges abuse of power and there must be prima facie evidence in support of the allegation. It is only then that the onus may shift. However all this may be, was the power in this case in fact used for an extraneous purpose? It is number said that the power had been exercised for any ulterior purpose. Now, the purpose of the Act, quite clearly, is to prevent unreasonable eviction and also to companytrol rent. These two purposes are intertwined. An eviction becomes unreasonable where the object is to exploit the situation arising out of the dearth of accommodation by letting out the premises at an unreasonably high rent and on realisation of extortionate premium. Often these are realised secretly, particularly so, the premium. Therefore, when there is numberrisk of an opportunity arising in which a landlord may be able to realise illegal rent or premium, an eviction may number be unreasonable indeed, there may be circumstances which would justify the inference that the tenant is trying to take an undue advantage of the situation and in such a case, the Government would be justified and within its power to exempt the premises from the operation of the Act. That is the position here. The lease was granted at a point of time when the situation was numbermal, that is, when a landlord was number in a position to make an unconscionable bargain for himself by exploiting the situation, for the lease was granted in 1940 when there was numberscarcity of accommodation. Next, the lease was granted under orders of Court. It was granted by the officers of the Court. There is numberquestion of either the Court or the officers using the situation for purposes of exploitation. Again, to refuse exemption under s. 13 in the present case would amount to preventing the Court from administering the estate in its charge in a manner which it has the power to do and which of companyrse is its duty to do for the benefit of the parties entitled to the estate. There was numberhing unfair to the second respondent in granting the exemption, for the second respondent had been given the option to take up the lease. He had refused it. He is number objecting to the exemption only because he finds it more profitable to companytinue in the premises than he thought it would be at the time the offer had been made to him. The appellant and his father had been deprived for a long time of the use of a companysiderable sum of money which was paid in terms of the bargain to which the second respondent had freely entered. It may be that the appellants father would number have gone in for the lease of the Casino Theatre premises and spent enormous sums of money for companystructing a showhouse there if the second respondent had number given him to understand that he would leave the Gaiety Theatre premises on April 30, 1947. The fact that the second respondent spent money, if any, in improving the Gaiety Theatre premises is irrelevant. He knew that he had undertaken to vacate the premises by April 30, 1947, and that the appellant was taking steps to recover possession of these premises. We do number think that the difficulties of a tenant on eviction decide what is or is number unreasonable eviction. One of the objects of the Act as stated in the preamble is to prevent unreasonable eviction of tenants. The word unreasonable necessarily companynotes a companysideration of all the circumstances including the companyduct of parties in order to find out what is unreasonable. It seems to us that under s. 13 it is the duty of the Government to take into companysideration all the relevant circumstances of a particular case or class of cases in order to determine if the protection of the Act given to the tenant or tenants companycerned should be withdrawn. The section is applicable number merely to institutions like hospitals or schools, but may be applied to other cases also, where there is numberquestion of any unreasonable eviction of the tenant, or where prevention of eviction itself may be unreasonable. We, therefore, think that the Governments action in exempting the Gaiety Theatre premises from the operation of the Act was within the scope of the Act, and the High Court does number seem to have companysidered the case from this point of view. For these reasons, in our view, the order of June 4, 1952, was a companypetent and legal order and numberexception can be taken to it. We would, therefore, allow the appeal and set aside the order of the High Court. The second respondent should pay the companyts of the other parties throughout.

SECOND SECTION CASE OF GÜLBAHAR ÖZER AND YUSUF ÖZER v. TURKEY (Application no. 64406/09) JUDGMENT STRASBOURG 29 May 2018 FINAL 08/10/2018 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Gülbahar Özer and Yusuf Özer v. Turkey, The European Court of Human Rights (Second Section), sitting as a Chamber composed of: Robert Spano, President,Paul Lemmens,Ledi Bianku,Işıl Karakaş,Nebojša Vučinić,Jon Fridrik Kjølbro,Stéphanie Mourou-Vikström, judges,and Hasan Bakırcı, Deputy Section Registrar, Having deliberated in private on 7 May 2018, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 64406/09) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Turkish nationals, Ms Gülbahar Özer and Mr Yusuf Özer (“the applicants”), on 17 September 2009. 2. The first applicant, Gülbahar Özer, was represented by Ms Aygül Demirtaş and Mr Selahattin Demirtaş, lawyers practising in Diyarbakır. The second applicant, Mr Yusuf Özer, was represented by Ms Reyhan Yalçındağ Baydemir, Ms Aygül Demirtaş and Mr Selahattin Demirtaş, lawyers practising in Diyarbakır. The Turkish Government (“the Government”) were represented by their Agent. 3. The applicants alleged, in particular, that the refusal of the national authorities to allow them to bury the bodies of their two children had been in breach of Article 8 of the Convention. 4. On 20 September 2010 the application was communicated to the Government. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicants were born in 1963 and 1965 respectively and live in İzmir. They are brother and sister. Their respective children, Sibel Sartık and Nergiz Özer, aged 24 and 15 respectively, were killed by soldiers on 19 January 2005 in south-east Turkey. During the same incident the soldiers also killed three other young people, aged 13, 16 and 22 (see Gülbahar Özer and Others v. Turkey, no. 44125/06, 2 July 2013). The bodies of those three individuals were subsequently handed over to their families, who buried them in Diyarbakır. 6. On 23 January 2005 the prosecutor ordered the release of the bodies of the applicants’ two children. The applicants took the bodies from the morgue in order to take them to the city of Siirt, where they wanted to bury them and where their graves had already been prepared with the help of the municipal officials. 7. On the same date the governor of Siirt issued a decision stating that crowds had gathered at the cemetery in Siirt and had attacked the municipal workers who were preparing the graves. Subsequently, the incidents at the cemetery had escalated and turned into “unlawful demonstrations”. Therefore, “in order to prevent any unwanted consequences”, the governor decided to order the burial of the applicants’ children in the two villages named in the respective birth register records of the two deceased. 8. While the applicants, together with the coffins of their two children, were on their way to Siirt, their vehicles were stopped by gendarme soldiers who told the applicants that they were not allowed to bury their children in Siirt. The soldiers told the applicants that, in accordance with the decision taken by the Siirt governor, the bodies would be buried in two other villages. The applicants told the soldiers that they had no connection with the two villages in question which, in any event, had been evacuated by soldiers in the 1990s. They stated that they wanted to bury their children side by side in their family cemetery in Siirt. Despite their objections, the bodies of the two children were confiscated and taken away by the soldiers. 9. The same day the second applicant made an official request to the office of the governor and asked for permission to bury the children in the city of Batman instead. This request was refused but the governor amended his decision so that the applicants’ children could be buried in the same cemetery in the town of Eruh, instead of being buried in two separate villages as he had previously ordered. In accordance with that decision, the applicants’ children were buried by the authorities in the municipal cemetery in Eruh at 1.45 a.m. on 24 January 2005 without any religious ceremony. 10. On 11 March 2005 the applicants brought a case before the Diyarbakır Administrative Court and asked for the Siirt governor’s decision to be annulled. They also requested that the Administrative Court issue an interim measure allowing them to exhume the bodies before they decomposed, and to bury them in a cemetery of their choice. The applicants agreed, in particular, that it was important and necessary to maintain public order. However, they argued that the governor’s decision had completely disregarded the moral values of their society and had aroused anger. The news that their children would not be buried in Siirt and that their bodies had been confiscated by the soldiers had caused an upsurge of emotion in the people waiting at the cemetery in Siirt and as a result they had attacked members of the security forces and local shops with sticks and stones. When the security forces responded to those attacks heavy handedly, scores of people had been injured and more than a hundred people had been arrested. All of that unrest had been caused by the governor’s unlawful decision. No such incidents had taken place during the burial of the three other individuals who had been killed at the same time as their children. In their complaint the applicants also referred to their rights under Articles 8 and 9 of the Convention. 11. On 30 March 2006 the Diyarbakır Administrative Court rejected the case. It noted that the governor’s decision had been based on section 11/C of the Law on the Administration of Provinces, which provided that the governor had a duty to maintain peace and public order in the province under his responsibility. The decision had been taken because the people who had gathered at the cemetery in Siirt and who were waiting for the bodies to arrive had thrown stones at municipal workers and members of the security forces. The decision to bury the bodies in the town of Eruh had therefore been taken with a view to maintaining public order. The Administrative Court considered that, although the applicants had the right to bury their children in a cemetery of their choice, the refusal to permit them to do so had been in compliance with the restrictions set out in the second paragraphs of Articles 8 and 9 of the Convention and in section 13 of the Turkish Constitution. 12. The applicants appealed against the decision and maintained that the incidents at the cemetery referred to by the Administrative Court had only occurred after the crowds had found out about the authorities’ refusal to allow them to bury their children in Siirt. They repeated their argument that the three others killed by the soldiers at the same time as their children had been buried by their families in Diyarbakır without incident. The applicants also reiterated their request for an interim measure. 13. The request for an interim measure was rejected by the Supreme Administrative Court on 13 December 2006. In a decision of 24 October 2008 the Supreme Administrative Court also rejected the appeal lodged by the applicants against the decision of the Diyarbakır Administrative Court. In reaching its conclusion the Supreme Administrative Court stated that the incidents at the Siirt Cemetery had begun when the people who had gathered there had insisted that the applicants’ two children be buried next to the graves of members of the PKK. 14. The decision of the Supreme Administrative Court was communicated to the applicants on 19 March 2009. II. RELEVANT DOMESTIC LAW AND PRACTICE 15. Section 11 of the Law on Administration of Provinces (Law no. 5442, 10 June 1949), in so far as relevant, provides as follows: “A) Governors are the superiors of all regular and private law enforcement forces located within their provinces. They shall take all necessary steps in order to prevent a crime from taking place and to maintain public order and safety. To that end, they may deploy regular and private armed forces of the State; managers and employees of such entities are obliged to swiftly comply with the governors’ orders. ... C) Governors have the duty to maintain and to protect the peace and safety, personal integrity and well-being of the public, the enjoyment of possessions, and preventative law-enforcement within their provinces.” THE LAW I. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION 16. The applicants complained that the way in which their two children had been killed by soldiers and the authorities’ subsequent refusal to allow them to bury their children in a cemetery of their choice ‒ exacerbated by the fact that they had been prevented from holding a religious ceremony ‒ had represented an unjustified interference with their right to respect for their private and family life within the meaning of Article 8 of the Convention which reads, in so far as relevant: “1. Everyone has the right to respect for his private and family life... 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.” 17. The Government contested that argument. A. Admissibility 18. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. The applicants’ submissions 19. The applicants complained that, at a time when they were grieving for the deaths of their children, who had been unlawfully killed by soldiers, they also had to endure injustice and frustration as a result of the confiscation of their children’s bodies. While confiscating the bodies the soldiers had kept them waiting by the side of the road for ten hours. The authorities had then buried their children without giving the families an opportunity to carry out any of the necessary religious rites such as washing and shrouding the bodies or conducting funeral prayers with the attendance of their families and friends. Their suffering was compounded by the burial of their children in the town of Eruh, with which they had no connection. 20. The applicants argued that it had in fact been the governor’s decision which had disturbed the public order and the authorities’ actions ‒ such as keeping them waiting for hours and confiscating the bodies of their children ‒ that had stirred the emotions of the people waiting at the cemetery in Siirt and ignited the subsequent disturbances. These, they argued, had not been taken into account by the domestic courts. 21. The alternative solution suggested by the second applicant to the authorities, namely to bury the children in the city of Batman, was not accepted either (see paragraph 9 above). Batman was a mere forty-five minute drive away from Siirt and the applicants could have visited the graves of their children there without difficulty. They also had family members living in Batman with whom they would have been able to stay when they wanted to visit the graves, instead of having to stay at hotels which they could not afford. 2. The Government’s submissions 22. According to the Government, a group of people had gathered at the cemetery in Siirt and was awaiting the arrival of the bodies. Members of this group had asked the municipal officials to prepare graves for the applicants’ children close to the graves of a number of PKK terrorists. When that request was rejected, the group had attacked the officials with sticks and stones. During that incident ten members of the security forces had been injured. As a result of that incident the governor of Siirt had ordered that the bodies should be buried in two other villages. 23. The Government argued that the decision to bury the applicants’ children in two separate villages had been taken by the governor in order to prevent further incidents in the cemetery and, therefore, to maintain public order and peace. Subsequently, taking into account the applicants’ objection, the governor had made an effort to reach a compromise and had amended his decision so that the two children could be buried in the same cemetery, namely Eruh Municipal Cemetery. 24. The governor’s decision had been taken in accordance with section 11 of the Law on Administration of Provinces which conferred on governors the power to take law-enforcement measures in order to protect the security of the public. That Law was in compliance with section 13 of the Constitution and in making that Law, the parliament had confined itself to determining the general scope of the governor’s powers rather than setting out any specific details in the field of public security matters. As a result of that general authority, the governors exercised a certain degree of discretion in such matters. The scope of the discretion vested in the governors varied according to the circumstances of each case. Moreover, section 125 of the Constitution, which provided that all acts and decisions of the public authorities are amenable to judicial review, provided sufficient protection of the individual against arbitrariness by public authorities in the exercise of their discretionary powers. 25. According to the Government, although there had been an interference by the public authorities with the exercise of the applicants’ rights guaranteed in Article 8 § 1 of the Convention, that interference had had a legal basis and had been necessary in the interests of public safety in the area in question and for the protection of the rights and freedom of others, within the meaning of Article 8 § 2 of the Convention. 3. The Court’s assessment 26. The Court has already held that the concepts of “private life” and “family life” encompass the right to bury a close relative and to be present when that burial takes place (see, in particular, Sabanchiyeva and Others v. Russia, no. 38450/05, §§ 117-123, ECHR 2013 (extracts), and Maskhadova and Others v. Russia, no. 18071/05, §§ 208-212, 6 June 2013 and the cases cited therein; see also, mutatis mutandis, Marić v. Croatia, no. 50132/12, §§ 59-60, 12 June 2014 and the cases cited therein). 27. Taking account of its case-law, the Court considers that the confiscation of the applicants’ children’s bodies by the soldiers, coupled with the authorities’ refusal to allow the applicants to bury their children in a graveyard of their own choosing and the applicants’ inability to carry out the usual burial rites, constituted an interference with the applicants’ “private life” and “family life” within the meaning of Article 8 of the Convention. Indeed, the respondent Government agreed that the events in question had constituted an interference with the applicants’ rights guaranteed in Article 8 of the Convention (see paragraph 25 above). It therefore remains to be seen if this interference was justified under the second paragraph of that provision. 28. The Court observes that the governor’s decision was based on Section 11 of the Law on Administration of Provinces (see paragraph 15 above) and that the interference was thus “in accordance with the law” within the meaning of Article 8 § 2 of the Convention. As regards a legitimate aim, the Court is prepared to accept that the interference was in the interest of public safety, for the prevention of disorder and for the protection of the rights and freedoms of others. 29. Turning to the question of whether the interference was “necessary in a democratic society”, the Court reiterates that an interference will be considered “necessary in a democratic society” for a legitimate aim if it answers a “pressing social need” and, in particular, if it is proportionate to the legitimate aim pursued and if the reasons adduced by the national authorities to justify it are “relevant and sufficient”. The object and purpose of the Convention, being a human rights treaty protecting individuals on an objective basis, call for its provisions to be interpreted and applied in a manner that renders its guarantees practical and effective. Thus, in order to ensure “respect” for private and family life within the meaning of Article 8, the realities of each case must be taken into account in order to avoid the mechanical application of domestic law to a particular situation. The Court has previously found that, for a measure to be regarded as both proportionate and necessary in a democratic society, there must be no possibility of recourse to an alternative measure that would cause less damage to the fundamental right at issue whilst fulfilling the same aim. The final evaluation as to whether the interference is necessary remains subject to review by the Court in order to ascertain conformity with the requirements of the Convention. A margin of appreciation is left to the competent national authorities in this connection. The breadth of this margin varies and depends on a number of factors, including the nature of the Convention right at issue, its importance for the individual, the nature of the interference and the objective pursued by the interference (see Sabanchiyeva and Others, cited above, §§ 131-134 and the cases cited therein). 30. Turning to the circumstances of the present case, in order to address the question of whether the measures taken concerning the bodies of the applicants’ children were proportionate to the legitimate aims that they were supposed to pursue, and whether the reasons given by the national authorities were “relevant and sufficient”, the Court must examine whether the national authorities took sufficient account of the particular nature of the case and whether the adopted measure, in the context of their margin of appreciation, was justified in view of the relevant circumstances of the case. 31. The Court notes that, according to the Government, the reason for the confiscation of the bodies of the applicants’ two children was that a crowd had gathered at the cemetery in Siirt and had asked for the bodies to be buried next to graves of members of the PKK. When that request was not accepted, the crowds had attacked members of the security forces and cemetery workers. The governor had taken the disputed decision to prevent the incident from escalating. According to the applicants, however, no disturbances had taken place at the cemetery until after the governor had taken his decision and the bodies had been confiscated. It had been the governor’s decision and the confiscation of the bodies of their children that had triggered the disturbances. 32. On the basis of the documents in the application file, the Court cannot ascertain with certainty when and why exactly the disturbances in the Siirt Cemetery began. In that connection the Court notes, on the one hand, that the applicants, beyond challenging the governor’s and subsequently the respondent Government’s version of the events, did not seek to allege that the governor’s decision had had an ulterior motive. On the other hand, the Court also notes the applicants’ submission − which was not contested by the Government − that no disturbances had taken place during the funeral in Diyarbakır of the three other individuals who had been killed by the soldiers at the same time as the applicants’ children. 33. In any event, the Court shares the parties’ view that it is the duty of the national authorities to take necessary steps to maintain public order. Indeed, the Court has already accepted that the governor took his decision in the interest of public safety, for the prevention of disorder and for the protection of the rights and freedoms of others (see paragraph 28 above). Nevertheless, the Court also considers that the confiscation of the applicants’ children’s bodies and their burial in a cemetery by the municipal authorities, thereby preventing the applicants from holding a funeral for their children in a cemetery of their own choice, was a particularly severe interference with the applicants’ rights guaranteed in Article 8 of the Convention (see Sabanchiyeva and Others, cited above, § 138). 34. The Court considers, therefore, that such a severe measure can only be justified, and be in compliance with the proportionality requirements of Article 8 of the Convention, if the national authorities had first ruled out the possibility of having recourse to alternative measures that would have caused less damage to the fundamental right at issue whilst fulfilling the same aim (see, inter alia, Nada v. Switzerland [GC], no. 10593/08, § 183, ECHR 2012). 35. In this connection the Court observes that a viable alternative was in fact suggested to the authorities by the applicants before the burial took place, namely that of burying their children in the city of Batman instead of Siirt. However, that request was not accepted and the applicants were not provided with any reasons for the refusal to entertain it. Moreover, the national courts failed to examine why that alternative solution was not considered by the authorities. 36. Secondly, the Court considers that the authorities could have, at the very least, ensured that the applicants were present during the burial of their children in Eruh cemetery. Furthermore, the authorities could have delayed the burial for a short period until the necessary security precautions had been taken and then, if necessary, limit the presence at the burial to only the applicants and other close family members. However, no thought appears to have been given to this possibility by either the national authorities or the courts. 37. In the light of the foregoing failure to give due consideration to any alternatives, the Court finds that the measure in question did not strike a fair balance between the applicants’ right to the protection of their private and family life, on the one hand, and the legitimate aims of public safety, the prevention of disorder and the protection of the rights and freedoms of others on the other, and that the respondent State overstepped any acceptable margin of appreciation in this regard. 38. Accordingly, there has been a violation of Article 8 of the Convention. II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION 39. Lastly, the applicants complained that the way in which their children had been killed, coupled with the authorities’ refusal to allow them to bury them in a cemetery of their choice, had amounted to ill-treatment within the meaning of Article 3 of the Convention. They also alleged that their inability to give their children a burial in a cemetery of their choice, which had been exacerbated by the fact that they had been prevented from holding a religious ceremony, had been in breach of their rights under Article 9 of the Convention. Under Article 13 of the Convention the applicants complained of a lack of an effective remedy capable of enabling them to have their children buried in a cemetery of their choice. Relying on Article 14 of the Convention the applicants alleged that their children had been portrayed as members of an illegal organisation and their bodies had thus not been shown the appropriate respect. Finally, under Article 17 of the Convention, the applicants complained that the justification relied on by the authorities for their refusal of the request had not been compatible with the rights guaranteed in the Convention. 40. Having regard to the violation found above, the Court deems it unnecessary to examine the admissibility or merits of these complaints separately. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 41. The applicants claimed 20,000 euros (EUR) each in respect of non‑pecuniary damage. 42. The Government argued that the sums claimed by the applicants were excessive and unacceptable. 43. The Court awards each of the applicants EUR 10,000 in respect of non-pecuniary damage. 44. The applicants also claimed EUR 5,435 for the costs and expenses incurred before the Court. EUR 5,352 of that sum was claimed in respect of the applicants’ lawyers’ fees, in support of which the applicants submitted to the Court a time-sheet showing the time the lawyers had spent on the case. The remaining EUR 83 was claimed in respect of expenses such as postage, photocopying, fax and stationery. In support of this latter claim the applicants submitted various receipts to the Court. 45. The Government considered this claim to be excessive and unsupported by documentary evidence. 46. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 3,000 to the applicants covering costs under all heads. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1. Declares the complaint under Article 8 of the Convention admissible; 2. Holds that there has been a violation of Article 8 of the Convention; 3. Holds that there is no need to examine the admissibility of merits of the complaints under Articles 3, 9, 13, 14 and 17 of the Convention; 4. Holds (a) that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement: (i) EUR 10,000 (ten thousand euros), plus any tax that may be chargeable, to each applicant in respect of non-pecuniary damage; (ii) EUR 3,000 (three thousand euros), plus any tax that may be chargeable to the applicants, to the applicants jointly in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 5. Dismisses the remainder of the applicants’ claim for just satisfaction. Done in English, and notified in writing on 29 May 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Hasan BakırcıRobert SpanoDeputy RegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Lemmens is annexed to this judgment. R.S.H.B. CONCURRING OPINION OF JUDGE LEMMENS 1. I agree with the finding of a violation of Article 8 of the Convention. However, I find it difficult to agree with all the steps in the reasoning adopted by the majority. In my opinion, the majority suggest that, even where the State has a margin of appreciation (as in the present case), the domestic authorities are under an obligation to choose the least restrictive measure. Such a suggestion not only runs counter to the most recent case-law of the Court, but would also put the Court in the difficult position of having to determine what that least restrictive measure, or otherwise a less restrictive measure, should be. 2. The majority state that, “for a measure to be regarded as both proportionate and necessary in a democratic society, there must be no possibility of recourse to an alternative measure that would cause less damage to the fundamental right at issue whilst fulfilling the same aim” (see paragraph 29 of the judgment, referring to Sabanchiyeva and Others v. Russia, no. 38450/05, §§ 131-134, ECHR 2013 (extracts); emphasis added). The same idea is expressed further in the judgment: “(S)uch a severe measure can only be justified, and be in compliance with the proportionality requirements of Article 8 of the Convention, if the national authorities had first ruled out the possibility of having recourse to alternative measures that would have caused less damage to the fundamental right at issue whilst fulfilling the same aim” (see paragraph 34 of the judgment, referring to Nada v. Switzerland [GC], no. 10593/08, § 183, ECHR 2012; emphasis added). If this statement is to be taken literally, it would mean that where various alternatives are open to the competent authorities, they can adopt only one of them, namely the least restrictive one. 3. It is true that there is case-law of the Court which lends support to such a view (see, among other authorities, Glor v. Switzerland, no. 13444/04, § 94, ECHR 2009, and Mouvement raëlien suisse v. Switzerland [GC], no. 16354/06, § 75, ECHR 2012 (extracts)). It is on this case-law that Nada and Sabanchiyeva, both cited by the majority, are built. However, this case-law is difficult to reconcile with the long-standing principle that the adjective “necessary”, within the meaning of Article 8 § 2 (and similar Articles), is not synonymous with “indispensable” (compare with the expressions “absolutely necessary” (Article 2 § 2), “strictly necessary” (Article 6 § 1), and “to the extent strictly required by the exigencies of the situation” (Article 15 § 1)) (Handyside v. the United Kingdom, 7 December 1976, § 48, Series A no. 24). It is sufficient for there to be a “pressing social need”, the existence of which is to be assessed in the first place by the domestic authorities (ibid.). This leaves the competent authorities a possibility of choosing between various options, or in other words a margin of appreciation (ibid.). Whilst the competent authorities, when considering the adoption of a measure that may interfere with fundamental rights, are required to give due consideration to these rights, they must thus in principle be left a choice between different ways and means of meeting that obligation. The Court’s supervisory function being of a subsidiary nature, it is limited to reviewing whether or not the particular solution adopted can be regarded as striking a fair balance (see Hatton and Others v. the United Kingdom [GC], no. 36022/97, § 123, ECHR 2003‑VIII)[1]. It follows from the foregoing that the central question as regards the necessity of an interference is not whether a less restrictive measure should have been adopted or, indeed, whether the respondent State can prove that, without the measure actually adopted, the legitimate aim would not be achieved. Rather the core issue is whether, in adopting the measure under review, the competent authority acted within the margin of appreciation afforded to it (see, albeit with respect to interferences that were the direct result of a legislative act or a general regulation, Animal Defenders International v. the United Kingdom [GC], no. 48876/08, § 110, ECHR 2013 (extracts), and Garib v. the Netherlands [GC], no. 43494/09, § 157, ECHR 2017). To suggest that in a given situation only one option, namely the least restrictive one, is valid, without accepting that other, more restrictive options might be equally compatible with the Convention, amounts to disregarding the national authorities’ margin of appreciation. 4. This is not to say that the availability of less restrictive measures is irrelevant for the assessment of whether the measure actually taken can be considered proportionate, and therefore “necessary”. On the contrary, in some cases it may be highly relevant to take into account the existence of such alternatives. As the Court held in Roman Zakharov: “[The Court] must ascertain whether the interference] meets the requirement of ‘necessity in a democratic society’, as provided by Article 8 § 2 of the Convention, including whether it is proportionate to the legitimate aims pursued, by verifying, for example whether it is possible to achieve the aims by less restrictive means” (Roman Zakharov v. Russia [GC], no. 47143/06, § 260, ECHR 2015; emphasis added). The choice of the least restrictive measure is thus not a conditio sine qua non for the compatibility with the Convention of the measure adopted, but the failure to adopt a less restrictive measure is an element, among others, that may lead to the conclusion that the measure actually adopted was not “necessary”. Equally relevant may be the fact that the competent authorities did not (even) examine whether the legitimate aims pursued could have been attained by other, less restrictive means (see, for instance, Lashmankin and Others v. Russia, nos. 57818/09 and 14 others, § 373, 7 February 2017). 5. In the present case, the majority attempt themselves to define what would have been “viable alternatives” (see the wording used in paragraph 35 of the judgment). They refer in the first place to the possibility for the families to have their children buried in Batman instead of Siirt (ibid.). This was a suggestion made at some point by one of the applicants (see paragraph 9 of the judgment), but not taken up in the proceedings before the domestic courts. The majority further refer to the possibility for the families to be present during the burial of their children in the cemetery of Eruh (see paragraph 36 of the judgment). They finally refer to the possibility of delaying the burial (in Siirt) for a short period (ibid.). I am not sure that the first two alternatives would have been compatible with the Convention. The main complaint of the applicants was that the children had been buried “without giving the families an opportunity to carry out any of the necessary religious rites”. They further argued that their suffering had been compounded by the burial of their children in a place with which they had no connection (see paragraph 19 of the judgment). The first two alternatives are not a response to these complaints. In any event, given the fact that the Court can only “review” measures taken by the domestic authorities, I believe that it is not its role to suggest what other precise action could (and even should) have been taken by them. 6. The facts of the case show that soldiers took the bodies of the children from their families, while they were on their way to the cemetery of Siirt, and then buried the children in another cemetery, in the middle of the night, without allowing for any religious ceremony (see paragraphs 8 and 9 of the judgment). I agree with the majority that these are measures so egregious that they could not be taken without due consideration of the possibility of alternative measures. The fact that the authorities did not consider any alternative to the measures adopted is sufficient for me to conclude that in the given circumstances the State overstepped its margin of appreciation and that, accordingly, there has been a violation of Article 8. As explained above, I see no need to indicate what might have been viable alternatives, and I do not think that it is correct to suggest that only the least restrictive measure could be compatible with the Convention. [1]. This idea has recently been expressed as follows in the Copenhagen Declaration of 13 April 2018 (§ 28, c and d): “The Court’s jurisprudence on the margin of appreciation recognises that in applying certain Convention provisions, such as Articles 8-11, there may be a range of different but legitimate solutions which could each be compatible with the Convention depending on the context. This may be relevant when assessing the proportionality of measures restricting the exercise of rights or freedoms under the Convention. The margin of appreciation goes hand in hand with supervision under the Convention system, and the decision as to whether there has been a violation of the Convention ultimately rests with the Court”.

Leave granted. Heard learned companynsel for the parties. The appeal is disposed of in terms of the signed order. K. Dhawan Shashi Bala Vij Court Master Court Master Signed order is placed on the file IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.3578 OF 2009 Arising out of SLP C No.1877 of 2007 AJAY KUMAR APPELLANT. VERSUS UNION OF INDIA ORS. RESPONDENTS. ORDER Leave granted. Heard learned companynsel for the parties. The appellant was originally recruited as companystable in CRPF but during the companyrse of medical examination it was found that his vision was number numbermal. Then he was subjected to Examination by the Medical Board on 24th April, 2002 and it was found that though he had numbermanifest squint, he had moderate exophoria with slow recovery and ultimately the Board opined that the candidate is fit for the job of Constable in CRPF. But subsequently on 24th March, 2003, his services were terminated on the ground that the Director of Medical Directorate found him unsuitable. The appellant filed a writ petition and the High Court referred the matter to the Medical Board companysisting of some senior doctors from the Postgraduate Institute of Medical Education and Research, Chandigarh. The Medical Board gave the following opinion He had unaided visual acuity of 6/6 in both eyes and his companyor vision and fundus examination was found -2- to be within numbermal limits. He has numbermanifest squint. However, he has exophoria for near with slow recovery. Worth four dot test showed binocular single vision. In our opinion, the candidate is fit for the job of Constable in CRPF. In view of the medical opinion expressed by the Medical Board of the Postgraduate Institute of Medical Education and Research, Chandigarh, we are unable to agree with the respondent that the appellant is number medically fit. Respondents are directed to reinstate the appellant forthwith.

Case C-316/09 MSD Sharp & Dohme GmbH v Merckle GmbH (Reference for a preliminary ruling from the Bundesgerichtshof) (Medicinal products for human use – Directive 2001/83/EC – Prohibition on the advertising to the general public of medicinal products available only on prescription – Definition of ‘advertising’ – Information communicated to the competent authority – Information accessible on the internet) Summary of the Judgment Approximation of laws – Medicinal products for human use – Directive 2001/83 – Advertising – Definition (European Parliament and Council Directive 2001/83, as amended by Directive 2004/27, Art. 88(1)(a)) Article 88(1)(a) of Directive 2001/83 on the Community code relating to medicinal products for human use, as amended by Directive 2004/27, must be interpreted as meaning that it does not prohibit the dissemination on a website, by a pharmaceutical undertaking, of information relating to medicinal products available on medical prescription only, where that information is accessible on the website only to someone who seeks to obtain it and that dissemination consists solely in the faithful reproduction of the packaging of the medicinal product, in accordance with Article 62 of Directive 2001/83, and in the literal and complete reproduction of the package leaflet or the summary of the product’s characteristics, which have been approved by the authorities with competence in relation to medicinal products. In contrast, the dissemination, on such a website, of information relating to a medicinal product which has been selected or rewritten by the manufacturer, which can be explained only by an advertising purpose, is prohibited. (see paras 43, 47-48, operative part) JUDGMENT OF THE COURT (Third Chamber) 5 May 2011 (*) (Medicinal products for human use – Directive 2001/83/EC – Prohibition on the advertising to the general public of medicinal products available only on prescription – Definition of ‘advertising’ – Information communicated to the competent authority – Information accessible on the internet) In Case C‑316/09, REFERENCE for a preliminary ruling under Article 234 EC from the Bundesgerichtshof (Germany), made by decision of 16 July 2009, received at the Court on 10 August 2009, in the proceedings MSD Sharp & Dohme GmbH v Merckle GmbH, THE COURT (Third Chamber), composed of K. Lenaerts, President of the Chamber, D. Šváby (Rapporteur), R. Silva de Lapuerta, G. Arestis and J. Malenovský, Judges, Advocate General: V. Trstenjak, Registrar: C. Strömholm, Administrator, having regard to the written procedure and further to the hearing on 23 September 2010, after considering the observations submitted on behalf of: – MSD Sharp & Dohme GmbH, by U. Karpenstein and F. Fellenberg, Rechtsanwälte, – the Czech Government, by M. Smolek, acting as Agent, – the Danish Government, by B. Weis Fogh and C. Vang, acting as Agents, – the Hungarian Government, by M. Fehér and K. Szíjjártó, acting as Agents, – the Polish Government, by M. Dowgielewicz, acting as Agent, – the Portuguese Government, by L. Inez Fernandes and A.P. Antunes, acting as Agents, – the Swedish Government, by A. Falk, acting as Agent, – the United Kingdom Government, by S. Hathaway, acting as Agent, – the European Commission, by M. Šimerdová and G. Wilms, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 24 November 2010, gives the following Judgment 1 This reference for a preliminary ruling concerns the interpretation of Article 88(1)(a) of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use (OJ 2001 L 311, p. 67), as amended by Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004 (OJ 2004 L 136, p. 34) (‘Directive 2001/83’). 2 The reference has been made in proceedings between MSD Sharp & Dohme GmbH (‘MSD’) and Merckle GmbH concerning an action by which the latter seeks an injunction restraining MSD from disseminating on its website information relating to three prescription-only medicinal products that it manufactures, namely Vioxx, Fosamax and Singulair, on the ground that that dissemination constitutes advertising to the general public prohibited by Directive 2001/83. Legal context European Union law 3 Recitals 2, 40, 44 and 45 in the preamble to Directive 2001/83 are worded as follows: ‘(2) The essential aim of any rules governing the production, distribution and use of medicinal products must be to safeguard public health. … (40) The provisions governing the information supplied to users should provide a high degree of consumer protection, in order that medicinal products may be used correctly on the basis of full and comprehensible information. … (44) Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities [OJ 1989 L 298, p. 23] prohibits the television advertising of medicinal products which are available only on medical prescription in the Member State within whose jurisdiction the television broadcaster is located. This principle should be made of general application by extending it to other media. … (45) Advertising to the general public, even of non-prescription medicinal products, could affect public health, were it to be excessive and ill-considered. Advertising of medicinal products to the general public, where it is permitted, ought therefore to satisfy certain essential criteria which ought to be defined.’ 4 Article 1 of Directive 2001/83 states: ‘For the purposes of this Directive, the following terms shall bear the following meanings: … 24. Outer packaging: The packaging into which is placed the immediate packaging. 25. Labelling: Information on the immediate or outer packaging. 26. Package leaflet: A leaflet containing information for the user which accompanies the medicinal product. …’ 5 The inclusion in the packaging of all medicinal products of a package leaflet is obligatory except in the cases provided for in Article 58 of the directive. Article 59 of Directive 2001/83 provides that the package leaflet is to be drawn up in accordance with the summary of the product characteristics and must include the information to be mentioned therein. 6 Under Article 61 of Directive 2001/83: ‘1. One or more mock-ups of the outer packaging and the immediate packaging of a medicinal product, together with the draft package leaflet, shall be submitted to the authorities competent for authorising marketing when the marketing authorisation is requested. The results of assessments carried out in cooperation with target patient groups shall also be provided to the competent authority. 2. The competent authority shall refuse the marketing authorisation if the labelling or the package leaflet do not comply with the provisions of this Title or if they are not in accordance with the particulars listed in the summary of product characteristics. 3. All proposed changes to an aspect of the labelling or the package leaflet covered by this Title and not connected with the summary of product characteristics shall be submitted to the authorities competent for authorising marketing. If the competent authorities have not opposed a proposed change within 90 days following the introduction of the request, the applicant may put the change into effect. …’ 7 Article 62 of Directive 2001/83 provides: ‘The outer packaging and the package leaflet may include symbols or pictograms designed to clarify certain information mentioned in Articles 54 and 59(1) and other information compatible with the summary of the product characteristics which is useful for the patient, to the exclusion of any element of a promotional nature.’ 8 According to Article 71(1) of that directive: ‘Medicinal products shall be subject to medical prescription where they: – are likely to present a danger either directly or indirectly, even when used correctly, if utilised without medical supervision, or – are frequently and to a very wide extent used incorrectly, and as a result are likely to present a direct or indirect danger to human health, or – contain substances or preparations thereof, the activity and/or adverse reactions of which require further investigation, …’ 9 Under Article 86 of Directive 2001/83, at the beginning of Title VIII thereof, entitled ‘Advertising’: ‘1. For the purposes of this Title, “advertising of medicinal products” shall include any form of door-to-door information, canvassing activity or inducement designed to promote the prescription, supply, sale or consumption of medicinal products; it shall include in particular: – the advertising of medicinal products to the general public, – … 2. The following are not covered by this Title: – the labelling and the accompanying package leaflets, which are subject to the provisions of Title V, – correspondence, possibly accompanied by material of a non-promotional nature, needed to answer a specific question about a particular medicinal product, – factual, informative announcements and reference material relating, for example, to pack changes, adverse-reaction warnings as part of general drug precautions, trade catalogues and price lists, provided they include no product claims, – information relating to human health or diseases, provided that there is no reference, even indirect, to medicinal products.’ 10 Article 87 of that directive states: ‘1. Member States shall prohibit any advertising of a medicinal product in respect of which a marketing authorisation has not been granted in accordance with Community law. 2. All parts of the advertising of a medicinal product must comply with the particulars listed in the summary of product characteristics. 3. The advertising of a medicinal product: – shall encourage the rational use of the medicinal product, by presenting it objectively and without exaggerating its properties, – shall not be misleading.’ 11 Article 88(1)(a) of Directive 2001/83 provides: ‘Member States shall prohibit the advertising to the general public of medicinal products which: (a) are available on medical prescription only, in accordance with Title VI’. National law 12 Paragraph 10 of the Law on the advertising of medicines (Heilmittelwerbegesetz), in the version published on 19 October 1994 (BGBl. 1994 I, p. 3068), as amended by the Law of 26 April 2006 (BGBl. 2006 I, p. 984), provides: ‘(1) As regards prescription-only medicines, advertising may be sent only to doctors, dentists, veterinarians, pharmacists or persons authorised to trade in medicinal products. (2) Medicinal products intended to treat, in humans, insomnia or psychological problems, or which are psychotropic, may not be advertised otherwise than in professional circles.’ The dispute in the main proceedings and the question referred for a preliminary ruling 13 The parties in the main proceedings are pharmaceutical companies and are in competition with each other. MSD presented its Vioxx, Fosamax and Singulair medicinal products which were available only on prescription on its website which was accessible by way of a link which was not password-protected, and was accordingly freely accessible, reproducing the packaging of the product, the therapeutic indication and the leaflet containing instructions for use of the product. 14 Merckle GmbH takes the view that such conduct constitutes an infringement of Paragraph 10(1) of the Law on the advertising of medicines, as amended, which prohibits advertising to the general public of medicinal products which are available only on prescription, as well as conduct contrary to the rules on competition. It sought an order from the Landgericht (Regional Court) requiring MSD, on penalty of certain fines, to desist from disseminating on the internet for commercial purposes promotional material on prescription-only medicinal products in such a way that that information is also freely available to those outside the medical professions. 15 The Landgericht upheld that application. The Oberlandesgericht (Higher Regional Court) dismissed MSD’s appeal against the Landgericht’s judgment, stating that the information published by MSD on its website, even if it is merely factual and is not typically commercial in nature, falls within the definition of advertising of medicinal products, which is to be interpreted broadly. 16 According to the referring court, the outcome in the appeal on a point of law (Revision) brought before it by MSD depends on whether Article 88(1)(a) of Directive 2001/83 also prohibits advertising to the general public of the type at issue in the present case, which contains only information communicated to the competent authority under the marketing authorisation procedure for the medicinal products concerned and which, in any event, is accessible to anyone who purchases them, where that information is not presented to the person concerned without his asking for it, but is accessible on the internet only by a person who takes steps to obtain it. 17 The referring court explains that the publications on the internet also fall within the scope of Title VIII of Directive 2001/83 when they are intended to promote sales and that it matters little whether they are presentations promoting the medicinal product concerned or other information relating to it. It observes that, in accordance with Article 86(2) of that directive, the provisions of Title VIII thereof do not concern the labelling and the package leaflet if the latter are used in their respective functions. According to its own case-law, information constitutes advertising if the mandatory information which must appear on the labelling and in the package leaflet cease to be in the distinctive form provided for by the legislation on pharmaceutical products and are used as an independent communication. 18 In that context, the Bundesgerichtshof (Federal Court of Justice) seeks to ascertain whether a teleological interpretation of the prohibition of advertising must lead to a restrictive interpretation of that prohibition laid down in Article 88(1)(a) of Directive 2001/83, so that that prohibition does not apply to the type of advertising to the general public which is the subject of the dispute in the main proceedings. In that connection, account must be taken, in particular, of the fact that the information is disseminated by the manufacturer, and that such information may make it possible to avoid or reduce the risk of uninformed self-medication. 19 In those circumstances, the Bundesgerichtshof decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling: ‘Does the scope of application of Article 88(1)(a) of Directive 2001/83 … extend to the advertising to the general public of medicinal products which are available only on prescription where that advertising contains only information which was placed before the authorising authority in the course of the marketing authorisation procedure and which is accessible in any event to every person acquiring the product, and where that information is not made available to an interested party on an unsolicited basis but can be accessed only through the internet when the party concerned takes steps to do so?’ Consideration of the question referred The subject of the reference for a preliminary ruling 20 MSD takes the view that the question referred for a preliminary ruling does not concern only the interpretation of Article 88(1)(a) of Directive 2001/83, but concerns above all the validity of that provision, in so far as a rule of law prohibiting the online publication of information on medicinal products, which has been checked by the competent authorities and which is useful to patients, cannot be compatible with the fundamental rights of the European Union, in particular the freedom of information, the right to decide freely how to care for one’s own health, freedom of expression and freedom of enterprise. Also arguing that the referring court expressly doubts the proportionality of that provision, MSD invites the Court to give a ruling on its validity. 21 According to the Court’s case-law, it is for the referring court alone to determine the subject-matter of the questions it intends to refer. It is solely for the national courts before which actions are brought, and which must bear the responsibility for the subsequent judicial decision, to determine in the light of the special features of each case both the need for a preliminary ruling in order to enable them to deliver judgment and the relevance of the questions which they submit to the Court (see Joined Cases C‑376/05 and C‑377/05 Brünsteiner and Autohaus Hilgert [2006] ECR I‑11383, paragraph 26). 22 It must be held in that connection that the question referred for a preliminary ruling clearly seeks the interpretation of Article 88(1)(a) of Directive 2001/83. It is apparent from the order for reference that the referring court asks essentially if the definition of advertising of medicinal products for the purposes of European Union law covers a specific situation, described in detail in that decision, in which the referring court envisages the possibility of a restrictive interpretation taking account of fundamental rights. However, that does not mean that the validity of the legislation of the European Union concerned is itself called into question. The referring court does not express doubts as to the validity of Article 88(1)(a) of that directive, or that such a question was raised in the main proceedings. 23 In accordance with settled case-law, Article 267 TFEU does not make available a means of redress to the parties to a case pending before a national court, so that the Court cannot be compelled to evaluate the validity of European Union law on the sole ground that that question has been put before it by one of the parties in its written observations (Brünsteiner and Autohaus Hilgert, paragraph 28 and the case-law cited). 24 It follows that there is no need to give a ruling on the validity of Article 88(1)(a) of Directive 2001/83. The interpretation of Article 88(1)(a) Directive 2001/83 25 Article 88(1)(a) of Directive 2001/83 prohibits without exception any advertising to the general public of medicinal products which are available only on medical prescription. Therefore, in order to answer the question from the referring court, it is necessary to examine whether the activity at issue in the main proceedings concerns medicinal products which are available only on medical prescription in accordance with Title VI of that directive, whether it constitutes advertising within the meaning of that provision and, finally, whether it is directed at the general public. 26 In that connection, it is common ground that the activity at issue in the main proceedings concerns medicinal products which are available only on medical prescription in accordance with Title VI of Directive 2001/83. 27 In order to interpret the concept of ‘advertising’ within the meaning of Article 88(1)(a) of Directive 2001/83 it is appropriate to examine the wording of the provision of that directive which defines it as well as the general scheme and purpose of the provision in the context of that directive. 28 As regards the concept of ‘advertising of medicinal products’, Article 86(1) of Directive 2001/83 defines that concept as ‘any form of door-to-door information, canvassing activity or inducement designed to promote the prescription, supply, sale or consumption of medicinal products’. 29 It is apparent from the outset from the wording of that provision, in particular from the expression ‘any form’, that the concept of advertising of medicinal products adopted by the European Union legislature is very broad. As is clear from recital 44 in the preamble to Directive 2001/83, that concept may include the dissemination on the internet of information relating to medicinal products (see, to that effect, Case C‑421/07 Damgaard [2009] ECR I‑2629, paragraph 28). 30 As regards, in particular, medicinal products which, like those at issue in the main proceedings, are available only on prescription, that broad conception of advertising is supported by the essential aim of Directive 2001/83, which is to safeguard public health (see Damgaard, paragraph 22) and which, in light of the serious consequences for health which may arise from improper use or overconsumption of such medicinal products, justifies a broad interpretation of the prohibition on advertising those products. 31 It is also clear from the wording of Article 86(1) of Directive 2001/83 that the purpose of the message constitutes the fundamental defining characteristic of advertising, and the decisive factor for distinguishing advertising from mere information. 32 Consequently, the definition in Article 86(1) of Directive 2001/83 does not, in principle, preclude publications or dissemination which include only objective information from being regarded as advertising. If the message is designed to promote the prescription, supply, sale or consumption of medicinal products, it is advertising for the purposes of that directive. However, material which is purely informative, without promotional intent, is not covered by the provisions of that directive relating to advertising of medicinal products. 33 The question whether a dissemination of information has a promotional objective must be determined by undertaking a detailed examination of all the relevant circumstances of the case, which is for the national court (see, to that effect, Damgaard, paragraph 23). 34 As regards the identity of the person disseminating information relating to a medicinal product, although it is undeniable that the manufacturer of that medicinal product has a financial interest in marketing its product, the fact that the manufacturer disseminates such information itself cannot, as such, lead to the conclusion that it has an advertising purpose. It is also necessary, for such a fact to be a conclusive factor in favour of the classification of that dissemination as advertising, that the conduct, action and approaches of the manufacturer disclose its intention to promote, via such dissemination, the prescription, supply, sale or consumption of that medicinal product (see, by analogy, Case C‑219/91 Ter Voort [1992] ECR I‑5485, paragraph 26). 35 However, it is conceivable that, in certain circumstances, the publication by a manufacturer of information relating to its medicinal products forms part of the general communication policy of the undertaking, in order to provide objectively accurate information to the patients concerned and to avoid as far as possible the risks to health from self-medication without consulting the package leaflet. Such may be the case of patients who have lost the package leaflet for the medicinal product used. Furthermore, the intention to take account of the public desire to be informed or to highlight the transparency of the undertaking might also lead a pharmaceutical undertaking to publish information about its medicinal products. 36 As regards the purpose of the communication, it must be observed that, as a general rule, the requirement for a medical prescription for medicinal products such as those at issue in the main proceedings is to ensure that any interest aroused by the objective information relating to the medicinal products mentioned on the manufacturer’s website cannot lead directly to a decision to purchase and that the final decision as to the medicinal product to be taken by the patient remains with his doctor. 37 It is admittedly possible that, because of a request by an informed patient, the doctor is led to prescribe a medicinal product other than that which he initially preferred and that, consequently, the factual information contributes, even marginally, to increasing sales. However, such a possibility is not sufficient to show promotional intent on the part of the manufacturer of the medicinal product. Furthermore, in principle it does not represent a specific danger to the health of the patient if the doctor takes the view that the prescription of one or other of the medicinal products may be envisaged and cannot compromise the objectivity with which, as noted in recital 50 in the preamble to Directive 2001/83, a doctor must act when issuing a prescription for a given patient. A prescribing doctor is required, from the point of view of professional conduct, not to prescribe a given medicinal product if it is not fitting for the therapeutic treatment of his patient (see, to that effect, Case C‑62/09 Association of the British Pharmaceutical Industry [2010] ECR I‑0000, paragraphs 39 and 40). 38 Furthermore, the possibility for the patient to access in advance, before a medical examination, objective information from reliable sources could, in some circumstances, contribute to the prescription of appropriate treatment, in so far as there may be a more fruitful dialogue between the doctor and the informed patient. 39 In the same way, the dissemination on the internet of the packaging and the package leaflet of the medicinal product could, in certain circumstances, avoid uninformed self-medication by a patient who has lost that leaflet. 40 As regards the contents of the communication, it is apparent from the order for reference that the presentation by MSD of its products on its website consists in reproducing the packaging of the medicinal products at issue and the therapeutic indications and the instructions in the package leaflet. 41 In that connection, it should be observed that Article 61 of Directive 2001/83 provides that all the information appearing on the packaging and the package leaflet of a medicinal product must have been submitted to the competent authorities when the marketing authorisation was requested and approved by them. Thus, this is information which is not only objective, and without any danger a priori to the consumer, but also approved, and the appearance of which on the packaging and the package leaflet is even obligatory in accordance with Articles 54 and 59 of that directive. 42 Furthermore, according to Article 62 of Directive 2001/83, the outer packaging and the package leaflet may not include any element of a promotional nature. 43 It follows that, if the dissemination of information relating to medicinal products, which are available only on medical prescription, on the manufacturer’s website consists solely in the faithful reproduction of the packaging of the medicinal product, in accordance with Article 62 of Directive 2001/83, and in a literal and complete reproduction of the package leaflet or the summary of the product’s characteristics approved by the authorities with competence in relation to medicinal products, and if it is not accompanied by any additional element which supports its classification as advertising, the objective of protecting health pursued by the prohibition on advertising of such medicinal products does not appear to lead to such a dissemination being classified as prohibited advertising for the purposes of Article 88(1)(a) of Directive 2001/83. 44 A different classification must, however, be adopted where the information relating to the medicinal product is selected or rewritten by the manufacturer, since such manipulation of information can be explained only by an advertising purpose. 45 Among the other relevant factors for determining whether the communication at issue in the main proceedings must be classified as advertising are, in the present case, the group of addressees and the technical characteristics of the media used in order to disseminate the information. 46 In that connection, it should be observed that, admittedly, according to the information provided by the order for reference, the information at issue in the main proceedings is accessible to everyone, since MSD did not decide to reserve access to it to certain groups of persons such as healthcare professionals 47 However, that information is simply available on the manufacturer’s website, according to the system of ‘pull’ services, so that consulting it requires active research steps by the internet user and a person who is not interested in the medicinal product concerned will not be unwillingly confronted with that information. That means of communicating information with the assistance of a passive presentation platform is not, in principle, intrusive and does not impose itself unexpectedly on the general public, such a situation thus distinguishing itself from that of ‘push’ services, in which an internet user is confronted, without searching for it, with that kind of content by means of intrusive windows called ‘pop-ups’, which appear spontaneously on the screen, from which situation a strong presumption of advertising must, by contrast, be inferred. 48 Having regard to all of the foregoing, the answer to the question referred is that Article 88(1)(a) of Directive 2001/83 must be interpreted as meaning that it does not prohibit the dissemination on a website, by a pharmaceutical undertaking, of information relating to medicinal products available only on medical prescription, where that information is accessible on the website only to someone who seeks to obtain it and that dissemination consists solely in the faithful reproduction of the packaging of the medicinal product, in accordance with Article 62 of that directive, and in the literal and complete reproduction of the package leaflet or the summary of the product’s characteristics, which have been approved by the authorities with competence in relation to medicinal products. On the other hand, the dissemination, on such a website, of information relating to a medicinal product which has been selected or rewritten by the manufacturer, which can be explained only by an advertising purpose, is prohibited. It is for the referring court to determine whether and to what extent the activities at issue in the main proceedings constitute advertising within the meaning of that directive. Costs 49 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Third Chamber) hereby rules: Article 88(1)(a) of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use, as amended by Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004, must be interpreted as meaning that it does not prohibit the dissemination on a website, by a pharmaceutical undertaking, of information relating to medicinal products available on medical prescription only, where that information is accessible on the website only to someone who seeks to obtain it and that dissemination consists solely in the faithful reproduction of the packaging of the medicinal product, in accordance with Article 62 of Directive 2001/83, as amended by Directive 2004/27, and in the literal and complete reproduction of the package leaflet or the summary of the product’s characteristics, which have been approved by the authorities with competence in relation to medicinal products. On the other hand, the dissemination, on such a website, of information relating to a medicinal product which has been selected or rewritten by the manufacturer, which can be explained only by an advertising purpose, is prohibited. It is for the referring court to determine whether and to what extent the activities at issue in the main proceedings constitute advertising within the meaning of Directive 2001/83, as amended by Directive 2004/27. [Signatures] * Language of the case: German.

