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Thursday 15th April 1999 LORD JUSTICE LAWS: On 23rd July 1998 at the Maidstone Crown Court the appellant was convicted of a single count of dangerous driving after trial by a jury before His Honour Judge Neligan. He was fined £100, with seven days' imprisonment in default and was disqualified from driving for twelve months. There were two other matters before the court which had been committed under section 41 of the Criminal Justice Act 1988. One was using a vehicle without insurance and the other, failing to provide a specimen of breath. However, the Crown Court found that the pleas which had been entered to those charges had been equivocal and so, as was appropriate, they were remitted to the magistrates' court. The appellant now appeals against his conviction for dangerous driving by leave of the single judge. In outline the prosecution case was as follows. It was at about 1.30 pm on 3rd September 1997 in Ashford that the appellant was driving a rented Volkswagen Polo. In the car were six children aged between 6 and 15. The time came when he was followed for some distance by a detective constable in an unmarked car. His evidence was to be that the appellant swerved across the carriageway and exceeded the speed limit. The appellant, who gave evidence on his own behalf, told the jury (in answer, as it happens, to a question from the judge) that he was driving perfectly normally until he realised he was being followed. He was to say he thought he was being followed by someone in what is now called a 'road rage' and so was seeking to get away from him. The officer, following at speed, eventually brought the appellant's car to a halt because the two vehicles collided. He arrested the appellant not on suspicion of dangerous driving but for theft, his suspicion being that the car may have been stolen. The appellant was taken to the police station, where he was held for some time before in due course he was told that he was being reported for dangerous driving. In view of the single ground of appeal upon which we have found it necessary to hear argument, it is appropriate to describe the evidence in the case in rather more detail. The detective constable in question was Mr Apperley. He was the only Crown witness as to the manner of the appellant's driving. He was on duty in Ashford in plain clothes at the time and, as we have said, driving an unmarked police car. He noticed the appellant's Volkswagen Polo at about 1.20 pm, when it was on his offside as he waited at a set of traffic lights. He was to tell the jury that the Polo's engine was being revved at a very high pitch. The lights changed. DC Apperley said the Polo pulled away some six lengths in front of him. It moved from the offside of the three lanes of traffic across to the nearside, then into a slip road and on to Romney Marsh Road, which is a dual carriageway. According to the officer, as the Polo turned the corner its brakes were applied so that the car, as it were, leant over on one side. Then it accelerated off at speed. The officer estimated the speed to be about 60 mph by reference to his own speed. The prevailing speed limit was 40 mph. The Polo negotiated a second roundabout at speed again, and again leaning over, as if careening on two wheels. DC Apperley said he was seven or eight car lengths behind the Polo at this point and could see the heads of children inside the vehicle. He estimated the Polo's speed at 70-75 mph as it drove towards the Bad Munstereifel Road. It approached the roundabout there and swerved from the offside to the nearside lane. Then it braked hard, entered the roundabout in the middle lane and continued straight over. DC Apperley said the car was being driven erratically and at high speed, moving across the carriageway, accelerating and braking hard. He told the jury that he then contacted the police station at Ashford on his police radio so that a marked police vehicle could be alerted and brought to the scene. As will become apparent, this reference to the radio message is at the centre of the appeal. The officer continued to follow the Polo along the Ashford Road, where it again accelerated to a speed in excess of the prevailing limit of 40 mph. At the Magpie Hall turn the Polo indicated an intention to turn right and at this stage DC Apperley caught up with it. He followed it into Magpie Hall Road. It approached the Stubbs Cross turn and again accelerated hard. The speed by now was estimated by the officer at about 70 to 75 mph. The car then pulled into the nearside. The officer said as he stopped behind it, it pulled out directly in front of another vehicle, a four-wheel-drive Shogun and accelerated away. The officer followed. Temporarily he lost sight of the Polo because the Shogun was between the two of them. As he passed the entrance to a quarry in Mock Lane he saw a cloud of dust and stopped sharply and reversed back along Mock Lane towards the quarry entrance. Then it was that his vehicle and the Polo collided. DC Apperley opened his car door and told the appellant that he was a police officer. The appellant, on the officer's evidence, shouted back, saying that the officer was harassing him and scaring his children. He said that he did not believe that Mr Apperley was a police officer and attempted to leave the scene. The officer said that he restrained him against one of the vehicles and showed him his warrant card. The appellant then calmed down. DC Apperley arrested the appellant, as we have said, on suspicion of theft of the Polo. Other officers arrived at the scene, but it is not necessary to describe any of the other evidence given on behalf of the Crown. The appellant told the jury that he had been driving a hired Volkswagen Polo on the day in question because his own car had been earlier stolen. He was on his way with the children to his sister's house and he knew the route well. He said he drove at the same speed as the rest of the traffic as he went down Station Road, although he thought he had driven somewhat over the speed limit of 70 on the dual carriageway. He denied that his car had leaned over to one side as he moved from the centre lane to the nearside lane to exit on the slip road towards Romney Marsh Road. On that road he said he noticed a Peugeot very close behind him. This was the officer's unmarked car. He said he was driving perfectly normally as he negotiated the roundabout at the junction with Bad Munstereifel Road. He then realised that there was a car extremely close to him accelerating, as he thought, to keep up with him. The appellant was aware that the Peugeot driver was upset by something and he feared a road rage incident. So it was that he increased his speed to 60 or 70 mph in an effort to get away from the Peugeot car. In Magpie Hall Road, fearing that the appellant driver was chasing him, he stopped so that it might pass by. But the Peugeot also stopped. So, he said, he became yet more frightened. He deliberately pulled out in front of the Shogun so as to put it between his car and the Peugeot. He said that he had not then turned into Tally Ho Road, which is where he intended to go, because he wanted to get away from the Peugeot. He thought at this point that his speed was about 50 mph. The Shogun was behind him. He turned into Mock Lane, then into the quarry entrance, hoping that the Peugeot would pass and its driver would not see him. Indeed, the Peugeot shot past but, on the appellant's evidence, it then stopped and violently reversed. The appellant tried to turn out of the quarry in the direction from which he had come, but the Peugeot continued to reverse at speed, crashing into his car. It was the appellant's view that the Peugeot driver had deliberately collided with his car. He had been very frightened during the course of the incident. He said that he opened his door and reversed a short distance in order to try to get around the Peugeot and caught the open door of the Peugeot as he did so. He shouted at DC Apperley, who took hold of him and pushed him against the car. The appellant thought he was being assaulted and said that he was relieved when he saw the officer's warrant card and realised that he was indeed a police officer. As we have said, it was in answer to a question from the judge that the appellant told the jury that he drove responsibly and carefully throughout the incident, having, as was the fact, children in the car. Two of the children gave evidence for the defence, but it is not necessary to describe the details of their testimony. The first ground of appeal and, as will appear, the only one which it is necessary to canvass is that the learned judge ought to have acceded to a submission which was made to him that he should stay the proceedings as an abuse of the process of the court. That submission related to the evidence of DC Apperley to the effect that he had alerted other officers to the appellant's driving by using his police radio. The radio message would certainly have been recorded. However, the tape which recorded the message or messages had been destroyed. This matter was raised before the judge. The judge, rightly in our view, found that since the tape was material relevant to an investigation under paragraph 2.1 of the relevant statutory Code of Practice, its destruction was in breach of the mandatory requirements of paragraph 5.1 of the code. But the appellant sought not only such a finding from the judge but, as we have said, an order that the case be stopped. It was said that without the tape the appellant was deprived of an essential piece of material without which his trial could not be fair. Faced with this submission the judge heard evidence from DC Apperley on a voir dire in the absence of the jury. He said this: "It is submitted to me that its destruction [that is the tape] was such an abuse of the process of the court that I ought not to permit this prosecution to continue. It relates, it is submitted, to the very issue, the nature of the driving, that the jury will have to decide. If that were right, I would agree with that submission. In order to test the matter, I heard from the officer whose messages were recorded. He has told me that he used his radio to report a dangerous driver and to request uniformed officers in a marked car to attend to stop the defendant's vehicle. Such messages as he passed were designed to inform those officers of his whereabouts so that they might go to the right place. He may, he told me, have made reference to the manner of the driving, but it was not a full commentary of the driving now complained of. Furthermore, he made his statement within a short time of the incident in which the driving was described. I do not think the destruction of the messages relating primarily to whereabouts rather than to the manner of the driving is such an abuse of the process of the court that it requires my intervention." Miss Smart by her grounds and skeleton argument submits that DC Apperley's evidence about what he said over the radio is in apparent conflict with a computer aided record; that the officer accepted at the least that he made some comments about the nature of the appellant's driving; that since DC Apperley was the only Crown witness as to the manner of the driving and given that at the scene he arrested the appellant for theft, not dangerous driving, the tape would or, at the very least, might have provided critical material for cross-examination of the officer. She refers to the authority of this Court in the case of Birmingham [1992] Crim LR 117 where the Court held that an abuse of process for want of fairness arose by reason of the fact that a video recording of a scene relevant to the prosecution was not available. Miss Smith for the Crown accepts, as she must, that there was a breach of the code in the destruction of the tape. However, she says that did not yield such unfairness that the judge must properly have stopped the case. She submits that the trial process itself protected the appellant, who through his counsel was able to conduct a thorough cross-examination of DC Apperley, no doubt in the voir dire as well as before the jury, so that any points of inconsistency or the like were thoroughly explored. Elegant though Miss Smith's submission was, it does not confront the critical question in the case. On the facts here what difference might have been made if this tape had been available? We repeat: DC Apperley was the only witness of the driving and he arrested the defendant for theft not for dangerous driving. It seems to us inescapable that there exists more than a fanciful chance that had this tape been available there would have been material contained on it upon which the appellant would properly have wished to cross-examine Mr Apperley. The matter is not marginal or tangential. The tape would have constituted a contemporary record of the words the officer spoke as he followed the appellant in the car. We make it clear that nothing is to be inferred from this judgment to the effect that a breach of the mandatory requirements of paragraph 5.1 of the code will generally or even frequently give rise to a state of affairs in which it would be right to stop the prosecution: far from it. We have emphasised the particular specific features of this case however which, upon the facts here, do properly give rise to that result. For that reason this appeal will be allowed. It is unnecessary in the circumstances to go into the second ground of appeal which concerned a question of whether a defence of necessity arising out of the appellant's stated belief that he was being pursued by a man in a road rage should have been left to the jury. We say no more about that aspect of the case. © 1999 Crown Copyright

Lord Justice Buxton : This appeal concerns the compatibility with article 5 of the European Convention on Human Rights [the ECHR] of various arrangements made by the Mental Health Act 1983 [the 1983 Act] for dealing with persons with mental disorder. The statutory structure No issue arises as to the construction of the 1983 Act, so it will be sufficient to describe its relevant provisions in summary form. •    Section 2 provides for the admission and detention for assessment of a person on the ground that he is suffering from mental disorder of a nature warranting such detention, and that he needs to be detained in the interests of the health or safety of himself or others. By section 2(4), such detention can only last for 28 days •    Section 3 provides for the compulsory detention of a person for treatment, for a period of initally up to six months •    Section 7 provides for the making of a guardianship order in respect of a person suffering from mental disorder •    In all of the foregoing cases, section 66 permits the patient to make an application for the discharge of the order to a Mental Health Review Tribunal [MHRT] •    Additionally, an order for discharge from a section 2 detention may be made either by the hospital authorities or by the patient's nearest relative (section 23). However, the patient's responsible medical officer [RMO] may make what is colloquially called a barring order preventing a discharge by the nearest relative if he thinks that the patient if discharged would be liable to be a danger to himself or to others (section 25) •    Under section 29 an authorised social worker may apply to the County Court for the removal of the nearest relative from the performance of his functions under the Act, inter alia if he considers that the nearest relative is unreasonably failing to agree to a guardianship order. When such an application is made, the 28 day period under section 2(4) is, by section 29(4), extended automatically until the proceedings have been finally disposed of. The case of MH MH is 32 years of age, and has the misfortune to suffer from Down's Syndrome. Until comparatively recently she lived at home with her mother, her nearest relative, but on 31 January 2003 she was admitted to detention under section 2. Shortly thereafter the mother sought a section 23 discharge, but MH's RMO issued a barring order under section 25. The section 2 order was to expire automatically on 28 February 2003, but on 27 February 2003 a section 29 application was made to the Telford County Court to displace the mother as nearest relative. By section 29(4), therefore, MH remained subject to detention under the section 2 order. When the present application came before Silber J, in January 2004, he was very surprised indeed to find that still no date had been fixed for the hearing of the section 29 application that had been made eleven months previously. We may add that that history of delay has been extended, in that even at the date of this judgment, some 20 months after the section 29 application, those proceedings still have not been "finally disposed of" for the purposes of section 29(4), because the nearest relative has appealed to this court against the decision of the County Court judge. In the meantime, however, the local authority had succeeded in finding suitable accommodation for MH other than in the psychiatric hospital to which she had been admitted only for a 28 day assessment, and MH moved to that accommodation on 21 July 2003. On 7 August 2003 a guardianship order was made in respect of her. That order now authorises her continued restriction. MH makes two complaints. First, her disability is sufficiently serious for her to have been unable either herself to make an application to the MHRT in respect of the section 2 detention, or to authorise others to make an application on her behalf. Second, because of what she contends is the adventitious fact of the application under section 29 she has been detained under section 2 very well beyond the normal period of 28 days. The first complaint affects the interests of all patients suffering from a disability as serious as that of MH. The second complaint potentially affects all persons in respect of whom a section 2 detention is prolonged under section 29(4). It was for those reasons that Silber J accepted, and with respect was right to accept, that the proceedings should not be stayed because MH herself has long ago passed out of the ambit of section 2. It was for those reasons that this court gave permission to appeal from Silber J's rejection of MH's application on its merits. And, quite apart from the general importance of the issues, MH was by the operation of the statutory scheme kept for over six months in a form of detention that the statute itself assumes to require only 28 days to fulfil its statutory purposes. The issue in this appeal The objections to the statutory scheme have already been indicated in outline. They are •    A competent section 2 patient has access to the MHRT, whereas an incompetent patient such as MH does not •    Section 29(4) may extend a section 2 detention for many months after the expiry of its statutory term, and neither the competent nor the incompetent patient has any recourse to the MHRT in respect of that extension These, however, are the express and intended rules of a statutory scheme. If MH is going to displace them, her only recourse is under ECHR; but there are serious difficulties in applying the jurisprudence, and more particularly the detailed wording, of the relevant article, article 5, to the facts of the present case. Before turning to those difficulties, however, I must address the judgment below of Silber J, who in a detailed and if I may say so careful review of the available authority found himself unable to afford MH any relief. Some part of the judge's reasoning addressed the article 5 difficulty that I have mentioned in paragraph 6 above, and to which I return below. The judge was, however, also persuaded that aspects of the statutory scheme provided the patient with sufficient protection for ECHR purposes even though her right to recourse to the MHRT was limited, or in practice non-existent. These considerations were, in respect of access to the MHRT in respect of the initial detention under section 2the automatic expiry of that detention after 28 days; and in respect of the section 29(4) extension the fact that it was supervised, at least indirectly, by the County Court. I am not persuaded on either of those points, which I deal with in turn. Automatic release after 28 days The judge, at his paragraph 36, accepted the argument of the Secretary of State that automatic discharge at the end of the 28 day period (absent, of course, a section 29 application) was a better safeguard for the patient than an "automatic review". The latter expression reverts to the jurisprudence of article 5, and I shall have to come back to it. The problem about the argument at this stage is, however, that it does not address the imbalance between the competent patient, who can apply to the MHRT under section 66 within 14 days of his detention, and the incompetent patient who, because he is not mentally able to make or promote such an application, has no recourse to an outside body: except through the agency of the nearest relative, who can be, and in this case was, barred under section 25. If the 28 day limit is a sufficient safeguard in the case of incompetent patient, why is it not so in the case of the competent? Why in his case is recourse to the MHRT given at all? And, further, even a 28 day period of detention without review by a judicial body at least raises questions under the ECHR. Whilst I would agree that no rule of thumb can be laid down either in respect of detention generally or in respect of particular categories of detention, nevertheless it is impossible to say that the ECHR organs neither could have nor should have any concern about a 28 day detention without judicial review. Mr Bowen, for MH, added a further point. The incompetent patient will not be able to apply to the MHRT in respect of a section 3 detention any more than he will in respect of a section 2 detention. The initial span of a section 3 detention is six months, not 28 days. An argument that there also lack of access to a judicial tribunal is offset by the limited time-span of the initial order would not seem to be very promising. County Court supervision The context of section 29 proceedings is not directly the interests of the patient, but rather issues as to the suitability of her nearest relative. The patient has no locus within them except as a witness in the contest between the referring social worker and the nearest relative. The judge pointed out, in his paragraph 54, that wherever the patient remains in detention during section 29 proceedings that will be because, as in the present case, the RMO has issued a barring order to a section 23 application by the nearest relative because the patient is likely to act in a manner dangerous to other persons or to himself. While I see the force of that argument in most cases, it is in my view not a complete answer to the problem of the section 29(4) extension either as a matter of fact or as a matter of civil rights. As to fact, it cannot be assumed without further consideration that the patient remains throughout the (in this case) year long process in the same condition as she was when the banning order predated that process. As to civil rights, the patient's complaint is that her condition does not justify detention, or at least that that question should be answered by a court. That is not the issue before the County Court, which is why the judge, rightly, held that the County Court is not performing a function under article 5 of the ECHR. A further problem arises in connexion with the emphasis placed by the ECHR on the speedy review of detention. Not only is the County Court not reviewing the lawfulness of the patient's detention, but also questions must arise about its promptitude in performing the task that it does undertake. The judge at his paragraph 41 cited and relied on the requirement stated by Hale LJ (as she then was), a judge of unparalleled authority in the field of mental health law, in R(S) v City of Plymouth [2002] 1 WLR 2582[39] that "applications under section 29 have to be dealt with quickly" The history of the present case may be unfortunate and unusual, but unfortunate it indeed is in the context of the obligation set out by Hale LJ. Silber J suggested that any undue delay by the County Court would involve a breach of its obligations under article 6 of the ECHR. But that is of no help to the patient. The standard of promptitude in such an application will be that appropriate to the condition of the nearest relative, not that appropriate to the condition of the patient. Moreover, the patient is not party to the proceedings: as Hale LJ pointed out in paragraph 24 of her judgment in the City of Plymouth case, he is the one person whom the County Court rules do not permit to be joined. Thus, the proceedings are not and cannot be concerned with the determination of his civil rights and obligations, so it is difficult to see how he can complain under article 6 of delay in pursuing them. Article 5 of the ECHR For these reasons, therefore, we are obliged directly to confront the issue of whether the statutory scheme conforms to article 5 of the ECHR. MH's argument was that to accommodate her difficulty a generous reading was required of article 5.4 of the ECHR: "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" MH, though deprived of her liberty, was in practice unable, as the state knew, to take proceedings in the form of an application to the MHRT that would otherwise be available to her. Therefore the state, in accordance with the spirit of article 5.4, should make that application on her behalf, or otherwise ensure that her case was brought before the MHRT. The judge at his paragraphs 25-26, and elsewhere, rejected this contention on the simple wording of the article. The article 5.4 right is a right to take proceedings, not a right to be brought before a court. The latter is the language not of article 5.4 but, in significant contrast, of article 5.3: which applies to persons arrested on criminal charges as envisaged by article 5.1.c, and not to persons such as MH who are detained as being of unsound mind as envisaged by article 5.1.e. I return to this verbal problem below. Before that, however, I must address a number of additional arguments advanced by the Secretary of State in support of the judge's conclusion, none of which I found convincing. First, the Secretary of State argued that a person such as MH still had the right to apply to the MHRT: it was her condition, rather than any action on the part of the state that either the ECHR or the court should control, that prevented her from exercising that right. This approach seems to me to be excessively formalistic. MH finds herself in the position that she is because the state, perfectly properly, has taken action on her behalf because of her actual or reasonably perceived mental condition. The state having asserted that reason to justify its engagement with MH, it is difficult to see that it can properly rely on a (severe) aspect of that mental condition to justify the witholding from MH of the protection that she would otherwise have. Second, for the Crown Mr Morshead showed us dicta in various cases in the ECtHR that stressed that the right under article 5.4 was indeed a right on the part of the patient to bring proceedings himself: see for instance paragraph 61 of the judgment of the ECtHR in Winterwerp v The Netherlands (1979) 2 EHRR 387, and paragraph 66 of the judgment of the ECtHR in Tam v Slovakia (Application 50213/99, 22 June 2004). Such observations were however made in the context of a competent applicant, and to stress that the article 5.4 obligation is not discharged if the applicant is dependent on the discretionary decision of a non-judicial body before he can get before the appropriate judicial body. In the present context, the Secretary has a default power under section 67 of the 1983 Act to refer cases to the MHRT if he thinks fit, and in the event did so refer the case of MH. The MHRT, in March 2003, upheld the continuing section 2 detention. However the judge correctly held, in his paragraph 33, that the discretionary default power of the Secretary of State cannot meet the requirement set out in Wintwerp and Tam that recourse under article 5 should not controlled by a non-judicial body. Third, reliance was placed on the availability of habeas corpus or judicial review. That argument raises issues that are specific to the problem that arises under section 29(4), and will be dealt with under that heading. Section 2 orders and the incompetent patient As we have seen, there are undoubted, and as the judge thought conclusive, difficulties in applying article 5.4 to oblige the state to act on the incompetent patient's behalf. We also have to remember that the ECHR provides the court with a set of guiding principles, and not with a palm tree. Nevertheless, I cannot think that the scheme of protection for persons detained in cases of suspected unsound mind can have been intended to exclude, simply because of their mental inability, persons who find themselves in the position of MH. The matter may perhaps be tested by asking what reply the authors of the ECHR would have given had they been asked whether the particular language that they adopted in article 5.4 was intended to exclude from the protection of article 5 a person who, solely because of lack of capacity to do so, was unable to take proceedings. At least if they were English lawyers I suspect that they would have replied with a testy "of course not" worthy of the hypothetical parties in Shirlaw v Southern Foundaries [1939] 2 KB 206 at p227. We have not been shown any ECHR authority that impedes that approach. Mr Morshead took us to the judgment of the ECtHR in TW v Malta (1999) 29 EHRR 185[43], where the court pointed to the difference of wording between article 5.3 and article 5.4, already observed. But that was a case of detention on a criminal charge, where the court was at pains to stress that recourse in an article 5.1.c case cannot be dependent on any initiative by the prisoner. That is far from concluding that in the converse case, where relief is in the first instance in the hands of the subject, but the subject is unable to obtain that relief, the court would hold that assistance to the subject in asserting the right was excluded. I am therefore of opinion that the state is obliged by the general principles of protection that inform article 5 to place the incompetent patient in the same position as the competent patient, as nearly as it is possible to do so, with regard to access to the MHRT. How that should be done; and what exact relief this court should provide; are issues of more difficulty, which I address at the end of this judgment under the heading of remedies. The section 29(4) problem This case is more straightforward. The patient detained under section 2, whether competent or incompetent, is detained beyond the 28 day limit without adequate judicial supervision. When that occurs, the justification for his original detention, whether or not it has been approved by the MHRT, has expired, and he is detained just because of the existence of proceedings in respect of which he is a spectator. That will be so even if the County Court judge finds in favour of the nearest relative if the approved social worker appeals: see paragraph 4 above. I have no doubt that in those circumstances he should have the right to return to the MHRT to obtain a judicial decision on his continued detention. If the states wishes to avoid what it may think to be unnecessary and wasteful use of the MHRT it must find some way of disposing of section 29(4) proceedings in the way expounded by Baroness Hale of Richmond in the passage quoted in paragraph 12 above, rather than in the manner in which they appear to have been pursued in the present case. Habeas Corpus and Judicial Review The Secretary of State said that any such added relief was unnecessary. In an appropriate case the patient could bring either habeas corpus or judicial review proceedings. That of course would not avail the incompetent patient who could not bring any proceedings, whether before the MHRT or otherwise; but it was an appropriate means of recourse for the competent patient faced with detention under section 29(4). Perhaps unsurprisingly, we did not hear much in argument about habeas corpus, but Mr Morshead strongly urged the merits of judicial review as a substitute for recourse to the MHRT. Until the incorporation of the ECHR into domestic law judicial review could not have served the necessary purpose, as the ECtHR recognised in paragraph 139 of its judgment in HL v United Kingdom (application 45508/99, 5 October 2004). Those limits were, however, said to have been removed by the decision of this court in R(Wilkinson) v Broadmoor Special Authority [2002] 1 WLR 419 where, on an application to cross-examine treating doctors in proceedings under articles 3 and 8 of the ECHR, the court held that it was entitled to reach its own view as to the compliance of the treatment with the ECHR, and that for that purpose the doctors should be cross-examined. That, however, was all that the court decided. As this court further held in R(N) v M [2003] 1 WLR 562 [39], citing the well-known warning of Lord Steyn in R(Daly) v Secretary of State [2001] 2 AC 532 [28], whatever the intensity or intrusiveness of intervention required of the court by the ECHR its role remains one of review, and it must not allow itself to be drawn into a merits challenge. But the proceedings before the MHRT, which the incompetent patient is deprived of under section 2, and all patients are deprived of under section 29(4), are indeed a merits challenge. Witholding of access to the MHRT cannot therefore be justified by substituting a process that by definition is not a merits challenge. There is a further reason why recourse to judicial review, even if it were available, is quite inappropriate in this case. What the patient seeks is access to a skilled and specialist tribunal, the MHRT, which is uniquely able to make a professional assessment of his medical condition. It cannot possibly be sensible to substitute for that specifically targeted relief the general process of judicial review, conducted according to different rules by a judge who has no medical knowledge whatsoever. Remedies It was suggested that to place the state under an obligation to refer the case of an incompetent section 2 patient to the MHRT would both raise practical difficulties, and also involve some patients in unwelcome investigation of their cases. I do not understand the first of these problems. The doctors who examine the patient on admission should be able to determine whether he is competent to give instructions in relation to the MHRT. That is little different from other important and difficult decisions that they have to make about the patient's welfare and state of mind. If they conclude that he is incompetent, a mechanism must be provided for an automatic referral to the MHRT. There may be some cases where a patient positively does not want such a referral, and is competent to form that view. The MHRT, if so satisfied, would simply not proceed with the reference. It is difficult to see how that or any other related circumstance is unreasonable or unreasonably intrusive, given the considerable intrusion into the patient's life already caused by the original section 2 order. I therefore consider, first, that a mechanism must be provided for the reference of the case of an incompetent patient to the MHRT in circumstances where a patient has a right to apply to the MHRT; and, second, that all patients should have a right to apply to the MHRT in respect of an extension of their section 2 detention by reason of the operation of section 29(4). The two sources of remedy under the Human Rights Act 1998 are either a "reading down" of the statutory provisions under section 3; or a declaration of incompatibility under section 4. This aspect of the case was not dealt with satisfactorily, the argument for MH initially contenting itself with saying that she was "neutral" as to which course was taken. That will not do. As, for instance, the speeches in the House of Lords in Ghaidan v Mendoza [2004] 3 WLR 113 graphically illustrated, the issue of remedy is often the most difficult question in a human rights case. Parties who assert, as does MH, that the court must provide a remedy for a breach of the ECHR must, as in the case of any other remedy sought from a court, specify in detail what that remedy should be, so that it can be tested by argument and review. Such consideration however rapidly reveals that the complaint in the present case, which I have found to be justified, is not that any part of the present 1983 Act positively offends against the ECHR; but that there is lacking from the scheme of the 1983 Act provisions that are necessary to make that scheme compliant with the ECHR. Although I am well aware of the guidance given by Lord Steyn in paragraph 50 of his speech in Ghaidan v Mendosa, that section 3 is the first resort, and section 4 only a last resort, I do not see how a process of reading down can be used to add to a statute provisions that it does not contain. What is needed in this case is amendment to add those provisions to the statutory scheme. We had the benefit of submissions, principally from the Secretary of State, as to what declarations should be made in the light of the conclusions set out in these judgments, copies of which were provided to the parties in draft. The declarations that follow largely reflect the Secretary of State's submissions. I would merely draw notice to the fact that the declarations require reference to "a court", rather than specifically to the MHRT. That form is adopted in deference to the Secretary of State's submission that it would be consistent with his obligations under article 5 to provide effective relief through a court other than the MHRT, however unlikely that method would be in practice. I would therefore declare that (i) section 2 of the Mental Health Act 1983 is incompatible with article 5.4 of the European Convention on Human Rights in that it is not attended by adequate provision for the reference to a court of the case of a patient detained pursuant to section 2 in circumstances where a patient has a right to make application to a Mental Health Review Tribunal but the patient is incapable of exercising that right on his own initiative; (ii) section 29(4) of the Mental Health Act 1983 is incompatible with article 5.4 of the European Convention on Human Rights in that it is not attended by provision for the reference to a court of the case of a patient detained pursuant to section 2 of that Act whose period of detention is extended by the operation of the said section 29(4). Lord Justice Wall : I have had the advantage of reading Buxton LJ's judgment in draft. I agree with it, and with the declarations of incompatibility he proposes. I add a short judgment of my own on the two principal questions raised by the appeal. I do so because of the importance of the issues raised, and because we are disagreeing with the judge in relation to them. I do not wish to add anything to what Buxton LJ says in relation to habeas corpus and judicial review. In Re F (Adult: Court's Jurisdiction) (Re F) [2001] Fam.38, this court identified a lacuna in section 1(2) of the Mental Health Act 1983 (the Act) which it held the court could cure by reference to the common law doctrine of necessity and the use of declaratory relief. T, the incapable adult in that case, was mentally impaired, but her impairment was not "associated with abnormally aggressive or seriously irresponsible conduct" on her part. As a consequence she did not fall within the criteria for "mental impairment" laid down in section 1(2) of the Act, and it was not possible for the court to make a guardianship order in relation to her under section 7. As she would otherwise have been unprotected, however, this court held that the High Court had an inherent jurisdiction to make declarations as to what was in her best interests. It had jurisdiction, accordingly (if such a course was warranted by the facts) to make a declaration that it was in her best interests to remain in local authority accommodation and for the local authority to restrict and supervise her contact with her mother. This appeal raises a distinct but related topic. In the instant case, MH was initially admitted to hospital on 31 January 2003 following the execution of a warrant under section 135(1) of the Act, and she was then detained for assessment under section 2. The local authority was able to invoke section 135(1) and section 2 of the Act because, as the medical report prepared by MH's responsible medical officer (RMO) stated in his report for the Mental Health Review Tribunal (MHRT) which was finally held on 26 March 2003 on a reference by the Secretary of State under section 67 of the Act, there was both "past and present evidence of abnormally aggressive and seriously irresponsible conduct". Unlike T in Re F, therefore, MH's condition fell within the restrictive definition of "(severe) mental impairment" in section 1(2) of the Act. MH's detention was due to expire after 28 days on 28 February 2003. However, as Buxton LJ relates in paragraph 3 of his judgment, that detention was automatically extended by the operation of section 29(4) of the Act, although the application to displace MH's mother as nearest relative never seems to have been listed and, meanwhile, a guardianship order under section 7 of the Act was made on 7 August 2003. The first question in this appeal I turn immediately to the first of the two issues we are asked to decide. The judge formulated it in the following way: "Does Article 5(4) of ECHR require there to be an automatic review of the lawfulness of a patient's detention where the patient lacks the capacity to make her own application for a review of the lawfulness of her detention?" Article 5(1) and (4) of the Convention read as follows: - 1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: ….. (e) the lawful detention ….. of persons of unsound mind …. 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 by a court and his release ordered if his detention is not lawful. The judge addressed this question after having first decided that section 66(1) of the Act, which provides for applications to MHRTs, was not incompatible with Article 5(4) of the Convention. In so doing, he accepted the argument advanced by the Secretary of State that the wording of Article 5(4) gave the right "to take proceedings" and that the wording of Article 5(4) did not include a requirement for, or a right of automatic review. A citation from X v United Kingdom (19810 4 EHRR 188 reinforced his view that: - Article 5(4) does not require there to be an automatic review of the lawfulness of a patient's detention but it will be satisfied if the detainee can institute proceedings to challenge the lawfulness of his detention. In addressing the applicability of Article 5(4) to the case of an incompetent patient, the judge accepted the submission made by Mr. Bowen for MH that the power given by section 67 of the Act to the Secretary of State to refer the case of any patient to a MHRT at any time "if he thinks fit" did not, in itself, provide an adequate safeguard. The judge gave two reasons for this. The first was that the Secretary of State could only exercise the power after a request had been made to him. Thus since a patient in MH's position lacked the capacity to make the request and had nobody to make it for her, the power would not be exercised. The second was that the exercise of a right by a patient under Article 5(4) could not be dependent upon the exercise of another power by a member of the executive which may or may not be exercised in the patient's favour. I respectfully agree with the judge on both points. However, when he addresses the specific question which I have set out at paragraph 34 above, the judge goes on to give two reasons for rejecting Mr. Bowen's submission in relation to it. Firstly, he relies on his previous finding that Article 5(4) does not confer a right on the part of a patient to an automatic review. Secondly, he finds that there are adequate procedural safeguards in place for the protection of patients detained under section 2 of the Act. He accepts the submission made on behalf of the Secretary of State that of critical importance is the fact that this was a section 2 detention which, he says: …. for two reasons by its nature is of an inherently short duration. First, as I have explained, the patient could apply to the Tribunal within the first 14 days of his or her detention pursuant to section 66(1)(a) and (2)(a) of the 1983 Act. Second, it is more important that section 2(4) of the 1983 Act requires that the patient be released at the end of the 28 day period, regardless of whether any application has been made to the Tribunal in the meantime unless a different legal basis for the patient's continuing detention has since emerged. The judge accordingly regarded the safeguard of automatic release at the end of 28 days as a better safeguard for a patient detained under section 2 of the Act than an "automatic review", and rejected the argument that there should be an automatic review for a patient who lacks the capacity to make his own application. I find myself unable to accept the judge's reasoning in relation to the first issue on a number of grounds. The first and most fundamental is that I do not regard what may be an unlawful detention of 28 days in a hospital under section 2 of the Act without access to a MHRT as being "of an inherently short duration" so as to render Article 5(4) safeguards against its unlawfulness otiose in the case of the mentally incapable. In testing the proposition that 28 days is a period of inherently short duration, it seems to me appropriate to look at the length of time which the Act regards as the appropriate duration of emergency procedures, the implementation of which the person affected has no right of challenge. Such periods are measured in hours, not days. Section 135 of the Act provides a good example. By section 135(3) a patient who has been removed to a place of safety in the execution of a warrant issued by a justice of the peace under Section 135 may be detained there under the warrant for a period not exceeding 72 hours. If, within that period no other lawful basis for his detention is created, he must be released. To take another example from a different jurisdiction, an emergency protection order taken under section 44 of the Children Act 1989 for the protection of a child may last for up to eight days in the first instance, but the maximum period allowed before the order can be challenged in court is 72 hours: - see Children Act 1989, section 45(9). Speaking for myself, I would measure periods of "inherently short duration" in terms of hours rather than days, and I would regard 72 hours in the context of section 135 as such a period. That is not, of course, to say that such a period of detention may not be unlawful if section 135 has been improperly applied: the significance of the time frame is that the person detained is released at the end of it unless a lawful cause of further detention is created. Thus in cases of suspected serious mental illness, as with suspected child abuse, it is not unacceptable and may well be necessary for the state to use its powers of detention for a period of hours before either an alternative system of lawful detention is created (which must itself be capable of challenge) or the patient is released. In my judgment, it is not possible to extend the concept of inherently short duration to 28 days. The second, and equally powerful objection to the judge's approach lies in the fact that the state has recognised and implemented a means of challenge to the 28 days period for those capable of making the challenge. In this context, there is, I think, no answer to the questions Buxton LJ poses in paragraph 8 of his judgment in relation to the imbalance between the competent and the incompetent patient. It is, to my mind, simply not tenable to suggest that protection under the Act is only afforded to those capable of asking for it. Indeed, the fact that the State has in section 66(1)(a) and (2)(a) provided a careful structure for swift access by competent patients to MHRTs (which themselves have to be constituted within a period of 7 days from the application being made) reinforces, in my judgment, the need for equivalent provision to be put in place for the incompetent patient who, by definition, is more vulnerable and is incapable of making such an application. It may be a trite or simplistic observation, but article 5(1) and (4) apply to "everyone". Article 5(4) entitles everyone deprived of his or her liberty to take proceedings to challenge the lawfulness of their detention. The right to apply to a MHRT is not given only to those who are capable of exercising it. So to hold, it seems to me, depletes the right of any meaning so far as the incompetent patient is concerned. I have already pointed out that in accepting Mr. Bowen's submission that a reference to a MHRT by the Secretary of State under section 67 of the Act is an inadequate safeguard, the judge gives as one of his reasons the fact that, because the Secretary of State can only react to an application, the Tribunal will not take place because the patient is incapable of making the request. In my judgment, the same reasoning applies to an application for a Tribunal within the 28 days period. If the incompetent patient is incapable of making the application, the patient has no safeguard. Furthermore, of course, as the events of this case demonstrate, there was no automatic release at the end of the 28 day period. For all these reasons, I am in complete agreement with Buxton LJ that the absence of any mechanism enabling an incompetent patient to apply to a MHRT within the 28 day period of admission and detention for assessment provided by section 2 of the Act renders it in this respect inconsistent with Article 5(4) of ECHR, and I would make a declaration of incompatibility under section 4 of the Human Rights Act 1998 in the terms proposed by Buxton LJ in paragraph 29 of his judgment. The second question in this appeal Buxton LJ neatly describes this as "the section 29(4) problem". It only arises, of course, where there is an application to the county court to replace the patient's nearest relative on the grounds provided by section 29(3)(c) of (d) of the Act, namely: - (c) that the nearest relative of the patient unreasonably objects to the making of an application for admission for treatment or a guardianship application in respect of the patient; or (d) that the nearest relative of the patient has exercised without due regard to the welfare of the patient or the interests of the public his power to discharge the patient from hospital or guardianship under the Part of this Act, or is likely to do so. The judge's principal answer to the proposition that section 29(4) left the patient (whether competent or incompetent) without recourse to a MHRT until the application to replace the nearest relative had been finally disposed of (section 29(4)(a)) was that …. where the section 29 application is made with a view to a guardianship application rather than for the purpose of an admission for treatment, the existence of the duty of the county court to exercise its powers under section 29 of the 1983 Act in accordance with its duties as a public body under section 6(1) HRA 1998 is of critical importance. Those duties, which require the county court "not to act in a way which is incompatible with a Convention right" would and should prevent the section 29(4) procedure from becoming so protracted so as to require a new and fresh right to another article 5(4) review. This answers the claimant's complaints about the lack of sufficiency of the grounds of appeal to the Tribunal under section 66 of the 1983 Act or as a consequence of the section 29(4) procedure. Thus, this claim also fails. Like Buxton LJ, I am not persuaded by this reasoning. On the practical front, the application to displace MH's mother was lodged on 27 February 2003. Although the circuit judge gave directions on 27 March 2003 for the hearing of the application with a view to all the evidence necessary for its disposal being in place by May 1, 203, no date had been fixed for it by the time the proceedings for judicial review came before the judge on 22 January 2004. By that time, MH had been admitted into guardianship. Not only, of course, did MH not have any right of recourse to an MHRT throughout this period, she was also not a party to the section 29 application, and had no control over the timing or the manner in which it was processed. And as Buxton LJ points out, the issue before the country court is not directly related to the patient, but to the suitability of the nearest relative. I cannot but contrast the procedure under section 29 with that under the inherent jurisdiction, where the patient is represented by the Official Solicitor with all the resources at his command, and both the nearest relative and the local authority can be represented in a hearing before a High Court Judge of the Family Division which is both fully informed and swiftly convened. I therefore find myself in complete agreement with Buxton LJ's analysis on the section 29(4) point, and like him, would grant the declaration of incompatibility identified in paragraph 29 of his judgment. Remedies It is plainly not for this court to re-write the statute. In practical terms, however, and subject to any further argument on the point, I do not see any major difficulty in ensuring access to MHRTs for incompetent patients admitted under section 2 of the Act and patients whose cases fall within section 29(4). Unfortunately, the mental health charity MIND, (which initially applied to intervene in the appeal but, in the event, provided only written material for us to consider) was unable to provide any statistics identifying the extent of the problems thrown up by this case. But in any event, it is plain that in its operation of section 2, the system is able to convene a MHRT swiftly for any patient who applies for one. I accept that not every competent patient admitted under section 2 necessarily requires a MHRT. However, under section 68 of the Act, the managers of the hospital have a duty to refer particular cases to a MHRT, and it would not seem to me to be administratively very difficult to devise a system in which hospital managers were under a duty to refer incompetent patients admitted under section 2 to a MHRT within the time limits laid down by section 66(2)(a). I would equally have thought that it would be possible at the same time for the hospital managers to identify a solicitor from the panel of solicitors regularly representing patients at MHRTs at the particular hospital to represent the patient. A similar obligation could be placed on hospital managers in a situation to which section 29(4) applied. I would therefore allow the appeal and make the two declarations of incompatibility identified by Buxton LJ. Mr Justice Lindsay: I agree with the judgment of Buxton LJ, which I have had the advantage of reading in draft. I add only two matters. First, like Wall LJ (see paras 40-43 above) I cannot regard a detention of 28 days as being "of an inherently short duration". But I would go further. Reference to any such period would father a notion that there is some tolerable period, determined by rule of thumb on what would be, so to speak, a "one size fits all" basis, during which a detention could in all mental health cases properly be regarded as unchallengeable, irremediable by or on behalf of the patient and not requiring review. Even worse, such a notion, were it to be called to into existence, could pass by analogy, like a disease transmissible across species, to detentions on grounds other than mental health. But the legislation, which (enacted, as it was, before the Human Rights Act) could so easily have provided some such "safe" period, makes no such provision. There is no express fixing of some such period for general applicability nor room to imply one, nor any mention of any period of "inherently short duration". Further, I would doubt that any such "safe" period, even were there to be one, could be fixed simply by reference to clock or calendar; the period appropriate, if any were, to, say, violent or self-harming, tranquillised or sedated patients would surely need to reflect their particular respective and different conditions. Even the broadest guidance (such, for example, that the "safe" period should be a matter of hours not days) could mislead; one could hardly have 72 hours being acceptable but 3 days being not. Any search for what I have called a "safe" period is, in my judgment, misconceived; the subject is so intensely fact-sensitive, case by case, that the creation of a general rule should not even be attempted. Secondly, I need to comment upon an argument advanced by the Secretary of State. It depends on a distinction being drawn between the language of Article 5.3 "(Everyone …. detained in accordance with the provisions of paragraph 1 (c) …. shall be brought promptly before a Judge …)" and the language of Article 5.4 "(Everyone who is deprived of his liberty … shall be entitled to take proceedings …)". That distinction led Mr Morshead to argue that under Article 5.4 it was only he or she who was deprived of his or her liberty that was to be entitled, him – or herself, to take proceedings by which the lawfulness of the detention was to be decided. Were a rigorously literal approach to be appropriate some force could be attributed to such an argument but it has to be remembered that the Convention of which 5.4 forms part is intended to cope with the whole range of those deprived of their liberty by arrest or detention throughout the numerous jurisdictions which have subscribed to the Convention, many deploying a more purposive approach than was traditionally used here. Within those jurisdictions there will doubtless be many different circumstances in which one person is entitled or required to bring proceedings in the name of or on behalf of another. If one restricts Article 5.4 so that only the very person detained or deprived of liberty can "take proceedings" to determine the lawfulness of the detention then one would have arrived at a construction as if the Convention had read "Everyone who has capacity himself to bring such proceedings … shall be entitled to take proceedings". That is not what 5.4 says and, in its context, the word "Everyone" is plainly shorthand intended to enable not only the very person who is deprived of liberty to take proceedings but, where some other is, by the relevant domestic law, authorised or required to proceed in that person's name or on that person's behalf, to ensure that he, too, should be entitled to take the proceedings. The Crown's construction would or might preclude Article 5.4 applications in all sorts of cases, including the detention of persons under 18, well beyond those with mental disorder. I cannot think that that was intended either by those subscribing to the Convention or by Parliament in its enacting of the Human Rights Act 1998. As for relief, I agree the form proposed by Buxton LJ. ORDER: Appeal allowed. The court declares: (1) that section 2 of the Mental Health Act 1983 is incompatible with Article 5 (4) of the European Convention on Human Rights, in that it is not attended by adequate provision for the reference to a court of the case of a patient detained pursuant to section 2 in circumstances where a patient has a right to make an application to a Mental Health Review Tribunal but the patient is incapable of exercising that right on his own initiative. (2) that section 29 (4) of the Mental Health Act 1983 is incompatible with Article 5 (4) of the European Convention on Human Rights, in that it is not attended by a provision for the reference to court of the case of a patient detained pursuant to section 2 of that Act whose period of detention is extended by the operation of the said section 29 (4). The respondent to pay the appellant her costs of this appeal, to be assessed on the standard basis if not agreed. Application for permission to appeal to the House of Lords refused. The order for costs made below to stand. (Order does not form part of approved Judgment)