GRAND CHAMBER CASE OF NAGMETOV v. RUSSIA (Application no. 35589/08) JUDGMENT STRASBOURG 30 March 2017 This judgment is final but it may be subject to editorial revision. In the case of Nagmetov v. Russia, The European Court of Human Rights, sitting as a Grand Chamber composed of: Guido Raimondi, President,Luis López Guerra,Angelika Nußberger,Ledi Bianku,Helen Keller,Paul Lemmens,Valeriu Griţco,Faris Vehabović,Ksenija Turković,Dmitry Dedov,Branko Lubarda,Yonko Grozev,Síofra O’Leary,Carlo Ranzoni,Armen Harutyunyan,Stéphanie Mourou-Vikström,Pauliine Koskelo, judges,and Françoise Elens-Passos, Deputy Registrar, Having deliberated in private on 1 September 2016 and 23 January 2017, Delivers the following judgment, which was adopted on the last‑mentioned date: PROCEDURE 1. The case originated in an application (no. 35589/08) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Yarmet Uzerovich Nagmetov (“the applicant”), on 11 July 2008. 2. The applicant was represented by Ms K. Moskalenko and Ms K. Kostromina, lawyers practising in Moscow and Strasbourg, assisted by Ms A. Maralyan. The Russian Government (“the Government”) were represented by Mr G. Matyushkin, Representative of the Russian Federation to the European Court of Human Rights. 3. The applicant alleged under Article 2 of the Convention that his son had died following the use of a lethal weapon against him, and that there had been no effective investigation in this respect. 4. The application was allocated to the First Section of the Court (Rule 52 § 1 of the Rules of Court). On 13 January 2012 the application was communicated to the Government. 5. On 5 November 2015 a Chamber of the First Section, composed of András Sajó, president, Mirjana Lazarova Trajkovska, Julia Laffranque, Paulo Pinto de Albuquerque, Linos-Alexandre Sicilianos, Erik Møse and Dmitry Dedov, judges, and André Wampach, Deputy Section Registrar, gave judgment. They unanimously declared admissible the applicant’s complaints under Article 2 of the Convention and held that there had been violations of this Article under its substantive and procedural limbs. While noting that no claim for just satisfaction had been made, the Chamber unanimously decided to make a just-satisfaction award in respect of the non‑pecuniary damage sustained by the applicant. The concurring opinion of Judge Sajó was annexed to the judgment. 6. On 4 February 2016 the Russian Government requested that the case be referred to the Grand Chamber in accordance with Article 43 of the Convention, with regard to the just-satisfaction award made in the Chamber judgment. The panel of the Grand Chamber granted the request on 14 March 2016. 7. The composition of the Grand Chamber was determined according to the provisions of Article 26 §§ 4 and 5 of the Convention and Rule 24 of the Rules of Court. Having consulted with the parties, the President of the Grand Chamber decided to dispense with a public hearing in the present case (Rule 59 § 3 and Rule 71 § 2). On 23 January 2017 Helen Keller, substitute judge, replaced judge Işıl Karakaş, who was prevented from sitting (Rule 24 § 3). 8. The applicant and the Government each filed written observations (Rule 59 § 1 and Rule 71 § 1). THE FACTS I. THE CIRCUMSTANCES OF THE CASE 9. The applicant was born in 1949 and lives in Makhachkala, Republic of Dagestan, Russia. 10. On 25 April 2006 the applicant’s son, Murad Nagmetov, participated in a public gathering in the village of Miskindzha, in the Dokuzparinskiy district of Dagestan. Several hundred people took part, alleging corruption by local public officials. At around 3 p.m. officers from the special mobile unit encircled the participants and fired several warning shots into the air. 11. Thereafter the gathering was dispersed by the authorities with the use of firearms (see also Primov and Others v. Russia, no. 17391/06, §§ 15‑18, 12 June 2014). Murad Nagmetov was wounded by a tear-gas grenade and died from his wounds. Five other people were seriously wounded; a large number of people sustained injuries and were arrested. 12. On the same day the prosecutor of the Republic of Dagestan initiated criminal proceedings on charges of murder and illegally handling firearms (Articles 105 and 222 of the Criminal Code) and assigned the case to an investigator. 13. A forensic expert examined the deceased’s body and extracted the objects that had killed him. 14. On the same day, the investigator commissioned a ballistics report from the Forensic Expert Centre of the Dagestan Ministry of the Interior to determine the type of the grenade, the type of rifle used to fire it and whether the grenade had striae that could be used to identify that rifle. 15. On 11 May 2006 the ballistics expert issued a report and concluded as follows: “1. The forensic expert was given the following two objects for examination: a grenade with a special charge; and an obturator with a special charge (a 23 mm cartridge used with a carbine type KS-23 (KS-23M)). It has not been possible to determine the exact make of the tear-gas grenade. 2. ... It would not be possible to use the obturator on the body of the grenade to identify the specific weapon used. It would however be possible to use the separate obturator to identify the weapon used, if the weapon were provided for examination.” 16. On 26 June 2006 the investigating authority commissioned another ballistics report to identify the rifle used to fire the grenade extracted from the body of the applicant’s son. On 6 July 2006 the Forensic Expert Centre of the Dagestan Ministry of the Interior declined to carry out an examination, referring to the absence of “facilities or equipment for test-shooting 23 mm canisters with special gases”. 17. On an unspecified date, a number of carbines used by officers of the special mobile unit on 25 April 2006 were seized. 18. In July and August 2006 the investigating authority commissioned ballistics reports from the Forensic Expert Centre of the Dagestan Ministry of the Interior and another local expert institution. However, the reports were not produced, apparently, on account of lack of sufficient technical facilities. 19. On 6 September 2006 the Federal Office of Forensic Examination of the Federal Ministry of Justice was asked to prepare a ballistics report in order to determine which rifle had been fired at the victim. The investigating authority submitted the objects extracted from the victim’s body, as well as thirteen carbines. 20. On 19 October 2006 the authorities took the decision to open another criminal case concerning the charge of abuse of power by a public official causing death (Article 286 of the Criminal Code). It appears from the decision that it concerned persons other than the applicant’s son. The decision read as follows: “It was established that police officers had had recourse to firearms ... Officers from the special mobile unit fired gunshots, using 23 mm cartridges, and teargas grenades, acting in violation of a directive dated 5 November 1996 and in excess of their powers... It is prohibited to fire these tear-gas canisters at a person. As a result, Mr N. and Mr A. sustained injuries.” 21. The above-mentioned cases were subsequently joined. 22. On 8 November 2006 the Federal Office of Forensic Examination issued a report, the relevant parts of which read: “ ... As the relevant 23 mm cartridges had not been submitted for test shots, a request for 23 mm Volna cartridges was made to the relevant department of the Ministry of the Interior of the Russian Federation ... [Footnote: Volna cartridges are used for training purposes relating to the use of KS-23 and KS-23M carbines. These cartridges are similar to those normally used with these carbines. The only difference is that they do not contain the irritating chemical substance.] ... The research part ... 2. ... I note that the tear-gas grenade has no striae left by the carbine used to fire it. This may be explained by the fact that the grenade could not have had contact with the interior of the carbine as it had been loaded into it with the aid of two obturators ... 5. Test shots have been carried out in respect of the KS-23 and KS23M carbines that were submitted for the examination. The purpose of the test shots was to observe the striae left on the obturators of the grenades fired from these carbines, and to compare the striae with the striae left on the obturator of the grenade used against the victim. I have used 23 mm Volna cartridges for the test shots. These cartridges are similar to those that were submitted for the examination ... 6. ... In view of the variance of the results of the test shots, it was impracticable to identify the relevant carbine on the basis of the striae left on the obturators ... in particular, on account of the elasticity and low thermo-resistance of the material used in the obturators ...” 23. On 15 November 2006 another ballistics report was requested from the Forensic Science Institute of the Federal Security Service (“the Institute”). The Institute was likewise provided with thirteen carbines and the objects extracted from the victim’s body. 24. On 26 February 2007 the expert from the Institute issued a report stating that it was not practicable to determine which of the examined carbines had been used to shoot the cartridge. The forensic expert explained that she had been provided with Volna cartridges for the purpose of her research and for test shots, whereas the elements extracted from the victim’s body were parts of a grenade. The forensic expert specified that Volna cartridges and tear-gas grenades had “different geometric parameters and are made of materials with different characteristics”. 25. On 26 February 2007 the investigating authority suspended the investigation. 26. On 30 August 2007 the applicant’s other son, Mr Rafik Nagmetov, brought court proceedings challenging the alleged inaction of the investigating authority. In a judgment of 8 October 2007 the Sovetskiy District Court of Makhachkala dismissed the complaint. The court held as follows: “Over seventy people were interviewed in the course of the investigation. The necessary (medical, ballistics, criminological) examinations were carried out ... All carbines which had been used by the officers were seized ... All relevant officers were identified ... The logbooks concerning distribution of weapons and ammunition were examined ... On three occasions three different expert institutions were asked to submit ballistics reports. The requests were not complied with on account of the absence of the necessary equipment ... Attempts were made to identify the relevant rifle in other expert institutions ... Those were not equipped for this kind of forensic examination ... In consequence, the Federal Office of Forensic Examination was not able to identify the weapon ... Another request is pending before the Forensic Science Institute of the Federal Security Service ... Thus, the investigating authority has carried out all the investigative measures that were possible in the absence of an identified suspect.” 27. On 14 January 2008 the Supreme Court of the Republic of Dagestan upheld the judgment. 28. The applicant’s son, Mr Rafik Nagmetov, also sought judicial review of the suspension decision of 26 February 2007. On 25 July 2008 the District Court held that the suspension of the investigation was justified. However, on 8 September 2008 the appeal court quashed the judgment and ordered a re-examination of the complaint. In a judgment of 6 October 2008 the District Court granted the complaint, considering that by failing to submit appropriate comparative material to the forensic expert, the investigating authority failed to take “exhaustive measures aimed at identifying the perpetrator”. 29. On an unspecified date, the applicant became aware that the evidence extracted from the body of his son had been lost. 30. In November 2009 the applicant requested that the authorities commission an additional ballistics report and complained about the loss of the evidence. 31. On 16 December 2009 the investigation was resumed. It appears that the investigating authority took some measures to clarify what had happened to the evidence. In particular, armourers from the special mobile unit were interviewed. The investigator also made an enquiry with the Institute referring to his difficulties in interpreting the report of 26 February 2007. It remains unclear what reply was received to this enquiry. 32. According to the Government, the enquiry about the loss of evidence yielded no specific results, in particular on account of the death of the investigator in the case and the redeployment of the investigation unit. 33. On 16 January 2010 the investigator again suspended the investigation. 34. On 21 February 2011 the acting prosecutor of the Republic of Dagestan determined that this decision was unlawful and ordered a resumption of the investigation. The decision reads as follows: “Having examined the file, I conclude that the investigation did not exhaust the measures aimed at establishing the circumstances of the crime, at collecting the evidence and identifying the rifle used to cause the victim’s death ... In particular, the request for a ballistics report to the Institute was submitted with Volna cartridges instead of the type of cartridges used for causing the victim’s death. The different geometric parameters of these cartridges prevented the experts from identifying the carbine used against the victim ... Following the resumption of the investigation in December 2009 the investigator merely made an enquiry instead of actually submitting grenades for comparative research ... It does not follow from the expert report of 26 February 2007 that it would have been impossible to identify the rifle, provided that cartridges of the relevant type were provided. The evidence extracted from the victim’s body was examined for the purposes of the above expert report. Thus, the current unavailability of this evidence is not an obstacle to seeking a new ballistics report from the same institution.” 35. Following the resumption of the investigation the investigator made enquiries with the Institute about the possibility of carrying out a ballistics examination in the absence of the evidence extracted from the victim’s body. While it remains unclear what reply was received from the Institute, it does not appear that any new ballistics examination was carried out. 36. On 17 April 2011 the investigating authority issued a decision suspending the investigation. This decision reads as follows: “It follows from the evidence in the case file that on 25 April 2006 inhabitants of nearby villages and other people blocked the road with stones and logs ... In reply to lawful orders from the police requiring them to disperse, unidentified people threw stones at the police, causing various physical injuries to eleven officers. The police officers used firearms to retaliate... Officers of the special mobile unit fired shots with their pump-action shotguns towards the crowd, using 23 mm cartridges, and a tear-gas grenade. In so doing they violated a directive dated 5 November 1996 ... and acted in excess of their powers. As a result, [the applicant’s son] and others sustained shotgun wounds ... causing [him] to die on the spot. ... It is impossible to commission another ballistics report in the absence of the cartridge. It has not been possible to identify the person who shot [the applicant’s son].” 37. The applicant did not challenge this decision. II. PROCEDURAL HISTORY OF THE CASE BEFORE THE COURT 38. On 11 July 2008 the applicant lodged an application before the Court. Relying on Article 2 of the Convention, the applicant argued that his son had died because of an unlawful and excessive use of lethal force. The investigations into his son’s death were ineffective. In his application form the applicant sought “compensation for the related violations of the Convention” albeit without specifying the type of damage and the amount. 39. Following communication of the case, on 24 May 2012 Ms K. Kostromina, the applicant’s representative, was invited to submit observations and claims for just satisfaction on behalf of the applicant. The relevant standard letter read as follows in this respect: “The President of the Section has instructed me to invite you to submit by 26 July 2012 ... any claims for just satisfaction. ... With regard to just satisfaction claims, I would draw your attention to Rule 60 and would remind you that failure to submit within the time allowed quantified claims, together with the required supporting documents, entails the consequence that the Chamber will either make no award of just satisfaction or else reject the claim in part. This applies even if the applicants have indicated their wishes concerning just satisfaction at an earlier stage of the proceedings. The criteria established by the Court’s case-law when it rules on the question of just satisfaction (Article 41 of the Convention) are: (1) pecuniary damage, that is to say losses actually sustained as a direct consequence of the alleged violation; (2) non‑pecuniary damage, meaning compensation for suffering and distress occasioned by the violation; and (3) the costs and expenses incurred in order to prevent or obtain redress for the alleged violation of the Convention, both within the domestic legal system and through the Strasbourg proceedings. These costs must be itemised, and it must be established that they are reasonable and have been actually and necessarily incurred. You must attach to your claims the necessary vouchers, such as bills of costs. The Government will then be invited to submit their comments on the matter. These time-limits will not normally be extended.” 40. No such observations or claims were submitted by 26 July 2012. In a subsequent letter Ms Kostromina explained that, despite an informal agreement between them, her former legal office had not forwarded the mail to her new address (of which the Court had not been informed). On 11 October 2012 the President of the Section, on an exceptional basis, granted the lawyer leave to submit observations and claims, despite the expiry of the time-limit on 26 July 2012. The new time-limit was 22 November 2012. However, none were submitted by that date. The Government was informed that while no observations had been submitted within the time-limit, it transpired that the applicant wished to maintain his application before the Court and that the Court would therefore examine the case on the basis of the file as it stood at the time. III. RULES OF COURT AND PRACTICE DIRECTION ON JUST SATISFACTION CLAIMS 41. The Rules of Court (adopted by the Plenary Court pursuant to Article 25 of the Convention) read in the relevant parts as follows at the relevant time: “Rule 36 – Representation of applicants ... 2. Following notification of the application to the respondent Contracting Party under Rule 54 § 2 (b), the applicant should be represented in accordance with paragraph 4 of this Rule, unless the President of the Chamber decides otherwise. ... 4. (a) The representative acting on behalf of the applicant pursuant to paragraphs 2 and 3 of this Rule shall be an advocate ..., or any other person approved by the President of the Chamber. (b) In exceptional circumstances and at any stage of the procedure, the President of the Chamber may, where he or she considers that the circumstances or the conduct of the advocate or other person appointed under the preceding sub-paragraph so warrant, direct that the latter may no longer represent or assist the applicant and that the applicant should seek alternative representation. ... Rule 60 – Claims for just satisfaction 1. An applicant who wishes to obtain an award of just satisfaction under Article 41 of the Convention in the event of the Court finding a violation of his or her Convention rights must make a specific claim to that effect. 2. The applicant must submit itemised particulars of all claims, together with any relevant supporting documents, within the time-limit fixed for the submission of the applicant’s observations on the merits unless the President of the Chamber directs otherwise. 3. If the applicant fails to comply with the requirements set out in the preceding paragraphs the Chamber may reject the claims in whole or in part. 4. The applicant’s claims shall be transmitted to the respondent Contracting Party for comment. ... Rule 75 – Ruling on just satisfaction 1. Where the Chamber or the Committee finds that there has been a violation of the Convention or the Protocols thereto, it shall give in the same judgment a ruling on the application of Article 41 of the Convention if a specific claim has been submitted in accordance with Rule 60 and the question is ready for decision; if the question is not ready for decision, the Chamber or the Committee shall reserve it in whole or in part and shall fix the further procedure ...” 42. The Practice Direction on Just Satisfaction Claims (issued by the President of the Court in accordance with Rule 32 of the Rules of Court on 28 March 2007) read in the relevant parts as follows at the relevant time: “4. Claimants are warned that compliance with the formal and substantive requirements deriving from the Convention and the Rules of Court is a condition for the award of just satisfaction. II. Submitting claims for just satisfaction: formal requirements 5. Time-limits and other formal requirements for submitting claims for just satisfaction are laid down in Rule 60 of the Rules of Court ... Thus, the Court requires specific claims supported by appropriate documentary evidence, failing which it may make no award. The Court will also reject claims set out on the application form but not resubmitted at the appropriate stage of the proceedings and claims lodged out of time. III. Submitting claims for just satisfaction: substantive requirements ... 13. The Court’s award in respect of non-pecuniary damage is intended to provide financial compensation for non-material harm, for example mental or physical suffering. 14. It is in the nature of non-pecuniary damage that it does not lend itself to precise calculation. If the existence of such damage is established, and if the Court considers that a monetary award is necessary, it will make an assessment on an equitable basis, having regard to the standards which emerge from its case-law. 15. Applicants who wish to be compensated for non-pecuniary damage are invited to specify a sum which in their view would be equitable. Applicants who consider themselves victims of more than one violation may claim either a single lump sum covering all alleged violations or a separate sum in respect of each alleged violation. ... 23. The Court’s awards, if any, will normally be in the form of a sum of money to be paid by the respondent Contracting Party to the victim or victims of the violations found. Only in extremely rare cases can the Court consider a consequential order aimed at putting an end or remedying the violation in question. The Court may, however, decide at its discretion to offer guidance for the execution of its judgment (Article 46 of the Convention).” THE LAW I. ALLEGED VIOLATION OF ARTICLE 2 OF THE CONVENTION 43. The applicant complained under Article 2 of the Convention that his son Murad had died in circumstances disclosing an unlawful and excessive use of lethal force. The applicant also contended that no effective investigation had been carried out. 44. Article 2 of the Convention reads as follows: “1. Everyone’s right to life shall be protected by law. No one shall be deprived of his life intentionally save in the execution of a sentence of a court following his conviction of a crime for which this penalty is provided by law. 2. Deprivation of life shall not be regarded as inflicted in contravention of this article when it results from the use of force which is no more than absolutely necessary: (a) in defence of any person from unlawful violence; (b) in order to effect a lawful arrest or to prevent the escape of a person lawfully detained; (c) in action lawfully taken for the purpose of quelling a riot or insurrection.” A. The Chamber’s judgment 45. In its judgment of 5 November 2015 the Chamber held that there had been violations of Article 2 of the Convention under its substantive and procedural aspects. The Chamber’s judgment contained the following findings in relation to the complaint under Article 2 of the Convention: “(a) Material aspect 40. The Court notes that the Government have acknowledged that Murad Nagmetov was deprived of his life, in contravention of the requirements of Article 2 of the Convention. In particular, the Government stated, together with the domestic authorities, that it was against Russian law to fire the tear-gas grenade in question directly at a person. 41. The Court finds no reasons to disagree with the above submission (see also Abdullah Yaşa and Others v. Turkey, no. 44827/08, § 48, 16 July 2013). Thus, there has been a violation of Article 2 of the Convention. (b) Procedural aspect ... 46. First of all, the Court notes that following the death of the applicant’s son a criminal investigation was opened, and it was done without delay (see, by contrast, Lyapin v. Russia, no. 46956/09, §§ 128-133, 24 July 2014). 47. Second, the Court considers that the applicant’s argument concerning, in substance, the alleged partiality of the investigating authority or the experts in the case is unspecific and unsubstantiated. In the present case, the Court has no reasons to conclude that there was any hierarchical or institutional connection between the persons responsible for and those carrying out the investigation and those implicated in the events (see, by way of comparison, A.A. v. Russia, no. 49097/08, § 94, 17 January 2012, and Davitidze v. Russia, no. 8810/05, § 107, 30 May 2013). 48. Third, as to the thoroughness of the authorities’ efforts to identify the person who caused the victim’s death, the Court reiterates that in investigations into killings crucial evidence is usually available to the investigating authorities at the beginning of the investigation. The body of the victim, the crime scene, eyewitness evidence and the material used in the commission of the offence, such as bullets and spent cartridges, are of benefit to investigators and provide them with pointers in the earliest stages of their enquiries (see Er and Others v. Turkey, no. 23016/04, § 54, 31 July 2012). The Court’s task in the present case is to determine, with due regard to the specific allegations and arguments from the parties, whether some deficiency in the investigation undermined its ability to identify the person responsible for the victim’s injuries and death. 49. It follows from the available material that over seventy people were interviewed in the course of the investigation; the relevant officers were identified; and the logbooks concerning distribution of weapons and ammunition were examined ... The applicant raised no arguments relating to these investigative measures. At the same time, the Court observes that in his application before it the applicant referred mostly to the allegedly unsatisfactory quality of the expert reports. 50. It appears from the available material that the domestic authorities proceeded on the assumption that the victim’s death resulted from the use of a weapon by an officer of the special mobile unit and that this use was in breach of the domestic regulations because it was not appropriate to fire a tear-gas grenade directly at a person. In the circumstances of the case, the authorities considered it pertinent to check for a possible match between the evidence extracted from the victim’s body and the carbines held by the officers during the public gathering on 25 April 2006. 51. As to the pace and thoroughness of the measures concerning this aspect of the investigation, it remains unclear when the relevant carbines were seized. At least, it is noted that the first ballistics expert stated in May 2006 that it would be possible to identify the specific weapon using a separate obturator, if such a weapon were provided for examination ... More than a month later, the investigating authority decided to commission another ballistics report from the same expert institution. However, at this point it could not be done because of the absence of “facilities or equipment for test-shooting 23 mm canisters with special gases” ... As a result, this test was only performed after August 2006 when the investigating authority provided the forensic experts with a number of carbines ... It is uncontested that these carbines were the ones that had been used by the officers of the special mobile unit on 25 April 2006. However, it is regrettable that it took nearly eight months to make proper arrangements for a comparative forensic examination in late 2006 and then three more months to receive a reply from the Forensic Science Institute of the Federal Security Service in February 2007 ... 52. The Court considers that, in addition to the above unjustified delays, the domestic authorities failed to take reasonable measures to preserve the key evidence in the case. The Court reiterates in this connection that to be effective an investigation should be “capable of leading to” the identification and punishment of those responsible. Otherwise, it would be possible in some cases for agents of the State to abuse the rights of those within their control with virtual impunity (see Labita v. Italy [GC], no. 26772/95, § 131, ECHR 2000‑IV). Therefore, the loss of the evidence extracted from the victim’s body ... required a prompt and thorough enquiry. In the circumstances relating to the use of weapons by an agent of the State it was important to confirm or dispel any doubts as to the absence of any bad faith in handling evidence on the part of any public officials. Nevertheless, the available decisions contain no presentation or assessment of any evidence as to the circumstances of the loss of the key piece of evidence ... The Court has not been provided with convincing evidence that the Russian authorities took sufficient steps to secure the evidence concerning the incident and to investigate the loss of the key piece of evidence. 53. The respondent Government has argued that the effectiveness of the domestic investigation was not undermined by the loss of the evidence because it happened after the investigators had already exhausted all reasonable measures, including the comparative forensic examination. The investigation could not be completed on account of the objective impossibility to identify the relevant rifle. 54. The Court agrees with the Government that the ballistics report of 8 November 2006 did contain an assessment of the relevant evidence, including that extracted from the victim’s body. The expert test shot the carbines and made an attempt to compare the results with the striae left on the evidence extracted from the victim’s body. This measure was intended to establish whether any of the carbines had been used to fatally wound the applicant’s son. The expert concluded that it was technically impossible to establish, to a reasonable degree of certainty, whether or not any of the tested carbines had been used to shoot the victim. 55. However, it appears that the investigating authority and the prosecutor’s office were not satisfied with the ballistics report of 8 November 2006 ..., and thus the Forensic Science Institute was asked to reassess the matter. It replied in February 2007 that it was not practicable to determine which of the carbines had been used to shoot the cartridge. It remains unclear why the new forensic expert was provided with Volna cartridges rather than the relevant type of grenades for comparative research and why those could not have been obtained by her proprio motu. The respondent Government have not substantiated their statement before the Court that the Institute had insufficient technical facilities to carry out a forensic examination. 56. For its part, the Court is not ready to rely on the report of 8 November 2006 as regards its conclusion of the impossibility of identifying the relevant carbine. It can be reasonably inferred from the expert’s explanation in February 2007 that Volna cartridges were not appropriate for comparative testing because they and the elements of the grenade, which had been extracted from the victim’s body, had different geometric parameters and were made of materials with different characteristics ... 57. The investigating authority failed to act on the information received from the Institute and suspended the investigation in February 2007, without any valid reason. While the domestic court eventually acknowledged in October 2008 that the investigating authority had wrongly suspended the investigation and had not taken “the exhaustive measures aimed at identifying the perpetrator” ..., it was only in December 2009 that the authorities resumed the investigation. 58. By that time, the key evidence had already been lost ... However, the prosecutors considered that a new forensic examination was still necessary and possible ... Despite the prosecutors’ orders, the investigating authority failed to submit the materials for a new forensic examination. Instead, they limited their work to making enquiries with the Institute which, apparently, yielded no replies ... 59. The Court has not been provided with any evidence which would refute the domestic authorities’ conclusion that the new comparative ballistics assessment remained necessary and possible, despite the loss of the evidence. The report of 26 February 2007 may be perceived as disclosing an important disagreement with the methodology of the report of 8 November 2006, that is, whether it was appropriate to use Volna cartridges for the comparative test-shooting, as it was done in the latter forensic examination. By implication, it could be argued that there remained a possibility that a proper comparative assessment might lead to the identification of the relevant rifle. 60. In addition, the Court cannot but note that the available official decisions, including the most recent one in 2011, concern the suspension of the investigation. They do not contain any presentation or analysis of the available evidence such as statements regarding the incident on 25 April 2006. Thus, the applicant has not been provided with any official conclusions relating to his son’s death. 61. Lastly, it does not transpire from the available material that there was any adequate disciplinary or criminal inquiry carried out in respect of the superior officers who had the task of training and supervising the officers who had been involved in the events on 25 April 2006. 62. Taken together, the foregoing considerations have led the Court to conclude that the authorities did not exhaust all reasonable and practicable measures, which would be capable of providing assistance in identifying the shooter and in establishing the other relevant circumstances of the case. 63. There has therefore been a violation of Article 2 of the Convention under its procedural limb.” B. The Court’s assessment 46. Before the Grand Chamber the applicant maintained his complaint under Article 2 of the Convention, and the Government made no submissions on it. 47. The Court endorses the Chamber’s findings and holds that there has been a violation of Article 2 of the Convention under its substantive and procedural limbs. II. APPLICATION OF ARTICLE 41 OF THE CONVENTION 48. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Non-pecuniary damage 1. The Chamber’s findings 49. In its judgment of 5 November 2015 the Chamber took note of the fact that the applicant had not submitted a claim for just satisfaction within the prescribed time-limit, and stated that no award would normally be made. However, referring to the powers conferred on it by Article 41 of the Convention and previous cases in which the Court had exceptionally found it equitable to award compensation in respect of non-pecuniary damage, even where no such claim had been made, the Chamber decided to make an award. In reaching this conclusion, the Chamber referred to the particular gravity of the violation of the Convention, the absence of any domestic compensation and the uncertain prospects of success in obtaining adequate compensation in a speedy manner after the Court’s judgment. Having regard to the above considerations, the Court found it appropriate and necessary in the particular circumstances of the case to award the applicant, on an equitable basis, a sum of 50,000 euros (EUR), in respect of non-pecuniary damage, plus any tax that might be chargeable to him. 2. The parties’ submissions before the Grand Chamber (a) The applicant 50. The applicant submitted that he had made a just satisfaction claim in the application form (see paragraph 38 above) and acknowledged that he had subsequently failed to comply with the formal requirements at the communication stage of the proceedings. The applicant argued, however, that nothing in the letter or spirit of the Convention or even the Rules of Court prevented the Court from making an award in the absence of a formal claim from an applicant. On the contrary, Article 41 of the Convention set out the basis for an award that the Court “shall” make “if necessary”. Rule 60 § 3 of the Rules of Court provided that the Court “may” dismiss the claim in whole or in part where an applicant had not properly complied with the procedural requirements. The above consideration meant that the Court was not prohibited from making an award where a requirement to submit a claim at the appropriate stage had not been complied with. Such a decision would not run counter to the principle of subsidiarity, since the decision remained within the Court’s purview. 51. As was clearly stated in the application form, the applicant’s application to the Court pursued the aim of obtaining a declaration of a violation of the Convention as well as the aim of obtaining compensation. Thus, it should be accepted that a claim had been made but was not quantified. 52. The applicant’s representatives invited the Grand Chamber to “affirm the judgment” made by the Chamber but submitted no further claim for just satisfaction either as regards costs and expenses incurred before it or with respect to pecuniary or non‑pecuniary damage. The applicant also made a written statement confirming his interest in pecuniary compensation for the violation of Article 2 of the Convention, in the following terms: “My representative has informed me that the Russian Government challenged the Court’s judgment awarding me compensation in relation to my son’s death ... In my application to the Court I asked for compensation. I did not specify the amount because I could not at the time and cannot now ‘put a price’ on my son’s life, since it is without price ... The Russian State did not investigate the murder of my son and now, moreover, it has refused to pay the money that the European Court considered to be just satisfaction ... I insist that the Court should confirm that the judgment [issued by the Chamber] is correct.” 53. Alternatively, the applicant invited the Court to make an exception in the present case while acknowledging the Court’s prevailing practice not to make an award in the absence of a formal claim. When making an award, the Chamber had correctly taken into consideration the absolute nature of the protected Convention right whose violation had given rise to the matter of just satisfaction. (b) The Government 54. The Government argued that the Chamber’s award ran counter to the principle of subsidiarity and the Court’s primary role of setting human‑rights standards across Europe rather than allocating monetary compensation. Article 46 of the Convention set out the basis for the Court to order individual measures such as an award of compensation for the damage and loss suffered by an applicant on account of a violation of the Convention. However, such compensation was not intended to punish the respondent State. Nor was it vindictive or exemplary in character, for the purpose of deterring any future blameworthy conduct. The compensation should not exceed the loss actually sustained by the injured party. The above consideration found its application in the ne ultra petitum rule established in Rule 60 of the Rules of Court and was thus binding on the Court. 55. Along with a finding of a violation of the State’s obligations under an international treaty, the claim for compensation (duly submitted and reasoned by the injured party) was a condition sine qua non for reaching a decision on the matter of compensation. An injured party could choose to resort to international justice for the sole purpose of obtaining a finding of a violation which, for that party, might constitute just satisfaction. In the absence of a clearly sought and formulated claim, an award would be arbitrary, since the adjudicating authority would not dispel doubts as to whether damage had actually been incurred. 3. The Court’s position 56. The Court will examine in turn whether there is a just satisfaction “claim” within the meaning of the Rules of Court in the present case, whether it has competence to make a just-satisfaction award and whether it is appropriate to make such an award in the circumstances of the present case. (a) Whether there is a just satisfaction “claim” (i) General principles and established practice 57. The Court reiterates that Article 41 of the Convention (cited above) empowers it to afford the injured party such satisfaction as appears to it to be appropriate (see Karácsony and Others v. Hungary [GC], no. 42461/13, § 179, ECHR 2016 (extracts)). 58. Article 41 does not impose on applicants or their representatives before the Court any procedural requirements (non-)compliance with which would, at the same time, circumscribe the Court’s decision on the matter of just satisfaction. However, certain requirements are contained in the Rules of Court and a Practice Direction (quoted in paragraphs 41 and 42 above), both of which are intended to establish a procedural framework for organising the Court’s activity and assisting it in the exercise of its judicial function. 59. On the basis of the above provisions, it is the Court’s prevailing practice that the applicants’ indications of wishes for reparation mentioned in the application form in respect of the alleged violations cannot palliate the ensuing failure to articulate a “claim” for just satisfaction during the communication stage of the proceedings. Thus, the Court normally refused to take such statements into account for the purpose of Article 41 of the Convention (see Mancini v. Italy, no. 44955/98, §§ 28-29, ECHR 2001‑IX; Fadıl Yılmaz v. Turkey, no. 28171/02, §§ 26-27, 21 July 2005; Miltayev and Meltayeva v. Russia, no. 8455/06, § 62, 15 January 2013; Anđelković v. Serbia, no. 1401/08, § 33, 9 April 2013; compare Burdov v. Russia, no. 59498/00, §§ 44-47, ECHR 2002‑III; Gorodnitchev v. Russia, no. 52058/99, §§ 142-43, 24 May 2007; Čalovskis v. Latvia, no. 22205/13, §§ 233-37, 24 July 2014; Neshkov and Others v. Bulgaria, nos. 36925/10, 21487/12, 72893/12, 73196/12, 77718/12 and 9717/13, §§ 302-03, 27 January 2015; and Blesa Rodríguez v. Spain, no. 61131/12, §§ 47-48, 1 December 2015). (ii) Application of the principles and established practice in the present case 60. As a starting point, the Court finds it appropriate to ascertain whether a “claim” for just satisfaction has ever been made before the Court in the present case and, if yes, whether this claim complied with the applicable formal/procedural requirements. 61. The Court notes that the applicant stated in the application form his wish to obtain monetary compensation (albeit without specifying the type of damage and the amount) in relation to the violations of the Convention, including its Article 2. It was clearly pointed out in the Court’s letter to the applicant’s representative during the communication stage of the proceedings (see paragraph 39 above) that an indication, at an earlier stage of proceedings, of the applicant’s wishes concerning just satisfaction did not redress the failure to articulate a “claim” for just satisfaction in the observations. In the light of the Court’s general principles and the established practice mentioned above, the applicant’s indication of a wish for eventual monetary compensation as expressed at the initial non‑contentious stage of the procedure before the Court, dating back to 2008, does not amount to a “claim” within the meaning of Rule 60 of the Rules of Court, read together with its Rule 71 § 1 in the context of the present case. 62. Furthermore, it is uncontested that no “claim” for just satisfaction was made during the communication procedure in the proceedings before the Chamber in 2012. 63. Lastly, the Court notes that, acting on behalf of the applicant, his representatives submitted a memorial before the Grand Chamber inviting it to “affirm the judgment” delivered by the Chamber (see paragraph 52 above). The Court does not need to determine whether these submissions should be interpreted as properly articulating a “claim” for just satisfaction on account of non‑pecuniary damage. Neither Article 41 of the Convention nor the Rules of Court specify whether it is permissible to make a just satisfaction claim in respect of non-pecuniary damage for the first time in the proceedings before the Grand Chamber. However, the practice in cases referred under Article 43 of the Convention has been generally that the just satisfaction claim remains the same as that originally submitted before the Chamber, an applicant only being allowed at this stage to submit claims for costs and expenses incurred in relation to the proceedings before the Grand Chamber (see, as recent authorities, Lupeni Greek Catholic Parish and Others v. Romania [GC], no. 76943/11, § 176, 29 November 2016, and Schatschaschwili v. Germany [GC], no. 9154/10, §§ 167-70, ECHR 2015; see also Khan v. Germany [GC], no. 38030/12, § 45, 21 September 2016). (b) Whether the Court has competence to make a just-satisfaction award in the absence of a properly made “claim” and whether it is appropriate to make such an award in the present case (i) Overview of the guiding principles, rules and approaches relating to just satisfaction 64. The Court reiterates at the outset that it has a double role in respect of applications lodged under Article 34 of the Convention: (i) to render justice in individual cases by way of recognising violations of an injured party’s rights and freedoms under the Convention and Protocols thereto and, if necessary, by way of affording just satisfaction and (ii) to elucidate, safeguard and develop the rules instituted in the Convention, thereby contributing in those ways to the observance by the States of the engagements undertaken by them as Contracting Parties (see, mutatis mutandis, Karner v. Austria, no. 40016/98, § 26, ECHR 2003‑IX, and Jeronovičs v. Latvia [GC], no. 44898/10, § 109, 5 July 2016). The awarding of sums of money to applicants by way of just satisfaction is not one of the Court’s main duties but is incidental to its task under Article 19 of the Convention of ensuring the observance by States of their obligations under the Convention (see Salah v. the Netherlands, no. 8196/02, § 70, ECHR 2006‑IX (extracts)). 65. The Court also reiterates that, in the context of the execution of judgments in accordance with Article 46 of the Convention, a judgment in which the Court finds a breach of the Convention imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach. The Contracting States that are parties to a case are in principle free to choose the means whereby they will comply with a judgment in which the Court has found a breach. This discretion as to the manner of execution of a judgment reflects the freedom of choice attaching to the primary obligation of the Contracting States under the Convention to secure the rights and freedoms guaranteed (Article 1). If the nature of the breach allows for restitutio in integrum, it is for the respondent State to effect it (see Brumărescu v. Romania (just satisfaction) [GC], no. 28342/95, § 20, ECHR 2001‑I, and Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, §§ 32-33, ECHR 2000‑XI; see also Papamichalopoulos and Others v. Greece (Article 50), 31 October 1995, § 34, Series A no. 330‑B, and Guiso-Gallisay v. Italy (just satisfaction) [GC], no. 58858/00, § 90, 22 December 2009). 66. The Court is empowered to afford the injured party such satisfaction as appears to it to be appropriate, as follows from Article 41 of the Convention, if national law does not allow – or allows only partial – reparation to be made. At the same time, the rule on exhaustion of domestic remedies under Article 35 § 1 of the Convention does not apply to just satisfaction claims submitted to the Court under Article 41 of the Convention (see Salah, cited above, § 67; see also Jalloh v. Germany [GC], no. 54810/00, § 129, ECHR 2006‑IX). 67. It is not specified in Article 41 of the Convention (and was not specified in the former Article 50 of the Convention) that the existence of a “claim” is/was a prerequisite for the Court to exercise its discretion. At the relevant period (that is, in 2012 in the present case) the Rules of Court contained requirements relating to just satisfaction, including the requirement to make a “claim” within the prescribed time period during the communication stage of the proceedings before the Chamber. These requirements are addressed to applicants and their representatives, who are required to file a “claim” for any such just satisfaction as they wish to obtain. It follows from Rule 60 § 3 that the Court “may” take an adverse decision where an applicant (or his or her representative) has not complied with the requirements. 68. It has been the Court’s prevailing practice that it normally looks only to the items actually claimed and will not of its own motion consider whether the applicant has been otherwise prejudiced (see The Sunday Times v. the United Kingdom (no. 1) (Article 50), 6 November 1980, § 14, Series A no. 38; see also, among many others, Kaya and Others v. Turkey, no. 4451/02, §§ 56-57, 24 October 2006; and Al-Dulimi and Montana Management Inc. v. Switzerland [GC], no. 5809/08, §§ 159-60, ECHR 2016). 69. The Court previously found it necessary, in rare cases, to make a monetary award in respect of non-pecuniary damage, even where no such claim had been made or where the claim was belated, taking into account the exceptional circumstances of the cases, for instance the absolute or fundamental character of the right or freedom violated (see, in relation to a violation of Article 2 of the Convention, Kats and Others v. Ukraine, no. 29971/04, § 149, 18 December 2008; in relation to a violation of Article 3 of the Convention on account of ill-treatment and lack of an effective investigation or appalling conditions of detention, Bursuc v. Romania, no. 42066/98, § 124, 12 October 2004; Mayzit v. Russia, no. 63378/00, § 88, 20 January 2005; Davtyan v. Georgia, no. 73241/01, § 71, 27 July 2006; Babushkin v. Russia, no. 67253/01, § 62, 18 October 2007; Igor Ivanov v. Russia, no. 34000/02, §§ 50-51, 7 June 2007; Nadrosov v. Russia, no. 9297/02, § 54, 31 July 2008; Chember v. Russia, no. 7188/03, § 77, ECHR 2008; Chudun v. Russia, no. 20641/04, § 129, 21 June 2011; and Borodin v. Russia, no. 41867/04, § 166, 6 November 2012; see also, in relation to a violation of Article 5 of the Convention, Rusu v. Austria, no. 34082/02, § 62, 2 October 2008, and Crabtree v. the Czech Republic, no. 41116/04, § 60, 25 February 2010). Furthermore, in a case concerning Article 8 of the Convention, the Court ordered under Rule 39 of the Rules of Court that the respondent State was to appoint a representative to the applicant, who was entirely divested of the capacity to act and was not capable under domestic law of choosing her own legal representative. When it later transpired that the representative so appointed had omitted to claim just satisfaction, the Court made a non-pecuniary award, having regard to the trauma, anxiety and feelings of injustice that the applicant must have experienced as a result of the procedure leading to the adoption of her daughter (see X v. Croatia, no. 11223/04, §§ 61-63, 17 July 2008). 70. By comparison, in some other cases the Court considered that a finding of a violation constituted sufficient just satisfaction and thus dismissed related claims (see, for instance in relation to violations of Articles 3, 5 or 6 of the Convention, Ibrahim and Others v. the United Kingdom [GC], nos. 50541/08, 50571/08, 50573/08 and 40351/09, § 315, 13 September 2016; Murray v. the Netherlands [GC], no. 10511/10, § 131, ECHR 2016; Vinter and Others v. the United Kingdom [GC], nos. 66069/09, 130/10 and 3896/10, § 136, ECHR 2013 (extracts); and Nikolova v. Bulgaria [GC], no. 31195/96, § 76, ECHR 1999‑II). 71. The principle of ne ultra petitum (“not beyond the request” or “not beyond the scope of the dispute”), referred to by the respondent Government, finds its primary application in the situation where a claim for just satisfaction is lower than the amount that would normally be awarded by the Court in comparable circumstances (see, for instance, Mateescu v. Romania, no. 1944/10, § 39, 14 January 2014; Rummi v. Estonia, no. 63362/09, § 139, 15 January 2015; Neshkov and Others, cited above, § 301; and Yevdokimov and Others v. Russia, nos. 27236/05 and 10 others, § 58, 16 February 2016). 72. On the other hand, neither the above principle nor Rules 60 and 75 have invariably prevented the Court from applying a degree of flexibility, essentially in respect of non-pecuniary damage, and, for instance, agreeing to examine claims for which applicants did not quantify the amount, “leaving it to the Court’s discretion” (see, among many other examples, Guzzardi v. Italy, 6 November 1980, §§ 112-14, Series A no. 39; Blesa Rodríguez, cited above, §§ 47-48; Frumkin v. Russia, no. 74568/12, §§ 180‑82, 5 January 2016; Svetlana Vasilyeva v. Russia, no. 10775/09, §§ 43-45, 5 April 2016; Sürer v. Turkey, no. 20184/06, §§ 49-51, 31 May 2016; compare Mihu v. Romania, no. 36903/13, §§ 82-84, 1 March 2016). As the Court has previously stated, it is in the nature of non-pecuniary damage that it does not lend itself to a process of calculation or precise quantification (see Varnava and Others v. Turkey [GC], nos. 16064/90, 16065/90, 16066/90, 16068/90, 16069/90, 16070/90, 16071/90, 16072/90 and 16073/90, § 224, ECHR 2009). 73. The Court emphasises in this connection that, in particular as regards just satisfaction on account of non-pecuniary damage, the Court’s guiding principle is equity, which involves flexibility and an objective consideration of what is just, fair and reasonable in all the circumstances of the case, including not only the position of the applicant but the overall context in which the breach occurred (see Varnava and Others, cited above, § 224; and Al-Jedda v. the United Kingdom [GC], no. 27021/08, § 114, ECHR 2011). The Court’s awards in respect of non-pecuniary damage serve to give recognition to the fact that non-material damage occurred as a result of a breach of a fundamental human right and reflect in the broadest of terms the severity of the damage (ibid.). (ii) The Court’s approach in the absence of a properly made “claim” 74. Article 41 of the Convention confers on the Court the competence to afford just satisfaction (“shall ... afford” in the English text; “accorde” in the French text) and allows the Court discretion in deciding on this matter (“if necessary” in the English text; “s’il y a lieu” in the French text) (see Guzzardi, cited above, § 114). The exercise of such discretion encompasses such decisions as to refuse monetary compensation or to reduce the amount that it awards. Naturally, it includes a decision to award compensation. 75. Making a global assessment of the principles and approaches summarised above, the Court reaffirms that an applicant and his or her representative designated under Rule 36 of the Rules of Court must observe formal and substantive requirements contained in these Rules on the matter of just satisfaction, at a risk of incurring adverse consequences for the applicant. A representative acts on behalf of the applicant who appointed him or her, which means, inter alia, that pursuant to Rule 37 communications or notifications addressed to that representative are deemed to have been addressed to the applicant. The representative is deemed to act in the applicant’s interest; the representative’s actions are normally deemed to be based on the applicant’s instructions and wishes, and require co-operation between them in the course of the proceedings before the Court (see, mutatis mutandis, V.M. and Others v. Belgium [GC], no. 60125/11, §§ 35 and 37, 17 November 2016), for instance, as regards the choice to seek just satisfaction before the Court for the alleged violation of the Convention. This usually entails, in particular, that an applicant has to bear the adverse consequences arising from his or her representative’s conduct of a case before the Court. Consequently, a representative’s failure to submit a “claim” for just satisfaction would, as a rule, entail that the Court would make no award. 76. At the same time, Article 41 of the Convention being the primary legal provision on just satisfaction, the norm of a higher hierarchical value (see, mutatis mutandis, Cyprus v. Turkey (just satisfaction) [GC], no. 25781/94, § 42, ECHR 2014) and the norm which is applicable in the context of the system for the protection of human rights agreed by the Contracting Parties, the Court holds that while it would normally not consider of its own motion the question of just satisfaction, neither the Convention nor the Protocols thereto preclude the Court from exercising its discretion under Article 41 of the Convention. The Court therefore remains empowered to afford, in a reasonable and restrained manner, just satisfaction on account of non-pecuniary damage arising in the exceptional circumstances of a given case, where a “claim” has not been properly made in compliance with the Rules of Court. 77. The exercise of such discretion should always take due account of the basic requirement of adversarial procedure. Where the Court might exceptionally envisage a possibility of a just-satisfaction award on account of non-pecuniary damage in the absence of a properly made “claim”, it should be appropriate to seek the parties’ submissions, for instance, by way of reserving the Article 41 matter under Rule 75 § 1 of the Rules of Court (see, mutatis mutandis, Cyprus v. Turkey (just satisfaction), cited above, § 4). 78. Bearing in mind the above considerations, the Court finds it appropriate to adopt the following approach to be applied in exceptional situations. It is first necessary to ascertain that a number of prerequisites have been met, before weighing the compelling considerations in favour of making an award, in the absence of a properly made “claim” for just satisfaction. (α) Prerequisites 79. The Court finds it conceivable that an applicant may choose to limit (ab initio or at a later stage) his or her application before the Court to a recognition that the rights under the Convention or the Protocols thereto were violated by the respondent State, while seeking no monetary reparation before the Court (see, for instance, Mihu, cited above, §§ 82-84) or preferring to subsequently seek it at domestic level, for instance where effective remedies become clearly available in view of the Court’s judgment. Therefore, the Court would attach particular importance to indications unequivocally showing that an applicant expressed a wish to obtain monetary compensation in addition to the recognition of the violation of the Convention, and that his or her interest in obtaining compensation is expressed in relation to the same facts as those that underlie the Court’s findings about a violation of the Convention in his or her case. It is further necessary to ascertain that there is a causal link between the violation and the non-material harm arising from the violation of the Convention. (β) Compelling considerations 80. On the basis of its conclusions concerning the prerequisites mentioned above, the Court would then examine whether there are compelling considerations in favour of making an award, despite the applicant’s non-compliance with the requirements arising under Rule 60 of the Rules of Court, namely that a claim for non-pecuniary damage must be made, and made in due time, during the contentious procedure. ‑ Particular gravity and impact of the violation, and overall context of the case 81. Where the Court envisages of its own motion a just-satisfaction award on account of non-pecuniary damage, it is appropriate to take into account the particular gravity and the particular impact of the violation of the Convention (for instance, on account of its nature or degree), which, for example, significantly harmed the moral well-being of the applicant, otherwise seriously affected his or her life or livelihood or caused another particularly significant disadvantage (see, mutatis mutandis, Varnava and Others, cited above, § 224), and, as it may be pertinent in the particular circumstances of a given case, the overall context in which the breach occurred. ‑ Unavailability or partial availability of adequate reparation at domestic level 82. As a further element to be taken into consideration for making a just-satisfaction award in the absence of a properly made “claim”, the Court needs to ascertain whether there are reasonable prospects of obtaining adequate “reparation”, in terms of Article 41 of the Convention, at the national level after the Court’s judgment. (iii) Application in the present case (α) Prerequisites 83. The Court considers, and it is also common ground between the parties, that the applicant sustained non-material harm arising from the violation of Article 2 of the Convention and that there is a causal link between the violation and the harm. The non-pecuniary damage existed in the present case on account of the moral suffering and distress sustained by the applicant due to the unlawful and unjustified lethal use of firearms against his son and the incomplete investigation into the matter. 84. The Court attaches importance to the unequivocal indication that the applicant wished and continues to wish to obtain monetary compensation in addition to the recognition of the violation of the Convention. His interest in obtaining compensation was expressed in relation to specific facts disclosing a violation under Article 2 of the Convention on account of the death of his son (see paragraphs 38 and 52 above). (β) Compelling considerations on the facts of the present case 85. The conduct of a case before the Court being essentially a matter between an applicant and his or her representative, the Court notes, however, that the applicant’s representative in the present case submitted no “claim” for just satisfaction in the procedure before the Chamber, despite, as it transpires from the documents in the file, the applicant’s explicit wish to obtain such just satisfaction. Thus, the Court is not inclined to conclude in the particular circumstances of the present case that the applicant should, ipso facto, bear the unfavourable consequence of such an omission, and will give weight to the considerations presented below. 86. With due regard to the considerations in paragraphs 75 and 76 above, the Court’s concern in the present case is whether any compelling considerations make it necessary (s’il y a lieu) to afford just satisfaction to the applicant. ‑ Particular gravity and impact of the violation, and overall context of the case 87. Endorsing the Chamber’s assessment, the Grand Chamber has concluded above that the present case disclosed particularly serious violations of the Convention; the findings relate both to the substantive and procedural limbs of Article 2 of the Convention. The respondent Government itself acknowledged before the Chamber a violation of the substantive limb and did not plead otherwise before the Grand Chamber. The Court considers that the finding of a violation of the Convention in the present case would not constitute in itself sufficient just satisfaction and that the particular gravity and impact of the violations and the overall context in which the breach occurred, in particular the lengthy and defective investigation of a death inflicted by an agent of the State, plead in favour of a just-satisfaction award (compare X v. Croatia, cited above, §§ 61-63). ‑ Unavailability or partial availability of adequate reparation at domestic level 88. The Court notes that there is no possibility of restitutio in integrum in the present case. Without prejudice to eventual general or individual measures that may be adopted in the domestic legal order in compliance with Article 46 of the Convention, the material before the Court leads it to conclude, within its assessment under Article 41 of the Convention, that no reasonable prospect of success has been shown for obtaining adequate “reparation” at domestic level, especially if such a request were to be made years after the violations of the Convention and the suspension of the domestic investigation in the present case. 89. In the context of the complaints under Articles 2 and 3 of the Convention, redress that is commensurate with the nature of the violation would normally require a proper investigation capable of leading to the punishment of those responsible and monetary compensation (see, essentially in the context of the Court’s assessment of a possible loss of victim status on account of favourable domestic measures following death or ill-treatment inflicted intentionally, Gäfgen v. Germany [GC], no. 22978/05, §§ 121-30, ECHR 2010; Mustafa Tunç and Fecire Tunç v. Turkey [GC], no. 24014/05, §§ 130-35, 14 April 2015; and Jeronovičs, cited above, §§ 103-08; see also Kopylov v. Russia, no. 3933/04, §§ 127‑31, 29 July 2010, and Razzakov v. Russia, no. 57519/09, § 50, 5 February 2015). It is noted that the applicant has not received any redress, such as a monetary compensation, in relation to the facts underlying the violations under Article 2 of the Convention (see, mutatis mutandis, Tomasi v. France, 27 August 1992, § 130, Series A no. 241‑A, and Trévalec v. Belgium (just satisfaction), no. 30812/07, §§ 26-27, 25 June 2013). 90. The Government have not suggested that the applicant has available to him domestic remedies that offer reasonable prospects of “reparation” in relation to the Convention violations (see, mutatis mutandis, Clooth v. Belgium, 12 December 1991, § 52, Series A no. 225, and Clooth v. Belgium (Article 50), 5 March 1998, §§ 14-16, Reports of Judgments and Decisions 1998‑I), in particular remedies that may be based on the Court’s judgment finding a violation of the Convention, for claiming monetary compensation. It follows from the available information that the criminal investigation has remained suspended since 2011, so that no definitive domestic decision has been taken as to the merits of the applicant’s criminal complaint and as regards the legality of the use of weapons in the present case. In any event, while it appears that, following the Court’s judgment, the application of the Code of Criminal Procedure might open a possibility of having the criminal investigation resumed, the Court notes that more than nine years have passed since the relevant events, which may adversely affect any eventual measure of “reparation”. 91. Against this background, and in so far as monetary compensation is relevant in the context of the present discussion on just satisfaction, the Court finds no indication, and the respondent Government have not argued otherwise, that the domestic law allows adequate “reparation” to be sought and obtained within a reasonable time in respect of the Court’s findings concerning the death inflicted on the applicant’s son and the defects in the investigation (see, mutatis mutandis, Tarariyeva v. Russia, no. 4353/03, §§ 96-101, ECHR 2006‑XV (extracts); Menesheva v. Russia, no. 59261/00, §§ 76-77, ECHR 2006‑III; Dedovskiy and Others v. Russia, no. 7178/03, §§ 98-102, ECHR 2008 (extracts); Denis Vasilyev v. Russia, no. 32704/04, § 136, 17 December 2009, and Islamova v. Russia, no. 5713/11, § 73, 30 April 2015, in the context of Article 13 of the Convention). (iv) Conclusion 92. Having examined the parties’ submissions, in view of the foregoing considerations taken as a whole, the Grand Chamber is satisfied that the present case discloses exceptional circumstances which call for a just- satisfaction award in respect of non-pecuniary damage, notwithstanding the absence of a properly made “claim” (see, by contrast, Schatschaschwili, cited above, §§ 167-70, in the context of Article 6 of the Convention). Making its assessment on an equitable basis, the Court accordingly awards the applicant 50,000 euros (EUR) in respect of non-pecuniary damage, plus any tax that may be chargeable. It considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. B. Other types of damage 93. The Court notes that no claim in respect of pecuniary damage or costs and expenses was made. Thus, it makes no award (see Tarakhel v. Switzerland [GC], no. 29217/12, § 134, ECHR 2014 (extracts), and Perdigão v. Portugal [GC], no. 24768/06, § 87, 16 November 2010). FOR THESE REASONS, THE COURT 1. Holds, unanimously, that there have been violations of Article 2 of the Convention under its substantive and procedural limbs; 2. Holds, by fourteen votes to three, (a) that the respondent State is to pay the applicant, within three months, the following amount, to be converted into the currency of the respondent State: EUR 50,000 (fifty thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points. Done in English and French, and notified in writing on 30 March 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Françoise Elens-PassosGuido RaimondiDeputy RegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment: (a) joint concurring opinion of Judges Nußberger and Lemmens; (b) joint dissenting opinion of Judges Raimondi, O’Leary and Ranzoni. G.R.F.E.P. JOINT CONCURRING OPINION OF JUDGES NUSSBERGER AND LEMMENS 1. We voted with the majority to award the applicant an amount of 50,000 euros in respect of non-pecuniary damage. 2. However, to our regret, we are unable to subscribe to the reasons contained in the judgment. In fact, we share to a very large extent the criticism made by Judges Raimondi, O’Leary and Ranzoni in their joint dissenting opinion. Nevertheless, we believe that a claim for just satisfaction for non-pecuniary damage has been validly made in the present case and that the Grand Chamber can naturally act upon it. The issue at stake: the consistent application of the Rules of Court 3. The Rules of Court are made to be observed. They are clear and have been applied over decades. Whoever seeks an award in respect of non‑pecuniary damage has to make a claim to that effect[1] so that the Government may comment on it and the Court can decide after having heard both parties. 4. It is true that the text of the Convention itself does not set out either the procedure for claiming just satisfaction or the specific prerequisites. Nevertheless, there is no contradiction between Article 41 of the Convention and the Rules of Court. It is one thing to regulate the formal requirements for exercising a certain competence, and another to grant discretion as to the substance of the decision to be taken. It follows from Article 41 of the Convention that the Court has a certain discretion to award or not to award compensation. But this discretion does not include the possibility of observing or not observing the procedural rules. Awarding just satisfaction for human-rights violations: an acceptable rather than a good solution 5. Before turning to the question of interpretation of the relevant rules, we would like to acknowledge that it may generally be questionable whether human-rights violations can be cured by money. The applicant rightly states that he would not be able to express in monetary terms the pain of having lost his son.[2] 6. Nevertheless, having no better option, the drafters of the Convention chose to provide for the option of awarding money as one of the means of bringing about justice, despite the danger of commercialising human rights. Discretion and equal treatment 7. While it is true that the Court has a discretion to award just satisfaction for non-pecuniary damage, there is still the question of equality requiring it to treat those in the same situation in the same way. In many cases the Court has not awarded just satisfaction because it has considered that the necessary claim had not been made in the correct way.[3] We share the dissenters’ view that the Court should follow its own rules and case-law and not “invent” exceptions to fit a given case. Formulation of the claim in the application form 8. While Article 41 of the Convention does not specify a requirement to make a claim for just satisfaction, the general principle of law ne ultra petitum prohibits a court from awarding more than what has been claimed.[4] This principle is confirmed in Rule 60 § 1 of the Rules of Court: “An applicant who wishes to obtain an award of just satisfaction under Article 41 of the Convention in the event of the Court finding a violation of his or her Convention rights must make a specific claim to that effect.”[5] We note that there is no indication in Rule 60 § 1 of when the claim should be made. 9. Rule 60 § 2 goes on to provide that “[t]he applicant must submit itemised particulars of all claims, together with any relevant supporting documents, within the time-limit fixed for the submission of the applicant’s observations on the merits unless the President of the Chamber directs otherwise”. We understand that this rule provides for the need to specify the claims already made in the application form (if this has indeed been done) and to produce relevant evidence of the damage incurred. It is interesting to note that Rule 60 § 2 does not provide that the claim as such can only be made during the communications stage, that is, within the time-limit fixed for the submission of the applicant’s observations. 10. Rule 60 § 3 further provides that “[i]f the applicant fails to comply with the requirements set out in the preceding paragraphs the Chamber may reject the claims in whole or in part”. Why “may”, and not “shall”?[6] In our opinion, this is so because there are cases where the Court can award just satisfaction without needing any particulars of claim or supporting documents. This is obviously, and in particular, the case with claims for just satisfaction for non-pecuniary damage. While it is clearly preferable to have an indication of what the applicant considers to be adequate, this cannot be seen as a condition sine qua non for awarding compensation. Rule 60 § 3 empowers the Court to reject a claim where, because of the absence of itemised particulars or supporting documents, it is not in a position to rule (easily) on the quantum of the damage.[7] We further note that, according to the very wording of Rule 60 § 3 itself, that provision is based on the assumption that a claim has been made[8]; if no claim at all has been made, the principle ne ultra petitum is a sufficient basis for the Court not to make an award[9], and there is no need to mention any other possible failure by the applicant. 11. As is noted in paragraph 38 of the judgment, in the present case the applicant sought compensation, in the application form, for violations of Article 2 of the Convention. Our understanding of Rule 60 is that this should be sufficient to satisfy the requirement that a “specific claim” must be made, at least as far as non-pecuniary damage is concerned. Moreover, we see no reason why the Court cannot, even without further particulars of claim, award just satisfaction for non-pecuniary damage on the basis of the claim thus made. 12. However, while such an interpretation of the Rules of the Court is in our view perfectly valid, we acknowledge that the Court’s practice has been different. This is clearly expressed in paragraph 5 of the Practice Direction on Just Satisfaction Claims where it is said that the Court “will also reject claims set out on the application form but not resubmitted at the appropriate stage of the proceedings ...” From the facts of the case it is evident that the applicant was informed about this practice (see paragraph 39 of the judgment). Formulation of the claim in the applicant’s memorial before the Grand Chamber 13. Even if Rule 60 should be read in the way that has been common practice for years and has been laid down in the Practice Direction, we still believe that there is a sufficient basis for enabling the Grand Chamber to make an award of just satisfaction. 14. Indeed we base our view, alternatively, on the specific powers which the Grand Chamber has when deciding cases referred to it at the request of one of the parties (Article 43 of the Convention). A case referred to the Grand Chamber necessarily embraces all aspects of the application previously examined by the Chamber in its judgment.[10] The judgment of the Chamber will be set aside in order to be replaced by the new judgment of the Grand Chamber.[11] A reconsideration of an award in respect of non‑pecuniary damage is neither explicitly nor implicitly excluded by the Convention or the Rules of Court; nor is there, as claimed by the majority, a practice that “the just satisfaction claim remains the same as that originally submitted before the Chamber” (see paragraph 63 of the judgment).[12] 15. According to Rule 71 § 1 of the Rules of Court, “[a]ny provisions governing proceedings before the Chambers shall apply, mutatis mutandis, to proceedings before the Grand Chamber”. This means that the parties may be invited to submit further evidence and written observations before the Grand Chamber (see Rule 59 § 1). In his or her observations an applicant can then raise the question of non-pecuniary damage anew. 16. In the present case we interpret the applicant’s invitation to the Court to “affirm the judgment” (see paragraph 52 of the judgment) as a new claim for non-pecuniary damage, this time specified in the amount of 50,000 euros. The Russian Government had ample opportunity to comment on this claim. 17. In our opinion, an award by the Grand Chamber of just satisfaction for non-pecuniary damage in these circumstances is therefore compatible with the Rules of Court. Judicial policy: the steps to be taken 18. The conclusion which we arrive at is a solution for the specific case before us. In future, if it is deemed necessary to provide for exceptions to the principle ne ultra petitum we think that the matter can best be regulated by amending Rule 60 of the Rules of Court. We agree with the view expressed in the joint dissenting opinion that the definition of exceptions to procedural rules is an important question which should be discussed and decided by the plenary Court on the basis of Article 25 (d) of the Convention and not by seventeen judges of the Grand Chamber.[13] 19. It will then be for the plenary to define the circumstances in which the Court can make an award of just satisfaction despite the applicant’s failure to make a valid claim. 20. We note that the majority’s reasoning is based on a set of “prerequisites” and “compelling considerations” which circumscribe the “exceptional situations” that allow for derogations from the principle ne ultra petitum (see paragraphs 78-82 of the judgment). With all due respect, we cannot consider these conditions to be workable. On this point, we fully agree with the views expressed in the joint dissenting opinion.[14] The conditions are vague and imprecise. Moreover, the “compelling considerations” coincide almost entirely with the general conditions for making an award in respect of non-pecuniary damage.[15] 21. In our opinion, any exceptions should be formulated as briefly and clearly as possible, so that they can easily be applied by the Court in each individual case. JOINT DISSENTING OPINION OF JUDGES RAIMONDI, O’LEARY AND RANZONI I - Introduction 1. In its judgment of 5 November 2015, the Chamber held unanimously that there had been a violation of Article 2 of the Convention under both its substantive and procedural limbs. These violations were the result of the unlawful killing of the applicant’s son by police during a demonstration about alleged corruption by public officials held in a town in Dagestan in 2006 and the ensuing ineffective investigation into his death. 2. It is important to stress at the outset that today’s Grand Chamber judgment confirms, unanimously, this finding of a double violation of Article 2 of the Convention.[16] 3. The referral of the case to the Grand Chamber at the request of the respondent State and in accordance with Article 43 of the Convention concerned exclusively the award of just satisfaction pursuant to Article 41 of the Convention. It is trite, but perhaps necessary, to recall that a referral request such as this is only accepted by the Grand Chamber Panel if the case raises a serious question affecting the interpretation or application of the Convention or its Protocols or a serious issue of general importance. The question raised by the instant case – which by its nature falls under both branches of Article 43 – was whether the Court can award just satisfaction and, in particular, non-pecuniary damages, in the absence of a claim for just satisfaction duly submitted in accordance with the Convention and the Rules of Court?[17] 4. In determining whether the Court is competent to make an award, we would argue that the circumstances of the instant case and, in particular, the events surrounding and following the tragic death of the applicant’s son, are relevant but not determinative. The Court’s task under Article 19 of the Convention is to ensure the observance by States of their obligations under the Convention. The finding of a double violation of Article 2 of the Convention in the instant case corresponds to its primary function. As the majority judgment recognises, the awarding of sums of money to applicants by way of just satisfaction is not one of the Court’s main duties but is incidental to its task of ensuring the observance by States of their obligations under the Convention.[18] 5. What the Grand Chamber was being asked to do in the context of this referral was to resolve legal uncertainty as a result of the development of diverging case-law on the just satisfaction question outlined above (whereby some chambers award just satisfaction against some States in the absence of a claim while others, in cases concerning other States, do not). As such, the Grand Chamber was also being asked to answer a question of considerable importance regarding the nature and value of the procedural rules which govern the Court and its procedures and by which applicants and respondent States are meant to abide. 6. We respectfully disagree with the majority that, in the absence of a claim for just satisfaction, the Court can and should award pecuniary and non-pecuniary damages as well as costs and expenses.[19] As we explain below, the legal framework on just satisfaction, established in Article 41 of the Convention and Rule 60 of the Rules of Court (and explained, furthermore, in the relevant Practice Direction), do not support the finding of the majority. The fact that the Court has, in a limited line of cases relating almost exclusively to certain respondent States, deviated from the rule clearly elucidated in its Rules of Court and enunciated in its case-law is not a sound basis for the validation of this divergent case-law by the Grand Chamber. While it is true that the terms of Article 41, the Rules of Court and the Court’s own case-law on just satisfaction provide for a certain degree of judicial discretion, we would argue that this discretion comes into play only when certain formal and substantive requirements are met, only when necessary and only when it is first established, at the outset, that the internal law of the respondent State allows only partial reparation to be made. 7. In holding as they do, the majority of the Grand Chamber risk driving a coach and four horses through the procedural rules governing just satisfaction and undermining, more generally, the Rules of Court, despite the importance and raison d’être of procedural rules. The Court itself, in its case-law on Article 6 of the Convention, has emphasized this. In order to determine when the newly confirmed exception will apply the majority judgment establishes certain criteria. However, the latter are both vague and porous and likely to give rise either to a considerable degree of legal uncertainty, or to differential treatment of different respondent States, or to both. 8. We would submit that an alternative was open to the Court if indeed a review of the relevant case-law by the Grand Chamber indicated that refusing an award of just satisfaction in the absence of a duly submitted claim was problematic when viewed from the perspective of the Convention system for the protection of fundamental rights.[20] II – Detailed examination of the legal framework governing just satisfaction claims 9. The relevant rules, in the Convention and the Rules of Court, on just satisfaction are outlined in the Grand Chamber judgment.[21] 10. Given that, we would argue, the majority are selective in their reliance on some rules to the pointed exclusion of others, it is necessary to analyse them in greater detail. Article 41 of the Convention 11. Article 41 must, as the majority insist, be our starting point. The Court “shall” afford just satisfaction to the injured party, but such an award presupposes: - the finding of a violation; - the finding that the internal law of the respondent State allows only partial reparation to be made; - the existence of an injured party (normally the “victim” of the violation), and - the necessity of an award to be made.[22] 12. Article 41 thus empowers the Court to make an award but it does not oblige it to do so.[23] 13. It is true, as the majority judgment indicates at § 67, that Article 41 does not specify that the existence of a claim, duly made, is a prerequisite for the Court to award just satisfaction. Nevertheless, is it not in the very nature of a document like the Convention – an international treaty signed in 1950 and subsequently ratified by 47 High Contracting Parties – that it is left to the Rules of Court to specify to which formal and substantive requirements an award by the Court of just satisfaction is subject?[24] Like all procedural rules governing the organisation, procedure and proceedings in a court of law, whether national or international, the Rules of Court contain the details that the relevant Convention article lacks. They put flesh on the bones of those Convention provisions which concern procedure and the organisation and functioning of the Court.[25] Neither, for example, does Article 41 specify that the satisfaction for which it provides covers pecuniary and non-pecuniary damages as well as costs and expenses. This only became clear over time, as the Court interpreted and applied first Article 50 and then Article 41 of the Convention, in conjunction with the relevant Rules of Court.[26] Nor is mention made in Article 41 of the need for the establishment of a causal link. Should this lead us to call into question the requirements established in this regard in the Rules of Court, the Practice Direction and the Court’s own case-law? Finally, the reasoning of the majority in § 67 of the Grand Chamber judgment can so easily be turned on its head. Had the drafters intended the Court to have the power to make an award of just satisfaction of its own motion, they would have provided for this explicitly. An explicit possibility to grant reparation proprio motu in exceptional cases is provided for the International Criminal Court; the only international court which, to our knowledge, has this express power.[27] 14. The majority are also right in recognising the hierarchical superiority of Article 41 over Rule 60.[28] Unfortunately, its reasoning sacrifices the nature, content and function of procedural rules on that normative altar. It also ignores the scope of the rule-making powers of the Court and its plenary, pursuant to Article 25(d) of the Convention.[29] Rule 60 and the Practice Direction on just satisfaction claims 15. Rule 60 itself merits closer attention. Pursuant to Rule 60(1), an applicant who wishes to obtain an award of just satisfaction under Article 41 of the Convention in the event of the Court finding a violation of his or her Convention rights must make a specific claim to that effect. The terms of this rule could not be clearer but in case they are not clear enough, point 4 of the Practice Direction indicates: “Claimants are warned that compliance with the formal and substantive requirements deriving from the Convention and the Rules of Court is a condition for the award of just satisfaction”. At point 5, it further states: “The Court will also reject claims set out on the application form but not resubmitted at the appropriate stage of the proceedings and claims lodged out of time”. These conditions are spelled out to applicants and their legal representatives in correspondence from the Registry. 16. The Court has, in the past, pointed to and relied on the clarity of these provisions. In Andrea Corsi v. Italy (Revision), following the Court’s refusal to grant just satisfaction in the absence of a claim, the applicant requested revision of the judgment because he was sure his representative had submitted such a claim, although he could not prove that this was the case. The Court held: “[I]t does not suffice to submit claims for just satisfaction; the Court must also receive them within the time-limits ... . The provisions of the Rules of Court are clear in this respect as they mention the “filing” of these documents at the Registry. Rule 38 § 2 [of the Rules of Court] specifies the means of verifying whether the parties have observed the time-limits”.[30] Should there be any doubt as to the prevailing line established in the case-law on Article 41, previously Article 50, it is also worth revisiting Sunday Times v. United Kingdom (Article 50), where it is clearly stated: “In the context of Article 50, the Court normally looks only to items actually claimed ... and, since no question of public policy is involved, will not of its own motion consider whether the applicant has been otherwise prejudiced”.[31] This is not simply a dusty, historical, jurisprudential precedent, albeit one reflecting clearly the principle of ne ultra petitum. It is a judgment which reflects a principle respected and applied by the Court over many years, not least by the Grand Chamber in a recent case where it refused to award any just satisfaction in the absence of a claim duly made by the applicant.[32] 17. The submission of a claim as a prerequisite for an award is further emphasised, firstly, by Rule 60(2), which provides that applicants must submit itemised particulars of all claims, together with any relevant supporting documents, within the time-limit fixed for the submission of the applicant’s observations on the merits unless the President of the Chamber directs otherwise. 18. It also follows, secondly, from Rule 60(4), which provides that the applicant’s claims shall be transmitted to the respondent Contracting Party for comment. The latter rule is essential to and characterises the adversarial nature of the proceedings before the Court. Under Rule 60(4), the respondent State is always offered an opportunity to comment on the applicant’s claim within a specified time-limit. The Registrar informs the parties as appropriate by letter. The President of the Section may agree to extend the time-limit if good reason is shown and if such an extension has been requested before the expiry of the established time-limit. If the response is submitted by a respondent State out of time it is not admitted to the file, unless the Court has exercised its discretion and extended the deadline. If it is duly submitted, it is transmitted to the applicant for information. The importance, for the parties, for the Court’s proceedings to be properly adversarial is plain to see. Any other organisation of procedure would undoubtedly fall foul of the Court’s own case-law under Article 6 of the Convention.[33] 19. As regards the submission of a claim, when and in what form, the applicant in the instant case had indicated a wish for compensation in his application form. His representative was invited, by letter of 24th May 2012, following communication of the case, to submit observations and claims for just satisfaction within a time-limit. With regard to the latter, the representative’s attention was drawn, in unequivocal terms, to the fact that failure to submit (quantified) claims within the time-limit together with the required supporting documents would mean the Chamber would make no award or reject the claims in part and this despite the fact that the applicant may have indicated a wish for compensation at an earlier stage in the proceedings.[34] No observations or claims were submitted by the deadline of 26 July 2012. The applicant’s representative subsequently explained the lack of submissions as resulting from the failure of her former law firm to forward her correspondence. In the circumstances and, on an exceptional basis, by letter of 11th October 2012, the President of Section I granted her leave to submit observations and claims, extending the deadline to 22 November 2012 in the exercise of the discretion conferred by Rule 60(2). Nothing was submitted to the Court by the applicant or his representative by that date. The facts of the present case indicate that a clear procedural rule was applied with the requisite degree of flexibility, in accordance with the Rules of Court, with a view to protecting the applicant’s interests. 20. Our examination of Rule 60 brings us to its third paragraph; the only potentially problematic one in terms of clarity and the one on which the majority prefer to dwell to the exclusion of the other three paragraphs outlined above. Rule 60(3) provides that “If the applicant fails to comply with the requirements set out in the preceding paragraphs the Chamber may reject the claims in whole or in part”. The reference to the preceding paragraphs (plural) and the use of “may” (facultative) are where potential problems lie.[35] This rule could be read, in conjunction with the use of “shall” in Article 41, as proof of the Court’s (absolute) discretion when awarding just satisfaction. This is the preferred route of the majority.[36] However, their choice is not borne out by the terms of Article 41, which contain conditions as explained above, by the clear terms of the remainder of Rule 60, by the terms of the Practice Direction or by the prevailing position of the Court in its case-law.[37] All point to the fact that the Court will award just satisfaction but only in certain circumstances and where certain conditions, formal and substantive, are fulfilled. It would be strange for Rule 60 to establish the conditions for the processing and grant of an award only to nullify those conditions immediately thereafter. Furthermore, whatever one is to deduce from the reference to paragraphs and may in Rule 60(3), even that Rule, given its reference to “the claims”, presupposes that such claims have been made. That Article 41 requires the submission of a claim is also borne out by other Rules of Court. Rule 75(1), for example, provides that: “Where the Chamber or the Committee finds that there has been a violation of the Convention or the Protocols thereto, it shall give in the same judgment a ruling on the application of Article 41 of the Convention if a specific claim has been submitted in accordance with Rule 60 and the question is ready for decision”. Substantive requirements and the different heads of just satisfaction 21. The Practice Direction provides details regarding what falls under each head of just satisfaction and further explains the formal and substantive conditions to be met in relation to each one.[38] 22. As regards pecuniary damage and costs and expenses, the applicant has to show that pecuniary damage has resulted from the violation[39] and that costs and expenses were actually and necessarily incurred and reasonable as to quantum.[40] 23. Needless to say, fulfilling these substantive requirements is a condition for the award of just satisfaction under these heads. However, the very nature of what has to be proved, as demonstrated by the details in the Practice Direction and Rule 60, further underlines why the submission of actual claims is essential. 24. As regards non-pecuniary damage, the head under which the majority of the Grand Chamber decided to exceptionally grant just satisfaction in the circumstances of the present case, the Practice Direction makes clear that the Court’s award is intended to provide financial compensation for non-material harm, for example mental or physical suffering. In addition, it indicates that, it is in the nature of non-pecuniary damage that it does not lend itself to precise calculation. This difficulty explains, in our view, the wording of Rule 60(3) discussed above, namely the fact that the Court may reject the claims in whole or in part if the requirements in paragraphs 1 and 2 of Rule 60 are not complied with. The “may” reject the claims refers specifically to the preceding Rule 60(2) and, in particular, to situations where the applicant has not or cannot submit itemised particulars. As the applicant in the instant case rightly points out, and the Court has accepted in other circumstances, it is impossible to put a price on the life of a child or to quantify the moral damage caused by other violations.[41] 25. On the other hand, point 14 of the Practice Direction confirms the substantive requirement which must be fulfilled if non-pecuniary damages are to be awarded: “If the existence of such damage is established, and if the Court considers that a monetary award is necessary, it will make an assessment on an equitable basis, having regard to the standards which emerge from its case-law”. How, one must ask, is this substantive requirement to be fulfilled, in the context of proceedings which must be adversarial, if no claims for just satisfaction are submitted? III – Competence of the Court in the absence of a just satisfaction claim 26. If Article 41, the Rules of Court, the Practice Direction and the vast majority of the Court’s decisions on just satisfaction all clearly point to the absence of such an award by the Court in the absence of a claim submitted in accordance with the prescribed formal and substantive requirements, on what basis do the majority of the Grand Chamber decide to both confirm this mandatory procedural rule[42] and deviate from that rule in exceptional cases? 27. The deviation is justified variously by the Court’s role under Article 34 of the Convention to render justice in individual cases,[43] the legal obligation of States under Article 46 of the Convention to put an end to the breach and make reparation for its consequences,[44] the Court’s power under Article 41 of the Convention to award such satisfaction as appears to it to be appropriate,[45] the absence in that same provision of an indication as to formal conditions limiting the exercise of that discretion as well as the use of “may” in Rule 60(3) and “shall” in Article 41 itself,[46] the fact that, in several cases, the Court has awarded just satisfaction of its own motion,[47] the fact that, in some cases, it finds it appropriate to award no just satisfaction or to award it even if the applicant has not quantified the claim,[48] the fact that the guiding principle when awarding non-pecuniary damages is the principle of equity[49] and, finally, the fact that the primary application of the principle of ne ultra petitum in this field is to ensure that the Court itself does not raise the amount claimed by the applicant even if, in similar cases, it would normally award a higher amount.[50] 28. While we entirely agree with the majority that both equity and flexibility have guided the Court in determining, in accordance with Article 41, the appropriate award to be made in the circumstances of a particular case, we would respectfully disagree with the majority as to when and how the Court’s discretion in this regard kicks in and subject to what it must be exercised. As indicated in paragraph 12 above, there is no doubt that Article 41 empowers the Court to make awards of just satisfaction. However, its power to do so is dependent on the factors listed in paragraph 11 and further conditioned by the Rules of Court outlined above.[51] 29. In addition, it is important to examine more closely the authorities on which the majority rely in §§ 70 to 72. When the Court considered, in the cases cited in § 70, that the finding of a violation constituted sufficient just satisfaction, it was clearly exercising its discretion as per the terms “just” and “if necessary” in Article 41 of the Convention. Perhaps even more importantly, in all the cases listed in § 70, a claim for just satisfaction had been duly made such that Article 41 was engaged. When applying the principle of ne ultra petitum to limit the amount of the awards in the cases referred to in § 71 of the judgment, the Court was again examining just satisfaction claims which had been duly submitted. Similarly, as regards the cases cited in § 72, in all of them except one, Blesa Rodríguez, where the applicant had merely indicated his wish for compensation in the application form, the applicants in question had made duly submitted claims but had expressly left the amount to the discretion of the Court. 30. As regards Article 41 of the Convention, first and foremost it must be established that the internal law of the respondent State only provides for partial reparation.[52] It is striking that this threshold condition is examined at the end rather than at the beginning of the majority judgment.[53] It features, in fact, as one of the two compelling considerations to determine whether the Court should make an award of just satisfaction in the absence of a duly made claim.[54] This sequence is questionable for this issue is, according to the terms of Article 41, the first which should be tackled before the Court exercises whatever power Article 41 confers on it. It is not an issue which falls to be determined when the Court is considering, in exceptional cases, whether to grant an award in the absence of a claim; it is a question the answer to which triggers the Court’s engagement with Article 41 in the first place. 31. This leads us to one of the main points of disagreement we have with the majority. In essence, the latter consider that Article 41 of the Convention confers on the Court a power which, in certain exceptional cases, the Court can and should exercise regardless of express provisions conditioning the exercise of that power and its discretion in the Rules of Court.[55] While we entirely agree with the need for the Court to act flexibly and in accordance with the principle of equity, procedural rules are there to ensure that it will do so only where a claim for just satisfaction is duly made and subject to certain conditions. In other words, we agree with the existence of a discretion in the hands of the Court, we disagree regarding the moment when this discretion can be exercised and insist that it is circumscribed – as all discretions should be – by clear, coherent and accessible procedural (and substantive) rules.[56] The clarity of the Rules of Court – with which applicants need no longer comply in exceptional circumstances – and the clarity of the Court’s own case-law are both sacrificed. Indeed, jurisprudence interpreting and applying the Rules of Court is reduced to mere judicial practice; to be deviated from or overthrown as an individual case requires. 32. The specific nature of Article 41 as lex specialis in relation to the general rules and principles of international law[57] does not mean that the European Court of Human Rights is absolved, qua human rights court, from observing the principle of ne ultra petitum. That would be an extraordinary proposition but it is one which, implicitly, underpins the majority judgment. IV – Examination of the exceptional circumstances in which an award can be made in the absence of a claim 33. Having decided to deviate from the prevailing case-law and the Rules of Court, the majority judgment then seeks to ensure that the Court “remains empowered to afford, in a reasonable and restrained manner, just satisfaction on account of non-pecuniary damage arising in the exceptional circumstances of a given case, where a ‘claim’ has not been properly made in compliance with the Rules of Court”.[58] It does so by trying to set out, on the one hand, the prerequisites for the exercise of this power and, on the other, the compelling considerations which must determine whether the Court actually makes an award in the absence of a duly made claim. Prerequisites for applying the exception (i) Need for an express wish to receive compensation 34. The first prerequisite relates to the fact that “the Court would attach particular importance to indications unequivocally showing that an applicant expressed a wish to obtain monetary compensation in addition to recognition of the violation of the Convention”.[59] In other words, it is preferable that the applicant indicate, presumably in his application, like the applicant in the instant case, that they wish to receive monetary compensation. However, as phrased, § 79 does not indicate either where this wish should be expressed, at what stage in the procedure and, if such a wish is not expressed, whether this will preclude or dissuade the Court from awarding compensation. It may do so but, the nature and scope of the discretion that the majority confer on the Court in the field of just satisfaction mean that it may not. (ii) Need for the establishment of a causal link 35. The next prerequisite is that it will be necessary in any event to establish a causal link between the violation and the non-material harm arising from the violation of the Convention.[60] This not only makes sense; it also reflects the Rules and established case-law.[61] However, as pointed out above, it is difficult to envisage, given circumvention of the procedural rules which seek to provide precisely for the establishment and verification of this crucial causal link, how this will be done.[62] (iii) Need for an adversarial procedure 36. This brings us to the next point, which is neither a prerequisite nor a compelling consideration – the need for an adversarial procedure and the difficulties which arise in this regard as a result of the absence of a duly made claim.[63] 37. In § 77 of the Grand Chamber judgment, the majority stipulate that the exercise of the Court’s discretion under Article 41 should always take due account of the basic requirement of adversarial procedure. Again, this is entirely correct; but again, respect for the requirements of an adversarial procedure is precisely what the provisions of Rule 60 seek to ensure – an express, itemised, claim, duly made by the applicant in accordance with the relevant procedural rules and within a fixed time-limit (albeit extendable), with the possibility for the respondent State to comment on the claims and the receipt by the applicant of those comments.[64] 38. By creating an exception to Rule 60 in exceptional cases, the Grand Chamber risks doing two things. On the one hand, the length of proceedings before the Court will grow ever longer, as will its workload. A judgment on the merits will have to be followed by a separate judgment addressing just satisfaction because the latter question will not, to use the terms of Rule 75(1), be ready for decision. An exchange of observations will have to take place to ensure that the procedure is adversarial and to avoid the non‑pecuniary award being, in the words of the respondent State in the instant case, arbitrary.[65] On average, it takes an additional 12 to 18 months for a separate Article 41 judgment to be handed down. Given the Court’s docket and its limited budget, this will involve time and resources that it cannot afford. In the instant case, in the absence of a claim at Chamber and Grand Chamber level,[66] it is difficult to contend that the procedure has been truly adversarial. 39. On the other hand, the “divergent” strand of cases on which the Chamber and Grand Chamber rely to justify an award in exceptional circumstances concern certain States only. Will this differentiated approach to exceptional awards continue after the Grand Chamber judgment in the instant case? If the Nagmetov precedent means what was divergent merely becomes exceptional but can be applied across the board, will it be applied consistently or will the undefined principles of equity, flexibility and necessity on which the Court’s discretion relies lead to differences in the quantum of the award depending on the respondent State? Compelling considerations which govern the exception (i) Particular gravity and impact of the violation and overall context of the case 40. The first compelling consideration which will determine if the Court makes an award in the absence of a duly made claim relates to the particular gravity and impact of the violation of the Convention and the overall context of the case. Did the violation, for example, significantly harm the moral well-being of the applicant, otherwise seriously affect his or her life or livelihood or cause another particularly significant disadvantage.[67] 41. This compelling consideration is interesting for a number of reasons. Firstly, the Grand Chamber provides for three cumulative conditions but attaches to these conditions not one, but two, illustrative lists of examples. The cumulative nature of the conditions is no doubt intended to restrict the circumstances in which the judicially-created exception applies. The use of “for example” and “for instance” is likely to have the opposite effect. Secondly, the terms of this compelling condition are quite loose and open-ended – violations of many different Convention articles in many different circumstances could come within these terms. Thirdly, it is noteworthy that the Grand Chamber did not accept the applicant’s invitation to pin the exception to the absolute nature of the right violated. This is both wise and worrying. It is wise because, as the majority themselves indicate, citing the violation of Article 8 of the Convention as a result of the proceedings leading to the adoption of the applicant’s daughter in X. v. Croatia,[68] the violation of qualified rights may also have an enormous and tragic impact – such as the loss of one’s own child in adoption or child custody cases (a form of living death for some parents). In the small number of cases where the Court has granted an award in the absence of a duly made claim, it has, more often than not, justified its departure from the Rules of Court with reference to the absolute character of the article of the Convention violated[69] or to the fundamental importance of the right at stake.[70] However, in some other cases, no such justification for the award is provided, the latter being simply tied to the particular circumstances of the case.[71] The breadth of the Grand Chamber’s language reveals the worrying aspect – namely, how difficult it will be for the Court to limit the parameters of its own judicially‑created exception. What will it do, for example, when faced with an Article 6 case resulting from child custody proceedings where what is at issue are due process rights with, however, in the background, the very real and tragic loss of access to children in a transnational custody dispute?[72] It is not difficult to envisage the exception becoming so broad that it will further consume the rule from which it was intended to only exceptionally deviate. 42. The majority judgment seeks, in §§ 79 to 82, to circumscribe the judicial exception created and it is to be applauded in this respect. Unfortunately, although it tries to do so by extracting a pattern from the divergent case-law, we would respectfully argue that it will be difficult to ensure clarity, transparency and coherence in the case-law when the exception is subsequently applied. Furthermore, some possible grounds for delimiting the scope of the exception are notable by their absence. Of relevance could be the fact that an applicant was not legally represented,[73] was considered particularly vulnerable[74] or was the victim of a double violation of an article having an absolute or fundamental character.[75] While the vulnerability criterion might be an excessively fluid and subjective one, the other two are objective and easily verifiable. (ii) Provision of reparation under domestic law 43. This compelling consideration was examined previously (see paragraph 30 above), where we questioned whether a consideration which determines whether Article 41 is triggered in the first place can also serve as a consideration delimiting when the judicially-created exception to the just satisfaction rule applies. V – Consequences of and alternatives to the Grand Chamber’s decision 44. The first consequence of the Grand Chamber’s judgment is likely to be, as indicated above, an increase in legal uncertainty. Even though the Court now confirms the divergent case-law which has allowed for the award of just satisfaction in exceptional cases in the absence of a specific claim, the terms delimiting the scope and application of this judicially-created exception may not be sufficiently clear and foreseeable for the reasons explained above. One might expect divergence as regards reliance on the exception, divergence as regards the quantum of damages which result from its application and even divergence as regards the respondent States with reference to which it is said to apply in the circumstances of each case. It is also striking that the majority judgment is framed in terms of the exceptional award by the Court of “just satisfaction” in the absence of a specific claim, but there is no discussion as regards whether this exception applies exclusively to non-pecuniary damage, the head at issue in the instant case. Paragraphs 69, 72-73, 79-80, 81, 83 and 92 of the majority judgment seem to limit the exception to the award of just satisfaction under that head but the reasoning of the majority in the remainder of the judgment refers to just satisfaction in general and, as such, to all three heads. While the applicant claimed neither moral damage nor costs and expenses, application of the requirements of the Rules of Court was suspended as regards the first omission but not as regards the second.[76] 45. The second consequence is even broader. It relates to compliance with the Rules of Court and the circumstances in which they – and the Practice Directions which clarify them – can be circumvented by the parties. A central tenet of the Court’s case-law on Article 6 of the Convention is that domestic rules governing the formal steps to be taken and the time-limits to be complied with in lodging court documents are aimed at ensuring the proper administration of justice and compliance, in particular, with the principle of legal certainty. The Court has repeatedly signalled to litigants that they should expect those rules to be applied.[77] Why would the Court, given this case-law, choose to undermine its own procedural rules in the manner outlined above? What the Court has found wanting under Article 6 are national rules which, in themselves, are excessively formalistic or which are applied by the authorities with excessive formalism.[78] However, it can hardly be argued, in the instant case, that the Rules of Court were applied in an excessively formalistic manner. The applicant, who was legally represented, was informed that a wish for compensation expressed in his application form did not suffice and that a specific claim had to be submitted. The procedure for submitting a claim was explained and a deadline set. When this deadline was not respected, it was extended by the President of the Section but still not respected. 46. It is also worth reflecting on the fact that the Grand Chamber, confronted as it was in this case with a large body of case-law against an award and a divergent, minority, strand of case-law in favour, had at its disposal an alternative. It could have upheld its prevailing case-law, confirming and clarifying for the future that the Rules of Court required the submission of a specific claim for an Article 41 award to be made, while highlighting why, in certain exceptional cases, the Rules as they stand at present fall short of what the Convention system requires. Since the Court, perhaps unique amongst international courts, possesses exclusive competence to adopt and amend the Rules of Court by virtue of Article 25(d) of the Convention, the plenary could have subsequently amended those rules and, specifically, the problematic Rule 60(3), if required. It is suggested that such a path, involving the drafting of procedural rules by a Court committee specialised in that field, their submission for observations to the High Contracting Parties and others and their approval by the plenary court and not a Grand Chamber formation representing a fraction of the Court, would have allowed for the establishment of clearer procedural rules while preserving the integrity of the Rules of Court more generally. A question of judicial and procedural policy would have been addressed in the appropriate forum and not with reference to the circumstances of an individual case.[79] 47. The circumstances of the present case are, unquestionably, tragic. The respondent State’s responsibility for the loss of life of a young man and its failure to investigate effectively the circumstances surrounding his death are the subject of a unanimous Chamber judgment, confirmed unanimously by the Grand Chamber. Nevertheless, it behoved the latter to introduce certainty where it presently lacks and to look beyond the individual circumstances of this case and this applicant. For the legal reasons outlined in detail above, we respectfully disagree with the Grand Chamber’s findings on just satisfaction, however humane an award of monetary compensation may appear to be in the tragic circumstances of a case like this. [1]. See Rule 60 § 1: “… must make a specific claim to this effect.” [2]. See paragraph 52 of the judgment: “I did not specify the amount because I could not at the time and cannot now ‘put a price’ on my son’s life, since it is without price.” [3]. See the case-law cited in paragraph 59 of the judgment. As indicated below, we do not necessarily agree with the finding that no claim had been made in these cases; however, we do agree with the conclusion that, where no claim has been made, no award can be granted. [4]. For applications of this principle in the case-law on Article 41 of the Convention, see, among other authorities, Ilyushkin and Others v. Russia, nos. 5734/08 and 28 other, § 76, 17 April 2012; Pacifico and Others v. Italy, nos. 34389/02, 34390/02, 34392/02 and 34458/02, § 44, 15 November 2012; Neshkov and Others v. Bulgaria, nos. 36925/10, 21487/12, 72893/12, 73196/12, 77718/12 and 9717/13, § 301, 27 January 2015; Identoba and Others v. Georgia, no. 73235/12, § 110, 12 May 2015; and Kavaklıoğlu and Others v. Turkey, no. 15397/02, § 301, 6 October 2015. [5]. See also Rule 75 § 1: “Where the Chamber or the Committee finds that there has been a violation of the Convention or the Protocols thereto, it shall give in the same judgment a ruling on the application of Article 41 of the Convention if a specific claim has been submitted in accordance with Rule 60 …” [6]. See on this point also the joint dissenting opinion, § 20. [7]. We note that this idea was clear in the original wording of Rule 60 § 2, adopted in 1998 and in force until the amendment of Rule 60 on 13 December 2004: “Itemised particulars of all claims made, together with the relevant supporting documents or vouchers, shall be submitted, failing which the Chamber may reject the claim in whole or in part.” [8]. It is true that Rule 60 § 3 refers to the “preceding paragraphs”, including paragraph 1. This does not mean, in our opinion, that it also applies to the situation where no claim at all has been made. It can indeed apply to a situation where a claim has been made, but where this claim is, for instance, insufficiently “specific” (and where particulars of it have not subsequently been furnished). [9]. See, among other authorities, X v. Latvia [GC], no. 27853/09, § 122, ECHR 2013, and Nusret Kaya and Others v. Turkey, nos. 43750/06, 43752/06, 32054/08, 37753/08 and 60915/08, § 91, ECHR 2014 (extracts). [10]. See, among other authorities, K. and T. v. Finland [GC], no. 25702/94, §§ 140-41, ECHR 2001‑VII; Azinas v. Cyprus [GC], no. 56679/00, § 32, ECHR 2004‑III; Kovačić and Others v. Slovenia [GC], nos. 44574/98, 45133/98 and 48316/99, § 194, 3 October 2008; and Murray v. the Netherlands [GC], no. 10511/10, § 88, ECHR 2016. [11]. See V.M. and Others v. Belgium [GC], no. 60125/11, § 39, 17 November 2016. [12]. The case-law cited by the majority does not prove the existence of such a practice. In Lupeni Greek Catholic Parish and Others v. Romania ([GC], no. 76943/11, § 176, ECHR 2016 (extracts)) reference is made to a letter sent to the applicants telling them “that they were not required to amend the claims”. Obviously that does not mean that they were not allowed to amend the claims. In Schatschaschwili v. Germany ([GC], no. 9154/10, § 167, ECHR 2015) it is only noted that the applicant “did not make any claims for just satisfaction in his observations.” In Khan v. Germany ([GC], no. 38030/12, § 45, 21 September 2016) it is noted that “the applicant was informed that her claims in respect of just satisfaction before the Chamber would be taken into account”. [13]. See the joint dissenting opinion, § 46. [14]. See the joint dissenting opinion, §§ 33-43. [15]. The majority identify as “compelling considerations” the “particular gravity and impact of the violation, and [the] overall context of the case” and the “unavailability or partial availability of adequate reparation at domestic level”. It is these circumstances that, according to the majority, justify setting aside the otherwise obligatory rules. While the former criterion has to be taken into account in determining the amount to be awarded in respect of non-pecuniary damage, the latter is an essential precondition for an award as already explicitly stated in Article 41. [16] See § 47 and point 1 of the operative part of the Grand Chamber’s judgment. [17] A claim which has not been duly submitted refers to different circumstances – failure to submit a claim at all, failure to submit a claim despite having indicated in the application form that the applicant wished to receive compensation or failure to respect the deadlines established in the Rules of Court. [18] See, in this regard, Scordino v. Italy (no. 1) [GC], no. 36813/97, § 176, ECHR 2006; and Salah v. Netherlands, no. 8196/02, § 70, ECHR 2006-IX (extracts). [19] See, for a general discussion of Article 41, O. Ichim, Just Satisfaction under the European Convention on Human Rights, CUP, 2015, in particular, pp. 173-175; J. Laffranque, “Can’t Get Just Satisfaction” (2014) in A. Seibert-Fohr and M. E. Villiger (eds.): Judgments of the European Court of Human Rights – Effects and Implementation, Ashgate, p. 82; K. Reid, “A Practitioner’s Guide to the European Convention on Human Rights” (2nd edn. 2002) Thomson, Sweet & Maxwell, p. 546. [20] See below § 46 of this Opinion. [21] See §§ 41-42 of the majority judgment. [22] See, for the elucidation of these conditions, De Wilde, Ooms and Versyp v. Belgium (Article 50), judgment 10 March 1972, Series A no. 14, § 21. [23] Note also the use of “empowers” in § 57 of the majority judgment and in Grand Chamber judgments such as Karácsonyi v. Hungary, no. 37494/02, § 179, 18 April 2006 and O'Keeffe v. Ireland [GC], no. 35810/09, §199, 28 January 2014. See also point 1 of the Practice Direction on just satisfaction claims, issued by the President of the Court in accordance with Rule 32 of the Rules of Court on 28 March 2007: “1. The award of just satisfaction is not an automatic consequence of a finding by the [ECtHR] that there has been a violation of a right guaranteed by the [ECHR] or its Protocols. The wording of Article 41, which provides that the Court shall award just satisfaction only if domestic law does not allow complete reparation to be made, and even then only “if necessary” (s’il y a lieu in the French text), makes this clear.” [24] Article 41 of the Convention was inspired by Article 10 of the German Swiss Treaty on Arbitration and Conciliation of 1921 and Article 32 of the Geneva General Act for the Pacific Settlement of International Disputes of 1928. Note that Articles 24(1) and 25(d) of the Convention indicate that the Court shall have a registry whose functions and organisation shall be laid down in the rules of the Court and that the plenary court is competent to adopt the latter (see De Wilde, Ooms and Versyp, cited above, § 16). On the exclusive competence of the Court to adopt, and amend, its own procedural rules and the alternative route this provided the Court to resolve a case such as this, see below paragraph 46. [25] Pursuant to Article 34 of the Convention, the Court may receive individual applications and, pursuant to Article 35 it shall not deal with certain types of applications or applications in certain circumstances. These bare rules are further clarified and conditioned by the Rules of Court – not least Rules 38 and 47 – and by the Practice Directions on the institution of proceedings and on written pleadings. These rules are applied rigidly and formalistically by the Court and failure to comply with them lead to thousands of complaints not being examined every year. [26] See further, for example, the analysis of the different heads in Neumeister v. Austria (Article 50), judgment of 7 May 1974, Series A no. 17, §§ 40-43; and, as regards Article 41, Lechoisne and Others v. France, no. 61173/00, § 28, 17 June 2003: “Under Rule 60 § 2 of the Rules of Court, the applicants must submit itemised particulars of all claims under Article 41 of the Convention, together with any relevant supporting documents, failing which the Court may reject the claims in whole or in part” (emphasis added). [27] See Article 75 of the Rome Statute of the International Criminal Court, adopted 17 July 1998, entered into force 1 July 2002, 2187 UNTS 90. [28] See also Cyprus v. Turkey (Just satisfaction), no. 25781/94, § 42, 12 May 2014. [29] See further § 46 below [30] Andrea Corsi v. Italy (Revision), no. 42210/98, § 12, 2 October 2003, emphasis added. See also Sykora v. Slovakia, no. 26077/03, §§ 31-32, 18 January 2011; Fadil Yilmaz v. Turkey, no. 28171/02, §§ 26-27, 21 July 2005; and Chiorean v. Romania, no. 20535/03, §§ 31-34, 21 October 2008. The need to respect deadlines is emphasised by Rule 38(1), Rule 60 and by the Practice Direction. [31] Sunday Times v. United Kingdom (Article 50), no. 6538/74, § 14, 6 November 1980. See also Francesco Lombardo v. Italy, judgment of 26 November 1992, Series A no. 249-B, § 25; or Nasri v. France, no. 19465/92, § 49, A 320-B, 1995. [32] Schatschaschwili v. Germany GC, no. 9154/10, §§ 166-170, 15 December 2015. The applicant had specified the amount of compensation sought both in his application form and orally before the Grand Chamber. His failure to comply with the requirements of Rule 60 despite, as in the instant case, clear instructions from the Court’s registry and legal representation, led to the Court making no award. [33] For the requirement that a procedure be adversarial see, for example, Brandstetter v. Austria, judgment of 28 August 1991, Series A no. 211, p. 27, § 67 and Vermeulen v. Belgium, judgment of 20 February 1996, Reports 1996-I, p. 234, § 33. [34] The letter received by the applicant’s representative in the instant case reflects the standard and established practice under the Rules of Court. See Willekens v. Belgium, no. 50859/99, § 27, 24 April 2003. Note also that, pursuant to Rule 37(1), communications or notifications addressed to the agents or advocates of the parties shall be deemed to have been addressed to the parties. [35] This equivocal language only reappears in one other place, point 5 of the Practice Direction: “Thus, the Court requires specific claims supported by appropriate documentary evidence, failing which it may make no award”. However, the same point continues: “The Court will also reject claims set out on the application form but not resubmitted at the appropriate stage of the proceedings and claims lodged out of time.” The contrast between the two sentences may mean that the failure referred to in the first sentence is a failure to submit appropriate documentary evidence. In other words, the failure to itemise (possibly fatal) is distinguished from the failure to submit (fatal). [36] See §§ 67 (reliance on the use of “may” in Rule 60(3)), 74 (reliance on the use of “shall” in Article 41) and 76 of the majority judgment (reliance on the fact that Article 41 is a norm of a higher hierarchical value than the Rules of Court). [37] See also Ichim, cited above, pp. 52 and 77, who observes, respectively, that “Cases of a victim-oriented approach supported by ultra petita awards of reparation are relatively scant” and “the Court refrains not only from making ex officio awards, but also from ruling ultra petita”, albeit he proceeds, on p. 77, to detail some examples from the divergent strand of case-law on which the majority rely and which they today confirm. [38] See points 10-12 of the Practice Direction on pecuniary damage, points 13-15 on non‑pecuniary damage and points 16-21 on costs and expenses. [39] See, for example, for no award of pecuniary damage where the causal link could not be established, inter alia, Saunders v. United Kingdom, no. 19187/91, § 86, 17 December 1996; Coëme and Others v. Belgium, nos. 32492/96, 32547/96, 32548/96, 33209/96 and 33210/96, § 155, ECHR 2000-VII; and Saadi v. Italy [GC], no. 37201/06, §187, ECHR 2008-II. [40] See, for example, Sunday Times v. United Kingdom (Article 50), cited above, § 23 and Jalloh v. Germany [GC], no. 54810/00, §133, ECHR 2006-IX. [41] The Practice Direction recognises this – applicants who wish to be compensated for non-pecuniary damage are “invited” to specify a sum which in their view would be equitable – as does the Court’s case-law. The Court has made awards where the applicants have failed to quantify the amount, “leaving it to the Court’s discretion”. The case-law of the Court also recognises this. See, for example, the authorities cited at § 72 of the majority judgment. It is important to stress, however, that with the exception of the applicant in Blesa Rodríguez v. Spain, no. 61131/12, 1 December 2015, who had indicated a wish for compensation only in the application form, all other applicants listed had submitted a claim but had asked that the decision on quantum be at the discretion of the Court. [42] See §§ 59 and 75 of the majority judgment. [43] Ibid., § 64. [44] Ibid., § 65. [45] Ibid., § 66. [46] Ibid., §§ 67 and 74. [47] Ibid., § 69. [48] Ibid., §§ 70 and 72. [49] Ibid., § 73. [50] Ibid., § 71. [51] The Court has generally referred to the fact that it enjoys a “certain discretion in the exercise of the power conferred by Article 50 Article 41” a fact borne out by the expressions “just” and “if necessary” – see, for example, Guzzardi v. Italy, no. 7367/76, § 114, 6 November 1980 and Perdigao v. Portugal GC, no. 24768/06, § 85, 16 November 2010. In addition, it has recognised that its jurisdiction under Article 41 of the Convention is limited: see variously Velikova v. Bulgaria, no. 41488/98 § 96, ECHR 2000-VI; Philis v. Greece (No. 1), judgment of 27 August 1991, Series A no. 209, p. 27, § 79; and Allenet de Ribemont v. France, judgment of 7 August 1996, Reports 1996-III, p. 910, §§ 18-19 (where it reminded the Commission not only of the bounds established by the Rules of Court but also of the limits to its own contentious jurisdiction under the Convention). [52] For an analysis of the origins of this threshold condition and some of the difficulties it raises see the partly concurring opinion of Judge Zupancic in Lucà v. Italy, no. 33354/96, ECHR 2001-II. [53] See §§ 88-91 of the majority judgment. [54] Ibid., § 82. [55] On the under-defined concept of necessity see Ringeisen v. Austria (Article 50), judgment of 22 June 1972, Series A no. 15, § 22, where the Court indicated that just satisfaction is necessary where the respondent Government has refused the applicant the reparation to which he considered himself entitled. [56] See, in support of our interpretation, point 14 of the Practice Direction. See also the joint concurring opinion of Judges Nussberger and Lemmens (§ 4) on this same point of fundamental divergence. [57] See Cyprus v. Turkey (Just Satisfaction), cited above, § 42. [58] See § 76 of the majority judgment, emphasis added. [59] Ibid., § 79. [60] Idem. [61] See Andrejeva v. Latvia GC, no. 55707/00, § 111, 18 February 2009: “the indispensable condition for making an award in respect of pecuniary damage is the existence of a causal link … and this is also true of non-pecuniary damage”. [62] See Rule 60(1), (2) and (4), as further clarified in the Practice Direction. [63] See above § 18 for the comments on Rule 60(4). [64] See the description of the provisions and operation of Rule 60 in §§ 15-20 above. [65] See § 55 of the majority judgment. [66] See §§ 60-63 of the majority judgment. Before the Grand Chamber, the applicant’s representative invited the latter simply to affirm the Chamber judgment but, as indicated in § 52 of the majority judgment, submitted no further claim for just satisfaction under any of the three heads. [67] See § 81 of the majority judgment. [68] See X. v. Croatia no. 11223/04, §§ 61-63, 17 July 2008. [69] See, for example, Mayzit v. Russia, no. 63378/00, § 88, 20 January 2005; Igor Ivanov v. Russia, no. 34000/02, § 50, 7 June 2007; Babushkin v. Russia, no. 67253/01, § 62, 18 October 2007; Chember v. Russia, no. 7188/03, § 77, 3 July 2008; Chudun v. Russia, no. 20641/04, § 129, 21 June 2011; and Boordin v. Russia, no. 41867/04, § 166, 6 November 2012, which all concerned violations of Article 3 of the Convention by the Russian Federation. [70] See, for example, Rusu v. Austria, no. 34082/02, § 62, 2 October 2008; and Crabtree v. the Czech Republic, no. 41116/04, § 60, 25 February 2010, which pointed to the fundamental importance of the Article 5 rights violated. See also Kats v. Ukraine, no. 29971/04, 18 December 2008, which concerned Article 2 and in which a claim had been submitted albeit out of time. The Court made an award for non-pecuniary damage due to the “fundamental character” of the right in Article 2. [71] See, for example, Davtyan v. Georgia, no. 73241/01, § 71, 27 July 2006. [72] See, for example, Henrioud v. France, no. 21444/11, 5 November 2011, where in a case involving loss of child custody and access to the applicant’s children, the Court merely found a violation of Article 6(1) of the Convention due to the excessive formalism of the French courts. See also, in the context of Article 8, Yusopova v. Russia, no. 66157/14, 20 December 2016. [73] See, for example, Dorogaykin v. Russia, no. 1066/05, §§ 48-49, 10 February 2011. [74] See, for example, Neshkov and Others v. Bulgaria, nos. 36925/10, 21487/12, 72893/12, 73196/12, 77718/12 and 9717/13, § 84, 27 January 2015. [75] See, for example, Bursuc v. Romania, no. 42066/98, 12 October 2004 and Chember, cited above, although the Court did not explicitly say this fact was relevant to its decision to award damages in the absence of a duly submitted claim. [76] In the absence of a claim for costs and expenses, the Court declares itself barred from awarding them – see § 93 of the majority judgment. [77] See, inter alia, Miragall Escolano v. Spain, nos. 38366/79 et seq., § 33, 25 January 2000; Tricard v. France, no. 40472/98, § 29, 10 July 2001; and Marc Brauer v. Germany, no. 24062/13, §§ 34 and 42, 1 September 2016. See also, the recent Grand Chamber decision in V.M. and others v. Belgium [GC] (Striking Out), no. 60125/11, § 35, 17 November 2016, which referred to the Rules of Court and the requirement, in the interests of the proper administration of justice, that applicants and their representatives stay in touch during the proceedings before the Court. [78] See, for example, Marc Brauer, cited above, § 43. [79] See also the joint concurring opinion of Judges Nussberger and Lemmens (§ 18).

COURT OF APPEAL FOR ONTARIO CITATION: Travelbrands Inc. v. Bramalea Travel Centre Inc., 2019 ONCA 404 DATE: 20190515 DOCKET: C65973 Feldman, Paciocco and Fairburn JJ.A. BETWEEN Travelbrands Inc. Plaintiff (Respondent) and Bramalea Travel Centre Inc. Defendant (Appellant) Edwin Upenieks and Angela Kwok, for the appellant Doug Bourassa, for the respondent Heard and released orally: May 13, 2019 On appeal from the judgment of Justice Lederer of the Superior Court of Justice, dated September 11, 2018. APPEAL BOOK ENDORSEMENT [1] The appellant appeals from the summary judgment granted in favour of the respondent. The appellant submits that the motion judge erred by deciding the case on summary judgment when the record was deficient. [2] We do not agree. The motion judge’s comment about the record before him related to the failure to put case law on the nature of the relationship between the parties before the court. However, he was able to analyze the legal relationship based on the evidentiary record. [3] The appellant’s position on the legal issue was that Bramalea acted only as a middle man between customers and Travelbrands Inc. as the seller of the travel products. In our view the motion judge did not err in rejecting that submission and finding that Bramalea was the purchaser of the products on behalf of its customers and that Travelbrands was the seller. On that basis Bramalea is responsible for the invoices sent to it by Travelbrands. [4] The appeal is therefore dismissed with costs of $9,000 inclusive of disbursements and HST.

Judgment of the Court (First Chamber) of 15 January 2002. - Commission of the European Communities v Grand-duché de Luxembourg. - Failure by a Member State to fulfil its obligations - Environment - Directive 75/442/EEC - Decision 94/3/EC - European Waste Catalogue. - Case C-196/01. European Court reports 2002 Page I-00569 Parties Grounds Decision on costs Operative part Keywords Member States - Obligations - Implementation of directives - Failure to fulfil obligations not contested Parties In Case C-196/01, Commission of the European Communities, represented by H. Støvlbaek and J. Adda, acting as Agents, with an address for service in Luxembourg, applicant, v Grand Duchy of Luxembourg, represented initially by N. Mackel and subsequently by J. Faltz, acting as Agents, defendant, APPLICATION for a declaration that the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 1(a) of Council Directive 75/442/EEC of 15 July 1975 on waste (OJ 1975 L 194, p. 39), as amended by Council Directive 91/156/EEC of 18 March 1991 (OJ 1991 L 78, p. 32), and Commission Decision 94/3/EC of 20 December 1993 establishing a list of wastes pursuant to Article 1(a) of Directive 75/442 (OJ 1994 L 5, p. 15), THE COURT (First Chamber), composed of: P. Jann, President of the Chamber, L. Sevón (Rapporteur) and M. Wathelet, Judges, Advocate General: P. Léger, Registrar: R. Grass, having regard to the report of the Judge-Rapporteur, after hearing the Opinion of the Advocate General at the sitting on 13 December 2001, gives the following Judgment Grounds 1 By application lodged at the Court Registry on 8 May 2001, the Commission of the European Communities brought an action under Article 226 EC for a declaration that the Grand Duchy of Luxembourg had failed to fulfil its obligations under Article 1(a) of Council Directive 75/442/EEC of 15 July 1975 on waste (OJ 1975 L 194, p. 39), as amended by Council Directive 91/156/EEC of 18 March 1991 (OJ 1991 L 78, p. 32) (hereinafter Directive 75/442), and Commission Decision 94/3/EC of 20 December 1993 establishing a list of wastes pursuant to Article 1(a) of Directive 75/442 (OJ 1994 L 5, p. 15). 2 Article 1(a) of Directive 75/442 provides as follows: For the purposes of this Directive: (a) "waste" shall mean any substance or object in the categories set out in Annex I which the holder discards or intends or is required to discard. The Commission, acting in accordance with the procedure laid down in Article 18, will draw up, not later than 1 April 1993, a list of wastes belonging to the categories listed in Annex I. This list will be periodically reviewed and, if necessary, revised by the same procedure. 3 The list referred to in the above provision was adopted by the Commission, under the title European Waste Catalogue (EWC), by Decision 94/3. According to point 5 of the introductory note of the annex to that decision: The EWC is to be a reference nomenclature providing a common terminology throughout the Community with the purpose to improve the efficiency of waste management activities. ... 4 The EWC was incorporated into Luxembourg law by the circular of the Minister for the Environment of 20 November 1998 introducing a waste nomenclature (Mémorial A 1998, p. 2548). According to the first indent of point 1 of that circular: This circular has two objectives - to introduce a Luxembourg waste nomenclature - to take over the European Waste Catalogue (EWC). 5 In accordance with the procedure provided for in the first paragraph of Article 226 EC, the Commission, after giving the Grand Duchy of Luxembourg an opportunity to submit observations, by letter of 25 July 2000 delivered a reasoned opinion calling upon that Member State to take the necessary measures to comply therewith within two months of notification of the opinion. Since the Grand Duchy of Luxembourg failed to do so, the Commission brought the present action. 6 The Commission submits that the Grand Duchy of Luxembourg infringed Article 1(a) of Directive 75/442 and Decision 94/3, first, by incorporating the EWC by means of a ministerial circular binding on the administration but not on third parties, and, second, by introducing alongside the EWC a purely Luxembourg nomenclature differing from the EWC and having the effect of excluding the use of the EWC for a large number of operations in which the classification of waste is taken into account. 7 The Luxembourg Government does not dispute the Commission's submissions, but states that a Grand Ducal regulation ensuring integral and accurate use of the EWC is due to enter into force on 1 January 2002. 8 It is settled case-law that the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion and the Court cannot take account of any subsequent changes (see, inter alia, Case C-261/98 Commission v Portugal [2000] ECR I-5905, paragraph 25). 9 As the Luxembourg Government does not dispute that it did not adopt the necessary measures to comply with Article 1(a) of Directive 75/442 and Decision 94/3, the Commission's action must be regarded as well founded. 10 It must therefore be held that the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 1(a) of Directive 75/442 and Decision 94/3. Decision on costs Costs 11 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs, if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs and the Grand Duchy of Luxembourg has been unsuccessful, the latter must be ordered to pay the costs. Operative part On those grounds, THE COURT (First Chamber) hereby: 1. Declares that the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 1(a) of Council Directive 75/442/EEC of 15 July 1975 on waste, as amended by Council Directive 91/156/EEC of 18 March 1991, and Commission Decision 94/3/EC of 20 December 1993 establishing a list of wastes pursuant to Article 1(a) of Directive 75/442; 2. Orders the Grand Duchy of Luxembourg to pay the costs.

FIFTH SECTION CASE OF STASZUK v. UKRAINE (Application no. 70840/10) JUDGMENT This version was rectified on 21 November 2017 under Rule 81 of the Rules of Court. STRASBOURG 5 October 2017 This judgment is final but it may be subject to editorial revision. In the case of Staszuk v. Ukraine, The European Court of Human Rights (Fifth Section), sitting as a Committee composed of: Erik Møse, President,Yonko Grozev,Gabriele Kucsko-Stadlmayer, judges,and Anne-Marie Dougin, Acting Deputy Section Registrar, Having deliberated in private on 12 September 2017, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 70840/10) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Polish national, Mr Jan Michal Staszuk (“the applicant”), on 13 November 2010. 2. The applicant was represented by Mr S.V. Zakharov, a lawyer practising in Kyiv. The Ukrainian Government (“the Government”) were represented by their Agent, most recently Mr I. Lishchyna. 3. On 4 June 2015 the applicant’s complaints under Article 5 §§ 1, 3 and 4 of the Convention were communicated to the Government and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court. 4. The Polish Government were informed of their right to intervene in the proceedings in accordance with Article 36 § 1. They chose not to avail themselves of that right. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1985 and lives in Warsaw. 6. On 14 May 2010 the applicant was arrested in Kyiv by officers of the Security Service of Ukraine (“the SBU”) on suspicion of unlawfully importing equipment for the covert surveillance of telephone networks and using it to intercept private telephone conversations (see paragraph 24 below), an offence committed in collaboration with M., a Russian national. 7. An SBU investigator lodged a request with the Shevchenkivskyy District Court of Kyiv (“the District Court”) seeking that the applicant be remanded in custody pending the investigation. He submitted that the applicant’s detention was necessary in order to prevent him from absconding and interfering with the investigation, given that the applicant was a foreign national, did not have a permanent place of residence in Ukraine and was suspected of a serious offence. 8. On 17 May 2010 the District Court held a hearing in the presence of the prosecutor and his lawyer, remanded the applicant in custody, and ordered that he be placed in an SBU detention facility. It held that the arguments submitted by the investigator were sufficiently strong to allow the conclusion that the applicant should be detained. 9. On 27 May 2010 the Court of Appeal held a hearing to examine the applicant lawyer’s appeal against the order of 17 May 2010 in the presence of a prosecutor and the applicant’s lawyer and upheld the order. 10. On 13 July 2010 the District Court held a hearing in the presence of the prosecutor, the applicant and his lawyer and extended the applicant’s detention until 14 September 2010. It noted that there were no reasons to release the applicant and that the investigative authority needed time to complete the investigation. 11. On 26 July and 6 August 2010 the Court of Appeal held hearings to examine, respectively, the applicant lawyer’s and the applicant’s own appeals against the District Court’s decision of 13 July 2010. Only a prosecutor was present at the former hearing, whereas the latter hearing was attended by the prosecutor, the applicant and his lawyer. The Court of Appeal rejected both appeals and upheld the District Court’s decision on both occasions. 12. On 9 September 2010 the Court of Appeal held a hearing in the presence of the prosecutor and the applicant’s lawyer, granted the investigative authority’s request, and extended the applicant’s detention until 14 November 2010. The court noted that the charges against the applicant were serious, that there were no reasons to release him and that the investigative authority needed more time to complete the investigation. 13. On 1 November 2010 the investigator charged the applicant with several additional offences in connection with the same events: breaching the privacy of telephone communications and unlawful transfer of equipment subject to export control, committed in a group (see paragraph 24 below). 14. On 12 November 2010 the Court of Appeal extended the applicant’s detention until 14 December 2010. 15. On 14 December 2010 the applicant’s case was sent to the District Court for trial. 16. On 27 April 2011 the District Court committed the applicant for trial, rejected the applicant’s request for release and ordered his continuing detention pending trial. The court stated that the applicant was charged with a serious offence, was a foreign national and had no permanent place of residence in Ukraine. No time-limit was set for his detention. 17. On 25 August 2011 the District Court rejected the applicant’s requests for release. It gave reasons similar to those given in its decision of 27 April 2011 and added that there was no reason to set an end-date for the applicant’s detention since his detention was needed to complete the trial. 18. On 14 October, 24 November 2011, and 11 January 2012 the District Court rejected the applicant’s further requests for release. It gave reasons similar to those given in its decision of 27 April 2011. 19. On 19 March 2012 the District Court convicted the applicant as charged, sentencing him to four years’ imprisonment. 20. On 7 December 2012 the Court of Appeal quashed the conviction and remitted the case for additional investigation. It ordered the applicant’s continuing detention without giving reasons. 21. On 15 January 2013 the District Court set bail for the applicant. 22. On 16 January 2013 the applicant was released on bail. 23. On 17 May 2013 the District Court approved the applicant’s plea bargain, convicted him, and sentenced him to two years and eight months’ imprisonment, which was to be considered fully served in view of the time the applicant had spent in pre-trial detention. II. RELEVANT DOMESTIC LAW 24. Article 163 § 2 of the Criminal Code makes breaching the privacy of telephone communications, if committed using special equipment for covert surveillance, punishable by three to seven years’ imprisonment. Article 359 § 2 of the Code makes unlawful use of equipment for covert surveillance of telephone networks committed in a group punishable by four to seven years’ imprisonment. Article 333 § 1 of the Code makes unlawful transfer of equipment subject to export control punishable by a fine or by up to three years’ of restriction of liberty (i.e. detention in a semi-open institution) or by imprisonment for the same term with or without a prohibition on the right to occupy certain positions or engage in certain activities for the term of up to three years. THE LAW I. ALLEGED VIOLATIONS OF ARTICLE 5 §§ 1 AND 3 OF THE CONVENTION 25. The applicant complained that his detention between 14 December 2010 and 27 April 2011 and between 27 April 2011 and 19 March 2012 had not been lawful and that his detention in the course of pre-trial investigation and trial had been unreasonably lengthy. He relied on Article 5 §§ 1 and 3 of the Convention which read as follows in the relevant part: “1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: ... (c) the lawful arrest or detention of a person effected for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so; ... 3. Everyone arrested or detained in accordance with the provisions of paragraph 1 (c) of this Article shall be ... entitled to trial within a reasonable time or to release pending trial. Release may be conditioned by guarantees to appear for trial.” The Government disagreed and submitted that there had been no violation of the above provisions.[1] A. Admissibility 26. The Court notes that these complaints are not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that they are not inadmissible on any other grounds. They must therefore be declared admissible. B. Merits 1. Article 5 § 1 27. The Court observes that between 14 December 2010 and 27 April 2011 there was no court order authorising the applicant’s detention and that from 27 April 2011 to 19 March 2012 the applicant’s detention was based on a legislative framework which did not require the courts to provide any grounds for detention or to set a time-limit for it, and indeed, no-time limit had been set in the applicant’s case. The Court has dealt with similar situations in the past and found that such practice was incompatible with the requirement of lawfulness enshrined in Article 5 § 1 (see Kharchenko v. Ukraine, no. 40107/02, §§ 70-76, 98, 10 February 2011). It does not see any reason to depart from that conclusion in the present case. 28. The Court finds, accordingly, that there has been a violation of Article 5 § 1 of the Convention. 2. Article 5 § 3 29. The general principles regarding the right to trial within a reasonable time or to release pending trial, as guaranteed by Article 5 § 3 of the Convention, have been recently summarised in Buzadji v. the Republic of Moldova ([GC], no. 23755/07, §§ 87-91, ECHR 2016 (extracts)). 30. The applicant’s detention to be taken into account for the purposes of Article 5 § 3 lasted between 14 May 2010 and 19 March 2012 and between 7 December 2012 and 16 January 2013, that is more than one year and eleven months overall which is not short in absolute terms (see, for example, Iłowiecki v. Poland, no. 27504/95, § 52, 4 October 2001, and Doronin v. Ukraine, no. 16505/02, § 61, 19 February 2009). 31. The Court notes that the suspicion that the applicant had committed a serious offence and the danger of the applicant, a foreigner with no established residence in Ukraine, absconding might have initially justified his detention (see Van der Tang v. Spain, 13 July 1995, §§ 64-67, Series A no. 321). However, those reasons did not evolve with the passage of time and the domestic courts, in extending detention, relied on repetitive formulae without referring to specific circumstances of the applicant’s case. Moreover, on 7 December 2012 the Court of Appeal gave no reasons whatsoever for the applicant’s continuing detention (see paragraph 20 above). 32. In a number of cases (see, for example, Tretyakov v. Ukraine, no. 16698/05, § 59, 29 September 2011, and Rudnichenko v. Ukraine, no. 2775/07, § 81, 11 July 2013), including the leading case of Kharchenko (cited above, § 99) the Court already found violations of Article 5 § 3 in respect of issues similar to those in the present case. Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion in the present case. 33. There has, therefore, been a violation of Article 5 § 3 of the Convention. II. ALLEGED VIOLATION OF ARTICLE 5 § 4 OF THE CONVENTION 34. The applicant complained that he and his lawyer had not been duly informed about certain hearings of the Court of Appeal at which matters relating to the applicant’s pre-trial detention were decided. 35. The Court − being master of the characterisation to be given in law to the facts of the case, and having regard to the substance of the applicant’s complaints − decides to examine them under Article 5 § 4 of the Convention (see Navarra v. France, 23 November 1993, § 28, Series A no. 273‑B). Article 5 § 4 of the Convention reads: “4. Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful.” A. The parties’ submissions 36. On his application form the applicant complained that he and his lawyer had not been informed about the hearings of the Court of Appeal held on 27 May, 26 July and 9 September 2010. 37. The Government submitted that the applicant was either present personally or represented by a lawyer at the hearings of 27 May, 6 August and 9 September 2010. For the Government, this demonstrated that they had been duly informed of the hearings. 38. The applicant did not submit any observations in response to those of the Government. B. The Court’s assessment 39. The applicant limited his submissions to asserting that neither he nor his lawyer was informed of the above-mentioned hearings. He did not explain specifically how this prejudiced his rights under Article 5 § 4. As far as the applicant’s lawyer is concerned, he was in fact present at the hearings of 27 May, 6 August and 9 September 2010. Moreover, the applicant himself was present at the hearing of 6 August 2010. Accordingly, no arguable issue under Article 5 § 4 arises in those respects. 40. To the extent that the applicant may be understood to be arguing that his personal presence was required at the hearings of 27 May and 9 September 2010, the Court notes that those hearings followed shortly the hearings of 17 May 2010 and 6 August 2010 at which the applicant was present and assisted by a lawyer. The applicant did not show that he wished to present at those subsequent hearings new arguments, in particular arguments related to his personal circumstances, which were not examined at earlier hearings (contrast, for example, Christodoulou and Others v. Greece, no. 80452/12, § 77, 5 June 2014). Since the applicant was represented at all the hearings in question, no equality of arms issue arises either. Accordingly, even accepting the applicant’s allegation that he was not duly summoned to the hearings of 27 May and 9 September 2010, the applicant has not made an arguable case that Article 5 § 4 has been breached due to his personal absence from the hearings of 27 May and 9 September 2010 (see Depa v. Poland, no. 62324/00, §§ 48 and 49, 12 December 2006, and Altınok v. Turkey, no. 31610/08, §§ 54 and 55, 29 November 2011). 41. It is true that the applicant was neither present nor represented at the hearing of 26 July 2010 and the Government have not specifically rebutted the applicant’s allegation that the applicant and his lawyer had not been properly summoned to that hearing. However, the Court of Appeal examined the same question, namely conducted a review of the first-instance court’s detention order of 13 July 2010, on 6 August 2010 in the presence of both the applicant and his lawyer. It appears that the only substantive difference was that on 26 July the Court of Appeal examined the applicant’s lawyer’s appeal while on 6 August 2010 it examined an appeal lodged by the applicant himself. The applicant did not allege that there was any breach of his rights at the 6 August hearing, did not explain what the difference between the two appeals was, or why he had lodged an appeal separately from his lawyer. Neither did he provide any other explanation as to why he believed that his rights had been prejudiced in such circumstances. The Court therefore considers that this complaint is not sufficiently developed nor substantiated. 42. Accordingly, this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 43. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 44. The applicant claimed compensation in respect of non-pecuniary damage but left the determination of the amount to the Court’s discretion. 45. The Government maintained that there had been no violation of the applicant’s rights in the present case.[2] 46. The Court, ruling on an equitable basis, awards the applicant 5,000 euros (EUR) in respect of non-pecuniary damage. B. Costs and expenses 47. The applicant made no claim for costs and expenses. Accordingly, the Court makes no award under this head. C. Default interest 48. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1. Declares the complaints under Article 5 §§ 1 and 3 admissible and the remainder of the application inadmissible; 2. Holds that there has been a violation of Article 5 § 1 of the Convention; 3. Holds that there has been a violation of Article 5 § 3 of the Convention; 4. Holds (a) that the respondent State is to pay the applicant, within three months, EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non‑pecuniary damage; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points. Done in English, and notified in writing on 5 October 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Anne-Marie DouginErik MøseActing Deputy RegistrarPresident [1]. Rectified on 21 November 2017: This sentence was added. [2]. Rectified on 21 November 2017: “did not comment” was replaced with “maintained that there had been no violation of the applicant’s rights in the present case”.