P. Madon, J. The Appellant, Ganesh Sugar Mills, is a partnership firm carrying on the business of manufacturing sugar in the District of Gorakhpur in the State of Uttar Pradesh. Sub-section 1 of Section 3 of the U.P. Sugarcane Purchase Tax Act, 1961 U.P. Act IX of 1961 Hereinafter referred to in short as the Act , levies a tax on the purchase of sugar-cane by the owner of a factory or a unit at the rates specified in the said sub-section to be companylected in the manner prescribed by rules made under the Act. Sub-sections 3 and 5 of Section 3, as originally enacted, provided and Sub-sections 4 and 8 of Section 3 provide as follows Any tax payable under this Act, if number paid by the date prescribed for payment thereof, shall carry interest at the rate of six per cent per annum from such date till the date of payment. Where any tax payable under this Act, or interest thereon, or both, as the case may be, remains unpaid for a period exceeding fifteen days beyond the date prescribed for payment thereof, the person liable to pay the same shall, in addition to the amount of arrears of tax and interest thereon, be also liable to pay, by way of penalty, a further sum, number exceeding ten per cent of the total sum payable, calculated at such rate or rates as may be prescribed. Any person aggrieved by an order of assessment made under this Act, or by the imposition of interest under Sub-section 3 or penalty under Sub-section 4 , may within thirty days of the intimation of that order, or imposition, as the case may be, prefer an appeal to the Cane Commissioner. The officer or authority empowered to companylect the tax may forward to the Collector of the district where the factory or the unit, as the case may be, is situate, a certificate under his signature specifying the amount of arrears of tax and interest, if any, due from any person, and on receipt of such certificate the Collector shall proceed to recover the amount specified from such person as if it were an arrear of land revenue. By his numberice dated December 14, 1967, the Cane Commissioner, Uttar Pradesh, intimated to the Appellant Firm that under Sub-sections 3 and 5 of Section 3 of the Act a sum of Rs. 3, 53,648 was due as interest upto October 31, 1967, and called upon the Appellant Firm to deposit the said amount in the Treasury within 15 days. The companycluding paragraph of the said letter stated, The entire record on the basis whereof the interest has been calculated can be seen in the office of the Cane Inspector companycerned. By his numberice dated March 13, 1970, the Additional Collector, Oorakhpur, intimated to the Appellant Firm that the Cane Commissioner, Uttar Pradesh, had sent a certificate for recovery of a sum of Rs. 3,83,745/- on account of interest of Purchase Tax ending 31.3.69 and that on his failure to pay the said sum into the Treasury by March 20, 1970, companyrcive measures would be adopted. A companyy of the said numberice along with a recovery certificate was sent to the Tahasildar, Pharender, for taking necessary action in companysultation with the Sub-Divisional Officer, Pharender, to whom also a companyy of the said numberice was sent for taking necessary action. The Appellant Firm also received another numberice dated March 13, 1970, from the Additional Collector, Gorakhpur, stating that a sum of Rs. 1,87,575 on account of penalty for the year 1969-70 was outstanding against it up to February 28, 1970, and called upon it to deposit the said amount immediately in the Treasury. On March 20, 1970, the Appellant Firm filed a writ petition, being Civil Miscellaneous Writ Petition No. 1153 of 1970, before the Allahabad High Court companytesting the validity of the said numberice dated March 13, 1970, on the ground that numberinterest or penalty companyld be demanded under the Act unless an order was passed imposing such interest or penalty, and further on the ground that numberdetails were supplied to the Appellant Firm with respect to the amount of interest claimed and that numberopportunity had been given to the Appellant Firm to companytest these demands. During the pendency of the writ petition in the High Court, the recovery certificate with respect to penalty was recalled by the Additional Collector and numberquestion, therefore, relating to the said numberice demanding penalty falls to be determined by us in this Appeal The Allahabad High Court had held in certain other writ petitions that interest did number accrue automatically Under Section 3 3 of the Act and, therefore, numberinterest companyld be claimed unless there was an order assessing interest. When the Governor of Uttar Pradesh promulgated the Uttar Pradesh Taxes and Fees Laws Amendment Ordinance, 1970 U.P. Ordinance No. 14 of 1970 , opportunity was taken also to amend the Act so as to increase the rate of interest as also to get over the above High Court judgment. This was done by Chapter V of the said Ordinance companysisting of Sections 13 and 14. By Clause i of Section 13 the rate of interest specified in Sub-section 3 of Section 3 of the Act was increased from six per cent to nine percent by substituting the words nine percent for the words, six per cent. Sub-clause b of Clause i of the said Section 13 inserted with retrospective effect in Sub-section 3 an Explanation to Sub-section 3 of Section 3 of the Act. Sub-clause b of Clause 1 of the said Section 13 provided as follows in Sub-section 3 x x x b at the end the following Explanation shall be inserted and be deemed always to have been inserted, namely Explanation Interest falling due under this Sub-section shall be recoverable numberwithstanding that numberorder or numberice is passed or issued by any authority. A further amendment in the Act was made by Clause ii of the said section. 13. The said amendment was that for the words, figures and brackets Any person aggrieved.by an order of assessment made under this Act or by demand of interest under Sub-section 3 . or by an order imposing penalty under Sub-section 4 , may, within thirty day of the intimation to him of the Order of demand occurring in Sub-section 5 of Section 3 of the Act, the words, figures and brackets Any person aggrieved by an order of assessment made under this Act or by an order imposing penalty under Sub-section 4 may within thirty days of the intimation into him of the order were substituted with retrospective effect. Section 14 of the said Ordinance was a validating section and was in the following terms Validation.-Notwithstanding any judgment, decree or order of any companyrt to the companytrary, anything done or any action taken for the recovery of any interest fallen due under Sub-section 3 of Section 3 of the principal Act shall be deemed to be and always to have been as valid as if the provisions of Clauses i b and ii of Section 13 of this Ordinance were in force at all material times, and accordingly, numberproceedings for recovery of such interest shall be deemed to be or ever to have been invalid on the ground of absence of any order or numberice of assessment, imposition or demand of such interest before the initiation of such proceedings. Chapter V of the said Ordinance was brought into force with effect on and from August 11, 1970 by Notification No. ST-4788/X-900 68 -70 dated. August 10, 1970 published on page 1 of the U.P. Gazette Extra-ordinary dated August 10 1970. Chapter V of the said Ordinance was repealed and replaced by the Uttar Pradesh Sugarcane Purchase Tax Amendment Act, 1970 U.P. Act No. 1 of 1971 , with effect from August 11, l970, namely, the date on which Chapter V of the said Ordinance was brought into force. Section 3 of the Amendment Act reproduced mutatis mutandis the provisions of Section 14 of the said Ordinance. The writ petition of the Appellant Firm was heard along with other writ petitions which raised similar companytention with respect to the pre-requisite of imposition op penalty and in view of the amendments made in the Act by the said Ordinance, all these petitions were dismissed with numberOrder as to companyts. The Appellant Firm thereafter filed this Appeal after obtaining a certificate from the High Court under Clause 1 of Article 133 of the Constitution of India prior to the amendment of that clause by the Constitution Thirtieth Amendment Act, 1972, on the ground that the amount in dispute at the time of the filling of its writ Petition and in dispute on appeal was more than Rs. 20,000. Whatever might have been the position earlier, after the above amendments were made with retrospective effect in Sub-sections 3 and 5 of Section 3 of the Act, there is numberscope left for the companytention that a proceeding for recovery of interest on the amount of tax paid late was invalid on the ground that numberorder imposing or assessing such interest had been passed and the position has been put beyond all doubt by the validating provisions companytained in Section 14 of the said Ordinance and repeated in Section 3 of the said Amendment Act. Under Sub-section 3 of Section 3 of the Act, the rate of interest is a fixed one and if the tax is number paid by the prescribed date, interest begins to run automatically at the rate specified in that sub-section. The question of an order assessing or imposing interest would only arise where the rate of interest is number fixed but depends upon the discretion of the authority leaving interest or where the charging of interest is discretionary with the authority. Under the Act there is numbersuch discretion given to any authority. The rate of interest is fixed as also the time from which it companymences to run and the time when it stops running. Sub-section 3 of Section 3 provides that the interest is payable for the period from the date prescribed for payment of tax up to the date of payment of such tax. There can be thus numberquestion of assessing the amount of interest payable. It is a matter of pure arithmetical calculation. The said Ordinance which was replaced by the Amendment Act inserted the Explanation to Sub-section 3 of Section 3 and amended Sub-section 5 of Section 3 by deleting the reference to imposition of interest with retrospective effect and on companying into force of Chapter V of the said Ordinance, the Appellant Firms companytention that numberinterest companyld be demanded or recovered without an order assessing or imposing interest did number hold good any longer. The High Court was, therefore, right in rejecting this companytention of the Appellant Firm. As regards the second companytention of the Appellant Firm that the said numberice dated march 13, 1970, was vague and did number companytain any particulars is companycerned, it would appear that this companytention was overlooked in the High Court, very probably because the Appellant Firms writ petition was heard along with several other writ petitions which were disposed of by a companymon judgment. Although this point does number appear to have been argued in the High Court, it was taken in the application for grant of certificate of fitness for appeal made to the High Court and in the statement of the case filed by the Appellant Firm in this Court. As there is companysiderable force in this point, in the interest of justice, we have permitted it to be argued before us. In its writ petition the Appellant Firm had averred that it had paid by the prescribed time the tax due according to the returns filed by it. In the affidavit in reply filed by C.M. Kapoor, Senior Cane Development Inspector, in the office of the Cane Commissioner, U.P., it was stated that the returns filed by the Appellant Firm were accepted as companyrect and interest was calculated on the delayed payment of tax. It was denied in the said affidavit in reply that the Appellant Firm was number given an opportunity or number supplied with the details of the amount of interest claimed and for this purpose the last paragraph of the said numberice dated December 14, 1967, was relied upon in which it was stated, The entire record on the basis whereof interest has been calculated can be seen in the office of the Cane Inspector companycerned. Clause a of Section 2 of the Act defines the term assessment year as meaning the period beginning on the first day of October in any year and ending on the thirtieth day of September in the year next following. Under Rule 5 of the Uttar Pradesh Sugarcane Purchase Tax Rules, 1961, the owner of a factory is to Submit to the assessing officer before the eighteenth day of each calendar month a return in the prescribed form showing the quantity of sugarcane purchased by the factory during the preceding month and the amount of tax due under the Act and deposited by him in respect of such quantity of sugarcane together with the treasury receipt indicating the deposit made. A companyy of such return is to be furnished to the Cane Commissioner, the companylecting authority if he is a person other than the Cane Officer and to such other officer, if any, as the Cane Commissioner may specify in that behalf. Under Rule 4, within a fortnight of the close of each month up to the 31st day of March in an assessment year, the owner of a factory is to pay into the Government treasury fifty per cent oft he amount due as purchase tax under the Act on the quantity of sugarcane purchased during such month. The balance fifty per cent of the amount of tax outstanding for payment is to be paid in equal monthly instalments beginning from the 15th day of May and ending on the 15th day of September of the same year. The full amount of tax due on the purchase of sugarcane made during the month of April and onwards in any assessment year is, in addition to the instalments hereinbefore mentioned, to be paid by the fifteenth day of the month next following such purchase. Under Rule 6. on receipt of a return submitted to him Under Rule 5 the assessing officer is to ascertain whether the amount of tax has been companyrectly stated and if he finds that the amount of tax has number been companyrectly stated, he is, after giving the owner of the factory a reasonable opportunity of being heard, by order, to assess and determine the companyrect amount of tax and inform the owner of such factory of the amount so determined. On receipt of this information the owner of the factory is to deposit within a period of one week the amount due in the Government treasury and inform the Assessing Officer about it. Under Rule 8 1 , the amount of interest due on the arrears of tax under Sub-section 3 of Section 3 is payable on the first day of the month next following the month in respect of which such interest is due. Under Rule 9 2 , where any arrears of tax, interest or penalty remains unpaid on the first day of October in any year, the companylecting authority is straightaway to take steps to recover the arrears as an arrear of land revenue. Rule 10 provides that the certificate to be forwarded by the companylecting authority to the Collector Under Section 3 8 of the Act is to be in Form V appended to the said Rules and is to specify the amount of arrears of tax and interest together with the amount of penalty, if any, imposed under Sub-section 4 of Section 3 of the Act. The form of the recovery certificate requires the companylecting authority to state the period for which the amount of purchase tax, interest and penalty is due. From the provisions of the said Rules set out above it is clear that a return under the Act is to be a monthly return, the tax due according to it is to be payable by instalments and a recovery certificate is to state the period in respect of which tax, interest or penalty is due. Where there has been delayed payment of tax the period to be stated would be the period of delay in payment of tax due for a particular period. Here, there is numberdispute that the amount of tax due has been paid. What is alleged is that tax was paid number by the prescribed date but later. The impugned numberice dated March 13, 1970, merely states that the amount of interest claimed therein is on account of interest on purchase tax ending 31.3.1969. Nowhere in this numberice the period for which the tax was paid late has been indicated number the period for which such tax was due. Unless these particulars are mentioned there would be numberopportunity for the owner of factory to ascertain whether the payment of tax was delayed or number and whether the amount claimed is companyrectly stated or number. Once the amount of Tax and the period of delay is mentioned, the amount of interest payable thereon would be a matter of arithmetical calculation but to mention merely the amount of interest due up to a particular date can companyvey numberinformation to the owner of a factory. Once a recovery certificate is forwarded to the Collector, Under Section 147 of the Uttar Pradesh Land Revenue Act, 1901 U.P.

Case T-329/01 Archer Daniels Midland Co. v Commission of the European Communities (Competition – Cartels – Sodium gluconate – Article 81 EC – Fine – Article 15(2) of Regulation No 17 – Guidelines on the method of setting fines – Leniency Notice – Principle of proportionality – Equal treatment – Non‑retroactivity – Duty to state reasons – Rights of the defence) Judgment of the Court of First Instance (Third Chamber), 27 September 2006 Summary of the Judgment 1. Community law – General principles of law – Non-retroactivity of penal provisions (Council Regulation No 17, Art. 15; Commission Notice 98/C 9/03) 2. Competition – Fines – Guidelines on the method of setting fines (Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03) 3. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement (Council Regulation No 17, Art. 15(2)) 4. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement (Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03) 5. Competition – Fines – Amount – Determination – Deterrent effect of the fine (Art. 81 EC; Council Regulation No 17, Art. 15) 6. Competition – Fines – Amount – Determination – Criteria – Actual impact on the market (Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1A, first para.) 7. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement (Council Regulation No 17, Art. 15(2)) 8. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement (Council Regulation No 17, Art. 15) 9. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Attenuating circumstances (Art. 81(1) EC; Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 3, third indent) 10. Competition – Fines – Accumulation of Community penalties in respect of separate facts arising out of the same set of agreements (Council Regulation No 17, Art. 15) 11. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Attenuating circumstances (Art. 81(1) EC; Council Regulation No 17, Art. 15; Commission Notice 98/C 9/03) 12. Competition – Fines – Amount – Determination – Non-imposition or reduction of the fine in return for cooperation of the undertaking concerned (Council Regulation No 17, Art. 15(2); Commission Notice 96/C 207/04, Sections B(b) and C) 13. Competition – Fines – Amount – Determination – Criteria – Appraisal of the extent of the cooperation shown by each of the undertakings during the administrative procedure (Council Regulation No 17, Art. 15; Commission Notice 96/C 207/04, Sections B, C and D) 14. Competition – Administrative procedure – Statement of objections – Necessary content (Council Regulation No 17, Art. 19(1)) 15. Competition – Fines – Amount – Discretion of the Commission – Judicial review (Art. 229 EC) 1. The principle of non-retroactivity of criminal laws, enshrined in Article 7 of the European Convention on Human Rights as a fundamental right, constitutes a general principle of Community law which must be observed when fines are imposed for infringement of the competition rules. That principle requires that the penalties imposed correspond with those fixed at the time when the infringement was committed. The adoption of guidelines capable of modifying the general competition policy of the Commission as regards fines may, in principle, fall within the scope of the principle of non‑retroactivity. First, the Guidelines are capable of producing legal effects. Those effects stem not from any attribute of the Guidelines as rules of law in themselves, but from their adoption and publication by the Commission. By adopting and publishing the Guidelines, the Commission imposes a limit on its own discretion; it cannot depart from those rules under pain of being found, where appropriate, to be in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations and legal certainty. Second, as an instrument of competition policy, the Guidelines fall within the scope of the principle of non‑retroactivity, just like a new interpretation by the courts of a rule establishing an offence, in conformity with the case-law of the European Court of Human Rights on Article 7(1) of the European Convention on Human Rights which holds that that provision precludes the retroactive application of a new interpretation of a rule establishing an offence. According to that case-law, that is the case in particular where there is an interpretation by the courts which produces a result which was not reasonably foreseeable at the time when the offence was committed, having regard notably to the interpretation of the rule applied in the case-law at the material time. It follows however from that same case-law that the scope of the notion of foreseeability depends to a considerable degree on the content of the text in issue, the field it covers and the number and status of those to whom it is addressed. Thus, a law may still satisfy the requirement of foreseeability even if the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. More specifically, this is true particularly in relation to persons carrying on a professional activity, who are used to having to proceed with a high degree of caution when pursuing their occupation. They can on this account be expected to take special care in assessing the risks that such an activity entails. In order to ensure that the principle of non-retroactivity is observed, it is necessary to ascertain whether the modification, which consisted in the adoption of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty, was reasonably foreseeable at the time when the infringements at issue were committed. In that regard, the main innovation in the Guidelines consisted in taking as a starting point for the calculation a basic amount, determined on the basis of brackets laid down for that purpose by the Guidelines; those brackets reflect the various degrees of gravity of infringements but, as such, bear no relation to the relevant turnover. The essential feature of that method is thus that fines are determined on a tariff basis, albeit one that is relative and flexible. Next, the fact that the Commission, in the past, imposed fines of a certain level for certain types of infringement does not mean that it is estopped from raising that level within the limits indicated in Regulation No 17 if that is necessary to ensure the implementation of Community competition policy: on the contrary, the proper application of the Community competition rules requires that the Commission may at any time adjust the level of fines to the needs of that policy. It follows that undertakings involved in an administrative procedure in which fines may be imposed cannot acquire a legitimate expectation that the Commission will not exceed the level of fines previously imposed or in a method of calculating the fines. Consequently, those undertakings must take account of the possibility that the Commission may decide at any time to raise the level of the fines by reference to that applied in the past. That is true not only where the Commission raises the level of the amount of fines in imposing fines in individual decisions but also if that increase takes effect by the application, in particular cases, of rules of conduct of general application, such as the Guidelines. (see paras 38-46) 2. The application by the Commission of the method set out in the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty in calculating the fine imposed on an undertaking does not constitute discriminatory treatment by comparison with undertakings which infringed the Community competition rules at the same time but, for reasons pertaining to the time when the infringement was discovered or to the conduct of the administrative procedure initiated against them, were sanctioned before the adoption and publication of the Guidelines. (see para. 53) 3. The gravity of infringements of the competition rules has to be determined by reference to numerous factors, such as the particular circumstances of the case and its context; moreover, there is no binding or exhaustive list of the criteria which must be applied. Furthermore, the criteria for assessing the gravity of an infringement may include the volume and value of the goods in respect of which the infringement was committed and the size and economic power of the undertaking and, consequently, the influence which it was able to exert on the relevant market. It follows that, on the one hand, it is permissible, for the purpose of fixing a fine, to have regard both to the total turnover of the undertaking, which gives an indication, albeit approximate and imperfect, of the size of the undertaking and of its economic power, and to the market share of the undertakings concerned on the relevant market, which gives an indication of the scale of the infringement. On the other hand, it follows that it is important not to confer on one or other of those figures an importance which is disproportionate in relation to other factors and the fixing of an appropriate fine cannot therefore be the result of a simple calculation based on total turnover. In any event, the mere fact that the fine imposed on an undertaking exceeds turnover through sales of the product which is the subject of the cartel in the European Economic Area during the period that undertaking participated in the cartel, or even exceeds it significantly, is not sufficient to show that the fine is disproportionate. (see paras 76-77, 80) 4. In accordance with Article 15(2) of Regulation No 17, the fine is set on the basis of the gravity and duration of the infringement. Furthermore, in accordance with the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty, the Commission sets the starting amount on the basis of the gravity of the infringement, taking into account the actual nature of the infringement, its actual impact on the market and the scope of the geographic market. That legal framework does not therefore in itself require the Commission to take account of the small size of the product market. However, when assessing the gravity of an infringement, the Commission must take account of a large number of factors, the nature and importance of which vary according to the type of infringement in question and the particular circumstances of the case. Those factors attesting to the gravity of the infringement may, depending on the circumstances, include the size of the relevant product market. Consequently, although the size of the market may constitute a factor to take into consideration when determining the gravity of the infringement, its significance varies according to the particular circumstances of the case. (see paras 99-102) 5. Deterrence is one of the main considerations which must guide the Commission when setting fines imposed for an infringement of the Community competition rules. If the fine were set at a level which merely negated the profits of the cartel, it would not be a deterrent. It is reasonable to assume that when making financial calculations and management decisions, undertakings take account rationally not only of the level of fines that they risk incurring in the event of an infringement but also the likelihood of the cartel being detected. In addition, if the purpose of the fine were to be confined merely to negating the expected profit or advantage, insufficient account would be taken of the fact that the conduct in question constitutes an infringement of Article 81(1) EC. To regard the fine merely as compensating for the damage incurred would be to overlook not only the deterrent effect, which can relate only to future conduct, but also the punitive nature of such a measure in relation to the actual infringement committed. Similarly, in the case of an undertaking which is active on a large number of markets and has a particularly large financial capacity, to take into account turnover on the relevant market cannot suffice to ensure that the fine has deterrent effect. The larger an undertaking is and the more overall resources it has at its disposal which enable it to act independently on the market, the more it must be aware of the importance of its role as regards the smooth functioning of competition on the market. Consequently, the factual circumstances of the economic power of an undertaking which has been found guilty of an infringement must be taken into account when setting the amount of the fine in order to ensure that it has deterrent effect. (see paras 140-142) 6. According to Section 1A, first paragraph, of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty, the Commission is to take account, inter alia, of the actual impact of the infringement on the market, where this can be measured, when calculating the fine on the basis of the gravity of the infringement. That measurable impact of the cartel must be regarded as having been sufficiently demonstrated if the Commission is able to provide specific and credible evidence indicating with reasonable probability that the cartel had an impact on the market. Consideration of the impact of a cartel on the market necessarily involves recourse to assumptions. In this respect, the Commission must in particular consider what the price of the relevant product would have been in the absence of a cartel. When examining the causes of actual price developments, it is hazardous to speculate on the part played by each of those causes. Account must be taken of the objective fact that, because of the price cartel, the parties specifically waived their freedom to compete with one another on prices. Thus, the assessment of the influence of factors other than that voluntary decision of the parties to the cartel not to compete with one another is necessarily based on reasonable probability, which is not precisely quantifiable. Therefore, unless the criterion of Section 1A, first paragraph, is to be deprived of its effectiveness, the Commission cannot be criticised for referring to the actual impact on the market of a cartel having an anti‑competitive object, such as a price or sales quota cartel, even though it does not quantify that impact or provide any assessment in figures in this respect. (see paras 174-178) 7. When determining the gravity of an infringement of competition law, particular account should be taken of the legislative background and economic context of the conduct complained of. In this respect, in order to assess the actual effect of an infringement on the market the Commission must take as a reference the competition that would normally exist if there were no infringement. It follows, first, that particularly in the case of price agreements there must be a finding by the Commission – with a reasonable degree of probability – that such agreements have in fact enabled the undertakings concerned to achieve a higher level of price than that which would have prevailed had there been no cartel. Second, it follows that, in making its assessment, the Commission must take into account all the objective conditions in the relevant market and have regard to the economic context and, if appropriate, also the legislative background. Account should be taken of the existence of any ‘objective economic factors’ which indicate that, had there been a ‘free play of competition’, prices would not have developed in the same way as the prices which were actually charged. (see paras 191-192) 8. In curbing prohibited cartels, the actual conduct which an undertaking claims to have adopted is irrelevant for the purposes of evaluating a cartel’s effect on the market, since the effects to be taken into consideration are those arising from the infringement as a whole in which it participated. (see para. 204) 9. In assessing the gravity of an infringement of the competition rules for the purpose of fixing the amount of the fine, the Commission must take into consideration not only the particular circumstances of the case but also the context in which the infringement occurs and must ensure that its action has the necessary deterrent effect. Only by taking into account those factors is it possible to ensure that the action taken by the Commission for the purpose of maintaining undistorted competition on the common market is fully effective. A purely literal analysis of the third indent of paragraph 3 of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty could give the impression that the mere fact that an offender terminates an infringement as soon as the Commission intervenes constitutes, generally and without reserve, an attenuating circumstance. However, such an interpretation would reduce the effectiveness of the provisions for maintaining effective competition, as it would weaken both the penalty which could be imposed for an infringement of Article 81 EC and the deterrent effect of such a penalty. Unlike other attenuating circumstances, the fact of terminating an infringement as soon as the Commission intervenes is not inherent in any particular individual characteristic of the offending party itself or the specific facts of the particular case, since it results mainly from the – external – intervention of the Commission. Thus, termination of an infringement only after the Commission has intervened should not be rewarded in the same way as an independent initiative of the offending party, and merely constitutes an appropriate and normal reaction to that intervention. Moreover, the fact of termination merely marks a return by the offending party to lawful conduct and does not enhance the effectiveness of the actions taken by the Commission. Lastly, the alleged attenuating nature of the fact of termination cannot be justified solely by the incentive to terminate the infringement to which it relates. In this respect, the classification of the continuation of an infringement after the Commission intervenes as an aggravating circumstance already rightly constitutes an incentive to terminate the infringement, which does not reduce the penalty or its deterrent effect. Thus, if termination of an infringement as soon as the Commission intervenes were to be recognised as an attenuating circumstance, that would unduly impair the effectiveness of Article 81(1) EC by weakening both the penalty and its deterrent effect. Consequently, the Commission cannot place itself under an obligation to consider the mere fact that the infringement was terminated as soon as it intervened to be an attenuating circumstance. Accordingly, the third indent of paragraph 3 of the Guidelines must be interpreted restrictively so as not to undermine the effectiveness of Article 81(1) EC, and as meaning that solely the particular circumstances of the specific case in which an infringement is actually terminated as soon as the Commission intervenes can warrant that termination being taken into account as an attenuating circumstance. In the case of a particularly serious infringement, whose object is price fixing and market sharing, committed intentionally by the undertakings concerned, its termination cannot be regarded as an attenuating circumstance where it was terminated as a result of the Commission’s intervention. (see paras 276-282) 10. The principle of ne bis in idem prohibits the same person from being sanctioned more than once for the same unlawful conduct in order to protect one and the same legal interest. The application of that principle is subject to three cumulative conditions: the identity of the facts, the unity of offender and the unity of legal interest protected. Thus, where the actions on which two sanctions are based arise out of the same set of agreements but nevertheless differ as regards both their object and their geographical emphasis, that principle does not apply. That is the case where the sanctions relate to cartels concerning different markets. That is also the case of a cartel which also concerns the territory of non‑member States since, under the principle of territoriality there is no conflict in the exercise by the Commission and by the competition authorities of those non‑member States of their power to impose fines on undertakings which infringe the competition rules of the European Economic Area and of those States. (see paras 290-292) 11. Whilst it is important that an undertaking takes steps to prevent fresh infringements of Community competition law from being committed in the future by members of its staff, the taking of such steps does not alter the fact that an infringement has been committed. The Commission is therefore not required to take a circumstance such as that into account as an attenuating circumstance, especially where the infringement in question amounts to a manifest infringement of Article 81(1) EC. 12. Furthermore, although the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty provide that the Commission may find that there were aggravating circumstances in the case of an undertaking which has already committed one or more infringements of the same type, it does not follow that, where the infringement in question is the first of that type committed by the undertaking in question, it should receive favourable treatment by virtue of an attenuating circumstance. (see paras 299-300) 13. In order for an undertaking to be able to benefit from a significant reduction in the fine under Section C of the Notice on the non-imposition or reduction of fines in cartel cases, that notice requires, in Section B(b) thereof, to which Section C refers, that that undertaking be the first to adduce decisive evidence of the cartel’s existence. That notice does not provide that, in order to satisfy that condition, an undertaking which informs the Commission about a secret cartel must provide it with all the decisive evidence for preparing the statement of objections or, still less, for adopting a decision establishing an infringement. (see paras 319-321) 14. In order to ensure that it does not conflict with the principle of equal treatment, the Notice on the non-imposition or reduction of fines in cartel cases must be applied in such a way that, as regards the reduction of fines, the Commission must treat in the same way undertakings that provide the Commission, at the same stage of the procedure and in similar circumstances, with similar information concerning the conduct imputed to them. The mere fact that one of those undertakings was the first to acknowledge the alleged facts in response to the questions put to them by the Commission at the same stage of the procedure cannot constitute an objective reason for treating it differently. However, that applies only in the context of cooperation of undertakings which does not fall within the scope of Sections B and C of the Leniency Notice. Unlike those sections, Section D does not provide for different treatment for the undertakings concerned on the basis of the order in which they cooperate with the Commission. (see paras 338-339, 341) 15. The statement of objections must be couched in terms that, albeit succinct, are sufficiently clear to enable the parties concerned properly to identify the conduct complained of by the Commission. It is only on that basis that the statement of objections can fulfil its function under the Community regulations of giving undertakings all the information necessary to enable them properly to defend themselves, before the Commission adopts a final decision. Provided that the Commission indicates expressly in the statement of objections that it will consider whether it is appropriate to impose fines on the undertakings concerned and that it sets out the principal elements of fact and of law that may give rise to a fine, such as the gravity and the duration of the alleged infringement and the fact that it has been committed ‘intentionally or negligently’, it fulfils its obligation to respect the undertakings’ right to be heard. In doing so, it provides them with the necessary elements to defend themselves not only against a finding of infringement but also against the fact of being fined. Therefore, as regards determining the amount of fines, the rights of defence of the undertakings in question are guaranteed before the Commission through the opportunity to make submissions on the duration, the gravity and the foreseeability of the anti-competitive nature of the infringement. (see paras 359, 361-362) 16. Where the examination of the pleas raised by an undertaking against the legality of a Commission decision imposing on it a fine for infringement of the Community competition rules has not revealed any illegality, there is no need for the Court of First Instance to make use of its unlimited jurisdiction in order to reduce that fine. (see para. 382) JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber) 27 September 2006 (*) (Competition – Cartels – Sodium gluconate – Article 81 EC – Fine – Article 15(2) of Regulation No 17 – Guidelines on the method of setting fines – Leniency Notice – Principle of proportionality – Equal treatment – Non-retroactivity – Obligation to state reasons – Rights of the defence) In Case T‑329/01, Archer Daniels Midland Co., established in Decatur, Illinois (United States), represented by C.O. Lenz, lawyer, L. Martin Alegi, M. Garcia and E. Batchelor, Solicitors, applicant, v Commission of the European Communities, represented by A. Whelan, A. Bouquet and W. Wils, acting as Agents, defendant, APPLICATION for annulment of Article 1 of Commission Decision C(2001) 2931 final of 2 October 2001 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case COMP/E-1/36.756 – Sodium Gluconate) in so far as it pertains to the applicant, or at least to the extent that it finds the applicant was party to an infringement after 4 October 1994, and for annulment of Article 3 of that decision in so far as it pertains to the applicant or, in the alternative, annulment or reduction of the fine imposed on it by the decision, THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber), composed of J. Azizi, President, M. Jaeger and F. Dehousse, Judges, Registrar: I. Natsinas, Administrator, having regard to the written procedure and further to the hearing on 18 February 2004, gives the following Judgment Facts 1 Archer Daniels Midland Co. (‘ADM’) is the parent company of a group of companies which operate in the cereal and oil seed processing industry. ADM entered the sodium gluconate market in 1990. 2 Sodium gluconate is a chelating agent, products which inactivate metal ions in industrial processes. Those processes are used, inter alia, in industrial cleaning (bottle washing, utensil cleaning), surface treatment (de-rusting, degreasing, aluminium etching) and water treatment. Chelating agents are thus used in the food industry, the cosmetics industry, the pharmaceutical industry, the paper industry, the concrete industry and in various other industries. Sodium gluconate is sold worldwide and competing undertakings have a worldwide presence. 3 In 1995, total sales of sodium gluconate on a worldwide level were around EUR 58.7 million and sales in the European Economic Area (EEA) around EUR 19.6 million. At the material time, almost all of the sodium gluconate produced worldwide was in the hands of five undertakings namely (i) Fujisawa Pharmaceutical Co. Ltd (‘Fujisawa’), (ii) Jungbunzlauer AG (‘Jungbunzlauer’), (iii) Roquette Frères SA (‘Roquette’), (iv) Glucona vof (‘Glucona’), a joint venture controlled jointly, until December 1995, by Akzo Chemie BV, a wholly-owned subsidiary of Akzo Nobel NV (‘Akzo’), and Cooperatieve Verkoop- en Productiervereniging van Aardappelmeel en Derivaten Avebe BA (‘Avebe’) and (v) ADM. 4 In March 1997, the United States Department of Justice informed the Commission that following an investigation into the lysine and citric acid markets, an investigation had also been opened into the sodium gluconate market. In October and December 1997 and February 1998, the Commission was informed that Akzo, Avebe, Glucona, Roquette and Fujisawa acknowledged that they had participated in a cartel to fix the price of sodium gluconate and to allocate sales volumes of the product in the United States and elsewhere. Pursuant to agreements entered into with the United States Department of Justice, those undertakings and ADM were fined by the United States authorities. The fine imposed on ADM with regard to the cartel on the sodium gluconate market was part of the global USD 100 million fine paid in the context of the lysine and citric acid cases. 5 On 18 February 1998, the Commission sent requests for information under Article 11 of Council Regulation No 17 of 6 February 1962 – First Regulation implementing Articles [81] and [82] of the Treaty (OJ English Special Edition 1959‑1962, p. 87) to the main producers, traders and customers of sodium gluconate in Europe. That request was not sent to ADM. 6 Following receipt of the request for information, Fujisawa approached the Commission and announced that it had cooperated with the United States authorities in the course of the investigation described above and that it wished to cooperate with the Commission under the Commission notice on the non-imposition or reduction of fines in cartel cases (OJ 1996 C 207, p. 4; ‘the Leniency Notice’). On 12 May 1998, following a meeting with the Commission on 1 April, Fujisawa supplied a written statement and a file of documents providing a summary of the cartel’s history and a number of documents. 7 On 16 and 17 September 1998, the Commission carried out inspections pursuant to Article 14(3) of Regulation No 17 at the premises of Avebe, Glucona, Jungbunzlauer and Roquette. 8 On 10 November 1998, the Commission sent a request for information to ADM. On 26 November 1998, ADM announced that it intended to cooperate with the Commission. During a meeting held on 11 December 1998, ADM provided a ‘first instalment of [its] cooperation’. A statement from the company and documents relevant to the case were subsequently handed to the Commission on 21 January 1999. 9 On 2 March 1999, the Commission sent detailed requests for information to Glucona, Roquette and Jungbunzlauer. By letters of 14, 19 and 20 April 1999, those undertakings made it known that they wished to cooperate with the Commission and provided it with certain information about the cartel. On 25 October 1999, the Commission sent additional requests for information to ADM, Fujisawa, Glucona, Roquette and Jungbunzlauer. 10 On 17 May 2000, the Commission, on the basis of the information supplied to it, sent a statement of objections to ADM and the other undertakings concerned for infringement of Article 81(1) EC and Article 53(1) of the Agreement on the EEA (‘the EEA Agreement’). ADM and all the other undertakings concerned submitted written observations in response to the Commission’s objections. None of the parties requested an oral hearing, nor did they substantially contest the facts as set out in the statement of objections. 11 On 11 May 2001, the Commission sent additional requests for information to ADM and the other undertakings concerned. 12 On 2 October 2001, the Commission adopted Decision C(2001) 2931 final relating to a proceeding under Article 81 EC and Article 53 of the EEA Agreement (COMP/E-1/36.756 – Sodium Gluconate; ‘the Decision’). The Decision was notified to ADM by letter of 12 October 2001. 13 The Decision includes the following provisions: ‘Article 1 [Akzo], [ADM], [Avebe], [Fujisawa], [Jungbunzlauer] and [Roquette] have infringed Article 81(1) EC and – from 1 January 1994 onwards – Article 53(1) of the EEA Agreement by participating in a continuing agreement and/or concerted practice in the sodium gluconate sector. The duration of the infringement was as follows: – in the case of [Akzo], [Avebe], [Fujisawa] and [Roquette], from February 1987 to June 1995, – in the case of [Jungbunzlauer], from May 1988 to June 1995, – in the case of [ADM], from June 1991 to June 1995. … Article 3 For the infringement referred to in Article 1, the following fines are imposed: (a) [Akzo] EUR 9 million (b) [ADM] EUR 10.13 million (c) [Avebe] EUR 3.6 million (d) [Fujisawa] EUR 3.6 million (e) [Jungbunzlauer] EUR 20.4 million (f) [Roquette] EUR 10.8 million …’ 14 In calculating the amount of the fines, the Commission applied in the Decision the methods set out in the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty (OJ 1998 C 9, p. 3; ‘the Guidelines’) and the Leniency Notice. 15 First, the Commission determined the basic amount of the fine by reference to the gravity and duration of the infringement. 16 In that context, as regards the gravity of the infringement, the Commission found, first, that, taking into account the nature of the infringement, its actual impact on the EEA sodium gluconate market and the scope of the relevant geographic market, the undertakings concerned had committed a very serious infringement (recital 371 of the Decision). 17 Next, the Commission considered that it was necessary to take account of the actual economic capacity of the offenders to cause significant damage to competition, and to set the fine at a level which ensured that it had sufficient deterrent effect. Consequently, taking as its basis the relevant undertakings’ worldwide turnover from the sale of sodium gluconate in 1995, the last year of the infringement, communicated by the relevant undertakings following the Commission’s requests for information, and from which the Commission calculated the respective market shares of those undertakings, the Commission divided the undertakings into two categories. In the first category, it placed the undertakings which, according to the data in its possession, held worldwide shares in the sodium gluconate market above 20%, namely Fujisawa (35.54%), Jungbunzlauer (24.75%) and Roquette (20.96%). The Commission set a starting amount of EUR 10 million for those undertakings. In the second category, it placed the undertakings which, according the data in its possession, held worldwide shares in that market of below 10%, namely Glucona (approximately 9.5%) and ADM (9.35%). The Commission set the starting amount of the fine at EUR 5 million for those undertakings, that is to say, for Akzo and Avebe, which jointly owned Glucona, at EUR 2.5 million each (recital 385 of the Decision). 18 In order to ensure that the fine had a sufficient deterrent effect and to take account of the fact that large undertakings have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law, the Commission also adjusted the starting amount. Consequently, taking account of the size and the worldwide resources of the undertakings concerned, the Commission applied a multiplier of 2.5 to the starting amount for ADM and Akzo and therefore increased that starting amount, so that it was set at EUR 12.5 million as regards ADM and EUR 6.25 million as regards Akzo (recital 388 of the Decision). 19 As regards the duration of the infringement committed by each undertaking, the starting amount was moreover increased by 10% per year, i.e. an increase of 80% for Fujisawa, Akzo, Avebe and Roquette, of 70% for Jungbunzlauer and of 35% for ADM (recitals 389 to 392 of the Decision). 20 Accordingly, the Commission set the basic amounts of the fines at EUR 16.88 million as regards ADM. As regards Akzo, Avebe, Fujisawa, Jungbunzlauer and Roquette, the basic amount was set at EUR 11.25 million, EUR 4.5 million, EUR 18 million, EUR 17 million and EUR 18 million respectively (recital 396 of the Decision). 21 Second, on account of aggravating circumstances, the basic amount of the fine imposed on Jungbunzlauer was increased by 50% on the ground that the undertaking had acted as ringleader of the cartel (recital 403 of the Decision). 22 Third, the Commission examined and rejected the arguments of certain undertakings, including ADM, that there were attenuating circumstances which should have applied in their case (recitals 404 to 410 of the Decision). 23 Fourth, under Section B of the Leniency Notice, the Commission allowed Fujisawa a ‘very substantial reduction’ (namely 80%) of the fine which would have been imposed if it had not cooperated. In addition, the Commission took the view that ADM did not meet the conditions laid down in Section C of the Leniency Notice and did not qualify for a ‘substantial reduction’ of the amount of its fine. Finally, under Section D of that notice, the Commission allowed ADM and Roquette a ‘significant reduction’ (namely 40%) of the fine, and allowed Akzo, Avebe and Jungbunzlauer a 20% reduction (recitals 418, 423, 426 and 427 of the Decision). Procedure and forms of order sought by the parties 24 ADM brought the present action by application lodged at the Registry of the Court of First Instance on 21 December 2001. 25 Upon hearing the Report of the Judge-Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure and, in the context of measures of organisation of procedure under Article 64 of the Rules of Procedure of the Court of First Instance, put written questions to the parties to which they replied within the prescribed period. 26 The parties presented oral argument at the hearing on 18 February 2004. 27 By letter of 21 July 2006, ADM requested the Court of First Instance to consider a new plea based on the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2; ‘the 2006 Guidelines’) on the ground that those guidelines constitute a matter of law and of fact which has come to light in the course of the procedure within the meaning of Article 48(2) of the Rules of Procedure of the Court of First Instance. Having regard to the general principle of sound administration of justice, the Court, without reopening the procedure, invited the Commission to comment on ADM’s request. By letter of 11 August 2006, the Commission expressed the view that there were no grounds for acceding to ADM’s request. 28 ADM claims that the Court should: – annul Article 1 of the Decision in so far as it pertains to it, or at least to the extent that it finds that it was party to an infringement after 4 October 1994; – annul Article 3 of the Decision insofar as it pertains to it; – in the alternative, annul or substantially reduce the fine imposed on it; – order the Commission to pay the costs. 29 The Commission contends that the Court should: – dismiss the application; – order ADM to pay the costs. Law 30 The pleas put forward by ADM, all of which relate to the setting of the fine imposed on it, concern (i) whether the Guidelines apply to this case, (ii) the gravity of the infringement, (iii) the duration of the infringement, (iv) the existence of attenuating circumstances, (v) its cooperation during the administrative procedure and (vi) observance of the rights of the defence. A – Whether the Guidelines apply 1. Infringement of the principles of legal certainty and non-retroactivity of penalties a) Arguments of the parties 31 ADM submits that the method of calculating fines laid down by the Guidelines differs fundamentally from the Commission’s previous fining practice which, as the Commission acknowledges in the Decision (recital 395), entailed determining the fine according to a base rate representing a certain percentage of sales in the relevant Community market. Conversely, the Guidelines introduce a fixed rate fine, for example EUR 20 million for a very serious infringement, regardless of the volume of sales of the product concerned. 32 ADM observes that during the period to which this case relates (1991 to 1994 or 1991 to 1995), the Commission consistently applied this practice and imposed fines of generally between 2% and 9% of the value of sales of the relevant product in the Community market. By contrast, implementation of the new policy deriving from the Guidelines results in fines of 43 to 153 times higher than those imposed on the basis of the former practice. 33 ADM acknowledges that the Commission has discretion to increase fines where competition law policy requires higher dissuasive fines. However, in imposing a fine of 43 to 153 times that which would have been fixed under its former approach, the Commission manifestly overstepped any such discretion. Contrary to the Commission’s contention, that conclusion is borne out by the judgment of the Court of First Instance in Case T-16/99 Lögstör Rör v Commission [2002] ECR II-1633, paragraph 237. In that judgment, the Court of First Instance made the Commission’s ability to increase the level of fines within the limits indicated in Regulation No 17 subject to the condition that doing so is necessary to ensure the implementation of Community competition policy. The Commission has not provided any explanation nor put forward any evidence in either the Decision or its pleadings such as to show that the implementation of that policy requires the imposition of fines 43 to 153 times higher than those obtaining when the former standard practice applied. ADM also observes that in Lögstör Rör v Commission and all the other cases dealing with the pre-insulated pipes cartel, apart from the case concerning ABB, the Commission imposed fines of a level comparable to the level prevailing when its earlier practice was followed. ADM asserts that the undertakings participating in that cartel were fined only between 3% and 14% of the affected sales and even ABB’s fine represented only 44% of its affected sales. 34 ADM submits that the undertakings concerned must be able to carry on business in conditions which are predictable. Thus, as the Guidelines also explain (first paragraph), the Commission must follow a coherent and non-discriminatory policy when setting the amount of the fines. Lack of legal certainty in the assessment of fines is antithetical to the notion of effectively implementing the deterrent constituted by a fine. For a fine to act as an effective deterrent, it is essential that the undertakings concerned have prior knowledge of applicable penalties. An effective general amnesty or leniency policy requires that the penalties in cases of non-cooperation are clearly defined in advance. Likewise, it is unconscionable to maintain a state of constant uncertainty as to the level of fines which may be imposed for competition law violations, especially given the long period of time taken to complete investigations of such infringements. Consequently, legal certainty requires that the approach which the Commission adopts in calculating fines under Article 15(2) of Regulation No 17 may be predicted with a sufficient degree of certainty. 