_EN Opinion of the Advocate-General Opinion of the Advocate-General Table of contents I – Introduction II – Community legal framework III – The tax scheme applicable to the coordination centres IV – Facts and procedural background A – Facts prior to the Commission Decision B – The Commission Decision C – Procedures before the Court against the Commission Decision D – Facts subsequent to the Commission Decision E – The Council Decision F – Procedure before the Court against the Council Decision V – The actions A – The action against the Council Decision (Case C‑399/03) 1. Forms of order sought and pleas in law 2. Appraisal B – The actions against the Commission Decision (Joined Cases C‑182/03 and C‑217/03) 1. Forms of order sought a) Case C-182/03 Belgium v Commission b) Case C-217/03 Forum 187 v Commission 2. The admissibility of the action brought by Forum 187 a) Arguments of the parties b) Appraisal i) The admissibility of the action brought by Forum 187 on the basis that it is itself directly and individually concerned ii) The admissibility of the application brought by Forum 187 on the ground that it is acting in place of some of its members 3. The merits of the actions a) The application by Forum 187 for the annulment of the Decision of 17 February 2003 in its entirety i) The plea alleging the lack of any legal basis and infringement of the principle of legal certainty – Arguments of the parties – Appraisal ii) The plea alleging infringement of Article 87(1) EC – The method of analysis of the scheme in question – Whether an advantage is conferred on certain undertakings – The existence of a commercial advantage – Assessment of taxable income – The exemption from property tax – The exemption from capital duty – The exemption from withholding tax – The notional withholding tax Selectivity Justification on the grounds of the nature and the general scheme of the system VI – Conclusions ( State aid – Tax scheme applicable to coordination centres established in Belgium – Application by an association – Admissibility – Commission decision that that scheme does not constitute aid – Change by the Commission of its assessment – Procedure – Regulation (EC) No 659/1999 – Procedure applicable to monitoring of existing aid – Article 87(1) EC – Transitional measures – Protection of legitimate expectations – General principle of equal treatment ) Case C-399/03 Commission of the European Communities v Council of the European Union (Aid granted by the Kingdom of Belgium to coordination centres – Aid intended to allow the extension of the tax scheme tax applicable to coordination centres declared to be incompatible with the common market – Council decision declaring such aid to be compatible with the common market – Article 88(2), fourth indent, EC – Illegality) I – Introduction 1. The three actions for annulment before the Court concern the tax scheme applicable to coordination centres adopted by the Kingdom of Belgium. 2. A coordination centre is an undertaking created by a group of multinational companies for the purpose of providing various services to those companies, in particular in the financial field. In 1982, the Kingdom of Belgium introduced a special tax scheme for the benefit of such centres under which individual approvals might be granted for a period of 10 years. Such approvals were renewable. 3. The Commission of the European Communities, to which the scheme had been notified, held that it did not constitute State aid. However, following studies undertaken by the Council of the European Union in 1997 on tax competition between Member States, it carried out a fresh investigation into the scheme. 4. By decision of 17 February 2003, (2) the Commission held that the scheme constituted State aid incompatible with the common market. It ordered the Belgian Government not to grant benefits under it to new coordination centres or to renew the 10-year approvals after 17 February 2003. However, it allowed the approvals then in force to remain in effect until their expiry or 31 December 2010, at the latest. 5. After that decision was adopted, the Belgian Government requested the Council to authorise it to grant until 31 December 2005 a similar tax treatment to that of the scheme applicable to coordination centres to centres having an approval which expired between 17 February 2003 and 31 December 2005. The Council allowed that request by decision of 16 July 2003. (3) 6. An application for the annulment of the Commission Decision was brought by the Kingdom of Belgium and by Forum 187 ASBL, (4) an association formed under Belgian law which is a federation of coordination centres in Belgium, in Joined Cases C-182/03 and C‑217/03, respectively. 7. An application for annulment was brought by the Commission against the Council Decision in Case C-399/03. 8. As the legal and factual background to both those actions is the same, I shall consider them together in this Opinion. 9. In so doing, I shall consider the following six points: whether the Council had the power to adopt the Decision of 16 July 2003, whether the action brought by Forum 187 is admissible, whether the Commission was entitled to alter its previous determination as to the existence of aid, whether the classification of the tax scheme applicable to the coordination centres as State aid was well founded and, finally, whether, in ordering the Kingdom of Belgium not to renew, even temporarily, approvals expiring after the notification of its decision of 17 February 2003, the Commission failed to have regard to the legitimate expectations of the coordination centres and the general principle of equal treatment. II – Community legal framework 10. The EC Treaty contains a prohibition in principle of State aid, coupled with certain exceptions. Article 87(1) EC states: ‘Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.’ 11. Article 87(2) and (3) EC go on to list the types of State aid which are automatically compatible with the common market and those which may be considered to be compatible with it. The latter include aid to promote the economic development of areas where there is serious underemployment and aid to facilitate the development of certain economic activities, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. 12. Article 88 EC provides: ‘1. The Commission shall, in cooperation with Member States, keep under constant review all systems of aid operating in those States. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the common market. 2. If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the common market having regard to Article 87, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission. If the State concerned does not comply with this decision within the prescribed time, the Commission or any other interested State may, in derogation from the provisions of Articles 226 and 227, refer the matter to the Court of Justice direct. On application by a Member State, the Council may, acting unanimously, decide that aid which that State is granting or intends to grant shall be considered to be compatible with the common market, in derogation from the provisions of Article 87 or from the regulations provided for in Article 89, if such a decision is justified by exceptional circumstances. If, as regards the aid in question, the Commission has already initiated the procedure provided for in the first subparagraph of this paragraph, the fact that the State concerned has made its application to the Council shall have the effect of suspending that procedure until the Council has made its attitude known. If, however, the Council has not made its attitude known within three months of the said application being made, the Commission shall give its decision on the case. 3. The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 87, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision.’ 13. Article 89 EC authorises the Council to make regulations for the application of Articles 87 EC and 88 EC. Pursuant to that power, the Council has adopted Regulation (EC) No 659/1999, (5) which sets out detailed rules concerning the procedures to be followed for the purposes of the application of Article 88 EC. 14. Article 1(b) of Regulation No 659/1999 defines the concept of ‘existing aid’. It provides that for the purposes of that regulation, ‘existing aid’ is to mean: ‘(i) … all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the Treaty; (ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council; (iii) aid which is deemed to have been authorised pursuant to Article 4(6) of this Regulation [(6) ] or prior to this Regulation but in accordance with this procedure; (iv) aid which is deemed to be existing aid pursuant to Article 15; [(7) ] (v) aid which is deemed to be an existing aid because it can be established that at the time it was put into effect it did not constitute aid, and subsequently became aid due to the evolution of the common market and without having been altered by the Member State. Where certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation’. 15. Articles 17 to 19 of Regulation No 659/1999 set out the procedures for the monitoring of existing aid. Article 17 provides that the Commission is to review existing aid schemes in cooperation with the Member States. Where it considers that such a scheme is not, or is no longer, compatible with the common market, it is to inform the Member State concerned of its preliminary view and to give it the opportunity to submit its comments within a period of one month, which may be extended. 16. Article 18 of the regulation states that where the Commission, in the light of the information submitted by the Member State pursuant to Article 17, concludes that the existing aid scheme is not, or is no longer, compatible with the common market, it is to issue a recommendation proposing appropriate measures to the Member State concerned. The recommendation may propose, in particular: substantive amendment of the aid scheme, the introduction of procedural requirements, or the abolition of the aid scheme. 17. Pursuant to Article 19 of the regulation, where the Member State concerned does not accept the proposed measures and the Commission, having taken into account the arguments of the Member State concerned, still considers that those measures are necessary, it is to initiate the formal investigation procedure under Article 88(2) EC. III – The tax scheme applicable to the coordination centres 18. The tax scheme applicable to coordination centres adopted by the Kingdom of Belgium was introduced by Royal Decree of 30 December 1982. (8) It is common ground that no material amendments were made to it between the time when the Commission notified the Belgian Government that it considered that it did not constitute State aid, in 1984, in 1987 and then in 1990, and its decision of 17 February 2003. (9) 19. A coordination centre may be created as a Belgian company having legal personality or as a branch in Belgium of a foreign company. To benefit from the tax scheme introduced by Royal Decree No 187, a centre must first receive individual approval by royal decree. In order to obtain that approval, the centre must form part of a multinational group of companies. That condition requires, inter alia, that the members of the group be established in at least four countries. The group must also have capital and reserves of at least BEF 1 thousand million. It must in addition have an annual turnover of at least BEF 10 thousand million. Banks and insurance companies are excluded from the scheme. 20. The centre in question must have as its exclusive object the development and centralisation of one or more activities of a preparatory or auxiliary nature, which must be undertaken exclusively for the benefit of all or some of the group companies. (10) 21. At the end of the first two years of its operations, it must have the equivalent of at least 10 full-time employees in Belgium. 22. The approval granted to a centre is valid for 10 years and renewable for the same period. 23. The tax scheme for approved coordination centres comprises the following measures: – the centres’ taxable income is determined at a standard rate. It represents a percentage of their total operating expenses and costs, under exclusion of staff costs, financial charges and corporation tax; – the centres are exempt from property tax on the buildings they use to carry on their business activities; – the 0.5 per cent registration fee is not payable on contributions made to a centre or on increases to its registered capital; – the centres are exempt from withholding tax. They are thus exempt from withholding tax on dividends, interest and royalties distributed by those centres, with certain exceptions, and on income received by such centres on their cash deposits; – the centres pay an annual tax fixed at BEF 400 000 per full-time member of staff, but which cannot exceed BEF 4 000 000 per centre. IV – Facts and procedural background A – Facts prior to the Commission Decision 24. The tax scheme applicable to the coordination centres was investigated for the first time by the Commission in 1984. In a decision of 16 May 1984, it held that the scheme did not constitute aid. However, the scheme that was implemented in practice differed from the scheme that had been notified to it. The Commission therefore initiated the formal investigation procedure in December 1985. After alterations were made to the scheme by the Belgian Government, the Commission held that it no longer contained an aid element and, by letter of 9 March 1987, it informed the Government that the procedure had been closed. 25. That assessment was confirmed in the answer given on behalf of the Commission by Leon Brittan, the Commissioner responsible for competition, on 24 September 1990 to Written Question No 1735/90 by Mr Gijs de Vries, Member of the European Parliament. (11) 26. Following a review of tax competition between the Member States, the ‘Economic and Financial Affairs’ Council (Ecofin) adopted a code of conduct for business taxation. (12) It set up an ad hoc group, to be called the ‘Code of Conduct Group’, to assess national tax measures having harmful consequences for the common market. 27. Following that action by the Member States, the Commission undertook to draw up guidelines on the application of Articles 87 and 88 EC to measures relating to direct business taxation and committed itself ‘to the strict application of the aid rules concerned’. On 11 November 1998, the Commission accordingly adopted a notice on the application of the State aid rules to measures relating to direct business taxation. (13) On the basis of that notice, the Commission investigated or re-investigated the tax schemes in force in the various Member States. 28. In the course of those investigations, the Commission asked the Belgian authorities in February 1999 for information regarding the tax scheme applicable to the coordination centres, which was cited by the Code of Conduct Group as one of the 66 national measures that had potentially harmful consequences for the functioning of the common market. Those authorities replied in March 1999. 29. In July 2000, the Commission services informed those authorities that the scheme appeared to constitute State aid. For the purpose of initiating the cooperation procedure with those authorities in accordance with Article 17 of Regulation No 659/1999, the Commission services invited them to submit their observations within one month. 30. At its meeting of 26 and 27 November 2000, the ‘Ecofin’ Council noted that, in accordance with its resolution of 1 December 1997, all harmful measures relating to direct business taxation were to have been eliminated by 1 January 2003. It adopted a proposal from the Presidency that, as regards undertakings benefiting from a harmful tax scheme on 31 December 2000, the effects of those schemes would expire at the latest on 31 December 2005, whether they were schemes granted for a fixed period or not. It also decided that it could, on a case‑by-case basis and in order to take account of particular circumstances, decide following a report from the Code of Conduct Group to extend the effects of certain harmful tax schemes beyond 31 December 2005. (14) 31. Following an exchange of correspondence with the Belgian authorities, the Commission wrote to those authorities on 11 July 2001 to propose, on the basis of Article 88(1) EC, a number of appropriate measures to render the tax scheme applicable to the coordination centres compatible with the common market. In that letter, the Commission also indicated to those authorities that, as a transitional measure, coordination centres approved before those appropriate measures were accepted might continue to benefit from that tax scheme until 31 December 2005. (15) 32. As the Belgian authorities did not accept the measures proposed by the Commission, the latter initiated the formal investigation procedure by decision notified by letter of 27 February 2002 and published in the Official Journal of the European Communities on 20 June 2002. (16) In particular, it invited the Kingdom of Belgium to inform it of the number of coordination centres that had been approved at the date of that letter and, in respect of each of them, the date of the most recently granted approval or renewal. It also invited that Member State and interested third parties to submit observations and to supply any relevant information for determining whether the beneficiaries of the scheme at issue had legitimate expectations that transitional measures would be laid down. (17) 33. By letter of 16 May 2002, the Belgian authorities notified a new tax scheme applicable to the coordination centres to the Commission, which was registered by the Commission as new aid under reference N 351/2002. 34. On 21 January 2003, the ‘Ecofin’ Council approved the extension of the effects of certain harmful tax schemes beyond 2005. As regards the Belgian tax scheme applicable to the coordination centres, it provided that centres subject to the scheme on 31 December 2000 could continue to benefit from it until 31 December 2010. (18) B – The Commission Decision 35. On 17 February 2003, the Commission adopted the contested decision, which was notified on the same day to the Kingdom of Belgium. 36. In that decision, the Commission first of all gives its reasons for classifying the tax scheme applicable to the coordination centres as ‘existing aid’ and the legal basis for the procedure it followed. The decision states that Article 1(b) of Regulation No 659/1999 could serve as a legal basis in the matter and that, failing that, Articles 87 and 88 EC were to be treated as the true legal basis of the Commission’s action. 37. The decision of 17 February 2003 also indicates that, if it were to be regarded as a withdrawal or amendment of the decisions of 1984 or 1987, it satisfies the conditions for the exercise of the Commission’s right to withdraw or amend any unlawful favourable measure. 38. In the remainder of the decision, the Commission sets out the reasons why it takes the view that the various measures which form the tax scheme applicable to the coordination centres satisfy the conditions laid down under Article 87(1) EC, but do not qualify for any of the derogations provided for in Article 87(2) and (3). 39. The Commission lastly considers the legitimate expectations of the coordination centres. It recognises the existence of such expectations and indicates that they justify its allowing centres having an approval on 31 December 2000 to continue to enjoy the benefits of the tax scheme in question until the expiry of their period of approval current when the Decision of 17 February 2003 was notified and 31 December 2010, at the latest. It indicates that its position is based on the following grounds. 40. The Commission states that the approval granted by the Belgian authorities constitutes acknowledgement in advance that the approved centre will satisfy the requirements for benefiting from the derogating scheme laid down under Royal Decree No 187 for 10 years, without having to provide evidence of doing so each year. However, it indicates that that approval does not represent an undertaking on the part of those authorities to the approved centre that it will maintain the benefits conferred by that scheme for 10 years. It also notes that, in so far as it used the procedure for monitoring existing aid, its decision cannot have retroactive effect and that it must ensure legal certainty by setting, if necessary, a transitional period for the phasing out of the effect of the scheme at issue. 41. The Commission considers in that regard that it should take into account the substantial investments made by the coordination centres and the groups to which they belong relating to the creation and development of the infrastructure for the centres and the changes made to the organisation of the structures, networks, procedures and the distribution of activities within the group. It must also take into account the long-term commitments made to staff, property companies and financial institutions. The Commission states that, although approval provides no guarantee as to the continued existence of the tax scheme in question or of the benefits under it, it recognises that centres were established, investments made and commitments entered into in the reasonable and legitimate expectation of a certain degree of continuity in the economic conditions, including the tax scheme. It therefore concludes that it should allow a transitional period so that the scheme for the current beneficiaries may be gradually phased out. 42. However, it adds as the 120th recital: ‘Because the approvals do not represent a right to the continuation of the scheme or its advantageous character, even during the approval period, the Commission believes that they cannot, under any circumstances, confer a right to have the scheme renewed when the present approval expires. In view of the explicit restriction of the approval to 10 years it is impossible that a legitimate expectation should have been created as to automatic renewal, which would have amounted to approval that could theoretically last for ever.’ 43. The above considerations lead the Commission to draw the following conclusions: ‘121. The Commission concludes that the tax scheme covering coordination centres in Belgium is incompatible with the common market and that measures must be taken to remedy the incompatibility of its various components by abolishing or amending them. As of the date of notification of this Decision, new beneficiaries can no longer be covered by this scheme or sections thereof, nor can it be maintained by renewing existing approvals. The Commission notes that centres approved in 2001 have not benefited from the scheme since 31 December 2002. 122. As regards the centres currently covered by the scheme, the Commission acknowledges that the 1984 Decision approving Royal Decree No 187 and the reply to a Parliamentary question given by the Member of the Commission responsible for competition … gave rise to a legitimate expectation that the scheme did not violate the rules on State aid enshrined in the Treaty. 123. In view of the substantial investments made on this basis, as well as the need to respect legitimate expectations and the legal certainty of the beneficiaries, it is justifiable to allow a reasonable period for eliminating the scheme’s impact on the existing approved centres. The Commission takes the view that this reasonable period comes to an end on 31 December 2010. The centres whose approval expires before this date can no longer make use of their approval after the deadline. After the date on which approval lapses and at any rate after 31 December 2010, it will be unlawful to grant or maintain the tax concessions in question.’ 44. The operative part of the Decision of 17 February 2003 originally provided as follows: ‘Article 1 The tax scheme which currently operates in Belgium for the benefit of coordination centres approved under Royal Decree No 187 constitutes aid incompatible with the common market. Article 2 Belgium is required to withdraw the aid referred to in Article 1 or to amend it in such a way as to make it compatible with the common market. As of the date of notification of this Decision, the benefits of this scheme or sections thereof may no longer be granted to new beneficiaries or maintained by renewing existing agreements. With regard to centres approved before 31 December 2000, the scheme may be maintained until the expiry date of the individual approval applying on the date hereof and until 31 December 2010 at the latest. In accordance with the second paragraph, if approval is renewed prior to that date the benefits of the scheme dealt with in this Decision may no longer be granted, even temporarily. …’ 45. As it decided that the words ‘on the date hereof’ in the first sentence of the third paragraph of Article 2 of the decision might lead to confusion, the Commission decided to replace them with the words ‘on the date of notification of this Decision’. It therefore drew up a corrigendum to that effect, which was notified to the Kingdom of Belgium on 25 April 2003. 46. That corrigendum provides that the third paragraph of Article 2 of the Decision of 17 February 2003 should accordingly read as follows: ‘With regard to centres approved before 31 December 2000, the scheme may be maintained until the expiry date of the individual approval applying on the date of notification of this Decision (19) and until 31 December 2010 at the latest. In accordance with the second paragraph, if approval is renewed prior to that date the benefits of the scheme dealt with in this Decision may no longer be granted, even temporarily.’ 47. In the light of that corrigendum, the scope of the transitional measures laid down under the Decision of 17 February 2003 must be understood as follows, as all the parties accepted in the course of the proceedings. All coordination centres benefiting from an individual approval effective at the date the decision was notified, namely 17 February 2003, may continue to benefit from it until its expiry or, if earlier, 31 December 2010. However, no approval may be renewed after 17 February 2003. C – Procedures before the Court against the Commission Decision 48. By application of 25 April 2003, the Kingdom of Belgium brought proceedings for the annulment of the Decision of 17 February 2003, in its original version. It also requested that application of the decision be suspended. 49. Following the corrigendum notified to the Kingdom of Belgium on 25 April 2003, the latter submitted a fresh application to the Court dated 9 May 2003, on the basis of Article 42(2) of the Rules of Procedure, seeking to raise two new pleas in law and to bring the Commission Decision, in its corrected version, within the scope of its action for annulment. 50. By application of 28 April 2003, Forum 187 brought proceedings before the Court of First Instance of the European Communities for the annulment of the Commission Decision, in its original version. It also requested that application of the decision be suspended. On 16 May 2003, it brought an additional application against the Commission Decision, as corrected. 51. By order of 16 May 2003, the Court of First Instance declined jurisdiction in that action and that application for interim measures in favour of the Court of Justice, where those matters were registered under numbers C-217/03 and C-217/03 R, respectively. 52. By separate document of 16 June 2003, the Commission raised a plea that the action brought by Forum 187 was inadmissible. The latter lodged its observations in reply to that objection on 7 August 2003. By order of 30 March 2004, the Court reserved a decision on that plea until the final judgment. 53. By order of 26 June 2003, the President of the Court gave a ruling on the requests brought by the Belgian Government and Forum 187 that application of the Commission Decision be suspended. He made the following order: ‘1. The operation of the decision of the Commission C (2003) 564 final of 17 February 2003 concerning the aid scheme implemented by Belgium in favour of coordination centres established in Belgium is suspended insofar as it prohibits the Kingdom of Belgium from renewing coordination centre authorisations effective as at the date of notification of the decision. 2. The effects of renewals made pursuant to this order shall not extend beyond the day on which judgment is given in the main action. …’ 54. Cases C-182/03 and C-217/03 were joined for the purposes of the oral procedure and the judgment. The parties presented oral argument at the hearing on 14 September 2005. D – Facts subsequent to the Commission Decision 55. First, the Commission carried out an investigation into the new tax scheme applicable to the coordination centres notified by the Kingdom of Belgium by letter of 16 May 2002. 56. By decision of 23 April 2003, the Commission approved the new scheme in so far as it provides for, in particular, prior authorisation for the coordination centres to be granted for a 10-year period and for the tax base to be calculated by reference to the sum of operating costs, coupled with a suitable profit margin. However, as the new scheme also incorporated an exemption for such centres from withholding tax and capital duty and provided that the ‘abnormal and gratuitous’ advantages granted to those centres fell outside the charge to tax, the Commission initiated the formal investigation procedure in relation to those three measures. 57. Following the initiation of that procedure, the Kingdom of Belgium undertook to withdraw the exemptions concerned and to replace them by other exemptions or reductions applying to all undertakings established in that country. It also undertook to bring all abnormal and gratuitous advantages received by the coordination centres within the charge to tax. 58. By a decision of 8 September 2004, the Commission held that, in the light of those undertakings, the measures constituting the new tax scheme applicable to the coordination centres did not constitute aid for the purposes of Article 87(1) EC. (20) 59. However, at the hearing on 14 September 2005, the representative of the Kingdom of Belgium stated that the Belgian authorities had been unable to obtain sufficient information from the Commission services to put the new scheme into practice and that it had ultimately been abandoned, as had been notified to the Commission by letter of 28 February 2005. He also indicated that the Kingdom of Belgium had opted for measures of general application, which had been adopted in the summer of 2005. 60. Secondly, the Kingdom of Belgium has adopted measures to benefit coordination centres having an approval which expired after the Decision of 17 February 2003. 61. By letter of 20 March 2003, the Minister for Finance of the Kingdom of Belgium notified the Commission, pursuant to Article 88(3) EC, of his intention to grant, until 31 December 2005, the benefit of tax measures similar to those laid down under the scheme for coordination centres to centres having an approval which expired between 17 February 2003 and 31 December 2005. 62. The Kingdom of Belgium also asked the Council, by letter of the same date, to declare those measures compatible with the common market in accordance with the third subparagraph of Article 88(2) EC. 63. By letter of 25 April 2003, the President of the Commission replied to the Belgian Minister for Finance that the Decision of 17 February 2003 had taken effect, that it was not open to Belgium to suspend its application and that, since the decision expressly governed the grant and renewal of benefits under the tax scheme at issue, the letter of 20 March 2003 could not be considered as notification of new aid for the purposes of Article 88(3) EC. 64. By letter of 26 May 2003, the Kingdom of Belgium again notified the Commission that it intended to take the measures set out in its letter of 20 March 2003. By letter of the same date, it also asked the Council to declare the proposed measures compatible with the common market in accordance with the third subparagraph of Article 88(2) EC. 65. At its meeting of 3 June 2003, the ‘Ecofin’ Council gave agreement in principle to that request and instructed the Committee of Permanent Representatives to the take all measures necessary to allow the Council to adopt the proposed decision at the earliest opportunity, and, in any event, before the end of June 2003. 66. By letter of 17 July 2003, the Commission, in reply to the notification given by the Kingdom of Belgium by letter of 26 May 2003, confirmed its reply of 25 April 2004, without prejudice to the interim order of 26 June 2003. E – The Council Decision 67. In its Decision of 16 July 2003, the Council notes the legal and factual background to the request from the Kingdom of Belgium to authorise the proposed measures relating to the coordination centres having an approval which expired between 17 February 2003 and 31 December 2005. 68. In that context, it states that the Commission had held in 1987 and 1990 that the tax scheme applicable to the coordination centres introduced by Royal Decree No 187 did not give grounds for objection. It refers to the circumstances leading that institution to undertake a further investigation into that scheme and describes the terms of the Decision of 17 February 2003. The Council also notes that at its meeting of 26 and 27 November 2000 proposals were approved whereby undertakings benefiting from a harmful tax scheme as at 31 December 2000 could continue to do so until 31 December 2005 and that it reserved the right to grant an extension beyond that date in order to take account of special circumstances. 69. The Council next states that the centres referred to in the application by the Kingdom of Belgium hold temporary approvals, which, by virtue of Royal Decree No 187, were renewable, that if the proposed measures were not to proceed those centres might be obliged to cease operating in Belgium and that such a cessation of activities would have very negative economic and social repercussions for that Member State. 70. The Council also mentions that the Commission provided in its decision for the effects of the tax scheme applicable to the coordination centres to be maintained in the case of approvals expiring after 31 December 2005 and that other decisions of the Commission specified time-limits of up to 31 December 2010 for competitive tax schemes of other Member States, so that the application of the particular measures proposed by the Kingdom of Belgium should not give rise to potential distortions of competition that were disproportionate having regard to the anticipated advantages. 71. The Council concludes from that that exceptional circumstances indeed exist to justify giving the Kingdom of Belgium leave to grant, until 31 December 2005, the benefit of the proposed tax measures to coordination centres having an approval in force as at 31 December 2000 and an approval which expires between 17 February 2003 and 31 December 2005. 72. In the light of those factors, the Council adopted the following decision: ‘Article 1 The aid which Belgium plans to grant in the period up to 31 December 2005 to undertakings authorised as at 31 December 2000 to act as coordination centres under Royal Decree No 187 of 30 December 1982, and whose authorisations expire between 17 February 2003 and 31 December 2005, shall be considered compatible with the common market; by way of derogation from the general rules on taxation, it involves: – application of the normal corporate tax rate to a theoretical tax base corresponding to a variable percentage of certain operating costs (the “cost-plus” method). However, an alternative tax base is used if it exceeds the tax base resulting from application of the “cost-plus” method; this alternative tax base includes the abnormal or benevolent advantages received by the centres and non-deductible expenses, – application of a special annual tax of EUR 10 000 per employee, with a ceiling of EUR 100 000, – exemption from the précompte immobilier (property tax) on buildings owned by the centres which they use for their professional activity, – exemption from précompte mobilier ( withholding tax) on dividends, interest and royalties paid by the centres except, in the case of interest, where the beneficiary is subject to tax on natural persons or to tax on legal persons, – exemption from withholding tax on the income with the centres receive a their cash deposits, – exemption from the 0.50 % registration tax on subscriptions of capital and on increases in authorised capital. – …’ F – Procedure before the Court against the Council Decision 73. By application of 24 September 2003, the Commission brought an action for the annulment of the Council Decision before the Court. 74. The Council lodged its defence on 16 December 2003, the Commission lodged its reply on 27 February 2004 and the Council lodged its rejoinder on 18 May 2004. 75. After the end of the oral procedure, the Court delivered its judgment of 29 June 2004 in Commission v Council , (21) in which it held that the Council no longer had the power to authorise, on the basis of the third subparagraph of Article 88(2) EC, the grant to the beneficiaries of unlawful aid which has been declared to be incompatible with the common market by a decision of the Commission of an amount designed to compensate for the repayments which they are required to make pursuant to that decision. (22) 76. The parties made their submissions as to the consequences to be drawn from that judgment in the context of the present action at the hearing on 14 September 2005. V – The actions 77. I shall start by considering the action brought by the Commission against the Council Decision. A – The action against the Council Decision (Case C‑399/03) 1. Forms of order sought and pleas in law 78. The Commission claims that the Council Decision should be annulled and that the latter should be ordered to pay the costs. 79. In support of its application, it raises three pleas in law alleging, first, a lack of competence on the Council’s part, secondly, misuse of powers and abuse of process and, thirdly, infringement of the Treaty and the general principles of Community law and, in the alternative, a manifest error of assessment as to the existence of exceptional circumstances. 80. It argues that the first plea is well founded in the light of the judgment in Commission v Council . It states that the objective of the Council Decision is to maintain in place the tax scheme at issue which it has held to be incompatible with the common market and that it does not relate to a new aid scheme or to individual measures, as the Council contends. 81. It also submits that the Council was no longer competent, rationae temporis, to adopt the Decision of 16 July 2003, as Article 88(2) EC allowed it a period of three months in which to determine its position and that the date on which the Kingdom of Belgium notified the Council of the aid in question should be set at 20 March 2003. 82. The Council’s primary contention is that the action should be dismissed and it contends, in the alternative, that its decision should be maintained in force until the date on which the Court delivers its judgment. It also maintains that the Commission should be ordered to pay the costs. 83. The Council submits that the solution adopted in the judgment in Commission v Council cannot be applied to the these proceedings since, in the present case, it authorised new aid, which was not the same as that in relation to which the Commission had given a ruling. 84. It states that the fact that an aid scheme has been held to be incompatible does not prevent the Member State concerned from granting new aid to the undertakings which might have benefited from the previous scheme, as indeed Regulation No 659/1999 expressly provides. 85. It argues that the aid authorised in its decision is not the same as the tax scheme applicable to the coordination centres classified by the Commission as State aid incompatible with the common market for the following reasons: first, at a formal level, it was introduced by different statutory provisions; secondly, unlike the former tax scheme, it applies to a limited number of identifiable undertakings, that is to say the 30‑odd coordination centres having an approval which expires between 17 February 2003 and 31 December 2005; lastly, its decision has no effect beyond 31 December 2005. 86. The Council submits that the fact that the Commission declared the tax scheme applicable to the coordination centres to be incompatible with the common market does not preclude the Kingdom of Belgium granting to certain centres tax advantages similar to those provided for by the previous scheme. 87. The Council goes on to state that its decision is not intended to overturn the effects of the Commission Decision. As the Commission has declared that the tax scheme applicable to the coordination centres henceforth constitutes State aid, the Council and the Commission are entitled to authorise aid measures if they form the view that the circumstances justify them. 88. As regards, lastly, the period which elapsed between the application by the Kingdom of Belgium and the Decision of 16 July 2003, the Council has argued that the letter of the Permanent Representative of Belgium to the European Union of 20 March 2003 is only a preparatory document, intended to facilitate translation, in order that discussions on the proposed measures might take place. The application of the Kingdom of Belgium was accordingly not submitted to it until 26 May 2003. 2. Appraisal 89. Having regard to the analysis of the division of powers in State aid matters between the Council and the Commission adopted by the Court in Council v Commission , which was a judgment of the Full Court, I am of the opinion that the plea alleging lack of competence by the Council to adopt the Decision of 16 July 2003 is well founded. 90. In support of my analysis, I shall start by noting the facts and the reasoning of the Court in that judgment. 91. In 1994 and 1999, the Portuguese Republic introduced various aid schemes in favour of a number of agricultural undertakings in the form of credits, moratoria on the repayment of borrowings and loans at favourable rates. The Commission held that aid to be incompatible with the common market, in whole or in part, and ordered that it be repaid by the beneficiaries, together with interest on the sums due. 92. Following the decisions of the Commission, the Portuguese Republic requested the Council, on the basis of the third subparagraph of Article 88(2) EC, to authorise it to grant aid to the Portuguese farmers obliged to repay that aid. The new aid was of the same amount as the sums due. 93. The Council granted that request. (23) It stated that repayment of the aid granted by the Portuguese Republic would threaten the economic viability of a number of beneficiaries and would have extremely damaging social effects in certain regions of that Member State. (24) It concluded from that that exceptional circumstances existed, within the meaning of the third subparagraph of Article 88(2) EC, justifying the authorisation of the proposed measure. 94. The Commission brought proceedings for the annulment of that decision before the Court, in which it invoked, inter alia, a plea that the Council was not competent to take such a decision. 95. In its appraisal of that plea, the Court adopted a two-stage reasoning. First, it defined the scope of the third subparagraph of Article 88(2) EC, which lays down the powers of the Council in matters of State aid. It stated that that provision was exceptional in character, as Articles 87 EC and 88 EC reserve a central role for the Commission in determining whether aid is incompatible. 96. It also concluded from the third and fourth subparagraphs of Article 88(2) EC that, if the Member State concerned has made no application to the Council before the Commission declares the aid in question to be incompatible with the common market, the Council is no longer authorised to exercise the exceptional power conferred on it by the third subparagraph in order to declare such aid to be compatible with the common market. (25) 97. It added that such an interpretation, which avoids the same State aid being the subject of contrary decisions taken successively by the Commission and the Council, contributes to legal certainty. 98. Secondly, the Court held that the limitation thus imposed on the Council’s powers implies that it also lacks the power to rule on an aid measure having the aim of allocating to beneficiaries of the unlawful aid declared to be incompatible by a Commission decision an amount designed to compensate for the repayments which they are obliged to make pursuant to that decision. 99. It stated that it had consistently been held that the abolition, by means of recovery, of State aid which has been unlawfully granted is the logical consequence of its being found to be unlawful, since the aim of obliging the Member State granting it to abolish aid is to restore the previous situation and that objective is obtained once the aid in question, increased where appropriate by default interest, has been repaid by the recipient. 100. It concluded from that that to hold that a Member State may grant to beneficiaries of unlawful aid, which has been declared to be incompatible with the common market by a decision of the Commission, new aid in an amount equivalent to that of the unlawful aid, intended to neutralise the impact of the repayments which the beneficiaries are obliged to make pursuant to that decision, would clearly amount to thwarting the effectiveness of decisions taken by the Commission under Articles 87 EC and 88 EC. 101. The Court stated that, in the same way that the Council cannot paralyse the effectiveness of a decision of the Commission finding aid to be incompatible with the common market by itself declaring the aid compatible with the common market, nor can the Council thwart the effectiveness of such a decision by declaring compatible with the common market, in accordance with the third subparagraph of Article 88(2) EC, aid designed to compensate the beneficiaries of the unlawful aid declared to be incompatible for the repayments they are required to make pursuant to that decision. (26) 102. The application of those rules in the present case leads to the conclusion that the Council could not validly adopt the Decision of 16 July 2003. 103. It was only after the Decision of 17 February 2003 that the Kingdom of Belgium brought an application before the Council under the third subparagraph of Article 88(2) EC. Accordingly, the effect of the judgment in Commission v Council (27) is that the Council was no longer authorised to exercise the exceptional power conferred on it by that provision in order to declare compatible with the common market the national scheme which the Commission had declared to be incompatible in that decision. Similarly, the judgment provides that the Council could not thwart the effectiveness of that decision. 104. Contrary to what the Council maintains, I am of the opinion that in adopting its Decision of 16 July 2003 it infringed both those rules. 105. Thus, a comparison of the measures described in Article 1 of the Council Decision and in the letters from the Kingdom of Belgium of 28 March and 26 May 2003 shows that the content of those measures is the same as those laid down under the tax scheme applicable to the coordination centres which was the subject of the Commission Decision. The measures authorised by the Council involve the application of the same method for determining taxable benefits, together with liability for the same tax in respect of the number of employees as in the tax scheme applicable to the coordination centres. They also comprise the same exemptions from withholding tax, property tax and capital duty. 106. It should next be noted that the measures referred to in the Council Decision are authorised for the benefit of the coordination centres having rights on 31 December 2000 under the tax scheme declared to be incompatible with the common market and having an approval which expired between 17 February 2003 and 31 December 2005. Those measures are accordingly authorised for the benefit of undertakings which had rights under the aid scheme declared to be incompatible by the Commission Decision and which, under that decision, could not obtain a renewal under that scheme. 107. Lastly, it is clear from the statement of reasons in the Council Decision that its object is to overcome the effects of the Commission Decision as regards the coordination centres having an authorisation which expired between 17 February 2003 and 31 December 2005. (28) 108. In so authorising the Kingdom of Belgium to treat the coordination centres having an approval expiring between 17 February 2003 and 31 December 2005 in the same way for tax purposes as under the scheme which was declared to be incompatible by the Commission in its Decision of 17 February 2003 in order to overcome the inability to renew that scheme for the benefit of those centres, the Council did indeed rule on the compatibility of a scheme in relation to which the Commission had already adjudicated and it did indeed seek to negate the effects of that decision in their regard. 109. None of the arguments relied on by the Council appears to me to be capable of calling that analysis into question. Thus, the fact that the measures authorised by the Council were based, in terms of form, on new legislative provisions enacted by the Kingdom of Belgium and not on a request that the effects of the tax scheme introduced by Royal Decree No 187 be extended justifies their being treated as separate measures. It is plain that the division of powers between the Council and the Commission laid down by the Court in its judgment in Commission v Council could be easily circumvented and the effectiveness of a decision of incompatibility could be largely undermined if it were to be sufficient for the Member State concerned to reproduce in identical terms, in new legislation, the provisions of an aid scheme declared to be incompatible with the common market and to submit it to the Council. 110. In the light of the judgment in Commission v Council , it is necessary to have regard to the effects of the measures to which the decisions taken by the Commission and thereafter by the Council relate in order to determine whether the latter acted within the scope of the powers conferred on it by the third subparagraph of Article 88(2) EC. 111. Similarly, the arguments that the Council Decision covers only a precise and determined number of undertakings and has effects which are limited as to time do not justify the conclusion that the Council was entitled to authorise the measures concerned on the basis of the third subparagraph of Article 88(2) EC. 112. As the reasoning set out in the judgment in Commission v Council makes clear, the object of the division of powers between the Council and the Commission in matters of State aid is to contribute to legal certainty by avoiding the same aid being the subject of contrary decisions taken successively by those institutions. (29) Where the Commission has declared aid to be incompatible with the common market, it is for the Member State and the beneficiaries of that measure to make use of the means of obtaining redress before the Community judicature and the national courts in order to challenge, directly or indirectly, that decision. Legal certainty also requires that, where the Commission’s decision has become final, it cannot be annulled by a Council Decision. Lastly, it is necessary to avoid any conflict between a decision of the Council and a judgment of the Community Courts delivered in relation to the previous decision of the Commission. 113. Having regard to those objectives, the determinative criterion is whether the Council Decision is, or is not, in conflict with the Commission Decision or deprives it of all effect. It is therefore of little relevance that the Council Decision applies to a smaller number of undertakings than the Commission Decision or that the measures it authorises have a shorter duration than the tax scheme declared to be incompatible by the Commission. In the present case, it is sufficient to note that Article 2 of the Commission Decision provides that, as of the date of its notification, the benefits of the scheme in question may no longer be extended by the renewal of existing agreements (second paragraph) and that, if the approval is to expire before 31 December 2010, the benefits of the scheme may no longer be granted, even temporarily (third paragraph). 114. It follows that the Council no longer had the power to authorise the Kingdom of Belgium to grant to its centres a tax treatment that was the same as that declared to be incompatible by the Commission. I am therefore of the opinion that the first plea relied on by the Commission, alleging lack of competence on the Council’s part to adopt the Decision of 16 July 2003, is well founded and that the latter should accordingly be annulled. 115. In the light of the foregoing, I therefore propose that the Court should annul the Council Decision, without it being necessary to consider the other pleas relied on by the Commission in support of its application. The Council, which is the unsuccessful party to this action, should pay the costs. 116. The Council requests that, should its Decision of 16 July 2003 be annulled, its effects be maintained in force until the date on which the Court’s judgment is delivered. 11 7. I do not consider that that request should be granted for the following reasons. The object of the division of powers in State aid matters laid down under Article 88 EC is, as mentioned above, to avoid conflict, not only between the Commission and the Council in relation to the same national measure, but also between the Council and the Community Courts when the latter rule on an application for the annulment of a Commission decision. 118. In the present case, the Decision of 17 February 2003 is the subject of an action brought by each of the Kingdom of Belgium and Forum 187. The object of the application brought by the Member State is the annulment of the decision in so far as it prohibits the renewal of the approvals expiring after 17 February 2003. It is also the case that the Kingdom of Belgium and Forum 187 have, by virtue of the interim order of 26 June 2003, been granted an order for the suspension of the operation of the Commission Decision in so far as it prohibits any renewal of approvals from that date. It follows that, by virtue of that order, the Kingdom of Belgium may renew the approval granted to those centres having an approval which expires after 17 February 2003. That order therefore has effects which are similar to those of the Council Decision because, as mentioned above, the tax measures covered by the latter are the same as those laid down under the tax scheme applicable to the coordination centres. 119. That being the case, the Council has no interest in requesting that the effects of its decision be maintained until the Court delivers its judgment if the Court grants the applications brought by the Kingdom of Belgium and Forum 187. 120. If, on the other hand, the Court rejects those applications and negates the effects of the interim order, it would be illogical and contrary to the division of powers laid down under Article 88 EC to provide that the Council Decision is to be effective until the Court delivers its judgment. In so far as that judgment cannot, in fact, be delivered before 31 December 2005, such an approach would mean that the annulment of the Council Decision becomes pointless. B – The actions against the Commission Decision (Joined Cases C‑182/03 and C‑217/03) 1. Forms of order sought a) Case C-182/03 Belgium v Commission 121. The Kingdom of Belgium asks the Court to annul the Commission Decision in so far as it does not authorise it go grant, even temporarily, renewal of ‘coordination centre status’ to those centres which benefited from it on 31 December 2000. 122. It application seeks the annulment of the second and third paragraphs of Article 2 of the Commission Decision in so far as that article provides that ‘as of the date of notification of this Decision, the benefits of this scheme or sections thereof may no longer be … maintained by renewing existing agreements’ and that ‘in accordance with the second paragraph, if approval is renewed prior to [31 December 2010] the benefits of the scheme dealt with in this Decision may no longer be granted, even temporarily’. (30) 123. That Member State also asks that the Commission be ordered to pay the costs, including those relating to the interlocutory proceedings. 124. In the document of 9 May 2003, lodged following the corrigendum of 23 April 2003, the Kingdom of Belgium raised two new pleas in law, directed against that corrigendum. The first of those pleas alleged infringement of the principle of legal certainty by reason of the difficulties of interpretation which, according to that Member State, the new wording of the third paragraph of Article 2 of the Decision of 17 February 2003, as amended by that corrigendum, continued to give rise to. However, in the light of the explanations provided by the Commission in its defence as to the meaning of that article and the scope of the interim measures which it lays down, the Kingdom of Belgium expressly withdrew that new plea in its reply. (31) It is therefore unnecessary to consider that plea. 125. The second of those new pleas involves the circumstances in which the corrigendum was adopted. In that plea, the Kingdom of Belgium stated that it had serious doubts as to the propriety of the procedure under which that document was adopted. It also expressly reserved the right to challenge its validity. It argued that it was for the Commission to indicate the decision-making procedure under which the measure had been taken and to supply evidence that it had been attached to the summary note or the day-note, as the case may be, provided for in Article 18 of the Rules of Procedure of the Commission. (32) Failing that, it would be the task of the Court to prescribe the measures of inquiry, by order made pursuant to Article 45 of its Rules of Procedure, which it considered appropriate, while reserving the applicant’s rights. 126. In its defence, the Commission argued that the corrigendum of 23 April 2003 had had the same official authentification seals applied to it as the original version of the Decision of 17 February 2003. It also maintained that that measure had been adopted under the oral procedure at the meeting of the College of 23 April 2003, and was fully compliant with its rules of procedure. 127. It should be pointed out that in its additional application the Kingdom of Belgium did not ask for the annulment of the corrigendum, but merely reserved the right to challenge its validity at a later stage. It therefore did not bring an actual application before the Court, pursuant to Article 38 of the Rules of Procedure. 128. I should also note that the Kingdom of Belgium has given no reason to believe that the corrigendum was adopted without regard to the Rules of Procedure of that institution and that it is accordingly vitiated by an infringement of its essential procedural requirements. The Kingdom of Belgium does no more in that regard than refer to the fact that the document was a corrigendum. However, the explanations provided by the Commission show that the measure followed the same adoption procedure as the original version of 17 February 2003. (33) Support for that position is to be found in the fact that the Commission’s letter of 23 April 2003 and the corrected version of the Decision of 17 February 2003 bear the same authentification seals as the original version of the decision. Lastly, it appears that neither in its reply nor in the oral procedure did that Member State maintain its challenge to the propriety of the procedure followed for the adoption of that corrigendum. 129. I am therefore of the opinion that the second new plea put forward by the Kingdom of Belgium in its additional application is not admissible, as it is not raised in support of an application or, alternatively, that it should be rejected. 130. In the light of the foregoing, the matter brought before the Court by the Kingdom of Belgium is thus an application for partial annulment of the Commission Decision, in so far as it does not authorise it to renew, even temporarily, the approvals of the coordination centres which benefited from the scheme in question on 31 December 2000 and had an approval which expired before 31 December 2010. 131. The Commission contends that that application should be rejected and that the Kingdom of Belgium should be ordered to pay the costs, including those relating to the interlocutory procedure. b) Case C-217/03 Forum 187 v Commission 132. In its application received at the Registry of the Court of First Instance on 30 April 2003, Forum 187 asked that Court to annul the Decision of 17 February 2003 in whole or in part. 133. By that application, Forum 187 seeks primarily the annulment of that decision in its entirety, in particular in so far as Article 1 of the decision holds the tax scheme applicable to the coordination centres to be State aid incompatible with the common market. It also seeks, in the alternative, partial annulment of the Commission Decision inasmuch as it failed to lay down adequate transitional measures. 134. In its original application, Forum 187 complained that the Commission had failed to adopt transitional measures in relation to, first, coordination centres having an approval which was renewed between 31 December 2000 and 17 February 2003 and, secondly, those having an approval which expired after 17 February in 2003 and in 2004. However, following the correction of Article 2 of the Decision of 17 February 2003, Forum 187 withdrew its application as regards the centres having an approval which was renewed between 31 December 2000 and 17 February 2003. (34) 135. Lastly, Forum 187 seeks an order that the Commission pay the costs of Cases C-217/03 and T-276/02. (35) 136. Following the corrigendum of the Decision of 17 February 2003, Forum 187 lodged at the Court an additional application of 16 May 2003, in which it stated that the Commission’s error in the wording of Article 2 of the decision had led it to put forward arguments which were no longer relevant. It asked that that institution be ordered to bear the costs thereby occasioned, whatever the result of the action for annulment might be. 137. The Commission contends that the Court should reject the action brought by Forum 187 as being manifestly inadmissible and, in the alternative, unfounded. It also contends that Forum 187 should be ordered to pay the costs. 138. I shall start by considering the plea of inadmissibility raised by the Commission against the action brought by Forum 187. 2. The admissibility of the action brought by Forum 187 a) Arguments of the parties 139. The Commission submits that Forum 187 does not have locus standi to challenge the Decision of 17 February 2003, which is not addressed to it, since it is not directly and individually concerned by the decision. 140. It states that an association such as Forum 187, which was constituted in order to protect the collective interests of a category of persons, cannot be individually concerned by a measure affecting the general interests of that category. Forum 187’s application could be admissible only if that association were to show that its own interests are affected by the Decision of 17 February 2003, or that it is acting as representative of a number of its members who themselves would have locus standi . 141. As regards the first point, the Commission argues that Forum 187 cannot claim to be directly and individually concerned by the Decision of 17 February 2003 by reason of its position in relation to the Belgian authorities and its participation in the administrative procedure leading to the decision. 142. It states that, according to the judgment in Arbeitsgemeinschaft Deutscher Luftfahrt-Unternehmen and Hapag-Lloyd v Commission , (36) the mere fact that Forum 187 has submitted observations on behalf of its members during that procedure is not in itself sufficient to confer the requisite locus standi on it. It maintains that it has never recognised Forum 187 as being entitled to conduct negotiations on behalf of its members, nor does that association enjoy any official or quasi-official status with the Belgian authorities. The position of Forum 187 is thus different from that of the association involved in the facts leading to the judgment in AIUFFASS and AKT v Commission , (37) which was in a unique situation in the textile industry sector. Nor is the position of Forum 187 similar to that of the Landbouwschap, whose action was declared to be admissible in Van der Kooy and Others v Commission (38) and which had negotiated with the Netherlands Government the preferential gas tariff held to be State aid incompatible with the Treaty. 143. The Commission also states that Forum 187 cannot claim that the Decision of 17 February 2003 threatens its raison d’être , since the decision does not require in any way that the activities of the coordination centres in Belgium should cease. 144. As regards the second point, the Commission argues that its decision covers an aid scheme which is available to a category of undertakings and not a group of individual measures granting aid to one or more undertakings identified by name. It is therefore a measure of general application which applies to objectively determined situations and which has legal effects in relation to categories of persons denoted in the abstract. The Commission contends that the decision also does not apply to a closed class of persons, the number and identity of which are known or can be ascertained, but to all undertakings, present, past and future, which may have been entitled to claim the benefits of the tax scheme applicable to the coordination centres. 145. The Commission states that Forum 187 does not refer to any feature which would lead to the conclusion that some of its members are concerned ‘by reason of certain attributes peculiar to them, or by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed’, to adopt the wording which has been used since Plaumann v Commission . (39) An undertaking which currently manages a coordination centre or which contemplates setting up such a centre in the future would be affected by the Commission Decision only by virtue of its objective status as a current or potential beneficiary of the tax scheme at issue, so that it is not directly and individually concerned by the Decision of 17 February 2003. 146. Moreover, none of the members of Forum 187 was given special treatment by either the Belgian authorities, when the scheme was introduced, or by the Commission, when it was investigated. The position of the members of Forum 187 differs from that of the beneficiaries of individual aid granted under a sectoral scheme which they are obliged to repay, as was the case in CETM v Commission , (40) Italy and Sardegna Lines v Commission (41) and Italy v Commission . (42) In the present case, no member of Forum 187 had an existing and established right which was affected by the Decision of 17 February 2003. The Commission states in that regard that the transitional measures allowed all the coordination centres to benefit from their current approval until the date of its expiry, save for those having an approval which extended beyond 31 December 2010. 147. As regards more particularly the coordination centres having an approval which expired shortly after the Decision of 17 February 2003, their situation was no different from that of the other members of Forum 187, so that it could be could be said that they were distinguished individually in the same way as an addressee. Where a tax scheme provides a benefit that is limited as to time, it is inevitable that not all approvals will expire at the same point. The date on which such expiry occurs is an objective factor which shows that those centres are affected by a general measure and that such an effect may vary in its application. The Commission also points out that those centres did not have an established right to the renewal of their approval. The question whether they might have a legitimate expectation that their approval would be renewed is one which goes to the merits. 148. Lastly, the members of Forum 187 are not completely precluded from bringing proceedings, as they can challenge any measure taken by the national authorities which affects their tax position before the Belgian courts. They can challenge the validity of the Decision of 17 February 2003 in the context of those proceedings. 149. Forum 187 contests the plea of inadmissibility raised by the Commission and submits that its application should be held to be admissible on two grounds. First, a number of its members are directly and individually concerned by the Commission Decision. These comprise, first, the 30 centres which had their approval renewed during 2001 and 2002 and for which the period during which they may benefit from the tax scheme at issue is restricted to 31 December 2010. Secondly, they comprise the eight centres having an application for renewal which was pending when the Commission Decision was adopted and which cannot, because of it, benefit from such an application. (43) 150. Forum 187 secondly submits that it is affected by the Commission Decision as it is the representative body for the coordination centres which is recognised by the Belgian authorities, with which it has a quasi-official status, as is evidenced by the documents annexed to its reply to the plea of inadmissibility. It collaborated closely with those authorities when the Commission and the Code of Conduct Group investigated the tax scheme applicable to the coordination centres and the Belgian Government regularly asked it to inform its members of changes in the situation. Forum 187 is therefore individually concerned by the Commission Decision, in accordance with the principles laid down by the Court in Van der Kooy and Others v Commission. 151. Forum 187 adds that it is individually concerned by the Commission Decision since the decision affects its raison d’être . Thus, in the absence of any replacement tax scheme, a large number of coordination centres will be obliged to ask themselves whether they wish to remain in Belgium. 152. Forum 187 lastly claims that it played an important part in the administrative procedure before the Commission and that the latter informed it directly of its decision. b) Appraisal 153. As was stated at the hearing and as is clear from case-law, an association such as Forum 187, which is responsible for protecting the collective interests of undertakings, is, as a matter of principle, entitled to bring an action for annulment against a final Commission Decision in matters of State aid only in two cases. Its application is admissible, first, where the undertakings which it represents or some of those undertakings themselves have locus standi . (44) The association is then considered to be acting in place of its members. Secondly, its action is also admissible if it can prove an interest of its own in bringing the action. Case-law recognises that such a situation may arise where, in particular, the association’s position as negotiator has been affected by the measure which it is sought to annul. (45) 154. That delineation of the admissibility of an action brought by an association for the protection of collective interests before the Community Courts flows from the fourth paragraph of Article 230 EC, which makes an action for annulment brought by natural or legal persons against a decision which is not addressed to them subject to the requirement that it concern them both directly and individually. If the measure in question does not satisfy those requirements, an action to challenge it by a natural or legal person is inadmissible. Furthermore, each of those necessary requirements involves a question of public policy, so the Community judicature must raise the inadmissibility of its own motion. (46) 155. An association for the protection of collective interests is therefore not entitled to seek the annulment of a decision which is not addressed to it unless that decision concerns it or its members directly and individually. It follows that, in accordance with settled case-law, an association is not entitled to bring proceedings against such a measure for the benefit of the general and collective interests of the undertakings which it represents. (47) It is thus a question of preventing parties being able, through the creation of such an association, to circumvent the requirements of the fourth paragraph of Article 230 EC. (48) 156. It is in the light of those considerations that the admissibility of the action for annulment brought by Forum 187 against the Commission Decision should be appraised. For that purpose, I shall start by considering whether the action brought by that association is admissible on the basis that it is affected by that decision in terms of its own interests. i) The admissibility of the action brought by Forum 187 on the basis that it is itself directly and individually concerned 157. Forum 187 maintains that it is individually concerned by the Commission Decision because, first, its position as negotiator was affected by that decision and, secondly, the decision threatened its very existence. I am of the opinion that Forum 187’s arguments cannot be accepted as regards either of these points. 158. As regards, first, the impact on its position as negotiator, it should be noted that this criterion was laid down by the Court in its judgment in Van der Kooy and Others v Commission , the facts of which are highly unusual. 159. Thus, the Court held in relation to the circumstances which gave rise to that judgment that the decision given by the Commission classifying preferential tariffs for the supply of gas for glasshouse growers as State aid incompatible with the common market affected the position as negotiator of the Landbouwschap, the body established under Netherlands public law responsible for protecting the interests of operators in the agricultural sector, not only because that body had actively participated in the formal investigation procedure initiated by the Commission, but also because it had negotiated those tariffs with the supplier, with, moreover, its signature appearing on the agreement establishing those tariffs and that, following the Commission’s decision, it had been obliged to undertake fresh negotiations and to enter into a fresh agreement. Accordingly, the Landbouwschap had, in effect, jointly participated in the framing of the national scheme at issue. 160. In CIRFS and Others v Commission , the Court also accepted that an application brought by an association was admissible, where the latter’s position as negotiator was affected in a different way. In that case, the matter before the Court was an action brought by the CIRFS, an association whose membership consisted of the main international producers of synthetic fibres against a decision in which the Commission had held that aid granted by a Member State did not require to be the subject of prior notification because that aid did not fall within the scope of the ‘discipline’ agreed to by the Member States in relation to aid to the Community synthetic fibre industry, which was set out in a Commission notice. 161. The Court held that the position of the CIRFS as negotiator was affected because that association had pursued, in the interest of the main international producers of synthetic fibres, a number of actions connected with the policy of restructuring that sector of activity and that it had, in particular, acted as the Commission’s interlocutor with regard to the introduction of the discipline relating to the conditions for the grant of State aid and its extension and adaptation. The CIRFS had thus actively participated in the development of the discipline setting out the rules for the grant of aid in the sector concerned. 162. As the Court has recently confirmed in Commission v Aktionsgemeinschaft Recht und Eigentum , (49) participation in the formal investigation procedure in order to protect the collective interests of the operators which an association represents does not prove that the latter is affected by the decision in question in terms of its own interests. (50) The position as negotiator of such an association is to be considered as affected if, and only if, it participated actively in the investigation adoption of the national measure in question, as was the case in Van der Kooy and Others v Commission , or the legal rules under which it was enacted, as the CIRFS had done in relation to the discipline applying to the award of aid in the business sector concerned. 163. The matters relied on by Forum 187 does not establish that it participated at such a level. It is true that those matters show that it maintained contacts with the Belgian authorities in order to ensure the proper application of the tax scheme in question. However, that does not mean that it was involved in the determination of the content of the various measures laid down under the scheme at issue which were considered to be State aid by the Commission. It neither negotiated nor signed any agreement establishing the tax scheme applicable to the coordination centres. Nor, in order to give effect to the contested decision, did it initiate fresh negotiations or conclude a new agreement concerning those provisions. (51) I am accordingly of the view that it cannot be affected by the Decision of 17 February 2003 in its ‘position as negotiator’. 164. As regards, next, the argument that the Commission threatened the very existence of Forum 187, were that argument to be well founded it could lead to that association’s application being found to be admissible, because its own interests would then be affected. However, I am of the view that that argument is not be well founded in the present case for the following reasons. 165. Forum 187 submits that the effect of the Commission Decision is that, in the absence of a replacement scheme, the coordination centres will be forced to cease their activities in Belgium. As the Commission points out, its Decision of 17 February 2003 does not prohibit the carrying on by those centres of their activities in Belgium, nor does it impose any restrictions on those activities. It extends only to the tax scheme applying to those centres and does not prevent the Kingdom of Belgium from establishing a replacement tax scheme. Furthermore, Forum 187 argues in its second plea, alleging infringement of Article 87(1) EC, that the various tax measures laid down by the scheme in question and classified as ‘State aid’ by the Commission do not confer any economic advantage on those centres. That being the case, it is thus difficult to accept that the abolition of that tax scheme will lead all the coordination centres or a significant number of them to cease their activities in that Member State. 166. I am therefore of the opinion that Forum 187 is not individually concerned by the Decision of 17 February 2003 by virtue of being affected by it as regards its own interests. 167. It is necessary at this point to consider whether the application for annulment brought by Forum 187 is admissible on the ground that some of its members themselves have locus standi to bring such an action before the Community Courts. ii) The admissibility of the application brought by Forum 187 on the ground that it is acting in place of some of its members 168. Forum 187 submits that its application should be held to be admissible since it represents two groups of coordination centres which are directly and individually concerned by the Commission Decision. Those groups comprise, first, 30 centres having an approval which was renewed in 2001 or 2002 and for which that decision limits the period of application of the tax scheme in question to 31 December 2010 and, secondly, eight centres which had a pending application for renewal and which are, by virtue of that decision, prevented from obtaining such a renewal. 169. As the Court expressly confirmed in Codorniu v Council , (52) the fact that a Community measure has a general sphere of application does not prevent it from being of direct and individual concern to certain traders and thus constitute a decision in their regard. The fact, in the present case, that the Commission Decision is, in relation to traders, to be regarded as a measure of general application, inasmuch as it holds the tax scheme applicable to the coordination centres, that is to say to a category of traders referred to in a general and abstract manner, to be incompatible with Community law, does not prevent it from being of direct and individual concern to some of those centres by reason of their own characteristics. 170. There is no challenge on the Commission’s part in relation to the first condition laid down by the fourth paragraph of Article 230 EC, which requires that the centres belonging to the two groups represented by Forum 187 must be directly concerned by the Decision of 17 February 2003. I am also of the opinion that that condition is satisfied. It is clear from case-law that natural or legal persons who are concerned by the contested measure are directly concerned by it where that measure leaves no discretion to its addressees who are entrusted with the task of implementing it, with such implementation being, in terms of the customary expression, ‘purely automatic and resulting from Community rules without the application of other intermediate rules’. (53) 171. That is indeed the case in these proceedings, since the Commission Decision, having declared the tax scheme applicable to the coordination centres to be incompatible with the common market, goes on to prohibit the Kingdom of Belgium from granting renewals to centres having an approval which expires after 17 February 2003 and provides that approvals renewed before that date cannot extend beyond 31 December 2010. The Belgian authorities thus have no discretion in the application of those provisions. 172. However, the issue in the present case is whether the centres belonging to the two groups referred to by Forum 187 fall to be considered as being individually concerned by the Commission Decision. It is therefore necessary to establish whether the criteria laid down by the Court in Plaumann v Commission and subsequently confirmed by established case-law, (54) those two groups are affected by the Decision of 17 February 2003 by reason of certain attributes peculiar to them, or by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and distinguishes them individually ‘just as in the case of the person addressed’. 173. As the Commission points out, the general sphere of application of a measure as regards certain traders is not called into question by the mere fact that they are affected to a greater extent than or in a different way from other traders. It is in the nature of a general provision that its uniform application may affect interested parties in different ways, depending on their precise situation. In the particular field of State aid, it is also settled case-law that an undertaking cannot, as a rule, contest a Commission decision prohibiting a sectoral aid scheme if it is concerned by that decision solely by virtue of belonging to the sector in question and being a potential beneficiary of the scheme. (55) 174. However, it is also clear from case-law that when the contested measure affects a group of persons which were identified or identifiable at the time when that measure was adopted and in accordance with criteria which are specific to the members of that group, the latter may be considered to be individually concerned by that measure, as members of a limited class of traders. (56) 175. An action brought by such persons has thus been declared to be admissible when the contested measure modifies the applicant’s rights retrospectively. The Court decided that point in its judgment in Toepfer and Getreide-Import v Commission , in which it accepted for the first time that a person could be individually concerned by a decision addressed to a Member State. (57) It also adopted that approach in its judgment in Bock v Commission , (58) and in its judgments in Agricola commerciale olio and Others v Commission and Savma v Commission . (59) 176. In its judgment in CAM v Commission , (60) the Court also accepted that the applicant had locus standi when the contested measure concerned situations which existed at the time of its adoption and denied the benefit of acquired rights in respect of future transactions. (61) 177. It follows that where rights previously acquired by individuals are affected by a Community measure, those individuals are entitled to challenge the lawfulness of that measure before the Community Courts. 178. In the light of that case-law, I am of the opinion that the coordination centres having an approval which was renewed during 2001 and 2002 should be held to be individually concerned by the Commission Decision. 179. Under the tax scheme in question, the renewal of the centres’ approval in 2001 or 2002 conferred on them the right to benefit from the application of that scheme for 10 years and that period was restricted by the Commission Decision to 31 December 2010. The rights acquired by those centres on the basis of the Belgian tax scheme and the previous decisions of the Commission, which provided that Community law in the field of State aid did not preclude that scheme, were therefore clearly reduced by the Decision of 17 February 2003. 180. Furthermore, the number of centres in such a position could be known at the time when the decision was adopted and cannot increase. They therefore plainly form a restricted class or a closed class of economic operators within the meaning of the case-law, who are particularly affected by the Commission Decision. 181. Lastly, the locus standi of those centres can also be inferred, in my opinion, from the judgments in Italy and Sardegna Lines v Commission and Italy v Commission . It was held in those cases that an undertaking to which aid had been granted under a sectoral scheme fell to be considered as individually concerned by a Commission decision declaring that aid scheme to be incompatible with the common market and ordering the recovery of sums paid under that scheme to each beneficiary. The Court held that such an undertaking was concerned by the decision not only as an undertaking in the sector of activities in question, being a potential beneficiary of the aid scheme at issue. It was also concerned by virtue of being the actual beneficiary of individual aid granted under that scheme. (62) 182. In my view, that case-law also applies to the present case. Just as with the applicants in the cases which led to the judgments referred to above, the coordination centres having an approval which was renewed in 2001 and 2002 and which was limited in time to 31 December 2010, are concerned by the Commission Decision not only as centres which potentially benefit from the tax scheme at issue. They are also concerned by virtue of being the actual beneficiaries of that scheme, upon renewal of their individual approval. 183. For all of the above reasons, I am of the opinion that the action brought by Forum 187 is accordingly admissible inasmuch as it represents the 30 centres having rights to benefit from the scheme at issue which were restricted in time to 31 December 2010. 184. That suffices to substantiate the admissibility of the action brought by Forum 187 for the annulment of the Decision of 17 February 2003 in so far as that decision holds that the tax scheme applicable to the coordination centres constitutes State aid incompatible with the common market. 185. However, Forum 187 also seeks the partial annulment of the Decision of 17 February 2003 in so far as the decision did not lay down transitional measures for the benefit of those coordination centres having an approval which expires after 17 February in 2003 or in 2004. Of the two groups of coordination centres which, according to Forum 187, are entitled to bring proceedings directly before the Community Courts, only the eight centres having an application for renewal which was pending when the Decision of 17 February 2003 was adopted have an interest to bring such an application. 186. The partial annulment of that decision in so far as it does not lay down transitional measures for the coordination centres having an approval which expires after 17 February in 2003 or in 2004 can be of no benefit to those centres having an approval which was renewed in 2001 or in 2002. An action for annulment brought by a natural or legal person is admissible only in so far as that person has an interest in the annulment of the contested measure, which presupposes that the action must be liable, if successful, to procure an advantage for the party who has brought it. (63) Moreover, the lack of interest in bringing proceedings constitutes an absolute bar to proceeding. (64) 187. The admissibility of that alternative claim by Forum 187 is accordingly subject to the condition that those eight centres also have locus standi . The fact that that claim for partial annulment of the Commission Decision is encompassed within the claim made by the Kingdom of Belgium, the admissibility of which is agreed and does not appear to be capable of being disputed, (65) does not mean that the matter does not require to be considered, should the primary claim by Forum 187 be rejected and should it accordingly be necessary to adjudicate on its alternative claim. 188. Were that to be the case, I am also of the opinion that the action brought by Forum 187 is admissible, since the coordination centres having an application for renewal which was pending at the time when the Commission Decision was notified clearly have locus standi to bring proceedings for the annulment of the decision before the Community Courts. 189. The admissibility of an action brought by the members of a group of persons which were identified or identifiable at the time when the contested measure was adopted and in accordance with criteria which are specific to the members of that group has been accepted where the Community law provision on which such a measure is based expressly obliged the institution which was its author to take into account the particular circumstances of the applicants. (66) 190. I am of the opinion that that case-law may be applied to the coordination centres having an application for renewal which was pending at the time when the Decision of 17 February 2003 was adopted. 191. First, those centres are clearly part of a closed class, as defined by case-law, the members of which are particularly affected by the Commission Decision. That decision provides that centres approved on 31 December 2000 and having an individual approval which was in place on 17 February 2003 may continue to benefit from it until its expiry or 31 December 2010, at the latest. It also provides that approvals expiring before 31 December 2010 may no longer be renewed, even temporarily. Those centres which were already approved on 31 December 2000 and having a ten-year approval expiring between 17 February 2003 and 31 December 2010 thus constitute a group which was clearly identifiable at the time when the Commission Decision was adopted and which cannot increase thereafter. 192. Furthermore, those centres are affected in a particular way, by comparison with the other coordination centres and all of the companies which could have established such centres. They are distinguished by the fact that they possessed a 10-year approval expiring between 17 February 2003 and 31 December 2010, that, in terms of the Belgian legislation referred to in the decisions of the Commission of 1984 and 1987, that approval was renewable and that, by virtue of the Commission Decision, it could not be renewed. 193. Secondly, as the judgment in Sofrimport v Commission makes clear (67) and as the Court confirmed in Antillean Rice Mills and Others v Commission , (68) the fundamental point to be determined in assessing whether persons who are affected in a particular way by a measure of general application are individually concerned by it is the protection which they are afforded under Community law. Forum 187 invokes the principle of the protection of legitimate expectations and argues that the coordination centres concerned had a legitimate expectation that their approval would be renewed. 194. I am in no doubt that a general principle such as the principle of the protection of legitimate expectations may protect the applicants in such a way as to distinguish them individually, as may an express provision of a measure of Community law on the basis of which the contested measures were adopted and which obliges the author of the measure in question to take account of their particular situation, as the Court accepted was the case in Piraiki-Patraiki and Others v Commission and Sofrimport v Commission . In my view, the protection guaranteed by a general principle is indeed a factor which is capable of distinguishing an applicant and of allowing him to bring an action for annulment directly before the Community Courts. (69) 195. It is true, as the Commission states, that the question whether the coordination centres could have a legitimate expectation in the renewal of their approval is the subject of a substantive challenge. However, it is my view that at the stage when the admissibility of the action is under consideration it is sufficient to note that, in its Decision of 17 February 2003, the Commission analysed, in the 117th to 120th recitals in the preamble, the nature of the legitimate expectation on which the coordination centres having an approval in force at the time when the decision was notified might rely. The fact that the Commission undertook such an analysis clearly shows that those centres benefited from a particular protection, by comparison with all the other coordination centres and companies of multinational groups which had contemplated the establishment of such centres, on the basis of the principle of the protection of legitimate expectations. 196. In my opinion, that point suffices to distinguish the coordination centres having an approval which expired between 17 February 2003 and 31 December 2010 from the other traders concerned by the Commission Decision. Those centres thus clearly constitute a closed class which is sufficiently distinguished from those other traders and to which the principle of the protection of legitimate expectations provides a particular protection, which they should be entitled to assert by bringing legal proceedings before the Community Courts. 197. I am therefore of the opinion that the second group of coordination centres which Forum 187 claims to represent in the present action should be recognised as having locus standi . 3. The merits of the actions 198. In so far as the action brought by Forum 187 is more extensive than that brought by the Kingdom of Belgium, as it seeks the annulment of the Decision of 17 February 2003 in its entirety, I shall start by considering that application. 199. If necessary, I shall next consider the applications by Forum 187 and the Kingdom of Belgium for the partial annulment of the Commission Decision, in so far as it failed to lay down transitional measures for those centres having an approval which expires after 17 February 2003. a) The application by Forum 187 for the annulment of the Decision of 17 February 2003 in its entirety 200. In support of that application for annulment, Forum 187 invokes three pleas in law. In the first plea, it argues that that decision lacks any legal basis and infringes the principle of legal certainty, in that it is contrary to previous decisions taken more than 15 years ago. In its second plea, Forum 187 claims that, in classifying the tax scheme applicable to the coordination centres as State aid, the Commission contravened Article 87(1) EC. In its last plea, Forum 187 submits that that decision is vitiated by a lack of adequate reasoning as regards the Commission’s basis for going back on its previous decisions. i) The plea alleging the lack of any legal basis and infringement of the principle of legal certainty – Arguments of the parties 201. Forum 187 submits that the principle of legal certainty requires the Commission to comply with its past decisions and that the circumstances in which it may withdraw an unlawful decision are very restricted. The association claims that the Commission’s decision to initiate the formal investigation procedure had two bases, namely Article 1(b)(v) of Regulation No 659/1999 and its general power to correct a previous mistake. In its decision of 17 February 2003, the Commission added Articles 87 EC and 88 EC. Forum 187 argues that that decision lacks any legal basis on the ground that it could not be adopted under any of those provisions. 202. According to Forum 187, Regulation No 659/1999 cannot provide a legal basis, because Article 1(b)(v), which defines the concept of existing aid, requires that for a measure which did not constitute aid to become existing aid there must have been an evolution of the common market. That provision cannot apply where the Commission seeks to alter its determination that a measure does not constitute State aid. 203. Forum 187 argues that the Commission was also not entitled to base its decision on Article 87 EC and 88 EC for the following reasons. First, the Commission initiated the formal investigation procedure on the basis only of Regulation No 659/1999 and cannot select another legal basis for the decision to close that procedure. Secondly, those articles do not provide the Commission with broader powers than those provided in Regulation No 659/1999, which defines the competence of that institution exhaustively. As the tax scheme applicable to the coordination centres does not fall within the definition of existing aid under that regulation, the Commission could not claim to have based the Decision of 17 February 2003 on Article 88(1) EC. 204. Lastly, Forum 187 states that the Commission cannot claim to have corrected a mistaken decision more than 15 years after adopting it. Case-law provides that the right to correct a mistake must be exercised within a reasonable period. In reversing its decision that the tax scheme did not constitute State aid more than 15 years after it was taken, the Commission infringed the principle of legal certainty since, in particular, its previous decisions are binding on it in their entirety. Furthermore, it has provided no explanation to justify the passage of such a long period of time. Lastly, the Commission cannot rely on the fact that its decision has no retroactive effect. The Decision of 17 February 2003 necessarily has retroactive consequences by reason of the scale of the investments made in the coordination centres. 205. In reply to those arguments, the Commission submits that it was entitled to alter its assessment that the tax scheme in question did not constitute State aid, provided that it complied with the principles of legal certainty and the protection of legitimate expectations and at the same time observed existing rights. Its entitlement to do so can be inferred from its power to keep existing aid under constant review, which allows it to amend, as regards the future, a decision holding aid to be compatible with the common market. As regards the procedure to be followed, it is clear, according to the Commission, that the scheme at issue could not be considered as new aid and that it is the procedure applicable to existing aid which should be applied by analogy. – Appraisal 206. I should state at the outset that I consider it to be important to note that the Commission does not provide in the Decision of 17 February 2003 that its previous decisions relating to the tax scheme applicable to the coordination centres are to be withdrawn. Neither in the statement of reasons nor in the operative part of that decision does it indicate that its decisions of 1984 and 1987 and its reply to the Parliamentary question of 1990 are to be retroactively annulled and that its Decision of 17 February 2003 was intended to replace them. Had that been the case, it would have been beyond doubt that such a decision would have been contrary to the principles of legal certainty and of the protection of legitimate expectations. 207. While an institution is entitled retroactively to withdraw a decision which appears to it to be mistaken, it has consistently been held that such withdrawal must take place within a reasonable time and that regard must be had to how far the beneficiaries of the measure in question might have been led to rely on its lawfulness. (70) Those conditions would plainly not have been satisfied if the Commission had wished retroactively to annul its decision that the tax scheme applicable to the coordination centres does not constitute State aid 19 years afterwards and at a time when the Member State to which its previous decisions had been addressed had implemented the scheme. 208. The true position is that it is clear from the Decision of 17 February 2003 and the documents before the Court that the decision was taken after the Commission had decided to carry out a new investigation into the tax scheme applicable to the coordination centres, by applying to it the monitoring procedures for an existing aid, which implies that its final decision cannot have retroactive effect. Those documents also show that the Commission took the view that, from that time on, the scheme constituted State aid incompatible with the common market. 209. In considering this plea, it is therefore necessary to determine whether the Commission was entitled to change its determination as to whether that scheme of general application, which had not been significantly amended since its previous determinations of 1984, of 1987 and of 1990, constitutes aid within the meaning of Article 87(1) EC and, if so, whether the Commission was justified in applying the procedure relating to existing aid schemes. 210. It is true that the principle of legal certainty requires that Community legislation must be certain and its application foreseeable by those subject to it. (71) The principle aims to ensure that legal situations and relations under Community law are foreseeable. (72) It applies all the more strongly when the secondary legislation is capable of having financial consequences, (73) as may be the case with decisions taken by the Commission in the field of State aid. Furthermore, the obligation to notify State aid laid down under Article 88(3) EC has in particular the objective of dispelling any doubts as to whether a national measure does, or does not, constitute State aid within the meaning of Article 87(1) EC. 211. The principle of legal certainty and that of the protection of legitimate expectations, which represents the same concept, expressed in subjective terms, as the former, therefore require that the Member State which took the precaution of notifying the Commission of the tax scheme which it intends to put into place, as also the beneficiaries of the scheme, may rely on the lawfulness of a decision declaring that that scheme does not constitute State aid. 212. It is also common ground that Regulation No 659/1999, which, according to the second recital in the preamble, codifies the rules relating to the exercise by the Commission of the powers conferred on it by Article 88 EC, makes no express provision for the situation which arises in these proceedings. Thus, it is only in Article 1(b)(v) of the regulation, that the concept of existing aid is defined so as to include a measure which did not constitute aid when it was put into effect, but is none the less to be treated as existing aid, namely when that measure ‘subsequently became an aid due to the evolution of the common market’. 213. Regulation No 659/1999 does not define what is meant by the ‘evolution of the common market’. However, it may be interpreted as meaning a change to the economic and legal framework in the sector affected by the measure in question. The expressions ‘evolution’ and ‘common market’ suggest that the market on which the national measure in question produces its effects has been altered in such a way that that measure, which did not originally constitute aid, henceforth falls within the scope of Article 87(1) EC. That concept accordingly does not apply where, as in the present case, the Commission alters its assessment on the basis only of a more rigorous application of the Treaty rules in the field of State aid. 214. However, unlike Forum 187, I do not consider that the principle of legal certainty and the provisions of Regulation No 659/1999 preclude the Commission changing its determination as to whether a tax scheme of general application constitutes aid, when it takes the view that that is the conclusion to which the proper application of the rules of the Treaty must lead it. 215. In my opinion, Articles 87 EC and 88 EC support that approach. First, as the Court has already held, the principle of respect for legal certainty, important as it may be, cannot be applied in an absolute manner, but its application must be combined with that of the principle of legality. (74) Secondly, as the Commission has argued, it is on the basis of Articles 87 EC and 88 EC that the scope of its powers and obligations in the field of State aid falls to be assessed. Regulation No 659/1999, which constitutes a measure of secondary legislation adopted in order to apply Articles 87 EC and 88 EC, cannot therefore be interpreted so as to restrict the scope of the rules laid down by the Treaty. 216. Article 88 EC entrusts the Commission with the task of undertaking not only a preliminary investigation of plans by Member States to grant new aid but also with keeping all existing aid under constant review. In carrying out that review, the Commission may, in cooperation with the Member State which has granted the aid in question, propose to that Member State that it make such alterations as regards the future operation of the aid as shall appear necessary for such aid to remain compatible with the common market. Article 88(2) provides that, where that procedure is unsuccessful, the Commission may require that State to alter the aid or to abolish it, within such period of time as it may determine. 217. The aim of the powers conferred on the Commission by Article 88 EC is therefore to prevent a scheme of general aid continuing to be applied and to permit the grant of new individual aid when it appears that that scheme is no longer compatible with the common market. The task of the Commission is therefore to act in such a way as to ensure that no aid scheme which is contrary to the proper working of the common market is authorised or gives rise to new applications. 218. Article 88 EC also has the effect of ensuring equality between the Member States and traders. Developments in the economic and legal framework may mean that a new aid scheme, identical in content to an existing scheme in operation in another Member State, should be the subject of a negative decision on the Commission’s part. It would therefore be contrary to the general principle of equal treatment to allow traders to benefit from new applications of the existing aid scheme. 219. In the light of those points, I am of the opinion that the Commission is entitled to alter its determination as to the existence of aid, if it considers that that is the position to which the proper application of the Treaty rules must lead it. While the Commission is thus obliged to respect the principles of legal certainty and the protection of legitimate expectations, that requirement, important as it may be, must be reconciled with the principle of legality and, hence, the rules imposed by Articles 87 EC and 88 EC. It would be contrary to those provisions to allow a national scheme to continue to be implemented when it is apparent that it impedes the proper working of the common market. It would also be contrary to the equality of treatment between Member States and traders, as a new scheme which was identical to the national scheme originally held not to constitute aid would be the subject of a negative decision. 220. That being the case, I am of the opinion that the Commission properly carried out the functions entrusted to it by the Treaty in the field of State aid when it decided in the present case to undertake an investigation or a re-investigation of all tax schemes in operation in the Member States which the Code of Conduct group had declared harmful to the common market as it considered that those schemes were liable to fall within the scope of Article 87(1) EC. 221. I am accordingly of the view that legal certainty does not preclude the Commission altering, as regards the future, its determination as to whether or not a measure constitutes aid. Similarly, the Decision of 17 February 2003 does not lack any legal basis, as Forum 187 maintains, but is based on Articles 87 EC and 88 EC, as is mentioned in the 69th recital in the preamble. 222. As regards the procedure which is to apply when the Commission alters its determination in that way, I am also of the opinion that it is only the procedure applying to the monitoring of existing aid which can apply. Regulation No 659/1999, which codifies the rules relating to the exercise by the Commission of the powers conferred on it by Article 88 EC, recognises only two kinds of national measures: new measures and existing aid. In the circumstances under consideration, the Commission is contemplating altering its assessment of a national scheme which had been notified to it and which, ex hypothesi , as in the present case, has not been significantly altered since its previous decision. That scheme cannot therefore be considered as a new measure, which has just been notified to the Commission and has not yet been implemented, or as unlawful aid, that is to say aid granted without having been previously notified to it or before it has given a ruling within the prescribed period. It is therefore an existing measure as far as the Commission is concerned, since it was aware of it, and is similar, for the purposes of determining the applicable review procedure, to existing aid within the meaning of Article 1(b) of Regulation No 659/1999. 223. Moreover, such a classification will ensure the greatest legal certainty for the Member State which introduced the measure in question and for the traders which benefit from it. It therefore means that such a measure will continue to be implemented until the Commission finds it to be incompatible with the common market. Furthermore, if the Commission does take such a decision, that decision can take effect only as regards the future and within a timescale which it is for the Commission to determine. (75) 224. Lastly, such a procedure does not deny the undertakings which have benefited from the application of the general scheme at issue the right to challenge the substance of the Commission’s new finding that the scheme in question constitutes State aid, as they may either bring proceedings for annulment before the Community Courts, as Forum 187 has done, or raise a plea of illegality before, inter alia, the national court, as the Court held they may do in its judgment in Unión de Pequeños Agricultores v Council . (76) 225. There is also no foundation for Forum 187’s complaint that the Commission did not indicate in its letter to the Belgian Government informing it of the initiation of the formal investigation procedure that the applicable procedure was that laid down in Articles 17 to 19 of Regulation No 659/1999, nor that it changed the legal basis during the procedure, as the purpose of that regulation is merely to codify the rules relating to the exercise by the Commission of the powers conferred on it by Articles 87 EC and 88 EC. 226. As to the question whether, in its Decision of 17 February 2003, the Commission correctly took account of the legitimate expectations of the coordination centres, that will be considered, if necessary, in the context of the application for partial annulment of that decision. However, the answer to that question will not call into question the conclusion that the Commission was entitled to alter its opinion as to whether the tax scheme applicable to the coordination centres constitutes State aid and to apply the procedure relating to existing aid laid down under Articles 17 to 19 of Regulation No 659/1999. 227. In the light of all of the above points, I am of the opinion that the first plea should be rejected. ii) The plea alleging infringement of Article 87(1) EC 228. Forum 187 puts forward a number of arguments to show that the Commission wrongly applied Article 87(1) EC in classifying the tax scheme applicable to the coordination centres as State aid for the purposes of that provision. First of all, it challenges the method used by the Commission to analyse the tax scheme in question. Next, it contends that the various measures constituting the scheme do not satisfy the conditions laid down under Article 87(1) EC. Forum 187 thus maintains that those measures confer no advantages on the coordination centres, that they do not involve a transfer of State resources, that the Commission has failed to establish that they affect competition and intra-Community trade, that the scheme in question is not selective and that, in any event, it is justified by the nature and the general scheme of the Belgian tax system. 229. The Commission contests all of those objections. 230. For the sake of clarity, I shall set out in greater detail the various arguments put forward by the parties against the point to which they relate. – The method of analysis of the scheme in question 231. Forum 187 complains that the Commission failed to have proper regard to the competence of the Member States in tax matters. It states that, in the absence of harmonisation of the rates and structure of corporation tax in the Community, the Kingdom of Belgium is entitled to determine the rules applying to the liability to tax of subsidiaries of multinational groups. It maintains that where those rules distort competition, the provisions of Articles 96 EC and 97 EC apply, and not those relating to State aid. 232. Forum 187 also contends that the Commission’s analysis of the scheme in question was unduly general. It argues that the tax scheme applicable to the coordination centres applies to 230 centres which belong to groups carrying on their activities in very different sectors. The economic impact of the measures in question varies considerably depending on whether the group sells motor cars or foodstuffs. The Commission should therefore have undertaken a much more detailed analysis of the impact of the measures in question. 233. I agree with the Commission that the investigation of a national tax scheme under Article 87 EC does not of itself constitute a failure to have proper regard to the competence of the Member States in tax matters. While it is true that direct taxation is indeed within their competence, so that each Member State is free to lay down its own rules relating to corporation tax, it is also common ground that those rules do not fall outside the scope of Article 87 EC. It follows that measures taken by a Member State in the exercise of its powers in tax matters may, in some cases, be shown to be incompatible with that article. 234. As the Commission rightly states, the question to be decided in considering this plea is whether the scheme in question does, or does not, constitute State aid. As the concept of State aid, as defined in Article 87(1) EC, is a legal concept which must be interpreted on the basis of objective factors, (77) it is necessary to consider whether, irrespective of the fact that the Commission had adopted a contrary position in 1984, in 1987 and in 1990, the tax scheme applicable to the coordination centres does in fact meet the conditions necessary for it to fall within the scope of that provision. 235. As regards, next, the level at which the Commission should have considered the effects of the scheme in question in the present case, it is true that, as the Commission rightly points out, where the measure in question is an aid scheme and not an individual aid measure, case-law provides that it may confine itself to examining the general characteristics of the scheme in question without being required also to examine its effects on the particular situation of certain undertakings. (78) The question whether, in the present case, that case-law is applicable and whether the Commission was thus entitled to restrict itself to such an examination where the scheme in question benefits centres where the groups concerned carry out their activities in very different sectors, effectively calls into question the Commission’s finding that the measures laid down under the scheme at issue each satisfy the conditions set out under Article 87(1) EC. I shall therefore consider that complaint when analysing those conditions. 236. It should also be stated at this point, first, that those conditions are cumulative. (79) Secondly and as mentioned above, in so far as, the concept of State aid is a legal concept which must be interpreted on the basis of objective factors, the Community Courts must in principle, where the Commission’s analysis is not based on a complex economic appraisal, carry out a comprehensive review as to whether a national scheme falls within the scope of Article 87(1) EC. (80) 237. I shall now consider whether the tax scheme applicable to the coordination centres satisfies each of the conditions laid down by that provision. It is therefore necessary to determine whether the measures laid down under that scheme confer an advantage on certain undertakings, whether that advantage is granted by a Member State or through State resources and whether it distorts or is liable to distort competition in intra-Community trade. – Whether an advantage is conferred on certain undertakings 238. I shall first consider whether the tax measures contained in the tax scheme applicable to the coordination centres is capable of conferring an advantage on its beneficiaries. I shall next consider whether such an advantage is selective. I shall, if necessary, go on to consider whether that selectivity is justified by the objectives of the system of which that scheme forms part. – The existence of a commercial advantage 239. Case-law law provides that the concept of aid is to be widely construed. It covers not only positive benefits, such as subsidies, but also interventions which, in various forms, mitigate the charges which are ‘normally’ included in the budget of an undertaking and which, without being subsidies in the strict meaning of the word, are similar in character and have the same effect. (81) Thus, ‘a measure by which the public authorities grant to certain undertakings a tax exemption which, although not involving a transfer of State resources, places the persons to whom the tax exemption applies in a more favourable financial situation than other taxpayers constitutes State aid within the meaning of [Article 87 EC]’. (82) 240. The Commission held in the Decision of 17 February 2003 that the method of assessment of taxable income, the exemption from property tax, the exemption from capital duty and the system of a notional withholding tax constitute advantages for the coordination centres. Forum 187 challenges that determination as regards each of those measures. I shall therefore examine them in turn, starting with the method of assessment of taxable income. – Assessment of taxable income 241. The tax scheme applicable to the coordination centres provides that the taxable profit of those centres is not to be based on the difference between the income and the charges of the undertaking, as is the case under the ordinary tax law in Belgium. It is set at a flat-rate amount which represents a percentage of the full amount of operating costs and expenses, from which staff costs (83) and financial charges (84) are excluded. 242. The profit margin of a coordination centre is generally to be calculated on a case-by-case basis, taking into account the work actually carried out by the centre. If the centre itself charges for some of its services at a rate that corresponds to its costs plus a percentage for profits, the same percentage can be used for the profit margin, provided that it is not exceptional. In the absence of any objective criteria for determining the percentage of profits to be taken into account the rate is set at eight per cent. 243. The taxable profits of the centres in question may not, however, be less than the total of the expenditure or charges that are not deductible as business costs (usually non-deductible expenditure) and the exceptional or gratuitous advantages extended to the centre by the members of the group to which they belong. 244. The profits of the coordination centres having been assessed in accordance with those rules, they are taxed at the standard rate of corporation tax. 245. That method of assessment of taxable profits is based on the so‑called ‘cost-plus’ method, which is one of the systems recommended by the Organisation for Economic Co-operation and Development (OECD) for the taxation of services provided by a subsidiary or a fixed establishment on behalf of companies belonging to the same international group and established in other States. 246. The objective of that method is as follows. The setting of prices for transactions carried out between companies belonging to the same group may be influenced by tax considerations, so as to reduce the charge to tax borne by the group overall by taking advantage of the rules of assessment in each country. In order to combat such practices and to avoid the adjustments they may require the national administrations to make, together with the risk of double taxation, a number of methods have been developed by the OECD in order to determine the ‘transfer prices’ of goods or services within a multinational group. The aim of those methods is that the prices charged should correspond to those which would apply in normal conditions of competition. The ‘cost‑plus’ method, which is one of those methods, involves taking as the basis of calculation the costs incurred by the service provider and applying to them a margin representing a reasonable profit, expressed as a percentage. (85) 247. In the Decision of 17 February 2003, it is not that method of flat‑rate taxation, as such, which is classified as State aid by the Commission. It is the decision of the Belgian authorities to remove from the whole of the operating expenses which serve as the basis of calculation for the determination of the taxable income of the coordination centres, both staff costs and financial charges, which represent quantitatively significant costs. The Commission also states that, in the absence of any objective criteria for determining the percentage of profits to be taken into account, the rate is to be set at eight per cent. It considers that, when those two exemptions and that percentage are taken into account, the taxable amount to which the normal corporation tax rate falls to be applied is not calculated in such a way that services provided by the coordination centres are to be taxed as if they were supplied by another company, in a context of free competition, pursuant to the principle underlying the OECD’s ‘cost‑plus’ method. 248. Forum 187 contests the Commission’s analysis for the following reasons. 249. It argues first of all that the exclusion of financial charges and staff costs from the tax base does not infringe the principles laid down by the OECD regarding the setting of transfer prices. Those principles determine what costs are to be taken into consideration when invoicing for goods and services to a connected undertaking, but do not extend to the taxation of those costs, which represents a subsequent stage. 250. As regards, next, the exclusion of financial charges, Forum 187 contends that to bring them within the charge to tax would result in the imposition of a charge to tax that was higher than the profit margin of those centres. That would be the case, in particular, when they entered into transactions that were accounted for on a cost-benefit basis, where no loss or profit is realised. 251. According to Forum 187, it is also necessary to take account of the finances of the international group as a whole. The imposition of a reduced tax rate at the level of the coordination centres may be counterbalanced by a higher charge to tax at group level. There are many countries which tax the parent company on its global income and have a system for taxing controlled foreign companies. 252. Moreover, the Commission failed to take account of the fact that under the ‘cost-plus’ method, such centres may be taxed even if they have made losses, which is far from being a purely theoretical possibility. 253. As regards the exclusion of staff costs, Forum 187 argues that this is counterbalanced by the tax of EUR 10 000 per employee for the first 10 employees. It is also necessary to take account of the fact that many of the coordination centres employ cross-border staff whose tax situation is complex. 254. Lastly, Forum 187 contests the validity of the Commission’s objection to the application of a flat-rate of eight per cent in determining the profit margin. That rate was approved by the Vice-President of the Commission, Leon Brittan, in 1990. It corresponds to the tax rate imposed on foreign branches in Belgium. The fact that an administrative practice is involved does not mean that it has no legal authority. Lastly, the rate is not applied systematically, and the competent authorities may use a lower or higher rate depending on the value added by each centre in question. 255. Forum 187 also states that there is a rule that taxable income may not be lower than the total amount of the charges or expenses which are not deductible by way of trading expenses and exceptional or gratuitous advantages extended to the centre by the members of the group to which it belongs. 256. I am not persuaded by those arguments. 257. I would point out first of all that Forum 187 does not appear to challenge the fact that whether or not an advantage exists falls to be assessed on the basis of the criterion which underlies the OECD’s ‘cost‑plus’ method, namely that the transfer prices must be set at a level which results in them being the same as those which would apply in normal conditions of competition. In order to determine that an advantage exists there must be a point of comparison. As the Commission stated in the 98th recital in the preamble to the Decision of 17 February 2003, the purpose of the ‘cost-plus’ method drawn up by the OECD is to tax the centres which provide intra-group services on a basis which is comparable to that which would result from the application of the ordinary tax law, based on the difference between income and charges of an undertaking carrying on its business in an environment subject to free competition. It is thus on the basis of that criterion that it is necessary to consider whether the method of determination of the taxable income laid down in the tax scheme applicable to the coordination centres reduces the tax that would ‘normally’ be imposed on them. 258. Forum 187 maintains that it is not contrary to the principle underlying the OECD’s ‘cost-plus’ method to exclude financial charges and staff costs. I share the contrary view taken by the Commission. As mentioned above, that method seeks to establish transfer prices which are similar to those which would be charged under conditions of free competition. Staff costs and financial charges incurred in connection with cash management or financing represent, as the Commission states in the 89th recital in the preamble to the Decision of 17 February 2003, essential costs which make a major contribution to enabling the coordination centres to earn revenue, as the latter provide services, in particular those of a financial nature. For the same reason, it cannot be denied that both of those categories of expenses represent a material part of the overall operating expenses borne by those centres. (86) 259. I therefore adopt the Commission’s view that the exclusion of those charges and expenses from the costs which determine the taxable income of the centres in question does not result in transfer prices which are similar to those which are charged under conditions of free competition. Accordingly, such an exclusion does indeed afford an economic advantage to those centres and the groups to which they belong. 260. That analysis is not undermined by the fact that the inclusion of financial charges could, in some cases, result in a tax base that is unduly high. Were it to be established, such a matter would show that the’cost‑plus’ method is not appropriate for establishing the transfer prices of the coordination centres. It does not, however, justify the exclusion of financial charges in their entirety. 261. Nor can the economic advantage created by that exclusion be qualified or extinguished in the light of the tax charge borne overall by the international group by reason of the liability to tax in other States of the various companies which are members of it. It is necessary to have regard to the tax system of the Member State concerned in determining whether the scheme in question does, or does not, create an advantage in favour of its beneficiaries. 262. Similarly, the fact that such a system provides for a coordination centre to be liable to tax when it has not made any profit does not, in my view, call into question the validity of the Commission’s analysis. Such a risk is inherent in the’cost-plus’ method, as it is based on operating costs and not on the difference between income and expenditure. That risk cannot therefore justify the systematic exclusion of staff costs and financial charges, which represent expenses that are indispensable to the carrying on of the activity of those centres. Moreover, the fact that some 220 or 230 coordination centres have benefited for a number of years from the application of the scheme in question confirms the Commission’s analysis and the fact that a liability to tax may arise notwithstanding that no profit has been made does not detract from the advantageous nature of the scheme. 263. As regards the annual tax imposed from 1 January 1993 of EUR 10 000 per full-time member of staff, the Commission, correctly in my view, inferred from the fact that that tax is capped at EUR 100 000 that it does not counterbalance the beneficial effects of the systematic exclusion of all staff costs. That cap corresponds to the minimum number of 10 employees that the coordination centres are required to employ on a full‑time basis once they have been carrying on business for two years. The documents before the Court show that the 220 or 230 coordination centres established in Belgium have allowed 9 000 direct jobs to be created, which represents an average of more than 10 employees per centre. 264. As regards the rate of eight per cent, applied by default to the operating costs in order to assess the tax base, the Commission has argued, in my opinion persuasively, that such a rate is unduly low, as it is applied to a basis of assessment which is significantly reduced and as the coordination centres carry out their activities for the benefit of groups which are active in widely differing sectors, in which profit margins may accordingly vary. The fact, on which Forum 187 relies, that that rate corresponds to the tax rate applying to profits of branches in Belgium is not relevant in my view, since in the tax scheme applicable to the coordination centres that rate serves to calculate the profit margin to which the normal rate of corporation tax applies. 265. Lastly, the Commission is right, in my opinion, to argue that the alternative tax base, intended to avoid possible abuses by laying down a minimum basis of assessment, does not extinguish the advantage conferred by the combined application of the abovementioned exclusions and the rate of eight per cent. It stated in the Decision of 17 February 2003 that that alternative basis includes only amounts which are also liable to tax in Belgium in the case of companies that are not subject to the scheme in question, and are added to the accounting benefits which the ‘cost‑plus’ method seeks to reconstruct for the coordination centres. 266. In the light of those matters, the Commission held, correctly in my view, that the rules relating to the determination of taxable income constituted an advantage for the coordination centres and the groups to which they belong. – The exemption from property tax 267. The tax scheme applicable to the coordination centres provides that those centres are exempted from property tax on immovable property used for business purposes. Thus, the Decision of 17 February 2003 shows that property tax is ordinarily levied on every company which is entitled in Belgium, as owner or as a person enjoying the usufruct of a property, to immovable property, that term being used to designate built or unbuilt immovable property, including material and equipment which are immovable owing to their intrinsic nature or the use to which they are put. 268. Forum 187 denies that this represents an advantage since, first, that exemption only benefits coordination centres which have their own immovable property, that is to say fewer than five per cent of them. Secondly, there are other exemptions from that tax under Belgian law, from which the exempted centres might have benefited. 269. The Commission’s finding that the exemption from property tax does indeed constitute an advantage within the meaning laid down by case-law is in my view correct. I note that the other exemptions from that tax under Belgian law do not apply to all companies established in Belgium. Such an exemption for the coordination centres accordingly constitutes a reduction in a liability which ordinarily affects companies’ budgets. 270. The fact that fewer than five per cent of those centres in fact benefit from it, since more than 95 per cent of them lease the building in which they carry on their activities, does not call that analysis into question. It is sufficient to find that that measure confers an economic advantage on the coordination centres which own the building in which they carry on their business in comparison with another company which also owns the building which its uses for business purposes and which does not qualify for any of the other exemptions laid down under Belgian law. 271. The exemption from property tax was therefore rightly considered by the Commission to constitute an advantage for the purposes of Article 87(1) EC. – The exemption from capital duty 272. The tax scheme applicable to the coordination centres also provides that the registration duty of 0.50 per cent which applies under the law of the Kingdom of Belgium is not due on contributions made to coordination centres or on increases of their capital. 273. Forum 187 contends that this does not represent an advantage, as Article 7(1) of Directive 69/335/EC (87) requires Member States to maintain the exemptions on capital transactions which were in place on 1 July 1984 (88) and the exemption in favour of the coordination centres was introduced prior to that date. 274. I do not consider that Forum 187’s argument can be accepted. As the Commission points out, while Article 7(1) of Directive 69/335 does indeed require Member States to retain the exemption for transactions which were already exempted on 1 July 1984, that provision cannot be interpreted in a manner which contravenes the Treaty rules, such as Article 87(1) EC. The provision cannot therefore authorise a Member State to maintain within its legal system law an arrangement whereunder the exemption from capital duty exists for the benefit only of a particular type of companies, such as the coordination centres, and which thus confers on them an advantage in comparison with other companies established in that State. 275. Such a difference in treatment might, in some cases, have come within Article 9 of Directive 69/335, which provides that certain types of transactions or of capital companies may be the subject of exemptions in order to achieve fairness in taxation, or for social considerations, or to enable a Member State to deal with special situations. However, the exercise of that right was subject to the requirement that the State concerned submitted an application to that effect to the Commission in good time, having regard to the application of Article 97 EC. The Commission indicates that that condition was not satisfied and Forum 187 does not dispute the point. 276. In my opinion, the Commission was therefore right to hold that the exemption from capital duty for contributions made to the coordination centres and increases in their capital constitutes an advantage falling under Article 87(1) EC. – The exemption from withholding tax 277. The tax scheme applicable to the coordination centres provides that there is to be exempted from withholding tax, that is to say from deduction at source, dividends, interest and royalties distributed by centres, except, in the case of interest, where it is paid to a beneficiary which is subject in Belgium to tax on natural persons or to tax on legal persons. Income received by those centres on their cash deposits is also exempted from withholding tax. 278. The Commission held in its Decision of 17 February 2003 that that general exemption for income distributed by the coordination centres confers an economic advantage on the centres and the groups to which they belong in so far as it goes beyond the exemptions laid down under the ordinary law. Thus, there is an exemption for income distributed by those centres, which does not apply to other companies, in the following three situations: first, where the beneficiary is a non‑resident company established outside the European Union, in a country with which the Kingdom of Belgium has not concluded an agreement on the avoidance of double taxation, secondly, in cases involving a company established in Belgium or in another Member State and which does not satisfy the criteria laid down in Directive 90/435/EEC (89) and, lastly, in cases involving a company established in one of a number of countries with which that Member State has concluded an agreement providing for taxation at source, even if such taxation is limited. 279. The Commission also states that the advantage conferred by that exemption lies either in the deferred payment of final taxes, or in the mitigation of final tax or even in the complete non-taxation of income from movable property. 280. Forum 187 denies that that exemption constitutes an advantage for the following reasons. There are numerous exemptions from withholding tax under Belgian tax law and the coordination centres are in the same position as banks and financial centres, which benefit from a similar exemption. The cases referred to by the Commission in which the exemption of those centres derogates from the exemptions which exist in favour of other companies are exceptional. In practice, very few centres benefit from that additional exemption, as the Kingdom of Belgium has concluded agreements on the avoidance of double taxation with many other States and the number of coordination centres which do not satisfy the conditions laid down under Directive 90/435 is very limited. Nor did the Commission take account of the fact that such an exemption may, in some circumstances, be disadvantageous to those centres. 281. Forum 187 argues that it would also be wrong to maintain that the exemption from withholding tax confers an advantage in the form of a deferral of payment of the tax, as all companies, including the coordination centres, are obliged to make a prepayment quarterly. Similarly, the only cases in which such an exemption leads to a complete absence of taxation are those in which the beneficiaries are not subject to corporation tax in Belgium, and no actual advantage is thus conferred. 282. Forum 187’s arguments do not go to show that the Commission’s analysis is incorrect. The latter sets out examples in its Decision of 17 February 2003 of the advantages which the exemption confers in particular circumstances. It accordingly states that withholding tax is the final Belgian tax for income distributed to non-resident companies which are unable to have this income offset or refunded in the country in which they are established. The exemption from withholding tax for income distributed by the coordination centres does indeed lead, in the case of companies which are in such a situation, to the absence of any charge to tax. Forum 187’s argument that such an exemption from withholding tax leads to a complete absence of liability to tax only where the beneficiaries are not subject to tax in Belgium does not undermine the validity of that assessment. 283. In the same way, the Commission’s position is in my view persuasive when it states that the exemption from withholding tax creates an advantage in the form of a deferral of the time when the tax has to be paid. It appears that it is more advantageous for the recipients of payments made by the coordination centres to make advance payments in respect of their liability to tax to the Kingdom of Belgium on a voluntary basis, according to a schedule chosen by the undertaking having regard to its estimated taxable income, than to have applied to them a systematic and flat-rate deduction on each amount that is distributed. 284. Furthermore, the Commission has demonstrated that the exemption from withholding tax from which those centres benefit goes beyond the exemptions laid down under the ordinary law applying to undertakings, so that the scheme at issue does indeed create, to that extent, an advantage in comparison with the scheme which applies under the ordinary law. – The notional withholding tax 285. In the tax scheme applicable to the coordination centres, as well as the exemption from withholding tax, there exists a ‘notional withholding tax’ for payments made by those centres. Under that system, beneficiaries receive the sums paid by the centres without any deduction at source, but they are permitted to deduct a notional withholding amount from the total amount of the tax they are liable to pay. 286. During the formal investigation procedure, the Belgian authorities informed the Commission that that notional withholding tax was no longer granted on interest paid by the coordination centres on the basis of agreements concluded after 24 July 1991 nor was it granted on dividends distributed after that date or on royalties paid or assigned after 1 January 1986. 287. In its Decision of 17 February 2003, the Commission considers that, notwithstanding the fact that its rate was reduced to zero in 1991, the notional withholding tax does constitute an advantage, as it has not been repealed. It states that that reduction to zero for interest paid under agreements concluded after 1991 does not mean that such a system does not continue to apply to interest paid on long-term loans concluded prior to that year. It also states that the rate could be adjusted by ordinary royal decree. 288. Forum 187 contests the Commission’s assessment. It submits that, inasmuch as the rate of the notional withholding tax has been set at zero per cent since 1991, the Commission cannot claim that State aid is involved. 289. I agree with the Commission’s assessment only as regards the interest paid on long-term loans concluded prior to 24 July 1991. In so far as that notional withholding tax may continue to apply to interest paid under those agreements, the system does indeed constitute, in my opinion, an economic advantage conferred on the coordination centres and the groups to which they belong. That notional withholding tax is, in effect, offset against the tax payable by the recipients of the interest paid by the coordination centres as if there were a deduction at source, which has in fact not been made. 290. By contrast, I do not believe that the system may be considered as an advantage following the reduction of the rate to zero. In order to determine whether aid exists, it is necessary to take into account the effects which the measure in question is liable to have. (90) In my opinion, the Commission has failed to show how a notional withholding tax that has been reduced to zero might confer an advantage on the recipients of payments made by the coordination centres or, accordingly, on the centres themselves and the groups to which they belong. Merely because the rate might be adjusted by royal decree does not mean that it has to be considered as an advantage, as the possibility is purely hypothetical and a royal decree constitutes a legislative act. The Commission’s argument can, in my view, be adopted only where the rate of the notional withholding tax may be increased on an ad hoc basis, by virtue of a purely discretionary practice on the part of the national administration. 291. I am therefore of the opinion that the notional withholding tax constitutes an advantage only in so far as it applies at a rate higher than zero to interest paid under agreements entered into prior to 24 July 1991. Selectivity 292. Article 87(1) EC provides that State aid is a measure which confers an advantage on ‘certain undertakings or the production of certain goods’. A national measure, the application of which is, as in the present case, dependent on objective criteria, therefore comes within Article 87 EC only if it does not constitute a measure of general application. As Forum 187 states, distortions of competition occasioned by national measures of general application are not subject to the provisions of the Treaty relating to State aid but to Articles 94 EC and 96 EC, which relate to the approximation of the laws of the Member States which affect the functioning of the common market. A tax measure is thus covered by Article 87 EC only where it is specific or selective in its nature. (91) 293. Contrary to what Forum 187 maintains, the Commission has indeed established that the tax scheme applicable to the coordination centres is selective in nature. Case-law provides that a national measure is selective where, under a particular statutory scheme, the measure favours certain undertakings over others which are in a legal and factual situation that is comparable in the light of the objective pursued by that scheme. (92) In other words, as Advocate General Darmon stated in points 50 and 58 of his Opinion in the Sloman Neptun case, (93) the fundamental criterion for establishing the selective character of a national measure is that it is in the nature of a derogation from the system in which it is set and a measure constitutes a derogation where it does not apply to all the undertakings which, in view of the nature and the scheme of the system, are capable of benefiting from it. 294. The tax measures laid down under the scheme applicable to the coordination centres satisfy that condition. 295. As mentioned above, the exemptions from property tax, from capital duty and from withholding tax, coupled with the notional withholding tax, constitute derogations from the ordinary Belgian tax law, which would otherwise apply to the coordination centres. The fact, invoked by Forum 187, that there are many other derogations from those taxes and that some coordination centres may also benefit from them does not call into question the fact that the scheme at issue is itself derogatory in nature and restricts the benefit of those exemptions to those centres which satisfy the conditions laid down under it. That is sufficient to show the selective nature of the exemptions concerned. 296. As regards, next, the method for assessing taxable income, Forum 187 argues that the scheme at issue is not selective since it was designed to provide the tax treatment which was most appropriate for multinationals creating coordination centres to provide services within the group to which they belong and which are faced with the risk of double taxation, particularly because of ‘cash-pooling’ activities. (94) That scheme thus applies to the companies for which it was designed. It would be inappropriate for a small Belgian undertaking and arbitrary were it to apply to all companies. 297. In reply, the Commission argues, rightly in my view, that the tax scheme applicable to the coordination centres is not open to all international groups, but only to those having subsidiaries which are established in at least four different countries, which have capital and reserves equal to or greater than BEF 1 thousand million and which have a consolidated annual turnover equal to or greater than BEF 10 thousand million. 298. If one takes into account the objective which, according to Forum 187, underlies the assessment of the taxable profits of the coordination centres, namely the choice of a system adapted to the taxation of intra-group services and which allows double taxation to be avoided, one finds, as the Commission states in the 112th recital in the preamble to its Decision of 17 February 2003, that the abovementioned conditions exclude from the application of the scheme centres carrying on identical activities but for the benefit of smaller groups, that is to say groups having subsidiaries established in fewer than four countries and the capital and turnover of which are less than the required thresholds. Once again, this represents a selective measure in that it is reserved to ‘certain undertakings’. 299. Lastly, it is clear from the above that, while the Commission indicated in the 104th recital in the preamble to its Decision of 17 February 2003 that the arguments presented to it in the course of the formal investigation procedure ‘have done nothing to change [its] views on the selective nature of application’, has not reversed the burden of proof, as Forum 187 contends. In fact, the Commission has persuasively set out in the decision the reasons why the measures laid down under the tax scheme applicable to the coordination centres are selective. Justification on the grounds of the nature and the general scheme of the system 300. Case-law provides that the measure at issue cannot be considered as selective and, accordingly, there is no State aid within the meaning of the Treaty, where different treatment of undertakings in relation to charges is justified by the nature or general scheme of the system of which it is part. (95) 301. It has also been held that it is for the Member State which has introduced such a differentiation in relation to charges into its legal system to show that it is actually justified by the nature and general scheme of the system of which it forms part. (96) 302. Forum 187 here restates the arguments already put forward by it to the effect that the scheme at issue does not constitute a derogation from the ordinary system but a different type of taxation, dictated by fiscal logic and the need to provide a solution to the problem of double taxation of services provided within an international group of companies. It again states that the scheme at issue is open only to multinationals because such a problem becomes truly complex only where a number of subsidiaries are involved. Lastly, the tax scheme applicable to the coordination centres must be seen as a whole and the various measures laid down under it ought not to be analysed separately. 303. Those arguments do not seem to me to show that the tax scheme applicable to the coordination centres is justified by the particular situation of those centres or the groups of which they are a member. In my view, Forum 187 merely raises certain assertions but fails properly to explain why the risk of double taxation justifies restricting the benefit of the scheme at issue to centres created by groups of a certain size. Nor does it demonstrate in what way such a risk of double taxation renders necessary the advantages conferred by the method of assessing taxable income, or the various exemptions laid down under the scheme at issue, or in what way the various measures comprised in the scheme must necessarily be seen as a whole. Nor does Forum 187 establish in what way the various measures laid down under the scheme are justified by the tax system in force in Belgium. 304. Having regard to the matters set out above, the measures laid down under the tax scheme applicable to the coordination centres do indeed constitute an advantage for the purposes of Article 87(1) EC. – Whether the measure involves the State 305. Case-law provides that for advantages to be capable of being categorised as State aid within the meaning of Article 87(1) EC, they must, first, be imputable to the State and, secondly, be granted directly or indirectly through State resources. (97) 306. It is not disputed that the first of those two cumulative conditions applies, nor does it appear capable of being disputed, as the scheme at issue is a tax scheme adopted by the Kingdom of Belgium. 307. By contrast, Forum 187 argues that the scheme at issue does not satisfy the second condition, since it increased the tax revenues of that Member State. The latter received more that EUR 500 million a year from the tax revenue and social security contributions from the coordination centres. There was therefore no transfer of State resources. 308. That argument cannot be accepted. For the condition that the aid must be financed through State resources to be satisfied, it is sufficient that the measure should receive actual support, directly or indirectly, from the public budget. (98) The waiver, by the Member State concerned, of the right to levy a tax in whole or in part which places the persons to whom the exemption applies in a more favourable financial position than other taxpayers constitutes State aid, (99) even if, at the same time, the scheme in question generates tax revenues for that State, by reason, inter alia, of the taxation of profits earned by the companies benefiting from the aid and salaries paid by those undertakings to their employees. The material factor in considering that condition is the public nature of the resource and not the question whether the measure at issue ultimately does, or does not, represent a charge for the budget of the Member State concerned. 309. As the Commission rightly points out, were Forum 187’s argument to be adopted, it would be possible for a measure not to fall within the prohibition laid down in Article 87(1) EC where it had the effect of encouraging an undertaking to establish itself in the Member State concerned or allowed it to increase its taxable income or dissuaded it from establishing itself in another country. Such a result could be contrary to the objective pursued by that provision. That argument would also mean that it would be impossible to determine whether State aid existed until after the measure in question had produced its effects, which would run contrary to the system of preventative control of new aid laid down under Article 88(3) EC. – The adverse effect on trade between Member States and on competition 310. Forum 187 argues first of all that the Commission has failed to demonstrate in what way trade between Member States would be affected by the tax scheme applicable to the coordination centres. It maintains that the Commission did not specify whether that effect arises at the level of the centres or the groups of companies to which they belong. 311. Forum 187 next submits that trade between Member States is not affected since, were the scheme in question not to exist, multinational groups would have carried out the same internal operations out of another country. Forum 187 points out in that regard that there are similar schemes to the Belgian scheme in other Member States. The location of the coordination centres is also irrelevant to trade between Member States since the centres carry out intra-group operations. 312. Forum 187 also argues that the Commission has failed to show in what way the position of companies having coordination centres is strengthened in relation to competing companies. It claims that the Commission failed to have proper regard to the principle of the single economic entity, in terms of which activities within a group do not fall to be considered as being in competition with third parties. Nor can coordination centres compete with one another. 313. Moreover, the scheme in question was open to all multinationals, so that there was no distortion of competition at that level. Similarly, such multinationals are not in competition with small undertakings, which do not carry out cross-border transactions such as ‘cash pooling’ and are not faced with double taxation of internal financial transfers. 314. In my view, none of those arguments is well founded. 315. First of all, it is clear from the Decision of 17 February 2003 that the Commission did indeed indicate why it took the view that the scheme at issue affects trade between Member States and distorts or threatens to distort competition. Thus, it states in the 100th recital in the preamble to the decision that that the centres, thanks to the advantages they enjoy, are strengthening their competitive position in the sector of services provided to members of the group to which they belong, in which sector they compete directly with organisations including financial institutions, trusts and consultancies specialising in tax, recruitment, information technology, and so forth. Those advantages also strengthen the competitive position of companies in to the group, which are active in numerous economic sectors. The Commission added that those are all sectors characterised by intensive international and intra‑Community trade, where large multinational corporations compete directly with other multinational or local undertakings of different sizes. 316. Contrary to what Forum 187 contends, the Commission accordingly indicated that trade between Member States and competition were affected by the strengthened position in which both coordination centres and the groups to which they belong find themselves. 317. I am of the view that that analysis is correct. 318. As regards the effects of the scheme at issue on competition, it should be noted that that concept falls to be widely construed. Case-law provides that it is sufficient that the measure concerned relieves the beneficiary undertaking of charges and thereby strengthens its position in relation to competing undertakings for competition to be distorted. (100) 319. In my opinion, the Commission was right to hold that the advantages conferred on the coordination centres distorted competition between those centres and service providers in the financial, trust, information technology and recruitment sectors, that is to say providers which offer services identical to those provided by those centres. Forum 187 does not dispute, nor does it appear to be capable of being disputed, that all of those service activities plainly operate in a competitive environment within the Union. The fact, on which Forum 187 relies, that the centres in question may provide their services only to companies within their group does not mean that when they provide those services those centres are not in competition with foreign service providers which supply identical services. As the Commission states, the lower level of tax burden imposed on the coordination centres encourages companies within the group to use the services provided by those centres rather than those provided by other service providers. I do not find in Forum 187’s arguments any convincing reason why the services supplied by those centres to companies in their group could not be made available by other service providers. 320. Similarly, I agree with the Commission’s analysis as regards the effects on competition at the level of the multinational group companies which have created the 220 or 230 coordination centres active in Belgium. The scheme at issue does indeed strengthen the position of those companies in relation to their competitors, as it allows them to benefit from the services provided by the coordination centres on more favourable terms than those which would result from mere economies of scale arising from the concentration of the corresponding operations. In so far as those companies are active in many sectors of activity, which may be as varied, to take the examples given by Forum 187, as the sale of motor cars or that of foodstuffs, in which there is effective competition, I am of the opinion that such a tax scheme, precisely because of the wide-ranging nature of the activities covered by the multinational groups which it benefits, necessarily has an impact on c ompetition. 321. The argument put forward by Forum 187 that the scheme in question is open to all multinational groups does not in my view require that analysis to be called into question. As the Commission points out, first, that argument is incorrect, in so far as the scheme is open only to groups of a certain size in terms of their establishment, capital and turnover. Secondly, such international groups may also, depending on their activities, find themselves in competition with national undertakings. 322. Lastly, it is not in my view in doubt that the scheme in question affects trade between Member States. That condition is also to be widely construed since case-law provides that when aid granted by the State or through State resources strengthens the position of an undertaking compared with other undertakings competing in intra‑Community trade the latter must be regarded as affected by that aid. (101) 323. The reasons why the Commission was right to hold that the scheme at issue was liable to create distortions of competition also show that it affects trade within the Community. As the coordination centres provide their services to companies within the groups to which they belong which must be established in at least four different countries, there can be no doubt that the scheme in question distorts competition in intra‑Community trade. 324. In the light of the above points, I am also of the opinion that it was not necessary for the Commission to enter into detail and to consider the effects of the scheme in question on the particular situation of certain undertakings. In my view, it is sufficiently clear from all of those points that the tax scheme applicable to the coordination centres satisfies the conditions laid down under Article 87(1) EC, without it being necessary to illustrate that determination by concrete examples of the effects arising to the benefit of certain centres or certain groups in particular. 325. Having regard to all of the above matters, the tax scheme applicable to the coordination centres does indeed satisfy the conditions laid down under Article 87(1) EC and thus falls within the scope of that provision. 326. I therefore propose that the plea alleging infringement of Article 87(1) EC be rejected as being unfounded. iii) The plea alleging failure to state adequate reasons 327. Forum 187 argues that the scope of the duty to state adequate reasons is dependent on the extent to which individual interests may be affected by the decision in question and that, in the present case, that duty is particularly relevant because the Commission is reversing two previous decisions, taken more than 15 years earlier. 328. Forum 187 argues that the Commission failed to explain why its previous decisions were incorrect. It refers in that regard to the judgment in Stork Amsterdam v Commission , (102) where the Court of First Instance annulled, on the grounds of lack of adequate reasons, a Commission decision in which the latter adopted a different position from that adopted in a previous decision. 329. Forum 187 also claims that the Commission failed to state in what way there had been an evolution in the common market. 330. In my view, those objections are not well founded. 331. First of all, the objection alleging a failure to state in what way there had been an evolution of the common market is irrelevant, since, as mentioned above, the change in the Commission’s assessment that the scheme in question falls to be classified as State aid is not based on such an evolution. 332. As regards the second objection, Forum 187 is right to submit that the duty to state adequate reasons is particularly relevant where the Commission alters its previous determination as to whether State aid exists. It is settled case-law that the statement of reasons which Article 253 EC requires for a Community measure must be appropriate to the nature of that measure and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court having competence in the matter to exercise its power of review. (103) Where, as in the present case, the Commission classifies as State aid incompatible with the common market a national tax scheme which had been notified to it and which it had decided did not constitute aid, its decision must allow the Member State concerned and the parties interested properly to understand the reasons why it considers that the scheme satisfies each of the conditions laid down under Article 87(1) EC. 333. As was mentioned when considering the previous plea, the Commission complied with the duty to provide adequate reasons as the statement of reasons for its decision allowed Forum 187 to challenge in detail its conclusions in relation to the existence of State aid and, in my opinion, those reasons allow the Court to ascertain whether they are well founded. 334. I do not consider that the Commission was also required in its Decision of 17 February 2003 to explain why it reached a contrary conclusion in its decisions of 1984 and 1987 and in the reply given in 1990 by the Commissioner responsible for competition to a Parliamentary question. As mentioned above, the concept of State aid as defined in Article 87(1) EC falls to be objectively construed and the reasons why the Commission reached a different conclusion in its previous decisions are irrelevant to the question whether or not the scheme in question falls within the scope of Article 87(1) EC. 335. In the light of those factors, I am of the opinion that the plea alleging a failure to state adequate reasons, in so far as based on the objections set out above, should be rejected. b) The requests by the Kingdom of Belgium and Forum 187 for partial annulment of the Decision of 17 February 2003 336. In its Decision of 17 February 2003, the Commission held that the tax scheme applicable to the coordination centres constituted State aid incompatible with the common market and prohibited the Kingdom of Belgium from granting benefits under the scheme to new traders. 337. As regards existing approvals, the Commission acknowledged that its decisions of 1984 and 1987 and its reply given in 1990 given by the Commissioner responsible for competition to Parliamentary question No 1735/90 had created a legitimate expectation on the part of the coordination centres that the tax scheme in question did not infringe the Treaty rules relating to State aid. It stated that having regard both to the substantial investments that might have been made by those centres and the groups of which they are members and to the long-term commitments undertaken by those centres, observance of the legitimate expectations of the beneficiaries of the scheme in question justified providing that centres already approved on 31 December 2000 which had an approval in force on the date of notification of the decision, that is to say 17 February 2003, could benefit from the scheme in question until the expiry of their approval or 31 December 2010, at the latest. 338. However, it decided that no renewal could be granted for approvals in force at 31 December 2000 which expired after 17 February 2003. 339. In the 121st recital in the preamble to its decision, it stated that since the approvals conferred no right to the continuation of the scheme in question nor to the benefits under it, even during the period to which the approval related, they could not, in any circumstances, confer a right to have the scheme renewed when the present approvals expired. It added that, in view of the explicit restriction of the approval to 10 years, it was impossible for a legitimate expectation to have been created as to automatic renewal, which would have amounted to approval that could theoretically last for ever. 340. The second and third paragraphs of Article 2 of the Commission Decision thus provide: ‘As of the date of notification of this Decision, the benefits of this scheme … may no longer be granted to new beneficiaries or maintained by renewing existing agreements. With regard to centres approved before 31 December 2000, the scheme may be maintained until the expiry date of the individual approval applying on the date of notification of this Decision and until 31 December 2010 at the latest. In accordance with the second paragraph, if approval is renewed prior to that date the benefits of the scheme dealt with in this Decision may no longer be granted, even temporarily.’ 341. The Kingdom of Belgium seeks the annulment of the Commission Decision in so far as it does not authorise it to grant, even temporarily, renewal of coordination centres status to those centres which benefited from it on 31 December 2000 and had an approval which expired before 31 December 2010. 342. Forum 187, for its part, seeks the annulment of that decision in so far as it fails to lay down adequate transitional measures for centres having an approval expiring after 17 February in 2003 and in 2004. 343. I shall therefore consider these requests together, as that made by the Kingdom of Belgium also covers that made by Forum 187. 344. The Kingdom of Belgium puts forward four pleas in law in support of its application. The first plea alleges infringement of Article 88(2) EC and the principles of legal certainty, the protection of legitimate expectations and proportionality. 345. In its second plea, it alleges infringement of the principle of the protection of legitimate expectations as regards the opportunity to renew the approval. 346. In its third plea, the Kingdom of Belgium contends that the Decision of 17 February 2003 infringes the general principle of equal treatment. 347. The fourth plea alleges a failure to state adequate reasons. 348. Forum 187 puts forward two pleas, alleging infringement of the principle of the protection of legitimate expectations and a failure to state adequate reasons. 349. I shall start by considering the infringement of the principle of the protection of legitimate expectations put forward by the Kingdom of Belgium in its first two pleas, and by Forum 187. i) Infringement of the principle of the protection of legitimate expectations – Arguments of the parties The Kingdom of Belgium 350. The Kingdom of Belgium submits that the Commission expressly based its decision on the code of conduct and the studies undertaken by the ‘Ecofin’ Council in determining the transitional period to be granted to the coordination centres. It also points out that the dates of 31 December 2000 and 31 December 2010 are the same as the dates set out in the agreement in principle reached by the Council on 21 January 2003, in terms of which centres subject to the scheme at issue on 31 December 2000 could benefit from it during the existing 10-year period and until 31 December 2010, at the latest. However, it states that the Commission’s position was not fully consistent with that adopted by the Council. It points out that on 26 and 27 November 2000 the latter adopted the memorandum of the Presidency which provided that the tax scheme in question was to be continued for all the centres in question until 31 December 2005. The Commission Decision is thus vitiated by a lack of consistency. 351. It also contends that that statement of position on the Council’s part led the Belgian Minister for Finance to make an official statement to the Belgian Chamber of Representatives on 20 December 2000, confirming that renewals could be obtained until 31 December 2005. It adds that the opportunity for the coordination centres to benefit from the scheme in question until that date was referred to by the Commission in its proposals for appropriate measures of 11 July 2001. 352. The Kingdom of Belgium infers from that that both it and the coordination centres in question had a legitimate expectation that the centres having an approval which expired prior to the end of 2005 would not be deprived of the benefit of it with immediate effect but could benefit from a renewal of that approval until at least 31 December 2005. 353. The Kingdom of Belgium also contends that the coordination centres had a legitimate expectation in their approval being renewed, in the light of the provisions of the tax scheme in question. Such a renewal was automatic when the necessary conditions were satisfied and, on that basis, the centres having an approval which was due to expire shortly after the notification of the Commission Decision had undertaken long‑term commitments. It submits that the prohibition on renewal has the effect of subjecting those coordination centres to a significant tax burden, particularly by reason of the imposition of withholding tax on interest paid by those centres, including interest paid under ‘cash‑pooling’ arrangements. 354. In reply to the Commission’s argument that there had been a number of ‘signals’ notifying the Kingdom of Belgium and the coordination centres concerned that the tax scheme in question could not be maintained, the applicant contends that that argument was rejected in the interim order of 26 June 2003, because it is tantamount to saying that the procedure laid down under Article 88 EC serves no purpose. It also points out that until the Decision of 17 February 2003 was notified neither it nor the centres were in a position to know that it was that date that would be adopted by the Commission as the date from which approvals could not be renewed. Forum 187 355. Forum 187 also argues that, having regard to the approval of the scheme in question by the Commission in 1984, in 1987 and then in 1990, the coordination centres could legitimately believe that they would be entitled to continue to carry out their activities and that Community law would not prevent their approval being renewed. 356. It also maintains that the centres having an approval which expired in 2003 and 2004 required a transitional period in which to reorganise themselves and, if necessary, establish themselves in another country, by reason of the constraints of Belgian employment law, the workload involved in the reconfiguration of their information technology systems and the renegotiation of long-term financial and trading commitments entered into for the purposes of carrying on their activities. Forum 187 claims that those centres required a transitional period of 10 years. 357. Forum 187 also contests the grounds on which the Commission based its conclusion that the provision of transitional measures for those centres was unjustified. The fact that, according to the Commission, the approvals confer no automatic right to renewal is irrelevant to the question whether the centres in question should benefit from a period for adjustment. The Commission is thus in breach of its obligation to make good the harm caused by its change of position. Nor does it take account of the fact that those centres believed that their approval was to be renewed. The Commission 358. The Commission first of all denies that the works of the ‘Ecofin’ Council could have created a legitimate expectation on the part of the Kingdom of Belgium and the coordination centres. It submits that the policies adopted by the Council in the area of corporate taxation, which do not have the force of law, cannot fetter the activities which the Commission is required to carry out pursuant to its exclusive competence in the field of State aid. It argues in the alternative that the Council’s position adopted on 26 and 27 November 2000 does not bear the interpretation given to it by the Belgian Government in its statement of to the Belgian Chamber of Representatives. 359. As regards its proposals for appropriate measures, it states that these do not constitute a definitive act and that it may amend them in the light of observations made by the Member State to which they are addressed. It also maintains that its proposals were based on the premiss that all coordination centres should be given an identical minimum period prior to the scheme in question being terminated and that throughout the procedure the Kingdom of Belgium supported the alternative option, which was adopted in the Decision of 17 February 2003, namely that the approvals were to remain in force until their expiry, and could not be renewed. 360. The Commission next denies that the legal rules which applied to the coordination centres conferred on them an automatic right to renewal of their approval. It contends that the Kingdom of Belgium gave no guarantee to the coordination centres that the advantages afforded to them were to continue in existence and that renewal of the approval would be automatic, because it was subject to the same procedure and the same conditions as the initial approval. According to the Commission, the fact itself that the approval was effective for a limited period means that it conferred no rights beyond the end of that period. It adds that, prior to its Decision of 17 February 2003, the scheme in question, had already been amended by the Kingdom of Belgium and that those amendments, which had reduced the advantages initially provided for, were not accompanied by transitional measures. 361. The Commission also states that the Kingdom of Belgium and the coordination centres had received a number of signals prior to the adoption of the Decision of 17 February 2003, notifyi ng them that the scheme in question could not be maintained. It refers in that regard to the code of conduct adopted by the Council and the report of the Code of Conduct Group. It also mentions its notice on the application of the State aid rules to measures relating to direct business taxation, its request for information to the Belgian authorities relating to the scheme in question in February 1999, its proposals for appropriate measures sent to those authorities on 11 July 2001 and, lastly, its decision to initiate the formal investigation procedure of 27 February 2002. It also states that those measures were published or were referred to in press releases. 362. The Commission argues that the only legitimate expectations on which the centres were entitled to rely were those which its previous decisions gave rise to. It contends that it did indeed satisfy those expectations in allowing a transitional period to the centres having an approval in force at the time the decision was notified and in providing that they could benefit from them until their expiry and 31 December 2010, at the latest. However, for the reasons set out above, it was entitled to provide that access to or the renewal of the application of the scheme should be prohibited after the notification of the decision, in order that the effects of the scheme might gradually be phased out, as and when the approvals expired. 363. The Commission also denies that its decision had the consequence that the activities of the centres which could no longer benefit from the scheme at issue would have to cease their activities immediately. In the first place, its decision does not order the coordination centres to terminate their activities. In the second place, Forum 187 has argued that the measures laid down under the scheme in question confer no advantage on those centres. It does not accept the Kingdom of Belgium’s argument that the decision exposed those centres to a disproportionate increase in their liability to tax and to double taxation. 364. Lastly, the Commission rejects the arguments of Forum 187 on similar grounds and claims that it was neither necessary nor appropriate to lay down transitional measures for centres having an approval which expired in 2003 or 2004. – Appraisal 365. I shall start by describing briefly the nature of the principle of the protection of legitimate expectations. 366. That principle has been progressively accepted into the Community legal order by case-law, which has described it as a ‘superior rule of law’ for the protection of individuals, (104) ‘one of the fundamental principles of the Community’ (105) and as a ‘general principle’. (106) The principle of the protection of legitimate expectations therefore constitutes a general principle of Community law, allowing the legality of the acts of the institutions to be reviewed. 367. It can thus be seen as the corollary of the principle of legal certainty, which requires that Community legislation must be certain and its application foreseeable by legal persons, in that it seeks, where rules are altered, to ensure the protection of situations legitimately entered into by one or more natural or legal persons in particular. (107) 368. Given its subjective nature, it is difficult to give an exhaustive definition of the principle of the protection of legitimate expectations. Nevertheless, in the light of its application in case-law, it can be said that infringement of the principle is recognised when the following conditions are satisfied. First of all, there must be an act or conduct on the part of the Community administration capable of having given rise to such an expectation. Case-law provides that the principle of the protection of legitimate expectations may be invoked as against a Community act only to the extent that the Community itself has previously created a situation which could give rise to such an expectation. (108) It is that situation which constitutes, in effect, the ‘basis’ for the expectation of the person concerned. There must, moreover, be specific assurances. (109) 369. Next, the person concerned must not be able to foresee the change to the pattern of conduct previously adopted by the Community administration. Case-law provides that if a prudent and circumspect trader could have foreseen that the adoption of a Community measure is likely to affect his interests, he cannot plead the principle of the protection of legitimate expectations if the measure is adopted. (110) The expectation to which the measure or the conduct of the Community administration gives rise is therefore ‘legitimate’ and must accordingly be protected where the person concerned might reasonably rely on the maintenance or the stability of the situation thus created, in the same way as a ‘prudent and circumspect’ trader. 370. Lastly, the Community interest which the contested measure seeks to achieve must not justify the infringement of the legitimate expectation of the party concerned. That condition is satisfied where the balancing of the interests in question shows that, in the circumstances of the case, the Community interest does not prevail over that of the person concerned in seeing the situation maintained that it might legitimately have assumed to be a stable one. (111) 371. I shall therefore consider whether each of those conditions is satisfied in the present case. The basis for the expectation 372. The Commission acknowledges that its decisions of 1984 and 1987 and the reply given in 1990 by the Commissioner responsible for competition to Parliamentary question No 1735/90 gave rise to a legitimate expectation that there was no incompatibility between the tax scheme applicable to the coordination centres and the Treaty rules in the field of State aid. (112) 373. The parties are in dispute as regards the two following points. First, the Kingdom of Belgium and the Commission disagree as to whether the Council’s conclusions of 26 and 27 November 2000 and the proposals for appropriate measures made by the Commission are capable of giving rise to a legitimate expectation that the tax scheme at issue would be maintained until at least 31 December 2005 as regards all coordination centres. Secondly, the Kingdom of Belgium and Forum 187, on the one hand, and the Commission, on the other, are in dispute as to whether, as far as the tax scheme applicable to the coordination centres is concerned, the decisions of the Commission of 1984 and 1987 and the reply given in 1990 by the Commissioner responsible for competition entitle the centres to rely upon their approval being renewed. 374. As regards the first point, which relates to the expectations which the studies carried out by the ‘Ecofin’ Council and the Commission’s proposals for appropriate measures gave rise to, I am of the view that the position of the Kingdom of Belgium cannot be accepted. 375. In the first place, I do not consider that the Council’s conclusions of 26 and 27 November 2000 could have given rise to a legitimate expectation on the part of either the Kingdom of Belgium or the coordination centres, that the scheme in question would be maintained until at least 31 December 2005 for the following reasons. 376. As the Commission points out, the conclusions adopted by the Member States at the Council on 26 and 27 November 2000 represent a policy measure, which is declaratory in nature, and which is not, as such, capable of having legal effects. Accordingly, those conclusions can neither bind nor even restrict the Commission’s actings in exercising the particular powers which are conferred on it by the Treaty in the field of State aid. 377. Such an analysis of the scope of the conclusions of the ‘Ecofin’ Council is not disputed by the Kingdom of Belgium. It should be noted in that regard that, in its reply to the Commission of 30 August 2002 to the questions put by that institution in relation to the extent of legitimate expectations in the present case, the latter stated that ‘the discussions at Council level regarding the code of conduct fall completely outside the legal framework relating to State aid. They involve questions of policy, which will not be put into effect until the end of 2002’. (113) 378. Given its analysis of the scope of the Council’s conclusions, the Kingdom of Belgium cannot therefore claim that those conclusions gave it precise assurances as to the content of the transitional measures which the Commission would be led to adopt, if, at some time, it were to consider that the tax scheme at issue constituted State aid incompatible with the common market. (114) 379. I take the view that the same analysis should be adopted in relation to the coordination centres. It is well known that, in the field of State aid, the right of the beneficiaries of aid to entertain a legitimate expectation that the aid is lawful is subject to the condition that the procedure laid down in the Treaty has been followed. It is also settled case-law that a diligent businessman should normally be able to determine whether that procedure has been followed. (115) Those requirements are based on the mandatory nature of the monitoring undertaken by the Commission pursuant to Article 88 EC. 380. It can be inferred from that that, in the field of State aid, traders can, as a rule, entertain a legitimate expectation only in a case which does not infringe the powers given to the Commission by Article 88 EC. In other words, traders are deemed to be aware of the powers conferred on the Commission by the Treaty in the field of State aid. 381. In the light of that case-law, I am of the opinion that, even if the coordination centres were to have been aware of the Council’s conclusions of 26 and 27 November 2000, they were not entitled to rely on those conclusions being binding on the Commission. 382. Furthermore, as the Commission points out, the meaning of the proposal by the Presidency adopted at the Council on 26 and 27 November 2000 is not free from doubt. The proposal is worded as follows: ‘the Presidency proposes to the Council … that as regards undertakings benefiting from a harmful scheme on 31 December 2000, the effects of those harmful schemes should expire at the latest on 31 December 2005, whether they were schemes granted for a fixed period or not’. (116) It could therefore be construed as meaning that the date of 31 December 2005 represented the last date on which the 10‑year approvals in force as at 31 December 2000 could have effect. It does not necessarily mean that all approvals, including those expiring prior to 31 December 2005, were to remain in force until that date. 383. It follows from that that the Council’s conclusions of 26 and 27 November 2000 could therefore not, in any event, give the Kingdom of Belgium and the coordination centres precise assurances, as required by case-law, that all those centres could benefit from the scheme at issue until at least 31 December 2005. 384. As regards, next, the proposals for appropriate measures notified to the Kingdom of Belgium by the Commission under the procedure for monitoring existing aid, I am also of the opinion that they were not capable of giving that Member State and the coordination centres the precise assurances which that State relies on. 385. As the Commission points out, the transitional measures set out in those proposals are not binding on it where those proposals are not accepted by the Member State to which they are addressed. Those transitional measures may therefore be amended, where the circumstances so require, in the decision given at the end of the formal investigation procedure. Such a possibility is the logical corollary of the right of the Member State concerned to reject the appropriate measures proposed to it by the Commission and to challenge the classification of the measure in question as State aid during the formal investigation procedure. 386. It therefore cannot be accepted that the proposals for appropriate measures sent by the Commission to the Kingdom of Belgium in its letter of 11 July 2001 could have conveyed precise assurances as to the content of the transitional measures which that institution would, if appropriate, include in its decision ending the formal investigation procedure. 387. In the light of the above, I am of the opinion that neither the Council’s conclusions of 26 and 27 November 2000, nor the proposals for appropriate measures made by the Commission, could have created a legitimate expectation on the part of the Kingdom of Belgium and the coordination centres that the tax scheme at issue would be maintained until at least 31 December 2005 for all those centres. 388. By contrast, I agree with the Kingdom of Belgium and Forum 187 that, given the provisions of the Belgian tax scheme, the Commission decisions of 1984 and 1987 and the reply given in 1990 by the Commissioner responsible for competition to Parliamentary question No 1735/90 entitled the coordination centres to rely on the fact that the Treaty rules relating to State aid would not preclude their 10‑year approval being renewed and that the tax scheme would continue to apply. 389. In its decisions of 1984 and 1987 and in its reply given in 1990 by the Commissioner responsible for competition, the Commission stated that there was no incompatibility between the tax scheme applicable to the coordination centres and the Treaty rules in the field of State aid. 390. Consideration of the provisions of the scheme shows that it provided several advantages, the benefit of which was subject to a number of conditions, compliance with which was to be confirmed by royal decree. It is also true, as the Commission points out, that that scheme further provided that the approval granted by royal decree was to be valid for a period of 10 years. However, that does not justify the Commission’s finding that a coordination centre could not rely on the scheme being renewed at the end of that period. 391. I am of the opinion that the tax scheme applicable to the coordination centres was of the nature of a permanent scheme. It was established for an indefinite period. The coordination centres which satisfied the requirements of the scheme on the expiry of their 10-year approval were therefore entitled to have their approval renewed. That was expressly confirmed by the Law of 23 October 1991, the draft of which included confirmation in its statement of reasons that it was not intended to change the law but simply to dispel any concerns the coordination centres might have as to the possibility of obtaining a renewal. (117) I therefore consider that the permanent nature and the continuity in the application of the tax scheme for the centres which satisfied the conditions laid down under it form an intrinsic part of the national scheme on which the Commission ruled in 1984, in 1987 and in 1990. 392. The Commission puts forward a number of arguments against that analysis of the tax scheme in question. It notes in that regard that renewal was subject to compliance with the same formal procedure and the same conditions as applied when it was originally obtained. However, those factors do not in my view mean that the coordination centres could not rely on the tax scheme continuing. The conditions attaching to the renewal of the approval were the same as those applying to its original grant and were objective in nature. It should also be pointed out, as the Commission indicated in its Decision of 17 February 2003, that the decision whether to grant or withhold such a renewal was not one in relation to which the Belgian authorities had any discretion. (118) 393. That being the case, the fact that the approval came to the end of its 10-year term did not mean that the scheme in question ceased to apply to a coordination centre. It was the point at which the centre required to demonstrate to the Belgian authorities that it continued to meet the conditions which needed to be satisfied in order to benefit from it. The fact that the benefit of the scheme was granted for a fixed period of 10 years therefore did not undermine the continuity of the benefit of the tax scheme applicable to the coordination centres. 394. The Commission also argues that at no time did the Belgian authorities guarantee that the advantages conferred by the scheme would continue in existence and, moreover, that the authorities reduced the extent of those advantages, by introducing, for example, an annual charge of EUR 10 000 per full-time staff member from 1 January 1993. 395. In my opinion, those arguments also fail to show that the coordination centres having an approval which had just expired could not rely on the tax scheme at issue continuing. In support of that conclusion, I would refer, first, to the fact that the Commission itself acknowledged in its Decision of 17 February 2003 that although approval provides no guarantee as to the continued existence of that scheme or of the benefits under it, the coordination centres were entitled to rely on a ‘reasonable and legitimate expectation of a certain degree of continuity in the economic conditions, including the tax regime’. (119) Secondly, the amendments made by the Kingdom of Belgium to the scheme in question since its introduction by Royal Decree No 187 were a relatively peripheral in nature and did not affect the principal elements of the scheme, that is to say the method of calculation of the tax base and the exemptions from withholding tax, property tax and capital duty. 396. The tax scheme at issue accordingly entitled the coordination centres to rely in its continuing in existence and on their approval being renewed provided they satisfied the objective requirements laid down under the scheme. It follows that, in indicating in its decisions of 1984 and 1987 and in the reply given in 1990 by the Commissioner responsible for competition to Parliamentary question No 1735/90 that the scheme did not fall within the scope of Article 87(1) EC, the Commission did indeed allow the coordination centres having an approval in place on 31 December 2000 to rely on the fact that the Treaty rules on State aid would not prevent their 10-year approval being renewed upon its expiry. Whether the expectation was legitimate 397. The Commission argues that, at the time when its Decision of 17 February 2003 was notified to them, the coordination centres were not entitled to rely on a legitimate expectation that that scheme would continue or that their approval would be renewed since the centres had been given a number of signals that the scheme could not be maintained. The Commission refers in that regard to the code of conduct adopted by the Council and the report of the Code of Conduct Group. It also mentions its notice on the application of the State aid rules to measures relating to direct business taxation, its request for information to the Belgian authorities relating to the scheme in question in February 1999, its proposals for appropriate measures sent to those authorities on 11 July 2001 and, lastly, its decision to initiate the formal investigation procedure of 27 February 2002. 398. The Commission’s position is essentially that those factors signify that the coordination centres ought, when its Decision of 17 February 2003 was notified, to have foreseen that the Treaty rules on State aid would preclude any extension of their approval. I do not consider that that argument can be accepted and that the signals referred to by the Commission mean in this case that the right to rely on a legitimate expectation in the renewal of their approval should be denied to those centres. 399. I reach that conclusion on the basis of, first, the general scheme and the objectives of the procedure for the monitoring of State aid and, secondly, on the nature of the tax scheme in question. 400. As mentioned above, the aim of the obligation to give prior notice of State aid laid down under Article 88(3) EC is in particular to dispel any doubts on the part of the Member State which is considering introducing a measure as to whether it does, or does not, constitute aid for the purposes of Article 87(1) EC. 401. I have already stated that the concept of State aid, as defined in that provision, is objective in nature. Contrary to what the Commission suggested in its defence in Case C-182/03, (120) whether a national measure falls, or does not fall, within the scope of Article 87(1) EC is not a matter of discretion. The fact that the Commission has a wide margin of latitude in determining whether a national measure falls within the scope of that provision where consideration of the conditions laid down under it involves complex financial assessments does not mean that it may amend its determination that a measure constitutes aid at any time and on an entirely discretionary basis. 402. The Commission’s position is contrary to the objective underlying the mechanism laid down by Article 88(3) EC and the consequences which have been drawn from it by case-law. It is established that the purpose of the requirement to give notice set out in that provision is to provide legal certainty. (121) It is with that objective in mind that it has been held that the Member State should receive prompt notification as to whether aid is compatible with the Treaty and that the period of two months laid down by Article 4(5) of Regulation No 659/1999 in which the Commission is to give its opinion is mandatory. (122) It is also with that principle in mind that it has been held that, once a general scheme of aid has been approved by the Commission, individual grants of aid under it which are merely measures in implementation of it do not need to be notified. (123) 403. Accordingly, the decision by which the Commission finds that a measure does not constitute State aid for the purposes of Article 87(1) EC does not create a legal situation which may be regularly altered by the institutions in the exercise of their discretionary power, as may be the case particularly in an area such as that of the common organisation of the markets, the objective of which involves constant adjustment to reflect changes in economic circumstances. (124) 404. Accordingly, where a national measure has been notified to the Commission in accordance with Article 88(3) EC and the latter has given a decision that the measure does not constitute aid for the purposes of Article 87(1) EC, both the State which introduced the measure and the beneficiaries of it can, once the time-limit for bringing proceedings to challenge the decision has passed, be certain that the scheme does not contravene the Community rules on State aid. The parties concerned are thus entitled to believe that such a decision may generally be qualified only where there has been an evolution in the common market. 405. While, as mentioned above, the Commission may, by virtue of the principle of legality, also reverse such a determination where it considers that, contrary to what it had previously indicated, the scheme concerned falls within the scope of Article 87(1) EC, I am of the view that, should such a case arise, the expectation which its previous determination gives rise to should benefit from a particularly high degree of protection. 406. I am therefore of the view that such an expectation will cease to be legitimate only if the traders concerned are possessed with information which leads them to believe with a sufficiently high degree of probability that the Commission was to reverse its previous assessment. In other words, the fact that the Commission is reviewing the national measure in question and the possibility that it may, once the formal investigation procedure has been completed, adopt a negative decision, is not of itself sufficient to prevent the traders concerned relying on a legitimate expectation that the existing situation will prevail. 407. Next, it is also necessary to ensure that, having regard to the nature of the national measure in question, the traders to which it applies have been given adequate time in which to take account of any alteration in the Commission’s assessment of its compatibility with the Treaty rules on State aid. 408. Having regard to those considerations, I do not consider that the various signals relied on by the Commission, whether emanating from the ‘Ecofin’ Council or itself, justify denying the coordination centres the right to rely on a legitimate expectation that their approval would be renewed. 409. With respect, first of all, to the code of conduct adopted by the Council and the report of the Code of Conduct Group, I am of the view that they are irrelevant for the following reason. The undertaking given by the Member States in the code to repeal tax measures held to be harmful to the common market and the fact that the scheme in question was included in the report of the Code of Conduct Group as one of the national measures considered harmful could, it is true, indicate to the coordination centres that the Belgian Government would, in due course, require to amend or to repeal the scheme within a timescale fixed by the Council. 410. However, as already mentioned, the resolution is one of a policy nature, which did not bind the Commission in the exercise of the powers given to it by the Treaty and, accordingly, in its determination as to whether the objective conditions laid down under Article 87(1) EC existed. As a result, the Council’s code of conduct and the report of the Code of Conduct Group cannot, in my opinion, be considered as factors which should have led the coordination centres to believe that the Commission would decide that the scheme in question constituted State aid incompatible with the common market. 411. As regards, next, the notice on the application of the State aid rules to measures relating to direct business taxation and the fact that, in the notice, the Commission announced its intention to examine, or to re-examine, all tax schemes in force in the Member States, I am again of the view that they cannot be considered as a signal that the tax scheme applicable to the coordination centres fell within the scope of Article 87(1) EC and could not, as the Commission contends, remain in force. 412. The object of the notice is to provide clarification as to the application of Article 87(1) EC in the field of tax measures applying to undertakings. (125) Its content is thus much too general for it to be possible, merely by reading it, to be aware that the tax scheme applicable to the coordination centres met each of the requirements laid down under that provision. Moreover, in that notice, the Commission gives no indication of an amendment to the criteria on the basis of which it had previously determined whether a tax scheme did, or did not, constitute aid for the purposes of Article 87(1) EC. 413. With regard, lastly, to the request for information to the Belgian authorities relating to the scheme in question in February 1999, the proposals for appropriate measures sent to those authorities on 11 July 2001 and the decision to initiate the formal investigation procedure of 27 February 2002, I am again of the view that these did not allow the coordination centres to foresee with a sufficient degree of certainty what the final decision of the Commission would be. 414. The true position is that those matters informed the coordination centres that the tax scheme was being re-examined by the Commission. However, as was pointed out in the interim order of 26 June 2003, neither the proposals for appropriate measures sent to the Kingdom of Belgium nor the decision of 27 February 2002 to initiate the formal investigation procedure had any independent legal effect against that Member State or the coordination centres. (126) 415. Furthermore, the classification in both of those measures of the tax scheme applicable to the coordination centres as existing aid did not mean either that the Commission was going to adopt a negative decision and to decide in its final decision to reverse its findings reached in 1984, in 1987 and in 1990. As the Court of First Instance pointed out in its order in Forum 187 v Commission , in which it rejected as inadmissible the application brought by Forum 187 against the decision of the Commission of 27 February 2002 to initiate the formal investigation procedure, that classification was provisional in nature. Article 7 of Regulation No 659/1999 provides that that procedure may also be closed by a decision that, contrary to the classification adopted when the procedure was initiated, the national measure under consideration does not constitute aid, or that it is aid that is compatible with the common market. 416. The press notices describing the Commission measures likewise did not mention the reasons why that the tax scheme applicable to the coordination centres was henceforth considered by that institution to constitute State aid for the purposes of Article 87(1) EC. (127) It was only after the publication of the decision to initiate the formal investigation procedure in the Official Journal of the European Communities on 20 June 2002 that all the coordination centres could have become aware of the particular reasons why the Commission considered that the measures laid down under the tax scheme in question appeared to it to meet each of the conditions laid down under that provision and that they were incompatible with the common market. 417. However, even if the reasons set out in that decision should have led the coordination centres to foresee that the Commission might reverse its previous decisions, they also required to have adequate time, prior to the decision to close the formal investigation procedure being taken, in which to take account of such a possibility. Having regard to the specific features of the tax scheme in question, I do not believe that that consideration was possible. 418. The scheme at issue is, as mentioned above, a scheme which derogates from the ordinary tax law and which comprises a number of exemptions and a method for determining the particular tax base. The possibility that measures of that kind may be repealed is therefore much harder for an undertaking to take into account than that of the withdrawal of a subsidy. It requires not only that the economic consequences of such a repeal, which may be material, be taken into consideration, but also a significant degree of restructuring, particularly in relation to accounting matters. 419. It is also necessary to take account of the fact that the scheme had been in force from 1982 and that its benefits were granted for 10 years, renewable for a similar period. Having regard to the length of time in which it had been in effect and the period of the approvals which gave rise to an entitlement to benefits under it, it seems reasonable to believe, as the Kingdom of Belgium and Forum 187 maintain, that the coordination centres having an approval as at 31 December 2000 and which was in force when the Decision of 17 February 2003 was notified, had, with a view to ensuring continuity and stability, organised their long-term activities on the basis not only of the 10-year duration of the original approval but also, to some degree, of its renewal. 420. It thus appears very unlikely that the agreements entered into by those centres for the purposes of carrying on their activities, both with their employees and with third parties, would have been limited as to time and would have been set to expire at the end of their 10-year approval. On the contrary, there is every reason to believe that the activities of the coordination centres were organised on the basis that the tax scheme in question would continue to apply. 421. In those circumstances, I do not consider that the coordination centres had the time that was necessary to review their investments and reorganise their activities in the period between 20 June 2002, when the decision to initiate the formal investigation procedure was published, and 17 February 2003, so as to be able to take into account the possibility that the Commission might adopt a negative decision. 422. There is all the more justification for such reasoning, in my opinion, if one considers the position of the centres having an approval which expired shortly after the notification of the Decision of 17 February 2003. Even if it is accepted that the publication of the decision to initiate the formal investigation procedure in the Official Journal of the European Communities should have led them to take account of the possibility that the Commission might adopt a negative decision, those centres only had a few months available to them in which to adjust to a possible withdrawal of the approvals. Such a short period is all the more inappropriate since, as the Commission states in its defence in Case C-182/03, (128) many of the centres are in their second period of approval, so that their investments and their manner of working were determined in the light of a tax scheme in place for almost 20 years. 423. In the light of all of those factors, I am of the opinion that the coordination centres having an approval on 31 December 2000 and which approval was in force when the Decision of 17 February 2003 was adopted were entitled to have a legitimate expectation that they might benefit from the renewal of their approval when that decision was notified to them. That applies, in particular, to the centres having an application for renewal of an approval which was due to expire shortly after that notification. The balancing of the interests concerned 424. Case-law provides that the legitimate expectations of traders may be disregarded only where there is public policy interest which prevails over the beneficiary’s interest in the maintenance of a situation which it was justified in believing to be stable. It cannot be disputed that the Community interest requires that existing State aid schemes which distort competition between Member States cease to have effect. 425. In the present case, the Commission gives no explanation as to why that Community interest was sufficiently overriding to justify prohibiting any renewal from the time the decision was notified. The main aspect of its argument was that the tax scheme at issue did not entitle the coordination centres to have a legitimate expectation in their approval being renewed and, as I have just explained, I do not consider that that argument can be accepted. 426. The Commission also contends that a failure to renew would not give rise to a material or significant liability to tax on the part of the coordination centres. However, I am of the view that that argument cannot be accepted and that the transitional measures adopted in the decision of 17 February 2003 are vitiated by a lack of consistency. In my opinion, the Commission could not provide both that approvals in force as at the date of notification of its decision, including those renewed in 2001 and 2002, could remain effective until 31 December 2010 and prohibit any renewal after notification was made. 427. The opportunity given to the coordination centres having an approval in force when its decision was notified to benefit from those approvals until their expiry and 31 December 2010, at the latest, proves that the Commission took the view that the effects of the scheme on intra-Community trade are not unduly harmful, as it acknowledges that those effects will continue for another seven years. Moreover, the Commission did not refer in its Decision of 17 February 2003 to complaints from competitors or other factors which would allow the extent of the harmful effects of the scheme in question on intra‑Community trade to be precisely determined. 428. Similarly, the Commission, in the 119th recital in the preamble to its decision, justified allowing the current approvals to continue in force until their expiry by reason of the substantial investments made by the coordination centres and the groups to which they belong together with the long-term commitments entered into by those centres. In deciding on that basis that those investments and commitments justified the approvals remaining effective until their expiry and 31 December 2010, at the latest, the Commission necessarily acknowledged that the withdrawal of the scheme in question would prejudice the planned for benefits of those investments and the implementation of those commitments. 429. The Commission cannot therefore effectively argue in the proceedings before the Court that failure to renew to scheme at issue is incapable of materially increasing the liability to tax of the coordination centres and, accordingly, of causing them manifest harm. It is sufficient in that regard to refer to the nature of the measures laid down under the scheme at issue, which comprise exemptions from liability to tax, and, with respect to the method of calculation of taxable income, a particularly advantageous system of derogations. 430. It should also be pointed out that on the date on which the Commission Decision was adopted there was no substitute scheme in place to mitigate the effects of a failure to renew for the coordination centres having an approval which expired after the notification of the decision. The refusal to allow the Belgian Government to authorise any renewal of approvals from the time the Decision of 17 February 2003 was notified is therefore indeed capable of causing manifest harm to the coordination centres having an approval in force at that date which is due to expire prior to 31 December 2010. 431. In the light of those considerations, I am of the opinion that the balancing of the interests involved did not justify prohibiting the Belgian Government from renewing, even temporarily, the approvals which expired after the Commission Decision was notified. 432. Having regard to all of the above, I am of the view that the plea alleging infringement of the principle of the protection of legitimate expectations is well founded. The application for the annulment of the Commission Decision, in so far as it prohibits the Kingdom of Belgium from granting any extension of approvals to the coordination centres having an approval in force as at 17 February 2003, is accordingly justified. 433. However, the Kingdom of Belgium also requests the annulment of Article 2 of the Commission Decision, in so far as it prohibits it from renewing, even temporarily, approvals that were in force as at 17 February 2003 and expire before 31 December 2010. Consideration of that request, inasmuch as it essentially seeks a declaration that all renewals expiring before 31 December 2010 may be renewed and continue in effect until that date, requires that the plea alleging infringement of the principle of equal treatment be examined. ii) Infringement of the principle of equal treatment – Arguments of the parties 434. The Kingdom of Belgium contends that the Commission Decision discriminates without justification between those centres having an approval expiring shortly prior to its adoption, which accordingly benefit from the effects of the scheme in question until 31 December 2010, and those centres having an approval which expires after the notification of the decision and which are therefore denied the benefit of any transitional measure. It states that such discrimination is unjustified because those centres are in similar a economic situation. 435. The Kingdom of Belgium submits that the Commission Decision thus has the effect of treating the coordination centres which have benefited from the scheme in question for many years less favourably than those which obtained their approval more recently. It states that in order to avoid any discrimination the Commission should have provided that all those centres might benefit from the application of the scheme until 31 December 2010. 436. The Commission contests those arguments. It states that all the coordination centres are in the same position under Belgian law, in that they benefit from a 10-year approval. It maintains that it treated those centres in the same way, by providing that each of them could benefit from the whole of its period of approval until such approval expired. It thus took into account the investments made and the commitments undertaken for the period of the 10-year approval. It takes the view, however, that where those investments and commitments exceed the period of the approval, such a situation reflects a risk assumed by the undertaking. 437. The Commission considers that, in such circumstances, the grant of a transitional period in the form of the extension of the application of the scheme at issue to centres having an approval which expires after the notification of its decision would constitute unequal treatment. The existence of investments and long-term commitments is a matter which affects all centres in the same way, whatever the date on which their approval expires in the period between 2003 and 2010. – Appraisal 438. Case-law provides that the general principle of equal treatment requires that comparable situations must not be treated differently and different situations must not be treated alike unless such treatment is objectively justified. (129) 439. In the present case, the Commission argues that it did not disregard that principle because all the coordination centres are in the same position under Belgian law, all of them are affected in the same way as regards the existence of investments and long-term commitments, and it treated all of them in a similar manner in providing that they were to have the benefit of their approval until its expiry. 440. I do not consider that the Commission’s position can be accepted, as it is based on the premiss that at the time when its decision was adopted the coordination centres did not have the benefit of a legitimate expectation that their approval would be renewed. I have already stated that in my opinion that premiss is incorrect. If one starts from the opposing premiss, that those centres were legitimately entitled to believe that the Treaty rules in the field of State aid did not preclude the renewal of their approval, the conclusion becomes inevitable that the approach underlying the transitional measures adopted by the Commission in its Decision of 17 February 2003 leads to unequal treatment. 441. First, if one adopts the position that the coordination centres were legitimately entitled to expect that the tax scheme in question would continue to apply, it seems undeniable that the prohibition of any renewal, whatever its period might be, creates an inequality of treatment between them depending on the date on which their approval expires, as those of them having an approval which was renewed in 2001 or 2002 will be able to benefit from the scheme at issue until 31 December 2010, while those having an approval which expires before that date will not be able to benefit from the scheme in question after the approval expires. 442. Secondly, I do not believe that that difference in treatment can be justified by the fact that the coordination centres obtained their original approval on different dates. In other words, I do not consider that the fact that a coordination centre was approved for the first time in 1985 and obtained a renewal of its approval in 1995 justifies its right to benefit from the scheme in question terminating in 2005, while a centre which was granted an approval for the first time in 1990, renewed in 2000, will be able to benefit from it until 2010. 443. It can equally well be argued that a coordination centre which had benefited from the scheme for over 18 years at the time when the Commission Decision was adopted deserves just as much as a centre which began operating 13 years ago to benefit from the scheme in question until the end of the period laid down by the Commission for the full abolition of the scheme, since it has organised and developed its activities on the basis of the tax scheme in question and against an assumption that it would remain in place, for a longer period of time. 444. In my opinion, the lack of any justification for the difference in treatment created by the scheme in question is also confirmed by the fact that the choice of the date from which no approval could be renewed for any period at all is the date of notification of the decision closing the formal investigation procedure, which is largely discretionary in nature. Thus, it would have been sufficient for the Commission to give its decision closing that procedure at the end of the 18-month period laid down under Article 7 of Regulation No 659/1999 (130) for a coordination centre having an approval expiring on 30 June 2003 to obtain a renewal of it and, by virtue of Article 2 of the Commission Decision, also to benefit from the scheme at issue until 31 December 2010. 445. In the light of those matters, I am of the view that, in its Decision of 17 February 2003, the Commission failed to have regard to the general principle of equal treatment inasmuch as it provided that approvals in force at that date could remain effective until 31 December 2010 and that approvals expiring before that date could not be renewed and could not remain effective until that date. 446. In the light of all those matters, I propose that the Court should annul the Commission Decision in so far as it prohibits the Kingdom of Belgium from renewing, even temporarily, approvals that were in force on the date of notification of the decision and which expire before 31 December 2010. 447. Inasmuch as that proposal would lead to the Kingdom of Belgium’s application and Forum 187’s alternative application being granted, it is unnecessary to consider the other pleas relied on by the applicants. 4. Costs 448. Article 69(2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Under Article 69(3), the Court may, where each party succeeds on some and fails on other heads set out in their application, order that the costs be shared. 449. Forum 187 claims that the Court should order the Commission to pay the costs, including those relating to Case T-276/02. However, the costs in that case were the subject of an award by the Court of First Instance in its order of 2 June 2003, which declared its action against the decision to initiate the formal investigation procedure to be inadmissible. Forum 187’s application for costs can therefore be considered only in relation to those of these proceedings and those relating to the application for interim measures, which were reserved in the order of 26 June 2003. 450. If the Court accepts my proposals, in so far as Forum 187 would fail in part in its application in Case C-217/03, I propose that the costs be allocated as follows: Forum 187 should bear one half of its costs in Case C-217/03; the Commission should bear its own costs in that case and one half of the costs of Forum 187; lastly, the Commission should bear the costs in Case C-217/03 R. 451. Similarly, in so far as the action brought by the Kingdom of Belgium is held to be well founded, I propose to the Court that the Commission be ordered to bear its own costs and those of that Member State in Cases C-182/03 and C-182/03 R. VI – Conclusions 452. In the light of all the above matters, I propose to the Court that it should: – In Case C-399/03 (1) Annul Council Decision 2003/531/EC of 16 July 2003 on the granting of aid by the Belgian Government to certain coordination centres established in Belgium. (2) Order the Council of the European Union to pay the costs. – In Joined Cases C-182/03 and C-217/03 (1) Annul Commission Decision C (2003) 564 of 17 February 2003 concerning the aid scheme implemented by Belgium in favour of coordination centres established in Belgium, as rectified by the corrigendum of 23 April 2003, in so far as it prohibits the Kingdom of Belgium from renewing, even temporarily, approvals that were in force on the date on which that decision was notified and expire prior to 31 December 2010. (2) Dismiss the remainder of the action brought by Forum 187 ASBL. (3) Order Forum 187 ASBL to pay one half of its costs in Case C‑217/03, order the Commission of the European Communities to pay its costs and one half of the costs of Forum 187 ASBL in that case, and order the Commission of the European Communities to pay the costs in Case C‑217/03 R. (4) Order the Commission of the European Communities to pay the costs in Cases C-182/03 and C-182/03 R. (1) . (2) – Commission Decision C(2003) 564 final concerning the aid scheme implemented by Belgium in favour of coordination centres established in Belgium, as amended by Corrigendum of 23 April 2003 (‘the Commission Decision’ or the ‘Decision of 17 February 2003’). (3) – Decision 2003/531/EC on the granting of aid by the Belgian Government to certain coordination centres established in Belgium (OJ 2003 L 184, p. 17) (‘the Council Decision’ or the ‘Decision of 16 July 2003’). (4) – ‘Forum 187’. (5) – Council Regulation of 22 March 1999 laying down detailed rules for the application of Article [88] of the EC Treaty (OJ 1999 L 83, p. 1). (6) – Article 4 of Regulation No 659/1999 provides that where the Commission has received complete notification of a national measure it must, within two months, take a decision that the measure does not constitute aid, or that the aid is compatible with the common market, or that doubts are raised as to the compatibility with the common market of the measure which require that the formal investigation procedure be initiated. Pursuant to Article 4(6) of the regulation, where the Commission has not taken a decision within that two-month period, the aid is to be deemed to have been authorised. (7) – Article 15 of Regulation No 659/1999 sets out the rules governing limitation and provides that the powers of the Commission to recover aid are to be subject to a limitation period of 10 years. Article 15(3) of the regulation states that any aid with regard to which that period has expired is to be deemed to be existing aid. (8) – Royal Decree No 187 on the creation of coordination centres ( Moniteur belge of 13 January 1983). (9) – Commission’s defence in Case C-217/03, paragraphs 27 and 31. (10) – Article 1(2) of Royal Decree No 187 refers to the following activities: ‘advertising, the provision and ingathering of information, insurance and reinsurance, scientific research, relationships with national and international authorities, centralisation of accounting, administrative and information technology functions, centralisation of financial operations and the covering of risks arising from fluctuations in exchange rates, together with any other activity of a preparatory or auxiliary nature for the members of the group’. (11) – OJ 1991 C 63, p. 37. The Written Question raised several questions and was worded as follows: ‘On the basis of the “Coordination Centre Statutes” (1982), Belgium offers an attractive fiscal environment to businesses that operate internationally. 213 firms now benefit from this arrangement, and there are plans for a further 54 coordination centres … . 1. Is it true that Ireland, Luxembourg and Austria operate similar arrangements? 2. Do Member States other than Ireland and Luxembourg intend to introduce similar arrangements? 3. Has the Commission received notification of all such arrangements, which constitute a major tool in competition between Member States, pursuant to Article [88(3) EC]? Are they compatible with Articles [10 EC] and [87 EC]? 4. In this regard, does the Commission intend to use its power to propose the “appropriate measures required by the progressive development or by the functioning of the common market” (Article [88(1)] EC])?’ The Commissioner responsible for competition replied as follows: ‘Several Member States (France, the Federal Republic of Germany, Luxembourg, the Netherlands and the United Kingdom) have indeed introduced rules governing taxation of the European headquarters of multinational groups. The rules are designed to avoid double taxation, in particular by determining profits on a flat-rate basis. The Commission takes the view that such rules do not fall within the scope of Articles [87 EC] and [88 EC]. The Commission decided that the rules applicable to coordination centres in Belgium were unobjectionable as regards Article [87 EC], following the Belgian Government’s amendments to the provisions originally notified to it.’ (12) – Resolution of the Council and the Representatives of the Governments of the Member States, meeting within the Council of 1 December 1997, on a code of conduct for business taxation (OJ 1998 C 2, p. 2). (13) – OJ 1998 C 384, p. 3. (14) – Annexes 17, p. 5, and 18, pp. 7 and 8, to the application by the Kingdom of Belgium. (15) – Paragraph 33 of the Commission letter set out in Annex 23 to the application by the Kingdom of Belgium. (16) – OJ 2002 C 147, p. 2. (17) – Points 76 and 77 of the decision to initiate the formal investigation procedure. (18) – Point 10 of Annex 29 to the application of the Kingdom of Belgium. (19) – Author’s emphasis in order to show the correction. (20) – Commission Decision 2005/378/EC concerning the aid scheme which Belgium is proposing to implement for coordination centres (OJ 2005 L 125, p. 10). (21) – Case C-110/02 [2004] ECR I-6333. (22) – Paragraph 47. (23) – Council Decision 2002/114/EC of 21 January 2002 authorising the Government of Portugal to grant aid to Portuguese pig farmers who were beneficiaries of the measures granted in 1994 and 1998 (OJ 2002 L 43, p. 18). (24) – 13th recital in the preamble to Decision 2002/114. (25) – Commission v Council , paragraph 33. (26) – Commission v Council , paragraphs 44 and 45. (27) – Paragraph 33. (28) – Support for that analysis it also to be found in the grounds put forward by the Permanent Representative of the Kingdom of Belgium to the European Union in support of the application for authorisation of the measures in question, which are set out in his letters to the Council of 28 March and 20 May 2003. In those letters, he essentially states that his Government was of the view that the Commission Decision, inasmuch as it did not allow the renewal of the authorisations of the centres concerned, infringed their legitimate expectations and that he intended to maintain the tax scheme applicable to the coordination centres in place for their benefit until 31 December 2005. (29) – Paragraph 35. (30) – Application of the Kingdom of Belgium, paragraph 18. (31) – Paragraphs 45 and 46. (32) – OJ 2000 L 308, p. 26. (33) – See, to that effect, Case C-137/92 P Commission v BASF and Others [1994] ECR I‑2555, paragraph 68. (34) – Paragraph 36 of Forum 187’s reply. (35) – Forum 187 v Commission , in which the order of the Court of First Instance of 2 June 2003 was granted ([2003] ECR II-2075). (36) – Case T-86/96 [1999] ECR II-179 (‘ ADL ’). (37) – Case T-380/94 [1996] ECR II-2169. (38) – Joined Cases 67/85, 68/85 and 70/85 [1988] ECR 219. (39) – Case 25/62 [1963] ECR 95, 107. (40) – Case T-55/99 [2000] ECR II-3207. (41) – Joined Cases C-15/98 and C-105/99 [2000] ECR I-8855. (42) – Case C-298/00 P [2004] ECR I-4087. (43) – According to the table set out in Annex 4 to the application, the eight renewal applications which were pending when the decision was adopted comprise two applications where the new period of approval might have commenced in July and in October 2003, five applications where the period of approval might have commenced on 1 January 2004 and one application where that period might have commenced on 1 January 2005. (44) – Case C-6/92 Federmineraria and Others v Commission [1993] ECR I-6357, paragraph 17. (45) – Case C-313/90 CIRFS and Others v Commission [1993] ECR I-1125, paragraphs 29 and 30, and AIUFFASS and AKT v Commission , paragraph 50. (46) – See, inter alia, Case 294/83 Parti écologiste ‘Les Verts’ v Parliament [1986] ECR 1339, paragraph 19; CIRFS and Others v Commission , paragraph 23; and Italy v Commission , paragraph 35. (47) – Joined Cases 16/62 and 17/62 Confédération nationale des producteurs de fruits et légumes and Others v Council [1962] ECR 471, 479 and 480; order of 18 December 1997 in Case C-409/96 P Sveriges Betodlares and Henrikson v Commission [1997] ECR I-7531, paragraph 45; ADL , paragraph 55; and order of 29 April 1999 in Case T-78/98 Unione provinciale degli agricoltori di Firenze and Others v Commission [1999] ECR I-1377, paragraph 36. (48) – Joined Cases T-447/93, T-448/93 and T-449/93 AITEC and Others v Commission [1995] ECR II-1971, paragraph 60, and ADL , paragraph 65. (49) – Case C-78/03 P [2005] ECR I-10737. (50) – Paragraph 56. See also Case C-106/98 P Comité d’entreprise de la Société française de production and Others v Commission [2000] ECR I-3659, paragraphs 42 and 45. (51) – See, to that effect, ADL , paragraph 62. (52) – Case C-309/89 [1994] ECR I-1853, paragraph 19. (53) – See, inter alia, Case C-386/96 P Dreyfus v Commission [1998] ECR I-2309, paragraph 43 and the case-law cited there. (54) – See, inter alia, Case C-263/02 P Commission v Jégo-Quéré [2004] ECR I-3425, paragraph 45. (55) – Van der Kooy and Others v Commission , paragraph 15; Federmineraria and Others v Commission , paragraph 14; and Italy and Sardegna Lines v Commission , paragraph 33. (56) – Joined Cases 106/63 and 107/63 Toepfer and Getreide-Import v Commission [1965] ECR 405, 412 ; Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207, paragraph 31; Case C‑152/88 Sofrimport v Commission [1990] ECR I-2477, paragraph 11; Case C‑390/95 P Antillean Rice Mills and Others v Commission [1999] ECR I-769, paragraphs 25 to 30; Joined Cases T-480/93 and T-483/93 Antillean Rice Mills and Others v Commission [1995] ECR II-2305, paragraph 67; and Case T-47/00 Rica Foods v Commission [2002] ECR II-113, paragraph 41. (57) – The Court held as admissible an action by two companies which imported grain into Germany brought against a Commission decision which retrospectively authorised that Member State to take protective measures pursuant to which their applications for an import licence had been rejected. (58) – Case 62/70 [1971] ECR 897. In that judgment, the Court held as admissible an action brought by a company which imported foodstuffs against a Commission decision authorising the Federal Republic of Germany not to apply Community treatment to certain products originating in China and put into free circulation in the Benelux countries, in that that decision also concerned the importing of products in respect of which applications for licences were pending before the German administration at the time when it came into force. Thus, on 4 September 1970, the applicant had requested an import licence from the competent German authority for a consignment of Chinese mushrooms which were in free circulation in the Netherlands. On 11 September 1970, that authority gave the applicant notice that it would reject that application as soon as the Commission had given its authorisation to that effect. By decision of 15 September 1970, the Commission authorised the Federal Republic of Germany to exclude from Community treatment not only future applications to import black mushrooms from China but also pending applications. (59) – Case 232/81 [1984] ECR 3881 and Case 264/81 [1984] ECR 3915. The actions involved applications brought by tenderers against a Commission regulation repealing a previous regulation on the basis of which the Italian intervention agency had put up for sale a certain quantity of olive oil. The Court held that, as the situation between the parties to the sale was determined, ‘any intervention on the part of the Community institutions preventing [the Italian intervention authority] from carrying out its obligations to the tenderers designated by the drawing of lots necessarily constitutes a measure of direct and individual concern to them’ (paragraph 11 of both judgments). (60) – Case 100/74 [1975] ECR 1393. (61) – The case involved a company which had obtained, on 19 July 1974, an export licence for 10 000 tonnes of barley, valid until 16 October 1974. In terms of a Council regulation, the target and intervention prices applicable inter alia to cereals were to be subject to an increase of five per cent from 7 October 1974. However, by a regulation of 4 October 1974, the Commission had provided that that measure was not to apply to export licences issued before 7 October, thereby depriving the applicant of the benefit of the increase laid down by the Council in respect of the 3 978 tonnes of barley which it was still to export between 7 and 16 October. The Court accepted that the applicant’s action against the Commission’s regulation was admissible. It held that, by denying to a class of traders the benefit of an increase in the amount of the refund for specific exports, that regulation applied to a fixed and known number of cereal exporters and that, even if the measure was one of a number of provisions having a legislative function, concerned those exporters because of a factual situation which differentiated them from all other persons. (62) – Italy and Sardegna Lines v Commission , paragraph 34, and Italy v Commission, paragraph 39. (63) – Case T-310/00 MCI v Commission [2004] ECR I-3253, paragraph 44 and the case‑law cited there. (64) – Ibid., paragraph 45 and the case-law cited there. (65) – The action brought by the Kingdom of Belgium, as a privileged applicant, is admissible and case-law provides that a Member State has an interest in challenging a measure of an institution on the ground that it frustrates the legitimate expectations of certain traders (Case C-284/94 Spain v Council [1998] ECR I-7309, paragraph 42 and the case-law cited there). (66) – Thus, in Piraiki-Patraiki and Others v Commission exporters of cotton were held to be individually concerned by a Commission decision authorising the French Republic to take protective measures against imports of cotton from Greece on the ground that the applicants had already entered into contracts which were prevented from being performed by that decision and that the Commission was required by Article 130 of the Act concerning the conditions of accession of the Hellenic Republic and the adjustments to the Treaties (OJ 1979 L 291, p. 17), pursuant to which the decision had been taken, to inquire into the negative effects which it might have for the undertakings concerned. Similarly, in Sofrimport v Commission , Sofrimport was held to be individually concerned by two Commission regulations suspending the issue of licences for the importation into the European Community of apples from Chile, on the ground that it was an importer of products in transit and that the measure which had formed the basis of the regulations at issue required the Commission to take account, when adopting measures suspending import licences, of the particular circumstances of those goods. (67) – Paragraph 12. (68) – Paragraph 28. (69) – See, to that effect, Parti écologiste ‘Les Verts’ v Parliament , where the Court held as admissible the action brought by that political party against the acts of the bureau of the European Parliament which determined the allocation of appropriations on the ground that to hold the action to be inadmissible would lead to the creation of inequality in the protection afforded by the Court to competing groupings (paragraph 36). (70) – Case 14/81 Alpha Steel v Commission [1982] ECR 749, paragraph 10; Case 15/85 Consorzio Cooperative d’Abruzzo v Commission [1987] ECR 1005, paragraph 12; Case C-248/89 Cargill v Commission [1991] ECR I-2987, paragraph 20; Case C‑90/95 P De Compte v Parliament [1997] ECR I-1999, paragraph 35; and Case T‑251/00 Lagardère and Canal+ v Commission [2002] ECR II-4825, paragraph 140. (71) – Case 325/85 Ireland v Commission [1987] ECR 5041, paragraph 18. (72) – Case C-63/93 Duff and Others [1996] ECR I-569, paragraph 20. (73) – Ibid. (74) – Joined Cases 42/59 and 49/59 Snupat v High Authority [1961] ECR 53, 87. (75) – Italy v Commission , paragraph 42 and the case-law cited there. (76) – Case C-50/00 P [2002] ECR I-6677, paragraph 40. (77) – Case C-83/98 P France v Ladbroke Racing and Commission [2000] ECR I-3271, paragraph 25. See also Case T-274/01 Valmont v Commission [2004] ECR II-3145, paragraph 37. (78) – Italy and Sardegna Lines v Commission , paragraph 51, and Case C-278/00 Greece v Commission [2004] ECR I-3997, paragraph 24. (79) – Case C-482/99 France v Commission [2002] ECR I-4397, paragraph 68; Case C‑280/00 Altmark Trans and Regierungspräsidium Magdeburg [2003] ECR I‑7747, paragraph 74; and Case C-126/01 GEMO [2003] ECR I-13769, paragraph 21. (80) – France v Ladbroke Racing and Commission , paragraph 25, and Valmont v Commission , paragraph 37. (81) – See, inter alia, Case C-5/01 Belgium v Commission [2002] ECR I-11991, paragraph 32 and the case-law cited there, and GEMO , paragraph 28 and the case‑law cited there. (82) – Case C-387/92 Banco Exterior de España [1994] ECR I-877, paragraph 14, and Case C-6/97 Italy v Commission [1999] ECR I-2981, paragraph 16. (83) – These include, in particular: salaries and direct social benefits of management and staff, employers’ social security contributions, employers’ non-statutory insurance contributions, together with retirement and survivors’ pensions (Circular No Ci.RH.421/439.244 dd. of 29 November 1993, Chapter III, F, paragraph 42). (84) – The concept of ‘financial charges’ is defined in paragraph 42 of the abovementioned circular as extending to interest, commission and expenses relating to debts; amounts written down in respect of non-trading receivables, on cash investments and disposable assets; losses on the disposal of current assets other than trading receivables, cash investments and disposable assets; provisions of the centre concerned in respect of bad or doubtful debts; foreign-exchange and foreign currency conversion losses, together with all other costs which are deemed to be financial charges pursuant to the applicable accounting law. (85) – See Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations , OECD publications, Paris 2001, p. II-12 and p. VII-1. (86) – See, in that regard, the example of a calculation set out in paragraph 50 of Circular No Ci.RH.421/439.244 dd. of 29 November 1993. (87) – Council Directive of 17 July 1969 concerning indirect taxes on the raising of capital (OJ 1969 L 249, p. 25), as amended by Council Directive 85/503/EEC of 10 June 1985 (OJ 1985 L 156, p. 23) (‘Directive 69/335’). (88) – Article 7(1) of Directive 69/335 reads as follows: ‘Member States shall exempt from capital duty transactions, other than those referred to in Article 9, which were, as at 1 July 1984, exempted or taxed at a rate of 0.50% or less. The exemption shall be subject to the conditions which were applicable, on that date, for the grant of the exemption or, as the case may be, for imposition at a rate of 0.50% or less. …’ (89) – Council Directive of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 1990 L 225, p. 6). (90) – Case T-67/94 Ladbroke Racing v Commission [1998] ECR II-1, paragraph 52. (91) – Case C-200/97 Ecotrade [1998] ECR I-7907, paragraph 40; Case C-75/97 Belgium v Commission [1999] ECR I-3671, paragraph 26; Case C-295/97 Piaggio [1999] ECR I-3735, paragraph 39; Case C-409/00 Spain v Commission [2003] ECR I‑1487, paragraph 47; and Case C-172/03 Heiser [2005] ECR I-1627, paragraph 40 and the case-law cited there. (92) – Spain v Commission , paragraph 47, and Heiser , paragraph 40. (93) – Joined Cases C-72/91 and C-73/91 [1993] ECR I-887. (94) – As described by the parties to the case, that activity consists in the daily pooling by a coordination centre of cash surpluses of some of the companies in the group to which they belong and the lending of those surpluses to other companies in the same group. (95) – Case C-308/01 GIL Insurance and Others [2004] ECR I-4777, paragraph 72 and the case-law cited there. For a recent application, see Joined Cases C-128/03 and C‑129/03 AEM and AEM Torino [2005] ECR I-2861, paragraph 39. (96) – Case C-159/01 Netherlands v Commission [2004] ECR I-4461, paragraph 43. (97) – See, inter alia, France v Commission , paragraph 24 and the case-law cited there, and GEMO , paragraph 24. (98) – J.-P. Keppenne, Guide des aides d’État en droit communautaire – Réglementation, jurisprudence et pratique de la Commission , Bruylant, Brussels, 1999, p. 112, pararagaph 141. (99) – See, to that effect, Banco Exterior de España , paragraphs 13 and 14; Case C-6/97 Italy v Commission , paragraph 16; and Case C-156/98 Germany v Commission , [2000] ECR I-6857, paragraphs 25 and 26. (100) – Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 11, and Case 259/85 France v Commission [1987] ECR 4393, paragraph 24. (101) – Philip Morris v Commission , paragraph 11, and Germany v Commission , paragraph 33. (102) – Case T-241/97 [2000] ECR II-309. (103) – See, inter alia, Case 1/69 Italy v Commission [1969] ECR 277, paragraph 9, and Case C-310/99 Italy v Commission [2002] ECR I-2289, paragraph 48. (104) – Case 74/74 CNTA v Commission [1975] ECR 533, paragraph 44, and Sofrimport v Commission , paragraph 26. (105) – Case C-104/97 P Atlanta v European Community [1999] ECR I-6983, paragraph 52, and Case C-17/03 VEMW and Others [2005] ECR I-4983, paragraph 73. (106) – Joined Cases C-104/89 and C-37/90 Mulder and Others v Council and Commission [1992] ECR I-3061, paragraph 15, and Case C-403/99 Italy v Commission [2001] ECR I-6883, paragraph 35. (107) – See, to that effect, Duff and Others , paragraph 20, and Case C-107/97 Rombi and Arkopharma [2000] ECR I-3367, paragraph 66. (108) – Case 289/81 Mavridis v Parliament [1983] ECR 1731, paragraph 21; Case C‑177/90 Kühn [1992] ECR I-35, paragraph 14; Rombi and Arkopharma , paragraph 67; and Case C-459/02 Gerekens and Procola [2004] ECR I-7315, paragraph 29. (109) – Case C-82/98 P Kögler v Court of Justice [2000] ECR I-3855, paragraph 33; order of 13 December 2000 in Case C-44/00 P Sodima v Commission [2000] ECR I‑11231, paragraphs 50 to 52; and Case C-274/99 P Connolly v Commission [2001] ECR I-1611, paragraph 113. (110) – Case 265/85 Van den Bergh en Jurgens and Van Dijk Food Products v Commission [1987] ECR 1155, paragraph 44; Case C-22/94 Irish Farmers Association and Others [1997] ECR I-1809, paragraph 25; Joined Cases C-37/02 and C-38/02 Di Lenardo and Dilexport [2004] ECR I-6911, paragraph 70; and VEMW and Others , paragraph 74. (111) – For examples of that balancing of the interests concerned De Compte v Parliament , paragraph 39, and Case C-183/95 Affish [1997] ECR I-4315, paragraph 57. (112) – As mentioned above, such a legitimate expectation is expressly recognised by the Commission in the 122nd recital in the preamble to its decision. (113) – Annex 36 to the application by the Kingdom of Belgium, p. 9. (114) – See also, to that effect, Joined Cases 87/77, 130/77, 22/83, 9/84 and 10/84 Salerno and Others v Commission and Council [1985] ECR 2523, paragraph 59. (115) – Case C-24/95 Alcan Deutschland [1997] ECR I-1591, paragraph 25 and the case‑law cited there. (116) – Annex 17 to the application by the Kingdom of Belgium. (117) – Annex 39 to the application by the Kingdom of Belgium. (118) – 105th recital in the preamble. The fact that that recital forms part of the analysis of the selective nature of the scheme and not of the appraisal of legitimate expectations, as the Commission pointed out in paragraph 172 of its defence, has no bearing on the significance of the statement or its relevance to the appraisal of legitimate expectations. (119) – 119th recital in the preamble. (120) – Paragraph 98. (121) – Case C-99/98 Austria v Commission [2001] ECR I-1101, paragraphs 73 and 85. (122) – Ibid., paragraph 73. (123) – Case C-47/91 Italy v Commission [1994] ECR I-4635, paragraph 21, and Case C‑400/99 Italy v Commission [2005] ECR I-3657, paragraph 57. The Court stated that ‘if it did not do so, the Commission could, whenever it examined an individual aid, go back on its decision approving the aid scheme which already involved an examination in the light of [Article 87] of the Treaty. This would jeopardise the principles of the protection of legitimate expectations and legal certainty from the point of view of both the Member States and traders since individual aid in strict conformity with the decision approving the aid scheme could at any time be called in question by the Commission’ (Case C-47/91, paragraph 24). (124) – See, inter alia, Atlanta v European Community , paragraph 52. (125) – See paragraph 2 of the notice. (126) – Paragraph 119. (127) – See press releases of 11 July 2001 and 27 February 2002, set out in Annexes B3 and B5 respectively to the Commission’s defence in Case C-182/03. (128) – Paragraph 199. (129) – Joined Cases 66/79, 127/79 and 128/79 Salumi and Others [1980] ECR 1237, paragraph 14, and Case C-14/01 Niemann [2003] ECR I-2279, paragraph 49 and the case-law cited there. (130) – Article 7(6) of Regulation No 659/1999 provides that the Commission ‘shall as far as possible endeavour’ to adopt its decision within a period of 18 months from the opening of the procedure, but that that time-limit may be extended by common agreement between the Commission and the Member State concerned.