35 ADM adds that it is apparent from the United States Sentencing Guidelines (Section 1B1.11(b)(1); ‘the US Guidelines’) and from the decision of a federal Court of Appeals (United States v Kimler 167 F. 3d 889 (5th Cir. 1999) that retroactive application of new guidelines in the matter of fines is prohibited by the ex post facto clause of the United States Constitution when it results in the imposition of a punishment more severe than the punishment provided for when the infringement occurred. 36 Consequently, in ADM’s submission, where the new policy laid down in the Guidelines is applied retroactively to an infringement which, as is the case in this instance, took place prior to their publication and has the effect of imposing on ADM a much higher fine than those imposed when former practice prevailed without that increase being necessary to ensure compliance with competition law policy, such application offends against the principle of legal certainty and is unlawful. 37 The Commission contends that the plea should be rejected. b) Findings of the Court 38 The Court observes, first of all, that the principle of non-retroactivity of criminal laws, enshrined in Article 7 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, as a fundamental right, constitutes a general principle of Community law which must be observed when fines are imposed for infringement of the competition rules and that that principle requires that the penalties imposed correspond with those fixed at the time when the infringement was committed (Joined Cases C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P Dansk Rørindustri and Others v Commission [2005] ECR I‑5425, paragraph 202; Case T‑23/99 LR AF 1998 v Commission [2002] ECR II‑1705, paragraphs 218 to 221; and Case T‑224/00 Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission [2003] ECR II‑2597, paragraph 39). 39 Next, the Court considers that the adoption of guidelines capable of modifying the general competition policy of the Commission as regards fines may, in principle, fall within the scope of the principle of non‑retroactivity. 40 First, the Guidelines are capable of producing legal effects. Those effects stem not from any attribute of the Guidelines as rules of law in themselves, but from their adoption and publication by the Commission. By adopting and publishing the Guidelines, the Commission imposes a limit on its own discretion; it cannot depart from those rules under pain of being found, where appropriate, to be in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations and legal certainty (see, to that effect, Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraphs 209 to 212). 41 Second, as an instrument of competition policy, the Guidelines fall within the scope of the principle of non‑retroactivity, just like a new interpretation by the courts of a rule establishing an offence, in conformity with the case-law of the European Court of Human Rights on Article 7(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (see, in particular, Eur. Court H.R., S.W. v. United Kingdom and C.R. v. United Kingdom, judgments of 22 November 1995, Series A Nos 335-B and 335-C, §§ 34 to 36 and §§ 32 to 34; Cantoni v. France, judgment of 15 November 1996, Reports of Judgments and Decisions, 1996-V, §§ 29 to 32, and Coëme and Others v. Belgium, judgment of 22 June 2000, Reports, 2000-VII, § 145) which holds that that provision precludes the retroactive application of a new interpretation of a rule establishing an offence. According to that case-law, that is the case in particular where there is an interpretation by the courts which produces a result which was not reasonably foreseeable at the time when the offence was committed, having regard notably to the interpretation of the rule applied in the case-law at the material time. It should however be stated that it follows from that same case-law that the scope of the notion of foreseeability depends to a considerable degree on the content of the text in issue, the field it covers and the number and status of those to whom it is addressed. Thus, a law may still satisfy the requirement of foreseeability even if the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. More specifically, in accordance with Cantoni v. France (§ 35), this is true particularly in relation to persons carrying on a professional activity, who are used to having to proceed with a high degree of caution when pursuing their occupation. They can on this account be expected to take special care in assessing the risks that such an activity entails (Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraphs 215 to 223). 42 In view of the foregoing, it is therefore necessary to ascertain whether the modification, which consisted in the adoption of the Guidelines, was reasonably foreseeable at the time when the infringements at issue were committed. 43 In that regard, it should be noted that the main innovation in the Guidelines consisted in taking as a starting point for the calculation a basic amount, determined on the basis of brackets laid down for that purpose by the Guidelines; those brackets reflect the various degrees of gravity of infringements but, as such, bear no relation to the relevant turnover. The essential feature of that method is thus that fines are determined on a tariff basis, albeit one that is relative and flexible (Dansk Rørindustri v Commission, paragraph 38 above, paragraph 225). 44 Next, it should be recalled that the fact that the Commission, in the past, imposed fines of a certain level for certain types of infringement does not mean that it is estopped from raising that level within the limits indicated in Regulation No 17 if that is necessary to ensure the implementation of Community competition policy. On the contrary, the proper application of the Community competition rules requires that the Commission may at any time adjust the level of fines to the needs of that policy (see, to that effect, Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraph 227; Joined Cases 100/80 to 103/80 Musique diffusion française and Others v Commission [1983] ECR 1825, paragraph 109; Case C‑196/99 P Aristrain v Commission [2003] ECR I‑11005, paragraph 81; Case T‑12/89 Solvay v Commission [1992] ECR II‑907, paragraph 309; Case T‑304/94 Europa Carton v Commission [1998] ECR II‑869, paragraph 89; and Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraph 56). 45 It follows that undertakings involved in an administrative procedure in which fines may be imposed cannot acquire a legitimate expectation that the Commission will not exceed the level of fines previously imposed or in a method of calculating the fines (Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraph 228). 46 Consequently, the undertakings in question must take account of the possibility that the Commission may decide at any time to raise the level of the fines by reference to that applied in the past. That is true not only where the Commission raises the level of the amount of fines in imposing fines in individual decisions but also if that increase takes effect by the application, in particular cases, of rules of conduct of general application, such as the Guidelines (Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraphs 229 and 230). 47 Thus, without prejudice to the arguments set out in paragraph 99 et seq. below, ADM is wrong to contend in essence that, in the context of the cartel, the increase in the level of the fines by the Commission is manifestly disproportionate to the objective of ensuring the implementation of competition policy. 48 Similarly, the fact alleged by ADM – even if it were established – that the application of the new policy results in fines of 43 to 153 times higher than those imposed on the basis of the former practice is not capable of leading to a breach of the principle of non‑retroactivity. Having regard in particular to the case‑law cited in paragraph 41 of this judgment, it must have been reasonably foreseeable for ADM that the Commission could at any time review the general level of fines when implementing another competition policy. Thus, ADM should reasonably have been able to foresee such an increase – even if it were established – at the time when the infringements at issue were committed. 49 Finally, in so far as ADM claims that, to ensure that fines have a deterrent effect, it is essential that undertakings have prior knowledge of the level of fines which they must expect if they commit an infringement of the Community competition rules, it is sufficient to note that the deterrent effect of fines in no way presupposes that undertakings have prior knowledge of the exact level of the fine which they must expect for a particular type of anti‑competitive conduct. 50 Consequently, the plea alleging infringement of the principles of legal certainty and non-retroactivity of penalties must be rejected. 2. Breach of the principle of equal treatment a) Arguments of the parties 51 ADM submits that the application of the Guidelines violates the principle of equal treatment since it differentiates between undertakings which have infringed competition law by reference not to the date of the infringement but to the date on which the Commission’s decision was adopted, which was fixed by the Commission in an arbitrary manner. By way of example, the undertakings referred to in Commission Decision 97/624/EC of 14 May 1997 relating to a proceeding pursuant to Article [82] of the EC Treaty (IV/34.621, 35.059/F-3 – Irish Sugar plc) (OJ 1997 L 258, p. 1) and in Commission Decision 94/210/EC of 29 March 1994 relating to a proceeding pursuant to Articles [81] and [82] of the EC Treaty (IV/33.941 – HOV-SVZ/MCN) (OJ 1994 L 104, p. 34) were fined on the basis of only 6.8% and 5% of their relevant market sales respectively, although the infringements concerned were contemporaneous with the sodium gluconate cartel. 52 The Commission contends that that plea should be rejected. b) Findings of the Court 53 It is settled case‑law that the application of the method set out in the Guidelines in calculating the fine imposed does not constitute discriminatory treatment by comparison with undertakings which infringed the Community competition rules at the same time but, for reasons pertaining to the time when the infringement was discovered or to the conduct of the administrative procedure initiated against them, were sanctioned before the adoption and publication of the Guidelines (see, to that effect, Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraphs 69 to 73, and Joined Cases T‑202/98, T‑204/98 and T‑207/98 Tate & Lyle and Others v Commission [2001] ECR II‑2035, paragraphs 118 and 119). 54 Accordingly, for the reasons given in the judgments cited in the previous paragraph, the plea alleging breach of the principle of equal treatment must also be rejected. B – The gravity of the infringement 1. Introduction 55 ADM submits that the Commission incorrectly assessed the gravity of the infringement when calculating the amount of the fine. The pleas relied on in that respect concern (i) the failure to have regard to, or to have sufficient regard to the relevant product turnover, (ii) the failure to have regard to, or to have sufficient regard to the limited size of the sodium gluconate market, (iii) the fact that the need for deterrence was taken into account twice in relation to the fine, (iv) the application of a multiplier to the starting amount and (v) the actual impact of the cartel on the market. 56 Before ruling on the merits of the various pleas put forward in this connection, it is necessary to summarise the method followed by the Commission in this case in assessing and taking account of the gravity of the infringement, as set out in the recitals of the Decision. 57 It is apparent from the Decision that, in assessing the gravity of the infringement, the Commission found, first, that, having regard to the nature of the infringement, its actual impact on the EEA sodium gluconate market and the scope of the relevant geographic market, the undertakings concerned had committed a very serious infringement which had affected the whole of the EEA (recitals 334 to 371 of the Decision). 58 Next, the Commission considered that it was necessary to apply to the undertakings concerned ‘differential treatment in order to take account of the effective capacity of the offenders to cause significant damage to competition and … set the fine at a level which ensures it has a deterrent effect’. In that context, the Commission stated that it would take account of the specific weight and therefore the real impact of the offending conduct of each undertaking on competition (recitals 378 and 379 of the Decision). 59 For the purposes of assessing those elements, the Commission chose to rely on the worldwide sodium gluconate turnover of the undertakings concerned during the last year of the infringement, namely 1995. In this respect, the Commission found that ‘given [that the sodium gluconate market is] global, these figures g[a]ve the most appropriate picture of the participating undertakings’ capacity to cause significant damage to other operators in the common market and/or the EEA’ (recital 381 of the Decision). The Commission added that, in its view, that approach was supported by the fact that this was a global cartel, the object of which was inter alia to allocate markets on a worldwide level, and thus to withhold competitive reserves from the EEA market. It found, moreover, that the worldwide turnover of any given party to the cartel also gave an indication of its contribution to the effectiveness of the cartel as a whole or, conversely, of the instability which would have affected the cartel had that party not participated (recital 381 of the Decision). 60 On that basis, the Commission chose to establish two categories of undertakings: first, that composed of the ‘three major producers of sodium gluconate with worldwide market shares above 20%’ and, second, that composed of undertakings ‘which had significantly lower market shares in the worldwide sodium gluconate market (below 10%)’ (recital 382 of the Decision). Thus, the Commission set a starting amount of EUR 10 million for undertakings in the first category, which included Fujisawa, Jungbunzlauer and Roquette, which had market shares of approximately 36, 25 and 21% respectively, and a starting amount of EUR 5 million for undertakings in the second category, namely Glucona and ADM, which each had market shares of approximately 9%. Since Glucona was jointly owned by Akzo and Avebe, the Commission set basic amounts of EUR 2.5 million for each of those companies (recital 385 of the Decision). 61 Finally, in order to ensure that the fine had a sufficiently deterrent effect and to take account of the fact that large undertakings have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law, the Commission adjusted the starting amount. Consequently, taking account of the size and the worldwide resources of the undertakings concerned, the Commission applied a multiplier of 2.5 to the starting amount for ADM and Akzo and thus increased the fine to EUR 12.5 million as regards ADM and to EUR 6.25 million as regards Akzo by reference to the gravity of the infringement (recital 388 of the Decision). 2. The failure to have regard to, or to have sufficient regard to the relevant product turnover a) Arguments of the parties 62 ADM complains that the Commission failed to have regard to, or had insufficient regard to, relevant product turnover when calculating the basic amount of the fine. 63 First, ADM submits that it is apparent from the case-law of the Court of First Instance that relevant product turnover is an important element in the assessment of fines (Case T-77/92 Parker Pen v Commission [1994] ECR II-549, paragraphs 92 to 95; Joined Cases T-24/93 to T-26/93 and T-28/93 Compagnie maritime belge transports and Others v Commission [1996] ECR II-1201, paragraph 233; Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689, paragraph 127; and Case T-327/94 SCA Holding v Commission [1998] ECR II-1373, paragraph 176). 64 ADM submits that consideration of EEA sales in the relevant product is an appropriate starting point for assessing both the damage to competition on the relevant product market within the Community and the relative importance of the participants in the cartel in relation to the products concerned. That conclusion is borne out by the case-law of the Court of First Instance (Europa Carton v Commission, paragraph 44 above, paragraph 126; Case T-309/94 KNPBT v Commission [1998] ECR II-1007, paragraph 108, upheld on appeal by the Court of Justice in Case C-248/98 P KNP BT v Commission [2000] ECR I-9641). 65 Furthermore, the judgment of the Court of First Instance in Case T-9/99 HFB and Others v Commission [2002] ECR II-1487, paragraph 442, confirms that attributing disproportionate importance to an undertaking’s total size in assessing the fine is unlawful. 66 Similarly, ADM submits that, in comparable cases in recent years (Commission Decision 94/601/EC of 13 July 1994 relating to a proceeding under Article 85 of the EC Treaty (IV/C/33.833 – Cartonboard) (OJ 1994 L 243, p. 1); Commission Decision 94/815/EC of 30 November 1994 relating to a proceeding under Article 85 of the EC Treaty (Cases IV/33.126 and 33.322 – Cement) (OJ 1994 L 343, p. 1); Commission Decision 86/398/EEC of 23 April 1986 relating to a proceeding under Article 85 of the EEC Treaty (IV/31.149 – Polypropylene) (OJ 1986 L 230, p. 1); Commission Decision 89/515/EEC of 2 August 1989 relating to a proceeding under Article 85 of the EEC Treaty (IV/31.553 – Welded steel mesh) (OJ 1989 L 260, p. 1); Commission Decision 94/215/ECSC of 16 February 1994 relating to a proceeding pursuant to Article 65 of the ECSC Treaty concerning agreements and concerted practices engaged in by European producers of beams (OJ 1994 L 116, p. 1)) the Commission took as its basis sales of the relevant product in the Community market, as it indeed acknowledged in the Decision (recital 395). In relying in those decisions on that basis of calculation, the Commission set fines of between 2% and 9% of the undertakings’ relevant product turnover. If the Commission had also applied that basis of calculation in this instance, it would have imposed a fine on ADM of between EUR 66 000 and EUR 236 000. However, in failing to adhere to that basis of calculation, the Commission imposed on ADM fines which were 43 to 153 times higher than those which would have been imposed on that basis. 67 ADM submits that the Commission’s approach tends to penalise a low value niche product in the same way as a cartel in a high value, economically significant commodity. At no stage in the calculation of the fines did the Commission take sufficient account of ADM’s limited sales of sodium gluconate. 68 ADM adds that, even looking at its sodium gluconate sales in the EEA throughout the entire period of the cartel and not simply throughout one year, the Commission’s fine is still manifestly disproportionate. ADM’s total EEA sodium gluconate turnover for the period from June 1991 to June 1995 (the time during which the Commission alleges ADM participated in the cartel) amounted to only approximately EUR 7.83 million and so the fine represents 216% of that amount. ADM’s total EEA sodium gluconate turnover for the period from June 1991 to October 1994 (which ADM claims is the full period of its participation in the cartel) was approximately EUR 5.96 million and the fine imposed was equivalent to 283% of that amount. Whichever precise period of participation in the cartel is taken, the fine exceeds by more than 200% the total sales throughout the entire period of ADM’s participation in the cartel. Indeed, a fine representing 644% of annual sales would be the result of the method followed by the United States authorities to which the Commission refers had the cartel lasted 32 years (instead of less than four). 69 Consequently, ADM submits that the Commission not only disregarded the principles deriving from case-law but also violated the principle of proportionality. 70 Second, ADM submits that the Guidelines suggest that it is ‘necessary to take account of the effective economic capacity of the offenders to cause significant damage to other operators, in particular consumers’ and that they also provide, in the case of cartels, for weighting designed to reflect ‘the real impact of the offending conduct of each undertaking on competition’. 71 In ADM’s submission, the economic impact, whether on competition or on other operators, may be assessed only by reference to the amount of affected product sales. Only by taking these sales into account is it possible to assess the scope of the potential harm to consumers or competition in terms of an anti-competitive surcharge or other illegal benefit. 72 Consequently, in failing to take account of relevant product sales, the Commission applied its own guidelines incorrectly. 73 Finally, ADM submits that, in failing to give proper reasons for its decision not to take into account ADM’s EEA sales in the relevant product market, the Commission infringed its obligation to state reasons. 74 The Commission contends that the pleas put forward should be rejected. b) Findings of the Court 75 ADM alleges infringement, first, of the principle of proportionality, second, of the Guidelines and, third, of the obligation to state reasons. Infringement of the principle of proportionality 76 As acknowledged by settled case‑law, the gravity of infringements has to be determined by reference to numerous factors, such as the particular circumstances of the case and its context; moreover, there is no binding or exhaustive list of the criteria which must be applied (order in Case C‑137/95 P SPO and Others v Commission [1996] ECR I‑1611, paragraph 54; Case C-219/95 P Ferriere Nord v Commission [1997] ECR I‑4411, paragraph 33; and HFB and Others v Commission, paragraph 65 above, paragraph 443). 77 Furthermore, according to settled case-law, the criteria for assessing the gravity of an infringement may include the volume and value of the goods in respect of which the infringement was committed and the size and economic power of the undertaking and, consequently, the influence which it was able to exert on the relevant market. It follows that, on the one hand, it is permissible, for the purpose of fixing a fine, to have regard both to the total turnover of the undertaking, which gives an indication, albeit approximate and imperfect, of the size of the undertaking and of its economic power, and to the market share of the undertakings concerned on the relevant market, which gives an indication of the scale of the infringement. On the other hand, it follows that it is important not to confer on one or other of those figures an importance which is disproportionate in relation to other factors and the fixing of an appropriate fine cannot therefore be the result of a simple calculation based on total turnover (see, to that effect, Musique diffusion française and Others v Commission, paragraph 44 above, paragraphs 120 and 121; Parker Pen v Commission, paragraph 63 above, paragraph 94; SCA Holding v Commission, paragraph 63 above, paragraph 176; Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraph 188; and HFB and Others v Commission, paragraph 65 above, paragraph 444). 78 It follows that, although it cannot be denied, as ADM states, that turnover in the relevant product is an appropriate starting point for assessing both the damage to competition on the relevant product market within the Community and the relative importance of the participants in the cartel in relation to the products concerned, the fact remains that that is by no means the only criterion according to which the Commission should assess the gravity of the infringement. 79 Consequently, contrary to what ADM submits, if an assessment of the proportionality of the fine were confined, as it seems to propose, merely to the correlation between the fine imposed and the relevant product turnover, that would confer disproportionate importance on that criterion. 80 In any event, the mere fact, relied on by ADM, that the fine imposed exceeds turnover through sales of that product in the EEA during the period of the cartel, or even exceeds it significantly, is not sufficient to show that the fine is disproportionate. It is necessary to assess the proportionality of that fine by reference to all the factors which the Commission must take into account when determining the gravity of the infringement, namely, the actual nature of the infringement, its actual impact on the relevant market and the scope of the geographic market. The merits of the Decision in relation to some of those criteria will be considered below, as they arise in ADM’s arguments. 81 The plea alleging infringement of the principle of proportionality inasmuch as the fine imposed exceeds ADM’s turnover in sales of that product in the EEA during the period of the cartel must therefore be rejected. Infringement of the Guidelines 82 As the Court of First Instance has already had occasion to note, the Guidelines do not provide that fines are to be calculated according to the overall turnover of undertakings or their turnover in the relevant market. However, nor do they preclude the Commission from taking such turnover figures into account in determining the amount of the fine in order to ensure compliance with the general principles of Community law and where circumstances demand it (see, to that effect, LR AF 1998 v Commission, paragraph 38 above, paragraph 283, upheld on appeal in Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraph 258, and Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraph 187). 83 Consequently, the Guidelines do not provide that the turnover figures of the undertakings concerned – whether the overall turnover or the relevant product turnover – constitute the starting point for calculating the fines and, still less, that they constitute the only relevant criteria for assessing the gravity of the infringement. 84 On the other hand, the Commission may take account of turnover as one among a number of relevant factors. This is particularly so where, in accordance with the third to sixth paragraphs of Section 1A of the Guidelines, the Commission adjusts the amount in order to ensure that the fines have a sufficiently deterrent effect. In that respect, the Commission takes account of the effective economic capacity of the offenders to cause significant damage to other operators and of the need to ensure that the fine has a sufficiently deterrent effect (Section 1A, fourth paragraph) and applies weightings to the amounts determined on the basis of the specific weight and, therefore, the real impact of the offending conduct of each undertaking on competition, particularly where there is considerable disparity between the sizes of the undertakings committing infringements of the same type (Section 1A, sixth paragraph). 85 In particular, the Commission submitted in its pleadings that, when assessing, for the purpose of differentiating between the undertakings concerned, the actual impact of the offending conduct of each undertaking on competition, it must take account of the relevant product turnover. 86 As is clear from recitals 378 to 382 of the Decision, contrary to what ADM submits, the Commission did indeed take account of the relevant product turnover of the parties concerned in that context. As already noted at paragraphs 58 and 60 above, in order to apply that differential treatment to the undertakings concerned, the Commission relied on their worldwide sodium gluconate turnover during the last year of the infringement, namely 1995. 87 In the present case, the cartel is made up of undertakings which hold virtually the entire relevant product market at worldwide level. Moreover, the cartel concerns price-fixing and market‑sharing by means of allocating sales quotas. In such a case, the Commission may legitimately rely on the worldwide sodium gluconate turnover of the members of that cartel for the purpose of differentiating between the undertakings concerned. Since the objective of that differential treatment is to assess the effective economic capacity of offenders to cause damage to competition by their offending conduct and, therefore, to take account of their specific weight within the cartel, the Commission did not exceed its wide margin of assessment in finding that the worldwide market share of the respective members of the cartel was an appropriate indication. 88 Consequently, the plea alleging infringement of the Guidelines must be rejected. Infringement of the obligation to state reasons 89 It is settled case-law that the statement of reasons required by Article 253 EC must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure, so as to enable the persons concerned to ascertain the reasons for it and to enable the competent court to exercise its power of review. The requirement to state reasons must be assessed in the light of the circumstances of the case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. In that regard, it is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (Case C‑367/95 P Commission v Sytraval and Brink’s France [1998] ECR I‑1719, paragraph 63, and Case C‑301/96 Germany v Commission [2003] ECR I‑9919, paragraph 87). 90 In the case of a decision imposing fines on several undertakings for an infringement of the Community competition rules, the scope of the obligation to state reasons must be established, inter alia, in the light of the fact that the gravity of infringements must be determined by reference to numerous factors including, in particular, the specific circumstances of the case and its context; moreover, no binding or exhaustive list of the criteria which must be applied has been drawn up (order in SPO and Others v Commission, paragraph 76 above, paragraph 54). 91 In the present case, the Commission did not calculate the fine on the basis of the turnover for the relevant product in the EEA. Contrary to what ADM asserts, the Commission was not required to calculate the amount of the fine to be imposed on an undertaking on the basis of its turnover for the relevant product in the EEA (see paragraphs 86 and 87 above). Consequently, it cannot be criticised for failing to state why it did not use that factor in calculating the fine imposed. 92 Accordingly, the plea alleging infringement of the obligation to state reasons must also be rejected. 3. The failure to have regard to, or to have sufficient regard to the limited size of the relevant product market a) Arguments of the parties 93 ADM submits that the Commission, when calculating the fine, and contrary to its assertion at recital 377 of the Decision, has not, or at the least, has not correctly taken into account the limited size of the relevant product market. 94 First, the Commission set the starting amount for all the undertakings concerned at EUR 40 million and for ADM alone at EUR 5 million (recital 385 of the Decision). The amount of EUR 40 million represents more than 200% of 1995 EEA sodium gluconate sales for all the undertakings concerned. In addition, the final fine settled on by the Commission represented 438% (prior to reduction for cooperation), and 294% (after reduction), of 1995 EEA sodium gluconate sales (recitals 396 and 440 of the Decision). 95 Second, comparing the fine which the Commission imposed on it in this instance with the fines imposed in the Zinc phosphate case, Commission Decision 2003/437/EC of 11 December 2001 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case No COMP/E-l/37.027 – Zinc Phosphate) (OJ 2003 L 153, p. 1), ADM submits that the Commission infringed the principle of equal treatment. Although the two cases are partly contemporaneous and are comparable not only as regards the size of the relevant markets but also as regards the gravity and duration of the infringement, the Commission took into account the limited size of the zinc phosphate market in Europe and in that case set the aggregate fine at EUR 11.95 million (75% of overall relevant product sales) as opposed to the aggregate fine of EUR 40 million in the sodium gluconate case (over 200% of relevant EEA product sales). Furthermore, in the Zinc phosphate case, the basic amount was set at EUR 3 million for undertakings with over 20% market share and at EUR 0.75 million for the undertaking which had a significantly smaller market share. However, in the sodium gluconate case, the Commission set the starting amount for calculating the fine at EUR 10 million for undertakings with over 20% market share and at EUR 5 million for undertakings with a significantly smaller market share. 96 Third, ADM submits that the Decision is also inadequately reasoned on that point, since there is a contradiction between recital 377, on the one hand, and recitals 394 and 395 on the other. At recital 377, the Commission stated that it had taken into account relevant product turnover, while, at recitals 394 and 395, it rejects ADM’s submissions that relevant product turnover be taken into account. 97 The Commission contends that the pleas put forward should be rejected. As regards the comparison of this case with the Zinc phosphate case, the Commission maintains that in that instance, first, the fines originally calculated had been halved by virtue of the maximum limit of 10% of overall turnover laid down in Article 15 of Regulation No 17 and, second, the Commission found there to be no aggravating circumstances. Furthermore, any remaining differences in the treatment of the two cases are justified by the Commission’s discretion in this domain. b) Findings of the Court 98 ADM alleges infringement, first, of the principle of proportionality, second, of the principle of equal treatment and, third, of the obligation to state reasons. Infringement of the principle of proportionality 99 It should be borne in mind that, in accordance with Article 15(2) of Regulation No 17, the fine is set on the basis of the gravity and duration of the infringement. Furthermore, in accordance with the Guidelines, the Commission sets the starting amount on the basis of the gravity of the infringement, taking into account the actual nature of the infringement, its actual impact on the market and the scope of the geographic market. 100 That legal framework does not therefore in itself require the Commission to take account of the small size of the product market. 101 However, according to case‑law, when assessing the gravity of an infringement, the Commission must take account of a large number of factors, the nature and importance of which vary according to the type of infringement in question and the particular circumstances of the case (Musique diffusion française and Others v Commission, paragraph 44 above, paragraph 120). Those factors attesting to the gravity of the infringement may, depending on the circumstances, include the size of the relevant product market. 102 Consequently, although the size of the market may constitute a factor to take into consideration when determining the gravity of the infringement, its significance varies according to the particular circumstances of the case. 103 In the present case, the infringement concerns in particular a price cartel which, by its very nature, is intrinsically very serious. Furthermore, the undertakings party to the cartel supplied over 90% of the world market and 95% of the European market (recital 9 of the Decision). Finally, it is apparent that sodium gluconate is a raw material used in a number of very different finished products, therefore affecting several markets (recitals 6 and 8 of the Decision). In that context, the small size of the relevant market, assuming it is proven, is of only secondary importance in relation to all the other factors attesting to the gravity of the infringement. 104 In any event, account must be taken of the fact that the Commission found that the infringement had to be regarded as very serious for the purpose of the Guidelines which, for such cases, provide that the Commission may ‘envisage’ a starting amount in excess of EUR 20 million. However, in this case, according to recital 385 of the Decision, the Commission set a starting amount of only EUR 10 million for undertakings in the first category and of EUR 5 million for undertakings in the second category, which corresponds to half, or even a quarter of the amount which it could have ‘envisaged’ for very serious infringements under the Guidelines. 105 That determination of the starting amount of the fine confirms that, as it stated at recital 377 of the Decision, the Commission had regard, inter alia, to the limited size of the relevant product market. 106 Consequently, the plea alleging infringement of the principle of proportionality must be rejected. Infringement of the principle of equal treatment 107 It should be pointed out that, in accordance with settled law, the principle of equal treatment is infringed only where comparable situations are treated differently or different situations are treated in the same way, unless such difference in treatment is objectively justified (Case 106/83 Sermide [1984] ECR 4209, paragraph 28, and Case T‑311/94 BPB de Eendracht v Commission [1998] ECR II‑1129, paragraph 309). 108 It should also be pointed out that the Commission’s practice in previous decisions does not itself serve as a legal framework for the fines imposed in competition matters, as that framework is established by Article 15(2) of Regulation No 17, as supplemented by the Guidelines (see, to that effect, Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraphs 209 to 213, and the case‑law cited therein). 109 Furthermore, the determination of the amount of fines falls within the Commission’s wide discretion, so that traders cannot have a legitimate expectation in the Commission’s determination of such amounts (see, to that effect, Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraphs 171 and 172, and the case‑law cited therein). 110 Finally, it should be borne in mind that the mere fact that the Commission has found in its previous decisions that a type of conduct justified a fine of a certain amount in no way means that it is obliged to do so also in a subsequent decision (see, inter alia, by analogy, Case T‑7/89 Hercules Chemicals v Commission [1991] ECR II‑1711, paragraph 357; Case T‑347/94 Mayr-Melnhof v Commission [1998] ECR II‑1751, paragraph 368; and LR AF 1998 v Commission, paragraph 38 above, paragraphs 234 and 337). 111 Thus, in the present case, it must be held that the simple reference by ADM to the Zinc phosphate decision is in itself ineffective, since the Commission was not required to assess this case in the same manner. 112 As regards the application of the principle of equal treatment in the present case, it should be noted that the Commission’s other fining decisions are in principle only of an indicative nature, a fortiori where the facts of those other decisions, such as markets, products, the undertakings and periods concerned, are not the same as those in the contested decision (see, to that effect, Case T‑67/01 JCB Service v Commission [2004] ECR II‑49, paragraph 187). 113 In the present case, it must be held that, prima facie, the circumstances of the cartel to which the Decision relates differ from those in the Zinc phosphate decision. The zinc phosphate market cartel was limited to the territory of the EEA, whilst the sodium gluconate cartel was worldwide. Moreover, contrary to the circumstances of this case, only relatively small undertakings were involved in the zinc phosphate market cartel. Thus, the worldwide turnover of the undertakings involved in the Zinc phosphate decision ranged between EUR 7.09 million and EUR 278.80 million in 2000, whilst in this case the worldwide turnover of the undertakings involved ranged between EUR 314 million and EUR 14.003 billion in 2000, with ADM having worldwide turnover of EUR 13.936 billion. 114 In any event, even if all the circumstances relevant for the purposes of determining the appropriate amount in the Zinc phosphate decision could be regarded as comparable to those of this case, the Court considers, under its unlimited jurisdiction, that the basic amount set by the Commission for the infringement committed by ADM in this instance is appropriate in the light of all the factors referred to by the Commission in the Decision and in the light of the assessment of some of those factors in this judgment. 115 Consequently, ADM may not rely on the Commission’s decision in the Zinc phosphate case in order to show that there has been an infringement of the principle of equal treatment in this case. Infringement of the obligation to state reasons 116 Concerning the contradiction alleged by ADM between recital 377, on the one hand, and recitals 394 and 395 of the Decision on the other, it should be noted that at recital 377 of the Decision the Commission stated that it had had regard to the limited size of the sodium gluconate market when determining the starting amounts. Contrary to what ADM submits, the Commission did not contradict that statement when, at recital 395 of the Decision, it rejected the arguments put forward in particular by ADM which allege, in essence, that the Commission should have set the fines by reference to the turnover of the undertakings concerned on the relevant market. First, the fact that certain parties, including ADM, achieve only a small turnover on the relevant market does not necessarily indicate that that market is of limited size. Second, as was already stated at paragraph 104 above, in setting a starting amount of only EUR 10 million in this instance notwithstanding that it was an infringement which, by its very nature, was very serious, the Commission took account of the limited size of the market. Accordingly, the Decision is not contradictory on those points. 117 Consequently, the plea alleging infringement of the obligation to state reasons must also be rejected. 4. Deterrence taken into account twice in relation to the fine a) Arguments of the parties 118 ADM claims that the Commission took deterrence into account twice when calculating the fine: first, when classifying the role of the cartel participants for the purpose of setting the starting amount (recitals 378, 382 and 385 of the Decision) and, second, when applying an uplift of 250% to take account of ADM’s size and overall resources (recitals 386 to 388 of the Decision). In any event, if the arguments which the Commission has advanced before the Court are correct, the Decision is vitiated on this point by inadequate reasoning. 119 The Commission denies that it took deterrence into account twice in relation to the fine. On the contrary, it took two distinct consecutive steps, based on different criteria, in order to set the fine at a level ensuring that it had a sufficiently deterrent effect (recitals 378 and 380 of the Decision). Moreover, the Commission maintains that the Decision is adequately reasoned on this point. b) Findings of the Court 120 ADM thus pleads infringement, first, of the Guidelines and, second, of the obligation to state reasons. Infringement of the Guidelines 121 As ADM correctly submits, the Commission stated that it was necessary to set the fines at a deterrent level when applying to the cartel members differential treatment on the basis of their market share, thus placing ADM in the category of undertakings with market share of less than 10% (recitals 378, 382 and 385 of the Decision). Similarly, the Commission relied on that argument when applying to certain members of the cartel, including ADM, the multiplier of 2.5 to take account of their size and overall resources (recitals 386 to 388 of the Decision). 122 However, in order to set the starting amount of the fine on the basis of the gravity of the infringement, the Commission first categorised the infringement as such, taking into account objective factors, namely the actual nature of the infringement, its impact on the market and the geographic scope of that market. Second, the Commission took account of factors relating to the individual undertakings, namely the circumstances linked specifically to each member of the cartel, such as the size of the undertaking and its overall resources. It was in this second part of its analysis that it pursued, inter alia, the objective of ensuring that the fine was sufficiently deterrent. 123 As the Commission correctly submits, even if it referred to that objective twice in that second part of its analysis, in reality it carried out only one calculation, which it divided into two steps, and which was intended to set the fine for each individual member of the cartel at a level such that, taking account of their specific circumstances, the aim of deterrence could be attained in the light of all the objective and individual factors relating to the gravity of the infringement. 124 Contrary to what ADM submits, the Commission did not therefore ‘count twice’ the deterrent element of the fine. 125 Consequently, the plea alleging infringement of the Guidelines must be rejected. Infringement of the obligation to state reasons 126 It should be noted that ADM has not put forward any specific argument in support of its assertion and has merely complained that the Commission did not provide a statement of reasons for counting the deterrent element of the fine twice. 127 In any event, it has already been found, at paragraphs 121 to 125 above, that the Commission did not take the deterrent element of the fine into account twice. It did not therefore need to give a specific statement of reasons in that regard. 128 Consequently, the plea alleging infringement of the obligation to state reasons must also be rejected. 5. Application of a multiplier to the starting amount a) Arguments of the parties 129 ADM submits that increasing the starting amount by a multiplier of 2.5 is a manifestly disproportionate measure, which is also inadequately reasoned and in breach of the principle of equal treatment. 130 First, given that undertakings are rational economic entities, if a fine is to act as a deterrent, it is necessary only that it be set at a level at which the expected amount exceeds the profit from the infringement. If undertakings appreciate that the loss associated with the punishment eliminates the cartel profit, the fine will already act as a deterrent. That approach was endorsed by the Court of Justice in Musique diffusion française and Others v Commission, paragraph 44 above, paragraph 108. It is also reflected in the Guidelines, which provide (at Section 1A, fourth paragraph) that the deterrent effect is to be assessed by reference to the capacity of the cartel participants to cause damage to consumers and consequently require that any illegal cartel surcharge be taken into account when consideration is given to appropriate deterrence. That approach is also commonly found in other Community rules. 131 Even if it were accepted that a fine which is capped at the level of potential profits was insufficient, a rational basis for a deterrent fine would be to estimate the cartel’s expected profits as a percentage of sales of the affected product with some uplift to take account of error rates. That is precisely the rationale for the approach adopted in the United States. The Court of Justice (Musique diffusion française v Commission, paragraph 44 above, paragraph 108) and the Court of First Instance (HFB and Others v Commission, paragraph 65 above, in particular paragraph 456) have recognised in their case-law that there is a link between deterrence and the profits which may result from the cartel. 132 ADM does not dispute that total turnover may be taken into account for the purposes of calculating the fine. However, attributing disproportionate importance to total turnover results in a disproportionate fine. The Commission confines itself in this regard to defending the uplift applied by comparing it with ADM’s total turnover. There is no rational explanation capable of justifying the fact that calculation of the deterrent uplift concentrated on ADM’s total turnover. The Commission’s approach fails to explain why it was necessary to cancel out ADM’s profits from sales of products which were not related to the infringement at issue in order to discourage the undertakings concerned from pursuing their activities in a sodium gluconate cartel. 133 Second, in its reply, ADM puts forward an alternative plea. If the Court of First Instance were to accept, contrary to the foregoing submissions, that the deterrent uplift were justified by ADM’s size and overall resources, it would none the less remain the case that the Commission could not properly add to the EUR 7.5 million deterrent uplift a further 35% increase in the fine on account of duration. There is some logical justification for such an increase only where the deterrent uplift is based on expected cartel profits. The longer the duration of the cartel, the greater the potential profits and therefore an increase aimed at taking account of the duration of the cartel is appropriate. The correct method of calculating the fine would have been to apply the uplift only to the basic amount of EUR 5 million. The Commission itself appears to have intended that result, since at recital 392 of the Decision, it stated that ‘the starting amount of the fine determined for gravity (recital 385) [was] therefore increased by 35%’. Recital 385 of the Decision, however, refers only to the initial starting point of EUR 5 million. 134 Third, ADM submits that the Commission infringed the principle of equal treatment in taking into account for the purpose of the uplift in the starting amount of the fine the fact that large undertakings have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law (recital 386 of the Decision). 135 The undertakings involved in the infringement are all multinational groups with worldwide turnover in excess of EUR 300 million, which consequently all have access to in-house and external legal advice enabling them to determine whether they run the risk of entering into an illegal cartel and to assess the consequences of infringement. 136 In addition, the Decision is inadequately reasoned on this point. 137 The Commission submits that the argument concerning the further increase of 35% to take account of duration is a new plea, which must be rejected as inadmissible by virtue of Article 48(2) of the Rules of Procedure of the Court of First Instance. The Commission also contends that all the other pleas put forward should be rejected. b) Findings of the Court 138 ADM thus pleads infringement, first, of the principle of proportionality, second, of the principle of equal treatment and, third, of the obligation to state reasons. Infringement of the principle of proportionality 139 ADM raises two separate complaints in connection with this plea. 140 First, ADM claims in essence that, given that undertakings are rational economic entities, if a fine is to act as a deterrent, it is necessary only that it be set at a level at which the expected amount exceeds the profit from the infringement. In this respect, it should be recalled that deterrence is one of the main considerations which must guide the setting of fines (Case 41/69 Chemiefarma v Commission [1970] ECR 661, paragraph 173, and Case 49/69 BASF v Commission [1972] ECR 713, paragraph 38, and the case‑law cited in paragraph 90 above). 141 However, if the fine were set at a level which merely negated the profits of the cartel, it would not be a deterrent. It is reasonable to assume that when making financial calculations and management decisions, undertakings take account rationally not only of the level of fines that they risk incurring in the event of an infringement but also the likelihood of the cartel being detected. In addition, if the purpose of the fine were to be confined merely to negating the expected profit or advantage, insufficient account would be taken of the fact that the conduct in question constitutes an infringement of Article 81(1) EC. To regard the fine merely as compensating for the damage incurred would be to overlook not only the deterrent effect, which can relate only to future conduct, but also the punitive nature of such a measure in relation to the actual infringement committed. Thus, both the deterrent effect and the punitive effect of the fine are reasons why the Commission should be able to impose a fine which, depending on the circumstances of the case, may even substantially exceed the profit expected by the undertaking in question. 142 Similarly, in the case of an undertaking which, like ADM, is active on a large number of markets and has a particularly large financial capacity, to take into account turnover on the relevant market cannot suffice to ensure that the fine has deterrent effect. The larger an undertaking is and the more overall resources it has at its disposal which enable it to act independently on the market, the more it must be aware of the importance of its role as regards the smooth functioning of competition on the market. Consequently, the factual circumstances of the economic power of an undertaking which has been found guilty of an infringement must be taken into account when setting the amount of the fine in order to ensure that it has deterrent effect. 143 Furthermore, as the Commission stated without being contradicted by ADM, the fine set for ADM after the multiplier of 2.5 had been applied represents only a tiny proportion, i.e. 0.0538% of its total annual turnover and cannot be regarded as disproportionate from that point of view either. 144 Second, in its reply, ADM claims that the Commission could not under any circumstances add to the amount of EUR 7.5 million, which already included an uplift for deterrence, a further 35% increase in the fine on account of duration. In this respect, it should be borne in mind that, under Article 48(2) of the Rules of Procedure, the introduction of a new plea in law in the course of proceedings is not allowed unless it is based on matters of law or of fact which come to light in the course of the procedure. By contrast, a plea which constitutes an amplification of a submission previously made, either expressly or by implication, in the original application and is closely linked to it must be declared admissible. The same applies to a submission made in support of a plea in law (Case T‑231/99 Joynson v Commission [2002] ECR II‑2085, paragraph 156). 145 In the present case, ADM claimed in its application that the multiplier of 2.5 was excessive, maintaining in essence that it went beyond what was necessary to ensure that the fine had deterrent effect. It asserts in its reply, and in the alternative to the previous complaint that, in any case, the Commission should have applied the increase of 35% on account of the duration of the infringement, not to the amount obtained after the multiplier of 2.5 had been applied, but to the amount determined before the application of that multiplier. In so doing, ADM puts forward a complaint which is closely connected with that advanced in the application, thus merely amplifying the plea previously set out. Consequently, the merits of that complaint must be considered. 146 As regards the merits of the complaint put forward by ADM, the Commission was right to apply the multiplier based on the duration of the infringement to the basic amount which had already been increased by the multiplier of 2.5. In this respect, as has just been held (see paragraphs 140 to 143 above), the multiplier of 2.5 is a deterrent factor which ensures, first, that the fine has a sufficiently deterrent effect in the light of the characteristics of the undertaking concerned. However, nothing prevented the Commission from then increasing the figure thus obtained by a second multiplier which takes account of the nature of the infringement. The more ready undertakings are to commit very serious infringements over a long period of time, the greater is the need for deterrence. 147 As to the reference to recital 385 in recital 392 of the Decision, the Commission accepted before the Court that this was an error. However, that error does not undermine the lawfulness of the Decision, since it is clear from the way in which the increase for duration was calculated and from the reference to the starting amount determined for the gravity of the infringement, which includes the uplift on account of the multiplier of 2.5, that the Commission had in mind the adjusted basic amount for gravity. That is also clear from the logical sequence of the Commission’s analysis which, at recitals 378 to 388 of the Decision, took account, step by step, of the specific circumstances of the various undertakings concerned. It therefore becomes apparent that the reference at recital 392 concerned, in actual fact, not just recital 385, but recitals 385 to 388. In that context, regard should also be had to the fact that the Guidelines state that taking into account the duration of the infringement will point ‘to a possible increase in the amount of the fine’ (Section 1B, paragraph 2). 148 ADM is therefore wrong to criticise the Commission for adding to the uplift based on the need for deterrence a further 35% increase in the fine on account of duration. 149 Consequently, the plea alleging infringement of the principle of proportionality must be rejected. Infringement of the principle of equal treatment 150 ADM claims that the undertakings involved in the infringement all belonged to multinational groups which consequently all had access to in-house and external legal advice enabling them to determine whether they ran the risk of entering into an illegal cartel and to assess the consequences of infringement. 151 In this connection, it should be observed that, in the Decision, the Commission did indeed envisage two reasons for applying to the starting amount of the fine of certain members of the cartel, including ADM, a multiplier of 2.5. The Commission claimed that it was necessary, first, to ensure that the fine had a sufficiently deterrent effect and, second, to take account of the fact that large undertakings have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law (recital 386 of the Decision). 152 However, it is apparent from recital 388 of the Decision that it was essentially to ensure that the fine had a deterrent effect that the Commission decided to apply to ADM the multiplier of 2.5. As already mentioned in paragraphs 139 to 143 above, the Commission was right to have regard to the need to ensure that the fine had a sufficiently deterrent effect and, more particularly, it was right to consider, as stated at recital 387 of the Decision, that the appropriate starting point for a fine resulting from the criterion of the relative importance in the market concerned required further upward adjustment to take account of the size and overall resources of the undertakings concerned. Further, given that ADM and Akzo each had worldwide turnover of approximately EUR 14 billion in 2000 while the other cartel members only had turnover of between approximately EUR 300 million and EUR 3 billion, it cannot be disputed that, in order to achieve that objective, the Commission was entitled to draw a distinction between two categories of cartel members according to their size and overall resources and to increase the basic amount of the fine for ADM and Akzo by a multiplier of 2.5. 153 The Court considers that the legal and economic knowledge and infrastructures of the undertakings concerned can be taken into account in order to increase the amount of the fine. In the present case, ADM does not dispute that it has such legal and economic knowledge and infrastructures. An undertaking such as ADM having worldwide turnover of approximately EUR 14 billion in 2000 can moreover be considered to have such knowledge and infrastructures. Consequently, the Commission was right to find that the existence of such knowledge and infrastructures was a ground for increasing the basic amount of ADM’s fine. That finding cannot be called in question by ADM’s argument that the undertakings in the other category also have legal and economic knowledge and infrastructures such as to justify an increase in their fines too. Even if that were the case and the Commission was wrong not to find that the undertakings in that second category also had such knowledge and infrastructures, ADM could not in any event rely on that argument in order to obtain a reduction of the increase imposed on it. 154 Consequently, the plea alleging infringement of the principle of equal treatment must be rejected. Infringement of the obligation to state reasons 155 ADM asserts, without putting forward any arguments, that the Decision is inadequately reasoned as regards the multiplier of 2.5. In this respect, it should be observed that at recital 386 of the Decision, the Commission referred to the two reasons already mentioned in paragraph 151 above in order to apply the multiplier. Next, at recital 387 of the Decision, the Commission explained that, on the basis of the figures set out in recital 48 of that decision, it was necessary to place the cartel members in two categories. Finally, at recital 388 of the Decision, it stated that it considered it appropriate to apply the multiplier of 2.5 in order to ensure that the fine had a deterrent effect. 156 As regards the size of the multiplier applied to ADM, the Commission was entitled to refer merely to the size of that undertaking, as indicated in approximate terms by its overall turnover, and to draw attention to the need to ensure that the fine was deterrent. There was no obligation on the Commission, as part of its obligation to state reasons, to indicate the figures relating to the calculation method underlying that choice (see, to that effect, Case C‑291/98 P Sarrió v Commission [2000] ECR I‑9991, paragraph 80). 157 The Commission therefore provided sufficient reasoning for the Decision on that point and the plea alleging infringement of the obligation to state reasons must also be rejected. 6. Errors of assessment relating to the cartel’s actual impact on the market a) Introduction 158 First of all, it should be recalled that the gravity of infringements has to be determined by reference to numerous factors (see paragraph 76 above). In that context, the actual impact of the cartel on the relevant market can be taken into account as one of the relevant criteria. 159 In its Guidelines (Section 1A, first paragraph), the Commission stated that when assessing the gravity of the infringement it takes account of ‘[the] actual impact [of the infringement] on the market, where this can be measured’, as well as its nature and the size of the relevant geographic market. 160 As far as the present case is concerned, it is clear from recitals 334 to 388 of the Decision that the Commission did in fact set the fine, determined by reference to the gravity of the infringement, taking into account those three criteria. In particular, it considered that the cartel had an ‘actual impact’ on the sodium gluconate market (recital 371 of the Decision). 161 According to ADM, the Commission made several errors of assessment in its evaluation of the actual impact of the cartel on the relevant market. ADM asserts that those errors affect the calculation of the fines. b) The approach chosen by the Commission to show that the cartel had an actual impact on the market was incorrect Arguments of the parties 162 ADM submits that the Commission has failed to adduce evidence that the cartel had an actual impact on the sodium gluconate market, in particular because of errors made in the way that the Commission arrived at that conclusion. 163 First of all, in ADM’s submission, the Commission merely found that the cartel had effectively been implemented and inferred from this that the cartel must also have had an actual impact on the market. ADM states that, as is apparent from Section 1A, first paragraph, of the Guidelines and as the Commission itself recognised at recital 341 of the Decision, the implementation of a cartel should not be confused with the actual impact of the cartel on the relevant market. 164 Similarly, ADM is of the opinion that the Commission was not entitled to rely on the relatively long duration of the cartel in order to find that it had had an actual impact on the relevant market. ADM submits that the Commission has failed to adduce evidence of an actual impact, but has merely relied – unlawfully – on a presumption to that effect. 165 Finally, as regards the changes in sodium gluconate prices, ADM submits that the Commission has not, as it was required to do under Section 1A, first paragraph, of the Guidelines, adduced evidence that the cartel had a ‘measurable’ impact on those changes. By contrast, in ADM’s submission, the Commission relied only on a graph found at Roquette’s premises during the inspection and, when comparing the Commission’s findings derived from that graph with the arguments developed by ADM, the Commission noted that those ‘arguments … did not demonstrate in any convincing manner that the implementation of the cartel agreement could not have played any role in the price fluctuations’ (recital 359 of the Decision). Similarly, ADM criticises the fact that, without denying the validity of its arguments as such, the Commission merely observed that the development of sodium gluconate prices, as evidenced by that graph, ‘[was] also perfectly consistent with a cartel situation’ (also recital 359 of the Decision). In ADM’s submission, in adopting that approach, the Commission has failed to adduce evidence that the cartel had an actual impact on the market but has, on the contrary, unlawfully reversed the burden of proof on the parties. 166 The Commission accepts that the criteria for determining the implementation and the actual impact of the cartel should not be confused and that it is for the Commission to adduce evidence that the cartel had an actual impact on the market. However, it submits that in this instance it did not reverse the burden of proof but, by contrast, adduced evidence to the requisite legal standard that the cartel did have such an impact. Findings of the Court 167 In view of the complaints put forward by ADM as regards the approach chosen by the Commission to show that the cartel had had an actual impact on the sodium gluconate market, it is necessary to summarise the Commission’s analysis, as set out in recitals 340 to 369 of the Decision, before adjudicating on the validity of ADM’s arguments. – Summary of the Commission’s analysis 168 First, at recital 340 of the Decision, the Commission started its analysis as follows: ‘The Commission considers that the infringement, committed by undertakings which during the period covered by this Decision covered over 90% of the world market and 95% of the European market for sodium gluconate, had an actual impact on the sodium gluconate market in the EEA because it was carefully implemented. As the arrangements were specifically designed to restrict sales quantities, raise prices higher than they would otherwise have been and restrict sales to certain customers, they must have altered the normal pattern of market behaviour and therefore have had an effect on the market.’ 169 At recital 341 of the Decision, the Commission stated that, ‘[t]o the greatest extent possible, a distinction [had been] drawn between the question of the implementation of the agreements and the question of the effects produced in the market by this implementation’ but that ‘none the less, there [was], understandably, some overlap between the factual elements used to reach conclusions on these two points’. 170 That being so, the Commission first analysed the implementation of the cartel (recitals 342 to 351 of the Decision). The Commission submits that various elements relating to what it considered to be the cornerstone of the cartel, namely the sales quotas, showed that the cartel had been implemented. Further, the Commission relied on the fact that ‘[t]he cartel was characterised by a continuous concern for the fixing of target and/or minimum prices’ and added that, in its opinion, ‘[t]hese prices must have had an effect on the participants’ behaviour, notwithstanding the fact that they may not have been attained systematically by the cartel participants’ (recital 348 of the Decision). The Commission concluded that ‘the effectiveness of the implementation [of the cartel] could not be questioned’ (recital 350 of the Decision). 171 Second, the Commission assessed the impact of the infringement on the sodium gluconate market. It first referred to the assessment of the relevant market at recitals 34 to 41 of the Decision. Next, referring to the assessment already carried out at recitals 235 and 236 of the Decision, the Commission, relying on the two tables (‘the graphs’) found at Roquette’s premises (recital 354 of the Decision), stated as follows: ‘The price development as it is set out in the [graphs] found at Roquette during the investigation suggests that the goal pursued by the participants to the cartel was at least partly reached. The two [graphs] present the evolution of the price of sodium gluconate in [French francs (FRF)] in Europe from 1977 to 1995, and show that in 1985 the European sodium gluconate price plunged. It is likely that this movement resulted from the collapse of the earlier cartel and the subsequent increase in the use of production capacity. By the end of 1986, the price was around 50% lower than at the beginning of 1985. There is a strong probability that the enforcement of the new cartel agreements, from 1986 onwards, significantly contributed to the steep price increase of 1987-1989, when the price doubled. After a decrease in price in 1989 that remained smaller than the one of 1985, the price remained until 1995 some 60% higher than in 1987.’ 172 At recitals 235 and 236 of the Decision, to which recital 354 thereof refers, the Commission noted as follows: ‘(235) Two documents, found at Roquette’s premises during the inspection, are self-explanatory and constitute evidence of the results achieved by the sodium gluconate cartel. Among them is a [graph] presenting the average “European” price of sodium gluconate from 1977 until 1995. (236) In a striking manner, [one of the graphs] shows that in 1981 and 1987, when respectively the “first” and “second” cartel agreements were enforced, prices rocketed. In 1985, the prices suddenly fell, which corresponds to the end of the “first” cartel, when Roquette pulled out of the agreement. Between 1987 and 1989, there was a steep price increase, during which the price of sodium gluconate was basically multiplied by two. From 1989 until 1995 it remained some 60% higher than in the slack of 1987. It should be noted that by contrast with the 1981-1986 period, the price of sodium gluconate could be maintained at a significantly high price until 1995.’ 173 Next, the Commission summarised, analysed and rejected the various arguments put forward by the parties concerned during the administrative procedure to dispute the conclusion that it had drawn from the graphs found at Roquette’s premises. So far as concerns ADM’s arguments, which claimed in particular that that price development would have also occurred in the absence of a cartel, the Commission stated as follows (recitals 359, 365 and 369 of the Decision): ‘(359) … The arguments developed by ADM do not demonstrate in any convincing manner that the implementation of the cartel agreement could not have played any role in the price fluctuations. Whilst the scenario proposed by ADM may occur in the absence of a cartel, it is also perfectly consistent with a cartel situation. The increase in capacity in the mid-80’s may have been both the cause and the result of the collapse of the first cartel (1981-1985). As for the developments from 1987 onwards, they are fully consistent with the re-activation of the cartel over that period. Therefore, the fact that the price of sodium gluconate started to increase could not be exclusively explained in terms of a purely competitive reaction, but must be interpreted in the light of the fact that the participants had agreed on “floor prices” and market-share allocation as well as a reporting and monitoring system. All this would have contributed to the success of the price increases. … (365) [One of the graphs] found at Roquette confirms that during the period from 1991 to 1995, when ADM was involved in the cartel, prices remained stable or fell slightly. There is no evidence of any major decrease in prices let alone evidence that the price level would have been unprofitable. A more plausible explanation for ADM’s exit from the market would be that immediately after joining the cartel, it encountered major technical problems which persisted. Therefore, it was never able to meet its sales quotas. … (369) Finally, it is inconceivable that the parties would have repeatedly agreed to meet in locations across the world to allocate sales quotas, fix prices and allocate customers over such a long period, having regard, inter alia, to the risks involved, if they had perceived the cartel as having no effect or only a limited impact on the sodium gluconate market.’ – Findings 174 First, it should be borne in mind that, according to Section 1A, first paragraph of the Guidelines, the Commission is to take account, inter alia, of ‘[the] actual impact [of the infringement] on the market, where this can be measured’ when calculating the fine on the basis of the gravity of the infringement. 175 In this regard, it is necessary to analyse the exact meaning of the words ‘where this [i.e. the actual impact] can be measured’. In particular, it is a question of establishing whether those words mean that the Commission can take account of the actual impact of an infringement for the purpose of calculating fines only if, and in so far as, it is able to quantify that impact. 176 As the Commission rightly submitted, consideration of the impact of a cartel on the market in question necessarily involves recourse to assumptions. In this respect, the Commission must in particular consider what the price of the relevant product would have been in the absence of a cartel. When examining the causes of actual price developments, it is hazardous to speculate on the part played by each of those causes. Account must be taken of the objective fact that, because of the price cartel, the parties specifically waived their freedom to compete with one another on prices. Thus, the assessment of the influence of factors other than that voluntary decision of the parties to the cartel not to compete with one another is necessarily based on reasonable probability, which is not precisely quantifiable. 177 Therefore, unless that criterion, which can be taken into account when setting the amount of the fine, is to be deprived of its effectiveness, the Commission cannot be criticised for referring to the actual impact of a cartel on the relevant market, notwithstanding the fact that it cannot quantify that impact or provide any assessment in figures in this respect. 178 Consequently, the actual impact of a cartel on the relevant market must be regarded as having been sufficiently demonstrated if the Commission is able to provide specific and credible evidence indicating with reasonable probability that the cartel had an impact on the market. 179 In this instance, it follows from the summary of the Commission’s analysis (see paragraphs 168 to 173 above) that the Commission relied on two items of evidence to find that the cartel had had an ‘actual impact’ on the market. First, it referred to the fact that the cartel members had carefully implemented the cartel agreements (see, in particular, recital 340, reproduced in paragraph 168 above) which continued over a long period (recital 369 of the Decision, reproduced in paragraph 173 above). Second, the Commission took the view that the graphs found at Roquette’s premises show that the prices set by the cartel tallied to a certain extent with those actually charged on the market by the cartel members (recital 354 of the Decision, see paragraph 171 above). 180 Contrary to what ADM claims, the Commission did not merely infer from the effective implementation of the cartel that there had been an actual impact on the sodium gluconate market. As is apparent from the extracts from the Decision cited above, the Commission sought as far as possible to examine the implementation of the cartel and its actual impact on the market separately, considering, in essence, that the implementation of a cartel is a necessary precondition for demonstrating its actual impact but that it is not a sufficient condition (see, to that effect, recital 341 of the Decision). It is true that at recital 341 of the Decision, the Commission acknowledged that there was ‘understandably, some overlap between the factual elements used to reach conclusions on these two points’ – the reason why the Commission did not always use, as ADM submits, the appropriate terms in each of those parts of its analysis. However, the fact remains that ADM was wrong to complain that the Commission had confused the implementation with the actual impact of the cartel. Furthermore, because it is a precondition for the actual impact of a cartel, the effective implementation of a cartel constitutes an initial indicator that the cartel has had an actual impact. 181 In addition, the Commission cannot be criticised for finding that, in a case such as this, where the members of the cartel covered over 90% of the world market and 95% of the EEA market for sodium gluconate and devoted considerable efforts to organising, following up and monitoring the agreements of that cartel, its implementation amounted to a strong indication of effects on the market, especially since (see paragraph 179 above) the Commission did not confine itself to that analysis in the present case. 182 Moreover, the Commission was entitled to take the view that the weight of that evidence increases with the duration of the cartel. The sound functioning of a complex cartel concerning, as in this instance, price-fixing, market‑sharing and exchange of information leads inter alia to significant administrative and management costs. It was therefore reasonable for the Commission to consider that the fact that the undertakings persisted with the infringement and ensured that it was managed efficiently over a long period, despite the risks inherent in such unlawful activities, indicates that the cartel members made a certain profit from that cartel and, therefore, that it had an actual impact on the relevant market, even if that impact was not quantifiable. 183 As far as the graphs found at Roquette’s premises are concerned, it is apparent from the Commission’s analysis (see paragraphs 171 and 172 above) that, without claiming that those graphs amounted to irrebuttable proof that the cartel had an impact on prices and without even seeking to quantify that impact, the Commission found that there was a ‘strong probability’ that the enforcement of the agreements had ‘significantly contributed’ to the price development. 184 It will be considered below whether, as ADM submits, the Commission made errors in assessing the facts on which it based its findings. However, in the light of what was already held at paragraph 178 above, ADM is wrong to complain that the approach adopted by the Commission to show that the cartel had influenced the development of sodium gluconate prices was incorrect. That finding is not called into question by the fact that, in response to ADM’s arguments, the Commission contended in essence that it was unable to rule out that that price development could also have occurred in the absence of a cartel but that, in view of the effective implementation of the cartel and the parallelism between the actual prices and the agreed prices, that argument was not convincing. Thus the Commission did not, as ADM submits, require the undertakings in question to adduce evidence to the contrary, i.e. evidence which, for the reasons set out in paragraph 177 above, is often practically impossible to adduce, but, on the contrary, carefully weighed up the various arguments for and against its own conclusion. 185 It follows from all the foregoing that the approach adopted by the Commission in assessing the actual impact of the cartel on the sodium gluconate market was not incorrect. c) Assessment of the changes in sodium gluconate prices 186 ADM submits that the evidence which the Commission has put forward does not support the finding that there was a ‘strong probability that the enforcement of the new cartel agreements, from 1986 onwards, significantly contributed to the steep price increase of 1987-1989, when the price doubled’ (recital 354 of the Decision). In that context, it puts forward two different arguments. The Commission had insufficient information and failed to have regard to the other factors referred to during the administrative procedure – Arguments of the parties 187 ADM submits that it is unlikely that the cartel had any effects additional to the effects of market forces. It is apparent from the recitals of the Decision that the undertakings concerned themselves indicated that the price set between 1986 and 1987 did not cover the costs of raw materials; even in 1989 when the price was at a high point, those costs were not covered. In such a situation, ADM submits that the price would have increased in any event, even in the absence of a cartel. 188 ADM also submits that the Commission had very little information about the period between 1987 and 1989: it has no evidence relating to the price agreed before 9 August 1989. ADM submits lastly that the prices for the 1986‑1987 period suggest that there may have been a predatory strategy to force FinnSugar, the company from which ADM had bought the technology to produce sodium gluconate in 1989, to give up its expansion plans. 189 The Commission disputes that assessment, stating that, when the price of a product is ruinous and supply exceeds demand, the price can increase only if one of the undertakings on the market is ruined and exits that market and that in this instance no single undertaking could have raised prices by a unilateral decision without losing market share. The Commission therefore takes the view that, although that increase could have occurred in the absence of a cartel, the cartel existed and offers the most plausible explanation for the price movements. – Findings of the Court 190 It is settled case‑law that in reviewing the Commission’s appraisal of the actual impact of the cartel on the market it is particularly important that the Court examine the Commission’s assessment of the cartel’s effect on prices (Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraph 148, and, to that effect, Case T‑308/94 Cascades v Commission [1998] ECR II‑925, paragraph 173, and Mayr-Melnhof v Commission, paragraph 110 above, paragraph 225). 191 Moreover, the case‑law states that, when determining the gravity of an infringement, particular account should be taken of the legislative background and economic context of the conduct complained of (Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR 1663, paragraph 612, and Ferriere Nord v Commission, paragraph 76 above, paragraph 38) and that in order to assess the actual effect of an infringement on the market the Commission must take as a reference the competition that would normally exist if there were no infringement (see, to that effect, Suiker Unie and Others v Commission, paragraphs 619 and 620; Mayr-Melnhof v Commission, paragraph 110 above, paragraph 235; and Case T‑141/94 Thyssen Stahl v Commission [1999] ECR II‑347, paragraph 645). 192 It follows, first, that particularly in the case of price agreements there must be a finding by the Commission that such agreements have in fact enabled the undertakings concerned to achieve a higher level of price than that which would have prevailed had there been no cartel. Second, it follows that, in making its assessment, the Commission must take into account all the objective conditions in the relevant market and have regard to the economic context and, if appropriate, also the legislative background. It is clear from the judgments of the Court of First Instance in the cartonboard cartel case (see, inter alia, Mayr-Melnhof v Commission, paragraph 110 above, paragraphs 234 and 235) that account should be taken of the existence of any ‘objective economic factors’ which indicate that, had there been a ‘free play of competition’, prices would not have developed in the same way as the prices which were actually charged (see also Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraphs 151 and 152, and Cascades v Commission, paragraph 190 above, paragraphs 183 and 184). 193 In the present case, ADM does not dispute the Commission’s findings of fact. In particular, ADM does not dispute the Commission’s description of the price development, first, in the section of the facts relating to the description of the events (recitals 76 to 80 of the Decision) and, second, in the analysis of the impact of the cartel on the market (recital 354 of the Decision) based on the graphs found at Roquette during the inspection. 194 The material facts, as set out in the recitals of the Decision, can be summarised as follows: – in spring 1984, the previous cartel came to an end (recital 76 of the Decision); – for approximately two years (i.e. until about spring 1986), the sodium gluconate market was dominated by free competition (recital 77 of the Decision); – in May 1986, the first initiatives were taken to set up the new cartel (recital 79 of the Decision); – in February 1987, the new cartel was agreed and continued, with several amendments, until 1995 (recitals 79 and 80 of the Decision). 195 Next, the changes in the sodium gluconate price, as set out in recital 354 of the Decision, can be summarised as follows: – in 1985, sodium gluconate prices plunged and, in 1986, they had virtually halved in relation to the beginning of 1985; – between 1987 and 1989, sodium gluconate prices doubled; – in 1989, prices fell again, but to a lesser extent than in 1985, and stabilised until 1995 at a level approximately 60% higher than in 1987. 196 First, it follows that, in order to assess whether such agreements have in fact enabled the undertakings concerned to achieve a higher level of transaction price than that which would have prevailed had there been no cartel, the Commission correctly compared (i) sodium gluconate prices between the end of the previous cartel and the conclusion of the new cartel in February 1987, a period during which the market was characterised by free competition, with (ii) the prices charged after 1987, taking into account the passage of a certain amount of time necessary for the effective implementation of the cartel. 197 Similarly, in order to compare the situation of the prices actually charged with the situation that would have prevailed had there been no cartel, the Commission correctly pointed out that, between 1989 and 1995, prices were relatively stable. As the Commission stated at recital 42 of the Decision, without being contradicted on that point by ADM, the sodium gluconate market was, in principle, subject to significant variations. Consequently, the Commission was entitled to find that, had there been no cartel, the parties could not have expected a certain stability in the price of sodium gluconate. ADM has failed to put forward any argument to refute that finding. 198 Second, as regards the doubling of prices between 1987 and 1989, it must be held that, if, as ADM submits, the price of sodium gluconate was at a ruinous level in 1987 and there was an excess of supply, as there was in 1986 and 1987, it is inconceivable that prices could have increased in the absence of an external factor. If supply was in excess, prices would have decreased or remained low until the product became scarce again on account of one the operators leaving the market through, for example, bankruptcy or a takeover. However, in the present case, the Commission found that prices increased when the new cartel was actually set up. 199 In the light of the foregoing, the Commission was entitled to find that it had specific and credible evidence showing that the cartel had had an actual impact on the market which was, for the purpose of the Guidelines, ‘measurable’ by comparing the hypothetical price which, according to reasonable probability, would have prevailed had there been no cartel and the price charged in pursuance of the cartel. 200 The arguments put forward by ADM do not invalidate that finding. In particular, the argument relied on by ADM that, according to statements by its competitors, even when that price was at a high point it did not even cover the costs of raw materials is irrelevant. Assuming that that argument were established, it could not be ruled out that the applicable price in the absence of a cartel on a market in which competition had not been disturbed would also be below the cost of raw materials but possibly at a level even further away from the production cost. The Commission therefore correctly analysed the various arguments put forward by ADM and the other parties during the administrative procedure (see also paragraph 183 above). 201 Consequently, ADM was wrong to allege that the Commission had insufficient information and failed to have regard to the other factors referred to during the administrative procedure. ADM was not a member of the cartel at the time of the increase in sodium gluconate prices between 1987 and 1989 – Arguments of the parties 202 ADM asserts that the period of increase in sodium gluconate prices between 1987 and 1989 was prior to its involvement in the cartel and that, consequently, the Commission was not entitled to impose a higher fine on it on account of the cartel’s economic impact at a time when ADM was not a participant. 203 The Commission disputes the validity of that argument. – Findings of the Court 204 It is settled case‑law that the actual conduct which an undertaking claims to have adopted is irrelevant for the purposes of evaluating the cartel’s effect on the market; account must only be taken of effects resulting from the infringement taken as a whole (Case C‑49/92 P Commission v Anic Partecipazioni [1999] ECR I‑4125, paragraphs 150 and 152, and Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraphs 160 and 167). 205 As the Commission rightly contends, even if ADM joined the cartel only after the price of sodium gluconate doubled between 1987 and 1989, it benefited throughout the period of its participation from the achievements of the cartel prior to its membership, namely a steep price increase and a stabilisation of prices at a high level. Moreover, it helped to ensure that the cartel continued. 206 The Commission was therefore entitled to consider the cartel as a whole when determining the actual impact of the cartel in respect of all the parties involved. The question of when ADM became involved in the cartel is irrelevant for the purposes of determining the actual impact of the cartel. 207 Consequently, the complaint based on the fact that ADM was not a member of the cartel at the time when sodium gluconate prices increased between 1987 and 1989 must be rejected. d) Definition of the relevant market Arguments of the parties 208 ADM submits that the Commission made errors in its definition of the relevant market. It states that definition of the relevant market is necessary in order to measure the impact of the cartel on that market and that consequently those errors had an impact on the calculation of the fine. 209 First, ADM states that although the Commission acknowledged in the Decision that sodium gluconate may, depending on the relevant use, be replaced by other agents, it none the less excluded sodium gluconate substitutes from its definition of the relevant market. 210 In doing so, the Commission did not conform to its own established practice of recognising that partial substitutes can form part of the relevant market. Similarly, ADM submits that the Commission incorrectly applied the Notice on the definition of the relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5; ‘the Notice on market definition’). 211 In its submission, the evidence indicates that if purchasers of sodium gluconate had turned to alternative chelating agents, they would have eliminated a small but significant price rise and that consequently the market is wider than the Commission suggested. Taking as its basis a publication entitled Chemical Economics Handbook (B. Davenport et al. SRI International: ‘the CEH 2000 Report’), it points out that: – measured by price correlation, the following agents are closer substitutes to sodium gluconate than gluconic acid: glucoheptonate; HEDTA (powder); aminotri (acid); NTA (dry) acid; aminotri (NA5 salt) and EDTA (dry) acid; – glucoheptonate is a closer substitute for gluconic acid than is sodium gluconate; – the correlation between sodium gluconate and glucoheptonate prices is over 96%, suggesting that these prices move in virtual lock step; – the correlations between all of the chelating agents discussed in the CEH Report and sodium gluconate are above 60%, suggesting that sodium gluconate prices have been very sensitive to movements in prices of other chelating agents; – price correlations between gluconic acid and other chelating agents are greater than 60% except for two alternate forms of NTA. 212 ADM cites the Notice on market definition (paragraph 39), several Commission decisions on concentrations and the judgment of the Court of Justice in Case C‑185/95 P Baustahlgewebe v Commission [1998] ECR 1‑8417, paragraph 100, and argues that high correlation between product prices is evidence that they belong to the same product market for competition law purposes. It is apparent from the CEH 2000 Report that there is price competition across all chelating agents and that sodium gluconate and glucoheptonate are generally interchangeable in many applications. 213 ADM submits that the CEH 2000 Report findings are borne out by the responses of consumers questioned by the Commission in the course of its investigation, by the responses provided by the undertakings concerned to the Commission and by those undertakings’ internal memoranda. 214 Therefore, both the evidence identified by the Commission (from which it has nevertheless drawn mistaken conclusions) and the CEH 2000 Report demonstrate that the relevant market should have been more broadly defined to include products such as, in particular, gluconates and glucoheptonates, gluconic acid, glucophetonic acid, ‘mother liquors’ and lignosulfonates. 215 The arguments advanced by the Commission in the Decision cannot, in ADM’s view, undermine that conclusion. It is irrelevant whether the substitutes for sodium gluconate are imperfect or partial since, as is clear from paragraph 17 of the Notice on market definition, the Commission is required to assess whether a substitute would divert sufficient sales to defeat a small but significant price rise and not whether a substitute would capture all of a product’s sales, which would be the case with a perfect substitute. In addition, it is incorrect that the absence of a general substitute for sodium gluconate in relation to all its possible applications, supports the proposition that sodium gluconate is a relevant product market for competition law purposes (recital 37 of the Decision). In particular, the Commission has not pointed to a specific application for which sodium gluconate has no substitute. 216 Similarly, the Commission’s arguments based on Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461 are mistaken. (i) In that case the Court applied the test of whether there was a sufficient degree of interchangeability between all the products on the same market for the same use. That test is reflected in the economic theories underlying the Notice on market definition and ADM relies on it in its submissions. (ii) The facts of Hoffmann-La Roche are different from those of the present case. Whilst in that case, Vitamins C and E had no substitutes in nutritional uses, in this case the Commission has not identified any use for which sodium gluconate has no substitute. (iii) It is plausible that if only limited quantities of Vitamins C and E had been sold for technical uses, substitute products would not have impacted on the price fixing strategy developed by the applicant in Hoffmann-La Roche. The limited diversion of sales to substitute products for technical uses would not have negated the price rise because of the profits to be expected from larger sales of the products at higher prices for nutritional uses for which no substitute was available. 217 ADM submits that, in any event, the Commission’s attribution of key importance, at recital 37 of the Decision and in its defence (paragraph 78), to the testimony of customers is debatable. Recital 37 of the Decision defines customers as ‘compounders, which formulate a variety of products for different industries, thus exploiting two or more properties of sodium gluconate’. There is no support for that assertion. The CEH 2000 Report suggests that undertakings which buy sodium gluconate in order to use it to make other products are generally industry specific. None of the customers questioned appears to fit the Commission’s definition. 218 ADM also observes that in the matter of the Dow Chemical Company, the United States Federal Trade Commission concluded that chelating agents, regardless of application, form an economic market. 219 Second, ADM points out that, at recital 38 of the Decision, the Commission states that ‘the vast majority of the customers to whom the Commission sent a request for information on the issue of substitutability have replied that they would not be able to substitute sodium gluconate with another product in their industrial process’. In ADM’s submission, that conclusion is wrong. The evidence gathered by the Commission from customers is selective, ambiguous and undermined by the nature of the questions asked. 220 In this connection, ADM submits (i) that 5 of the 12 end-users who responded to the question asked by the Commission considered sodium gluconate to be substitutable, although one of them indicated that the substitute was gluconic acid. Those responses were confirmed by a distributor which indicated, unprompted, that there were a number of substitutes. The purchasers who replied to the question and confirmed that sodium gluconate was substitutable represented the majority of companies active in surface treatment and industrial cleaning (Solvay, Chemische Werke Kluthe and Henkel), accounted for 50% of sodium gluconate sales and included two of the largest customers by volume (Henkel and British Gypsum). 221 (ii) ADM claims that of the other customers questioned, only one gave a reasoned view for its answer, whilst in its Notice on market definition (paragraph 40), the Commission itself stated that answers on this subject can be taken into account only when they are sufficiently backed by factual evidence. 222 (iii) In ADM’s submission the questionnaire sent by the Commission did not ask the right question. It merely asked whether purchasers could replace sodium gluconate rather than asking what their reaction would be to a small but significant permanent price increase. Furthermore, of the negative responses, only one was reasoned and it was not possible to determine clearly whether minor technical difficulties impeded substitution or whether purchasers could never switch to another product even in the face of a sustained price increase in sodium gluconate. 223 Third, ADM observes that at recital 38 of the Decision, the Commission found that ‘the simple fact that the sodium gluconate producers entered into, participated in and devoted resources to a cartel on sodium gluconate for a long time, and that they chose not to extend it into other products, such as mother liquors, confirms that they considered sodium gluconate to be a relevant product market.’ 224 ADM maintains that the evidence suggests, contrary to the Commission’s assertion, that the parties were concerned by the possibility of customers turning to substitute products not controlled by the cartel members and that they sought unsuccessfully to extend the arrangements to mother liquors to prevent cheating on the cartel. Further, the evidence relied on by the Commission, namely the fact that parties participated in the cartel, may be for any number of reasons and does not as such support the conclusion drawn. 225 The Commission contends that the Court should reject all the arguments advanced by ADM. Findings of the Court 226 It must be observed as a preliminary point that at recitals 34 to 41 of the Decision the Commission examined the relevant product market and defined that market as consisting of sodium gluconate in its solid and liquid forms and its basic product, gluconic acid. Furthermore, in response to the arguments raised by ADM during the administrative procedure, the Commission accepted that sodium gluconate had a number of partial substitutes depending on the field of application, but found no evidence that those products would effectively constrain pricing of sodium gluconate. On the contrary, it found that several factors contradicted ADM’s contention. Thus it argued that there was no general substitute for sodium gluconate and that, given that that product was more environmentally friendly, certain users preferred it to potential substitutes. Moreover, it found that that view was confirmed, first, by the replies provided by customers of the cartel members and, second, by the very existence of the cartel which was limited to sodium gluconate and thus in its view constituted evidence that the members themselves regarded the market as being limited to sodium gluconate (recitals 37 and 38 of the Decision). 227 Furthermore, in the part of the Decision relating to the actual impact of the cartel on the market, the Commission referred to the review of the market summarised in the preceding paragraph (recital 353 of the Decision). 228 ADM asserts in essence that by excluding sodium gluconate substitutes, the Commission defined the relevant product market too restrictively. 229 In this respect, it should be stated, first, that ADM does not raise this complaint that the relevant product market was incorrectly defined in order to show that the Commission infringed Article 81(1) EC. It does not deny that it acted in breach of that provision by participating in the cartel on the sodium gluconate market. ADM seeks merely to establish in this respect that the Commission imposed on it an excessive fine, in particular because it found, in ADM’s opinion, that the cartel had had an actual impact on the relevant product market and took into account that factor when setting the fine. 230 However, that argument can be accepted only if ADM demonstrates that, had the Commission defined the relevant product market differently, it would have had to find that the infringement did not have an actual impact on the market defined as that consisting of sodium gluconate and its substitutes (see paragraph 178 above). 231 Only by demonstrating the above would it be possible to call in question the Commission’s determination of the amount of the fine by reference to the gravity of the infringement. 232 As already held at paragraphs 196 and 197 above, in the present case, in concluding that the infringement had an actual impact on the sodium gluconate market, the Commission compared the prices actually charged with those that would have prevailed had there been no cartel and relied on two factors in this respect. First, it compared the sodium gluconate prices charged during the period prior to the cartel, characterised by free competition, with those charged after a certain period of time which was necessary for the actual setting up of the cartel in 1989. Second, it found that between 1989 and 1995 prices were relatively stable whereas generally the market was characterised by considerable fluctuations in prices (recital 354 of the Decision). 233 In such a situation, if ADM’s argument alleging errors in the definition of the market is to succeed, it has to show that a comparison of the prices actually charged on the wider market – corresponding to its definition of the market – with those which would have prevailed on that wider market had there been no cartel, indicates that the cartel had no impact on that market. As already held at paragraph 178 above, it is only in such circumstances that the Commission could not have relied on the criterion of the actual impact of the cartel when calculating the fine by reference to the gravity of the infringement. 234 In this respect, ADM merely asserts that ‘[t]he Commission’s conclusions on the relevant product market are central to its findings on economic impact’, that the errors allegedly committed by it ‘vitiate the Commission’s view of economic impact and its assessment of fines’ and, lastly, that, if the Commission had defined the market by including within it sodium gluconate substitutes, it ‘would have concluded that any attempt by the parties to control the price of sodium gluconate would have been ineffective’. 235 It is true that the ADM devotes a significant part of its pleadings to analysing the data relating to the gelatine market and the discussion of economic theories for defining the relevant market in competition law. 236 However, ADM makes no attempt whatsoever to refute the Commission’s analysis in the Decision as regards the sodium gluconate market, if only by providing a rough comparison between the prices which had actually been charged, during the cartel, on the wider chelating agent market with those which, in all probability, would have prevailed on that wider market had there not been a cartel limited to sodium gluconate. 237 ADM therefore fails to demonstrate or put forward any elements which, together, would constitute a body of consistent evidence showing with reasonable probability that the impact of the sodium gluconate cartel on the wider chelating agent market was non‑existent or at least negligible. 238 Consequently, the complaint alleging that the relevant market was defined incorrectly must be rejected and it is not necessary to consider whether, as ADM claims, the Commission erred in law by excluding, for the purpose of the Decision, sodium gluconate substitutes from the relevant product market. 239 In the light of all the foregoing, the Court concludes that ADM has failed to establish that the Commission erred in its assessment of the actual impact of the cartel on the market. C – Errors in assessing the duration of the infringement 240 ADM submits that the Commission committed errors of assessment in considering that the infringement continued until June 1995. It asserts that it terminated its involvement in the cartel at the meeting of 4 October 1994 in London and that the meeting held between 3 and 5 June in Anaheim (California) cannot be regarded as a further part of the infringement. ADM therefore maintains that the fine must be reduced accordingly. 1. Termination of ADM’s involvement in the cartel at the meeting of 4 October 1994 in London a) Arguments of the parties 241 In ADM’s submission, the Commission was wrong in rejecting its arguments and in concluding, at recitals 319 to 323 of the Decision, that ADM did not cease to be involved in the cartel at the meeting of 4 October 1994 but continued to be involved until June 1995. 242 First, referring to the judgments of the Court of First Instance in Case T‑141/89 Tréfileurope v Commission [1995] ECR II‑791, paragraph 85, and BPB de Eendracht v Commission, paragraph 107 above, (paragraph 203), ADM argues that an undertaking ceases to participate in a cartel where it openly disassociates itself and withdraws from the agreement. ADM did so at the meeting of 4 October 1994. 243 At that meeting, ADM’s representatives informed the other participants that it would leave the group if outstanding issues on quotas were not resolved. No agreement was reached and ADM’s representatives left, as is apparent from the Commission’s document No 6. ADM points out that the Commission endorsed that account of the meeting of 4 October 1994 (recital 228 of the Decision). Those facts are consistent not only with the Commission’s conclusion that the meetings had become progressively more strained prior to the meeting of 4 October 1994 but also with the evidence provided by Jungbunzlauer to the Commission concerning that meeting. 244 In addition, ADM observes that on confirming its withdrawal from the cartel, it ceased reporting sales figures to the cartel – something the Commission acknowledges at recital 228 of the Decision. Contrary to the Commission’s interpretation at recital 321 of the Decision, that action was not merely a negotiating strategy which illustrated ADM’s firm intention to continue with the restrictive activities. It was an objective step, which was clearly understood by the other parties and indicated that ADM had ceased to participate in the cartel. 245 The Commission contends that that argument must be rejected. b) Findings of the Court 246 First, it should be borne in mind that, according to the case‑law cited by ADM itself (see paragraph 242 above), it could be concluded that ADM definitively ceased to belong to the cartel only if it had publicly distanced itself from what occurred at the meetings. 247 However, it follows from ADM’s own description of the facts, which, moreover, are consistent with those in the Decision (see, in particular, recitals 228 and 321) that at the meeting of 4 October 1994 in London ADM did not distance itself openly from the cartel objectives and the methods to be used for implementing those objectives, in particular the allocation of sodium gluconate sales quotas between its members. On the contrary, it follows that ADM sought in vain to resolve the disagreements breaking out between the cartel members and to reach a compromise on sales quantities. Such an approach testifies rather to an acceptance of the principle that the cartel would continue to be implemented. Consequently, at paragraph 321 of the Decision, the Commission was entitled to describe ADM’s conduct at that meeting as a negotiating strategy designed to obtain more concessions from the other members of the cartel rather than as an end to its involvement in that cartel. 248 Nor is it evident from any document relied on by ADM that the other cartel members would have understood its conduct at that meeting as meaning that it was publicly distancing itself from the terms of the cartel. 249 Indeed, Jungbunzlauer’s letter to the Commission of 21 May 1999 does not describe ADM’s conduct at the meeting of 4 October 1994 in London. It merely states that ‘[w]hen, in London on 4 October 1994, Roquette declared it would no longer observe any of the [cartel] agreements, all arrangements came to an end’. 250 In Fujisawa’s letter to the Commission of 12 May 1998, Fujisawa gave no account of that meeting; moreover, as is apparent from recital 224 of the Decision, it did not participate in it. Quite to the contrary, in that letter Fujisawa stated that the cartel was terminated only in 1995. 251 Nor does Jungbunzlauer’s description of that meeting in its letter of 30 April 1999 to the Commission contain any indication that, at that meeting, ADM stated that it wished to withdraw from the cartel. On the contrary, Jungbunzlauer stated in that letter that ADM had requested a reallocation of sales quantities but that that request was not accepted. 252 Second, in so far as ADM argues that, following that meeting, it ceased reporting sales figures to the other cartel members, it must be observed that, as is clear from recitals 81 to 90 of the Decision, the cartel consisted in a complex mechanism intended to divide markets, fix prices and exchange information about customers. The mere fact – even if it were established – that, following that meeting, ADM ceased reporting its sales figures to the other cartel members does not demonstrate that the cartel ceased to exist or that ADM ceased to participate in it. 253 Consequently, ADM has failed to establish that the Commission committed errors of assessment in considering that ADM did not terminate its involvement in the cartel at the meeting of 4 October 1994 in London. 2. The nature of the meeting held from 3 to 5 June 1995 in Anaheim a) Arguments of the parties 254 ADM submits that contrary to the Commission’s contention (recitals 232 and 322 of the Decision), the meeting of 3 to 5 June 1995 cannot be considered a further part of the infringement. The meeting coincided with an industry meeting and at that meeting the parties sought to aggregate historic sales data on an anonymous basis (recital 232 of the Decision). The proposed blind exchange of information on volume was not an illegal form of information exchange. It involved the parties aggregating sales volumes in a manner that did not indicate any firm-specific information to any of the participants. It did not entail any firm-specific sales monitoring, price agreements or sales allocation, which the Commission found were the key elements of the sodium gluconate cartel. In any event, the system planned by the participants to achieve the aim of establishing a total market figure failed. 255 The evidence contained in a document obtained from Roquette and mentioned by the Commission at recitals 233 and 322 of the Decision, according to which that meeting dealt with ‘compensation’ and the ‘worldwide production target’ and ‘price’, is vague and ambiguous. Furthermore, it is not witness testimony but a summary of the arrangement, prepared by a United States prosecuting authority, which formed the basis of discussion with Roquette’s witnesses. As a prosecution statement based on unknown sources, the document can have little probative value against the accounts of the eyewitnesses involved. 256 As to the fax of 1 May 1995 from Glucona to the hotel where the June 1995 meeting was to be held, ADM states that from that document it can be seen that the reservation was for 6 June 1995, whereas the meeting took place on 3 to 5 June 1995. The reservation could relate to a different meeting and, even if it related to the cartel, it shows, at most, that Glucona believed it might be able to persuade the others to reconstitute the cartel. 257 The Commission contends that this argument must be rejected. b) Findings of the Court 258 First, it should be observed that, as the Commission notes at recital 232 of the Decision, ADM does not dispute that, at that meeting, attended by all the cartel members, the participants discussed sales volumes of sodium gluconate in 1994. In particular, the Commission observed – and ADM did not dispute – that, according to ADM, Jungbunzlauer had asked it ‘to bring ADM’s total 1994 sodium gluconate sales figures’ (recital 232 of the Decision). 259 It should be noted that that approach was the same, in essence, as the standard practice within the cartel, which aimed to ensure that allocated sales quotas were adhered to and which, as is apparent from recitals 92 and 93 of the Decision, consisted in the cartel members communicating their sales figures before each meeting to Jungbunzlauer, which would aggregate those figures and distribute them during the meetings. 260 Second, ADM confirms the Commission’s description of events at recital 232 of the Decision, according to which a new information exchange system relating to sales volumes was proposed at the meeting. That system was supposed to make it possible to establish, anonymously, that is in such a way that no member of the cartel could know the figures of another member, the total size of the sodium gluconate market as follows: ‘[C]ompany A would write down an arbitrary number that represented a portion of its total volume. Company B would then show to company C the sum of company A + company B’s number. Company C would add to that sum the total volume of company C. Company A would then add to that the remainder of this total volume and report the total to the group.’ (recital 233 of the Decision.) 261 ADM cannot properly argue that that system does not constitute an infringement of Article 81 EC merely because it does not entail any firm‑specific price‑fixing agreement, allocation of sales quotas and sales monitoring. 262 The Commission was entitled to find that that conduct constituted a fresh attempt by the cartel members to ‘restore order on the market’ and to maintain their anti‑competitive practices implemented during previous years, aimed at ensuring control of the market through joint action, albeit, if necessary, in different forms and by different methods, and it is not necessary to assess whether, viewed in isolation, that conduct constituted an infringement of the competition rules. The fact that the cartel members had tried to set up an ‘anonymous’ system of information exchange, as described in paragraph 260 above, could reasonably be interpreted by the Commission as a logical consequence of the conduct of the undertakings within the cartel which, as recital 93 of the Decision in particular shows, was characterised by a ‘context of growing mutual suspicion’, but whose aim was none the less to share the market. From that point of view, the Commission was entitled to consider that by setting up the new information exchange system the cartel members showed that there ‘was still a firm intent to work out a solution to carry on with anti-competitive arrangements’ (recital 322 of the Decision) and to ‘keep control of the market through joint action’ (recital 232 of the Decision). 263 Third, the brief note written by Roquette at that meeting and which the Commission referred to at recitals 233 and 322 of the Decision (‘6.95 Anaheim: Discussion: compensation; 44,000MT worldwide production target; price’) can reasonably be regarded as confirming the Commission’s argument, even if it is true that, viewed in isolation and taken out of context, that note gives only an imprecise idea of the content of the discussions held during the meeting of 3, 4 and 5 June 1995. Moreover, contrary to what ADM submits, since Roquette submitted that document unprompted to the Commission during the administrative procedure, the Commission was entitled to use it to support its argument. 264 Fourth, the various statements of the cartel members referred to by ADM are not capable of undermining the Commission’s position. The statement of a Roquette employee, attached to Roquette’s letter of 22 July 1999, according to which that meeting ‘led to nothing and served no purpose at all’, which is consistent with Jungbunzlauer’s statement in its letter of 30 April 1999, is irrelevant, since it confirms that that meeting did not modify the functioning of a single continuing infringement (recital 254 of the Decision). Thus, that letter does not show the absence of any intention on the part of the cartel members to maintain the infringement. 