Sir Anthony Clarke MR: Introduction This is an appeal by AF from an order dated 30 November 2007 made by Stanley Burnton J ('the judge'). In the order the judge among other things refused an application that a hearing under section 3(10) of the Prevention of Terrorism Act 2005 ('the PTA') should be before a judge other than Ouseley J and made two declarations to which I refer below. Background AF has been the subject of three non-derogating control orders under section 3 of the PTA. The first was PTA/6/2006 which was imposed on 24 May 2006. It required AF, among other things, to remain in his residence for 18 hours a day and to remain in a restricted area for the remaining 6 hours. The order was revoked on 11 September 2006 by the Secretary of State ('the SSHD') following the decision of this court in SSHD v JJ and Others [2006] EWCA Civ 1141. It was replaced by PTA/33/2006 on the same day, 11 September 2006. This second order reduced the hours of curfew to 14 and relaxed some of the other restrictions in the first order. There followed a full hearing under section 3(10) of the PTA before Ouseley J. The hearing lasted 7 days and involved both extensive oral evidence and legal submissions. It also involved both open and closed hearings and open and closed evidence. Ouseley J handed down his judgment, [2007] EWHC (Admin) 651, on 30 March 2007. By an order of the same date, Ouseley J quashed PTA/33/2006 on the ground that the order constituted a deprivation of liberty under article 5 of the European Convention of Human Rights ('the Convention'). In the course of his lengthy judgment, which ranged over a number of different issues, Ouseley J reached the following conclusions which are relevant or potentially relevant for present purposes: i) On the closed material reasonable grounds existed for suspecting that AF was or had been involved in terrorism-related activity, although no such grounds were disclosed by the open material and it was not submitted that they were: [13]. ii) A control order was necessary for purposes connected with protecting members of the public from a risk of terrorism "in view of the potential harm to the public if AF engages in terrorism-related activity, and in view of his willingness and ability to do so": [133]. iii) Had the control order not breached Article 5, the court could be satisfied that the general run of restrictions were necessary, but the detail and balance would have to be examined further: [145]. iv) The process under the PTA was not one in which AF had been without a substantial and sufficient measure of procedural protection, so that there was no breach of article 6 of the Convention: [167]. In anticipation of the judgment of Ouseley J and in the light of his conclusion on article 5 of the Convention, the third control order PTA/4/2007 was made on 29 March 2007 and served on the following day. It reduced the period of curfew to 12 hours. Both parties appealed to the House of Lords under the leap frog procedure contained in section 12(3)(b) of the Administration of Justice Act 1969 and the appeal was heard together with an appeal from a decision of this court in SSHD v MB [2006] EWCA Civ 1140, [2007] QB 446. The House of Lords gave judgment in both cases on 31 October 2007. On the same day the House of Lords gave judgment in SSHD v JJ and Others [2007] UKHL 45 [2007] 3 WLR 642. By a majority the House of Lords held in SSHD v MB & AF [2007] UKHL 47, [2007] 3 WLR 681 i) reversing the decision of Ouseley J, that PTA/33/2006 did not amount to a deprivation of liberty contrary to article 5 of the Convention for the reasons given in SSHD v JJ; and ii) that the question whether AF had been given a fair trial in accordance with article 6 of the Convention would be remitted to the Administrative Court for reconsideration in the light of the opinions of the majority. The majority comprised Baroness Hale, Lord Carswell and Lord Brown of Eaton-under-Heywood. They also I think included Lord Bingham, albeit dubitante. Lord Hoffmann dissented. Before the House of Lords gave its judgment on 31 October 2007, the second control order PTA/33/2006 expired on 10 September 2007. This was because control orders (like the PTA itself) only have a life of one year and the order had been imposed on 11 September 2006. In fact AF had not been subject to PTA/33/2006 since 31 March 2007 when it was quashed by Ouseley J and replaced by PTA/4/2007. PTA/33/2006 was (I suppose) retrospectively revived by the order of the House of Lords which reversed Ouseley J's order and at the same time remitted it for reconsideration in the light of the majority opinions. Since, even if retrospectively revived, the order expired on 10 September 2007, the decision of the court on remission, so far as I can see, only has historical significance or potential significance. In the meantime, PTA/33/2006 was (as I have just said) replaced by PTA/4/2007 on 29 or 30 March 2007. That order was modified in some respects by Goldring J on 17 August 2007 and was further modified on 31 October and 9 November 2007. In particular, the number of hours of curfew was increased to 16 on 31 October in the light of the decision of the House of Lords. In these circumstances the matter was initially listed before Stanley Burnton J for directions in relation to the substantive hearing required under section 3 of the PTA in respect of PTA/4/2007. The control order was made under section 3(2). It follows that directions "for a hearing in relation to the order" were required under section 3(2)(c). Section 3(10) provides: "On a hearing in pursuance of directions under subsection 2(c) …, the function of the court is to determine whether any of the following decisions of the Secretary of State was flawed - (a) his decision that the requirements of section 2(1)(a) and (b) were satisfied for the making of the order; and (b) his decisions on the imposition of each of the obligations imposed by the order. " It was held by this court in SSHD v MB that section 3(10) should be construed so that the function of the court at such a hearing is to consider whether any of the decisions identified in section 3(10)(a) and (b) is (not was) flawed as at the date of the hearing. By section 3(11) the court must apply the principles applicable on an application for judicial review. This court explained at [60] of SSHD v MB that on the true construction of the PTA the review involved the court deciding whether the facts relied upon by the SSHD amounted (as at the date of the hearing) to reasonable grounds for suspecting that the controlee is or has been involved in terrorism-related activity. It follows that the role of the court when considering PTA/4/2007 is to decide whether a) the SSHD has reasonable grounds for suspecting that AF is or has been involved in terrorism-related activities; b) it is necessary, for purposes connected with protecting members of the public from a risk of terrorism, to make a control order imposing obligations on AF; and c) the decision of the SSHD in respect of each such obligation is flawed. Those formulations are derived from sections 2(1) and 3(2), (10) and (11) of the PTA as considered by this court in SSHD v MB. I will return below to the approach to be adopted by the court in reaching those decisions. In the light of the recent jurisprudence there is an anterior question, namely whether the hearing of those questions will be a fair hearing in accordance with article 6 of the Convention. As already indicated, Ouseley J held that the hearing under section 3(10) in respect of PTA/33/2006 was fair. He did so on the basis of the decision of this court in SSHD v MB (to which I was a party together with Lord Phillips CJ and Sir Igor Judge P) that, although the case against AF depended on the closed material which he was not permitted to see and, although he was not permitted to be told even the gist of the case against him, the hearing was fair because of the role played by the special advocates Mr Hugo Keith and Mr Jeremy Johnson. As I said earlier, the majority in the House of Lords took a somewhat different view. The principles applicable to the question whether the hearing under section 3(10) of the PTA in respect of PTA/4/2007 will be fair within the meaning of article 6 of the Convention will be different from those applied by Ouseley J in respect of PTA/33/2006. They will be the principles to be deduced from the speeches of the majority in SSHD v MB and AF. The same principles will be applicable to the question remitted to the Administrative Court by the House of Lords in respect of PTA/33/2006. The hearing before the judge on 21 November On 21 November Stanley Burnton J was invited to consider a preliminary question or questions said to arise or potentially to arise in relation to the hearings in respect of PTA/33/2006 and PTA/4/2007. The judge said at [1] that two issues of importance arose in relation to hearings under section 3(10) and 10(4) of the PTA namely a) whether a judge who decides issues arising on a hearing under section 3(10) of the PTA adversely to a respondent (or to the SSHD) is disqualified from adjudicating in subsequent proceedings under the PTA to which the respondent is a party; and b) the status of findings made by a judge as a result of a hearing under section 3(10) of the PTA in subsequent proceedings under the PTA between the same parties. The judge heard argument on 21 November, handed down a written judgment on 28 November and made an order on 30 November dismissing the application and making these two declarations in paragraphs 2 and 3. "2. A judge who decides issues arising on a hearing under section 3(10) to the Respondent (or to the Home Secretary) is not for that reason disqualified by prejudgment from adjudicating in subsequent proceedings under the Act to which the Respondent is a party. 3. Findings made by the court on issues arising on a hearing under section 3(10) are in principle to be regarded as binding between the Home Secretary and the respondent in relation to matters at the date of that hearing on a subsequent hearing under that subsection, subject to any differences in the evidence relevant to those issues before the court on each of those hearings." The judge granted permission to appeal. Subsequent events Since the judgment of the judge on 30 November a number of relevant events have taken place. A directions hearing took place before the judge on 5 February 2008, by which time it had been decided (for reasons which have nothing to do with the issues in these proceedings) that the section 3(10) hearing in respect of PTA/4/2007, including the hearing of the question whether such a hearing will satisfy article 6 of the Convention, will come before the judge (ie Stanley Burnton J) and not Ouseley J. So too will the hearing of the issue relating to PTA/33/2006 which was remitted by the House of Lords, namely whether the hearing before Ouseley J in 2007 satisfied article 6. This makes the appeal against paragraph 2 of the order of the judge quoted above academic in this case. Before the directions hearing the parties had exchanged skeleton arguments, which considered, among other things, how matters should proceed. It is not necessary to rehearse those arguments here. The judge decided that he would hold a closed hearing to consider the article 6 issues in relation to both control orders before deciding how to proceed thereafter. That hearing is to take place on 25 February. The remaining issues have been adjourned to 11 March. It is not clear whether the judge proposes to reach a decision on the article 6 issues before proceeding further. Nor is it clear, at any rate to me, whether he proposes to determine the article 6 issues only in relation to PTA/4/2007 or whether he also proposes to determine them in relation to PTA/33/2006. Those are essentially matters for the judge. So far as I can see, if he were to conclude that the hearing in relation to PTA/4/2007 would be unfair and contrary to article 6, it would follow that the hearing before Ouseley J was also unfair. If he were to hold that the hearing in relation to PTA/4/2007 is or will be fair, he will of course proceed to conduct it and, whether in those circumstances it would be necessary to consider whether the hearing before Ouseley J was fair, might depend upon whether the resolution of that issue would or might be relevant to the other issues in relation to PTA/4/2007. Otherwise it is difficult to see what advantage there would be in expending time and money considering whether the hearing before Ouseley J was fair, since that order has expired and AF does not seem likely to have a historical claim based on the unfairness of the hearing because he was not in fact subject to PTA/33/2006 between 30 March, when it was quashed by Ouseley J, and 11 September, when it expired. However, I recognise that it may not be possible for the judge to decide whether the PTA/4/2007 is or will be fair before considering at least some of the issues adjourned to 11 March. It may indeed be appropriate to proceed by stages, as suggested by Baroness Hale in SSHD v MB and AF at [72]. Also, it may be that the SSHD will wish to rely upon the findings of Ouseley J in connection with one or more of the substantive issues which arise under PTA/4/2007. In that event it must be open to AF to argue that that would not be appropriate on the ground that the hearing before Ouseley J was unfair. These are all matters for the judge and not, as I see it, for this court in this appeal. In these circumstances we are not concerned in this appeal with article 6 issues or with the reasoning of the majority in SSHD v MB and AF, as subsequently considered by Collins J in Re Bullivant [2007] EWHC 2938 (Admin) and by Silber J in SSHD v AE [2008] EWHC 132 (Admin). Correct approach to previous section 3(10) hearing As things stand, the most important issue in this appeal is the correct approach to previous conclusions of a judge at a hearing under section 3(10). In this regard the judge's conclusion is stated in paragraph 3 of his order quoted above as follows: "Findings made by the court on issues arising on a hearing under section 3(10) are in principle to be regarded as binding between the Home Secretary and the respondent in relation to matters at the date of that hearing on a subsequent hearing under that subsection, subject to any differences in the evidence relevant to those issues before the court on each of those hearings." Mr Otty submits on behalf of AF that it is wrong in principle to treat findings at a previous section 3(10) hearing as binding at a future such hearing. He goes further and submits that such findings are irrelevant at a future hearing and that the SSHD must establish her case afresh. Alternatively he submits that the court is entitled to have regard to findings made at an earlier section 3(10) hearing but will itself i) have to be satisfied that the facts relied upon by the SSHD amount to reasonable grounds for suspecting that the controlee is or has been involved in terrorism-related activity; and ii) have to give intense scrutiny to the necessity of each of the obligations imposed. Mr Otty further submits as part of his alternative case that it will only be in a case where there has been no change of any kind to the nature of the evidence adduced at the first section 3(10) hearing that the findings made on that first occasion will be capable of being relied on by the court without reconsideration of the underlying material on which they were based. At the hearing of the appeal the difference between the positions taken by the parties was less marked than had at first appeared. While the SSHD wishes or may wish to rely on previous findings as a starting point which should not be departed from in the absence of a change of circumstances, save perhaps in an exceptional case, Ms Grange accepted that it was wrong to treat such findings as binding and that the order of the judge would have to be altered to reflect that concession. In considering the issues that remain it is I think of some importance to have in mind the exercise upon which the court is engaged under section 3(10) and to consider the circumstances in which there might be successive hearings under section 3(10). I consider first the statutory context. I have already referred to the relevant parts of section 3, which requires a hearing on the issues stated above in the case of every non-derogating control order made by the SSHD with the permission of the court. By section 2(4)(a) such an order has effect for 12 months but, by section 2(4)(b), it may be renewed on one or more occasions in accordance with the provisions of the section. Those provisions include section 2(6), which provides that the SSHD may renew the control order, with or without modifications, if he -: "(a) considers that it is necessary, for purposes connected with protecting members of the public from a risk of terrorism, for an order imposing obligations on the controlled person to continue in force; and (b) considers that the obligations to be imposed by the renewed order are necessary for purposes connected with preventing or restricting involvement by that person in terrorism-related activity." Also, by section 7(2)(d) of the PTA the SSHD has the power to make such modifications to the obligations in the order as she considers necessary for the same purposes as are set out in section 2(6)(b). I have put the words continue in force in italics because they point to one of the key differences between a renewed or modified order and the original order. The other key difference is that there is no equivalent in section 2(6), or elsewhere in respect of renewed or modified orders, to section 2(1)(a), which provides that before making a non-derogating order the SSHD must have reasonable grounds for suspecting that AF is or has been involved in terrorism-related activities. In the case of a renewal or modification the statute takes it for granted that the SSHD had such reasonable grounds, no doubt in part because there will have been a hearing under section 3(10), at which that question will have been tested. It is significant to note that in such circumstances the controlee is not given the same rights as he has under section 3(10). His rights after renewal or modification are set out in section 10. Section 10(4), which relates to renewed orders, provides: (4) The function of the court on an appeal against the renewal of a non-derogating control order, or on an appeal against a decision not to revoke such an order, is to determine whether either or both of the following decisions of the Secretary of State was flawed - (a) his decision that it is necessary, for purposes connected with protecting members of the public from a risk of terrorism, for an order imposing obligations on the controlled person to continue in force; (b) his decision that the obligations to be imposed by the renewed order, or (as the case may be) the obligations imposed by the order to which the application for revocation relates, are necessary for purposes connected with preventing or restricting involvement by that person in terrorism-related activity. Section 10(5) contains a similar provision in the case of an appeal against a modification. Mr Otty submits that the differences between the functions of the court when a control order is first made and when an order is modified or renewed are significant because they show that, whereas in the first case the court must be satisfied that there are reasonable grounds for suspecting that the individual is or has been involved in terrorism-related activity, there is no such requirement in the cases of modification or renewal. For my part, I would entirely accept that the provisions are different and, indeed, that the statute provides that in every case of a new (as opposed to renewed) order the Secretary of State must have reasonable grounds for the belief just described. Moreover, I would accept that the effect of the decision of this court in SSHD v MB, in a part of the judgment which is unaffected by the views of the House of Lords, is that the court must be satisfied that such grounds exist at the time of the hearing under section 3(10) of the PTA. It follows that the court must apply its mind to that question. Further, it is true that the PTA does not treat the existence of such grounds as read, as it does in the case of a renewal or modification. However, it is not the SSHD's case that the grounds should be treated as read, only that an earlier finding by the court should be regarded as a starting point in the case of any new non-derogating order. While there is nothing in the PTA which provides that the earlier decision is decisive, there is equally nothing in the PTA which provides that it is irrelevant. I would reject the submission that the PTA contemplates that an earlier decision is irrelevant. Such a conclusion would be very odd in the light of the provisions of the Act to which I have referred. Take a case in which, perhaps because of administrative oversight, the SSHD fails to renew the order in accordance with section 2(6) and (7), which (as I read section 2) she must do before the order expires and then, after say three weeks, the error is discovered and a new order is made. There would have to be a hearing under section 3(10) and the court would have to be satisfied that the security grounds set out in section 2(1)(a) were satisfied as at the date of the hearing. In these circumstances it would, to my mind, be startling if the court could disregard the findings of the court on the earlier hearing under section 3(10), when, if the order had been renewed three weeks earlier, those findings would be conclusive. The sensible approach would be for the court to have regard to them. The only situation in which it was suggested on behalf of the SSHD that this situation might arise, save perhaps in the very unusual circumstances of this case, is where a control order expires and the SSHD decides not to renew it and then, say two or three years later, he or she decides to make a new order. In those circumstances there will on that hypothesis be a change of circumstances, so that, whatever approach is adopted, an historical decision would be likely to have comparatively little weight. In all these circumstances, unless constrained by authority, I would accept Mr Otty's alternative submission, albeit with some modifications. I would hold, as he submitted, that the court is entitled to have regard to findings made at an earlier section 3(10) hearing but will itself i) have to be satisfied that the facts relied upon by the SSHD amount to reasonable grounds for suspecting that the controlee is or has been involved in terrorism-related activity; and ii) have to give intense scrutiny to the necessity of each of the obligations imposed. A further part of Mr Otty's alternative submission was that it will only be in a case where there has been no change of any kind to the nature of the evidence adduced at the first section 3(10) hearing that the findings made on that first occasion will be capable of being relied on by the court without reconsideration of the underlying material on which they were based. There is I think considerable force in that submission but I do not think that it is possible to be so prescriptive. It seems to me that it will be a matter for the judge in each case to decide what weight it is appropriate to give to earlier decisions or findings. It will be a matter for judgment how far, if at all, it is appropriate to reopen issues which have been considered previously. Where the hearing is only a short time after the first hearing and little has changed, a judge will no doubt be very reluctant to revisit evidence which he has considered only very recently unless there is good reason to do so. It would I think be open to a judge in appropriate circumstances to refuse to revisit part of the evidence in an earlier hearing. It will be a case management decision how best to proceed. The underlying objective in every case is of course to deal with the case justly and, especially in cases of this type, where the controlee may not be given the detail of the case against him, the judge must ensure that the proceedings are fair. The majority opinions in SSHD v MB and AF make that very clear. Moreover, it does seem to me that the court should have in mind that, although proceedings under section 3(10) are civil proceedings, as Lord Bingham put it at [24] of SSHD v MB and AF, a controlee is entitled to such measure of protection as is commensurate with the gravity of the potential consequences. See also per Baroness Hale at [65], Lord Carswell at [82] and Lord Brown at [90]. This approach seems to me to be supported by the approach to hearings under section 3(10) discussed by this court in SSHD v MB. Lord Phillips CJ, giving the judgment of the court, said at [67]: "The issue that has to be scrutinised by the court is whether there are reasonable grounds for suspicion. That exercise may involve considering a matrix of alleged facts, some of which are clear beyond reasonable doubt, some of which can be established on balance of probability and some of which are based on no more than circumstances giving rise to suspicion. The court has to consider whether this matrix amounts to reasonable grounds for suspicion and this exercise differs from that of deciding whether a fact has been established according to a specified standard of proof. It is the procedure for determining whether reasonable grounds for suspicion exist that has to be fair if Article 6 is to be satisfied." This is the exercise which must be carried out under section 3(10) in every case. It seems to me that, save perhaps in the case where the very same exercise has been carried out very recently, the findings at an earlier hearing will be only one factor to be taken into account. It is important not to be too prescriptive. All depends upon the circumstances of the particular case. I turn to the reliance placed by the SSHD on the guidance given by the IAT (now the AIT) as to the weight to be attached on a subsequent human rights challenge to the findings of the adjudicator who had rejected an earlier asylum appeal in Devaseelan v SSHD [2003] Imm AR 1, as approved by this court in LD (Algeria) v SSHD [2004] EWCA Civ 804 (in relation to cases where, as here, the parties are identical) and AA (Somalia) v SSHD [2007] EWCA Civ 1040. It was submitted to the judge that the findings of Ouseley J in PTA/33/2006 are to be treated as "the starting point" for the consideration of the issues raised in PTA/4/2007, irrespective of the identity of the judge. The principal thrust of the submissions before the judge was that this was true in every case and that, given that that was the case, there was no basis for concluding that Ouseley J should be recused from holding the hearing under section 3(10). The judge accepted those submissions. Moreover, he did so as the basis for his conclusion that Ouseley J should not be recused on the ground of pre-judgment. He said at [17]: "However, in my judgment this contrast, and the wording of section 3(10) itself, does not indicate that Parliament intended to exclude the normal principle of public law that a decision, and in particular a judicial decision, made between parties should be respected in subsequent proceedings. Clearer wording would have been used if this had been intended. The principle is demonstrated by the authorities cited by Mr Eicke referred to above, but is not confined to immigration or asylum cases (or indeed to public law): see the discussion in the judgment of Carnwath LJ in AA (Somalia) v Secretary of State for the Home Department [2007] EWCA Civ 1040. " The judge then rejected at [18] Mr Otty's submission that there was a distinction between this type of case and asylum and immigration cases. For present purposes the critical part of the judge's reasoning is I think at [19-20]: "19. It follows that on a hearing under section 3(10), where there has been a previous hearing under the section in relation to an earlier control order, the starting point will be the findings of the court on the earlier hearing. Assuming no successful appeal against the findings in the first hearing, in the unlikely event of there being no difference in evidence or issues between the two hearings, the Court would treat the earlier findings as binding. That being so, there is no objective reason why the judge who decided the issues in the earlier hearing adversely to the respondent (or to the Home Secretary) should be disqualified by prejudgment from deciding the issues on the second hearing. 20. This does not mean that in the present case on the section 3(10) hearing on PTA/4/2007 the Court is bound to reach the same factual conclusions as those originally reached by Ouseley J in the hearing in relation to PTA/33/2006. The evidence will differ, in that it will have been brought up to date by both parties; there may be additional evidence quite apart from the consequences of the decision of the House of Lords; the Secretary of State may decide to disclose evidence that was previously closed, which may lead AF to supplement his evidence; he may decide to testify; the Court may preclude the Secretary of State from relying on some evidence on which he was previously able to rely; and the Court will have to consider the consequences of the passage of time during which AF has been subject to control orders. Inevitably, as all counsel recognise, the decisions of the Court on the admissibility of evidence on which the Secretary of State seeks to rely will impact on the issue remitted by the House of Lords on PTA/33/2006." I would not cast doubt on the general proposition that in public law cases, where there has been a previous decision in proceedings between the same parties, and the same question arises in subsequent proceedings the starting point is likely to be the decision in the first proceedings. However, all will depend upon the circumstances. The present case does seem to me to be a very different kind of case from that discussed in the cases upon which the SSHD relied before the judge. Indeed a reading of what are known as the Devaseelan guidelines shows that they are not directly applicable, unsurprisingly since they are dealing with very different problems. The guidelines are not unnaturally tailored to the particular problems involved in the case with which Devaseelan was concerned, namely where (under the legislation then in force) adjudicators of human rights challenges were inevitably reconsidering decisions of previous adjudicators on asylum claims arising out of the same facts. In Devaseelan the IAT gave guidance as to the weight to be attached to the findings of the adjudicator who had rejected the asylum appeal. The IAT said, amongst other things, that the first adjudicator's determination "should always be the starting point". Paragraphs 37 and 38 of the IAT decision included the following: "37. ... The first Adjudicator's determination stands (unchallenged, or not successfully challenged) as an assessment of the claim the Appellant was then making, at the time of that determination. It is not binding on the second Adjudicator; but, on the other hand, the second Adjudicator is not hearing an appeal against it. As an assessment of the matters that were before the first Adjudicator it should simply be regarded as unquestioned. It may be built upon, and, as a result, the outcome of the hearing before the second Adjudicator may be quite different from what might have been expected from a reading of the first determination only. But it is not the second Adjudicator's role to consider arguments intended to undermine the first Adjudicator's determination. 38. The second Adjudicator must, however be careful to recognise that the issue before him is not the issue that was before the first Adjudicator. In particular, time has passed; and the situation at the time of the second Adjudicator's determination may be shown to be different from that which obtained previously. Appellants may want to ask the second Adjudicator to consider arguments on issues that were not – or could not be – raised before the first Adjudicator; or evidence that was not – or could not have been – presented to the first Adjudicator." In paragraphs 39-42, under various headings, the IAT set out the guidelines as follows: (1) The first Adjudicator's determination should always be the starting-point. It is the authoritative assessment of the Appellant's status at the time it was made. In principle issues such as whether the Appellant was properly represented, or whether he gave evidence, are irrelevant to this. (2) Facts happening since the first Adjudicator's determination can always be taken into account by the second Adjudicator. If those facts lead the second Adjudicator to the conclusion that, at the date of his determination and on the material before him, the appellant makes his case, so be it. The previous decision, on the material before the first Adjudicator and at that date, is not inconsistent. (3) Facts happening before the first Adjudicator's determination but having no relevance to the issues before him can always be taken into account by the second Adjudicator. The first Adjudicator will not have been concerned with such facts, and his determination is not an assessment of them. (4) Facts personal to the Appellant that were not brought to the attention of the first Adjudicator, although they were relevant to the issues before him, should be treated by the second Adjudicator with the greatest circumspection. An Appellant who seeks, in a later appeal, to add to the available facts in an effort to obtain a more favourable outcome is properly regarded with suspicion from the point of view of credibility. (Although considerations of credibility will not be relevant in cases where the existence of the additional fact is beyond dispute.) It must also be borne in mind that the first Adjudicator's determination was made at a time closer to the events alleged and in terms of both fact-finding and general credibility assessment would tend to have the advantage. For this reason, the adduction of such facts should not usually lead to any reconsideration of the conclusions reached by the first Adjudicator. (5) Evidence of other facts – for example country evidence – may not suffer from the same concerns as to credibility, but should be treated with caution. The reason is different from that in (4). Evidence dating from before the determination of the first Adjudicator might well have been relevant if it had been tendered to him: but it was not, and he made his determination without it. The situation in the Appellant's own country at the time of that determination is very unlikely to be relevant in deciding whether the Appellant's removal at the time of the second Adjudicator's determination would breach his human rights. Those representing the Appellant would be better advised to assemble up-to-date evidence than to rely on material that is (ex hypothesi) now rather dated. (6) If before the second Adjudicator the Appellant relies on facts that are not materially different from those put to the first Adjudicator, and proposes to support the claim by what is in essence the same evidence as that available to the Appellant at that time, the second Adjudicator should regard the issues as settled by the first Adjudicator's determination and make his findings in line with that determination rather than allowing the matter to be re-litigated. We draw attention to the phrase 'the same evidence as that available to the Appellant' at the time of the first determination. We have chosen this phrase not only in order to accommodate guidelines (4) and (5) above, but also because, in respect of evidence that was available to the Appellant, he must be taken to have made his choices about how it should be presented. An Appellant cannot be expected to present evidence of which he has no knowledge: but if (for example) he chooses not to give oral evidence in his first appeal, that does not mean that the issues or the available evidence in the second appeal are rendered any different by his proposal to give oral evidence (of the same facts) on this occasion. (7) The force of the reasoning underlying guidelines (4) and (6) is greatly reduced if there is some very good reason why the Appellant's failure to adduce relevant evidence before the first Adjudicator should not be, as it were, held against him. We think such reasons will be rare. There is an increasing tendency to suggest that unfavourable decisions by Adjudicators are brought about by error or incompetence on the part of representatives. New representatives blame old representatives; sometimes representatives blame themselves for prolonging the litigation by their inadequacy (without, of course, offering the public any compensation for the wrong from which they have profited by fees). Immigration practitioners come within the supervision of the Immigration Services Commissioner under part V of the 1999 Act. He has power to register, investigate and cancel the registration of any practitioner, and solicitors and counsel are, in addition, subject to their own professional bodies. An Adjudicator should be very slow to conclude that an appeal before another Adjudicator has been materially affected by a representative's error or incompetence; and such a finding should always be reported (through arrangements made by the Chief Adjudicator) to the Immigration Services Commissioner. Having said that, we do accept that there will be occasional cases where the circumstances of the first appeal were such that it would be right for the second Adjudicator to look at the matter as if the first determination had never been made. (We think it unlikely that the second Adjudicator would, in such a case, be able to build very meaningfully on the first Adjudicator's determination; but we emphasise that, even in such a case, the first determination stands as the determination of the first appeal.) (8) We do not suggest that, in the foregoing, we have covered every possibility. By covering the major categories into which second appeals fall, we intend to indicate the principles for dealing with such appeals. It will be for the second Adjudicator to decide which of them is or are appropriate in any given case." I have set out those guidelines in detail because it can to my mind immediately be seen from them that the problems facing a judge conducting a hearing under section 3(10) of the PTA is much more complex than that with which the guidelines are concerned. This is apparent from the description of the exercise described in [67] of SSHD v MB in this court and quoted above. The distinction between the Devaseelan kind of case and this includes the fact that in asylum cases the appellant knows the case against him and very frequently gives evidence. His credibility is at the centre of the case both in respect of asylum and human rights. That is to be contrasted with the position of the controlee. Although his credibility may in one sense be in issue, he often knows little and sometimes (at any rate thus far) nothing about the case against him and (as in AF's case before Ouseley J) does not give evidence. Neither he nor his counsel is present during the critical part of the hearing, which is closed, and, once the closed material has been disclosed to the special advocate, neither he nor his counsel can discuss the case with the special advocate. Although I recognise that at a second hearing in respect of a new control order the judge and the special advocate will have a transcript of the evidence and submissions at the first hearing, neither the controlee nor his counsel will be able to see it. In these circumstances, a judge should in my opinion be very reluctant to treat the finding of the judge conducting the hearing under an earlier order as in practice determinative, save perhaps in the kind of case to which I referred earlier where the two hearings are for some reason very close together. In any event the authorities to which I have referred show that the Devaseelan guidelines are themselves very flexible. This can be seen, not only from the guidelines themselves, but also from the later cases. It was for example stressed in LD (Algeria) v SSHD, where the judgment of the court was given by Judge LJ. Although the court rejected a challenge to the guidelines, in doing so it stressed both the particular role of the guidelines and their flexibility. Thus in [29] Judge LJ said this: "In our judgment, the IAT, specialising in this field, was entitled to provide guidance to the entire body of specialist adjudicators about how they should deal with the fact of an earlier unsuccessful application when deciding the later one. Such guidance was essential to ensure consistency of approach among special adjudicators. The guidelines remedied an immediate and pressing difficulty, with direct application to, but not exclusively concerned with, the many cases in which, after unsuccessfully exhausting all the possible legal channels, asylum seekers remained in the United Kingdom, and put forward a case on human rights grounds after October 2000" The necessity for the guidelines thus arose out of very different circumstances from those with which we are concerned. In [30] Judge LJ said: "30. Perhaps the most important feature of the guidance is that the fundamental obligation of every special adjudicator independently to decide each new application on its own individual merits was preserved. The guidance was expressly subject to this overriding principle." He then set out both part of [37] of the IAT decision in Devaseelan and guideline 8 quoted above and added: "This is not the language of res judicata nor estoppel. And it is not open to be construed as such. In view of the argument, we must emphasise that in Devaseelan the IAT purported to do no more than provide guidance, and in our judgment, properly exercising its responsibilities, that indeed is what it did." It is important to note that, as in the case of the Devaseelan guidelines, the principle relied upon in this case is not a principle of res judicata or issue estoppel. That being so, I do not think that it is appropriate to speak of findings of a judge at a hearing under an earlier order as being "binding". That seems to me to be the language of issue estoppel. It also raises the question what is to be binding. Is it every conclusion of fact and, if not, what is it? It was no doubt in these circumstances that the SSHD conceded that it was wrong to treat the earlier findings as "binding". If they are not "binding" then how should they be taken into account? Carnwath LJ considered this problem in [54] of AA (Somalia) v SSHD, in which he and Ward LJ comprised the majority with Hooper LJ dissenting. At [54] Carnwath LJ considered the status of the first decision in circumstances where there was no issue estoppel or res judicata. He said: "As Hooper LJ has noted, this passage is prefaced by a statement that the first determination is not "binding" on the second Adjudicator. However, I understand this to be saying no more than that it is not binding in the technical sense of issue estoppel or res judicata. The whole purpose of the guidelines is to indicate the circumstances in which it is appropriate to follow the first decision rather than allow the issue to be relitigated. This is most explicit in the above extract from guideline (6) (directed specifically at an Article 3 claim based on the same reasons as a refugee claim). The same point is underlined by the remainder of guideline (6), which explains the limits to the new evidence which might justify reopening the first decision." Carnwath LJ then quoted from guideline 6, which is set out above. Carnwath LJ's approach I think be seen from [55] as follows: "The legal considerations underpinning the guidelines can be seen in the tribunal's treatment of the respective arguments. Mr Lewis for the applicant is recorded as submitting that - "…the previous determination is merely' a relevant matter to be taken into account' in the human rights appeal, but that neither the findings nor the conclusions of the first Adjudicator are binding upon the second Adjudicator…" (para 31) Miss Giovannetti, for the Secretary of State, accepted that the first Adjudicator's determination "cannot be regarded as binding on the second Adjudicator", but submitted that it was proper for a second Adjudicator to have regard to the first Adjudicator's findings, and that "the second Adjudicator should only differ from those findings where there is good reason to do so": "If the human rights claim was based on a different factual matrix, it would generally be necessary to make new findings, probably on additional evidence. The different factual matrix would itself be a good reason for not following and applying the first Adjudicator's determination. Otherwise, however, legal and policy considerations demanded that the Appellant's second appeal be determined in line with his first." (emphasis added) Miss Giovannetti identified four "legal and policy considerations" leading to that proposition: The first is fairness: it would be unfair to an Appellant, who had satisfied the first Adjudicator that his account of events was credible, to deprive him of the benefit of that finding. If that is right, it must follow that an Appellant who has failed to satisfy an Adjudicator of his credibility is not entitled to have the same evidence re-assessed by a second Adjudicator. It is not fair to the public for there to be a system in which favourable findings stand but unfavourable findings are always questionable. Secondly, general principles of consistency and finality in litigation are important even in the absence of a rule of res judicata. Thirdly, the general approach to findings of fact in immigration cases both on appeal to the Tribunal and outside the IAA (e.g. ex parte Danaie [1998] 1mm AR 84) is that findings of fact stand unless there is good reason to displace them. Fourthly, it would, in Miss Giovannetti's submission, be contrary to good administration to have a system which allowed for the continuing existence of two undisturbed determinations of the IAA containing inconsistent findings of fact in relation to the same individual." (para 33-4) The tribunal thought the answer lay somewhere between the two submissions, but "considerably nearer" that of the Secretary of State." Finally in [57] Carnwath LJ stressed, in the light of LD (Algeria) that the guidelines were a proper exercise of the IAT's role as a specialist body, in order to secure consistency, while respecting the "fundamental obligation" of each adjudicator to decide each case on its own merits. Carnwath LJ also stressed the view stated in [40] of LD (Algeria) that the guidelines must be applied flexibly. I have already expressed my reasons for concluding that the Devaseelan guidelines cannot simply be transferred wholesale to the different context of a hearing under section 3(10) of the PTA. I have also expressed my view that the findings in an earlier decision of a judge under section 3(10) should be taken into account and that there may be circumstances in which a judge might conclude that justice did not require the reopening of conclusions reached earlier. However, the judge conducting a hearing under section 3(10) does not make findings of fact in the way that an adjudicator does (or did) on an asylum claim or a human rights claim. I do not think that one can simply say that there has been no change of circumstances and that a judge conducting a section 3(10) in respect of a second control order can properly be regarded as bound by such conclusions as were reached at an earlier hearing. The principle is simply that he must have such regard to those conclusions as is appropriate in the circumstances. There is I think very little between this approach and that of the judge. Indeed, I entirely agree with his reasoning at [20] of his judgment set out above. The only point upon which I respectfully differ from him is his formulation of the declaration in paragraph 3 of his order, as follows: "Findings made by the court on issues arising on a hearing under section 3(10) are in principle to be regarded as binding between the Home Secretary and the respondent in relation to matters at the date of that hearing on a subsequent hearing under that subsection, subject to any differences in the evidence relevant to those issues before the court on each of those hearings." I would set aside that declaration. It was accepted on behalf of the Secretary of State that a second judge was not "bound" by any part of the decision of the first and the declaration suggests that the role of the judge conducting a section 3(10) hearing in respect of a new control order is to start with the conclusions of the judge who considered the first control order and then identify whether the circumstances are now sufficiently different to depart from the conclusions of the first judge. I do not think that that is the correct approach. It is the duty of the judge conducting the second section 3(10) hearing to consider the questions identified above as at the date of the hearing. In these circumstances I do not think that it is appropriate to treat an earlier decision on a different control order as a starting point. For the reasons I have given the judge should take it into account in the way suggested in [30-33] above. Apparent bias The only other issue in this appeal which it is appropriate to address is apparent bias, although it may be largely, if not entirely, academic in the events which have happened, since Ouseley J will not be conducting either the hearing under section 3(10) in respect of PTA/4/2007 or the matter remitted in respect of PTA/33/2006. The general principle is not in dispute. It has most recently been stated by Lord Bingham, giving the judgment of the Judicial Committee of the Privy Council in Prince Bolkiah v The State of Brunei [2007] UKPC 62 at [15]. It is a matter for the court to decide whether there is apparent bias or, as Lord Bingham put it, an appearance of bias. The court must first ascertain all the circumstances which bear on the suggestion that the judge was (or would be) biased. It must then ask itself whether those circumstances would lead a fair-minded and informed observer to conclude that there was (or would be) a real possibility that the judge was (or would be) subject to bias; that is that the judge might have been (or be) influenced for or against one or other party for reasons extraneous to the legal or factual merits of the case. Mr Otty drew our attention to the judgments of Laws and Keene LJJ in Sengupta v Holmes [2002] EWCA Civ 1104 at [25] and [33-4] and [44] respectively. Laws LJ had referred to two cases in the High Court of Australia, namely Re JRL ex parte CJL (1986) 161 CLR 342 and Livesey v New South Wales Bar Association (1983) 151 CLR 288. They show that the circumstances can be such that a judge who has made findings of fact against a party or reached conclusions as to the credit of a party in previous proceedings may have so conducted himself that a fair-minded and informed observer would conclude that he might be prejudiced against him. However, as I read the authorities, it all depends upon the facts. I do not think that the mere circumstance that the judge has reached conclusions of fact which are adverse to a party of itself leads to the conclusion that there is an appearance of bias. Laws LJ put it thus at [32]: "If a judge has presided at a first instance trial and roundly concluded on the facts – after hearing disputed, perhaps hotly disputed, evidence – that one of the parties lacks all merit, everyone would accept that it would be unthinkable that he should sit on that party's appeal". However, there are many cases in which issues of fact are remitted to the trial judge to consider or reconsider in the light of, say, a decision of an appellate court. It is a matter for judgment in each case whether the test identified above is satisfied. It seems to me to be very unlikely that the circumstances of successive hearings under section 3(10) of the PTA in respect of successive control orders would be such that a fair-minded observer would think that a judge who considered the first one might not be able fairly to consider the second one. On the contrary, it seems to me that justice is likely to be best served by having the same judge. I see no reason in principle why, in the ordinary case, a judge should not be able to consider the evidence available at the second hearing afresh entirely fairly, whether or not he had previously reached a conclusion in respect of an earlier control order where some of the evidence was the same. This is not to say that there might not be particular circumstances which might lead to the conclusion that that was not so. Whether there are or not will depend upon the circumstances of the case concerned. It is not I think necessary to say more than that, save perhaps to add that, if the point had been live, I would not have held that it was not appropriate for Ouseley J to conduct either the hearing in respect of PTA/4/2007 or the remitted hearing under PTA/33/2006 on the ground of apparent bias. I am not persuaded that a fair-minded and informed observer would think that Ouseley J might not conduct either such hearing fairly because of what Mr Otty called potential unfairness. When he reached his conclusions the relevant principles were those stated by this court in SSHD v MB, whereas they are now those stated by the House of Lords in SSHD v MB and AF. I see no reason why he should not be able conscientiously to reconsider his conclusions in the light of the judgments in the House of Lords. Lord Carswell appears to have thought that this was so at [85] of SSHD v MB and AF. I am not sure whether it is now said that we should set aside the declaration in paragraph 2 of the judge's order but I would decline to do so. I would only add that, in giving these reasons, I do not wish to prejudge in any way the issues before the judge, including any question whether the hearing before Ouseley J was fair: see the brief discussion at [17] and [18] below. CONCLUSIONS For the reasons I have given I would set aside the declaration in paragraph 3 of the order made by the judge but not that in paragraph 2. As at present advised I do not think that it is necessary to replace the declaration in paragraph 3 with another form of declaration. I hope that judges will be able to approach section 3(10) hearings in respect of a second or subsequent control order in accordance with the approach which I have summarised in [30-33] above. Lord Justice Rix: I agree. Lord Justice Keene: I also agree.

LORD JUSTICE PILL: This is an application for a writ of habeas corpus arising out of a decision of District Judge CSR Tubbs at the City of Westminster Magistrates' Court (CWMC) on 27th May 2009. The District Judge refused an application by Gary Samuel Owens, the applicant, who was subject to an order for extradition to Spain, to be discharged under section 36(8) of the Extradition Act 2003 ("the 2003 Act"). The applicant challenges that finding and seeks his discharge. On 2nd April 1991 the applicant was arrested in Tenerife and transferred to the court of first instance at Marbella for offences of murder and robbery alleged to have been committed in Marbella in February 1991. He was later released on bail and, in 1995, left the jurisdiction of that court and came to the United Kingdom. A detention order was issued. Eventually, on 6th August 2007, by means of a European Arrest Warrant (EAW), the extradition of the applicant was requested by the court of first instance, number 4 of Marbella, an interested party, in respect of the alleged offences. Spain has been designated a category 1 territory pursuant to section 1 of the 2003 Act. The warrant was received by the Serious Organised Crime Agency (SOCA), also an interested party, and an authority designated by the Secretary of State for the purposes of Part I of the Act. The EAW was certified by SOCA under section 2 of the 2003 Act on 27th February 2008. On 26th February 2009, at CWMC, District Judge Tubbs ordered the applicant's extradition pursuant to section 21(3) of the Act. On 15th May 2009 Bean J and Lloyd Jones J, sitting in this court, dismissed an appeal against that order. The court ordered: "... the application of the claimant for certification of points of law of general public importance and for permission to present a petition of appeal to the House of Lords be refused". Section 36 of the 2003 Act provides, insofar as is material: "(1) This section applies if— (a) there is an appeal to the High Court under section 26 against an order for a person's extradition to a category 1 territory, and (b) the effect of the decision of the relevant court on the appeal is that the person is to be extradited there. (2) The person must be extradited to the category 1 territory before the end of the required period. (3) The required period is— (a) 10 days starting with the day on which the decision of the relevant court on the appeal becomes final or proceedings on the appeal are discontinued, or (b) if the relevant court and the authority which issued the Part 1 warrant agree a later date, 10 days starting with the later date. (4) The relevant court is— (a) the High Court, if there is no appeal to the House of Lords against the decision of the High Court on the appeal; (b) the House of Lords, if there is such an appeal. (5) The decision of the High Court on the appeal becomes final— (a) when the period permitted for applying to the High Court for leave to appeal to the House of Lords ends, if there is no such application; (b) when the period permitted for applying to the House of Lords for leave to appeal to it ends, if the High Court refuses leave to appeal and there is no application to the House of Lords for leave to appeal; (c) when the House of Lords refuses leave to appeal to it; (d) at the end of the permitted period, which is 28 days starting with the day on which leave to appeal to the House of Lords is granted, if no such appeal is brought before the end of that period. (6) These must be ignored for the purposes of subsection (5)— (a) any power of a court to extend the period permitted for applying for leave to appeal; (b) any power of a court to grant leave to take a step out of time. (7) The decision of the House of Lords on the appeal becomes final when it is made. (8) If subsection (2) is not complied with and the person applies to the appropriate judge to be discharged the judge must order his discharge, unless reasonable cause is shown for the delay." Subsection (9) refers to Scotland and need not be cited. Not all sections are relevant to this appeal, but I have set them out in order that the full scheme should be specified. On 25th May 2009, no steps having been taken to remove the applicant, application was made to CWMC for his discharge. The application was heard on 27th May. It was submitted on the applicant's behalf that the "required period" within the meaning of section 36(3) of the Act had expired, that the District Judge, who was the appropriate judge within the meaning of the section, was required to discharge the applicant under section 36(8) unless reasonable cause was shown for the delay, and that there was no reasonable cause. The application was opposed, first on the ground that the required period had not elapsed and, secondly, on the ground that there was reasonable cause for the delay. The District Judge found in favour of the judicial authority on reasonable cause and by consent assumed, without deciding the point, that the required period had elapsed. The District Judge added that had she been minded otherwise to grant the application for discharge, she would have adjourned for further research and argument about the meaning of "required period". There is now an agreed statement of facts as to the sequence of events in May 2009. It differs from the evidence placed before CWMC. The District Judge found that administrative error is capable of amounting to reasonable cause within the meaning of section 36(8) and that, there being no suggestion of bad faith, general inefficiency or slack administration, the "human error" which had occurred, though regrettable and unfortunate, was the cause of the delay and was a reasonable one. The judge stated: "If it is accepted that the 'required period' is 10 days from that date [that is 15th May 2009] then SOCA's discovery on the morning of 26th May is very shortly afterwards and steps were taken to put it right and delay has thereby been kept to a minimum." The District Judge purported to grant an extension of time under section 36(3)(b), but it is agreed that she had no power to do so, the CWMC not being the relevant court within the meaning of section 36(3). That part of her order, at least, has been discharged by consent. An application was made to this court for a writ of habeas corpus. The application was heard on the afternoon of 3rd June by this court as now constituted. On the morning of 4th June, the court announced its decision dismissing the application with reasons to be given this morning, Monday, 7th June. The court also stated that if it decided the jurisdiction of the court should have been invoked under its judicial review jurisdiction and not its habeas corpus jurisdiction, permission to apply for judicial review would be granted and the application for judicial review refused. The court was prepared to assume that jurisdiction, if necessary. SOCA has submitted that the challenge to the District Judge's decision should properly have been brought as an application for judicial review. Reference was made to the observations of Richards LJ in Gronostajski v Government of Poland [2007] EWHC 3314 (Admin) at paragraphs 8 and 9: "I have real doubts as to whether habeas corpus is the appropriate procedure in this case. The claimant is detained in prison pursuant to an order of the court. That is, on its face, perfectly valid and within the jurisdiction of the court. That is not in dispute. The true target of the challenge is not the prison governor but the District Judge, the case being that he erred in declining to order discharge. That seems to me to be a challenge properly brought by way of judicial review against the Magistrates' Court, not by way of habeas corpus against the prison governor." Mr Summers, for the applicant, referred to other cases in which procedure by way of habeas corpus had not been challenged. There is no need for us to decide that issue, and we do not do so, though the observations of Richards LJ, with which, at any rate in the absence of fuller argument, I agree, should be borne in mind in future cases. Mr Summers has frankly accepted the procedural advantage to an applicant of habeas corpus. Unlike an application for judicial review, the applicant's ability to take the case beyond the High Court to the House of Lords does not depend on the need to obtain permission to apply for habeas corpus, or on the requirement, if judicial review is granted, but the application refused, that the case be certified as involving a point of law of general public importance. It is common ground that the court should assess the reasonableness of the cause shown for the delay by reference to the facts now agreed. The SOCA officer with conduct of the case, codenamed "Kent", was of the opinion that in the circumstances the required period under section 36(2) of the 2003 Act was a total of 24 days, 14 days in which the applicant had the right to apply to the High Court for certification of a point of general public importance arising out of the decision of 15th May, and to apply for leave to appeal, followed by the 10 days mentioned in section 36(3)(a). The required period would not, on that basis, end before 7th June. He set a reminder on the SOCA system for 25th May and went on leave. On 20th May 2009 the Crown Prosecution Service (CPS) sent an e-mail to SOCA's central address, indicating its view that the required period had expired on 24th May 2009. The SOCA team leader, who accessed that e-mail, agreed with the CPS' opinion. Kent's own team leader subsequently agreed with Kent's analysis of the expression "required period". Mr Summers has made submissions on both the "required period" issue and the "reasonable cause" issue. On the first, he relied on what he submits is a plain reading of section 36(3) and (5) and the decision of this court in Wood v City of Westminster Magistrates' Court [2007] EWHC 2058 (Admin). Mr Summers submitted that the decision of the High Court on the appeal to it became final at midnight on 24th/25th May. Further, he submitted that the administrative error, the misconstruction by Kent of the expression "required period", was not a reasonable cause for delay within the meaning of section 36(8). Reliance is placed on the decisions of this court in re Oskar [1988] Independent, 10th March, and re Lindley, CO/1183/97, 29th October 1997. The expression "reasonable cause" has its genesis in earlier extradition statutes. It should now be read, it is submitted, in the context of the Council Framework Decision of 13th June 2002 on the European Arrest Warrant and the surrender procedures between Member States (2002/584/JHA). Article 23 provides: "Time limits for surrender of the person 1. The person requested shall be surrendered as soon as possible on a date agreed between the authorities concerned. 2. He or she shall be surrendered no later than 10 days after the final decision on the execution of the European arrest warrant. 3. If the surrender of the requested person within the period laid down in paragraph 2 is prevented by circumstances beyond the control of any of the Member States, the executing and issuing judicial authorities shall immediately contact each other and agree on a new surrender date. In that event, the surrender shall take place within 10 days of the new date thus agreed. 4. The surrender may exceptionally be temporarily postponed for serious humanitarian reasons, for example if there are substantial grounds for believing that it would manifestly endanger the requested person's life or health. The execution of the European arrest warrant shall take place as soon as these grounds have ceased to exist. The executing judicial authority shall immediately inform the issuing judicial authority and agree on a new surrender date. In that event, the surrender shall take place within 10 days of the new date thus agreed. 5. Upon expiry of the time limits referred to in paragraphs 2 to 4, if the person is still being held in custody he shall be released." Section 36, it was submitted by Mr Summers, gives effect to Article 23 of the Framework Decision and requires a narrow construction of the words "reasonable cause". Framework decisions are binding on Member States as to the result to be achieved, but leave to national authorities the choice of form and methods. National law must be construed by the national court, as far as possible, in the light of the wording and purpose of the framework decision in order to obtain the result that it pursues and thus complies with Article 34.2(b) EU: Dabas v High Court of Justice in Madrid [2007] 2 AC 31. I can say now that I do not accept Mr Watson's submission that Article 23.5 of the Framework, which refers only to "release" and not to "discharge", was concerned only with the grant of bail. Given the presence of 23.3 and 23.4, which specify circumstances in which "surrender may be postponed", I regard that construction as impossible. I consider, first, the meaning of "required period". Mr Summers submitted that, application for certification having been made and refused on 15th May, the decision of the High Court became final within the meaning of section 36(5) on that day. Upon a refusal to certify, there could be no appeal to the House of Lords. The required period of 10 days under section 36(3) thereupon commenced and had elapsed before the application for discharge was made under section 36(8). I have to say that on first reading that submission appeared to me to have much force. In support of it, Mr Summers relied on the decision of this court in Wood, concerning the identical provision in Part II, section 118 of the Act. The chronology in that case, as stated by Leveson LJ at paragraph 1, was that an appeal to the High Court against an extradition order was heard and dismissed on 2nd June 2007. Leveson LJ stated: "1... Thereafter, by way of a letter, the claimant asked the court to certify a point of general public importance and also sought leave to appeal to the House of Lords. The matter came back before the court on 22nd March 2007, whereupon the court declined to certify a point of general public importance. As far as the litigation was concerned the matter was therefore at an end. 2. On 24th April 2007 an application was made to the City of Westminster Magistrates' Court for the claimant's discharge under section 118(7) of the Extradition Act 2003 on the basis that he had not in fact been extradited." At paragraph 8 Leveson LJ, with whom Stanley Burnton J agreed, stated: "Miss Dobbin, for the Secretary of State, points out that section 36 of the 2003 Act which deals with extradition following appeal follows the same language. As a result, she concedes that in some way this legislation ought to be construed so as to ensure that time is only extended beyond the conclusion of High Court proceedings if a certificate is in fact provided, notwithstanding that leave has been refused. As I have said, section 118(4) appears, on the face of it, to be comparatively straightforward, albeit it does not provide or reflect for the possibility of the need for a certified question. Having regard to the obligation which the statute intended to meet, however, it seems to me that it is proper to construe section 118(4) so as to make clear that where no point of law has ever been certified there is in fact no permitted period for applying to the House of Lords. After all, the House of Lords will only entertain a lawfully brought application and in the event that the High Court refuses to certify a point of law, no such application could ever properly be brought. Thus, there is no permitted period for applying to the House of Lords in the event of a certified question being refused. In those circumstances time cannot be extended as the district judge ruled." The question of construction arises in a context in which, as Leveson LJ pointed out, section 118 (and the same applies to section 36) does not expressly provide for the possibility of a need for certification. For SOCA, Mr Watson, supported by Miss Scott for the requiring authority, submitted that the required period in sections 36(2) and (3) does not begin until the period of 14 days, within which certification and leave to appeal may be requested, has elapsed. Section 36(5)(a) applies and certification may be requested within that period. It makes no difference, he submitted, that certification was requested and refused on the day of decision, because the right to apply to certify, whether on a different point or, by re-application, on the same point subsists. The 14-day period contemplated in section 36(5)(a) cannot be abridged. That is confirmed, submitted Mr Watson, by the provision of section 32 of the 2003 Act, which confers and regulates the power to appeal from the High Court to the House of Lords. Having referred to the requirement for leave (subsection(3)) and the requirement of certification (subsection (4)), subsection (5) provides: "An application to the High Court for leave to appeal under this section must be made before the end of the permitted period, which is 14 days starting with the day on which the court makes its decision on the appeal to it." A permitted period of 14 days is thus conferred with no suggestion of its curtailment by an application made, as in this case, for example, on the day the court made its decision. A request to certify and for leave is frequently made, not on that day, but following consideration of the judgments given and the framing of a question, or questions, dealt with in the judgments. That is done on a date later, within the 14-day period, as happened in Wood. In Wood the application to certify was not refused until over 2 months beyond the end of the 14-day period from decision. Mr Watson submitted that the case establishes, and is relevant to when the required period begins, only when a refusal to certify is declared at a date beyond the 14-day period. As Leveson LJ put it, "no point of law has ever [my emphasis] been certified". Nothing in Wood, it was submitted, suggests an abridgment of the 14 days granted by section 32(5) of the 2003 Act. The commencement of the 10-day period in section 36(3)(a) was deferred for much longer in Wood than it has been in the present case. Mr Watson referred to the recent case of Norris v Government of United States of America [2009] EWHC 995 (Admin), where application was made for the certification of one question during the substantive hearing — speciality. That application was refused within the body of the judgment of the High Court. Subsequently, a second application was made at a later date within the 14-day period in relation to a different question — Article 8. The second application for certification was granted, though leave in relation to it was refused. As Mr Summers submitted, the case is distinguishable, on its facts, from the present, in that two distinct appeals had been considered by the High Court in the same judgment: the specialty question and the Article 8 question. Mr Watson submitted that the case demonstrates that the 14-day period is sacrosanct. I agree with the submission of Mr Watson on the meaning of the words "required period". As noted by Leveson LJ, the provisions of section 36 do not include reference to certification. That requirement, as well as the requirement for leave, is expressly set out in section 32. The permitted period is stated expressly in subsection (5) to be 14 days. A further application could have been made in this case within the 14-day period. In the context of extradition proceedings contemplated by the Framework Decision and the statute, as to which I will make further reference when considering reasonable cause, I do not consider that an application and a refusal of a certificate on the day of decision starts the 10-day period running within the 14-day period previously mentioned. Such an effect, in the event, would have been an advantage, not to the judicial authority properly seeking extradition, but to the party seeking to avoid it. To make the running of a required period depend on when, within the period of 14 days, clearly stated in section 32, applications were refused would be to introduce uncertainty and an unwelcome technicality into the procedure. Moreover, the comparatively short period still involved (24 days) was inserted for the benefit, principally, of the judicial authority seeking extradition and, as in this case, seeking it promptly; it is not primarily for the benefit of the person resisting extradition. That is clear from the provision, in section 36(3)(b), that the authority may agree a later date with the relevant court, and may do so without reference to the applicant or his interests. Indeed, the court has followed that course in this case, extending the required period until 20th July. I go on to consider reasonable cause. Whether there was reasonable cause for delay was considered in the case of Oskar under the Fugitive Offenders Act 1967, section 10(2), which provided as far as is material: "... the court may, unless sufficient cause is shown to the contrary, by order direct the applicant to be discharged from custody and, if a warrant for his return has been issued under the said section 9, quash that warrant." The relevant decision of the House of Lords in Oskar was on 16th December 1987. Arrangements for removal to Australia were postponed to 27th February 1998, which was 11 days out of time. Giving a judgment, with which Nolan J agreed, Watkins LJ cited the decision of Lord Parker, Chief Justice, in Re Shuter [1960] 1 QB 142 at page 148. Lord Parker stated, when construing words in section 7 of the 1881 Act, that: "Accordingly, it seems to me that when one is construing the words in section 7, 'unless sufficient cause is shown to the contrary', one is entitled to take into account questions such as reasonableness in all the circumstances. Once one gets as far as that, as a matter of construction, it seems to me quite plain that on the facts disclosed in Mr Rushford's affidavit no one could say that he was not acting perfectly reasonably in making the arrangements he did. One cannot shut one's eyes to the fact that this is only a matter of a day or two's delay and that the alleged offences are serious offences." In Oskar, Watkins LJ found that the Home Office had misconstrued the effect of section 10 of the 1967 Act, and that there had been "administrative inertia in dealing with the offence lying on the file". Watkins LJ concluded: "The only relevant conduct is that of the Home Office in relation to the need to cause the applicant to be taken from custody and to be extradited expeditiously according to law. But two matters have, as I have said, been advanced for the admitted failure to do that: there was wholly avoidable delay in dealing with the offence on file and a misconstruction of section 10(1) of the Fugitive Offenders Act 1967. I do not see how the description 'reasonable' can apply to those errors in fact and in law. They are I feel bound to say inexcusable and come nowhere near constituting sufficient cause to allow us to refrain from directing forthwith the discharge from custody of the applicant and I would so order." Re Lindley was a decision under section 6(1) of the Backing of Warrants (Republic of Ireland) Act 1965. The section provides a superior court with a power to discharge "unless reasonable cause is shown for the delay". The word "may" is used, as it had been in section 7 of the 1881 Act. Kennedy LJ, with whom Smith J agreed, declined to exercise the power to discharge. A permitted period of 1 month had expired by 6 days. Kennedy LJ stated at page 3 of the transcript: "In my judgment there can be no question but that the requirements of international comity in the general sense could not be regarded as within the scope of the phrase 'reasonable cause for the delay' where it appears in section 6(1). I, for my part, would find it strange if that sort of a consideration, properly to be counted as of importance in relation to the Extradition Act, were not allowed to play any part at all in relation to the 1965 Act. I, therefore, would construe the 1965 Act (section 6(1)) in this way, that the word 'may' gives to this court a normal discretionary power, but that power is qualified by the indication that in certain circumstances, that is to say where a reasonable cause is shown for the delay, the jurisdiction must be exercised in one way. In other words, the court in those circumstances may not order him to be discharged. In other cases, it may or may not according as it considers appropriate." At page 4 Kennedy LJ stated: "It is apparent, and it really hardly needs saying, that damage to international relations is done if in a situation like this, because of a technicality, an offender or an alleged offender is not sent back to the Republic of Ireland to stand trial in circumstances where that, in reality, would appear to be the proper outcome." However, in the final substantive paragraph of his judgment, Kennedy LJ stated: "If I had to decide this matter on the basis of whether or not there was reasonable cause for the delay, despite the impressive arguments advanced to us by Mr Hardy that these words should be construed liberally, I could not construe them so liberally as to find that there was any reasonable cause for the delay. I am supported in that conclusion by the decision of this court in Oskar, where Watkins LJ, admittedly dealing with a rather different and more complicated set of facts, adopted a very similar approach in relation to what was, in reality, administrative incompetence." Mr Summers relies on that last paragraph and the finding that administrative incompetence did not constitute a reasonable cause for the delay. He submitted that SOCA's administration error, which, for this purpose, I assume, in the present case, resulted from the allegedly erroneous construction of the statute comes into the same category as that which arose in Oskar and Lindley. Those cases provide clear authority, he submitted, that an error such as that made in the present case does not provide reasonable cause for the delay. It was the discretion conferred by the word "may" on which Kennedy LJ relied in that case, not a discretion as to reasonable cause. Mr Summers also relied on the decision of this court in Governor of Wandsworth Prison v Kinderis [2008] QB 347. The expression "reasonable cause" was considered in the context of a submission that the existence of concurrent domestic proceedings constituted a reasonable cause for delayed surrender. The relevant provision was section 47 of the 2003 Act (materially identical to section 36). Laws LJ made the following observations: "29. As for that proviso, it seems to me that it simply means what it says. It will clearly be apt to bar the remedy of discharge in what I have called a force majeure case. One may readily multiply examples. Thus if the extradition is to be effected by air, a strike by airline or air traffic control staff over a period during which the extradition is set to take place might well fall within this category. And I would think there may readily be reasonable cause for the delay where it is occasioned on humanitarian grounds, such as the serious illness of the extraditee. To that extent the instances of postponement referred in article 23(3)(4) of the Framework Decision may be said to dovetail with the "reasonable cause" proviso in section 47(4) upon the latter's interpretation according to ordinary domestic canons of construction. ... 31... The... two considerations [force majeure and humanitarian] go only to whether there are particular circumstances — adventitious, contingent — which might prevent the extradition taking place within the required period stipulated under section 47(2) and (3)... 33. My conclusion on the proviso to section 47(4) is I think all of a piece with the use in sections 35(5) and 36(8) of exactly the same expression... They are concerned with the possibility of unlooked-for slippage in the execution of the tight timetable for extradition which the statute requires." The context in Kinderis was different. It was (and Mr Watson relied on this) that of the competing domestic and extradition jurisdictions. What was established in that case was the primacy of the obligation to facilitate extradition pursuant to the EAW scheme. It was a decision which favoured the interests of the authority requesting extradition and should be examined in that context. In R (Szklanny) v City of Westminster Magistrates' Court [2008] 1 WLR 789 Richards LJ held that the power to agree an extended period under section 35(4)(b) of the 2003 Act (materially identical to section 36(3)(b)) is not constrained by the situations annunciated in Article 23. However (and Mr Summers relied on this) in so holding Richards LJ contrasted the position under section 35(5) with that in section 35(4)(b). Richards LJ's reasoning is in paragraph 18: "Those are the main points put forward on behalf of the judicial authority. In my judgment, Ms Cumberland's submissions are well founded. The discretion conferred on the court by section 35(4)(b) of the 2003 Act is in broad terms. It is to be distinguished in that respect from the provision of section 35(5) that, in the event of non-compliance with subsection (3), discharge must be ordered 'unless reasonable cause is shown for the delay'. Had it been intended to impose a similar limitation on the power of the court in section 35(4)(b), the statute would have used similar language. The obligation to interpret national law, so far as possible, in the light of the wording and purpose of the Framework Decision should not require the discretion to be cut down in the way suggested by the claimant, so as to be exercisable only if it is shown that extradition within the normal period has been prevented by circumstances beyond the control of the member states concerned. The discretion must certainly be exercised with due regard to the wording and purpose of the Framework Decision and for that reason would no doubt fall normally to be exercised so as to extend the period where extradition was shown to have been prevented by circumstances beyond the control of the Member States. But I do not think that can be exhaustive of the circumstances in which the discretion may be exercised. Regard should be had not just to the wording of Article 23 but also to the Framework Decision's underlying purpose of facilitating extradition and enhancing extradition procedures, based on a spirit of mutual co-operation. I see no reason why those considerations should not in an appropriate case tell in favour of the grant of an extension at the request of the judicial authority even if it has not been shown that circumstances beyond the control of the Member States prevented extradition within the normal time limit, in the sense that the delay occurred without any fault on behalf of any of the state agencies concerned." The earlier part of the paragraph was relied on by Mr Summers as demonstrating the limited meaning of "reasonable cause". Mr Watson relied on the general comments made in the remainder of the paragraph about construction of the 2003 Act. In submitting that reasonable cause should be given the broader meaning, Mr Watson relied on another decision of this court in which Richards LJ gave the leading judgment. In Gronostajski issues arose as to when a court had begun an extradition hearing, and whether there was a reasonable cause for the delay in beginning that hearing, under section 8(7) of the 2003 Act. The delay was of one day and was caused by the non-production of the applicant at court on the day fixed for the hearing to begin and the judge's decision not to begin the hearing in the applicant's absence. Richards LJ stated at paragraph 23 that "in either case... the cause was a reasonable one." He stated: "25... The correct focus is on the situation in which the court found itself on 1st October as a result of non-production and on the court's reaction to that situation. I do not think that it can have been intended that the extradition procedures might be frustrated by questions as to whether or not there has been fault on the part of the prison authorities or of those responsible for delivering prisoners to court. 26. I accept that the judge may have focused unduly on the relatively short period since the initial hearing and the fact that the delay had been only one day. But I think he was entitled to have regard to those considerations as part of the overall circumstances of the case. Even if it could be said that he took into account an irrelevant consideration, such an error would not impel me to quash his decision because, in my judgement, for the reasons I have given, there was in this case a reasonable cause for the delay and the judge could properly so decide." Agreeing with Richards LJ, Gibbs J stated: "29... As it seems to me, the judge, in considering whether there was reasonable cause, was not confined to asking himself whether or not the error or omission of the prison service and/or the escort service was excusable or unreasonable. He was entitled to look at the issue in the light of all relevant circumstances. These included the fact that the court made all reasonable efforts to ensure that the error or omission of those agencies was put right in order to facilitate the applicant's attendance that day. They also included the fact that when those efforts had come to nothing the applicant's attendance was ensured at the next available opportunity, that is the following morning. 30. I accept that the mere fact that the delay was short does not, in itself, make it reasonable. But human or administrative error on occasion is inevitable. Here, after it had occurred, steps were taken to put it right and delay was thereby kept to a minimum. 31. I would hold that the judge would be entitled, and indeed would be right, to take into account the circumstances to which I have referred..." Mr Summers submitted that those statements in Gronostajski should not be given broad significance. The circumstances were different, in that the delay was caused by the failure of the prison authorities to produce the applicant at court. That delay was beyond the control of the court or of the requesting authority. There have been different approaches, in this court, in different contexts, to the meaning of "reasonable cause for the delay" in section 36(8) and other provisions in the 2003 Act to the same effect. In considering these, and how the expression should be applied to particular facts, it is, in my judgement, important to have regard to the wording and purpose of the Framework Decision. Recital 5 to the Framework Decision refers to: "... the introduction of a new simplified system of surrender of sentenced or suspected persons for the purposes of execution or prosecution of criminal sentences makes it possible to remove the complexity and potential for delay inherent in the present extradition procedures." Recital 10 provides that: "The mechanism of the European arrest warrant is based on a high level of confidence between Member States." The states referred to are in the European Union, and include Spain. It should be borne in mind that decisions such as Oskar were taken before the Framework Decision. The attempt by the requesting authority to extradite the applicant for his trial on very serious charges has been prolonged and strongly contested. Expedition, for which the Framework Decision and the 2003 Act provide, is primarily in the interests of the administration of justice in the jurisdiction to which removal is sought. Delay is to be avoided. The interests of persons resisting extradition must also be respected, but provisions plainly directed to ensuring prompt extradition in the interests of the requesting authority (Article 23 and section 36) should not readily be defeated by an administrative error, or an error of law in considering the length of time allowed, which have resulted in a very short delay in protracted proceedings involving very serious offences. The Framework Decision does not, in my judgement, exclude the power of a Member State to include an "unless clause" in its relevant statute, that is a clause permitting delay, in a strict timetable, for reasonable cause. Far from introducing an element of technicality, it provides a degree of flexibility, which accords with the purposes of the Framework Decision. Once included, construction of such a clause is not confined to the situations expressly stated in Article 23. Mr Summers rightly accepted, for example, that in this court, in Caldarelli v Court of Naples, Italy [2009] EWHC 107 (Admin), the court found that judicial decisions involving delay, in that case, an intention to consider three EAWs together, or the need for a court to reserve judgment before a decision, can provide a reasonable cause for delay. The expression can be construed, and I would construe it, as sufficiently broad to cover the short delay in this case if, contrary to my finding, the opinion of the appropriate SOCA officer as to the meaning of "required period", reached in good faith, was erroneous in law. In Shuter a test of reasonableness in all the circumstances was stated. The circumstances in this case include the shortness of the delay, the nature of the error made, if there was an error, and the consistent actions of the requesting authority, over a period of time, to implement the procedures provided as a result of the Framework Decision. That action should not, in my judgment, be defeated in the present circumstances. The views of Laws LJ in Kinderis were expressed in a different context, and when a different issue was being considered. A broader approach is consistent with the approach adopted by the members of this court in Gronostajski. For those reasons, I would refuse the application for habeas corpus and dismiss the appeal. If the application were to have been considered as an application for judicial review, having granted permission, I would refuse the application. MR JUSTICE CRANSTON: I agree. LORD JUSTICE PILL: Yes? MR SANDELL: My Lord, just two or three brief administrative things to sort out, if I may. I appear for the claimant. My learned friends Miss Jung and Miss Scott appear for the Serious Organised Crime Agency -- LORD JUSTICE PILL: Yes, Mr Sandell. MR SANDELL: Might I request an expedited copy of the transcript of this case? LORD JUSTICE PILL: Yes, and I am prepared to grant that, but it is quite a long judgment. We took this case, as you know, at very short notice and we attempted to deal with it promptly. (Pause). The shorthand writer is saying she can do it tomorrow. I would need to consider it, and my Lord, but we will do that promptly as well. MR SANDELL: I am very grateful, and also simply to request the usual taxation order from public funds. LORD JUSTICE PILL: Yes, you have the usual tax direction for your client. MR SANDELL: My Lord, I am most grateful. LORD JUSTICE PILL: Does anything else arise? MISS SCOTT: My Lord, one matter on behalf of the court of Spain. Your Lordships will remember that there was discussion as to whether the interested parties that appeared before you should be respondents for the purpose of any appeal to the House of Lords. My Lord, I have taken instructions and that is an application which I also seek to pursue: simply to the be cited as a respondent, rather than an interested party. LORD JUSTICE PILL: The Magistrates' Court — they have not appeared today, and that is very understandable — are the respondent. MISS SCOTT: My Lord, they appear represented by my learned friend, Miss Jung, the Serious Organised Crime Agency. LORD JUSTICE PILL: Is anyone here for SOCA? MISS SCOTT: Yes, my learned friend. LORD JUSTICE PILL: I am talking about the Magistrates' Court. MISS SCOTT: Forgive me. The Magistrates' Court do not appear. LORD JUSTICE PILL: No, thank you. You are SOCA, Miss Jung? MISS JUNG: I am, my Lord. LORD JUSTICE PILL: So, on paper, we do not have someone by way of a respondent, who is going to deal with the case if it goes to the House of Lords. So you are applying that the requesting authority should be made a respondent? MISS SCOTT: My Lord, yes, and I understand that it was Mr Watson's application that SOCA should also be treated as a respondent. I understood that was granted on Friday. LORD JUSTICE PILL: Miss Jung, do you make that application? MISS JUNG: My Lord, I do. That is the note that I have. LORD JUSTICE PILL: Yes. What do you say about that, Mr Sandell? MR SANDELL: My Lord, I was not present on Thursday, because my colleague Mr Summers was before the court. I understand that the court already granted SOCA's application to be made the respondent on Thursday, as regards the issuing judicial authority. The observation that adding a further party will inevitably expand the costs involved of any appeal, but no formal position on that application. LORD JUSTICE PILL: You are not resisting it? MR SANDELL: My Lord, no. LORD JUSTICE PILL: We are naturally concerned with costs and you should not have more parties than you need and Lord Hoffmann quite recently expressed reservations about the intervention of parties, but it does seem to us that in this case, both SOCA, whom we dealt with on Friday, and the requesting authority should be made respondents. MISS SCOTT: I am very grateful, my Lord. LORD JUSTICE PILL: To the extent it arises. MISS SCOTT: My Lord, yes. Thank you. LORD JUSTICE PILL: There is no application for costs inter partes? MISS SCOTT: No, thank you, my Lord. MISS JUNG: Thank you, my Lord. MR SANDELL: My Lord, forgive me if this is my misunderstanding, just one further clarification, if I may. In terms of the procedure for pursuing any further certificate or appeal, it is my understanding that the court has disposed of it, in essence, both as a habeas corpus application and as an application for judicial review. LORD JUSTICE PILL: We are not prepared to advise as to what course you should take. MR SANDELL: I understand. LORD JUSTICE PILL: But I hope what we have said is clear. MR SANDELL: My Lord, I am most grateful. LORD JUSTICE PILL: Of course, the order was made on Friday. MR SANDELL: My Lord, yes. LORD JUSTICE PILL: Can someone remind me of the date in July to which we referred? MISS SCOTT: My Lord, it is 20th July. LORD JUSTICE PILL: Yes, that was my recollection. Is there any further clarification required of the order made on Friday? MR SANDELL: Not from me, my Lord. MISS SCOTT: No, thank you. MISS JUNG: No, thank you, my Lord. LORD JUSTICE PILL: Thank you we will retire before the next case. (A short adjournment) LORD JUSTICE PILL: We will hear you now. It would be unfair to the people in the other case to defer too long, but we will hear what your application is to be. MR WATSON: My Lord, I do not think it will take long. My Lords, can first of all apologise for the apparent discourtesy in returning to court. LORD JUSTICE PILL: You were told you need not be here and someone else was here in your place. MR WATSON: Yes, absolutely, my Lord. There is just one issue that has arisen from the judgment that I thought it best to bring to your Lordships' attention immediately. It is simply this, there was one matter in your Lordships' decision that appeared to be contrary in its intent and effect to the indication that your Lordships gave last week. All parties are keen to clarify the position immediately. Last week we were all left with the understanding that your Lordships would deal with the application, notwithstanding the general position, as a judicial review application, grant permission, refuse on the merits and then, indeed, certify two questions that were to be drafted by my learned friends. As I understand it, and I was not here, but this is also the position of both parties, in your Lordship's decision that was handed down today, the entirety of the decision is understandably couched in terms of "If this is a habeas application, then it fails. If this is a judicial review application, permission granted but substantive application refused". Also, I should say, it is clear from your Lordship's judgment that your Lordships do not wish to decide the general point. The only issue that arises then is whether your Lordships viewed the Owens application as a judicial review application or a habeas application. LORD JUSTICE PILL: Both. What I was not prepared to do, and this was the application the other way, was to say that you could forget about habeas corpus. MR WATSON: My Lords, I entirely understand that, and I need to make it clear -- LORD JUSTICE PILL: How was it dealt with in the case that I cited, where Richards LJ gave the judgment? I do not have the papers with me, of course. MR WATSON: It is the case of Gronostajski. My Lords, on behalf of SOCA and the Crown Prosecution Service, I entirely understand that your Lordships do not wish to, and I am not seeking to invite your Lordships to, express any view as to the general approach to be taken in these cases. Unfortunately I do not have that report to hand. However, we would respectfully suggest that your Lordships do have to determine on which basis this application is to be decided — of course, that can be in terms where there is no general principle to be derived from it — the reason being that the applicant needs to know whether he must have two questions certified or not, because if it is a habeas application that is refused, then of course my learned friend need not have any questions certified and can apply for leave direct to their Lordships' house; if, however, it is a judicial review application, then my learned friend needs two questions. Your Lordships already indicated that you will certify two questions. Because of that, in discussion with regard to the two questions, we were all of the view that your Lordships were going to, having received an application for habeas, in fact treat it as an application for judicial review and dispose of it on a judicial review basis, thereby triggering a requirement for the two questions. So, my Lords, I would simply invite your Lordships to consider that aspect of your Lordships' current ruling. LORD JUSTICE PILL: How was it dealt with in the other case? MR WATSON: My Lord, as I understand it, it was a habeas application that was made. Richards LJ, at paragraph 8, raised his concern of his own motion and stated that he did not "propose to insist on the procedural niceties in the present case or to direct that the case proceed as a claim for judicial review. I shall simply deal with the substantive issues raised. That should not however be taken as an endorsement for the future of the procedure that has been adopted here". My Lords, in that case Richards LJ had before him a habeas application, was aware of the difficulties and suggested judicial review would be more appropriate, but dealt with it as a habeas application. If your Lordships had indicated last week that that was how your Lordships intended to proceed, there would be no issue about that today. However, we were under the impression that was your Lordships were going to, as in another case -- LORD JUSTICE PILL: That was not the case. We were concerned to give an indication, because of the urgency, and to make a decision. We did make a decision, but at that stage we kept open whether we would resolve this question of whether to refuse the habeas corpus on the grounds that it was judicial review. In that context, we set people's minds at rest. We said, "If we decide that it is not habeas and we will treat it as judicial review, then we can tell you that we would grant permission for judicial review, we would refuse the application and we would certify". MR WATSON: I see, my Lords. LORD JUSTICE PILL: That was the object, but this is dealt with as a habeas application. MR WATSON: I am very grateful. So, just so there is no misunderstanding on our part, this having arrived before the court as a habeas application, the court having dealt with that judgment in the alternatives, but declining to decide, either in the general terms, or in the particulars of this case, which is more appropriate, the court then refusing the application is refusing the original habeas application. Therefore, there is no need to certify two questions and the automatic right of leave to appeal to the House of Lords. LORD JUSTICE PILL: Well, whatever right exists on habeas, we have not been invited to consider that. Whatever rights exist on habeas do exist here. MR WATSON: Yes, my Lord, but in those circumstances there will be no application for certification of questions by the applicant. LORD JUSTICE PILL: I doubt it. Do you have anything further to say about that? MR WATSON: No, I am simply seeking to clarify that there is only one application before the court — it is a habeas application. In those circumstances, there will not be any certification of questions, because that is not how it is done. LORD JUSTICE PILL: Yes. The court is not advising the applicant as to what course he should take. There are courses to be taken and the House of Lords will decide whether they are the right courses or not. It would not be right for this court to advise about that. Had we had the luxury, as the court did in the other case, of giving judgment all at once (I do not know whether that was reserved or not). Had we been giving judgment today, we would not have had to give an indication on Friday. It was because you needed to know the result, not on 7th June, which might have been too late, but on 4th June that we did raise this possibility: if we decided, when reserving over the weekend, that habeas corpus was misconceived, nevertheless we would treat it as a judicial review application. MR WATSON: I am very grateful. Your Lordships having not decided that the habeas corpus was misconceived, but leaving that question open, had before it a habeas application, refused the habeas application, there was no judicial review application before this court and, therefore, any other matters here on in -- LORD JUSTICE PILL: What we have said about judicial review is on a contingent basis, which has not, in the event, arisen. MR WATSON: That is extremely helpful. I am very grateful, my Lord, for taking the time to -- LORD JUSTICE PILL: We have done our best, as counsel have, to get this case on early. We had to give a decision on Friday at your submission. MR WATSON: Yes. LORD JUSTICE PILL: At that stage things could only be done on a contingent basis, to some extent. MR WATSON: My Lord, that has been extremely helpful. I am so sorry, because after the hearing there was confusion between the parties as to what happened. I thought it was safer just to return to court. LORD JUSTICE PILL: Do you want to add anything, Miss Scott? MISS SCOTT: My Lord, no, thank you, except to perhaps apologise for not taking more time to clarify this earlier this morning. Thank you very for the indication. It has been very helpful. LORD JUSTICE PILL: Anything on your side? MR SANDELL: My Lord, I share my learned friends' gratitude. LORD JUSTICE PILL: Thank you. That concludes Owen, as far as this court is concerned.