265 In that respect, it should be borne in mind that for the purpose of examining the application of Article 81(1) EC to an agreement or a concerted practice, there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition within the common market (Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299, at p. 342; Commission v Anic Partecipazioni, paragraph 204 above, paragraph 99; Case C‑199/92 P Hüls v Commission [1999] ECR I‑4287, paragraph 178; Joined Cases T-39/92 and T-40/92 CB and Europay v Commission [1994] ECR II‑49, paragraph 87). 266 Fifth, the fact that that meeting was held in the context of a general industry meeting is irrelevant, since it does not exclude the possibility that the undertakings concerned used that general meeting to discuss the cartel. 267 Consequently, the Commission was entitled to find that ADM participated in the cartel until June 1995. 268 In the light of all the foregoing, it must be held that ADM has failed to establish that the Commission erred in its assessment of the duration of the infringement. D – Attenuating circumstances 269 As regards the Commission’s assessment of the attenuating circumstances, ADM alleges errors of assessment relating (i) to the termination of its involvement in the cartel prior to the investigation, (ii) to the fact that there was no need to ensure that the fine had a deterrent effect and (iii) to the adoption of a code of conduct by ADM. 1. Termination of ADM’s involvement in the cartel a) Arguments of the parties 270 ADM submits that the third indent of paragraph 3 of the Guidelines recognises that ‘termination of the infringement as soon as the Commission intervenes (in particular when it carries out checks)’ is an attenuating circumstance. It takes the view that in the present case, it should have benefited from that attenuating circumstance, given that it put an end to the infringement as soon as the United States competition authorities intervened. In addition, the facts of the present case are almost identical to those of the Amino Acids case (Commission Decision 2001/418/EC of 7 June 2000 relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case COMP/36.545/F3 – Amino Acids) (OJ 2001 L 152, p. 24, ‘the Amino Acids case’)), in which the Commission reduced the fines by 10%. Further, ADM relies on the judgment in Case T‑31/99 ABB Asea Brown Boveri v Commission [2002] ECR II-1881, paragraph 238, in which the Court of First Instance held that undertakings which had cooperated with the Commission to put an end to the cartel should be granted a reduction in their fine. Finally, contrary to the Commission’s submission, there are cases in which cartels have continued after the authorities have intervened. 271 The Commission submits that ADM is not entitled to rely on the third indent of paragraph 3 of the Guidelines in this instance. It is inconceivable that secret cartels should continue once they have been discovered. Therefore, it is inappropriate to apply the attenuating factor on the ground that the infringement ended as soon as the Commission intervened. b) Findings of the Court 272 Section 3 of the Guidelines, entitled ‘Attenuating circumstances’, provides for a reduction in the basic amount where there are particular attenuating circumstances, such as termination of the infringement as soon as the Commission intervenes (in particular as soon as it carries out checks). 273 The Commission acknowledges in the Decision that ADM and the other cartel members put an end to the infringement as soon as the United States authorities intervened on 27 June 1995 (recital 234 of the Decision). 274 In this connection, it should however be borne in mind, first, that, for the purpose of establishing a highly competitive common market, Article 3 EC provides that the activities of the Community are to include a system ensuring that competition in the internal market is not distorted. Article 81(1) EC, which prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, is one of the main instruments for ensuring the implementation of that system. 275 Next, it should be recalled that it is for the Commission both (i) to pursue a general policy designed to apply, in competition matters, the principles laid down by the Treaty and to guide the conduct of undertakings in the light of those principles and (ii) to investigate and punish individual infringements. In order to do so, the Commission has the power to impose fines on undertakings which, whether intentionally or negligently, infringe inter alia Article 81(1) EC (see, to that effect, Musique diffusion française and Others v Commission, paragraph 44 above, paragraph 105). 276 It follows that, in assessing the gravity of an infringement for the purpose of fixing the amount of the fine, the Commission must take into consideration not only the particular circumstances of the case but also the context in which the infringement occurs and must ensure that its action has the necessary deterrent effect (see, to that effect, Musique diffusion française and Others v Commission, paragraph 44 above, paragraph 106). Only by taking into account those factors is it possible to ensure that the action taken by the Commission for the purpose of maintaining undistorted competition on the common market is fully effective. 277 A purely literal analysis of the third indent of paragraph 3 of the Guidelines could give the impression that the mere fact that an offender terminates an infringement as soon as the Commission intervenes constitutes, generally and without reserve, an attenuating circumstance. However, such an interpretation would reduce the effectiveness of the provisions for maintaining effective competition, as it would weaken both the penalty which could be imposed for an infringement of Article 81 EC and the deterrent effect of such a penalty. 278 Unlike other attenuating circumstances, the fact of terminating an infringement as soon as the Commission intervenes is not inherent in any particular individual characteristic of the offending party itself or the specific facts of the particular case, since it results mainly from the – external – intervention of the Commission. Thus, termination of an infringement only after the Commission has intervened should not be rewarded in the same way as an independent initiative of the offending party, and merely constitutes an appropriate and normal reaction to that intervention. Moreover, the fact of termination merely marks a return by the offending party to lawful conduct and does not enhance the effectiveness of the actions taken by the Commission. Lastly, the alleged attenuating nature of the fact of termination cannot be justified solely by the incentive to terminate the infringement to which it relates, especially in the light of the above circumstances. It should be noted in this respect that the classification of the continuation of an infringement after the Commission intervenes as an aggravating circumstance (see, to that effect, Case T‑28/99 Sigma Tecnologie v Commission [2002] ECR II‑1845, paragraph 102 et seq.) already rightly constitutes an incentive to terminate the infringement, but, quite unlike the attenuating circumstance at issue, does not reduce the penalty or its deterrent effect. 279 Thus, if termination of an infringement as soon as the Commission intervenes were to be recognised as an attenuating circumstance, that would unduly impair the effectiveness of Article 81(1) EC by weakening both the penalty and its deterrent effect. Consequently, the Commission could not place itself under an obligation to consider the mere fact that the infringement was terminated as soon as it intervened to be an attenuating circumstance. Accordingly, the third indent of paragraph 3 of the Guidelines must be interpreted restrictively so as not to undermine the effectiveness of Article 81(1) EC. 280 Consequently, that provision must be interpreted as meaning that solely the particular circumstances of the specific case in which an infringement is actually terminated as soon as the Commission intervenes can warrant that termination being taken into account as an attenuating circumstance (see, to that effect, ABB Asea Brown Boveri v Commission, paragraph 270 above, paragraph 213). 281 In the present case, it should be recalled that the infringement in question relates to a secret cartel whose object is price fixing and market sharing. That type of cartel is expressly forbidden by Article 81(1)(a) and (c) EC, and constitutes a particularly serious infringement. The parties must therefore have been aware of the unlawful nature of their conduct. The secret nature of the cartel confirms the fact that the parties were aware of the unlawful nature of their actions. Consequently, the Court finds that there can be no doubt that the infringement was committed intentionally by the parties in question. 282 The Court of First Instance has already held that the fact that an intentional infringement was terminated cannot be regarded as an attenuating circumstance where it was terminated as a result of the Commission’s intervention (Case T‑156/94 Aristrain v Commission [1999] ECR II‑645, paragraph 138, and Case T‑157/94 Ensidesa v Commission [1999] ECR II‑707, paragraph 498). 283 In the light of the foregoing, the Court finds that, in the present case, the fact that ADM terminated the infringement as soon as a competition authority intervened is not capable of constituting an attenuating circumstance. 284 That finding is not affected by the fact that, in the present case, it was after the intervention of the United States authorities and not of the Commission that ADM put an end to the anti-competitive practices at issue (recital 234 of the Decision). ADM’s termination of the infringement as soon as the United States authorities intervened does not make that termination more intentional than if it had occurred as soon as the Commission intervened. 285 ADM again relies on ABB Asea Brown Boveri v Commission (paragraph 270 above, paragraph 238) in support of its argument, in so far as the Court of First Instance held in that judgment that undertakings which had previously cooperated with the Commission to put an end to the cartel should be granted a reduction in their fine. In this regard, it is sufficient to note that that judgment does not lead to the conclusion that the fact that the applicant terminated the infringement as soon as a competition authority intervened constitutes an attenuating circumstance in every case. Moreover, in the passage relied on by ADM, the judgment formulates the principle that where the conduct of the undertaking concerned made it easier for the Commission to establish an infringement and, as the case may be, to put an end to it, that factor must be taken into account. That implies an initiative by the undertaking concerned which goes beyond merely terminating the infringement after the Commission has intervened. Consequently, that case‑law does not call in question the analysis set out above. 286 As regards the Amino Acids case (see paragraph 270 above), relied on by ADM in order to show that there had been an infringement of the principles of equal treatment and of proportionality, the Court considers, first, that an administrative practice cannot arise from one case alone. Moreover, as recalled at paragraph 110 above, the mere fact that the Commission assessed conduct in a certain manner in its previous decisions does not mean that it is obliged to do so also when adopting a subsequent decision. Lastly and in any event, the Court considers that that case, in so far as it represents only the Commission’s assessment, is not capable of affecting either the above analysis based on one of the key Community objectives or the case‑law under Aristrain v Commission and Ensidesa v Commission, paragraph 282 above. 287 Accordingly, for the reasons set out above, the failure in the present case to take the termination of the infringement as soon as the United States competition authorities intervened into account as an attenuating circumstance cannot be regarded as incorrect. 2. No need to ensure that the fine has a deterrent effect a) Arguments of the parties 288 ADM observes that in the various proceedings before the United States courts relating to the lysine and citric acid cases, it has already paid more than USD 250 million on account of antitrust violations. The Commission should have taken that into account as an attenuating factor, as it has done in previous practice (Commission Decision 89/190/EEC of 21 December 1988 relating to a proceeding pursuant to Article 85 of the EEC Treaty (Case IV/31.865, PVC) (OJ 1989 L 74, p. 1)). 289 The Commission contends that that argument must be rejected. b) Findings of the Court 290 It should be noted at the outset that the principle of ne bis in idem prohibits the same person from being sanctioned more than once for the same unlawful conduct in order to protect one and the same legal interest. The application of that principle is subject to three cumulative conditions: the identity of the facts, the unity of offender and the unity of legal interest protected (see, to that effect, 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 338). 291 Thus, the Court of Justice and the Court of First Instance have already held on a number of occasions that, where the actions on which the two sanctions are based arise out of the same set of agreements but nevertheless differ as regards both their object and their geographical emphasis, that principle does not apply (Case 7/72 Boehringer v Commission [1972] ECR 1281, paragraphs 3 and 4; Case 14/68 Wilhelm and Others [1969] ECR 1, paragraph 11; Tréfileurope v Commission, paragraph 242 above, paragraph 191; and Case T‑149/89 Sotralentz v Commission [1995] ECR II‑1127, paragraph 29). 292 In the present case, the payments referred to by ADM concern in part other cartels, namely those relating to the lysine and citric acid markets. Second, so far as concerns the sodium gluconate cartel, under the principle of territoriality there is no conflict in the exercise by the Commission and by the competition authorities of non‑member States of their power to impose fines on undertakings which infringe the competition rules of the EEA and of those States (see, to that effect, Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraph 90, and Case 44/69 Bunchler v Commission [1970] ECR 733, paragraphs 52 and 53, and, by analogy, as regards concentrations, in respect of Community competence regarding the effects of unlawful conduct in parallel with the powers of non‑Member State competition authorities, Case T‑102/96 Gencor v Commission [1999] ECR II‑753, paragraphs 95 and 98). The Commission was not therefore required to take account of those circumstances under the principle of ne bis in idem. 293 In so far as ADM asserts that the Commission has already taken account of such a factor in the past as attenuating circumstances when setting fines, it is sufficient to recall that, in accordance with case‑law, the mere fact that in its earlier decisions the Commission took into consideration certain factors as attenuating circumstances does not mean that it is obliged to act in the same manner in any given case (see, to that effect, Hercules Chemicals v Commission, paragraph 110 above, paragraph 357, and Case T‑352/94 Mo och Domsjö v Commission [1998] ECR II‑1989, paragraphs 417 and 419). 294 In any event and for the sake of completeness, it should be noted, first, that ADM refers to just one decision and, second, that, in reply to a written question from the Court of First Instance, the Commission demonstrated to the Court that its now settled practice is not to apply such an attenuating circumstance in situations comparable to the present one. 295 Consequently, ADM was wrong to criticise the Commission for not granting it a reduction in the fine, on the ground that there was no need for deterrence. 3. ADM’s adoption of a code of conduct a) Arguments of the parties 296 ADM contends that, when calculating the fine, the Commission ought to have taken account of the fact that ADM had set up a rigorous and ongoing programme for compliance with the competition rules incorporating, in particular, the adoption of a code of conduct addressed to all company employees and the establishment of a special department. 297 In addition, the adoption of the compliance programme, the change of management and the departure of the senior executives involved in the infringement shows genuine contrition by ADM. Furthermore, ADM had not until then been subject to any adverse finding under Community competition law. 298 The Commission contends that those arguments must be rejected. b) Findings of the Court 299 It has already been held that, whilst it is important that an undertaking takes steps to prevent fresh infringements of Community competition law from being committed in the future by members of its staff, the taking of such steps does not alter the fact that an infringement has been committed. The Commission is therefore not required to take a circumstance such as that into account as an attenuating circumstance, especially where the infringement in question amounts, as in this instance, to a manifest infringement of Article 81(1)(a) and (b) EC (Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraph 373, and Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, paragraph 38 above, paragraphs 280 and 281). 300 Furthermore, in so far as ADM adds that it had not until then been subject to any adverse finding under Community competition law, it should be noted that, although in the opposite case the Guidelines provide that the Commission may find that there were aggravating circumstances in the case of an undertaking which has already committed one or more infringements of the same type, it does not follow that, where the infringement in question is the first of that type committed by the undertaking in question, it should receive favourable treatment by virtue of an attenuating circumstance. 301 Consequently, ADM was wrong to criticise the Commission for not granting it a reduction in the fine because it adopted a code of conduct. 302 It follows from all the foregoing considerations that ADM has failed to establish that the Commission erred in its assessment of the attenuating circumstances. E – ADM’s cooperation during the administrative procedure 1. Introduction 303 So far as concerns its cooperation during the administrative procedure, ADM puts forward two pleas, alleging (i) errors of assessment and (ii) breach of the principle of equal treatment. 304 Before examining the merits of those pleas, it is necessary to summarise the Commission’s assessment of the undertakings’ cooperation, as apparent from recitals 411 to 427 of the Decision. 305 First of all, under Section B of the Leniency Notice (see paragraph 6 above), the Commission allowed Fujisawa a ‘very substantial reduction’ of 80% of the fine which would have been imposed if it had not cooperated. In that context, the Commission acknowledged that it was Fujisawa which, for the purpose of that provision, had informed the Commission about the cartel before the Commission had undertaken any investigation. The Commission also acknowledged that, at the time when Fujisawa supplied its statement of facts and the documents regarding the cartel on 12 May 1998, the Commission did not yet have sufficient information to establish the existence of the cartel. In particular, the Commission found that Fujisawa had been the first of the cartel members to adduce evidence of the cartel’s existence for the whole of its duration by providing it with a list of cartel meetings and a summary of the actions of the main players and key facts between 1981 and 1995. According to the Commission, Fujisawa’s submission enabled it to construct a picture of the basic principles of the cartel, i.e. the structure and functioning of the cartel, including the main agreements reached and the implementation mechanisms developed (recitals 412 to 418 of the Decision). 306 Next, in rejecting ADM’s arguments to the effect that it met the conditions laid down in Section C of the Leniency Notice in order to qualify for a ‘substantial reduction’ of the amount of the fine, the Commission considered that at the time when ADM had started to cooperate with the Commission, there was already sufficient information, supplied by Fujisawa, to establish the existence of the cartel throughout the period (recitals 419 to 423 of the Decision). 307 Finally, under Section D of the Leniency Notice, the Commission allowed ADM and Roquette a ‘significant reduction’ of 40% of the fine, and allowed Akzo, Avebe and Jungbunzlauer a 20% reduction. In that respect, the Commission took into account in particular that Roquette had been the only cartel member to provide documents that record the events and conclusions of the cartel meetings and that, in their statements, Roquette and ADM had described the cartel mechanics and the roles of the participants and had given details of some meetings. The Commission stated that Fujisawa’s statements, Roquette’s documents and Roquette’s and ADM’s statements had constituted its main source of evidence for preparing the Decision (recitals 424 to 427 of the Decision). 2. Incorrect assessment of ADM’s cooperation a) Arguments of the parties 308 ADM submits that the 40% reduction in its fine, granted under Section D of the Leniency Notice, is insufficient. Contrary to the Commission’s finding at recital 422 of the Decision, by sending the Commission an account of the 1991 to 1995 period, it was the first to provide decisive evidence of the cartel’s existence in the post-1991 period. Therefore, the Commission was wrong in refusing to grant it a reduction under Section C of the Leniency Notice. 309 First, ADM submits that Fujisawa’s evidence relating to the same period is limited. 310 Fujisawa had submitted a covering letter containing details relating to the pre-1990 period. By contrast, for the 1991 to 1995 period, Fujisawa mentioned only two meetings without giving any specific information about price or volume agreements. Further, one of those meetings was the meeting of 6 June 1995, which, in ADM’s submission, had taken place after the end of the infringement (see above). As regards the other meeting, in June 1994 in Atlanta, the description is vague. 311 Fujisawa submitted a table showing a list of meetings drawn up by the Fujisawa executives who attended them. However, because of the very limited involvement of those executives during that period, the testimony about what occurred between 1991 and 1995 contains only minimal or irrelevant information about the meetings. It identifies only 5 of the 13 meetings which took place in that period and which formed the subject‑matter of the statement of objections. Furthermore, there is little description of what took place at those meetings: agreed prices, sales allocation or monitoring mechanisms are not listed for that period and the names of the representatives of the other undertakings attending are sometimes only partially recalled. 312 Second, ADM maintains that the documents obtained in the course of inspections of the premises of the other undertakings prior to ADM’s collaboration provide very little evidence relating to the period after the summer of 1991. The documents inspected at Glucona’s premises show meetings which generally coincide with exhibition meetings of the Institute of Food Technology (IFT) or of Food Ingredients Europe (FIE), which the participants were in any event likely to attend, but do not provide any detail as to the substance of the meetings. Furthermore, Glucona provided no other details about the content of the meetings and confined itself to stating that discussion had concerned ‘markets and sales’. 313 By contrast, ADM produced (i) the testimony of a former employee who provided first hand witness evidence of the meetings, content and mechanics of the cartel, (ii) the first information about seven meetings not even referred to in the evidence of Fujisawa and Glucona, nor specified in the Commission’s requests for information, (iii) details of the content of the meetings not described in either Glucona’s or Fujisawa’s evidence and an explanation of the designation of certain participants in each region as ‘price leaders’, the target prices set by the cartel and the impact and content of the cartel and (iv) a description of the roles of the participants at the meetings. 314 Third, ADM submits that that evidence enabled the Commission to obtain admissions and cooperation from the other participants. Towards the end of 1998, it appeared that the Commission’s evidence was very limited. Notwithstanding the information obtained from the United States authorities, requests for information and unannounced inspections of the parties’ premises during 1997 and 1998, only Fujisawa had offered to cooperate with the Commission (recitals 54 to 56 of the Decision). Moreover, the evidence supplied by Fujisawa was deficient and was not appreciably strengthened by documents obtained at the other parties’ premises (Avebe, Glucona, Jungbunzlauer and Roquette). 315 The Commission contends that the plea should be rejected. b) Findings of the Court 316 In the Leniency Notice, the Commission set out the conditions under which undertakings cooperating with it during its investigation into a cartel may be exempted from a fine or be granted a reduction in the fine which would otherwise have been imposed on them (see Section A3 of the Leniency Notice). 317 Inasmuch as ADM submits essentially that the Commission is wrong to deny it the reduction referred to in Section C of the Leniency Notice, it is necessary to ascertain whether the Commission failed to have regard to the conditions for applying that section. 318 Section C of the Leniency Notice, entitled ‘substantial reduction in a fine’, provides: ‘[Undertakings] which both satisfy the conditions set out in Section B … (b) to (e) and disclose the secret cartel after the Commission has undertaken an investigation ordered by decision on the premises of the parties to the cartel which has failed to provide sufficient grounds for initiating the procedure leading to a decision, will benefit from a reduction of 50% to 75% of the fine.’ 319 The conditions of Section B(b) to (e), to which Section C refers, apply to an undertaking which: ‘(b) is the first to adduce decisive evidence of the cartel’s existence; (c) puts an end to its involvement in the illegal activity no later than the time at which it discloses the cartel; (d) provides the Commission with all the relevant information and all the documents and evidence available to it regarding the cartel and maintains continuous and complete cooperation throughout the investigation; (e) has not compelled another [undertaking] to take part in the cartel and has not acted as an instigator or played a determining role in the illegal activity’. 320 In the present case, in order to show that the Commission should have granted it a ‘substantial reduction in [the] fine’ under Section C of the Leniency Notice, ADM asserts in essence that the evidence adduced by Fujisawa for the period between 1991 and 1995 was limited. However, that argument does not show that the Commission infringed the Leniency Notice in considering that, even for the period between 1991 and 1995 during which ADM took part in the cartel, ADM was not ‘the first to adduce decisive evidence of the cartel’s existence to the Commission’ for the purposes of Section C, read in conjunction with Section B(b) of the Leniency Notice. 321 The Leniency Notice does not provide that, in order to satisfy that condition, an undertaking which informs the Commission about a secret cartel must provide it with all the decisive evidence for preparing the statement of objections or, still less, for adopting a decision establishing an infringement. By contrast, according to the Leniency Notice, that condition is already satisfied where the undertaking which provides information about the secret cartel is ‘the first’ to ‘adduce decisive evidence of the cartel’s existence’. 322 ADM itself does not seriously dispute that the evidence adduced by Fujisawa, including for the period between 1991 and 1995, was decisive evidence of the cartel’s existence but merely argues that it was incomplete. 323 In any event, it should be noted that, as the Commission rightly pointed out at recital 415 of the Decision, in its letter of 12 May 1998 in which it disclosed the existence of the cartel, Fujisawa first of all revealed the identity of the cartel members. Next, it provided the Commission with a description of the main agreements reached between the cartel members between 1991 and 1995 and the mechanisms for implementing those agreements governing the manner in which the cartel functioned. Lastly, it submitted to the Commission a list, albeit incomplete, of the cartel meetings with a summary of the content of some of those meetings, including for the period from 1991 to 1995. The point relied on by ADM that Fujisawa did not supply any specific information regarding the content of the agreements for that period does not lead to the conclusion that the evidence adduced by that undertaking was not decisive evidence of the cartel’s existence, since that cartel constituted a single continuing infringement (recital 254 of the Decision) the content and the mechanisms of which were not specifically modified following ADM’s entry in the cartel (recitals 80 and 257 to 260). 324 The Commission was therefore entitled to take the view that Fujisawa was the first undertaking to adduce decisive evidence of the cartel’s existence. 325 It also follows that ADM’s arguments alleging, first, that the documents obtained in the course of inspections at the premises of the other cartel members provide only very little evidence relating to the period after the summer of 1991 and, second, that the evidence submitted by ADM enabled the Commission to obtain admissions and cooperation from the other participants cannot succeed either. 326 In the light of the cumulative nature of the conditions set out in Section B(b) to (e), as referred to in Section C of the Leniency Notice (see paragraphs 283 and 286 above), and since one of those conditions, namely that laid down in Section B(b), in conjunction with Section C of that notice, was not satisfied, it is not necessary to consider whether ADM satisfied the other conditions laid down in those provisions. 327 Consequently, the plea of illegality alleging incorrect assessment of ADM’s cooperation must be rejected. 3. Breach of the principle of equal treatment 328 This plea is in three parts. First, ADM argues that its cooperation in the investigation was at least equivalent to that of a party which was the subject of an earlier Commission decision. Second, it submits that the Commission was not entitled to grant Fujisawa a larger reduction than it was granted. Third, it submits that the Commission was not entitled to reduce Roquette’s fine by the same rate as its own. 329 It should be noted at the outset that the principle of equal treatment is infringed only where comparable situations are treated differently or different situations are treated in the same way, unless such difference in treatment is objectively justified (see paragraph 107 above). a) ADM’s cooperation in the investigation was at least equivalent to that of a party which was the subject of an earlier Commission decision Arguments of the parties 330 ADM claims that its cooperation in the investigation was at least equivalent, as regards its material contribution to the Commission’s case, to that of one of the parties which was the subject of Decision 94/601 in which the Commission reduced the fine by two thirds. The Commission should therefore have granted it at least the maximum reduction laid down in Section D of the Leniency Notice, namely 50%. 331 The Commission contends that this part of the plea should be rejected. Findings of the Court 332 It should be borne in mind that the mere fact that in its previous decisions the Commission granted a certain rate of reduction for specific conduct does not mean that it is required to grant the same reduction when assessing similar conduct in a subsequent administrative procedure (see Mo och Domsjö v Commission, paragraph 293 above, paragraph 147, and Lögstör Rör v Commission, paragraph 33 above, paragraphs 326 and 352, and the case‑law cited therein). 333 Moreover, ADM has not put forward any specific evidence to show that the facts in that case were comparable to those at issue here. 334 Consequently, the first part of this plea cannot be upheld. b) The Commission granted Fujisawa a larger reduction than that granted to ADM Arguments of the parties 335 ADM criticises the Commission for granting Fujisawa a larger reduction than that which it was granted. ADM observes that in both cases, the undertakings offered to cooperate as soon as they were contacted by the Commission in relation to the investigation. The only difference was that Fujisawa was the first to have this opportunity since it was the first undertaking to be contacted by the Commission. In those circumstances, it submits that it made every effort to cooperate with the Commission as soon as it was afforded that opportunity. 336 The Court of First Instance held in Joined Cases T-45/98 and T-47/98 Krupp Thyssen Stainless and Acciai speciali Terni v Commission [2001] ECR II-3757, paragraphs 246 to 248, (‘the Krupp judgment’) that the appraisal of the extent of the cooperation shown by undertakings cannot depend on purely random factors, such as the order in which they are questioned by the Commission. 337 The Commission contends that the plea should be rejected. Findings of the Court 338 ADM’s argument is based essentially on the principles outlined by the Court in paragraphs 138 to 248 of the Krupp judgment. In this connection, it should be recalled that in that judgment, as well as, indeed, in Case T‑48/98 Acerinox v Commission [2001] ECR II‑3859, paragraphs 132 to 141, the Court of First Instance examined the Commission’s application of Section D of the Leniency Notice. The Court found in essence that in order to ensure that it does not conflict with the principle of equal treatment, the Leniency Notice must be applied in such a way that, as regards the reduction of fines, the Commission must treat in the same way undertakings that provide the Commission, at the same stage of the procedure and in similar circumstances, with similar information concerning the conduct imputed to them. The Court added that the mere fact that one of those undertakings was the first to acknowledge the alleged facts in response to the questions put to them by the Commission at the same stage of the procedure cannot constitute an objective reason for treating them differently. 339 It should be noted that in those other cases, and unlike in this case, it was common ground that the cooperation of the undertakings concerned did not fall within the scope of Sections B and C of the Leniency Notice. As is apparent from paragraph 219 of the Krupp judgment, the Commission applied the provisions of Section D of that notice to all the undertakings concerned by the contested decision. Those other cases therefore merely raised the question whether, by treating the applicants differently from another undertaking concerned, within its available margin of assessment for applying Section D of that notice, the Commission infringed the principle of equal treatment. 340 By contrast, in the present case, ADM seeks to show in essence that it was because of purely random factors that Fujisawa was the first to have had an incentive to cooperate with the Commission and that it was for that reason that Fujisawa was granted a reduction under Section B of the Leniency Notice, whereas if the Commission had chosen to contact ADM first, ADM would have obtained a more substantial reduction, at least under Section C of that notice, since it would have been able to be the first to provide the information communicated by Fujisawa. ADM does not rely on the two judgments referred to in paragraph 338 above to show that the Commission applied Section D of the Leniency Notice to it in a discriminatory manner in comparison with the other cartel members (see, in this regard, paragraphs 347 to 351 below). 341 It should be observed that, unlike Sections B and C of the Leniency Notice, Section D of that notice does not provide for different treatment for the undertakings concerned on the basis of the order in which they cooperate with the Commission. Consequently, in the Krupp and Acerinox v Commission judgments (see paragraph 338 above) the Commission took account of that factor even though it was not expressly provided for in Section D of that notice. 342 Thus, even though the Commission must have a wide margin of assessment in organising the procedure in order to ensure that the system of cooperation between the undertakings in question and the Commission concerning secret cartels is successful, the Commission must nevertheless not act arbitrarily. 343 In this regard, it should be noted that, in the present case, it is apparent from the file and, in particular from recitals 53 to 64 of the Decision that after being informed during 1997 by the competent United States authorities that Akzo and Avebe (Glucona) had admitted to participating in an international sodium gluconate cartel the Commission sent, on 27 November 1997, those parties requests for information relating to the existence of any barriers to entry in respect of sodium gluconate imports in Europe. In particular, the Commission asked them to indicate the names of the largest sodium gluconate producers at worldwide level, the market shares of the undertakings active on that market at worldwide and European levels, and the worldwide production capacity for that product. In their response of 28 January 1998, Akzo and Glucona stated several times that the largest producers of sodium gluconate at worldwide and European level were, in addition to themselves, Roquette, Jungbunzlauer and Fujisawa. Although ADM’s presence on the relevant market was mentioned at one point in that response, ADM was not however referred to as one of the largest sodium gluconate producers. 344 That was the context in which, on 18 February 1998, the Commission sent requests for information concerning the same points as those set out in the requests for information sent to Akzo and Avebe (Glucona) on 27 November 1997. As is apparent from recital 55 of the Decision, in response to those requests, Fujisawa informed the Commission about the cartel and communicated to it information in this regard. 345 It cannot be ruled out that, apart from the procedure before the United States authorities, which concerned all the cartel members, the requests for information that the Commission sent, inter alia, to Fujisawa on 18 February 1998 amounted to an additional indication for Fujisawa that the Commission was in the process of carrying out an investigation into the sodium gluconate market. However, the manner in which the administrative procedure progressed, as described in paragraphs 343 and 344 above, does not suggest that the Commission acted arbitrarily, and ADM has adduced no evidence to that effect. 346 Consequently, ADM cannot complain that the Commission treated it in a discriminatory manner in relation to Fujisawa. c) The Commission granted Roquette the same reduction as it did to ADM Arguments of the parties 347 ADM objects to the fact that the Commission granted it the same reduction in the fine as it did to Roquette. Contrary to the Commission’s statement, the evidence provided by Roquette did not have the same value as ADM’s, given that ADM cooperated earlier, provided key witness evidence and prompted the other defendants, including Roquette, to cooperate. 348 The Commission contends that this part of the plea should be rejected. Findings of the Court 349 It should be observed that although ADM’s and Roquette’s fines were reduced by the same rate, the reduction was not based entirely on the same considerations. Although it is true that ADM provided evidence earlier than Roquette, the fact remains that ADM does not deny that, as is apparent from recital 426 of the Decision, it did not, unlike Roquette, supply contemporaneous documents recording the events and conclusions of the cartel meetings. 350 In any event, to the extent that ADM seeks to demonstrate that the Commission granted too high a reduction to Roquette, it must be borne in mind that the principle of equal treatment in relation to a particular act is limited by the principle that a person may not rely, in support of his claim and against a measure which complies with the relevant provisions, on an unlawful act committed in favour of a third party (see Cascades v Commission, paragraph 190 above, paragraph 259, and SCA Holding v Commission, paragraph 63 above, paragraph 160). 351 Consequently, that part of the plea and the plea in its entirety must be rejected. F – Defects in the administrative procedure a) Arguments of the parties 352 ADM puts forward four complaints as part of this plea. 353 First, ADM submits that its rights of defence were infringed in that it was not given an opportunity during the administrative procedure to comment on the application to the starting amount of a multiplier of 2.5, which is not provided for in the Guidelines. 354 Second, ADM complains that the Commission failed to specify in the statement of objections that sodium gluconate was the relevant product market. In paragraphs 3 to 9 of the statement of objections the Commission merely explained that sodium gluconate was one of many chelating agents belonging specifically to a family of chelating agents and that it had a number of partial substitutes. Although it established that sodium gluconate was the ‘reference product’, it immediately followed that statement by saying that the ‘closest alternative products are sodium glucoheptonate and EDTA’. Since the Commission stated in the statement of objections that there were substitutes, it should have clearly outlined its findings on the relevant product market, and why such alternatives did not form part of the relevant market, in such a way that the parties could have an opportunity to comment. Accordingly, the Commission did not examine the essential question of the definition of the relevant product market in the statement of objections. 355 Third, ADM submits that the Commission referred in the Decision (footnote 17) to a publication entitled Chemical Economics Handbook (SRI International, 1991), which was not disclosed to the parties. 356 Fourth, the Commission did not suggest in the statement of objections that implementation of the cartel must necessarily have an economic impact on the market. 357 The Commission contends that the four complaints put forward as part of this plea must be rejected. b) Findings of the Court 358 Observance of the rights of the defence, which constitutes a fundamental principle of Community law and which must be respected in all circumstances, in particular in any procedure which may give rise to penalties, even if it is an administrative procedure, requires that the undertakings and associations of undertakings concerned be afforded the opportunity, from the stage of the administrative procedure, to make known their views on the truth and relevance of the facts, objections and circumstances put forward by the Commission (Hoffmann-La Roche v Commission, paragraph 216 above, paragraph 11, and Case T‑11/89 Shell v Commission [1992] ECR II‑757, paragraph 39). 359 Similarly, according to the case-law, the statement of objections must be couched in terms that, albeit succinct, are sufficiently clear to enable the parties concerned properly to identify the conduct complained of by the Commission. It is only on that basis that the statement of objections can fulfil its function under the Community regulations of giving undertakings all the information necessary to enable them properly to defend themselves, before the Commission adopts a final decision (Joined Cases C‑89/85, C‑104/85, C‑114/85, C‑116/85, C‑117/85 and C‑125/85 to C‑129/85 Ahlström Osakeyhtiö and Others v Commission [1993] ECR I‑1307, paragraph 42, and Mo och Domsjö v Commission, paragraph 293 above, paragraph 63). 360 In its first and fourth complaints, ADM complains in essence that the Commission failed to inform it of the application of certain elements which were decisive for setting the fine, namely the multiplier of 2.5 (recitals 386 to 388), or the fact that the infringement had an actual effect on the market (recital 340 of the Decision). 361 In this regard, it should be observed that, according to settled case‑law, provided that the Commission indicates expressly in the statement of objections that it will consider whether it is appropriate to impose fines on the undertakings concerned and that it sets out the principal elements of fact and of law that may give rise to a fine, such as the gravity and the duration of the alleged infringement and the fact that it has been committed ‘intentionally or negligently’, it fulfils its obligation to respect the undertakings’ right to be heard. In doing so, it provides them with the necessary elements to defend themselves not only against a finding of infringement but also against the fact of being fined (Musique diffusion française and Others v Commission, paragraph 44 above, paragraph 21, and LR AF 1998 v Commission, paragraph 38 above, paragraph 199). 362 Therefore, as regards determining the amount of fines, the rights of defence of the undertakings concerned are guaranteed before the Commission through the opportunity to make submissions on the duration, the gravity and the foreseeability of the anti-competitive nature of the infringement (Case T-83/91 Tetra Pak v Commission [1994] ECR II-755, paragraph 235, and HFB and Others v Commission, paragraph 65 above, paragraph 312). 363 As regards the present case, it should be noted that, in the statement of objections sent to ADM, the Commission clearly stated that it was planning to impose on it a fine which it would determine by reference in particular to the gravity and duration of the infringement. It also made explicit reference to the Guidelines, indicating clearly by that reference that ADM should expect an assessment of its situation by reference to those guidelines and therefore had to defend itself in this regard if it deemed it appropriate. 364 Moreover, the Commission stated at paragraph 345 of the statement of objections that it intended to set the fines at a level of sufficient deterrence. Similarly, at paragraphs 264 and 346 of the statement of objections, the Commission stated in essence that, in assessing the gravity of the infringement, it intended to take into account the fact that it was a very serious infringement which had the object of restricting competition and which, furthermore, in the light of the very nature of the agreements concluded, necessarily had a serious impact on competition. 365 Observance of the rights of defence of the undertakings concerned does not require the Commission to state more precisely in the statement of objections the manner in which it will take account of each of those factors when setting the level of the fine. 366 Finally, it is clear that dividing members of cartels into groups constitutes a practice developed by the Commission on the basis of the Guidelines. The Decision was therefore adopted in a context well known by ADM and part of a consistent decision-making practice (see, to that effect, Joined Cases C‑57/00 P and C‑61/00 P Freistaat Sachsen and Others v Commission [2003] ECR I‑9975, paragraph 77). 367 The first and fourth complaints are therefore unfounded. 368 By its second complaint, ADM alleges that the Commission failed to specify in the statement of objections that sodium gluconate was the relevant product market. 369 It must be noted that at paragraphs 3 to 9 of the statement of objections, the Commission described the characteristics of sodium gluconate under the heading ‘The product’. Whilst it is true, as ADM points out, that the Commission states there that certain substitutes exist, the fact remains that, contrary to what ADM submits, the wording used by the Commission leaves no room for doubt that, at the stage of the statement of objections, it took the view that those substitutes did not form part of the relevant product market. 370 First, at paragraph 9 of the statement of objections, the Commission stated inter alia that those products were only partial substitutes and that, unlike those other products, sodium gluconate was a ‘reference product’, the demand for which far outstripped that for the other products. Second, in analysing the relevant market (paragraphs 39 to 50 of the statement of objections), the Commission consistently referred to sodium gluconate without mentioning those substitutes. 371 The second complaint is therefore unfounded. 372 Finally, in so far as in its third argument ADM submits that in the Decision (footnote 17) the Commission referred to a publication entitled Chemical Economics Handbook (SRI International, 1991) which had not been disclosed to the parties, it is sufficient to observe that, at footnote 4 of the statement of objections, the Commission stated that it was relying on that publication when describing the relevant product, and, as the Commission argues without being contradicted on that point by ADM, the publication is available to the public, and in particular to operators active on the market concerned by that publication. 373 Consequently, the third complaint and therefore the plea in its entirety must be rejected. G – The request to consider a new plea 374 In consequence of the Commission’s adopting the 2006 Guidelines and making them available on the internet, ADM requested that the Court consider a new plea based on those guidelines. ADM argues that it is apparent from the 2006 Guidelines that in the Decision the Commission took insufficient account of the very small amount of ADM’s sales in the relevant market and that it assessed the deterrent effect of the fine incorrectly. In particular, ADM submits that the maximum amount of the fine which would have been imposed on it under the 2006 Guidelines and prior to application of the Leniency Notice was EUR 3.8 million instead of EUR 16.88 million. 375 The Commission disputes ADM’s request. 376 Given that ADM’s request that the 2006 Guidelines be taken into account was lodged after the close of the oral procedure, it is first of all necessary to determine whether the oral procedure should be reopened in order to take into consideration ADM’s new plea based on the 2006 Guidelines. In this respect, the Court recalls that it is required to accede to a request that the oral procedure be reopened in order to take into account alleged new facts only if the party concerned relies on facts which may have a decisive influence on the outcome of the case and which it was unable to put forward before the close of the oral procedure (Case C 200/92 P ICI v Commission [1999] ECR I‑4399, paragraphs 60 and 61, and Case T-311/00 British American Tobacco (Investments) v Commission [2002] ECR II‑2781, paragraph 53). 377 In the present case, in so far as the applicant relies on the 2006 Guidelines in order to show that the Decision was illegal, it is sufficient to recall that, according to the case‑law, the legality of a Community measure is assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted (Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraphs 7 and 8; Joined Cases T‑177/94 and T‑377/94 Altmann and Others v Commission [1996] ECR II‑2041, paragraph 119). Consequently, elements of fact and law arising after the date of the adoption of the Community measure cannot be taken into account when assessing the legality of that measure (see, to that effect, Deutsche Bahn v Commission, paragraph 63 above, paragraph 102, and the case‑law cited therein). 378 Accordingly, since the new element relied on by ADM manifestly post‑dates the adoption of the Decision, that element cannot affect its validity (see, to that effect, Joined Cases T‑133/95 and T‑204/95 IECC v Commission [1998] ECR II‑3645, paragraph 37). The adoption of the 2006 Guidelines is not a new element capable of having a decisive influence on the legality of the Decision. There is, therefore, no need to reopen the oral procedure on that basis. 379 That conclusion is confirmed by the clarification in paragraph 38 of the 2006 Guidelines which states that those guidelines apply only in cases where the statement of objections has been notified after their date of publication in the Official Journal. Thus, those guidelines themselves explicitly preclude their application to cases such as the present one. Since those guidelines post‑date the adoption of the Decision and, a fortiori, the statement of objections preceding it, they do not form part of the legal or factual framework relevant to it. 380 To the extent that the applicant relies on the 2006 Guidelines in support of its plea that the fine is disproportionate, in relation to which the Court of First Instance enjoys unlimited jurisdiction, the Court finds that the mere fact that the application of the new method for calculating fines set out in those guidelines, which are not applicable to the facts of the present case, is capable of leading to a fine lower than that imposed by the Decision does not show that that fine is disproportionate. That finding is merely the expression of the Commission’s margin of assessment when establishing, in compliance with the requirements set out in Regulation No 17, the method which it intends to apply for calculating the amount of fines and thus for guiding the competition policy for which it is responsible. The criteria to be taken into account by the Court in assessing whether the amount of fines imposed at a given point in time is proportionate may therefore include the circumstances of fact and law and also the objectives of competition defined by the Commission in accordance with the requirements of the EC Treaty at that time. Moreover, it should be borne in mind that in Dansk Rørindustri and Others v Commission, paragraph 38 above, paragraphs 234 to 295, the Court of Justice rejected the applicants’ pleas and arguments seeking to dispute the calculation method resulting from the 1998 Guidelines to the extent that that method used as a starting point the basic amounts set out in those guidelines which are not determined according to relevant turnover. Lastly, it should be observed that the Court has held, at paragraphs 76 to 81, paragraphs 99 to 106, and paragraphs 139 to 149 above, that, in the present case, calculating the amount of the fine by reference to the 1998 Guidelines did not infringe the principle of proportionality. 381 In those circumstances, the Court finds that the adoption of the 2006 Guidelines does not have a decisive influence on the outcome of the case. There is therefore no need to reopen the oral procedure. H – Conclusion 382 Since none of the pleas raised against the legality of the Decision has been upheld, the fine should not be reduced under the unlimited jurisdiction enjoyed by the Court of First Instance. The action must therefore be dismissed in its entirety. Costs 383 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the defendant. On those grounds, THE COURT OF FIRST INSTANCE (Third Chamber) Hereby: 1. Dismisses the action; 2. Orders Archer Daniels Midland Co. to pay the costs. Azizi Jaeger Dehousse Delivered in open court in Luxembourg on 27 September 2006. Registrar President E. Coulon J. Azizi Table of contents Facts Procedure and forms of order sought by the parties Law A – Whether the Guidelines apply 1. Infringement of the principles of legal certainty and non-retroactivity of penalties a) Arguments of the parties b) Findings of the Court 2. Breach of the principle of equal treatment a) Arguments of the parties b) Findings of the Court B – The gravity of the infringement 1. Introduction 2. The failure to have regard to, or to have sufficient regard to the relevant product turnover a) Arguments of the parties b) Findings of the Court Infringement of the principle of proportionality Infringement of the Guidelines Infringement of the obligation to state reasons 3. The failure to have regard to, or to have sufficient regard to the limited size of the relevant product market a) Arguments of the parties b) Findings of the Court Infringement of the principle of proportionality Infringement of the principle of equal treatment Infringement of the obligation to state reasons 4. Deterrence taken into account twice in relation to the fine a) Arguments of the parties b) Findings of the Court Infringement of the Guidelines Infringement of the obligation to state reasons 5. Application of a multiplier to the starting amount a) Arguments of the parties b) Findings of the Court Infringement of the principle of proportionality Infringement of the principle of equal treatment Infringement of the obligation to state reasons 6. Errors of assessment relating to the cartel’s actual impact on the market a) Introduction b) The approach chosen by the Commission to show that the cartel had an actual impact on the market was incorrect Arguments of the parties Findings of the Court – Summary of the Commission’s analysis – Findings c) Assessment of the changes in sodium gluconate prices The Commission had insufficient information and failed to have regard to the other factors referred to during the administrative procedure – Arguments of the parties – Findings of the Court ADM was not a member of the cartel at the time of the increase in sodium gluconate prices between 1987 and 1989 – Arguments of the parties – Findings of the Court d) Definition of the relevant market Arguments of the parties Findings of the Court C – Errors in assessing the duration of the infringement 1. Termination of ADM’s involvement in the cartel at the meeting of 4 October 1994 in London a) Arguments of the parties b) Findings of the Court 2. The nature of the meeting held from 3 to 5 June 1995 in Anaheim a) Arguments of the parties b) Findings of the Court D – Attenuating circumstances 1. Termination of ADM’s involvement in the cartel a) Arguments of the parties b) Findings of the Court 2. No need to ensure that the fine has a deterrent effect a) Arguments of the parties b) Findings of the Court 3. ADM’s adoption of a code of conduct a) Arguments of the parties b) Findings of the Court E – ADM’s cooperation during the administrative procedure 1. Introduction 2. Incorrect assessment of ADM’s cooperation a) Arguments of the parties b) Findings of the Court 3. Breach of the principle of equal treatment a) ADM’s cooperation in the investigation was at least equivalent to that of a party which was the subject of an earlier Commission decision Arguments of the parties Findings of the Court b) The Commission granted Fujisawa a larger reduction than that granted to ADM Arguments of the parties Findings of the Court c) The Commission granted Roquette the same reduction as it did to ADM Arguments of the parties Findings of the Court F – Defects in the administrative procedure a) Arguments of the parties b) Findings of the Court G – The request to consider a new plea H – Conclusion Costs * Language of the case: English.

Lord Justice Richards : The appellant is a 30 year old Iraqi Kurd from the Kurdish Regional Government zone of Iraq ("the KRG"). He entered the United Kingdom clandestinely in December 1999 and claimed asylum. His claim was refused and an appeal was dismissed. The appellate process came to an end in July 2005. Following further, unsuccessful representations the appellant was removed to the KRG in November 2005. A claim for judicial review to challenge that removal was settled on the basis that the Secretary of State would use his best endeavours to bring the appellant back to the United Kingdom. The appellant arrived back in January 2006. He then made a series of further representations which the Secretary of State again rejected. The process culminated in a decision letter dated 1 September 2006, together with the issue of fresh removal directions. Following an unsuccessful application for an injunction, the appellant was removed to the KRG for a second time on 5 September 2006. While he was in the United Kingdom the appellant had formed a relationship with a British citizen, Ms Elizabeth Kennedy, to whom he became engaged to be married. Following his second removal to the KRG, he wished to apply for leave to enter the United Kingdom as a fiancé. For that purpose, as explained in greater detail below, he needed entry clearance; and to obtain entry clearance he was required to produce, in accordance with para 320(3) of the Immigration Rules, "a valid national passport or other document satisfactorily establishing his identity and nationality". The appellant's case is that he obtained what is known as an "S-series" passport from the Iraqi authorities within a week of his return to Iraq. His representative then wrote to the entry clearance officer ("the ECO") in Amman, asking for an assurance that if the appellant applied for entry clearance with his S-series passport the application would not be refused on the grounds of documentation. The ECO replied on 26 September 2006 in these terms: "Entry clearance applications to the UK for settlement as a fiancé are considered under paragraph 290 of the UK Immigration Rules. Under the Rules it is also a requirement that applicants present valid national travel documents or passports, or a document which satisfactorily confirms the holder's identity and nationality. With effect from 1 September 2006 Her Majesty's Government no longer accepts the S series Iraqi passport for the purpose of making UK entry clearance applications; other series of Iraqi passport, including the latest G series, are acceptable if valid. This means that the S series passport is no longer acceptable for the purposes of confirming identity and nationality. With effect from 1 November 2006 the S series passport will no longer be valid for travel to the UK, even in possession of a UK visa issued before 1 September. In this instance we will not be able to accept any application from the person named above unless he has an acceptable series Iraqi passport; we have no local discretion in this matter at all. His situation is no different from any other Iraqi national wanting to travel to the UK and to whom the same advice is applicable. We understand the issuing of the new G series Iraqi passport is centralised in Baghdad. Any queries concerning the issuing process of Iraqi passports needs to be taken up with the Iraqi passport issuing authorities." The appellant brought a claim for judicial review, challenging what were described as a decision of the Secretaries of State that S-series passports were not to be accepted as evidence of identity and nationality, and a decision of the ECO to refuse to entertain any application by the appellant for entry clearance unless he presented a G-series passport. The claim was dismissed by Goldring J, against whose order this appeal is brought. The central issue on the appeal is a narrow one, namely whether the Secretary of State's decision or policy that S-series passports are no longer to be accepted amounts to an unlawful removal or restriction of the power of ECOs under para 320(3) to decide as a matter of judgment in individual cases whether an S-series passport meets the requirements of that provision. The practical significance of the dispute would appear to be narrower still. If the Secretary of State's concerns about S-series passports are well founded, an applicant is likely to have extreme difficulty in persuading an ECO to accept such a passport as meeting the requirements of para 320(3) even if the ECO is free to make his own decision. Nonetheless, the appellant says that his S-series passport does meet those requirements and that he is entitled to have the opportunity so to persuade the ECO. Thus there is more to the case than an empty point of principle. Legal framework Section 3(2) of the Immigration Act 1971 provides that "[t]he Secretary of State shall from time to time … lay before Parliament statements of the rules, or of any changes in the rules, laid down by him as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter …". The rules laid before Parliament in accordance with s.3(2) are currently contained in HC395 as amended ("the Immigration Rules"). Para 26 of the Immigration Rules provides that an application for entry clearance will be considered in accordance with the provisions concerning the grant or refusal of leave to enter; and that, where appropriate, the term "entry clearance officer" should be substituted for "immigration officer". The requirements for leave to enter the United Kingdom as a fiancé are set out in para 290. They include, in sub-para (vii), that the applicant must hold a valid United Kingdom entry clearance for entry in this capacity. By para 292, leave to enter the United Kingdom as a fiancé is to be refused if such an entry clearance is not produced on arrival. Para 320 contains general grounds for the refusal of entry clearance or leave to enter the United Kingdom. It provides, in material part: "In addition to the grounds for refusal of entry clearance or leave to enter set out in Parts 2-8 of these Rules … the following grounds for the refusal of entry clearance or leave to enter apply: Grounds on which entry clearance or leave to enter the United Kingdom is to be refused ... (3) failure by the person seeking entry to the United Kingdom to produce to the immigration officer a valid national passport or other document satisfactorily establishing his identity and nationality; … Grounds on which entry clearance or leave to enter the United Kingdom should normally be refused ... (10) production by the person seeking leave to enter the United Kingdom of a national passport or travel document issued by a territorial entity or authority which is not recognised by Her Majesty's Government as a state or is not dealt with as a government by them, or which does not accept valid United Kingdom passports for the purpose of its own immigration control; or a passport or travel document which does not comply with international passport practice …." The central provision for present purposes is para 320(3). Read in conjunction with para 26, its effect is that entry clearance must be refused if the applicant fails to produce to the entry clearance officer "a valid national passport or other document satisfactorily establishing his identity and nationality". (Language similar to that of para 320(3) of the Immigration Rules is to be found in para 4(2)(a) of schedule 2 to the Immigration Act 1971; but reference to the latter provision does not in my view take matters any further and I therefore propose to say nothing more about it.) Home Office internal guidance on Iraqi passports S-series passports were introduced by the Interim Iraqi Government ("the IIG") in 2004. Internal guidance issued by the Home Office's International Delivery Directorate in October 2004 stated as follows in relation to them: "The IIG are working towards being able to issue a fully ICAO-compliant, Iraqi passport. Until that is available, a new temporary passport, the S-series, has been introduced by the IIG. S-series passports have a dark green cover and can be distinguished from earlier series of Iraqi passports by the letter S that appears before the passport number. The UK Government has decided that the S-series passport will be acceptable for purposes of establishing identity and nationality until 31 December 2004. During this period, visas for travel to the UK ... must be endorsed on an accompanying GV3 'Declaration of Identity for Visa Purposes' form. The GV3 form will also be useable in conjunction with the new, more secure, passport once this has been issued." The period referred to was reviewed and extended every six months, until a decision was taken to phase out the acceptability of the S-series passports from 1 September 2006. An internal guidance note dated 30 June 2006 stated: "PHASING OUT ACCEPTABILITY OF IRAQI S-SERIES FROM 1 SEPTEMBER 2006 The Iraqi Government started issuing a new machine-readable G-series passport on 11 April 06. The G-series is significantly more secure than the S-series passport and is fully acceptable as evidence of identity and nationality for the purpose of travel to the United Kingdom. G-series passports are not yet widely available and are not yet being issued by Iraqi missions overseas although applications will be accepted and passed to Baghdad. In view of this it has been decided to phase out acceptance of the S-series passport as follows: From 1 September 06: • no further visas to be issued on Uniform Format Forms (UFFs) to holders of S-series passports From 1 November 06: • S-series passports (accompanied by pre-1 September UFFs) no longer accepted for travel to the UK • valid visas or leave already endorsed on a UFF or other document must be accompanied by a G-series passport … REVISED GUIDANCE FOR UKVISAS, UKIS and IND CASEWORK 1) UKvisas For Entry Clearance Posts this means that the current arrangements for issuing visas continue until 31 August. From 1 September, no visas are to be issued to holders of S-series. Until 31 August visas issued to holders of S-series for travel to the UK must be endorsed on an accompanying EU Uniform Format Form (UFF - the replacement for the GV3 'Declaration of Identity for Visa Purposes'). Visas issued on a UFF before 1 September will be usable in conjunction with a new G-series passport after 1 November. Entry Clearance Posts should continue to check carefully documents submitted by holders of S-series passports and may make any additional checks to verify identity deemed appropriate. …" The background to all this is explained in a witness statement of Ann Williams, an Assistant Director in the Borders and Visa Policy Directorate of the Home Office's Immigration and Nationality Directorate. She states: "4. … It is not sufficient to produce 'a valid national passport' …. It must be a valid national passport 'satisfactorily establishing his identity and nationality'. A valid national passport may fail to satisfactorily establish a person's identity and nationality for a number of different reasons, including where it has been altered or is being used by an impostor or has been obtained through a fraudulent or deficient process. A 'valid national passport' may also fail to satisfactorily establish a person's identity and nationality where it lacks standard security features and is of such poor quality that it becomes difficult - or even impossible - to distinguish an officially issued document from a counterfeit or altered document. 5. The S-series passport was introduced by the interim Iraqi Government in 2004 as a temporary passport to allow Iraqi citizens to travel pending the introduction of a more secure replacement. Subsequently, the National Document Fraud Unit's analysis of sample specimens confirmed that the S-series was of poor quality and did not comply with minimum standards expected of an international travel document. The absence of security features such as a proprietary water-mark, the use of commonly available materials and the absence of a high security printing process make the S-series passport particularly vulnerable to counterfeiting. The fact that the fields in the document may be filled in manually and the ease with which photographs can be substituted due to the absence of anti-tampering features in the laminate sealing the biodata page are also of major concern. The S-series passport is so lacking in sophistication that it is not possible to be sure, even in the case of an officially issued passport, that it is genuine. 6. In spite of the serious reservations about the S-series, in view of the United Kingdom's central role in Iraq and the need for Iraqi nationals (e.g. businessmen, engineers, officials etc.) to be able to travel overseas in order to assist with reconstruction of the country's infrastructure, the decision was taken by Immigration Minister Des Brown on 15 September 2004 ... to give the S-series passport limited recognition until 31 December 2004. This recognition was reviewed and extended every six months, ultimately up until 30 June 2006, due to delays in the launch of the replacement passport. 7. During this period, because of the fact that the S-series passport had only limited recognition for the purposes of travel to the United Kingdom, visas and endorsements of leave have not been placed in S-series passports, but on a separate document. S-series passports were not acceptable in their own right for travel to the United Kingdom or for the purposes of leave to enter. 8. On 11th April 2006, the Iraqi Government started to issue a new, machine-readable G-series passport. This is a significantly more secure document than the S-series passport and is fully acceptable for travel to the United Kingdom. On this basis, the decision was taken by the Immigration Minister (Liam Byrne) on 29 June 2006 to stop accepting the S-series passport as a valid document for travel to the United Kingdom on a phased basis. The decision was embodied in staff guidance issued on 30 June 2006 .... The UK Government ceased issuing new visas to applicants holding S-series passports on 1 September 2006 (and, from 1 November, the S-series ceased to be an acceptable travel document for travel to the UK, even where the holder had valid leave to remain in the UK). 10. … It is neither practical nor desirable to make exceptions to allow travel to the United Kingdom on S-series passports when it is known that they can readily be obtained on the black market in Iraq and Jordan. Information obtained by the Entry Clearance Officer in Amman from senior Jordanian officials at the Karameh border-crossing suggests that S-series passports are readily available at a number of adjacent outlets, in the identity of one's choice, for the equivalent of £10 or less. The Iraqi S-series passport therefore presents a significant risk to the United Kingdom's border controls. 11. For these reasons, no exceptions can be made to the position that S-series passports are no longer acceptable as evidence of nationality and identity for the purposes of travel to the United Kingdom …." Ms Williams's witness statement goes on to list other States which have decided not to accept S-series passports, and an updated and expanded list has been provided to us. It is important to note, however, that S-series passports have continued to be issued by the Iraqi authorities, as para 14 of Ms Williams's witness statement makes clear: "It is accepted that the Iraqi Government is still issuing S-series passports and not withdrawing existing S-series passports during the current transition to the new G-series passport, for which there is a heavy demand." Goldring J's conclusion Having set out the background and the rival submissions, Goldring J expressed his conclusion as follows, at paras 27-31 of his judgment: "(1) In general, in the light of the evidence, the S-series passports are wholly unreliable as a means of identifying the person and his nationality. The second defendant was entitled so to conclude. His decision in that regard was entirely rational. (2) While in any given case it may not be impossible, it is extremely difficult for an ECO in the field reliably to ascertain whether a S-series passport presented to him is valid or not. In other words, it is extremely difficult for an ECO reliably to exercise any individual judgment under the rule when presented with a S-series passport. (3) On any sensible reading of Rule 320(3), it permits the second defendant to give guidance to that effect to the ECO. It would be surprising were he not able to. In giving such guidance he is bound to reflect what the reality of the position is. If the claimant is right, on facts such as the present, the rule permits him to say to the ECO in the strongest possible terms that an S-series passport is in general not a means of identifying the person and his nationality. The ECO must nevertheless, although ill-equipped to do so, seek to establish the position in the case before him bearing that guidance in mind. Such an outcome could not have been the intention of the draftsman of what is a rule to help the ECO to administer the Act. In such circumstances, in my view, the rule does permit the second defendant to provide what amounts to operational guidance to the effect that a passport of a particular class is no longer acceptable. (4) It would be too cumbersome and inflexible a procedure for the second defendant to have to lay before Parliament each such change. Provided the decision to change the guidance is rational, it may be taken and carried out by the second defendant in the way done here. In short, for those reasons, it does not seem to me that judicial review lies." Submissions For the appellant, Mr Cox submits that the judge's conclusion has no basis in the legislation governing immigration control. The ECO must determine an application for entry clearance in accordance with the Immigration Rules. It is for him to reach a decision on the factual matters raised by para 320(3). The Secretary of State's concerns about S-series passports can properly be reflected in guidance to which the ECO must have regard. Such guidance can be expressed in strong terms: for example, Mr Cox accepted in the course of argument before the judge that it would be open to the Secretary of State to give guidance to the effect that S-series passports were "not worth the paper they were written on". It is submitted, however, that the judge was wrong to refer to the internal document in this case as "operational guidance" to the effect that a passport of a particular class is no longer acceptable. This went beyond guidance. It was an instruction, which restricted the freedom of the ECO to make his own decision on the particular facts. It may be hard to persuade an ECO to accept an S-series passport in the light of guidance properly given by the Secretary of State; but the appellant is entitled to try to persuade an ECO that his S-series passport is valid and should be accepted. If the Secretary of State wishes to instruct ECOs not to accept any S-series passports, he must change the Immigration Rules themselves. For the Secretary of State, Miss Laing submits that the judge's approach is the right one. The purpose of the rule is to maintain the integrity of immigration control. The Secretary of State has grave and well-justified doubts about the reliability of a particular class of Iraqi passport, the S-series. There is no longer a necessity to accept that class of passport, because a considerably more reliable alternative, the G-series, has become available. On the particular facts of this case, the Secretary of State's "generic decision" or "policy" (as Miss Laing variously described it) that the S-series is not to be accepted has not removed from ECOs anything more than a wholly theoretical area of judgment. In practice, it is not possible for anyone to make a reliable judgment as to the validity of an S-series passport; an applicant cannot demonstrate the validity of such a passport. An ECO is therefore not in a position to accept any S-series passport as valid and meeting the requirements of para 320(3). On these facts, it is submitted that the Secretary of State's decision or policy is lawful and permitted by the legislative scheme. In her oral submissions Miss Laing also referred to the Secretary of State as "supplementing" para 320(3) by providing practical guidance the purpose of which is to enable ECOs to determine applications in accordance with the Immigration Rules. Discussion The fundamental point in this case, as it seems to me, is that the decision to be taken under para 320(3) is that of the individual ECO to whom the application for entry clearance is made. That is clear from the scheme of the Immigration Rules and the terms of para 320(3) itself, read together with para 26. It is the individual ECO who has to decide whether to grant entry clearance, and for that purpose he has to decide inter alia whether the applicant has produced "a valid national passport or other document satisfactorily establishing his identity and nationality". The decision requires an exercise of judgment in respect of whatever document or documents the applicant has produced. It is the ECO who must exercise such judgment and make the decision. It follows that the Secretary of State is not the decision-maker under para 320(3); and, although he is entitled to issue guidance to assist the ECO in his task, he is not entitled to instruct or direct the ECO as to the decision to be made or to remove or restrict the ECO's power of decision-making. The issue is whether, in relation to the S-series passport, the Secretary of State has overstepped his permitted role. Before focusing directly on that issue, however, I think it helpful to look in greater detail at the nature of the decision that the ECO has to make. When an applicant for entry clearance produces what purports to be a passport, the ECO has to decide first whether it is a "valid national passport". It is not necessary for the purposes of this appeal to determine the full criteria of validity, but there appeared to be a substantial measure of agreement between counsel that the document must at least be a passport issued by a recognised State authority, identifying and stating the nationality of the person to whom it is issued (who must, of course, be the applicant for entry clearance); it must be within date; there must be no material alteration to it; and it must not have been obtained by deception. Support for some of those criteria is provided by section 8 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004, which requires certain kinds of behaviour to be taken into account as damaging a claimant's credibility. By subsection (3)(b), one such kind of behaviour is "the production of a document which is not a valid passport as if it were". By subsection (8), a passport produced by or on behalf of a person is valid for the purposes of subsection (3)(b) "if it (a) relates to the person by whom or on whose behalf it is produced, (b) has not been altered otherwise than by or with the permission of the authority who issued it, and (c) was not obtained by deception". If the ECO is satisfied that an applicant has produced a valid national passport, must he then go on under para 320(3) to ask as a separate question whether that passport satisfactorily establishes the applicant's identity and nationality? That depends on whether para 320(3) is to be read disjunctively, as requiring an applicant to produce either "a valid national passport" or some "other document satisfactorily establishing his identity and nationality"; or conjunctively, as requiring an applicant to produce either "a valid national passport … satisfactorily establishing his identity and nationality" or some "other document satisfactorily establishing his identity and nationality". In my judgment the former, disjunctive construction is the natural reading and is to be preferred. A valid national passport can generally be taken to establish satisfactorily a person's identity and nationality, and it cannot have been intended to require the ECO to make a separate inquiry about those matters. It is only if the applicant relies on a document other than a valid national passport that there needs to be an inquiry into whether that document satisfactorily establishes his identity and nationality. Further, the disjunctive construction of para 320(3) is supported by the inclusion of a separate provision, in para 320(10), whereby production of a passport "which does not comply with international passport practice" is a ground on which entry clearance should normally be refused. That provision will generally be apt to cover the situation of a passport which, though valid, is of such poor quality that it cannot be relied on as satisfactorily establishing identity and nationality. Moreover it is difficult to see why such a provision would be needed at all if an ECO were required in any event, under para 320(3), to consider not only whether a passport was valid but also whether it satisfactorily established the applicant's identity and nationality. It follows from the above that when an applicant for entry clearance produces an S-series passport, the ECO must first decide, under para 320(3), whether it is a valid national passport. If it is not, then entry clearance must be refused (subject to the theoretical possibility, which can be dismissed for practical purposes, that the ECO may nonetheless be satisfied that the S-series passport, although not a valid national passport, counts as some "other document satisfactorily establishing his identity and nationality"). If, however, the S-series passport is found to be a valid national passport, the ECO needs to go on to consider, under para 320(10), whether it complies with international passport practice. If it does not, then entry clearance should normally be refused. Against that background I turn to examine the lawfulness of the material issued by the Secretary of State, in particular the so-called guidance note dated 30 June 2006 (quoted at para 12 above), and of the stance adopted by the ECO in Amman in reply to the inquiry by the appellant's representative about the appellant's proposed reliance on an S-series passport (quoted at para 3 above). In my judgment the relevant part of the so-called guidance note goes well beyond guidance and amounts to an instruction or direction to ECOs not to accept S-series passports for the purposes of entry clearance. There can be no doubting the mandatory nature of its terms: "From 1 September 2006, no visas are to be issued to holders of S-series". Ms Williams's witness statement makes clear that this was indeed the intention. This is also how it was understood by the ECO in Amman, whose reply to the appellant's representative stated that "Her Majesty's Government no longer accepts the S series Iraqi passport for the purpose of making UK entry clearance applications", that an application from the appellant could not be accepted unless he had an acceptable series Iraqi passport, and that "we have no local discretion in this matter at all". I therefore respectfully disagree with Goldring J's description of this as "operational guidance to the effect that a passport of a particular class is no longer acceptable". By telling ECOs not to accept any passport of a particular class, the Secretary of State has exceeded the proper limits of operational guidance and has interfered directly and unlawfully with the ECO's power of decision-making under para 320(3). This has resulted, in turn, in an unlawful refusal by the ECO in Amman to exercise his own judgment under para 320(3) in relation to individual applications. It is sought to justify the Secretary of State's approach on the basis that S-series passports are of such poor quality and so lacking in security features that an individual ECO is unable to form any reliable judgment about their validity. I find that attempted justification wholly unconvincing, for a number of reasons. First, practical considerations cannot affect the legal principle. However difficult it may be for an ECO to form a reliable judgment about the validity of an S-series passport, and however "theoretical" his area of judgment may be, the decision under para 320(3) must still be his and the decision-making power cannot lawfully be removed from him or restricted by the Secretary of State. Secondly, however difficult it may be to form a reliable judgment, I do not think that one can dismiss the possibility of an ECO reasonably deciding on the facts of an individual case that an S-series passport produced by an applicant is valid. I agree with Goldring J in leaving open that possibility (see para 15 above, at (2)). The Secretary of State does not contend that there are no valid S-series passports in existence, nor could he sensibly do so: the Iraqi authorities have issued them for several years and continue to issue them during the transition to the G-series; and some countries continue to accept them. The Secretary of State's case is based instead on the difficulty of distinguishing between valid and invalid or counterfeit S-series passports. Thus, Ms Williams states that "[t]he S-series passport is so lacking in sophistication that it is not possible to be sure, even in the case of an officially issued passport, that it is genuine" (see para 5 of her witness statement, quoted in para 13 above). In my view, however, it is possible to envisage non-fanciful factual circumstances in which an ECO could properly be satisfied of the validity of an individual S-series passport. Indeed, a judgment was presumably made and some S-series passports were presumably found to be valid when they were produced by applicants for entry clearance prior to 1 September 2006. Miss Laing suggested that S-series passports were accepted at that time merely as a matter of concession rather than because they were considered to be valid, but there is nothing in the material before the court to substantiate that suggestion. Thirdly, the Secretary of State's concerns about the difficulty of forming a reliable judgment about the validity of S-series passports can in my view be dealt with satisfactorily by means of guidance in appropriately strong terms, reflecting the points made in Ms Williams's witness statement. An ECO made fully aware of the vulnerability of S-series passports to counterfeiting and alteration will no doubt take a great deal of persuading to accept an S-series passport as valid. Fourthly, the Secretary of State's concerns about the S-series passports can also be taken into account under para 320(10). As to that, it is not necessary for the court to rule on the extent of compliance of S-series passports with international passport practice within the meaning of para 320(10), but it may be helpful to refer briefly to some of the points to which our attention was drawn in written submissions provided after the hearing. Relevant standards and recommended practices are contained in Annex 9 ("Facilitation") to the Convention on International Civil Aviation, as published by the International Civil Aviation Organization ("the ICAO"). "Standard" is defined as "[a]ny specification, the uniform observance of which has been recognized as practicable and as necessary to facilitate and improve some aspect of international air navigation … and in respect of which non-compliance must be notified by Contracting States to the Council …". "Recommended Practice" is defined as "[a]ny specification, the observance of which has been recognized as generally practicable and highly desirable to facilitate and improve some aspect of international air navigation … and to which Contracting States will endeavour to conform …". It is not in dispute that the expression "international passport practice" in para 320(10) of the Immigration Rules encompasses ICAO standards as so defined. Whether it also extends to ICAO recommended practices as so defined is less clear and is a matter of dispute between the parties. The issuance of machine readable passports and the specifications of such passports (as contained in an ICAO publication known as Document 9303, Part I) are at present the subject of recommended practices rather than standards. Contracting States will not be under an obligation to issue machine readable passports until 1 April 2010. Some of the features of S-series passports to which the Secretary of State takes objection, such as the absence of a suitable watermark, constitute non-compliance with the specifications for machine readable passports, but it is not clear that there are corresponding requirements for non-machine readable passports or, therefore, that those features constitute non-compliance with existing ICAO standards. Of particular significance, however, is the standard laid down in para 3.12 of Annex 9, which relates to non-machine readable passports though it cross-refers to the specifications for machine readable passports. Para 3.12 states that "[w]hen issuing passports that are not machine readable, Contracting States shall ensure that the personal identification and document issuance data and the format of the data page conform to the specifications for the 'visual zone' set forth in Doc 9303, Part I …". The Secretary of State contends that the effect of that provision, when read with the relevant parts of Document 9303, Part I, is that the data in question must be in printed form and appear on a single page; and that the S-series passport fails to comply with that requirement, since the information in it is completed in manuscript and is spread across two pages. In my view there is force in that contention, but it is right to note that the appellant takes issue with it; and, as I have made clear, no decision is called for on the point. That brief exposition, whilst leaving matters open, is sufficient to indicate that substantial issues arise under para 320(10) as to the compliance of S-series passports with international passport practice. If, therefore, an ECO decides that a particular S-series passport is valid, he will have to give careful consideration to the position under para 320(10); and again the Secretary of State can provide guidance in strong terms to assist him in that task. If the ECO decides that the passport, although valid, does not comply with international passport practice, entry clearance should normally be refused. For all those reasons I would reject the attempted justification of the Secretary of State's approach in this case and I would accept the substance of the submissions for the appellant. As already mentioned, the practical significance of that conclusion is likely to be very limited, but the appellant should at least have the opportunity to seek to persuade the ECO to grant him entry clearance on the basis of an S-series passport. The Secretary of State's concerns about S-series passports can be reflected in guidance and taken properly into account within the existing Immigration Rules. If, however, the Secretary of State wishes to remove any possibility of an S-series passport being accepted by an ECO for entry clearance purposes, then he must change the Immigration Rules themselves in order to produce that result. For completeness I should mention that both counsel referred in some detail to Ishtiaq v Secretary of State for the Home Department [2007] EWCA Civ 386, which concerned an application for leave to remain in the United Kingdom as the victim of domestic violence. Instructions to caseworkers prescribed the types of evidence on which an applicant could rely in order to prove that their relationship had broken down as a result of domestic violence. The issue for the court was whether it was open to an applicant to prove her case in some other way. The court construed the relevant provision of the Immigration Rules, para 289A(iv), as conferring a discretion on caseworkers to decide what evidence to require an applicant to produce in an individual case; and it was held that the instructions to caseworkers could guide the exercise of that discretion but could not take the discretion away from the decision-maker. For my part, I consider Ishtiaq to be of very limited assistance. It does provide an illustration of the principle that applies in the present case, but it is not needed in support of that principle. If it falls to the ECO to make the decision under para 320(3), as in my view it clearly does, then it is obvious, without any need to refer to Ishtiaq, that the Secretary of State is entitled to issue guidance but is not entitled to remove or restrict the ECO's decision-making power. Conclusion For the reasons I have given, I would allow the appeal. Lord Justice Thomas : I agree. Lord Justice Dyson : I also agree.