P. Wadhwa, J. Leave granted in all the special leave petitions. In this batch of appeals, it is the State of Punjab in the Police Department which is the appellant. There are in all 18 respondents. They were all enrolled as Constables in the Police Department and later deputed to the Criminal Investigation Department CID of the Punjab Police. During the companyrse of their deputation, they earned promotions on ad hoc basis and some of the respondents reached the rank of ad hoc Sub-InspectOrs. When they were sought to be repatriated to their parent departments, they were to go back as Constables or Head-constables if in the meanwhile on deputation they earned any promotion in their parent departments, They had served for long years in the CID and the prospect of going back as Constables was number to their liking. They, therefore, approached the High Court of Punjab and Haryana by filing writ petitions which were allowed to an extent. The High Court did say that the order of repatriation of the respondents being legal companyld number be set aside as such. However, directions were issued that the cases of the respondents in their parent departments be companysidered for promotions on the relevant dates when persons junior to them were promoted at different levels and, if necessary, even to relax the rules. In some of the cases two directions were given, namely, 1 if the respondents sought voluntary retirement from the posts they were holding in CID, the order of repatriation would number companye in their way and their cases for voluntary retirement be companysidered on the basis of the posts they were holding in CID and 2 to determine the seniority of the respondents in their parent departments by giving them the benefit of service they rendered in CID and companysequently to be companysidered for promotion with effect from the date the persons junior to them were promoted. To understand the rival companytentions, we shall companysider the case of Inder Singh one of the respondents CA Nos. 1293-1303 of 1995 . He was enrolled in the Punjab Police on August 31, 1966 as Constable and on April 13, 1969 was sent on deputation to CID in the same rank. He was sought to be repatriated on September 15, 1990 while he was holding the rank of ad hoc Sub-Inspector. During this period of deputation, Inder Singh, by order dated February 19, 1985 was promoted as officiating Head-Constable after giving him exemption under the relevant rules which we will companysider hereinafter. In the parent. Department, he was holding the substantive rank of Head Constable. During the pendency of the writ petition in the High Court, we are told that there was stay of order of repatriation. Inder Singh was number, however, given any posting till the judgment was delivered by the High Court. On November 7, 1994, he was posted in the CID unit at Faridkot. However, this joining was subject to final decision of the present appeal. This Court at the time of the admission of the special leave petition granted status quo which is companytinuing. The appellant has, therefore, companytended that from the date of repatriation, Inder Singh remained absent, uptil November 6, 1994. Taking into account this period of four years, Inder Singh was on deputation in CID for over 28 years. We may numbere that the Department has number taken any action against Inder Singh for his alleged absence from the date of the order of repatriation till the order of his rejoining CID and his posting at Faridkot. The High Court in granting relief to respondents negatived the companytention of the State that the respondents companyld number be promoted to higher posts in their parent departments without passing the various departmental examinations as per the relevant Rules, That was how the High Court dealt with these companytentions first by allowing the writ petitions by the learned single Judge and then on appeal before the Division Bench filed by the State against the judgment of the learned single Judge. The High Court was of the view that in terms of Sub-rule 3 of Rule 21.25 of the Punjab Police Rules, when an officer borne on the rolls of a district or range reached a place in seniority which would entitle him to be companysidered for substantive promotion if he were serving in the establishment to which he belonged permanently, he shall be informed and given the opportunity to return to the district Police force. The Court said that admittedly, the writ petitioner, who was sent on deputation to the CID, was number so informed and given the opportunity to return to his parent Department when he was entitled to be companysidered for substantive promotion to the higher post. As held by the learned single Judge, the appellant who failed in its statutory duty to inform the writ petitioner when his juniors in the parent department were companysidered for promotion to the higher post, companyld number take advantage of its own wrong. The writ petitioner while on deputation to CID, Intelligence Department, was found fit and had been promoted as Sub-Inspector on 12th December, 1989, and was holding that post on the date when the order for the repatriation to his parent department was issued. The High Court said that in view of such peculiar facts, it would be a good ground for relaxing the rule for companysidering him for promotion to the higher post with effect from the date his immediate juniors were so promoted in accordance with the directions given by the learned single Judge. The respondent in the writ petitions had prayed for writ of certiorari for quashing the order of repatriation and a writ of mandamus directing the petitioner to absorb him in CID Intelligence Department where he had put in 23 years of service or directing the petitioner to determine the seniority of the respondent in his parent department after giving him benefit of service which he had rendered for 23 years in the CID and companysequently to promote him from the date when his juniors were promoted. The Rules are called Punjab Police Rules and have been framed under the Police Act, 1861. It is number necessary for us to quote the relevant Rules in extenso except Rule 21.25 dealing with deputation to CID which is as under 21.25 1 Upper and lower subordinate posts other than those of Inspectors in the Criminal Investigation Department shall be filled by the deputation of suitable men from districts for a periods of three years extensible but number more than two years at a time at the discretion of the Deputy Inspector-General, Criminal Investigation Department. A Police officer on deputation to the Criminal Investigation Department will retain his original position in the cadre of his district or range. While in the Criminal Investigation Department he will be eligible for officiating promotion in that branch on reversion from the Criminal Investigation Department he will assume his place in his original cadre. Officiating promotion may be given in the district or range in the place of an officer deputed to the Criminal Investigation Department, such officiating post lapsing on the officers reversion. When an officer borne on the rolls of a district or range reaches a place in seniority which would entitle him to be companysidered for substantive promotion if he were serving in the establishment to which he belongs permanently, he shall be informed and given the opportunity of returning to district police work. No officer on deputation to the Criminal Investigation Department shall be substantively promoted to Head Constable or higher rank unless both the Deputy Inspector-General, Criminal Investigation Department and the Deputy Inspector-General of the range to which he belongs agree that he is qualified for such promotion by all the prescribed standards. The Deputy Inspector-General, Criminal Investigation Department, may make recommendation on behalf of, Sub-Inspectors serving under him to the Deputy Inspector-General of the range and the Inspector-General of Police, respectively, for promotion to the selection grade or admission to List F. A Sub-Inspector who becomes eligible while serving in the Criminal Investigation Department for grade promotion in the selection grade, shall receive such promotion, if the Deputy Inspector-General of the range and Criminal Investigation Department agree that he is fit for it. Annual reports on upper subordinates serving on deputation in the Criminal Investigation Department shall be sent by the Deputy Inspector-General, Criminal Investigation Department, to the range Deputy Inspector-General companycerned for record and other necessary action. In very exceptional cases and for the political branch only and with the written sanction of the Deputy Inspector-General personally, direct enrolment as companystable or in higher ranks, may be made to the Criminal Investigation Department. Specialists shall, however, when possible, be entertained on companytract terms, so that their services may be dispensed with when their utility ceases or deteriorates. 21.25. A The Deputy Inspector-General, Criminal Investigation Department, shall have companyplete disciplinary companytrol over all police officers while serving in the Criminal Investigation Department. Rules also describe the duties of CID but that is number necessary for us to refer to. Rules relating to promotion and deputation are quite specific and there is numberambiguity about them. Each district Range Districts are grouped into. Ranges has its own cadre of officers upto certain ranks. We are companycerned with the rank upto Sub-Inspector. Promotion from one rank to another and from one grade to another in the same rank is on the basis of selection-cum-seniority. What factors are to be taken into companysideration for promotion have been set out in Rule 13.1 and which are of general nature. Upto the rank of Sub-Inspector five lists A,B,C,D and E are to be maintained for the purposes of promotions from the Constables and companytain the names of the candidates as per their seniority after they have fulfilled the specified requirements. List A companytains the names of the Constables who were eligible for promotion to the selection grade and is maintained by the Superintendent of Police of the District. List B companytains the names of all Constables selected from admission to the promotion companyrse for Constables at the Police Training College. Selection is made in the month of January each year and is limited to the number of seats allotted to the district for the year with twenty percent reserve. A Departmental Promotion Committee is companystituted which companyducts tests in general law Indian Penal Code, Criminal Procedure Code, Indian Evidence Act and Local and Special Laws , interviews and examination of records and prepares the merit list. Rule 13.7 2 prescribes the eligibility criteria of the Constables who are to be entered in List B. Those Constables who have passed the Lower School Course at Police Training College, Phillaur and are companysidered eligible for promotion to Head Constables are entered in List-C. Promotion to Head Constables are made in accordance with the principles set out in Rule 13.1 1 and 2 . Selection grade Constables who have number passed the Lower School Course but are otherwise companysidered suitable can be promoted to Head Constables upto a maximum often per cent of vacancies but that can be done with the approval of the Deputy Inspector-General of 6. Police. Similarly List-D is maintained for selection for admission to the promotion companyrse for Head Constables at the Police Training College is made from amongst, all the companyfirmed Head Constables. Eligibility for admission to the promotion companyrse for Head Constables is prescribed in Rule 13.9 1 . Those Head Constables who qualify at Police Training College in the promotion companyrse for Head Constables find their names entered in Part-I of List-D. Rule 13.9 2 prescribes that names of outstanding Head Constables who have number passed the promotion companyrse for Head Constables due to being over-age but otherwise are of exceptional merit and are companysidered suitable may, with the approval of Inspector-General of Police, be entered in Part II of List D. Further under this sub-rule number more than 10 of the posts of Assistant Sub-Inspectors will be filled from the names in Part II of List D. Promotions to the posts of Assistant Sub-Inspectors are to be made from List D Part-II . Similar procedure is prescribed for promotion of all Assistant Sub-Inspectors to Sub-Inspector from List E Part-1 which companytains the names of Assistant Sub-Inspectors who qualified for promotion companyrse for Assistant Sub-Inspectors at Police Training College. List E is also in two parts. Part II of List E companytains the names of Assistant Sub-Inspectors of exceptional merit who have number qualified the companyrse for Assistant Sub-Inspectors at Police Training College and are companysidered suitable for promotion. CID does number have a cadre of its own officers upto the rank of Sub-InspectOrs. Rules 21.25 states that posts other than those of Inspectors in CID shall be filled by the deputation of suitable men from districts for a period of three years extensible but number more than two years at a time at the discretion of the Deputy Inspector-General, CID. A police officer on deputation to the CID retains his original position in the cadre of the district or range. While in the CID he is eligible for officiating promotion in that branch but on reversion from CID he assumes his place in his original cadre. Sub-rule 2 of Rule 21.25 also prescribes that officiating promotion may be given in the district or range in the place of an officer deputed to CID but such officiating post lapsing on the officers reversion. Under Sub-rule 3 of this rule when an officer while on deputation in CID reaches a place in seniority in that district he is entitled to be companysidered for substantive promotion as if he was serving in that district but he shall be informed and given the opportunity of returning to his district police work. This Sub-rule further prescribes that numberofficer on deputation to CID shall be substantively promoted to Head Constable or higher rank unless both the Deputy Inspector-General, CID and the Deputy Inspector-General of the range to which the officer belongs agree that he is qualified for such promotion by all the prescribed standards. It would appear that under this sub-rule Inder Singh while on deputation with CID earned his promotion as officiating Head Constables without his having to have passed Lower School Course in Phillaur and thus promoted to Head Constable out of 10 per cent of vacancies as having been found suitable for the promotion. In the writ petition of Inder Singh he raised the following four questions which according to him needed companysideration Whether the respondents were bound to absorb the petitioner in the CID Intelligence Department where he has put in 23 years service and he had excellent and unblemished service record? Whether the respondents are justified in repatriating the petitioner after more than 23 years of service and that too without giving him any benefit of 23 years of service which he has rendered in the CID, Intelligence Department? Whether the respondents are justified in repatriating the petitioner as Constable to his parent department when his juniors have been promoted and are working on the post of Sub-Inspectors and Inspectors? Whether the order of repatriation is discriminatory and violative of Articles 14 and 16 of the Constitution of India? As to what relief the High Court granted we have numbered above. We find that the respondents have number challenged their repatriation to their respective districts on the rolls of which they are borne but what they companytend is that they should hold the same position there as they were holding in CID. They submitted that while they were on deputation to CID their juniors have been promoted and number if they go back they have to work under them. These companytentions do number appear to us to be companyrect. For one the respondents do number have any right to hold on the post which they were having in CID in their parent department and 2 they were holding the posts in CID only on ad hoc basis. Appellants have brought on record a chart to show that even Constables who were senior to the respondents are still working as Constable as they companyld number qualify for further promotion in terms of the Rules mentioned above. In the case of Inder Singh numberConstable junior to him has been promoted and there are 65 Constable who are senior to Inder Singh who are still working as Constables. Respondents have then companytended that as per Sub-rule 3 of Rule 21.25 they were never informed and given numberopportunity of returning to their respective districts after they reached their places in seniority of their districts entitling them to be companysidered for substantive promotion. In the case of Inder Singh appellants have stated that old record of test for List-B was number traceable. However, Inder Singh has given his unwillingness to undergo Intermediate School in the term companymencing with effect from April 1, 1990 to October 1, 1990. For promotion from Constable to Head Constable passing of B-l test is a must. Inder Singh was number eligible to appear in the test for the first three years as he had number companypleted three years of service. Subsequently also he did number appear in any test held for the purpose. However, he was promoted on February 19, 1985 as officiating Head Constable by order of the Senior Superintendent of Police Ludhiana from List C having been given exemption. Appellants have stated that since test is held in January every year circulars letters are issued to the organisations including the CID where their employees are working asking them to appear in the test. This test is held on the same date throughout the State. The Constables who are eager to companypete are always on the alert to appear in the test as it is known to all the Constables that the test is being held. Appellants have also brought on record that apart from the fact that every Constable on deputation in CID would companye to know of the test, the respondents were also individually informed except that in the case of one or two of the respondents records were number available to show that they had also been individually informed of the test being held. On the dates of holding of the test eligible candidates assemble at the prescribed place where the test is companyducted. Several Constables serving in the CID on deputation appeared in B-l test. So it is very well known to every Constable wherever he may be, the appellants submit. It would, therefore, appear to us that there cannot be any excuse that the candidates were number aware of the holding of the test. It is then submitted that deputation to CID companyld number exceed a period of five years and after the expiry of this period the respondents should have been sent back to their respective districts and that after all this period on deputation to CID number asking them to appear in test would number only be irregular but arbitrary as well. We do number think that Sub-rule 1 of Rule 21.25 limits the deputation to CID for a maximum period of five years. In the first instance deputation is for three years and it can be extended for number more than two years at a time. It cannot be said that after three years the extension is for further two years and numbermore. We have to give an ordinary meaning to the words used in the sub-rule. We however, agree with the respondents that every time deputation was extended they should have been informed of their rights in CID while on deputation vis-a-vis their parent department. Mr. P.P. Rao learned Counsel for the appellant-State of Punjab, submitted that repatriation of the respondents was necessary as Government thought of injecting fresh blood in CID. It appears to be rather a specious plea. It is number disputed that officers having put in more years than the respondents are still working on deputation in CID. No reason is forth-coming as to why the respondents are the only persons who are picked up to be repatriated. But since this question was number raised in these terms we are number called upon to decide the same. It was then submitted by the respondents that deputation to CID had numbermeaning as all the police departments in the State are headed by the Inspector General of Police who is also the administrative head of CID. Reference in this companynection was made to Rules 1.2, 1.4. and 1.5. It is, however, number necessary for us to refer to these Rules as we do number find any substance in this companytention. Rules are statutory and each district range in the State has a separate cadre of its officers. There is numbercadre of officers up to the rank of sub Inspector in CID and the officers upto this rank are drawn from various districts in the State. Merely because the administrative head of all the police departments in the State is one it cannot be said that there can be numberrule for deputation to a particular department in the whole of the police establishment in the State. If we refer to the Rule 21.25 Deputy Inspector General, CID has companyplete disciplinary companytrol over all the police officer while serving in that department. On this very reasoning, there is numberscope for the argument that respondents be absorbed in CID as this Department has numbercadre of its own upto the rank of Sub-Inspector. It was than submitted that officers in CID are of exceptional merit and they have vast experience of companyducting investigation and in fact they help the district police in the companyduct of investigation and that they should be given exemption from appearing in tests or undergoing any training in the Police Training School and that they should be promoted in 10 per cent quota meant for officers of special qualities. If that is done it will certainly be in violation of the statutory rules. Promotion has to be by prescribed standards. Moreover it is numberodys case that any vacancy exists to which the respondents companyld have been promoted. In any case, we are number impressed with this argument. Mr. Bagga appearing for some of the respondents submitted that the case of Amrit Kumar CA 1297/95 was different. In his writ petition No. 8979 of 1991 in the High Court it was mentioned in the order dated June 12, 1991 that Amrit Kumar was working as Sub-Inspector in CID and was being repatriated as Head Constable to his parent department. The High Court ordered that he shall be repatriated as Sub-Inspector and it shall be open to the authorities to determine his seniority in the parent department in accordance with law. On clarification sought by the State the companyrt order dated March 6, 1992 states that it shall be open to the Department to determine the seniority of Amrit Kumar and post him to the post he was entitled to and that the order dated June 12, 1991 would number companyfer any benefit on him. We, therefore, fail to see how this case is any different or that Amrit Kumar would be posted as Sub Inspector in his parent department on repatriation. During companyrse of arguments, certain decisions of this Court were referred to on the question of deputation and the right of the deputationist on his repatriation. These, we may numbere. In D.M. Bharti v. L.M. Sud and Ors. 1991 Supp. 2 SCC 162, the appellant who was working as a Tracer in Municipal Corporation Ahmedabad went to Town Planning Establishment by way of deputation. In the Town Planning Establishment, the appellant was promoted as Junior Draftsman and there was a proposal to promote him further as Surveyor-cum Draftsman. But before this promotion companyld materialise, the Town Planning Establishment was wound up. The appellant, was, therefore, reverted back to his parent department, i.e., the Municipal Corporation and posted as a Tracer and number as a Junior Draftsman. The appellant treated this as a reversion and challenged the same. This Court said that it was number reversion and that when the appellant left the Municipal Corporation and joined the Town Planning Establishment, he was a Tracer and he companyld go back only as a Tracer subject, however, that if in the meantime, while he was on deputation, he had qualified for promotion to a higher post in the parent department, that benefit companyld number be denied to him. The Court said that promotions earned by an employee on deputation did number enjoin any protection and that on repatriation, he companyld be accommodated only on its original post or to the post to which he stood numberionally promoted in the parent department by having so qualified. In Ratilal B. Soni and Ors. v. State of Gujarat and Ors. , the appellant who belonged to the Revenue Department of the Gujarat Government was allocated to the Panchayat Service on companying into force of Gujarat Panchayat Act 1961. He went on deputation as Circle Inspector in the State Service and was later reverted back to his parent cadre in the Panchayat Service, This was challenged by the appellant. This Court held that the appellant being on deputation companyld be reverted to his parent cadre at any time and he did number get any right to be absorbed on the deputation post. In Puranjit Singh v. Union Territory of Chandigarh and Ors. 1994 Supp. 3 SCC 471, it was held that when a deputationist was repatriated, he companyld number claim promotions in the parent department on the basis of officiation in higher post in the borrowing organisation. In R. Prabha Devi and Ors. v. Government of India Through Secretary, Ministry of Personnel and Training Administrative Reforms and Ors. , the question before this Court which fell for companysideration was whether the service rule requiring eight years of approved service as Section Officer both for the direct recruits as well as for promotees for being eligible for companysideration for promotion to the Grade-I post in the Central Secretariat Services was arbitrary being in companytravention of Articles 14 and 16 of the Constitution of India. This Court laid the following principle The rule-making authority is companypetent to frame rules laying down eligibility companydition for promotion to a higher post. When such an eligibility companydition has been laid down by service rules, it cannot be said that a direct recruit who is senior to the promotees is number required to companyply with the eligibility companydition and he is entitled to be companysidered for promotion to the higher post merely on the basis of his seniority. The amended rule in question has specified a period of eight years approved services in the grade of Section Officer as a companydition of eligibility for being companysidered for promotion to Grade I Post of C.S.S. This rule is equally applicable to both the direct recruit Section Officers as well as the promotee Sections Officers. The submission that a senior Section Officer has a right to be companysidered for promotion to Grade-I post when his juniors who have fulfilled the eligibility companydition are being companysidered for promotion to the higher post, Grade I, is wholly unsustainable. The prescribing of an eligibility companydition for entitlement for companysideration for promotion is within the companypetence of the rule-making authority. This eligibility companydition has to be fulfilled by the Section Officers including senior direct recruits in order to be eligible for being companysidered for promotion. When qualifications for appointment to a post in a particular cadre are prescribed, the same have to be satisfied before a person can be companysidered for appointment. Seniority in a particular cadre does number entitle a public servant for promotion to a higher post unless he fulfils the eligibility companydition prescribed by the relevant rules. A person must be eligible for promotion having regard to the qualifications prescribed for the post before he can be companysidered for promotion. Seniority will be relevant only amongst persons eligible. Seniority cannot be substituted for eligibility number it can over-ride it in the matter of promotion to the next higher post. The rule in question which prescribes a uniform period of qualified services cannot be said to be arbitrary or unjust violative of Articles 14 or 16 of the Constitution. In view of the clear statement of law, the respondents before us cannot claim promotion in their parent department in companytravention of statutory Rules as they do number satisfy the eligibility companyditions. In T. Shantharam v. State of Karnataka and Ors. , the appellant was appointed in the Revenue Department of the State Government as Second Division Clerk. He was sent on deputation to the Food and Civil Supplies Department which was then part of Revenue Department as Assistant Civil Supplies Inspector. There he was promoted as Second Grade Civil Supplies Inspector. There was a seniority dispute between the appellant and Mr. R.K. Vasudev who was appointed in the Food Wing of the Revenue Department. The Court found that at all levels of appointments and promotions, the appellant was always senior to Mr. R.K. Vasudev. But fact remained that the appellant companytinued to be on deputation in the Food Wing of the Revenue Department right from 1967 to 1986. When the appellant was sought to be repatriated, he approached the Karnataka Administrative Tribunal which by order dated January 28, 1988 directed absorption of the appellant in the Food Department holding that he had number been given any proforma promotion in his parent department and that there was numbervalid ground to reject his request for absorption and that the appellant was entitled for a direction to the respondents to absorb him in the Department of Food and Civil Supplies in the post then held by him. The appellant was, thus, absorbed and was placed above R.K. Vasudev. The appellant was then promoted as Assistant Director on January 1, 1980. Similarly, R.K. Vasudev was also promoted as Assistant Director. The question before this Court was of the inter se seniority between the appellant and R.K. Vasudev. This Court agreed that as per Rules, the appellant companyld number have been sent on deputation to higher post than the post held by him in the parent Department. But then the Court said that he had uninterruptedly worked in the Food Department and under those circumstances though initially the appellant might have been mistakenly deputed to hold higher post in the Food and Civil Supplies Department, but since the appellant had obviously discharged his duties and higher responsibilities to the satisfaction of all companycerned, at this distance of time, it is highly unjust to send him back to hold the post in the parent department which he was entitled to hold and the Tribunal is number right to interfere with action of the department in its absorption of the appellant as per its own earlier order. This judgment is quite distinguished and of numberhelp to the respondents as the question which falls squarely for companysideration before us was number there and the appellant in that case had been absorbed by the department. In the present case before us, there is numberseparate cadre to which the respondents or any one of them companyld be absorbed. In Narayan Yeshwant Gore v. Union of India and Ors. , the appellant who was working in the National Sample Survey Organisation as Inspector was sent on deputation to Census Department at Nagpur. He remained there from 1961 to 1975 and earned promotion. His last promotion being that of Assistant Director. When he came back to his parent department, he was appointed as Assistant Director on ad hoc basis. While he was on deputation, his juniors in the parent department were appointed as Assistant Directors on ad hoc basis. After the decision of this Court in Narender Chadha and Ors. v. Union of India , where it was held that all those officers who were appointed as Assistant Directors in the National Sample Survey Organisation should be deemed to have been appointed substantively from the date of their ad hoc appointment. In companysequence there of, they became senior to the appellant. This Court held that the appellant was similarly situated along with those who were granted benefit by this Court and merely because the appellant was working in the Census Department at the relevant time, he companyld number be prejudiced. The Court extended the benefit given in Narender Chadhas Case supra to the appellant as well. Again this decision does number support the case of the respondents before us. Concept of deputation is well understood in service law and has a recognised meaning. Deputation has a different companynotation in service law and the dictionary meaning of the word deputation is of numberhelp. In simple words deputation means service outside the cadre or outside the parent department. Deputation is deputing or transferring an employee to a post outside his cadre, that is to say, to another department on a temporary basis. After the expiry period of deputation the employee has to companye back to his parent department to occupy the same position unless in the meanwhile he has earned promotion in his parent department as per Recruitment Rules. Whether the transfer is outside the numbermal field of deployment or number is decided by the authority who companytrols the service or post from which the employee is transferred. There can be numberdeputation without the companysent of the person so deputed and he would, therefore, know his rights and privileges in the deputation post. The law on deputation and repatriation is quite settled as we have also seen in various judgments which we have referred to above. There is numberescape for the respondents number to go back to their parent departments and working there as Constables or Head Constables as the case may be. It is numberdoubt really harsh on the respondents to be sent back after they have served the CID for number of years in higher rank though on ad hoc basis and number when they go back they have to work either as Constables or Head Constables. It was submitted before us that an employee companyld seek voluntary retirement after putting in 20 years of qualifying service and that the High Court in the impugned judgment gave option to the respondents to seek voluntary retirement while still working in the CID and holding higher ranks. This option can, however, be limited to only those respondents who have put in 20 years of qualifying service as per the relevant Rules. In our opinion, the High companyrt was justified in giving such an option to the respondents to seek voluntary retirement. At the time when special leave petitions were filed against the impugned judgment of the High Court, this Court directed that status quo be maintained while staying the impugned judgment of the High Court. The High Court in the writ petitions filed by the respondents granted stay of the orders of repatriation. After the impugned judgment, there was order of status quo by this Court. In this view of the matter, the respondents companytinued to be in the CID. We affirm the impugned judgment of the High Court to the extent that the respondents who put in 20 years of qualifying service in their parent departments and in CID would be entitled to seek voluntary retirement from the ranks they are holding in CID and the period of qualifying service would be companynted upto the date of this judgment. These options the respondents shall give within 30 days from the date of this judgment. The respondents who do number give such option and those respondents who have number put in 20 years of qualifying service would have to revert back to their parent department. It is in fact an admitted position that Constables on deputation to CID have reached higher ranks and retired form CID in those ranks. A hope, though number true, is instilled in officers like the respondents that they would companytinue in the CID holding higher ranks till the age of superannuation. The companyduct of the appellants number suddenly asking the respondents to go back to their parent departments when they have put in best years of their lives in CID would appear to be rather unjust. It would have been more appropriate for the appellant to repatriate the respondents after the expiry of the initial period of deputation or at least they should have been told the companysequences of their companytinuing on deputation and sudden repatriation. It would also be more appropriate, companysidering the fact that the deputation in CID companyld be for any number of years, that the rules are amended and a separate cadre is granted in CID to absorb the officers, if they are on deputation for a number of years. It is submitted before us that Constables who have companye on deputation to CID retired while holding higher ranks in CID and they earned their pension on the basis of their holding higher ranks though the pension was being paid by their parent department. This may be on the basis of relevant pension rules as applicable in the State. Now, if the respondents go back to their parent department and work their as Constables or Head Constables their emoluments would be reduced companysiderably and they would be deprived of getting higher pension when they retire. Considering the whole aspect of the matter we affirm the order of the High Court to the extent that option be given to all those respondents who have put in 20 years qualifying service to seek voluntary retirement from the CID in the ranks they are holding and they will be deemed to have worked in CID upto the date of this judgment.