Judgment of the Court of 28 October 1970. - Coöperatieve Vereniging "Necomout" GA v Hoofdproduktschap voor Akkerbouwprodukten and Produktschap voor Granen, Zaden en Peulvruchten. - Reference for a preliminary ruling: College van Beroep voor het Bedrijfsleven - Netherlands. - Case 16-70. European Court reports 1970 Page 00921 Danish special edition Page 00183 Greek special edition Page 00519 Portuguese special edition Page 00557 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords ++++ AGRICULTURE - COMMON AGRICULTURAL POLICY - LEVIES AND REFUNDS - ADVANCE FIXING - CANCELLATION IN THE CASE OF AN ALTERATION OF THE UNIT OF ACCOUNT - CONDITIONS ( REGULATION NO 1134/68 OF THE COUNCIL, ARTICLE 7 ) Summary THE SECOND PARAGRAPH OF ARTICLE 7 OF REGULATION NO 1134/68 OF THE COUNCIL OF THE EUROPEAN COMMUNITIES OF 30 JULY 1968 MUST BE INTERPRETED AS MEANING THAT CANCELLATION OF AN ADVANCE FIXING OF LEVIES OR REFUNDS MAY RELATE TO THE BALANCE OF THE QUOTA STILL OUTSTANDING AT THE DATE WHEN THE APPLICATION IS MADE, BUT ONLY TO SUCH BALANCE IN ITS ENTIRETY, AND MAY NOT RELATE TO AMOUNTS PREVIOUSLY IMPORTED OR EXPORTED . Parties IN CASE 16/70 REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE COLLEGE VAN BEROEP VOOR HET BEDRIJFSLEVEN FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN COOEPERATIEVE VERENIGING " NECOMOUT " GA AND ( 1 ) HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUKTEN, THE HAGUE ( 2 ) PRODUKTSCHAP VOOR GRANEN, ZADEN EN PEULVRUCHTEN, THE HAGUE, Subject of the case ON THE INTERPRETATION OF ARTICLE 7 OF REGULATION ( EEC ) NO 1134/68 OF THE COUNCIL OF 30 JULY 1968 LAYING DOWN RULES FOR THE IMPLEMENTATION OF REGULATION ( EEC ) NO 653/68 ON CONDITIONS FOR ALTERATIONS TO THE VALUE OF THE UNIT OF ACCOUNT USED FOR THE COMMON AGRICULTURAL POLICY, Grounds 1 BY A DECISION OF 10 APRIL 1970, WHICH WAS RECEIVED AT THE COURT REGISTRY ON 13 APRIL 1970, THE COLLEGE VAN BEROEP VOOR HET BEDRIJFSLEVEN, THE HAGUE, HAS PUT VARIOUS QUESTIONS UNDER ARTICLE 177 OF THE TREATY ESTABLISHING THE EEC, CONCERNING THE INTERPRETATION OF ARTICLE 7 OF REGULATION ( EEC ) NO 1134/68 OF THE COUNCIL OF 30 JULY 1968 LAYING DOWN RULES FOR THE IMPLEMENTATION OF REGULATION ( EEC ) NO 653/68 ON CONDITIONS FOR ALTERATIONS TO THE VALUE OF THE UNIT OF ACCOUNT USED FOR THE COMMON AGRICULTURAL POLICY . 2 REGULATION NO 1134/68, WHICH ENTERED INTO FORCE ON 4 AUGUST 1968, PROVIDES THAT IN THE CASE OF AN ALTERATION IN THE VALUE OF THE UNIT OF ACCOUNT OR IN THE PARITY OF THE CURRENCY OF A MEMBER STATE OR OF A THIRD COUNTRY THE AMOUNTS FIXED UNDER THE PROVISIONS RELATING TO THE AGRICULTURAL POLICY, AND IN PARTICULAR THE AMOUNTS OF LEVIES AND REFUNDS, MAY BE ADJUSTED TO THE NEW PARITIES, EVEN AS REGARDS LEVIES AND REFUNDS FOR WHICH TRADERS HAD EXERCISED THE RIGHT CONFERRED UPON THEM BY THE VARIOUS REGULATIONS ESTABLISHING THE ORGANIZATION OF THE AGRICULTURAL MARKETS TO HAVE THE AMOUNTS FIXED IN ADVANCE . 3 IN ORDER NOT TO PREJUDICE PERSONS HAVING PREVIOUSLY OBTAINED AN ADVANCE FIXING, THE REGULATION ENABLES THEM TO OBTAIN THE CANCELLATION OF SUCH FIXING IN THE EVENT OF CIRCUMSTANCES' REQUIRING ADJUSTMENT OF THE AMOUNTS FIXED IN ADVANCE . 4 IN ADDITION, THE TRANSITIONAL PROVISION OF THE SECOND PARAGRAPH OF ARTICLE 7 OF THE SAME REGULATION, WHICH WITH REGARD TO SUCH FIXING WAS BASED ON ESSENTIALLY LEGAL CONSIDERATIONS RELATING TO THE EFFECTS ON PENDING CONTRACTS OF A CHANGE IN LEGISLATION, CONFERS THE SAME RIGHT ON TRADERS WHO HAD OBTAINED BEFORE 4 AUGUST 1968 AN ADVANCE FIXING THE EFFECTS OF WHICH EXTENDED BEYOND THE ENTRY INTO FORCE OF THE NEW PROVISIONS LAID DOWN BY REGULATION NO 1134/68 . 5 UNDER THE TERMS OF THE SAID ARTICLE 7 THE WRITTEN APPLICATION FOR CANCELLATION WAS REQUIRED TO REACH THE COMPETENT AUTHORITY WITHIN THIRTY DAYS OF THE ENTRY INTO FORCE OF THE REGULATION, THAT IS TO SAY, NOT LATER THAN 3 SEPTEMBER 1968 . 6 THE NATIONAL COURT ASKS FIRST WHETHER THE APPLICATION FOR CANCELLATION MUST NECESSARILY RELATE TO THE ENTIRE AMOUNT STILL OUTSTANDING ON 4 AUGUST 1968 OF THE QUOTA TO WHICH THE ADVANCE FIXING RELATES . 7 ON THE ONE HAND, THIS QUESTION MUST BE CONSIDERED IN RELATION TO THE ARGUMENT EXPOUNDED BY NECOMOUT BEFORE THE COURT IN THE MAIN PROCEEDINGS TO THE EFFECT THAT A TRADER MAY AT ANY TIME DURING THE THIRTY DAYS ALLOTTED HIM APPLY FOR THE CANCELLATION OF THE ADVANCE FIXINGS RELATING TO THE WHOLE OF THE AMOUNT OUTSTANDING AT 4 AUGUST 1968, EVEN IF A PART OF THIS BALANCE HAS ALREADY BEEN IMPORTED OR EXPORTED IN THE MEANTIME SO THAT THE CANCELLATION MIGHT THUS HAVE RETROACTIVE EFFECT IN WHOLE OR IN PART . 8 ON THE OTHER HAND, IT MUST BE CONSIDERED IN RELATION TO THE ARGUMENT PROPOUNDED BY THE PRODUKTSCHAP TO THE EFFECT THAT AN APPLICATION FOR CANCELLATION MAY ONLY BE MADE WITH REGARD TO THE QUANTITY OUTSTANDING AT 4 AUGUST 1968 AND THAT IN THE MEANTIME NO PART OF THIS AMOUNT MAY BE IMPORTED OR EXPORTED . 9 THE SYSTEM OF ADVANCE FIXING, AS IT HAS BEEN IMPLEMENTED IN THE VARIOUS AGRICULTURAL REGULATIONS, ESTABLISHES A CONNEXION BETWEEN SUCH ADVANCE FIXING AND THE OBLIGATION TO IMPORT OR TO EXPORT THE ENTIRE QUOTA OF GOODS TO WHICH THE ADVANCE FIXING RELATES . 10 ARTICLE 7 OF REGULATION NO 1134/68 EXEMPTS FROM THIS OBLIGATION " A TRANSACTION STILL TO BE CARRIED OUT " AFTER 4 AUGUST 1968 THEREBY PROVIDING FOR THE DIVISION OF THE QUOTA MENTIONED IN THE LICENCE OR CERTIFICATE INTO ONE PART FOR WHICH THE ADVANCE FIXING IS VALID AND ANOTHER PART FOR WHICH IT MAY BE CANCELLED . 11 NEVERTHELESS, THE WORDING OF ARTICLE 7 DOES NOT NECESSARILY IMPLY THAT SUCH DIVISION MUST BE MADE BETWEEN THE PART OF THE QUOTA EXHAUSTED PRIOR TO 4 AUGUST 1968 AND THE BALANCE REMAINING AT THAT DATE . 12 FURTHERMORE, THE PROVISION OF A PERIOD OF THIRTY DAYS GRANTED TO THE TRADER CANNOT IMPLY THAT THE PERSON CONCERNED IS PROHIBITED FROM CONTINUING TO IMPORT OR TO EXPORT BETWEEN 4 AUGUST 1968 AND THE DATE ON WHICH HE CHOOSES TO LODGE HIS APPLICATION . 13 THIS MUST APPLY WITH EVEN GREATER FORCE IN VIEW OF THE FACT THAT THE TRADERS CONCERNED MAY BE BOUND BY CONTRACTUAL DELIVERY DATES AND THAT THE REGULATION SHOULD NOT BE INTERPRETED IN SUCH A WAY AS TO INCREASE THE DIFFICULTIES OF IMPLEMENTING SUCH OBLIGATIONS . 14 IN ANY EVENT, SINCE THE ARTICLE DOES NOT LAY DOWN THOSE CONDITIONS AND THEY DO NOT ARISE FROM THE GROUNDS WHICH FORM THE BASIS OF THE DISPUTED PROVISION, THERE IS NO REASON TO ADD TO THE LEGAL TEXT CONDITIONS WHICH IT DOES NOT CONTAIN EITHER EXPRESSLY OR BY IMPLICATION . 15 CONSEQUENTLY THE APPLICATION FOR CANCELLATION NEED NOT NECESSARILY REFER TO THE ENTIRE QUOTA STILL OUTSTANDING AT 4 AUGUST 1968 . 16 AN APPLICATION FOR CANCELLATION MUST THUS BE CONSIDERED EVEN IF A TRACER HAS BEFORE THE DATE OF HIS APPLICATION IMPORTED OR EXPORTED A PART OF THE BALANCE REMAINING ON 4 AUGUST 1968 TO WHICH THE ADVANCE FIXING RELATES . 17 THE REPLY THUS GIVEN TO THE FIRST QUESTION MAKES THE SECOND IRRELEVANT . 18 THE THIRD QUESTION ASKS WHETHER A TRADER WHO LODGES AN APPLICATION FOR CANCELLATION AFTER CONTINUING TO IMPORT OR EXPORT AFTER 4 AUGUST 1968 MAY APPLY FOR THE CANCELLATION OF ALL OR PART OF THE BALANCE OF THE QUOTA FIXED IN ADVANCE WHICH IS OUTSTANDING AT THE DATE OF LODGING THE APPLICATION . 19 IT IS CLEAR FROM THE WORDING OF ARTICLE 7, IN ACCORDANCE WITH WHICH THE APPLICATION RELATES TO THE CANCELLATION OF THE CERTIFICATE OR DOCUMENT CERTIFYING THE ADVANCE FIXING, THAT ONLY THE COMPLETE CANCELLATION OF THE CERTIFICATE CAN BE ENVISAGED CONSEQUENTLY INVOLVING THE CANCELLATION OF THE ENTIRE BALANCE . 20 FURTHERMORE, THIS INTERPRETATION CORRESPONDS TO THE RESTRICTED SCOPE OF THE EXCEPTION MADE BY THE SAID ARTICLE 7 TO THE PRINCIPLE OF THE IMMUTABILITY OF ADVANCE FIXINGS . 21 MOREOVER, SINCE SUCH CANCELLATIONS DISTURB THE PROPER FUNCTIONING OF THE SYSTEMS OF ORGANIZATION OF THE MARKETS, THERE CAN BE NO JUSTIFICATION FOR FAVOURING THEIR INCREASE WHEN THEY EXCEED THE LEGAL GROUNDS ON WHICH ARTICLE 7 WAS BASED . 22 CONSEQUENTLY, THE CANCELLATION OF THE ADVANCE FIXING MUST REFER TO THE ENTIRE QUOTA OUTSTANDING AT THE DATE OF LODGING THE APPLICATION . 23 THE FOURTH QUESTION ASKS WHETHER IF THE REPLY TO THE FIRST QUESTION IS IN THE NEGATIVE, IT IS ALSO POSSIBLE TO CANCEL THE ADVANCE FIXING WITH REGARD TO ONE OR MORE IMPORTATIONS OR EXPORTATIONS WHICH WERE EFFECTED BETWEEN 4 AUGUST 1968 AND THE DATE OF THE APPLICATION FOR CANCELLATION . 24 RETROACTIVE CANCELLATION WOULD PRECLUDE THE FORWARD PLANNING ON WHICH THE AUTHORITIES RESPONSIBLE FOR THE ADMINISTRATION OF THE AGRICULTURAL MARKETS MAY PROPERLY RELY IN ASSESSING THEIR CHARGES OR REVENUES AND IN DETERMINING MARKET TRADE . 25 SUCH AN INTERPRETATION WOULD, FURTHERMORE, EXCEED THE OBJECTIVES OF ARTICLE 7 WHICH AIM AT PROTECTING TRADERS AGAINST VIOLATION OF THE PRINCIPLE OF THE IMMUTABILITY OF ADVANCE FIXINGS . 26 IN THOSE CIRCUMSTANCES THE APPLICATION FOR CANCELLATION CAN ONLY RELATE TO THE QUOTA OUTSTANDING AT THE DATE OF THE APPLICATION . Decision on costs 27/28 THE EXPENSES INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES AND BY THE NETHERLANDS GOVERNMENT, WHICH HAVE SUBMITTED THEIR OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE COLLEGE VAN BEROEP VOOR HET BEDRIJFSLEVEN, THE DECISION ON COSTS IS A MATTER FOR THAT COURT . Operative part THE COURT IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE COLLEGE VAN BEROEP VOOR HET BEDRIJFSLEVEN, BY ORDER OF THAT COURT OF 10 APRIL 1970, HEREBY RULES : THE SECOND PARAGRAPH OF ARTICLE 7 OF REGULATION NO 1134/68 OF THE COUNCIL OF THE EUROPEAN COMMUNITIES OF 30 JULY 1968 MUST BE INTERPRETED AS MEANING THAT CANCELLATION OF AN ADVANCE FIXING OF LEVIES OR REFUNDS MAY RELATE TO THE BALANCE OF THE QUOTA STILL OUTSTANDING AT THE DATE WHEN THE APPLICATION IS MADE, BUT ONLY TO SUCH BALANCE IN ITS ENTIRETY, AND MAY NOT RELATE TO AMOUNTS PREVIOUSLY IMPORTED OR EXPORTED .

FOURTH SECTION CASE OF SISÁK v. SLOVAKIA (Application no. 62191/00) JUDGMENT (Friendly settlement) STRASBOURG 27 May 2003 This judgment is final but it may be subject to editorial revision. In the case of Sisák v. Slovakia, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: SirNicolas Bratza, President,MrM. Pellonpää,MrsV. Strážnická,MrR. Maruste,MrS. Pavlovschi,MrL. Garlicki,MrJ. Borrego Borrego, judges,and Mr M. O’Boyle, Section Registrar, Having deliberated in private on 6 May 2003, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 62191/00) 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 a Slovakian national, Mr Ladislav Sisák (“the applicant”), on 14 September 2000. 2. The Government of the Slovak Republic (“the Government”) were represented by Mr P. Vršanský, their Agent. 3. On 18 June 2002 the Fourth Section decided to communicate 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. 4. On 9 January and 14 February 2003 the applicant and the Government respectively submitted formal declarations accepting a friendly settlement of the case. THE FACTS 5. On 23 May 1988 the applicant filed an action for damages with the Košice I District Court. He claimed compensation from several persons on the ground that his house had been damaged as a result of a road traffic accident. 6. On 3 November 1993 the Košice I District Court allowed the applicant’s claims in part. 7. The applicant and one of the defendants appealed. The case file was submitted to the Košice Regional Court on 27 February 1995. On 24 August 1995 the latter quashed a part of the first instance judgment and ordered the District Court to take further evidence on the relevant claims. 8. The District Court instructed an expert to submit an opinion, and it heard the parties on 18 December 1995 and on 23 April 1996. A second expert was appointed by a decision delivered on 2 December 1997. He submitted the opinion on 31 December 1997. The applicant challenged both the expert and the District Court judge. 9. The case file was submitted to the Regional Court, between 12 January 1998 and 12 March 1998, which granted the applicant’s request for exclusion of the District Court judge. 10. On 23 July 1998 the District Court asked the parties to submit comments on the expert opinion. The applicant replied on 3 August 1998. 11. The case was adjourned on 26 October 1998, on 30 November 1998, on 8 February 1999 and on 22 March 1999. On 20 July 1999 the District Court appointed another expert who submitted her opinion on 17 September 1999. Hearings before the District Court were held on 2 May 2000 and on 30 October 2000. 12. On 24 October 2000 the Constitutional Court found that the Košice I District Court had violated the applicant’s constitutional right to have his case examined without undue delay. In its finding, the Constitutional Court held that the complex character of the case could not, on its own, justify the overall length of the proceedings, and that no delays in the proceedings could be imputed to the applicant. The Constitutional Court further held that the Košice I District Court had remained inactive for an overall period of approximately four years. 13. On 15 January 2001 the Košice I District Court delivered a second judgment on the case. It became final on 11 May 2001. THE LAW 14. The applicant complained that the length of the proceedings had been incompatible with the “reasonable time” requirement, provided in Article 6 § 1 of the Convention, which reads as follows: “In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal...” A. Admissibility 15. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. The Court therefore declares this complaint admissible. B. Solution reached 16. On 14 February 2003 the Court received the following declaration signed by the Agent of the Government: “I declare that, with a view to securing a friendly settlement of the above-mentioned case, the Government of the Slovak Republic offer to pay 100,000 (one hundred thousand) Slovakian korunas to Mr Ladislav Sisák. This sum is to cover any pecuniary and non‑pecuniary damage as well as costs, and it will be payable within three months from the date of delivery of the judgment by the Court pursuant to the Article 39 of the European Convention on Human Rights. This payment will constitute the final resolution of the case. This declaration does not entail any acknowledgement by the Government of a violation of the European Convention on Human Rights in the present case. The Government further undertake not to request that the case be referred to the Grand Chamber under Article 43 § 1 of the Convention.” 17. On 9 January 2003 the Court had received the following declaration signed by the applicant: “I note that the Government of the Slovak Republic are prepared to pay me the sum of 100,000 (one hundred thousand) Slovakian korunas covering pecuniary and non-pecuniary damage and costs with a view to securing a friendly settlement of the above-mentioned case pending before the European Court of Human Rights. I accept the proposal and waive any further claims against the Slovak Republic in respect of the facts of this application. I declare that this constitutes a final settlement of the case. This declaration is made in the context of a friendly settlement which the Government and I have reached. I further undertake not to request that the case be referred to the Grand Chamber under Article 43 § 1 of the Convention after delivery of the Court’s judgment.” 18. The Court takes note of the agreement reached between the parties. It is satisfied that the settlement is based on respect for human rights as defined in the Convention or its Protocols (Article 37 § 1 in fine of the Convention and Rule 62 §§ 3 and 4 of the Rules of Court). 19. Accordingly, the case should be struck out of the list. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the application admissible; 2. Decides to strike the case out of the list; 3. Takes note of the parties’ undertaking not to request a rehearing of the case before the Grand Chamber. Done in English, and notified in writing on 27 May 2003, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Michael O’BoyleNicolas BratzaRegistrarPresident

K. Agrawal, J. Leave granted The sole question of law which arises for companysideration in the present appeal is as to whether the Customs, Excise and Service Tax Appellate Tribunal in short the Tribunal has the power to dismiss the appeal for want of prosecution or number. The appellant is a partnership firm engaged in the manufacture and sale of Hot Re-rolled products. The Commissioner of Central Excise and Customs, Aurangabad, vide order dated 20.07.1999, re-fixed the annual capacity of production and duty liability of the appellant. Being aggrieved, the appellant moved the Tribunal. The Tribunal, vide order dated 18.01.2002, remanded the matter back to the Commissioner of Central Excise and Customs with a direction to determine the capacity of production in accordance with law after hearing the appellant. The Commissioner of Central Excise and Customs, Aurangabad, once again affirmed the order dated 20.07.1999. The appellant filed an appeal before the Tribunal against the order dated 14.05.2004 passed by the Commissioner of the Central Excise Customs, Aurangabad which was placed for hearing on 22.08.2012. On the very said date, the appellant as also his companynsel were number present. The Tribunal, therefore, dismissed the appeal for want of prosecution. The restoration application was also dismissed. The appellant preferred an appeal before the High Court of Bombay, Bench at Aurangabad being Central Excise Appeal No. 14 of 2013. The High Court, by order dated 18.01.2014, dismissed the appeal on the ground that numbersubstantial question of law arises for companysideration. Against the said order, the appellant has preferred this appeal by way of special leave. Heard Mr. Shashibhushan P. Adgaonkar, learned companynsel for the appellant and Shri K. Radhakrishnan, learned senior companynsel for the respondent. Learned companynsel for the appellant submitted that even if the appellant was number present before the Tribunal when the appeal was taken up for hearing, it companyld number have been dismissed for want of prosecution as Section 35C of the Central Excise Act, 1944 in short the Act enjoins upon the Tribunal to pass orders thereon as it thinks fit, that is, companyfirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as it may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. Thus, there is numberpower vested in the Tribunal to dismiss the appeal for want of prosecution even if the appellant therein has number appeared when the appeal was taken up for hearing. He further submitted that Rule 20 of the Customs, Excise and Service Tax Appellate Tribunal Procedure Rules, 1982 in short the Rules cannot be resorted to as the Section itself does number give power to the Tribunal to dismiss the appeal for want of prosecution. Learned senior companynsel for the respondent, however, submitted that under Rule 20 of the Rules, the Tribunal has been given the power to dismiss the appeal for want of prosecution if the appellant does number appear, and therefore, the order passed by the Tribunal as also by the High Court calls for numberinterference. Section 35C 1 of the Act which deals with the powers of the Tribunal reads as under- 35C. Orders of Appellate Tribunal.- 1 The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, companyfirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. Rule 20 of the Rules which gives a power to the Tribunal to dismiss the appeal for default in case the appellant does number appear when the appeal is called on for hearing reads as under- RULE 20. Action on appeal for appellants default. - Where on the day fixed for the hearing of the appeal or on any other day to which such hearing may be adjourned, the appellant does number appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for default or hear and decide it on merits Provided that where an appeal has been dismissed for default and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his number-appearance when the appeal was called on for hearing, the Tribunal shall make an order setting aside the dismissal and restore the appeal. From a perusal of the aforesaid provisions, we find that the Act enjoins upon the Tribunal to pass order on the appeal companyfirming, modifying or annulling the decision or order appealed against or may remand the matter. It does number give any power to the Tribunal to dismiss the appeal for default or for want of prosecution in case the appellant is number present when the appeal is taken up for hearing. A similar question came up for companysideration before this Court in The Commissioner of Income-Tax, Madras vs. S. Chenniappa Mudaliar, Madurai 1969 SCC 591 wherein this Court companysidered the provisions of Section 33 of the Income-tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946 which gave power to the Tribunal to dismiss the appeal for want of prosecution. For ready reference, Section 33 4 of the Income Tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946 are reproduced below- Section 33 4 of the Income Tax Act, 1922 33 4 . The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall companymunicate any such orders to the assessee and to the Commissioner. Rule 24 of the Appellate Tribunal Rules, 1946 Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appellant does number appear when the appeal is called on for hearing, the Tribunal may dismiss the appeal for default or may hear it ex parte. Considering the aforesaid provisions, this Court held as under- The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it has to dispose of an appeal by making such orders as it thinks fit on the merits. It follows from the language of Section 33 4 and in particular the use of the word thereon that the Tribunal has to go into the companyrectness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant. This can only be done by giving a decision on the merits on questions of fact and law and number by merely disposing of the appeal on the ground that the party companycerned has failed to appear. As observed in Hukumchand Mills Ltd. v. CIT, the word thereon in Section 33 4 restricts the jurisdiction of the Tribunal to the subject-matter of the appeal and the words pass such orders as the Tribunal thinks fit include all the powers except possibly the power of enhancement which are companyferred upon the Appellate Assistant Commissioner by Section 31 of the Act. The provisions companytained in Section 66 about making a reference on questions of law to the High Court will be rendered nugatory if any such power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been properly filed, for default without making any order thereon in accordance with Section 33 4 . The position becomes quite simple when it is remembered that the assessee or the CIT, if aggrieved by the orders of the Appellate Tribunal, can have resort only to the provisions of Section 66. So far as the questions of fact are companycerned the decision of the Tribunal is final and reference can be sought to the High Court only on questions of law. The High Court exercises purely advisory jurisdiction and has numberappellate or revisional powers. The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed proper order under Section 33 4 . It follows from all this that the Appellate Tribunal is bound to give a proper decision on questions of fact as well as law which can only be done if the appeal is disposed of on the merits and number dismissed owing to the absence of the appellant. It was laid down as far back as the year 1953 by S.R. Das, J. as he then was in CIT, v. Mtt. Ar. Ar. Arunachalam Chettiar that the jurisdiction of the Tribunal and of the High Court is companyditional on there being an order by the Appellate Tribunal which may be said to be one under Section 33 4 and a question of law arising out of such an order. The Special Bench, in the present case, while examining this aspect quite appositely referred to the observations of Venkatarama Aiyar, J. in CIT v. Scindia Steam Navigation Co. Ltd. indicating the necessity of the disposal of the appeal on the merits by the Appellate Tribunal. This is how the learned judge had put the matter in the form of interrogation How can it be said that the Tribunal should seek for advice on a question which it was number called upon to companysider and in respect of which it had numberopportunity of deciding whether the decision of the Court should be sought. Thus looking at the substantive provisions of the Act there is numberescape from the companyclusion that under Section 33 4 the Appellate Tribunal has to dispose of the appeal on the merits and cannot short-circuit the same by dismissing it for default of appearance. Applying the principles laid down in the aforesaid case to the facts of the present case, as the two provisions are similar, we are of the companysidered opinion that the Tribunal companyld number have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its companynsel was number present when the appeal was taken up for hearing. The High Court also erred in law in upholding the order of the Tribunal. We, therefore, set aside the order dated 18.01.2014 passed by the High Court of Judicature of Bombay, Bench at Aurangabad and also the order dated 22.08.2012 passed by the Tribunal and direct the Tribunal to decide the appeal on merits. Accordingly, the appeal is allowed with a companyt of Rs. 25,000/- to be payable by the Respondent. J. ANIL R. DAVE J. KURIAN JOSEPH J. K. AGRAWAL NEW DELHI NOVEMBER 14, 2014. ITEM NO.1A COURT NO.14 SECTION III For judgment S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Petition s for Special Leave to Appeal C No s . 8738/2014 Arising out of impugned final judgment and order dated 18/01/2014 in CEA No. 14/2013 passed by the High Court of Bombay at Aurangabad BALAJI STEEL RE-ROLLING MILLS Petitioner s VERSUS C.E. CUSTOMS Respondent s Date 14/11/2014 This petition was called on for pronouncement of judgment today. For Petitioner s Mr. Shashibhushan P. Adgaonkar, Adv. For Respondent s Mr. K. Radhakrishnan, Sr. Adv.

MR JUSTICE HENRIQUES: This is an appeal by way of case stated from a decision of Mr District Judge Gillibrand sitting at Horseferry Road Magistrates' Court on 12th February 2003. An information was laid against the respondent that on 9th January 2002 at Waterloo International Rail Terminal, the respondent did land a German shepherd dog brought from a place outside Great Britain, as prohibited under Article 4 Rabies (Importation of Dogs, Cats and other Mammals) Order 1974 contrary to Article 16(1) of the said Order and section 73 of the Animal Health Act 1981. District Judge Gillibrand found the following facts: "(a) On 9th January 2002 at approximately 1515 hours (i) Mr Christophe Servant along with his girlfriend's Alsation arrived at Waterloo International Station, having travelled by an SNCF owned and operated train. (ii) Mr Servant travelled with the dog quite openly from Bandol in Southern France, stopping at Paris, Calais and Ashford before arriving at Waterloo. (iii) Mr Servant believed he was entitled to bring the doing into Great Britain. However, his documentation for the doing was invalid and Waterloo is not an authorised point of entry. No issue arises here of any relevance to this case. (iv) Three operators, Eurostar (UK) Ltd, SNCF and SNCB use the network linking Great Britain, France and Belgium. The prevailing law applicable to the three is that of the country they are travelling across at any given point in time. Each country has a control zone to enforce their law, eg, customs and immigration in the main terminus of the other countries, eg, a control zone exists at Waterloo where French law is enforceable and a British zone in Paris et cetera. (v) The host company, here Eurostar (UK) Ltd, is responsible for breaches of British law committed by staff operating trains in Great Britain, whether the train is run by SNCF, SNCB or Eurostar." The learned judge, in dismissing the summons, posed four questions for the consideration of the High Court: "(1) Was I correct in law in finding that a deemed landing in a control zone in Paris was to be read in addition to and not to exclude a subsequent actual landing on the mainland (Articles 2(2) and 4(1) of the 1974 Order)? (2) Was I correct in law in finding that the respondent should have been prosecuted as a secondary party who caused or permitted the landing of an animal? (3) Was I correct in law on the facts found that the respondent had not caused or permitted the commission of the offence? (4) Was I correct in law on the facts found that the statutory defence in section 73(1) of the Animal Health Act 1981 was properly available to the respondent." By way of preliminary point, Mr Griffith Jones QC, who appears for the respondent, takes issue with the District Judge's purported finding of fact at (v), namely that: "The host company, here Eurostar (UK) Ltd, is responsible for breaches of British law committed by staff operating trains in Great Britain, whether the train is run by SNCF, SNCB or Eurostar." The complaint is that this is not a finding of fact but a proposition of law and Mr Griffith Jones submits that he knows of no proposition of law, nor legal basis, upon which Eurostar is rendered liable for criminal offences relating to the contravention of animal import controls committed by the staff of other operators, namely SNCF and/or SNCB. There was agreed evidence before the District Judge, such evidence having been published on the Eurostar website in these terms: "Eurostar ownership and structure. Eurostar is jointly owned by SNCF, SNCB and London and Continental Railways. The latter took over British Rail's interest in Eurostar through the acquisition of EPS, a subsidiary, following UK rail privatisation and changed the name to EUKL in October 1996. The three railways are each represented on the Board of Directors of Eurostar Group. EUKL, SNCF and SNCB are each responsible for the running of Eurostar services on their own territory and employ their own staff. In September 1999, Eurostar Group, a unified management structure, was established to drive some of the commercial direction and strategy of the business." It is accepted on behalf of Eurostar that the words on the website accurately stated the legal arrangement between Eurostar (UK) Ltd, SNCF and SNCB. Mrs Victoria Wilson, Company Secretary of the respondent company, gave evidence on behalf of the defendants and confirmed that Eurostar had operational control of trains staffed by SNCF and SNCB employees while the trains ran in the UK. Mr Griffith Jones submitted that there was no evidence that any Eurostar employee played any part in unloading the dog. The train was not even a Eurostar train. Mrs Wilson stated that the respondent was unable to exercise control over SNCF, their trains or staff. Where a breach of British law occurred, the only recourse was to report such breach to SNCF. The respondent was unable to discipline or respond to breaches by SNCF. The respondents, through their staff, were unable to travel on SNCF trains to check passengers or in any way regulate or control the operations of SNCF in Great Britain. In these circumstances the respondent had to rely on SNCF staff to uphold British law. Accordingly, submits Mr Griffith Jones, Eurostar (UK) Ltd were not responsible in law for any act or omission by the staff of SNCF. Eurostar (UK) Ltd does not accept that control of trains pins Eurostar with criminal responsibility for landing the dog in the United Kingdom. In response, Mr Hick relies upon the website extract and submits that SNCF manifestly delegated their responsibility and that Eurostar (UK) Ltd assumed responsibility. Mr Hick goes on to concede that Eurostar (UK) Ltd could not be found guilty of causing or permitting any criminal act committed by an employee of SNCF because the directing mind and will, at all relevant times, was the mind and will not of Eurostar (UK) Ltd, but of SNCF. That concession may well have been a generous one, having regard to the principles of agency, but it is not necessary, for present purposes, to determine whether Eurostar (UK) Ltd caused or permitted the landing of the dog. Question: was it open to the district judge to convict Eurostar (UK) Ltd as principals with the offence of landing the dog? It was said by Lord Hoffman in MGFM Asia Ltd v Securities Commission [1995] 2 AC 500 PC that a company's rights and obligations are determined by rules whereby the acts of natural persons are attributed to the company; such rules are normally to be determined by reference to the primary rules of attribution generally contained in the company's constitution and implied by company law, and to the rules of agency. The company will appoint servants and agents whose acts, by a combination of the general principles of agency and the company's primary rules of attribution, count as the acts of the company. Having done so, it will also make itself subject to the general rules by which liability for the acts of others can be attributed to natural persons such as vicarious liability in tort. It is perfectly plain from the website material that Eurostar agreed with both SNCF and SNCB to act as agents in the United Kingdom in the running of their trains. For the purposes of the Criminal Law, the strict liability obligations of SNCF were attributed to Eurostar (UK) Ltd subject, of course, to taking into account the language of the statute, its content and policy (see Lord Hoffman page 507, letter F). The purpose of the statute was to prevent the importation of animals and, thus, to maintain the United Kingdom free from rabies. Subject to determining that the relevant provision was a strict liability provision, it is manifest from the website extract that Eurostar (UK) Ltd is potentially liable under the relevant legislation. Whilst it would have been preferable for the District Judge to have expressed his findings of fact in terms of the agreed website extract, his finding at (v), expressed as a finding of law, was no more than convenient shorthand for what was never the subject matter of any controversy before him. It is convenient and necessary at this juncture to consider whether the legislation creates a strict liability offence. Article 2(2) of the order specifies: "For the purposes of this order, an animal shall be deemed to have been landed in Great Britain immediately it is unloaded or taken out of, or in any other manner leaves or escapes from, a vessel or aircraft, or immediately it is brought into a control zone in France or Belgium and 'land' or 'landing' shall be construed accordingly." Article 16(1) provides that: "No person shall land . . . an animal in Great Britain the landing of which is prohibited under Article 4(1) above." The respondent submits that since it cannot be shown that Eurostar (UK) Ltd landed the dog, the question of strict liability does not arise. Nevertheless, Mr Griffith Jones submits that the offence is not one of strict liability and the charge is bound to fail for lack of mens rea. He invites attention to B (a minor) v DPP [2000] 2 AC 428 for a redefinition of the proper approach to statutory interpretation. In that case the issue was whether it was necessary for the prosecution to prove the absence of a genuine belief on the part of the defendant that a child was over the specified age of 14. It was held that mens rea was an essential element of any criminal offence unless Parliament expressly, or by necessary implication, provided to the contrary. It is manifest from the speeches of Lords Nicholls, Steyn and Hutton that the case did not sound the death knell of strict liability offences. There exists a volume of such offences, usually arising under regulatory legislation applying to particular trades; for example, the sale of food and drink or medicines or the carrying on of businesses where continuous attention to detail is important. In Sweet v Parsley [1970] AC 132, Lord Reid recognised that strict liability is often applied to a class of quasi criminal offences which are not criminal in a real sense but which are prohibited in the public interest. Mr Griffith Jones makes specific reference to Lord Goddard CJ's dicta in Reynolds v Austin [1951] 2 KB 135: "Unless compelled by words of the statute so to hold, no court should give effect to a proposition which is so repugnant to all the principles of criminal law in this kingdom. This is not to throw any doubt on the well-established principle that if there is an absolute prohibition and the prohibited act is done, a penalty is incurred, but hitherto, that doctrine has never been applied, as far as I know, to a case where the prohibited act was not that of the defendant, but of some person over whom he had no control and for whom he had no responsibility." Those observations must be considered in the light of the website extract in which it is stated that the respondent is responsible for the running of Eurostar services in this country. In the same case, at page 149, Devlin J, as he then was, said: "It may seem, on the face of it, hard that a man should be fined and, indeed, made subject to imprisonment for an offence which he does not know that he was committing, but there is no doubt that the legislature has, for certain purposes, found that hard measure to be necessary in the public interest." He went on to quote Dean Roscoe Pound in his book 'The Spirit of the Common Law' at page 52: "Such statutes are not meant to punish the vicious will but to put pressure upon the thoughtless and inefficient to do their whole duty in the interest of public health or safety or morals." Later Devlin J went on to say: "There is another way in which the matter may be tested. In the case of statutes which apparently dispense with mens rea, it is sometimes said that it is the doing of an act which is absolutely prohibited that, itself, supplies the mens rea. In many such cases it is impossible to do the prohibited act without being conscious of it and though in such cases there may be no moral guilt if the accused does not know that he was doing wrong, this is an excuse which the law cannot permit." It was said by Lord Evershed in Lim Chin Aik v The Queen [1963] AC 160 that it is pertinent to inquire whether putting the defendant under strict liability will assist with the enforcement of the regulations. Without embarking upon a voluminous examination of strict liability offences, it suffices to observe that courts must have regard to the object of the legislation, the danger to be guarded against, and the likely efficacy of imposing strict liability. The penalty may also be relevant. At the time of the incident, the penalty was monetary only but, subsequently, section 75 of the Animal Health Act 2002 provides for a custodial sentence. The existence of a statutory defence is also relevant. Section 73(1) of the Act provides that: "A person is guilty of an offence against this Act who, without lawful authority or excuse, proof of which shall lie on him -- (a) does anything in contravention of this Act . . . " I have been referred to Bennion on statutory interpretation and, in particular, have considered what is called the principle against doubtful penalisation. At page 706 it is said: "In accordance with the basic rule of statutory interpretation, a penal enactment will not be given a strict construction if other interpretive factors weigh more heavily in the scales." The appellant submits that the words of the article mean what they say, namely that any person landing a prohibited animal commits an offence by that act alone, without a requirement that he knows, or is reckless as to, whether he is committing an offence. Mr Hick cited Aldersen B's dicta in Attorney General v Lockwood [1842] 9 M&W 378, cited in Sweet v Parsly, that statutes should be construed according to the plain, literal and grammatical meaning of the words in which they are expressed, unless that construction leads to a plain and clear contradiction of the apparent purpose of the Act, or to some palpable and evident absurdity. That test must, of course, be read in the light of B (a minor) v DPP. Having considered the purpose of the legislation and the importance of ensuring compliance with it, the penalties, the existence of a statutory defence, I have no doubt that the offence under Article 16(1) is an offence of strict liability. The risk of rabies becoming imported into Great Britain is so grave that, in order to prevent it, Parliament has created Article 16(1), an absolute offence of landing animals prohibited under Article 4(1). The respondent is engaged in running a transport business which gives rise to the risk of rabies entering Great Britain. Parliament has deliberately created a strict liability offence to be sure that no prohibited landing takes place. The offence is committed subject to the availability of the statutory defence pursuant to Section 73(1). I next consider whether the District Judge was correct in law in considering whether the respondent should have been prosecuted as a secondary party who caused or permitted the landing of an animal. The respondent's case is that at all material times, the dog was with and under the control of Mr Servant, its owner. Under Article 2(2) any landing at Waterloo occurred only when the dog was unloaded, or taken out of the train. The offence of landing the dog (if any) occurred at that point. The person who took the dog out of the train was Mr Servant. There was no evidence that any SNCF or Eurostar employee played any part in unloading the dog. Indeed, the District Judge found that Eurostar did everything in its power to prevent the landing at Waterloo. The respondent was properly convicted as a principal, the appellant submits. Article 2(2) of the 1974 Order was originally drafted as follows: "For the purposes of this order, an animal shall be deemed to have been landed in Great Britain immediately it is unloaded or taken out of, or in any other manner leaves or escapes from, a vessel or aircraft, and 'land' or 'landing' shall be construed accordingly." As a result of the construction of the Channel Tunnel, the Article was then amended by the Channel Tunnel (Amendment of Agriculture, Fisheries and Food Import Legislation) Order 1990 to read: "For the purposes of this order an animal shall be deemed to have been landed in Great Britain immediately it is unloaded or taken out of, or in any other manner leaves or escapes from a vessel, vehicle or aircraft, or immediately it crosses the frontier through the tunnel system as defined in the Channel Tunnel Act 1987, and 'land' and 'landing' shall be construed accordingly." Thereafter, as a result of the introduction of control zones, the Order was further amended by the Channel Tunnel (International Arrangements) Order 1993 to read: "For the purposes of this order, an animal shall be deemed to have been landed in Great Britain immediately it is unloaded or taken out of, or in any manner leaves or escapes from, a vessel or aircraft or immediately it is brought into a control zone in France or Belgium and 'land' and 'landing' shall be construed accordingly." The appellant submits that the 1990 amendment clearly defined "landing" in the way that made the carriers liable for the landing of prohibited animals transported into Great Britain through the Channel Tunnel system, in that the offence could be committed as soon as the animal crossed the frontier. It is further submitted that the 1993 amendment extended the liability so that the offences could be committed in control zones outside Great Britain. This amended and extended meaning of "landing" makes it plain that criminal liability is not confined to the party engaged in unloading the animal. The 1990 amendment defined "landing" in a way that made carriers liable for the landing of prohibited animals through the Channel Tunnel system, in that the offence could be committed as soon as the animal crossed the frontier. The 1993 amendment simply extended the above liability so that the offence could be committed in control zones outside Great Britain. This extended meaning of "landing" disposes of Mr Griffith Jones' submission that the sole lander of the dog was its owner. Mr Hick draws attention to the fact the that the Importation of Animals Order 1977, the Importation of Equine Animals 1979, the Importation of Birds, Poultry and Hatching Eggs Order 1979, the Importation of Animal Products and Poultry Order 1980 and the Importation of Processed Animal Protein Order 1981, were all amended in 1991 to say that landing included bringing the thing into England through the tunnel system as defined in the Channel Tunnel Act 1987. This, submits Mr Hick, provides support that Parliament intended carriers to be liable for offences of landing and that this construction should be applied to the 1974 Order itself. Not to hold carriers liable for landing under the 1974 Order is to infer that Parliament intended the Order to be unique (and uniquely lenient) among enactments of a similar type, amended at the same time. Having regard to the importance of the Order's objective, that, in my judgment, is inconceivable. I find Mr Hick's argument compelling and conclude that the legislation rendered the carriers liable to conviction as principals. Was the District Judge correct in law in finding that the deemed landing in the control zone in Paris was to be read in addition to, and not to exclude, a subsequent actual landing on the mainland? The respondent submits that he was in error. He ought to have held that the defendant, having been landed in Great Britain within the meaning of Article 2(2) of the 1974 Order (in the control zone in Paris), could not have been subsequently landed in Britain again at Waterloo. Under Article 2(2), the importation into Great Britain occurred by means of a landing immediately the dog was brought into a control zone in France. It is common ground that it was brought into a control zone in Paris. Thereby, it landed and was deemed to have been imported into Great Britain. Therefore, it is submitted that the dog had already been landed in Great Britain before it reached Waterloo. The offence, if any, was complete in Paris. One journey to Great Britain involves one importation or landing, and Article 2(2) identifies when such importation or landing occurs. Mr Griffith Jones amusingly postulates that if an animal has already landed in Great Britain without an intervening exportation, the implication would be bizarre as the animal would have to be treated as being landed in Great Britain every time it was unloaded within Great Britain. He goes on to submit that between Paris and London Waterloo, subject to possible agreement between the states of which those instructing him have been unable to trace the information, it may well be that the dog was in a continuous control zone between Paris and London Waterloo. Article 7 of the Channel Tunnel (International Arrangements) Order 1993 provides: "(1) For through trains, each state may carry out its frontier controls during the journey and may authorise the officers of the other state to carry out their frontier controls in its territory. (2) The two states may agree to an extension of the control zones for through trains, as far as London and Paris respectively." I am asked by Mr Griffith Jones to proceed on the basis that the case proceeded, at first instance, to consider whether there could be a deemed landing and an actual landing without the dog having necessarily entered a place outside a control zone before the actual landing. The prohibition, submits Mr Griffith Jones, is the landing in Great Britain of an animal brought from a place outside Great Britain. The Channel Tunnel (International Arrangements) Order 1993 defines "control zone" as the part of the territory of the host state determined by mutual agreement, within which the officers of the adjoining state are empowered to affect controls. "Through trains" means trains travelling the fixed link but originating and terminating outside it, as opposed shuttle trains which are trains solely within the fixed link. There is every reason to suppose that the dog may have remained in a control zone between Paris and London and I propose to reach my decision on that basis. Mr Hick submits that there was, nevertheless, a landing at London Waterloo. He submits that the purpose of the control zones is to enable adjoining states to implement its frontier controls in a host country. Article 5 of the 1993 Order makes the UK Criminal Law applicable in a control zone in Paris. It is submitted that the purpose of the control zones is to give the United Kingdom law enforcement authorities the power to act abroad, in addition to their ordinary powers on the mainland. Article 2(2) of the 1974 Order is a deeming provision that in no way detracts from the legislation relating to actual landing in Great Britain. It provides an additional location in which United Kingdom frontier controls may be exercised and does not purport to exclude the operation of the legislation on the mainland itself, nor to limit the generality of Article 4(1). I readily accept that submission. Whilst the dog was deemed to have landed in Great Britain by Article 2(2), it did not, in fact, actually land in Great Britain. I see nothing inherently objectionable in finding that both a deemed landing and an actual landing took place. To find otherwise would be to restrict the operation of the Criminal Law on the mainland. Statutory defence. Was the district judge correct in law in finding that the statutory defence in section 73(1) of the Animal Health Act was properly available to the respondent? The respondent submits that if otherwise guilty of an offence which is, of course, denied, Eurostar (UK) Ltd had a lawful excuse within Section 73(1) of the Act. In short, it is submitted that Eurostar (UK) Ltd has done everything it reasonably could have done. In Cambridgeshire and Isle of Ely County Council v Rust [1972] 2 QB 426, the Divisional Court held that under section 127 of the Highways Act 1959, a defendant had a lawful excuse if he had an honest and reasonable, albeit mistaken, belief in a state of facts which, if true, would have provided an answer to the charge. Whilst it is conceded that there was a landing at Waterloo which was not a specified point of entry, nevertheless, the proviso to article 4(4) contemplates licences being granted to permit landings at other points of entry. Eurostar had done everything, it is submitted, which sensibly it could have been expected to do to prevent dogs unlawfully being brought into Great Britain on SNCF trains. It was entitled to assume and believe that SNCF or the proper authorities in the Paris control zone would prevent any breach. On the basis of that belief, any dog on a SNCF train, if it were to be landed at Waterloo, would, it is submitted, and could, have been a dog licensed to be landed at Waterloo. Finally, it is said that the absence of any actual knowledge of the facts complained about amounts to a lawful excuse in the circumstances. The appellant submits that the respondent is unable to show that he either had a lawful authority or an excuse for the landing. As to lawful authority, it is unlawful to bring dogs into Great Britain through Waterloo International Rail Terminal since it is not one of the points of entry stipulated in the 1974 Order (as amended). Therefore, there can be no lawful authority for the landing of a dog at that location. As to reasonable excuse, it was held in Cambridgeshire and Isle of Ely County Council v Rust, on appeal to the Divisional Court, that in order for the defendant to have a lawful excuse for what he did, he must honestly believe on reasonable grounds that the facts are of a certain order. If they were of that order, his conduct would be lawful. Since the act charged was landing a dog brought from outside Great Britain at Waterloo International Rail Terminal, the respondent would have to believe in a state of facts that, if true, would render such an act lawful. It is not suggested that the respondent believed that Waterloo International was a lawful point of entry. Further, a belief that SNCF was enforcing British law properly would not render the landing lawful. Whilst proper enforcement could have prevented the landing, it could never have made it lawful. As Devlin J has said in Reynolds v G H Austin & Sons Ltd [1951] 2 KB 135, if the accused does not know that he was doing wrong, it is an excuse the law cannot permit. The appellant's argument is, in my judgment, untenable. The respondent could not establish either lawful authority or lawful excuse. There was a prohibited landing of this dog at Waterloo station. Waterloo was not an authorised place for the landing of animals from France. The respondent undertook responsibility for the running of the train on which the dog landed. The deemed landing of the dog in Paris was additional to and did not preclude the actual landing of it at Waterloo. In my judgment, the District Judge was wrong in law to dismiss the summons. I would answer the four questions thus: (1) Yes (2) No (3) Yes (the parties having agreed this) (4) No Accordingly, I order that this case be remitted to the Magistrates' Court with a direction to convict the respondent. Are there any applications? MR NORMAN: There is an application for costs on behalf of the Corporation, my Lord. I will have a copy of the costs schedule for your Lordship. MR JUSTICE HENRIQUES: Is there a copy at hand? MR NORMAN: Yes. One correction is made to it which my learned friends are aware of (Handed). MR JUSTICE HENRIQUES: Yes. The corrections? MR NORMAN: The last hearing that this case had at this court was occasioned by our failure to comply with a regulation about serving our appellant's notice. Therefore, it is not right that we should claim those costs from the other side. Those costs are £1,490 which makes the total application now £16,266. MR JUSTICE HENRIQUES: Are you having to pay some of the respondent's costs? MR NORMAN: That has not been determined. MR JUSTICE HENRIQUES: Is there any issue about this, Mr Griffith Jones? MR GRIFFITH JONES: So far as the figures themselves are concerned, there is no dispute on the figures. However, there are two points of principle. The first is the one my learned friend has already mentioned. Two points arise out of that. One is that we would respectfully submit that we should have our costs in relation to Newman J. MR JUSTICE HENRIQUES: The same occurred to me. You will have them. What are they calculated as? MR GRIFFITH JONES: My Lord, I do not have a figure I am afraid. MR JUSTICE HENRIQUES: Your figure for that was? MR NORMAN: £1,490. MR GRIFFITH JONES: My Lord, so far as that figure, £1,490, is concerned, it is not clear to me whether that includes both solicitors' costs and counsel's fees. MR NORMAN: Yes, it does. MR JUSTICE HENRIQUES: An all in figure. MR GRIFFITH JONES: My Lord, so be it, although there is no breakdown. MR JUSTICE HENRIQUES: No, it is obviously a reasonable figure. Presumably you would say some similar figure would be appropriate. MR GRIFFITH JONES: My Lord, indeed. MR JUSTICE HENRIQUES: If we take another £1,490 off the £16,266, can you do the mathematics for me there? MR GRIFFITH JONES: Whilst my learned friend is doing the arithmetic, can I mention the other point? On one of the issues that were raised in the statement of case, it was at the hearing that my learned friend conceded this point. There was, obviously, quite a lot of work that went into dealing with that issue and our submission is simply that that should be reflected in some way by a reduction in the total figure by way of costs. MR JUSTICE HENRIQUES: Yes. Thank you very much. The figure we get to is? MR NORMAN: £14,766, my Lord. MR JUSTICE HENRIQUES: Do you want to say anything about the fact that certainly part of the argument was indeed abandoned, namely as to whether or not the respondents could be held liable as a secondary party? MR NORMAN: Of course, it is trite to say it but we did have to think about it before we planned it. MR JUSTICE HENRIQUES: Of course. You were the appellant, it was a ground of appeal, it was a ground of appeal not, in effect, advanced, and the respondents were put to some expense in relation to that. If one took a figure of roughly a quarter, that would be fair? MR NORMAN: Yes, my Lord. MR JUSTICE HENRIQUES: So if I say less 25 per cent that will give you a further sum. MR GRIFFITH JONES: My Lord, whilst my learned friend does that, it is just a matter of arithmetic and the ultimate sum would be agreed, no doubt, on that basis, my Lord, I rise to my feet to deal with the question of permission to appeal. As we understand it, any appeal from your Lordship's order would go directly to their Lordships' house and it would be necessary, if an appeal is to proceed, for your Lordship, firstly, to certify that the case raised a point of law of general public importance. That is a condition precedent to any appeal. In addition, your Lordship, we would be inviting you to say that if we get to that point, that this is a matter that should be considered by the House of Lords. My Lord, dealing with the first point, the certificate. This is the first time your Lordship is aware that these regulations have been considered. They do raise, in our submission, difficult questions. The question of mens rea is but one of them. Whether you can, indeed, as your Lordship has ruled, have an actual landing of a dog already deemed to have landed in Great Britain and so on and so forth, I do not propose to rehearse the arguments again. MR JUSTICE HENRIQUES: Have you a draft of the point you would like me to certify? MR GRIFFITH JONES: My Lord, no. We can put that together. MR JUSTICE HENRIQUES: That, I think, is the condition precedent. I will obviously hear you but my preliminary view is that the practical consequences of the ruling, the potential consequences to Eurostar, do render this a matter of general public importance. The way in which you wrap it up and the way in which you formulate the question may take you a little time. I am minded to certify but not to grant permission to appeal. You would, of course, have to go to the committee at their Lordships' house in that respect. That would be of no surprise to you. Do the appellants wish to say anything about certifying? MR NORMAN: No. The final figure for costs, and I am grateful to my instructing solicitors for this, is £11,074.50. MR JUSTICE HENRIQUES: Very well. The respondent will pay the appellants costs in that sum the certified. Perhaps you would discuss it with the appellants and agree it between you. If you are able to agree it between you, you can submit it to me in writing, in which case, provided I do give it, there will be no necessity for either of you to attend. MR GRIFFITH JONES: My Lord, I am very grateful. Can I just, for clarification, indicate that, subject to anything your Lordship says, what we would intend to seek to embrace in the articulation of any point or points are the three issues: one, whether you can have a second actual landing after a deemed landing; two, whether or not a carrier, as you have described it, is targeted by the regulations; and thirdly, the question of mens rea. MR JUSTICE HENRIQUES: Yes, certainly. It is just a question of neatly wrapping that up in the certified question. I am very grateful to all counsel for their considerable assistance in a case which was not altogether straightforward. MR GRIFFITH JONES: My Lord, I am grateful to your Lordship for giving judgment so promptly even if it did go against us. MR JUSTICE HENRIQUES: Ordinarily, the certified point would be part of the order. It would probably help you if I said could we have it done this week. The sooner it is done -- MR GRIFFITH JONES: My Lord, I am minded to get it done today. MR JUSTICE HENRIQUES: I understand that. It is better, otherwise there is an order hanging about. MR GRIFFITH JONES: I am grateful, my Lord.