COURT OF APPEAL FOR ONTARIO CITATION: K.K. v. M.M., 2022 ONCA 72 DATE: 20220126 DOCKET: C69393 Paciocco, Nordheimer and Coroza JJ.A. BETWEEN K.K. Applicant (Appellant) and M.M. Respondent (Respondent) Gary S. Joseph, for the appellant Aida Pasha, for the respondent Heard: September 3, 2021 by video conference On appeal from the order of Justice Cynthia Petersen of the Superior Court of Justice, dated April 9, 2021, with reasons dated June 1, 2021 and reported at 2021 ONSC 3975. By the Court: OVERVIEW [1] The parties married in 2003 and separated in 2012. Regrettably, following separation they engaged in high-conflict litigation involving their children, V.K., and J.K. The trial judge described this case as a heartbreaking saga of family violence and parental alienation. [2] At the time of trial, the children were living in separate residences – J.K. with the appellant and visiting the respondent’s (his mother) house on weekends, and V.K. with the respondent. [3] After a 19-day trial, the trial judge directed that the children’s principal residence would be with the respondent, reversing the status quo living arrangement for J.K. The trial judge directed that the respondent would have sole responsibility for making all day-to-day and significant decisions without being required to consult the appellant. The order also addressed issues of child support, section 7 expenses under the Federal Child Support Guidelines , SOR/97-175, travel restrictions, and restricted contact. [4] On appeal, the appellant’s focus is on his son J.K. He submits that J.K.’s primary residence should be with him and that the trial judge erred by reversing the status quo that had remained in place for six and a half years before trial. The appellant requests that the final order of the trial judge be stayed , that J.K. be returned to his care, and that the respondent’s parenting time for both children revert to the status quo before trial. [5] In support of his submission, the appellant’s written materials alleged several legal errors, which were narrowed down by counsel in oral submissions to the following two complaints: 1. The trial judge erred in her application of the best interests test as set out in s. 16 of the Divorce Act , R.S.C., 1985, c. 3 (2nd Supp.). 2. The trial judge failed to meaningfully consider the recommendations of Dr. Goldstein, a court-appointed assessor who had prepared reports during the litigation pursuant to s. 30 of the Children’s Law Reform Act , R.S.O. 1990, c. C.12 (“CLRA”). [6] At the end of the hearing, the appeal was dismissed, with reasons to follow. These are those reasons. BACKGROUND FACTS [7] The parties were married in India. They immigrated to Canada so that the appellant could practice medicine. The family initially lived in Newfoundland and then Ontario. The parties separated in November 2012. The appellant filed an application issued on January 3, 2013 and the respondent filed her answer on February 27, 2013. [8] Prior to trial, the parties had approximately 40 court appearances at motions and conferences. During the litigation, several pre-trial orders about the children’s primary residence were made. Importantly, sole custody of the children was granted to the appellant father based on an interim finding of a motion judge of parental alienation by the respondent mother in March 2014. [1] [9] In making the interim finding of parental alienation, the motion judge relied on the expert evidence of a court-appointed assessor named Dr. Sol Goldstein pursuant to s. 30 of the CLRA . Dr. Goldstein provided opinion evidence that V.K. had been alienated from the appellant by the respondent and that both V.K. and the respondent conspired to alienate J.K. from the appellant. Dr. Goldstein expressed the view that V.K.’s mental health was being seriously compromised by the respondent’s influence. He recommended the immediate removal of the children from the respondent’s care. [10] Once the interim finding of parental alienation had been made, for the next six and a half years, the children resided with the appellant and the respondent had only limited parenting time, including lengthy periods of no contact or communication with her children. [11] The trial did not start until November 30, 2020. At trial, the appellant intended to call Dr. Goldstein as a witness to testify about the assessment he was appointed to conduct. However, Dr. Goldstein did not appear for trial despite being served with a summons to attend by the appellant. The appellant did not ask for an order from the trial judge compelling the doctor to attend. Instead, he sought to admit Dr. Goldstein’s s. 30 CLRA reports into evidence and asked the trial judge to give weight to the opinions and recommendations contained in them. For her part, the respondent objected to the admissibility of Dr. Goldstein’s assessment reports and letters. This objection was based on findings of the College of Physician and Surgeons (“CPSO”) arising from complaints that she filed against him. Among other things, the respondent sought to admit a copy of a decision of the Inquiries, Complaints and Reports (“ICR”) Committee of the CPSO dated April 16, 2018, pertaining to one of her complaints. The decision set out that the ICR Committee had serious concerns about Dr. Goldstein’s approach to the s. 30 assessment in this case. The appellant objected to the introduction of this material, citing s. 36(3) of the Regulated Health Professions Act , 1991, S.O. 1991, c. 18 (“ RHPA ”) which makes records of regulatory proceedings at the CPSO and decisions made in them inadmissible in civil proceedings. The trial judge held that the prohibition did not apply in this case and that no weight would be given to Dr. Goldstein’s opinions or recommendations. [12] During trial, the parties focused on the allocation of parental decision-making, the question of with whom the children should primarily reside, and the question of parental alienation. [2] [13] After an exhaustive and lengthy review of the evidence, the trial judge found that the appellant was not a credible witness. In contrast, the trial judge found that the respondent was credible and that she had not engaged in alienating conduct, but instead was the target of vilification and the victim of parental alienation created by the appellant. [14] The trial judge concluded that there was “an abundance of evidence that both children have been subjected to verbal, emotional and psychological abuse by the [appellant]” and “that the physical, emotional and psychological safety, security and well-being of both children would best be fostered if they were living together in [the respondent’s] home.” FRESH EVIDENCE [15] At the outset of the hearing, the appellant attempted to file fresh evidence allegedly relating to the determination of the issues under appeal. [16] The fresh evidence, an affidavit proffered by the appellant, purports to show that the respondent is wilfully breaching the final order of the trial judge and is undermining the appellant’s relationship with J.K. The appellant argues that it is not unusual in this type of high-conflict case for this court to receive updated information on appeal with respect to matters that relate to the best interests of the children. He submits that the wilful breaches by the respondent are an overarching concern on this appeal. For her part, the respondent submits that she has taken her responsibility as the decision-making parent very seriously. She contends she has used her discretion in the best interests of the child. Where she had concerns about specific details of the order and its effect on the child, she sought relief in the Superior Court to avoid being in breach of the trial judge’s order. [17] The test for admitting fresh evidence on appeal requires the moving party to satisfy four criteria: (i) the evidence could not have been adduced at trial; (ii) the evidence must be relevant in that it bears on a decisive or potentially decisive issue; (iii) the evidence must be reasonably capable of belief; and (iv) the evidence must be such that, if believed, it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result : R. v. Palmer , [1980] 1 S.C.R. 759, at p. 775. This court recently reaffirmed in Bors v. Bors, 2021 ONCA 513, 60 R.F.L. (8th) 36, that the Palmer criteria are more flexible where an appeal involves the best interests of children, where it is important to have the most current information possible “[g]iven the inevitable fluidity in a child’s development”: Goldman v. Kudelya , 2017 ONCA 300 , at para. 25, citing Children’s Aid Society of Owen Sound v. R.D. (2003), 178 O.A.C. 69 (C.A.), at para. 21 . [18] Notwithstanding the flexible approach for receiving fresh evidence where an appeal addresses the best interests of children, the fresh evidence in the present case does not meet the test for admission. The proposed fresh evidence is essentially the appellant’s account of what has transpired with J.K. since the order under appeal was made, including complaints that the respondent has failed to comply with the order and that the final order is causing harm to J.K. [19] This evidence is not essential to our decision to deal with the appellant’s grounds of appeal. As will become clear, even if the fresh evidence is believed, it could not reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result. The trial judge’s final decision to remove J.K. from the appellant’s care was firmly rooted in the evidence and based on clear findings made against the appellant’s credibility. The appellant’s complaints about what has occurred after the trial judge’s final order, and any allegations about the respondent’s conduct should more properly be taken up with the trial judge. We note that the trial judge’s final order had a built-in review of her parenting order after September 30, 2021. [20] Therefore, the motion to introduce fresh evidence is dismissed. DISCUSSION [21] Before turning to the appellant’s arguments, a comment should be made about the trial judge’s reasons in this case. The reasons comprise 898 paragraphs over more than 300 pages. The trial judge obviously laboured over her reasons and provided careful and thoughtful analysis on the multiple issues raised by the parties. We recognize that the trial judge had the significant task of reviewing the long litigation history between the parties. We also recognize that for certain days during the trial, the appellant was self-represented, and the trial judge likely felt that this obligated her to specifically address every argument to demonstrate that his position was understood. [22] Nevertheless, there are portions of the reasons that contain lengthy verbatim summaries of evidence. This court has recently raised concern about these types of recitations of the evidence in reasons for judgment: see Welton v. United Lands Corporation Limited , 2020 ONCA 322, 64 C.C.E.L. (4th) 265, at paras. 56-63; R.F. v. J.W. , 2021 ONCA 528, at para. 34, n. 7; N. v. F. , 2021 ONCA 614, 62 R.F.L. (8th) 7, at para. 266, n. 14, per Lauwers J.A. (dissenting), leave to appeal granted, [2021] S.C.C.A. No. 364. [23] Trial judges are not obliged to refer to every piece of evidence that is introduced at trial. All a trial judge must show is that they have grappled with the essential issues raised in the litigation. Given the narrow issues raised in this case – the best interests of the children – these verbatim summaries and, consequently, the length of the reasons, are problematic. One of the purposes behind the requirement to give reasons is to identify the issues to be resolved and to distill the evidence down to the facts that are relevant to those issues: see generally, R. v. Sheppard , 2002 SCC 26, [2002] 1 S.C.R. 869. The wholescale repetition of all the evidence heard does not fulfill that purpose. It does not help the parties who may be unable to understand the central basis for the decision reached. It does not help counsel in terms of their ability to understand and identify possible grounds of appeal. Finally, it does not help this court which must, among other things, then determine if extraneous facts influenced the trial judge’s analysis. [24] We now turn to the two main issues advanced by the appellant. A. BEST INTERESTS OF J.K. [25] According to the appellant, the trial judge erred in law by failing to adhere to the best interests analysis mandated by the applicable legislation and case law. He argues that the focus was not on J.K.’s best interests. Specifically, he submits that the trial judge erred by failing to fully consider the disruption caused to J.K. by removing him from the appellant, his school and his community, the negative effects on the relationship between J.K. and the appellant, and the desirability of maximizing contact between J.K. and both parents. [26] We do not accept these submissions. [27] We begin with the undisputed premise that since the order under appeal is a parenting order, the trial judge’s exercise of discretion and factual findings in connection with it are entitled to considerable deference on appeal: A.M. v. C.H. , 2019 ONCA 764, 32 R.F.L. (8th) 1, at para. 4; Van de Perre v. Edwards , 2001 SCC 60, [2001] 2 S.C.R. 1014, at para. 13. In our view, there is no basis to intervene because the appellant has failed to point to any material error, serious misapprehension of the evidence, or error of law in the trial judge’s reasons: see Van de Perre , at paras. 11-12. The trial judge engaged in a full inquiry into the best interests of both children. The appellant’s submissions invite us to retry the case, which is not our function. [28] The trial judge was completely focused on the best interests of the children. That focus is evident throughout her reasons and especially so in the portions of her reasons that are dedicated solely to the best interests analysis. [29] First, the trial judge noted that, in considering the parties respective parenting plans, she was required to determine what orders were ultimately in the children’s best interests in accordance with s. 16 of the Divorce Act . Section 16(1) directs that the court shall take into consideration “only the best interests of the child of the marriage in making a parenting order or a contact order” and s. 16(3) sets out a number of factors that the court must weigh in carrying out the best interests analysis. The trial judge noted that this legislation does not create an exhaustive list of relevant factors and that the weight to be given to each factor depends on the circumstances of each case. [30] Second, the trial judge expressly considered the appellant’s argument that a continuation of the status quo with him as the primary caregiver would prevent uprooting the children and disrupting their routines. She concluded that these were important considerations but that they were more applicable to J.K. because V.K. had already made the transition to living in Toronto with the respondent. She noted that J.K. only started attending his current school shortly before the trial and that he did not have long-established friendships or relationships with teachers and staff at the school. The trial judge noted that J.K. would be required to change schools in another year to start high school and that the respondent had no intention of interrupting his current school year in any event. [31] Third, the trial judge weighed the appellant’s parenting plan, which involved the same arrangements he had made for the last seven years. She noted that the appellant works long hours and runs his own medical clinic. He required the assistance of two nannies who would continue to assist J.K. with his homework, take the children to appointments, and oversee shopping and preparation of their meals. The trial judge found that the respondent, on the other hand, worked on average three days per week and spent more time with the children. [32] Fourth, the trial judge found that there was “an abundance of evidence” that both children were subjected to verbal, emotional, and psychological abuse by the appellant. She specifically found that he physically disciplined V.K. and, on more than one occasion, struck her when he was in a fit of rage. She concluded that the appellant’s inability to control his anger and his frequent resort to physical discipline of V.K. over a long period of time placed both children at risk of physical and psychological harm in his care, even if there was no evidence that he had ever struck J.K. [33] Fifth, the trial judge carefully considered J.K.’s bond with the appellant. However, she found that it was in his best interests that he be removed from the appellant’s grip. The trial judge held: Still, the greatest factor in favour of maintaining J.K.’s primary residence with his father is his strong emotional attachment to K.K. He has been in his father’s primary care for most of his living memory. Separating J.K. from his father to live principally with his mother will no doubt have a serious emotional impact on him. I am, however, convinced that he needs to be removed from the poisonous atmosphere of his father’s orbit in order to escape the crushing pressure under which he has been placed. His best interests necessitate not only that he lives principally with his mother and sister, but also that he has no contact with his father for a temporary period of time. [34] Finally, the trial judge found that the respondent, in contrast to the appellant who had devoted significant energy to vilifying her in the children’s eyes, has been consistently nurturing, yet firm and responsible, in her parenting. [35] Contrary to the appellant’s submission, the trial judge thoroughly considered J.K.’s best interests. She sensitively and carefully considered only the best interests of each child as required by s. 16(1) of the Divorce Act . She clearly considered all factors related to the circumstances of each child, giving primary consideration to each child’s physical, emotional and psychological safety, security and well-being, as required by s. 16(2). There is no basis to suggest that she erred in the assessment of best interests. Accordingly, this ground of appeal fails. B. ASSESSMENT OF S. 30 CLRA REPORTS (1) The Trial Judge’s Ruling [36] As noted above, the appellant father asked the trial judge to admit Dr. Goldstein’s s. 30 CLRA reports and letters into evidence and to consider the parenting recommendations contained within. [37] The respondent objected to the admissibility of Dr. Goldstein’s evidence. Her objection was based on findings of the CPSO arising from complaints that she filed against him. To support her objection, she sought to admit several items: a copy of the decision of the ICR Committee of the CPSO, copies of documents put before the ICR Committee, and a print-out of the CPSO’s on-line Public Register indicating Dr. Goldstein’s member status and his undertakings to the Discipline Committee of the CPSO. The reasons of the ICR Committee reveal that it had serious concerns about Dr. Goldstein’s approach to the s. 30 assessment in the present case and concluded that he would benefit from remediation. The public undertakings restricted Dr. Goldstein’s practice such that he undertook not to conduct any new assessments of individuals he believes have been subject to or have engaged in parental alienation and to terminate any ongoing practice related to parental alienation. [38] Dr. Goldstein also undertook not to provide opinion evidence about parental alienation to any third party, whether orally or in writing, in regards to individuals he had assessed or treated, except as required by law, in which case he was to advise the relevant parties, in advance of providing such opinion evidence, to consult the CPSO’s Public Register. [39] The appellant objected to the admissibility of all the CPSO documents, in part because of the statutory prohibition found in s. 36(3) of the RHPA. Section 36(3) renders inadmissible in a civil proceeding a record of a proceeding under the RHPA, or a report, document or thing prepared for or statement given at such a proceeding. [40] The trial judge noted that the statutory prohibition did not render inadmissible the fact that a complaint was made and did not capture the website information referring to the undertakings given by Dr. Goldstein. The trial judge then proceeded to interpret s. 36(3) of the RHPA – specifically, whether the case before her fell within the meaning of a “civil proceeding”, thus engaging the prohibition. [41] After laying out the principles of statutory interpretation, the trial judge drew several distinctions between “traditional” civil proceedings and family law litigation, the interests at play and remedies available in each. She noted that her task was to interpret the legislation within the distinct contextual framework of family law parenting disputes wherein the children’s best interests are paramount. [42] The trial judge found that to consider this case a “civil proceeding” would yield an absurd result contrary to the legislature’s intention. Upholding the prohibition would require her to ignore the ICR Committee’s findings. This, in turn, would force the respondent to duplicate the CPSO proceeding by calling expert evidence and proving deficiencies in the assessor’s reports from square one, resulting in more delay and expense in the litigation. Furthermore, finding the prohibition applied would mean determining the children’s best interests without reference to highly probative evidence about the validity of the opinions expressed by the court-appointed assessor. [43] The trial judge held that admitting the CPSO materials in the present case would not undermine the objectives of s. 36(3). Ultimately, she concluded that s. 36(3) of the RHPA did not apply, and in addition to her decision to admit the assessor’s public undertakings as information not captured by s. 36(3), she proceeded to admit the ICR Committee’s decision. Given the ICR Committee’s findings that the assessment reports were conducted in a substandard manner, she gave no weight to Dr. Goldstein’s written recommendations, and concluded by noting that, in the alternative, had she not admitted the ICR decision, she still would not have relied on Dr. Goldstein’s opinions unless the appellant produced the assessor for cross-examination, which he was unable to do. [3] (2) The Appellant’s Argument [44] The appellant submits that the trial judge erred in treating s. 36(3) of the RHPA as inapplicable, which makes records of regulatory proceedings at the CPSO and decisions made in them inadmissible in civil proceedings. He argues that the trial judge erred in concluding that a family law proceeding is not a civil proceeding as contemplated by the RHPA. Her decision to admit the CPSO materials tainted her decision and she erroneously gave no weight to the assessor’s opinion or recommendations. (3) Does s. 36(3) of the RHPA prohibit the admission of the CPSO materials? [45] Section 36(3) of the RHPA provides the following: No record of a proceeding under this Act, a health profession Act or the Drug and Pharmacies Regulation Act , no report, document or thing prepared for or statement given at such a proceeding and no order or decision made in such a proceeding is admissible in a civil proceeding other than a proceeding under this Act, a health profession Act or the Drug and Pharmacies Regulation Act or a proceeding relating to an order under section 11.1 or 11.2 of the Ontario Drug Benefit Act . [46] As the trial judge correctly stated, these words must be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the legislature: Rizzo & Rizzo Shoes Ltd. (Re) , [1998] 1 S.C.R. 27, at para. 21; Bell ExpressVu Limited Partnership v. Rex , 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26. [47] On a plain reading, this section creates a blanket prohibition against admitting in a civil proceeding any records, reports or documents directly related to a proceeding under the RHPA. The text of the provision leaves no room for exception or discretion in relation to the specific items mentioned: a record of a proceeding, a report, a document or thing prepared for or statement given at such a proceeding, or an order or decision made in such a proceeding . [48] That said, anything not specifically mentioned is fair game. As mentioned, the trial judge noted that the statutory prohibition did not preclude admissibility of evidence of the fact that a complaint was made and did not capture the website information referring to the undertakings given by Dr. Goldstein. We agree. The law is clear that the fact that a complaint was launched, an investigation held, and a decision rendered by the IRC are not covered by s. 36(3) of the RHPA and may be otherwise provable in court, without reference to a prohibited document: F. (M.) v. Sutherland (2000) , 188 D.L.R. (4th) 296 (Ont. C.A.), at para. 45, leave to appeal to S.C.C. refused, [2000] S.C.C.A. No. 531; Pouget v. Saint Elizabeth Health Care , 2012 ONCA 461, 294 O.A.C. 293, at para. 25; Ontario v. Lipsitz , 2011 ONCA 466, 281 O.A.C. 67, at para. 114, leave to appeal refused, [2011] S.C.C.A. No. 407; Armitage v. Brantford General Hospital (2004), 71 O.R. (3d) 44 (S.C.), at para. 29. [49] As well, Dr. Goldstein’s undertakings, while they may have been made in response to a decision or order covered by s. 36(3), are also not themselves either a decision or order captured by s. 36(3). The undertakings were generated by Dr. Goldstein himself, not by the board, and presumably were also generated after the board had completed its process and released its decision. The rationale that applies to keeping the other items listed in s. 36(3) confidential does not apply to them. Public undertakings are not meant to be confidential, they provide the public with notice, and their admission in civil proceedings where a trial judge deems them relevant does not undermine the purpose of s. 36(3), discussed below. We therefore agree with the trial judge that the undertakings themselves were admissible. [50] However, we respectfully disagree with the trial judge’s conclusion that all proceedings involving the best interests of the child are not civil proceedings and entirely evade the reach of s. 36(3) of the RHPA. In our view, an exemption for all family law cases goes too far. [51] First, private family law disputes, while distinct from other civil litigation in many respects, are “civil” proceedings in the ordinary sense of the word: they concern private relations between members of the community in contrast to criminal or child protection proceedings, which both involve state action. If the legislature had intended to exempt family law litigation from the reach of s. 36(3), it would have said so. [52] As this court explained in Sutherland , at para. 29, The purpose of s. 36(3) is to encourage the reporting of complaints of professional misconduct against members of a health profession, and to ensure that those complaints are fully investigated and fairly decided without any participant in the proceedings – a health professional, a patient, a complainant, a witness or a College employee – fearing that a document prepared for College proceedings can be used in a civil action. [53] The “broad objective” of the provision “is to keep College proceedings and civil proceedings separate”: Sutherland, at para. 31; see also Lipsitz , at paras. 101-3. [54] A global exemption to s. 36(3) for all family law cases would significantly erode the reach and purpose of s. 36(3). This is because unfortunately, family law disputes involving the best interests of children are fairly common. It would not be unusual for one of the many participants in an RHPA proceeding to at some point become involved in a family law proceeding involving the best interests of children. [55] Fortunately, it is possible to preserve the integrity and purpose of s. 36(3) of the RHPA while also giving effect to the purpose of Part III of the CLRA, which includes ensuring, “that applications to the courts respecting decision-making responsibility, parenting time, contact and guardianship with respect to children will be determined on the basis of the best interests of the children” and to s. 30 of the CLRA, under which Dr. Goldstein’s report was prepared, the purpose of which is to “report to the court on the needs of the child and the ability and willingness of the parties or any of them to satisfy the needs of the child.” [56] The trial judge was aware of the need to avoid absurdity in the context of these two distinct legislative schemes. Specifically, the trial judge was appropriately concerned that in the circumstances of this case, where a motion judge had relied on Dr. Goldstein’s opinions in finding parental alienation by the mother, which in turn resulted in a reversal of custody and a temporary order that lasted for more than six years, the court should not be deprived of highly probative evidence regarding the validity of those opinions and recommendations. [57] However, absurdity is avoided and the ordinary meaning of s. 36(3) preserved in two ways. First, although it is indisputable that increased efficiency could be achieved by allowing for the admissibility in family law proceedings of “orders or decisions made” at a proceeding governed by the RHPA, or “a r eport, document or thing prepared for or statement given at [an RHPA governed] proceeding”, s. 36(3) does not create an evidentiary privilege relating to the information or evidence used to prepare such orders, decisions, reports, documents, things or statements. There is nothing to prevent the parties from selecting and presenting such background evidence or information so that a trial judge is not deprived of highly probative evidence regarding the validity of relevant opinions and recommendations. Second, and as already explained, s. 36(3) does not apply to the fact that the complaint was made, the fact that an investigation was conducted, and the fact that a board decision was rendered and undertakings given. As this case demonstrates, depending on the circumstances those “facts” may be relevant when determining the probative value to give to opinions and recommendations. When these limitations on the reach of s. 36(3) are considered, “harmony [can be achieved] between the various statutes enacted by the same government”: Therrien (Re) , 2001 SCC 35, [2001] 2 S.C.R. 3, at para. 121; Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc. , 2021 ONCA 925, at para. 28. (4) Conclusion [58] In conclusion, while the confidentiality protections of s. 36(3) of the RHPA do apply to family law proceedings involving children, in our view the trial judge’s decision in this case was justified. Taken together, the fact of the complaint, the fact that an investigation was conducted and a decision given, and the content of the public undertakings were all admissible and sufficient to support the decision to give Dr. Goldstein’s opinions no weight. [59] We note that it is by no means clear that Dr. Goldstein’s opinions, even given more weight, would have affected the trial judge’s overall decision to reverse the status quo parenting arrangement. We say this acknowledging that the weight to be attached to the assessor’s evidence of any expert is a matter for the trier of fact. The trial judge was aware that the opinion likely supported the status quo because Dr. Goldstein’s reports were used by the motion judge in making an interim order. However, the trial judge gave detailed reasons for why she did not agree with maintaining the status quo. As we have set out in this judgment, we are satisfied that her findings against the respondent’s credibility and the best interests of J.K. are clearly supported by the record. [60] We would not give effect to this ground of appeal. C. OTHER GROUNDS [61] While other grounds of appeal were advanced by the appellant in his factum, they were not pressed in oral argument or only dealt with in a cursory manner. These issues may be dealt with summarily as follows. (1) The Assessment of the Appellant’s Credibility and Evidence [62] The trial judge found that the appellant was an incredible witness. In contrast, she found that the respondent was a credible witness and that her evidence was corroborated by other credible evidence at trial including the testimony of the Office of the Children’s Lawyer (“OCL”) clinician, Ms. MacKenzie, and the Children’s Aid Society (“CAS”) worker, Mr. Thomas. The appellant submits that the trial judge made several palpable and overriding errors in her assessment of his evidence. He argues that the trial judge improperly impugned his credibility, failed to consider the whole of the evidence, and improperly drew adverse inferences against him. We disagree. [63] In assessing his credibility, the trial judge found that the appellant: i. made several misrepresentations in his Form 35.1 sworn parenting affidavit filed before the court; ii. concealed from a case supervision judge his plans to travel with the children to India; iii. misrepresented the status of his health to obtain adjournments of the trial under false pretexts; iv. tendered a fake Indian hospital record as evidence during the trial; v. demonstrated a selective memory during cross-examination; vi. became evasive when confronted with difficult questions; and vii. made several prior inconsistent statements. [64] These unequivocal findings were amply supported in the record, and there is no basis to interfere with any of them. (2) Adequate Weight to J.K.’s views and preferences [65] The appellant submits that the trial judge failed to give adequate weight to J.K.’s views and preferences as required by law. We reject this submission. As noted above, the trial judge carefully considered reports from the CAS, the OCL Voice of the Child report, and the evidence of Mr. Thomas and Ms. MacKenzie (the author of the OCL Voice of the Child report) setting out the children’s views and preferences. The trial judge was aware of J.K.’s preference to live with the appellant. However, in relation to J.K. the trial judge found that “J.K.’s level of maturity is commensurate with his pre-teen age” and that “his views have been profoundly influenced by [the appellant’s] relentless vilification of [the respondent].” [66] In a case where both parties made allegations of parental alienation against the other, the trial judge was required to carefully examine the possibility that the children’s views may not be independently formed. The trial judge’s reasons demonstrate common sense and a reasoned approach to the children’s views. The CAS reports, the OCL Voice of the Child report, and the testimony from the authors of the reports were reviewed by the trial judge and sufficient to convey the children’s views and preferences. The trial judge recognized that J.K. had a strong emotional attachment to the appellant but felt that his views had been manipulated by the appellant. We defer to her findings and dismiss this ground of appeal. DISPOSITION [67] As explained above, this appeal was dismissed at the conclusion of the oral hearing. The panel requested that if the parties were unable to agree on costs, the court would receive brief written submissions. We have received those submissions. The respondent is entitled to costs in the amount of $20,000 all inclusive. “ David M. Paciocco J.A.” “ I.V.B. Nordheimer J.A.” “S. Coroza J.A.” [1] We use the former terminology of “custody” (which is no longer used in the legislation) only when referring to this order made in March 2014. [2] Although support issues were also litigated at trial, the appellant did not advance any support arguments in his factum or oral submissions. Needless to say, there is no basis to interfere with the trial judge’s findings on any of the support issues. [3] The trial judge also noted that the appellant did not ask her to compel Dr. Goldstein to attend cross-examination, but had he done so, she “would have denied the request based on [Dr. Goldstein’s] undertakings”. Though not directly argued on appeal except for a brief mention in oral argument, we note that, as set out above, Dr. Goldstein’s undertakings included an exception for giving opinions about individuals he has assessed where “required by law”. A court order summoning him to testify would have engaged this exception.

Under its resolution dated 16-9-1964, Respondent 2--Notified Area Municipal Council at Talcher imposed octroi 1 on foreign liquor. The imposition of octroi at 1 on foreign liquor was duly approved by the State Government. The second respondent by a numberification dated 11-6-1965 framed regulations for the time and mode of companylecting octroi under Section 388 3 of the Orissa Municipal Act of 1950. In these regulations, octroi 1 on foreign liquor is mentioned in the Schedule to the said regulations. By a resolution dated 17-2-1968, the second respondent increased the rate of octroi on foreign liquor from 1 to 10. Sanction of the State Government was obtained for this increase in February 1969. Accordingly, Respondent 2--Council demanded from the original first respondent, octroi 10 w.e.f. 10-11-1969. This demand is the subject-matter of challenge in the present proceedings. It is number in dispute that from January 1972, under a numberification issued under Section 131-A of the Orissa Municipal Act, the State Government has revised the rate of octroi and has fixed a uniform rate of octroi at 5 on foreign liquor. Therefore, numberclaim is being made in the present proceedings for any period after January 1972. The High Court has held that since the original rate of octroi was mentioned in the Schedule to the regulation framed under Section 388 3 , any change in the rate of octroi should have been done by amending the said regulation. Since this was number done, the increase in the rate of octroi by a resolution of the 2nd respondent is number valid. The power to levy octroi is companyferred under Section 131 of the Orissa Municipal Act, 1950. The material part of Section 131 is as follows Power to impose taxes.-- 1 The municipal companyncil may, from time to time, at a meeting companyvened expressly for the purpose of which due numberice shall have been given subject to the provisions of this Act impose within the limits of the municipality the following taxes and fees or any of them a - k kk an octroi on goods brought within the limits of a municipality for companysumption, use or sale therein l Provided that numbersuch imposition as is referred to in Clauses kk and shall be made without the sanction of the State Government. 2 Section 131, therefore, expressly provides the manner of imposing various taxes and fees including octroi. It requires a resolution to be passed at a meeting of the municipality expressly companyvened for that purpose of which due numberice shall have been given. Therefore under Section 131, the second respondent is entitled to levy octroi or to change the rate of octroi by a resolution passed at a meeting expressly companyvened for that purpose of which due numberice shall have been given. Section 388, on the other hand, deals with the powers of a municipality to make bye-laws and regulations. Under Sub-section 3 of Section 388, such regulations may provide for the regulation of the time and mode of companylecting the taxes under this Act. Regulations framed under Section 388, therefore, are required only to prescribe the time and mode of companylection of taxes. Regulations are number required for the purpose of imposing a tax or fixing the rate of tax. Imposition of tax is governed by Section 131 and number by any regulations framed under Section 388. The second respondent Council is, therefore, entitled to change the rate of octroi by a resolution passed under Section 131. The High Court, however, has held that since the original rate was imposed by a regulation, any change in the rate companyld only be made by amending that regulation. This view proceeds on a misinterpretation of the numberification of 7-1-1966 promulgating the regulations for the time and mode of companylection of octroi. Notification of 7-1-1966 is, in terms, a numberification in exercise of the power companyferred by Section 388 of the Orissa Municipal Act, 1950. The recital states, the Talcher Notified Area Council hereby makes the octroi regulations for the regulation of time and mode of companylecting the octroi tax levied by the Talcher Notified Area Council on articles and goods specified in Schedule A brought within the limits of Talcher Notified Area for companysumption, use or sale therein at the rates specified in the said Schedule under Section 131 1 kk of the aforesaid Act. The numberification deals in detail with the time and mode of companylecting octroi tax. The rate which is mentioned in the Schedule to the regulation is the rate whieh was fixed by a resolution passed under Section 131 1 kk by the second respondent Council at its meeting of 16-9-1964. Therefore, the rate mentioned in the Schedule is the rate fixed by the resolution of the second respondent. The regulation of 7-1-1966, therefore, does number, for the first time, fix a rate of octroi by that regulation. The appellant has submitted that as octroi was being levied for tlje first time it was thought companyvenient to incorporate the rate of octroi in the newly-framed octroi regulations. The actual rate, however, was fixed under a resolution of the second respondent.

CIVIL APPEAL NOs. 3821-23 OF 2005 SUDERSHAN REDDY, J. These appeals preferred under Section 35L b of the Central Excise Act, 1944 hereinafter referred to as the Act are directed against a companymon order dated 22.12.2004 passed by the Customs, Excise and Service Tax Appellate Tribunal hereinafter referred to as CESTAT West Regional Bench, Mumbai by which Appeal Nos. E/304/2004, E/314/2004 and E/315/2004 filed by the respondent-assessee were allowed. The facts briefly stated are as follows The respondents - M s. Danmet Chemicals Pvt. Ltd. hereinafter referred to as DCPL were manufacturing the products CRC 2-26 Aerosol and CRC Acryform Aerosol since 1983. They were claiming exemption under Notification No. 120/84-CE dated 11.5.1984 for the product CRC 2-26 and SSI exemption under Notification No. 175/86-CE dated 1.3.1986 for the product CRC Acryform. In their declarations they claimed the classification of the products CRC 2-26 under Chapter 2710.99 and CRC Acryform under Chapter 3203.40. On the basis of the material gathered during the routine transit checks and other information the Department issued show cause numberice dated 12.2.1993 to the respondent-assessee calling upon it to show cause as to why Central Excise duty of Rs. 56,69,872.80p should number be demanded and recovered for the period 26.2.1988 to 24.10.1992. In the said show cause numberice mainly 4 issues were raised, namely That the product CRC 2-26 was number a blended lubricating oil and was, therefore, number entitled to the benefit of Notification No. 120/84-CE dated 11.5.1984 That the product CRC Acryform was number entitled to the benefit of Notification No. 175/86CE dated 1.3.1986 inasmuch as the product carried on it the brand name trademark of a person number entitled to the benefit of the Notification That the respondent-assessee was a dummy or a fagade of Bharat Bijlee Ltd. for short BBL and also that the respondent and BBL were related persons and that therefore the price at which BBL sold the respondents products should be taken as the assessable value That the respondent-assessee had suppressed the facts with intent to evade duty and therefore the proviso to Section 11A 1 of the Act had been invoked. The Department issued 12 six-monthly show cause numberices between 27.10.1997 to 3.4.2003 for the period April, 1997 to 31.10.2002, demanding an aggregate amount of Rs. 22,55,444/- The matter was initially adjudicated by the Commissioner Adjudication vide order dated 31.8.1998 which was challenged by the respondent-assessee in appeal and the Tribunal having set aside the order of the Commissioner remitted the case to the Commissioner for de numbero adjudication. Accordingly, the Commissioner adjudicated all the show cause numberices vide his order dated 31.10.2003 whereby and whereunder it was held that the respondent-assessee is number entitled to exemption of duty under Notification No. 120/84-CE for the product CRC 2-26 and exemption under Notification No. 175/86-CE in case of product CRC Acryform. Aggrieved by the said decision the respondentassessee filed an appeal against the aforesaid order dated 31.10.2003 passed by the Commissioner, Central Excise, Mumbai-IV. The CESTAT decided all the issues that had arisen for its companysideration and accordingly allowed the appeal preferred by the respondent-assessee. We shall refer to those issues adjudicated by the CESTAT in detail appropriately. Being aggrieved by the decision of the Tribunal, Commissioner of Central Excise, Mumbai-IV preferred these appeals. We have heard Shri Vikas Singh, learned Additional Solicitor General for the appellant and Shri D. B. Shroff, learned Senior Counsel for the respondent-assessee. Elaborate submissions were made by both the companynsel. We have perused the orders passed by the Commissioner as well as the Tribunal. We have also gone through the material available on record. The learned Additional Solicitor General mainly companytended that the product CRC 2-26 manufactured by the respondent-assessee cannot be characterized as lubricating oil as it was predominantly anticorrosive in nature and was used for air companyditioners, panel boards and other electrical and electronic gadgets primarily to prevent companyrosion and for improving electrical properties. It was also submitted that the respondent-assessee was number entitled to SSI exemption for CRC Acryform since the respondent-assessee manufactured and cleared goods in the brand name of M s. BBL and also the logo of M s. CRC Chemicals Europe. Further submission was that DCPL and BBL are related persons and relation led to under valuation of the goods. The respondent-assessee is guilty of suppression of facts warranting invocation of the extended period. Shri D.B. Shroff, learned senior companynsel for the respondent-assessee supported the findings and companyclusion recorded by the Tribunal and reiterated the case of the respondent-assessee that he is entitled for the benefit of both the Notifications referred to hereinabove. Broadly, the following issues arise for our companysideration in these appeals namely Whether the product CRC 2-26 is a blended lubricating oil and thus is entitled to exemption under Notification No. 120/84? Whether the respondent is entitled to the benefit of Notification No. 175/86 in respect of the product CRC Acryform? Whether there was any willful misstatement or suppression of facts with intent to evade duty with regard to the products CRC 2-26 and CRC Acryform or about the relationship between the respondent and BBL so as to enable the Department to invoke the proviso to Section 11A 1 in show cause numberice dated 12.2.1993 and whether the demand raised in the said show cause numberice is substantially time-barred? Whether the Department can impose any penalty? Whether the respondent was a fagade or dummy of BBL and or whether the respondent and BBL are related persons within the meaning of Section 4 a and 4 3 b of the Act? ISSUE NO.1 Whether the product CRC 2-26 is a blended lubricating oil and thus is entitled to exemption under Notification No. 120/84? The material available on record suggests that CRC 2- 26 mainly companytains petroleum base oil 25, mineral oil 72 and rust preventives 3. It is the case of the respondent-assessee that these ingredients are blended together with a stirrer until thoroughly mixed. This blended lubricating oil is sold and used as a penetrating lubricating oil by many industries including government owned for the purposes of lubricating the ball and roller bearings, circuit breakers, companynectors, switches, push buttons etc. The petroleum base oil undisputedly is also mineral oil has lubricating properties and is the most important ingredient in CRC 2-26. Its main function is lubrication. It is explained that when it is sprayed on moving parts, the product forms a thin film on the surface and this film lubricates the parts. The film forming property is called lubricity. As companyrosion and rust increases friction amongst moving surfaces, a small percentage of proprietary rust preventives is also added so as to keep the surface rust free as far as possible for effective lubrication by the film. The certificates issued by various industrial companycerns including the government industries are part of record. Their genuineness is number put in issue. The test report on CRC 2- 26 carried out by Prof. M.C. Dwivedi, Professor of IIT categorically states that CRC 2-26 is a blended lubricant and that the lubricating oil used in the formulation companyforms with the requirements of the Bureau of Indian Standards requirements. The Department did number companytrovert the expert opinion given by the Professor. Be that as it may, the Department itself drew samples on the said products on more than one occasion i.e. in 1984, 1990 and 1993. The Deputy Chief Chemist has given the test reports and companymunicated the same vide letter dated 3.5.1985 stating that the sample which forms of a liquid is companyposed of mineral oil and small amount of additives 1990 analysis has been companymunicated vide letter dated 15.4.1991 stating that the sample is companyposed of mineral oils and additives, the percentage of mineral oil is more than 70 and the result of 1993 analysis was companymunicated vide letter dated 10.1.1994 specifically stating that it is a product primarily used as lubricant though it has anticorrosive properties also. It is well settled and needs numberrestatement at our hands that the test reports given by the Chemical Examiner are binding upon the Department in the absence of any other acceptable evidence produced by it in rebuttal. In the present case, the Department has neither produced any evidence to rebut the reports of the Chemical Examiner number impeached the findings of the test reports. Much reliance was sought to be placed by the Department on the label affixed on the companytainer which says that CRC 2-26 is a precision blended multi purpose lubricating oil that prevents malfunction due to the deteriorating effects of moisture and companyrosion, extends operational life, claims, protects metal, reduces downtime and maintenance. Under the heading Directions, it is mentioned that CRC 2-26 is to be used to clean, lubricate, protect precision mechanism. We fail to appreciate as to how this information companytained in the label supports the plea of the Department. It is true that the product in some measures companytains anti-corrosive properties. The HSN explanatory numberes specifically declares that oils classified under the head remain classifiable if various substances have been added to render them suitable for particular uses, provided the product companytains by weight 70 or more of petroleum oil or oils obtained from bituminous minerals as the base and that they are number companyered by a clear specific heading. There is numberdispute whatsoever the product in question to be a preparation companytaining 70 or more of mineral oil apart from 20 petroleum oil. The product is predominantly a blended lubricating oil. Negligible percentage of rust preventives does number make the product in question to be a rust preventive one. The plea of the Department that the product is number a lubricating oil is untenable. There is numbermaterial or evidence in support of the said plea. The findings recorded by the Tribunal based on material and evidence available on record in our companysidered opinion do number suffer from any error requiring our interference in exercise of our appellate jurisdiction. ISSUE NO.2 Whether the respondent is entitled to the benefit of Notification No. 175/86 in respect of the product CRC Acryform ? The companytention of the Department in this regard mainly was that labels CRC Acryform carried the logos B of BBL and CRC of CRC Chemicals Europe, who admittedly are number entitled to the benefit of numberification. It was submitted, in the circumstances CRC Acryform is number entitled to the benefit of Notification No. 175/86. There is numberdispute that the respondent-assessee has been using the trademark CRC Acryform as its own ever since 1987. It had applied to the Trademarks Registrar for registering the trademark as early as in the year 1992. The Trademark Registrar has registered CRC Acryform as respondents trademark on 14.10.1992 with retrospective effect from the date of use in the year 1987. It is true the registration of the trademark on 14.10.1992 after the companymencement of lis between the parties by itself may number be binding on the Department but its evidentiary value cannot be altogether ignored. So far as the CRC Chemicals Europe is companycerned it had given an affidavit and a certificate specifically stating that they do number manufacture and have number manufactured or sold any product under the name and style Acryform or CRC Acryform either in India or abroad and they have number claimed any title, right or ownership in the aforesaid names. This affidavit has been ignored altogether by the Commissioner on the ground that it was procured by the respondent-assessee and it was a false document. There is numberevidence made available by the Department that the same trade name or brand name is used by some other companypany apart from the respondent-assessee. There is also numberevidence available on record indicating any companynection between the CRC Acryform and CRC Chemicals Europe. In the absence of any specific statement in the show cause numberice to this effect burden in this regard cannot be cast on the respondent-assessee. Admittedly the use of the logo was discontinued from 1990 and the same was informed to the Department. So far as the CRC Acryform is companycerned it bears the mark CRC Acryform which is registered and shown in the trademark certificate. We are also number impressed by the submission made on behalf of the Department that CRC Chemicals Europe companyld number have permitted the manufacture of the product and supply the companycentrate without having title to the trademark for the simple reason that the licence agreement referred to and relied upon by the Department merely permits the respondent-assessee to manufacture CRC Acryform from the companycentrate supplied by CRC Chemicals Europe. The Commissioner mis-interpreted the clause in the agreement relating to the product CRC 2-26 and made it applicable to CRC Acryform. The licence agreement dated 30.9.1986 is numberhing but extension to the license agreement dated 1.10.1983 for CRC 2-26 of companyrse in addition permitting the manufacturer of CRC Acryform to label it as such. It is numberhere mentioned in the original license agreement and in the subsequent agreement dated 30.9.1986 that CRC Acryform is a trademark or brand name of CRC Chemicals Europe. The Tribunal upon appreciation of the evidence available on record came to the companyrect companyclusion that respondent-assessee companytinues to be a smallscale industry and entitles to the benefit of Notification No. 175/86 in respect of CRC Acryform. We find numbererror in the companyclusion so arrived at by the Tribunal. ISSUE No. 3 Whether there was any willful misstatement or suppression of facts with intent to evade duty with regard to the products CRC 2-26 and CRC Acryform or about the relationship between the respondent and BBL so as to enable the Department to invoke the proviso to Section 11A 1 of the Act, in the show cause numberice dated 12.2.1993 and whether the demand raised in the said show cause numberice is substantially time-barred? The classification lists filed by the assessee from time to time categorically mention in the companyumn relating to the process of manufacture as blending of various anticompanyrosive chemicals and solvents with mineral turpentine. It is mentioned that the product is a blended lubricating oil manufactured by blending mineral turpentine oil with anticompanyrosive in a base of companyrosive oil. The stand taken by the assessee is companysistent as is evident from the letter dated 20.3.1985 addressed to the Superintendent of Central Excise that they were the manufacturers of CRC 2-26 which was a blended lubricant companyprising of various anticorrosive oils and mineral turpentine oil and that the same was fully exempted under Notification No. 120/84. The required information was supplied to the Superintendent of Central Excise when he visited the factory of the respondent-assessee. Samples were again drawn in 1990 and 1993 to determine whether the product was number a lubricating oil. We have already referred to the analysis of the Deputy Chief Chemist who opined that the samples companytained mineral oil which was more than 70 and additives. The chemical test reports so obtained by the Department were never put in issue. No dispute has been raised in this regard. The declarations furnished by the respondent-assessee were totally inconformity with what has been stated in the test reports of the Deputy Chief Chemist. It is true that the exemption under Notification No. 120/84 was applicable to lubricating oil and greases which had a primary and permanent function of lubrication and number for the product having a primary function of anticompanyrosive protection. But the evidence available on record reveals that the quantum of rust preventives in CRC 2-26 is only 3 whereas mineral oil is 70. The evidence of the people in the trade, testimonials given by them including various government bodies reveal that the product CRC 2- 26 is primarily used as a lubricating oil. The test reports of the Deputy Chief Chemist companypled with the evidence referred to hereinabove lead to one and only one irresistible companyclusion that the product was primarily used for the lubricating purposes. No evidence has been produced by the Department to rebut the voluminous evidence made available by the respondent-assessee. In the circumstances, we find it difficult to hold that there has been companyscious or deliberate withholding of information by the assessee. There has been numberwillful misstatement much less any deliberate and willful suppression of facts. It is settled law that in order to invoke the proviso to Section 11A 1 a mere misstatement companyld number be enough. The requirement in law is that such misstatement or suppression of facts must be willful. We do number propose to burden this judgment with various authoritative pronouncements except to refer the judgment of this Court in Anand Nishikawa Co. Ltd. Vs. CCE 2005 188 ELT 149 SC wherein this Court held We find that suppression of facts can have only one meaning that the companyrect information was number disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done number that he must have done would number render it suppression. It is settled law that mere failure to declare does number amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. emphasis supplied It is clear from the material available on record that the Excise Authorities had inspected the manufacture process, companylected the necessary information and details from the respondent-assessee and even companylected the samples and sent to chemical analysis. The Authorities were aware of the tests and analysis reports of the products manufactured by the respondent-assessee. The relevant facts were very much within the knowledge of the Department Authorities. The Department did number make any attempt to lead any evidence that there was any willful misstatement or suppression of facts with intent to evade payment of duty. For the reasons aforesaid, we are of the view that the Tribunal did number companymit any error in holding that the extended period of limitation was number available to the Department for initiating the recovery proceedings under Section 11A 1 of the Act. So far as CRC Acryform is companycerned, the allegation was that the respondent-assessee did number mention about the license agreement in the classification lists. But the fact remains the companyies of the labels on the product which were furnished to the Department at the time of filing declarations and classification lists companytain information that CRC Acryform was manufactured under the license of CRC Chemicals Europe. The Department had even taken samples of CRC 2-26 which had companytained labels of the aforesaid product. This Court in O.K. Play India Ltd. vs. Commissioner of Central Excise, Delhi-III, Gurgaon 2005 188 ELT 300 SC while dealing with the effect of approval of the classification lists observed The classification lists were duly approved by the department from time to time. All the facts were known to the department, whose officers had visited the factory of the assessee on at least 12 occasions. In the circumstances, we do number find any infirmity in the reasoning given by the Tribunal in companying to the companyclusion that there was numberwillful suppression on the part of the assessee enabling the department to invoke the extended period of limitation under the proviso to Section 11A 1 of the 1944 Act. The same principle is reiterated in Commissioner of Central Excise, Jamshedpur Vs. Dabur India Ltd. 2005 182 ELT 308 SC . On the facts of the case, we hold that number-mentioning of the license agreement in the classification lists does number lead to the companyclusion that there has been willful suppression of facts with intent to evade duty. The demand in respect of CRC Acryform is, therefore, totally time barred. ISSUE NO. 4 Whether the Department can impose any penalty? The only ground for levying the penalty is that the respondent-assessee had suppressed the facts and had evaded the payment of duty. In view of our companyclusion that there has been numbersuppression whatsoever, the question of imposition of penalty does number arise. The duty demanded by invoking the extended period of limitation itself is untenable and unsustainable for the aforesaid reasons. In such view of the matter numberelaborate discussion on this aspect is necessary. ISSUE NO. 5 Whether the respondent was a fagade or dummy of BBL and or whether the respondent and BBL are related persons within the meaning of Section 4 a and 4 3 b of the Act? The Department in the show cause numberice dated 12.2.1993 alleged that i the assessee-respondent is a dummy facade of BBL ii the assessee-respondent and BBL are related persons. The assessee in response to show cause inter alia companytended that it is a wholly independent and separate companypany incorporated under the Companies Act, 1956 as early as on 21.5.1983 having two directors, namely Mr. N.J. Danani and his wife. A manufacturing unit was registered as a small-scale unit. It has numberborrowings or loans from BBL or any other manufacturing unit. The machineries required for the purposes of manufacturing the products are purchased and owned by the respondentcompanypany. The required raw materials and packing materials for manufacturing and packing the products were always purchased from its own resources and BBL in numbermanner exercises any supervision or companytrol over the affairs of the respondent-company. It is numberdoubt true that the registered office of BBL and the respondent-company was located in the same premises. The BBL owns the industrial gala in which respondents factory exists for which the respondentcompanypany pays market rent for its operation. The BBL before entering into a lease agreement on each occasion obtained a valuation report from an independent Valuer for the purposes of fixing the quantum of rent. The BBL entered into a lease agreement with the respondent-company under the Board Resolution of the companypany. Mere fact that both the registered offices are situated in the same premises and the manufacturing unit of the respondent-company is situated in the industrial gala owned by the BBL would number make both the companypanies are related to each other. There is numbermutuality of interest between both the companypanies. BBL admittedly does number hold any shares in respondent-company number the respondent-company owns any shares in BBL. One of the Directors in both the companypanies appears to be companymon. The respondentcompanypany was incorporated in 1983 and at that time Mr. N.J. Danani was only an employee of BBL and became its Director in June, 1988 and was one out of seven Directors. It is required to appreciate that the respondent first started manufacturing CRC 2-26 in the year 1984. The manufacture of CRC Acryform was started after September, 1986 but well before Mr. N.J. Danani became Director of BBL. 28 There is numberevidence on record in support of the allegation that the transactions between the respondentcompanypany and BBL were number on a principle to principal basis. The Commissioner found that the transaction between both the companypanies was number a simple relationship between manufacturer and seller, because respondent-company manufactured the product but did number mention its name on the product or carton, but mentioned that the product was marketed by BBL and put the logo of BBL thereon and that BBL did number pay any companysideration to the respondentcompanypany in that regard. This is totally companytradictory to the evidence available on record as held by the Tribunal. The name of the manufacturer is also mentioned on the product. There is numberevidence to arrive at any companyclusion that there was a hidden flow back of money between both the companypanies. The respondent did number take any loan or advances from BBL. The appellant did number produce any evidence to show that BBL has an interest in the respondent-companys business. The appellant however, placed much reliance upon the finding of the Commissioner which is as follows The respondent had a list price beyond which BBL companyld number sell and the arrangement between the parties was that BBL would be billed at 60 of the list price and that the difference in the prices would recover the companyt incurred by BBL for providing security services, and for expenses incurred by respondent for putting the logo and the name of BBL as also the companyt of printing the leaflets, advertisement material provided to BBL. The Tribunal after elaborate companysideration of the matter and upon appreciation of the evidence found that BBL was a bulk buyer of the product manufactured by the respondent-assessee and there is numberhing wrong in giving 40 discount. It was a numbermal trade practice. This Court in Metal Box India Ltd. Vs. Collector of Central Excise, Madras 1995 75 ELT 449 SC held that If a special trade discount is given to such a customer who is a buyer of 90 of goods, it would amount to a numbermal trade practice. At any rate it would number be an impermissible trade practice. In fact such type of companycessions are usually given by manufacturers whose goods are lifted by whole-buyers whose availability avoids lot of marketing and advertising companyts for the manufacturer and also ensures a guaranteed quantity of sales year after year. In order to keep such a wholesale monopolistic buyer attached to it, if under such circumstances by way of business expediency, the manufacturer offers him a special trade discount, it cannot be said that it is number in accordance with numbermal practice of wholesale trade. There is numberevidence available on record that the respondent-assessee received something further from BBL other than the price charged. There is numberevidence to suggest that the profit made by the BBL had flown into the respondent-company. BBL obviously is a distributor and number a relative within the meaning of Section 4 a and 4 3 b of the Act. This Court in Union of India Vs. Atic Industries 1984 17 ELT 323 SC held that For treating the customer as a related person, the first part of the definition of related person as given in Section 4 4 c requires that the person who is sought to be branded as a related person must be a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other. Thus, it is number enough that the assessee has an interest directly or indirectly in the business of the person alleged to be a related person number is it enough that the person alleged to be a related person has any interest directly or indirectly in the business of the assessee. It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest direct or indirect in the business of each other. The equality and degree of interest which each has in the business of the other may be different the interest of one in the business of the other may be direct while the interest of the latter in the business of the former may be indirect, but that would number make any difference so long as each has got some interest direct or indirect in the business of the other. In cases, where 50 share of the manufacturing companypany is held by7 the customer companypany, the customer companypany can be said to be having interest in the manufacturing companypany as a shareholder but for this reason, it cannot be said that the manufacturing companypany has any interest direct or indirect, in the business carried on by one of its shareholders even though the shareholding of such shareholders may be 50. In the absence of mutuality of interest in the business of each other, the customer companypany holding shares in the manufacturing companypany cannot be treated to be a related person. Emphasis supplied In such view of the matter it cannot be said that the respondent-assessee and BBL were related persons. The finding arrived at in this regard by the Tribunal is companyrect. No interference is called for.

Mr Timothy Brennan QC : Introduction In this application for judicial review the claimant, a national of Sri Lanka to whom asylum was refused in 2002, challenges refusals of the Secretary of State for the Home Department (SSHD) to admit a series of written submissions as a fresh claim (or claims) under paragraph 353 of the Immigration Rules. In short, the claimant's case is that while there has been no relevant change in his personal circumstances, developments in Sri Lanka since his original application for asylum was refused mean that his submissions qualify as a fresh claim, entitling him to a further in-country right of appeal. Legal principles The relevant legal principles were not in dispute. Paragraph 353 of the Immigration Rules provides:- "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. The submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered. The submissions will only be significantly different if the content: (i) had not already been considered; and (ii) taken together with the previously considered material, created a realistic prospect of success, notwithstanding its rejection. This paragraph does not apply to claims made overseas." The claimant's case is that although the SSHD rejected his further submissions she should have determined that they amounted to a fresh claim and, had she done so, it is common ground that the claimant would be entitled to a right of appeal in the United Kingdom against the rejection of his submissions. The only issue for determination by the court on judicial review is whether the SSHD decided lawfully that the further representations did not amount to a fresh claim in the sense used in paragraph 353. In R (MN (Tanzania) v Secretary of State for the Home Department [2011] EWCA Civ 193, the Court of Appeal (Maurice Kay, Moses and Sullivan LJJ) determined what was the correct approach to review of the SSHD's decision on issues arising under paragraph 353 in the light of the 'disarray' of previous authority. The correct approach is that taken in R (TK) v Secretary of State for the Home Department [2009] EWCA Civ 1550 and in WM (DRC) v Secretary of State for the Home Department [2006] EWCA Civ 1495, rather than that of other inconsistent case law (MN at [13]-[16]). The SSHD's decision is to be reviewed on Wednesbury principles, remembering that a decision which is not taken on the basis of 'anxious scrutiny' will be irrational. Paragraph 353 only imposes a 'somewhat modest' test that the application has to meet before it becomes a fresh claim (Buxton LJ in WM at [7]). In MN the Court of Appeal rejected the approach that, on judicial review of the SSHD's decision under paragraph 353, the court should reach its own decision on whether the further submissions amount to a fresh claim, and in particular whether they satisfy the "reasonable prospect of success" test. Earlier cases taking the rejected approach included R (YH) v SSHD [2010] EWCA Civ 116. Nevertheless, in MN at [12] Maurice Kay LJ referred with apparent approval to "relevant observations" of Carnwath LJ on the meaning of "anxious scrutiny" in YH at [24]: "… the expression in itself is uninformative. Read literally, the words are descriptive not of a legal principle but of a state of mind … However, it has by usage acquired special significance as underlining the very special human context in which such cases are brought, and the need for decisions to show by their reasoning that every factor which might tell in favour of an applicant has been properly taken into account. I would add, however, echoing Lord Hope, that there is a balance to be struck. Anxious scrutiny may work both ways. The cause of genuine asylum seekers will not be helped by undue credulity towards those advancing stories which are manifestly contrived or riddled with inconsistencies." Under paragraph 353 the burden is on the claimant to show that there is something new. Once he crosses that threshold, it is for the decision-maker (the SSHD) to decide whether the material (new and old) satisfies the relevant test. The requirement of anxious scrutiny means that decisions need to show by their reasoning that every factor which might tell in favour of an applicant has been properly taken into account. If nothing else, anxious scrutiny should in practice ensure that the benefit of any realistic doubt will be given to the claimant. (YH at [12]). The facts of this case The claimant arrived in the UK on 23 July 2002 and claimed asylum, which was refused by the SSHD in a decision dated 26 September 2002. The claimant's appeal was refused in a determination of an adjudicator promulgated on 21 March 2003 and his rights of appeal were exhausted by 28 April 2003. In due course he ceased to adhere to reporting conditions and was listed as an absconder from 15 March 2007. On 13 August 2010 the claimant was encountered and detained and on that date the SSHD made the first of the decisions that are challenged in the present proceedings. In this decision the SSHD decided not to reverse the decision on the earlier claim for asylum, and determined that the representations did not amount to a fresh claim. Further representations were made which the SSHD rejected in a decision of 20 August 2010; again it was determined that they further did not amount to a fresh claim. Judicial review proceedings were issued on 25 August 2010 and permission was granted by Nicol J on 15 September 2010. After detailed grounds of defence were filed on 6 December 2010 yet further representations, relying on private and family life, were made on 25 February 2011 and 3 March 2011. They were rejected in a decision of 3 October 2011. On granting permission to apply for judicial review in relation to the claimant's case on asylum and under Articles 2 and 3 of the European Convention on Human Rights, Nicol J observed that the claimant had not been able to present to the SSHD new material which was personal to him. However, the lead cases on Sri Lanka had themselves recorded the subsequent history of the island since the adjudicator's determination in the claimant's case and made more up to date findings as to the factors which were likely to contribute to a risk of ill-treatment. Permission was therefore granted on the basis that it was arguable that, taking those matters into account, the claimant would have a realistic prospect of success if he had a second appeal. The papers before Nicol J also referred to contentions relating to private and family life which had been built up since the claimant's arrival in the UK. However, the SSHD's conclusion that those matters did not give rise to a fresh claim was not challenged, and the claimant does not have permission to apply for judicial review on those grounds. No argument was addressed to me concerning the claimant's private and family life. The starting point in the claimant's case is the detailed findings of fact made by the adjudicator. There was no material before the SSHD to suggest that a different view should be taken of the facts personal to the claimant, and there is no such material before me. (1) The Claimant is a male Tamil from Trincomalee, single and without dependants, born in 1980. (2) The Claimant was not a member of the Liberation Tigers of Tamil Eelam (LTTE) but gave assistance to them as and when required. He was forced by them to give financial assistance and to employ and accommodate two LTTE boys who stored small weapons at his shop and home. (3) In December 2000, the Claimant and his aunt were arrested, detained and interrogated by the army. The Claimant was tortured and has scars to his body consistent with burns from cigarette butts and from a hot iron bar, and two scars consistent with an assault requiring stitches. (4) On release from Army custody in April 2001 the claimant was taken to a camp where he gave assistance to Government authorities by identifying LTTE members. He was transferred to an Army camp in Colombo in February 2002. (5) He secured his release from the Army camp in May 2002 through the payment of a bribe. The adjudicator was not satisfied (contrary to the claimant's evidence) that his release would have been recorded as an escape or that it would have led to the claimant's name being on a wanted list. (6) The claimant signed a document (said by him to be in Sinhalese and which he said he did not understand). No charges were laid as a result of the signing of the document and the claimant was released. Whatever the document was, and whether or not it was a confession, the adjudicator found that it was not significant and that the claimant would not be on a wanted list as a result of signing it. (7) There was no satisfactory evidence on which the adjudicator could conclude otherwise than that the claimant's aunt committed suicide. The adjudicator did not accept the claimant's version that she was raped and killed by the Army. (8) The adjudicator did not accept ("to the low standard required") that the army or the LTTE were subsequently looking for the claimant. He was unable to produce in evidence letters which he had claimed to have received recently from his grandmother informing him that the Army was looking for him and was unable to give a satisfactory explanation for his failure to do so. (9) On a consideration of the country situation evidence as it stood at the date of the decision, the claimant would not be at risk on return to Sri Lanka. His subjective fear of being returned to Sri Lanka was not objectively well founded. He had low level involvement with the LTTE and was not seriously involved. Any assistance he gave to the LTTE was under pressure. He was released by the army and never charged with any crime, and he was able after his release to leave Sri Lanka without difficulty using his own passport. He would therefore be of no interest to the authorities. (10) He had worked on behalf of the LTTE and it was only whilst in detention and under duress that he agreed to help identify LTTE members as did other young Tamils in similar situations. In the light of the country situation evidence (as it then stood), the claimant would not be at risk of reprisals from the LTTE if returned. (11) In the light of the country situation evidence (as it then stood), the Claimant would not come to the adverse attention of the authorities at Colombo airport on return merely as a result of being a failed asylum seeker returning from Europe, or of having previously been detained and released without charge, or of having scarring. The claimant's representations So far as relevant to the arguments which were advanced before me, the thrust of the claimant's representations which were rejected by the SSHD was that the situation had changed in Sri Lanka since the adjudicator's decision on the appeal in 2003. It was contended that the SSHD had attached inadequate weight to the decisions in LP (LTTE area – Tamils – Colombo – risk?) Sri Lanka CG [2007] UKAIT 00076 and NA v United Kingdom, [2008] ECHR 616, (2009) 48 EHRR 15. The most recent country guidance decision is that in TK (Tamils – LP updated) Sri Lanka CG [2009] UKAIT 00049 (a decision of the Asylum and Immigration Tribunal constituted of Carnwath LJ Senior President of Tribunals, CMG Ockelton, Deputy President AIT and Senior Immigration Judge Storey). Stress was placed on the omission of the SSHD even to mention the last of these cases, which was decided after the military defeat of the LTTE by government forces in May 2009 bringing to an end the armed conflict between the LTTE and government forces in Sri Lanka. The key risk factors relevant to the claimant on which he relied in particular were the following (established as they were in LP Sri Lanka and affirmed in TK Sri Lanka): (i) Tamil ethnicity; (ii) A previous record as an actual or suspected LTTE member; (iii) Signing a confession or other document; (iv) Having been asked by security forces to be an informer; (v) Scarring; (vi) Returning from London or other centre of LTTE activity; (vii) Having made an asylum claim abroad. It was submitted that the SSHD failed to engage with the claimant's risk profile arising from his previous record as a suspected LTTE member. Reference had been made by the SSHD to the claimant's detention as a suspected LTTE, and to his release from that detention on payment of a bribe, but this did not (it is argued) necessarily establish that the claimant is as a matter of fact not at risk on return to Sri Lanka by reason of such suspected membership. As was recorded in TK Sri Lanka at [140], quoting with apparent approval the words of the Tribunal in LP Sri Lanka: "…[m]uch will depend on the evidence relating to the formality of the detention (or lack of it), and the manner in which the bribe was taken and the credibility of the total story.  If the detention is an informal one, or it is highly unlikely that the bribe or 'bail' has been officially recorded, then the risk level to the applicant is likely to be below that of real risk." The Tribunal in LP Sri Lanka was drawing a distinction between the position of someone who was reasonably likely, on the evidence, to have a record, not merely in itself, but a record which recorded him as one who had escaped from government detention or who was a bail jumper from the court system. Such a person might be, in some cases, at real risk of persecution or serious harm. The position of such an individual was to be distinguished from that of someone (such as the claimant) who had not been to court and had been released after payment of a bribe. The adjudicator expressly addressed whether the claimant's release would have been recorded as an escape or would have led to the claimant's name being on a wanted list. She was not satisfied that such records would have been made. It is submitted on behalf of the claimant that the essential question to be asked is not whether the claimant was likely to be on a "wanted list" but whether there is a reasonable likelihood that the claimant's detention is likely to have been recorded and whether it will demonstrate that the claimant is someone likely to be of sufficient interest to the authorities on return to Sri Lanka. The case law, following the decision in TK Sri Lanka, suggests several factors which are relevant to the question whether the claimant is likely to be of such interest. In TK Sri Lanka the Tribunal said that: " we are not persuaded that the Sri Lanka authorities would have as much interest as before in persons in some way linked to the LTTE unless they were LTTE members/cadres or persons with an active role or profile in that organisation. ...  During the conflict it was logical in security terms for the authorities to be concerned not just about LTTE cadres, but also about the sizeable number of persons who were considered likely to aid the LTTE cadres materially by, e.g. supplying them with petrol or food.  Post-conflict, however, it is difficult to see why such persons would be as much of a concern." (TK at [75]) On the findings of the adjudicator already mentioned, the Claimant fell into the latter category of persons: he was not a member of the LTTE but gave assistance to them as and when required. In TK Sri Lanka the Tribunal said that: "We are prepared to accept that in the past 10-20 years the Sri Lankan authorities may well have taken steps to place more particulars relating to LTTE suspects on file and to transfer those onto computer databases.  At the same time, it seems clear that such steps will have enabled them to indicate a clearer profiling of security risks. ... It strongly suggests that the accuracy of date-recording has improved. In our view greater accuracy is likely to reduce substantially the risk that a person of no real interest to the authorities would be arrested or detained." ([82].) It is thus unlikely that the Claimant, a person who was of no interest to the authorities in 2003, would be recorded on a database today as being of interest to the authorities, if recorded at all. In relation to scarring, it was said that: "Given that a specific focus of current interest is in tracking down LTTE cadres, it is reasonable to assume that where there are other significant factors in play [emphasis added] this would bring an applicant to the attention of the authorities. A body inspection then becomes more likely and discovery of scarring consistent with battle-related injuries may intensify the risk of arrest, detention and subsequent ill-treatment." ([144]) In the absence of significant factors making the claimant of interest to the authorities, a body inspection is unlikely, and the presence of scarring is unlikely to be a risk factor. In any event, scarring as a risk factor was well established even at the time of the adjudicator's determination, and was expressly considered by the adjudicator. There is no new material on the point. In TK Sri Lanka at [81]-[82] and [134]-[135] the Tribunal made observations about record keeping, observing that: "[81] Assuming records are held at the airport or can be checked from there, the more difficult question concerns who they will cover and whether in particular every arrest and detention by the Sri Lankan authorities results in a record being raised. …[I]t was the evidence of … Professor Good, that the likelihood of records being kept of detention depended in part on who had made the arrest/detention: his evidence was that a record of an army detention was less likely than one of a police detention.  [82] A further question concerns the likely contents of these records. We are prepared to accept that in the past 10-20 years the Sri Lankan authorities may well have taken steps to place more particulars relating to LTTE suspects on file and to transfer those onto computer databases.  At the same time, it seems clear that such steps will have enabled them to indicate a clearer profiling of security risks. Significantly, Dr Smith's own evidence … was that data contained in official records pays close attention to detail and records and the levels of threat posed by the individual: "The records varied in their length and detail, depending upon the level of adverse interest" … At one point in his oral evidence he emphasised that "the government had developed ways of identifying Tamils of concern to them". He also said that all records included information on family members. In our judgment this is one of the most important items of evidence to have come to hand since LP and NA. It strongly suggests that the accuracy of date-recording has improved. In our view greater accuracy is likely to reduce substantially the risk that a person of no real interest to the authorities would be arrested or detained. 1. … [134] From our earlier discussion, it will be evident that a previous record held on a person describing him as an actual LTTE member may be a factor likely to give risk to a real risk of serious harm. Much will depend on the precise circumstances; events are very much at the stage where the Sri Lankan authorities are hoping that existing LTTE members will follow the example of the Karuna breakaway group and join the country's mainstream political system; they also speak of "rehabilitating" LTTE members. However, for a returnee, a record noting past membership would very likely lead to detention for a period and we continue to think that in relation to persons detained for any significant period, ill-treatment is a real risk.  The same would apply, in our judgment, to persons currently suspected of being LTTE members; if that is how their record describes them, then detention and ill-treatment are likely consequences. [135] There is a further point about records. We consider that in light of the evidence from Dr Smith regarding the increasing sophistication on the part of the Sri Lankan authorities in their record-keeping, it is reasonably likely that records will also contain indications of the level of security threat that an individual is or is not considered to pose: see above para 82." The claimant was detained by the army, not by the police, reducing the likelihood that a record would exist; he was released on payment of a bribe, reducing it further. He was an unwilling assistant of the LTTE (as well as of the army) and, if records exist, records are "reasonably likely" to contain indications of the level of security threat he posed, namely low rather than high. The claimant seeks to draw a parallel with the facts relevant to the applicant before the European Court of Human Rights in NA v UK (25904/07), where the Court considered that signature (by that applicant's father) of a document on the applicant's release from detention justified the inference that the authorities had made efforts to document his arrest and detention on suspicion of LTTE involvement. The court was concerned to examine the strength of the applicant's claim to be at real risk as a result of an accumulation of all the possible risk factors identified by the applicant as applicable to his case (see [142]). The applicant in NA had been arrested and detained no fewer than six times, the record keeping in his case included having him photographed and fingerprinted (see [143]). The Court considered ([145]) that the greatest possible caution should be taken when (as in the case of that applicant) it was accepted that a returnee had previously been detained and a record made of that detention. The decision in NA should be considered in the light of what was said in relation to it in TK Sri Lanka where, at [173] the Tribunal said in relation to NA: "The ECtHR goes on to note that the Sri Lankan authorities' 'interest in particular categories of returnees is likely to change over time in response to domestic developments and may increase as well as decrease', thereby acknowledging that the nature of the interest is contingent on the category of returnee". And at [174] the Tribunal observed that its approach: "may be considered a change of emphasis from that taken by the ECtHR in para 145 of NA but it remains that for the ECtHR the question of risk was all about profile." The claimant's profile, as found by the adjudicator, was not such as to give rise to serious risk. It is instructive to consider the approach taken in R (Lenin) v SSHD [2008] EWHC 2968 (Admin) where a claimant whose asylum claim had been rejected before the judgment in LP, argued, in reliance on new case law since 2003, that "the Sri Lankan authorities would be likely to have a computerised record of the Claimant's arrest, detention and release in 1998" and that "It is likely ... that the computerised record would be available to the authorities at Colombo airport so that upon the Claimant's return he would at risk of arrest and consequent persecution or torture" (Lenin at [37]). The argument was rejected by Wyn Williams J, in these terms: "38. It is true that the Defendant did not, specifically, address the issue of the likelihood of the Sri Lankan authorities having computerised details relating to the Claimant in her decision …That, however, is not entirely surprising. The whole thrust of the Defendant's assessment in her decision letters was that the Claimant's profile is such that he would be of no interest to the Sri Lankan authorities upon return. It is implicit in the Defendant's assessment that even if some record of his 1998 arrest and detention existed that would not alter the fact that he was of no interest to the authorities. That said, in my judgment it would have been desirable, at the very least, for the Defendant's decision letter to engage expressly with the issue of whether or not there was reason to believe that a computerised record of the arrest, detention and release of the Claimant in 1998 existed and was likely to be available to the authorities at the airport. 39. Is the Defendant's decision to be categorised as irrational or unreasonable or one lacking in anxious scrutiny by virtue of her failure to engage expressly with this issue? In my judgment, it is not since (a) the Defendant justifiably proceeded on the basis that the Claimant's profile was very low and secondly the conclusions expressed in LP and AN & SS do not support the conclusion that it is likely that the Claimant's details were computerised and available at the airport. I appreciate that there are passages in paragraphs 135 and 136 of the judgment in NA which demonstrates that computerised records of some persons who have been detained previously are likely to be available at the airport. In my judgment, however, those passages must be understood against the undisputed fact in that case that the details of NA had been recorded at the time of one of his many arrests. On the basis of the adjudicator's findings in this case and in the light of the recent factual conclusions expressed in AN & SS ... there is simply no proper factual basis upon which it would be proper to infer that details of the Claimant's arrest, detention and release in 1998 would be available to the authorities at the airport. 40. In my judgment the Defendant was entitled to conclude that the Claimant was not at risk of persecution and/or treatment in breach of his human rights notwithstanding the deteriorating situation in Sri Lanka. Further she was entitled to conclude that there was no reasonable prospect that any different view would be taken on an appeal from that decision." In my judgment a similar analysis is appropriate to the claimant's contentions in the present case. The likelihood that there would be a record about the claimant was addressed in the original appeal and the adjudicator's conclusions are not put in doubt by fresh material. The new material to be gleaned from TK Sri Lanka points, if anywhere, further away from the conclusion that there is likely to be a record about the claimant which would put him at risk. His involvement with members of the LTTE was itself at a low level and was unwilling. He was never himself a member of the LTTE and there is no reason now to suppose that a record exists suggesting the contrary, or that any such record would suggest him to present a high level of security risk. The claimant relies heavily on the recent decision of the Court of Appeal in MP (Sri Lanka) v Secretary of State for the Home Department [2011] EWCA Civ 362, submitting that a decision may be flawed if it demonstrates a failure to engage with the significance of a previous record of detention of a Tamil suspected of LTTE involvement. That case was an appeal from a dismissal of an asylum appeal in the Asylum and Immigration Tribunal; it did not arise under paragraph 353 and was not heard on judicial review. The appellant in MP (unlike the claimant in the present case) had been an LTTE member and it was because of this that he was detained by the authorities from November 2001 to March 2002, tortured and forced to sign a confession. In contrast to the claimant's position, the immigration judge had held that it was highly likely that there would be a record of the detention of that appellant. Lloyd LJ at [37] (with whom Rimer LJ agreed at [46]) considered that in the circumstances: "there must be at least a possible risk that the record would indicate a higher, rather than a lower, level of membership, or significant activities on behalf of LTTE." The majority of the Court of Appeal in MP considered this against the finding in TK Sri Lanka at [134] that a previous record held on a person describing him as an actual LTTE member may be a factor likely to give rise to a real risk of serious harm, and that for a returnee arriving at the airport in Sri Lanka, a record noting past membership would be likely lead to detention for a period and (in relation to persons detained for any significant period) ill-treatment was a real risk. The majority of the Court considered that the Tribunal did not appear to have recognised the clear inference from paragraph 134 of TK Sri Lanka that there would be at least some period of detention of the appellant, and that on the reasoning given in the determination in that case the court did not know whether the Immigration Judge thought about paragraphs 134, 135, 142 and 174 of TK Sri Lanka, or, if he did so, why he concluded that the content of the appellant's record would be such as to lead only to a period of detention, not to a significant period" (MP at [39]). The particular error on the part of the Tribunal identified in MP was thus that in that particular case, looking at the wording of the determination of the Tribunal appealed against, the Immigration Judge "Either … did not have regard to the point, which is an error of law in itself, or … failed to explain what he thought about it and why it was not a strong point in the appellant's favour, which is also an error of law, though of a different kind, because the appellant cannot tell why he has lost his case" (MP at [42]). The majority of the Court of Appeal considered that if the Immigration Judge had expressly considered the relevant passages of TK Sri Lanka, "a finding that he had not shown that there was a real risk could have been supported" (MP at [41]). As already mentioned, unlike the appellant in MP, the Claimant in this case was not an LTTE member and not someone who was liable to be detained, let alone for a significant period, for that reason. His profile (someone who provided certain practical assistance to the LTTE) was expressly found in TK Sri Lanka to be a profile that was no longer of interest to the authorities. As the Tribunal stressed (at [174]): "the basic question is whether an applicant can establish a real risk that he or she would be of sufficient interest to the authorities in their efforts to combat the LTTE as to warrant his or her detention and interrogation (NA, para 133) in the light of all the available evidence. In this regard it seems to us that what will determine the extent of interest the authorities at the airport will show in a returnee is not the existence of a record but what any record will disclose. We fully accept that learning of the mere existence of a record is likely to result in the individual concerned being checked and/or interrogated more than someone without a record, but we do not consider that the evidence demonstrates that that in itself leads to the individual being detained for any significant period. " As to the claimant's concerns that returning to Sri Lanka from London as a failed asylum seeker would put him at additional risk, the SSHD stated that the information that he had failed in an asylum claim would not be disclosed by the United Kingdom Border Agency on the claimant's removal to Sri Lanka. There is no reason to doubt this assurance and there is no reason to suppose that the claimant's arrival from London, as opposed to anywhere else, would by itself give rise to undue suspicion. Conclusion Reading the SSHD's decision letters as a whole, their thrust is clear. Such involvement as the claimant had with the LTTE was low-level; there was no outstanding warrant; his release on payment of a bribe was not likely to have been recorded as an escape; the document he signed was not significant; he was not likely to be of real interest to the authorities. It was necessary for the SSHD to review the claimant's risk profile in the light of the developments in Sri Lanka since the date of the adjudicator's determination. While it would have been preferable for the decision letters expressly to have mentioned the decision in TK Sri Lanka, there was in my judgment nothing in the claimant's profile, as found by the adjudicator and as reviewed by the SSHD, which could only, in the light of those developments, rationally have been regarded by the SSHD as placing him at greater risk if returned today than was found by the adjudicator at the date of his appeal. There is no new material to undermine the conclusions which were reached. In those circumstances I do not consider that the decision of the SSHD that the claimant's representations did not amount to a fresh claim can be categorised as irrational and I dismiss this claim for judicial review.