OPINION OF MR ADVOCATE GENERAL VERLOREN VAN THEMAAT DELIVERED ON 28 JANUARY 1982 ( *1 ) Mr President, Members of the Court, 1. Introduction Mrs Caracciolo was declared unfit for work in Belgium on 12 July 1965. On 9 November of that year she was authorized by the medical officer of her insurance institution, the Union Nationale des Mutualités Socialistes [National Union of Socialist Mutual Associations], to stay in Italy from 15 November to 14 December. However, she did not return from that stay. After failing to comply with a summons to attend a medical examination in Belgium, she was examined by the competent Italian insurance institution under the terms of a bilateral administrative arrangement between Belgium and Italy of 1950. As a result of that examination Mrs Caracciolo was declared fit to resume work on 5 January 1966 and at the same time payment of her benefit was stopped. On 31 January 1966 she submitted an application for an invalidity pension to the Institut National d'Assurance Maladie-Invalidité (National Sickness and Invalidity Insurance Institution] (hereinafter referred to as “the Belgian institution”) through the intermediary of the Italian institution concerned. It appears that that application was made on account of her lack of knowledge of the means available to her of challenging the abovementioned decision to discontinue payment of her benefits. On 26 November of that year a declaration of her invalidity was made in Italy. On 31 May 1968 her application to the Belgian institution for an invalidity pension was rejected, although it later appeared that this was on the basis of an incomplete file. On 12 May 1969 a fresh rejection followed, this time on the ground that she had neither applied for nor was in receipt of sickness benefit. The Belgian Law of 1963 provides for the grant of invalidity benefit only where payment of sickness benefit has been made for one year. After the case had been brought before various courts, the Cour du Travail [Labour Court], Brussels, dismissed the claim on 24 November 1977. Following an appeal in cassation, the Cour de Cassation [Court of Cassation] on 6 April 1981 referred to the Court a number of questions for a preliminary ruling. 2. The questions submitted for a preliminary ruling and their background The questions submitted read as follows: 1. Where a worker in receipt of sickness and invalidity insurance benefits in cash in a Member State of the European Community, who has been authorized to stay in another Member State in order to receive treatment there, has remained in that other State after the expiry of the prescribed period and on conditions which are irregular under the legislation of the State of origin and under an administrative arrangement concluded between the two States which has remained applicable under Regulations Nos 3 and 4 concerning social security for migrant workers, must Article 83 of Regulation No 4 be interpreted to mean that that provision determines not only the date on which a declaration or an appeal shall be deemed to have been made to the authority, institution or agency competent to take cognizance thereof but also the validity of the claim when it is addressed to an authority, institution or agency of a Member State other than that of the State whose authority, institution or agency is competent to take cognizance thereof? 2. If the answer to the first question is in the affirmative, must that provision be interpreted to mean that a claim which is submitted in the circumstances which have just been related must be considered valid although under the legislation of the Sute of the competent authority the claimant's residence in the other State was irregular? 3. Likewise, do the provisions of Article 10 (1) of Regulation No 3 concerning social security for migrant workers preclude the application by the insurance institution of the Member Sute of origin of the principle of the territoriality of benefits laid down by national legislation, in this case by Article 70 (1) of the Belgian Law of 9 August 1963? Those questions must be seen against the background of the judgment of the Cour du Travail, Brussels, finding that on 31 January 1966, the date on which the application for an invalidity pension was submitted, the appellant was still covered by Belgian insurance. As has already b.— stated, under Belgian law the ar nt's right to such a pension d. on the answer to the question w r she was entitled to sickness be If the application for the im...ny pension is interpreted as an app. -. against the declaration of 5 January 1966 that the appellant was fit for work, Article 83 of Regulation No 4 of the Council of the EEC (Journal Officiel 1958 No 30, p. 597) is relevant and in so far as is important here it reads as follows: “The date of submission of ... appeals to an authority ... of another Member State shall be deemed to be the date of submission thereof to the competent authority ...”. The same applies if the claim of the appellant in the main action is in fact regarded as an application for an invalidity pension. If that article were applied by treating the claim as an appeal, this would mean that the requirement under the Belgian law that an appeal should be made within 30 days would have been complied with. However, the Belgian institution takes the view that that provision applies only to applications which are properly made. Since in its opinion Mrs Caracciolo's application was irregular on account of her unauthorized stay in Italy, Article 83 is inapplicable. The practical consequence is thus the inadmissibility of the application for an invalidity pension if it is regarded as an appeal, with the result that the precondition that the appellant must be entitled to sickness benefit is not met. The Cour de Cassation divided that issue into two questions: (1) Does Article 83 provide merely for the assimilation of dates or does it also have a bearing on whether the application is irregular or not, and (2) if the latter part of that question is answered in the affirmative, is an application such as that made by Mrs Caracciolo to be regarded as properly made? The third question relates to another obstacle to the grant of the invalidity pension. Article 70 (1) of the Belgian Law provides inter alia that presence on Belgian territory is a condition of eligibility for such a benefit. 3. The first question The Cour de Cassation's first question raises the problem whether Article 83 of Regulation No 4 and the related provision contained in Article 47 of Regulation No 3 must be interpreted as meaning that substantive requirements may also be made with regard to the claims for social security benefits referred to therein. In its judgment in Case 40/74 Kingdom of Belgium, Costers and Vounckx v Berufsgenossenschaft der Feinmechanik und Elektrotechnik [1974] ECR 1323, the Court considered (at p. 1329) that those provisions sought primarily to protect the parties involved against the consequences of the different systems of social security and that they should be interpreted on the basis of “taking into account the particular difficulties encountered by workers residing in another Member State and possibly unaware of these rules as to competence”. Whilst it may be inferred from that statement alone that the provisions concerned are of administrative significance only, that was stated even more clearly by the Court in its judgment in Case 108/75 Balsamo v Institut National d'Assurance Maladie-Invalidité [1976] ECR 375. There the Court stated that all the conditions concerning the making of an application are satisfied as soon as the application is properly made in accordance with the procedure laid down by the legislation of the country of permanent residence. Therefore Article 83 is a provision which relates solely to the assimilation of dates. Accordingly, I propose that the Cour de Cassation's first question should be answered as follows: “Article 83 of Regulation No 4 relates solely to the date of submission of the claims or appeals referred to in that provision to the authority of the other Member State.” 4. The second question Although the second question is put only in the event of the first question's being answered in the affirmative, it none the less retains its importance in relation to the answer which I have proposed to the first question, provided that the comparison of the relevant national law with Community law is extended to provisions other than Article 83 of Regulation No 4. The question then resolves itself into an inquiry by the court making the reference as to the provisions of Community law which relate to the regularity of a claim or appeal such as the one in question. As in the case of the subsequent regulation, No 1408/71, the scheme of Regulations Nos 3 and 4 is such that, unless otherwise provided, those measures replace any prior bilateral and multilateral arrangements in the field of social security. So far as implementing provisions are concerned, Article 6 of Regulation No 4 provides that they are to continue to apply only if they are listed in Annex D. The Belgo-Italian Administrative Arrangement of 1950 is named therein only in so far as it relates to agricultural workers. Since it does not appear that that description was applicable to the appellant, the question of the legality of her extended stay in Italy should be determined exclusively on the basis of the provisions of Regulation Nos 3 and 4. I agree with the Commission that the only provision which may be relevant to this case is that contained in Article 19 (2) of Regulation No 3, which reads as follows: “(2) A wage-earner or assimilated worker, admitted to benefits chargeable to an institution of one Member Sute, who permanently resides in the territory of the said State, shall retain his right to such benefits when he transfers his permanent residence to the territory of another Member State; provided that the said person shall, before the transfer, obtain the authorization of the competent institution, which shall take due account of the reasons for the transfer.” However, I should like to point out emphatically that the foregoing in no way implies that Article 19 (2) is actually applicable to this case. The decision on that matter is reserved to the national court. Whether that provision is applicable will in particular depend on whether there may be said to be a vested right to benefits chargeable to the Belgian institution. The latter answers that question in the negative, since on 5 January Mrs Caracciolo was declared to be fit to resume work. As appears from its written observations and oral argument, the Commission assumes that this case concerns a claim for sickness benefit or an appeal against the refusal to award or continue payment of such benefit, and it accordingly comes to a different conclusion. However, the fact that it is a matter for the national court to decide whether or not Article 19 (2) is applicable does not mean, as the Belgian institution contended at the hearing, that the Coun may not make any statement at all concerning that provision because the Cour de Cassation has not submitted any question relating to it. Clearly, the Court's freedom in this regard is not unlimited. As Mr Advocate General Warner observed in his opinion in Case 22/79 Greenwich Film Production v SACEM [1979] ECR 3275, at p. 3295, the Court may not rule on questions which have been referred to it. That does not mean, however, that the Court may not advert to a provision of Community law which, on the facts, clearly may be applicable. The Coun has already stated, in its judgment in Case 16/65 Schwarze v Einfuhr- und Vorratistelle für Getreide und Futtermittel [1965] ECR 877 (at p. 886), that it is appropriate for the Coun to inform the national coun at once of its view “without compelling the national court to comply with purely formal requirements which would uselessly prolong the procedure under Article 177 and would be contrary to its very nature”. Assuming that Article 19 (2) might be considered by the national coun to be applicable, I do not agree with the Commission's interpretation of that provision. The Commission, referring to the Coun's judgment in Case 117/77 Algemeen Ziekenfonds Drenthe-Platteland v Pierik [197V ECR 825, takes the view that the refusai to authorize an extension of the stay in this case encountered difficulties on account of the limitation laid down by the Coun in paragraph 17 of that judgment. In my opinion, however, the last clause in Article 19 (2) of Regulation No 3 cannot simply be overlooked. As appears from the file, the appellant merely applied for and obtained authorization for temporary residence in Italy in accordance with Article 19 (1). She did not, however, request the authorization required by Article 19 (2) for the transfer of her residence to Italy. Owing to the fact thai in this cas; it appears from the file that no such au lorization was requested, this case is fi:.^. a mentally different from the case citec i the Commission, in which such authorization had in fact been requested. The said requirement which the Member Sutes may lay down is weakened by the Commission's reasoning, because it is no longer the competent institution but the applicant himself who judges the expediency of preserving his vested rights upon transfer of his residence to another Member State. Community law makes no provision as to the legal consequences of failure to comply with the requirement that authorization for transfer of residence must be requested. Therefore, in my opinion, the answer to the second question should be that, if the remaining conditions for the applicability of Article 19 (2) of Regulation No 3 are fulfilled, the national court should determine the consequences under national law with regard to the sickness benefits payable under that law of the failure to request authorization for transfer of residence as provided for in Article 19 (2) of Regulation No 3. 5. The third question The third question is also put in the event of the first question's being answered in the affirmative. In view of the suggested reply to the first question, the third question therefore has no purpose. Nevertheless, I consider that, even if Article 83 of Regulation No 4 has a purely administrative significance, it is still relevant to determine whether Article 10 (1) of Regulation No 3 prevents the insurance institution of the country of origin from applying the principle of territoriality, as laid down in the legislation concerned. I would again emphasize that the question whether or not the appellant's stay in Italy was irregular is not important for the purpose of answering the question thus reformulated. That would constitute a second barrier to the grant of an invalidity pension, if the claim were in fact classified as an application for the grant of an invalidity pension. Article 10 (1) of Regulation No 3 applies to the grant of “pensions or death benefits”. It is quite clear from the wording of that provision that it does not apply to sickness benefits. In paragraph 16 of its judgment in Case 41/77 The Queen v National Insurance Commissioner, exparte Warry [1977] ECR 2085 (at p. 2093), the Court acknowledged that the application of residence clauses in the grant and payment of sickness benefits was permissible also under Regulation No 1408/71. There may be some doubt in this regard in relation to invalidity benefits. Indeed, Article 10 (1) speaks of “pensions”, and in the heading to Chapter 3 of Title III of Regulation No 3 the word “pensions” is added to the expression “old age and death”, so that it might be argued, as indeed the Belgian institution argues, that a prohibition of residence clauses is inapplicable to invalidity benefits or pensions. On the other hand, it appears from Article 26 of Regulation No 3 that invalidity benefits are to a considerable extent assimilated to old-age and death benefits. Such assimilation seems, in contrast with the case of sickness benefits, to result from the nature of the social security provisions concerned. Article 10 (1) of Regulation No 1408/71 also supports that conclusion —, unlike the corresponding provision of Regulation No 3 — in expressly stating that a residence clause may not be applied to invalidity benefits. The Court gave the reason for that provision in its judgment in Case 51/73 Bestuur der Sociale Verzekeringsbank v Śmieja [1973] ECR 1213 by pointing out in paragraph 1 i that the aim of that provision was to guarantee to the party concerned his right to have the benefit of such payments even after taking up residence in a different Member State, for example, his country of origin. In view of this it seems justified to consider the prohibition on residence clauses contained in Article 10 (1) of Regulation No 3 to be applicable also to invalidity pensions. As appears from its observations, the Commission itself does not seem to exclude that interpretation. Unlike the Commission, however, I consider that the question concerning the application of Article 10 (1) is relevant to invalidity benefits, because my answer to the Cour de Cassation's second question does not necessarily rule out the possibility that there might in this case be a right to sickness benefit and that the necessary condition under Belgian law for grant of an invalidity pension might thereby be fulfilled. Moreover, the question is relevant if the claim must be regarded, contrary to the Commission's opinion, not as an appeal concerning the continued payment of sickness benefits but exclusively as a claim for the grant of an invalidity pension. In that connection, it also seems to me to be worth while once again to recall the Court's judgment in the abovementioned case of Warry. There, the Court stated, in paragraph 29, that it would be contrary to the scheme and aims of Regulation No 1408/71 for a claim for invalidity benefit to be refused on the ground that no claim for sickness benefit had been submitted at an earlier stage. Whilst that did not happen because a residence clause applicable thereto was not complied with, it is, as appears from paragraph 30 of the same judgment, sufficient for the claim for invalidity benefit to be made correctly according to the implementing provisions through the intermediary of the competent institution in the State of residence. In the light of that judgment the failure to fulfil a residence clause and therefore to satisfy a necessary precondition for the award of invalidity benefit, namely that there must be a right to sickness benefit, may not, in this case either, constitute a ground for refusing the former benefit. I therefore suggest that the Court de Cassation's third question should be answered as follows: “Article 10 (1) of Regulation No 3 must be understood as meaning that it is applicable also to invalidity benefits. The failure to fulfil a residence clause and therefore to satisfy a necessary precondition for the award of invalidity benefit under the law of a Member State, namely that there must be a right to sickness benefit, does not constitute a ground for refusing the former benefit.” ( *1 ) Translated from the Dutch.

Lord Justice Fulford : Introduction On 20 December 2012 in the Crown Court at Leeds before His Honour Judge Collier Q.C., The Recorder of Leeds, and a jury the appellants, Michael Scott Bowman (aged 45) and Mark Anthony Lennon (aged 41) were convicted of possession of a firearm with intent to endanger life (count 2), possessing ammunition without a firearms certificate (count 3) and possessing a prohibited firearm (count 4), and on 21 December 2012 they were sentenced to 16 years' imprisonment on count 3, 4 years' imprisonment concurrent on count 3 and 8 years' imprisonment, again to be served concurrently, on count 4 making a total of 16 years' imprisonment. On count 1 (attempted murder) the jury acquitted Bowman and Lennon was acquitted on the judge's direction following a submission of no case to answer. Before this court they appeal against their convictions by leave of the single judge. The Issue on the Appeal The single but important issue raised on this appeal is whether the judge erred in admitting evidence of the bad character of the appellants, by way of certain previous convictions, as evidence of propensity. The evidence was said to be relevant to an important matter in issue between the defendant and the prosecution under section 101 (1)(d) Criminal Justice Act 2003 ("CJA"). The relevant statutory material The relevant statutory provisions are contained in sections 101 and 103 of the CJA. Section 101 provides: "(1) In criminal proceedings evidence of the defendant's bad character is admissible if, but only if – […] (d) it is relevant to an important matter in issue between the defendant and the prosecution. […] (g) the defendant has made an attack on another person's character. […] (3) The court must not admit evidence under subsection (1)(d) or (g) if, on an application by the defendant to exclude it, it appears to the court that the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it. Section 103 of the 2003 Act provides: (1) For the purposes of section 101(1)(d) the matters in issue between the defendant and the prosecution include - (a) the question whether the defendant has a propensity to commit offences of the kind with which he is charged, except where his having such a propensity makes it no more likely that he is guilty of the offence; [...] (2) Where subsection (1)(a) applies, a defendant's propensity to commit offences of the kind with which he is charged may (without prejudice to any other way of doing so) be established by evidence that he has been convicted of - (a) an offence of the same description as the one with which he is charged, or (b) an offence of the same category as the one with which he is charged. (3) Subsection (2) does not apply in the case of a particular defendant if the court is satisfied, by reason of the length of time since the conviction or for any other reason, that it would be unjust for it to apply in his case." The Facts It was undisputed at trial that on the 10 June 2012 three men, Michael Bowman, Mark Lennon and a third man said by Bowman to be called "Ricky", drove to West Yorkshire from London in a Lexus motorcar. Cameras that automatically capture the number plates of cars, along with CCTV cameras, recorded their journey as they travelled north. The relevant telephone records revealed that for some days prior to their departure from London, Lennon had been in touch with a man called Mohammed Aslam, who lived at 49 to 51 Clarkson Street in Ravensthorpe, and, more generally, there was evidence of telephone calls and text messages between Bowman, Lennon and Aslam (in the period between 1 June and 10 June 2012). A gunshot was heard once they had entered Aslam's house. Thereafter, as the three men left the premises, Bowman was seen carrying a gun and they returned to the Lexus motorcar. Before they left the street, Bowman discharged the gun and a bullet struck the windscreen of a Renault Laguna motorcar that was driven by a man called Razwan Hussain. Hussain rang the police and gave them the registration number of the car carrying the man who had discharged the gun. The vehicle was later found in Todwick in South Yorkshire. Bowman's fingerprints were on a gun holster recovered from the foot well of the car. The two defendants were arrested in a public house called the Red Lion. Having been cautioned, Lennon said "I don't know what you're talking about" and Bowman said "I understand but it's nothing to do with me." The handgun was discovered in the grass near the vehicle where Bowman had disposed of it. It is a prohibited firearm and it contained two spent and three unspent cartridges. A man called Wyatt, who lived in Clarkson Street, knew the occupant of 49 – 51 Clarkson Street as "Rhys" (this was Aslam). He saw Aslam and one of his male relatives go into 49 – 51, just in front of three men he had not seen before. Two of the men were black and one was white. One of them was carrying a "crunched up" red and white plastic bag. He then heard a shot before the men emerged from Aslam's house. The judge summarized Wyatt's evidence in this regard as "[t]he three came running out and went back down the same way". Wyatt did not see the carrier bag at this stage but he noticed that the white male was carrying a pistol-type weapon in his left hand down by his left leg. Shortly afterwards, Aslam and his relative reappeared. Wyatt heard another shot and he saw the three men getting into a car. The judge made the following observation to the jury in this context "[h]is evidence may be important to you, particularly when you compare and contrast it with the evidence of Bowman because he does not describe anything of other people, as Mr Bowman does, for example the greeting that he says took place between Mark Lennon and one of the people who got out of the Laguna and things like that. Mr Wyatt saw nothing of that at all" (for Bowman's account in this regard, see below). Aslam later told or possibly threatened Wyatt, as follows: "You never saw anything; you never heard anything". Amanda Parott, a further neighbour, also heard what sounded like a first gunshot at about 7.40pm, which was followed by another a little later. The prosecution's case at trial was that the three men had brought the gun from London. It was suggested that although they had agreed to purchase drugs from Aslam, their real intention was to rob him. The Crown alleged that when Bowman discharged the firearm towards Hussain, he intended to kill; however the jury acquitted him on count 1. In the alternative it was argued that at the least he intended to endanger Hussain's life and, as we have set out above, both men were convicted of count 2. The prosecution relied upon the expert evidence of a firearms specialist (Home) who expressed a view as to the trajectory of the bullet and the pressure required to operate the mechanism, which indicated in his view that there had been an intention to kill. Certain aspects of the prosecution's evidence were of an undoubtedly unsatisfactory nature. Most particularly, Hussain provided statements to the police on 10 and 16 June 2012 that incriminated the appellants, but by the time of trial he was facing serious allegations relating to drugs offences, namely conspiracy to import heroin jointly with Aslam and others, and he was unwilling to answer questions about the present incident. He was treated as a hostile witness and his statements were put to him in detail. Although he began by accepting the truth of certain parts that were read to him, in due course he declined to comment as to whether they represented the truth. In his statement of 10 June 2012 he stated that at that time he lived in Dewsbury, not far from Aslam's address in Clarkson Street. When he drove his Laguna motorcar into that road on 10 June 2012 at about 7.45 pm, he saw a blue/grey Lexus car facing him. There was insufficient room for the cars to pass each other, and the drivers began to use their horns. Neither car moved. He suggested that Bowman, who was driving, leaned from the window and told him to move. He then pulled out a handgun and fired it causing something to hit Hussain's car and the windscreen cracked. He was afraid and drove backwards to escape. He called the police. In his statement of 16 June 2012 he explained he had been going to see his friend Nasseer, in order to park up and have a smoke. He was unable to provide Nasseer's surname. En route, he recognised a distant relative, Ashraf Khan, who got in the car, and as a result, Khan was present at the time of the incident. He said he had not mentioned this previously because he believed Khan was an illegal immigrant. As he left the scene he saw another Asian man, "Pecker", who indicated he had witnessed the incident, and he also got into Hussain's car and they went together to the police station, although Hussain did not know if his two passengers spoke to the officers. He denied that he knew the occupant of 49 – 51 Clarkson Road, although he was aware that his name was Aslam and that by reputation he had been involved with police and had previously been in prison. In cross-examination during the trial, Hussain denied the suggestion he was in Clarkson Road that evening by agreement to meet Aslam or that his role was to keep watch outside the address, but he agreed he may have had some telephone contact with Aslam. We interpolate to note that when Hussain and Aslam were arrested as co-conspirators in the drugs offence to which we referred earlier, the evidence gathered for the purpose of that prosecution showed, amongst other things, over 400 telephone calls made between the two men in the period February to June 2012. Hussain explained in evidence that he did not wish to get Aslam involved because he was a bad man. He agreed that between making his two statements, he had been arrested collecting carpets containing heroin from Manchester airport, but denied he had known these contained drugs. At one stage he indicated he had an account to tell but that this would not be revealed until his trial relating to this alleged importation of drugs. Aslam was arrested on 3 July 2012 in relation to a drugs conspiracy with Hussain and others. He was interviewed under caution and he declined to answer questions. He did not, therefore, provide any account concerning the events of 10 June 2012, and he did not attend as a witness at trial. The prosecution invited the jury to draw an adverse inference against both appellants on the basis of their refusal to answer questions during their interviews following their arrests, although Lennon gave a "prepared statement" in which he set out that he was unaware of any gun when he travelled up to London with Bowman and Ricky. He said there was a struggle inside the house during which the gun was discharged. Thereafter he heard a gun being discharged in the street but did not see by whom as he had put his head down in fear. As we indicated at the outset of this judgment, the prosecution also relied on evidence of the bad character of both appellants. The judge's decision on this issue is the subject matter of this appeal and we have considered the detail of the application below. Bowman gave evidence. He said he lived in London with his partner and children. He made money by purchasing "snide stuff" such as electrical goods and clothes that were re-sold at a profit. His account was that Lennon had arranged to purchase some iPhones in Ravensthorpe, whereto they travelled on 10 June with another man ("Ricky") who drove the Lexus. Bowman, who sat in the back, had raised £6,000 to purchase the telephones and together with money raised by Lennon they pooled their resources in the hope of securing a better deal. When they parked in Clarkson Street, he noticed Hussain's Laguna coming towards them from the direction of North Road. There were three men inside. Lennon spoke to Hussain (known to Lennon as "Cadge") who was at the wheel of the Laguna and the two men shook hands. Then Aslam, who appeared to know Lennon, invited them into the house, along with another Asian male, who had pulled up in a silver van. He thought Hussain would be joining them; however he remained outside and then appeared to drive away in his Laguna. Bowman testified that Aslam said Hussain had gone to fetch the iPhones and asked if they wanted to look at some "gear", meaning drugs, but Bowman declined. He said he felt uncomfortable, particularly when Aslam produced foil, gloves and a small amount of drugs in a bag, and he reiterated that he was only here to buy the electrical goods. Whilst they waited, Lennon went outside for a cigarette and when he returned, he questioned why Hussain was sitting outside in his car when he was supposed to be fetching the iPhones. Once another Asian male appeared the atmosphere in the room became awkward. The judge's summary of his evidence thereafter was as follows: "I was sitting on the chair. I saw him move his jacket round. I saw the holster here on his hip with a gun in a holster. I was petrified. I don't know what I was thinking. I've thought about it so much over the last six months but I thought, 'I'm gonna go for it', so I went for it. I grabbed it with both hands. I remember thinking, 'I can't let this go', and I grabbed the holster and the handle and I remember pulling and Aslam was trying to push my hands away. I remember pulling it back and it went off. It was so loud I think it went off by my ear. I didn't know what was going on all over the place. No-one was hurt. I remember waving it and telling them to get back, and Mark and Ricky were trying to get out the door. The three Asians moved back. I think Ricky went first and me last. I think I shouted in the house, 'Let me out of here'. Then they headed back to the Lexus and when I got to the Lexus I realised I had the holster in my right hand. It's a dodgy hand". He demonstrated his third finger where the tendon's gone and that he cannot move, so he said, "If I hold on to something, I have to hold on really tight. "As I got in the car I heard Mark shout, 'He's got a gun' about somebody in the Laguna, and I got a clear view of the Laguna. Somebody in the rear of the Laguna, if they had not got a gun, was trying to make it look like he had a gun. He had his arm out and I thought they were all over us. "I'd say that the front driver's headlight was about level with the front of the Lexus". That is the relation of the cars, as it were, facing each other. "It was not directly in front but it was level with it and if Ricky had wanted to drive he wouldn't have been able to do so and I think he beeped the horn. "I got out the passenger door. I hadn't even shut it. I heard Asian males behind me and I felt surrounded at one stage. I came round the back of the car and looked up the street at the Asians outside the house. I was looking round the side of the Laguna cos I wasn't sure if he had a gun. I remember I put the gun in my right hand and I'd thrown the holster to the floor. I thought, 'What am I going to do now?' I thought I'd scare them to get out of the way so we could go. I remember saying, 'Get out of the fucking way' and waving my arms around, indicating, gesturing to move the car out of the way. I think he shouted something. I think it was the guy in the back who was dictating, shouting the loudest, but the car came forward slightly. I could hear screaming and shouting behind me. I remember thinking, 'They're not going to move and so I'm going to have to scare them', so I aimed down at the passenger headlamp and it was about the distance from me", he said, where he was in the witness box, to the front of your Jury box. He said, "I fired the gun with my right hand. I shouldn't have done it", he said, "but I just wanted to get out and get back to my kids. I didn't want to hurt anyone. I'm charged with attempted murder but if he'd been killed, it wouldn't make sense. We wanted to get out of there. All I thought was to scare them and they'd move and they did. "When I fired, the car came forward and I jumped back. Then it went back. I think he stalled it and by then I was getting back into the Lexus. The Laguna moved out of the way and drove off towards North Road. I heard another car starting. Aslam and others, I don't know where they went. Then Ricky drove off. It was a nightmare. It was still going on. We got round the corner. There were cars chasing us. I think Ricky was pretty scared driving and the police took up the chase later and we ended up at Todwick". Lennon did not give evidence. The defence relied upon the bad character of the prosecution witnesses Aslam and Hussain, first to correct any assumption that Aslam was incapable of behaving as Bowman suggested; second, to support the contention that Aslam behaved as alleged by the defence; and, third, to support the contention that Hussain was connected with the events of 10 June 2012. Aslam had convictions for conspiracy to rob, robbery, assault on police officers and violent disorder. He had served terms of imprisonment but had never been convicted of firearms offences. As a footnote to this narrative, the third man "Ricky", whose real name is Warren Green, was arrested and tried following the convictions of these appellants. He was acquitted, although he admitted an offence of perverting course of justice (he had maintained that the Lexus motor car that belonged to his girlfriend had been stolen). The Ruling on the Application to admit evidence of bad character Towards the close of the prosecution evidence, prosecution counsel sought to adduce the previous convictions of both appellants. In a reserved ruling handed down on 13 December 2012 the judge gave his reasons for having admitted certain convictions relating to the two appellants. Bowman He admitted Bowman's convictions at the Central Criminal Court on 17 October 1990 for offences of conspiracy to commit affray, possessing a firearm without a certificate and wounding, for which he received an overall sentence of 2 ½ years' imprisonment. From the information counsel provided to the judge, it appears that the gun was thrown from a car in the context of a fight (hence the charges of conspiracy to commit affray and wounding), and all the occupants were liable for the gun on the basis of joint possession. It appears it was not discharged. The judge summarized the case against Bowman in the present trial in his ruling as follows: "17. In relation to MB the prosecution case is that the jury can infer that the gun was brought by MB to West Yorkshire from London from the following circumstances:" (i) The planning of the visit over several days - the first contact ML to MA was on 6.6.12 (visible from the telephone traffic and text messages, and where MB fits into that chronology); (ii) The circumstances of what happened in Clarkson Street (both in the house and on the street - there being no evidence at this stage of the trial of the gun being in the possession of anybody other than MB or of the holster being visible in the hand of MB when he went back past Wyatt's house); (iii) The gun was retained in the car until they abandoned it in Todwick; (iv) The gun was thrown away in Todwick by MB when the car was abandoned; (v) The recovery of the holster from the foot well of the car (M B's fingerprints were found on the holster)." He highlighted the defence submission that this was only one conviction, from "a very long time ago"; that there was a lack of detail about the circumstances in which the offence was committed; and that it involved a conspiracy. The prosecution application in relation to Bowman was based on section 101 (d) CJA ("gateway (d)": it is relevant to an important matter in issue between the defendant and the prosecution) and section 101 (g) CJA ("gateway (g)": Bowman had attacked the character of another person). As regards gateway (d), the judge noted that firearms offences are still a rare occurrence in the UK and therefore the rare nature of offences of this kind could properly be set against the significant time gap between the previous conviction and the current allegation. As to gateway (g) the judge agreed with the Crown's submissions that questions asked by counsel for Bowman had amounted to an attack on the character of the prosecution witness Hussain, in that "[i]n short it was being put that he was a part of MA's entourage who were intent on ripping off the visitors who had come on an innocent expedition to buy phones". Thus, the threshold of gateway (g) had been crossed and, dependent upon whether or not Bowman gave evidence and the content thereof, it may become necessary to give directions about the relative characters of Hussain and Bowman. Lennon Lennon had a more extensive record culminating in July 2005 with a conviction for possession of a firearm with intent to cause fear of violence (the appeal in that case is reported as AG Ref 89 of 2005 2006 1 Cr App R (S) 128, p.744; [2005] EWCA Crim 3031). In the instant trial, the case against Lennon was put on the basis of joint enterprise, and a conviction in his case was only possible if the jury had convicted Bowman. Therefore, the case against Lennon depended, inter alia, on the jury concluding that he knew Bowman had taken the gun to Ravenshorpe from London. The prosecution sought to adduce this conviction pursuant to gateway (d) (the evidence related to an important matter in issue) and it was accepted that gateway (g) did not arise in Lennon's case because his counsel had not attacked the character of any witness. The judge decided that the circumstances of the conviction for possessing a firearm demonstrated (i) he had ready access to firearms, (ii) he had a willingness to use firearms when he considered it necessary in the course of other criminal activity and (iii) he had an awareness of and knowledge about guns from his own personal experience, all of which were unusual matters. The judge noted the concession that was made by Lennon's counsel that the admissibility threshold had been crossed and therefore the real issue was whether it was fair to admit the conviction. He summarised the arguments thus: "36. The particular points […] about fairness were that (i) the prosecution shouldn't be allowed to prove that MB pulled out a gun by reference to ML's previous conviction; (ii) the use of this conviction was out of all proportion to the issue and what it could provide by way of assistance to the jury; (iii) inevitably it will prejudice the jury against the defendants." The Learned Judge ruled that the previous conviction of Lennon amounted to material that the jury could use if they thought fit, to help them resolve the issue between the parties, namely whether the gun was brought from London and if so whether Lennon was aware of its presence and whether he was in joint possession of it. The Judge's direction to the jury on the defendant's bad character The judge gave the following direction to the jury: "Now we come to the two defendants. You have heard about each of them, that he has a conviction for an offence in relation to firearms and you have been told a little of the circumstances, first of all surrounding the conviction that Bowman had in 1990 at the Old Bailey for conspiracy to commit affray, possessing a firearm without a certificate and wounding contrary to Section 20 of the Offences Against the Person Act, and you have been told about the conviction recorded against Lennon in 2005 at Kingston Crown Court for possessing a firearm with intent to cause fear of violence. The law permits the Prosecution to put this material before you if it is relevant to an important matter in issue between the defendants and the Prosecution. A very important issue in this case between both defendants and the Prosecution is whether this gun was brought from London by the defendants and taken into the house by Bowman or whether it was produced in the house by Aslam and taken from him by Bowman. Another important issue, assuming you conclude the gun was brought from London, is whether Lennon knew about it and its intended use." In deciding that matter, the Prosecution say that, so far as they are both concerned, the possession and use of firearms is a rare occurrence. Many offences are committed without any type of weapon being used. Some are committed by people carrying weapons. Only a few are committed by people carrying real and loaded firearms. So far as Bowman is concerned, the Prosecution say that, although it is a long time ago, it shows that he was prepared to be involved in a group of people who between them had a firearm in the boot of the car when they were conspiring to commit an affray. They, that is the Prosecution, say it shows a propensity which means a tendency, on his part to use firearms to commit offences. So far as Lennon is concerned, the Prosecution say it shows he was in possession of a firearm for which he was convicted of using with the intention of causing people to fear he would use violence against them. You should note that it was not suggested that this was a case of joint possession, as in Bowman's case. That conviction, they argue, shows ready access to firearms, a willingness to use them in connection with other criminal activity, on that occasion making threats of violence and so a likely awareness of a firearm being used in connection with a criminal enterprise. What do the Defence say? The Defence say, in relation to Bowman, it is a very long time ago, it was a joint offence involving a large number of youths, it was a weapon in the boot of a car, there was no ammunition, it was not used and that, given those matters, this cannot amount to a propensity. Furthermore, they say, he pleaded guilty to what he had done. As for Lennon, Mr Nathan argues, "This does not help you because there is no case to answer and the starting point for using this information would be that there is evidence to which this can be added; it does not provide evidence itself of his guilt in these offences". How should you approach and use this information about these two defendants? First, you must be very careful not to draw any conclusion such as, "Well, because he has done those things in the past, he must be guilty of this offence now". The use you may make of the information is limited. Before you can make any use of it in deciding whether the Prosecution have established the ingredients that are in issue in proving any of the offences, you must decide whether you are sure that they show the defendant whose case you are considering has what is called a propensity, which means a tendency, to use or be associated with firearms. If you are not satisfied that the person whose case you are considering has such a tendency, you should disregard their convictions in relation to deciding whether he acted as the Prosecution allege. On the other hand, if you are sure those convictions show he had such a tendency, you may have regard to them when deciding whether you are sure he behaved as the Prosecution allege in the case of Bowman or that he had the knowledge that the Prosecution allege in the case of Lennon. However, it is very important you bear in mind that those convictions are not evidence that either of them was, whether solely or jointly, in possession of a firearm. It is certainly not evidence that Bowman or Lennon committed any offence and you must be very careful not to give them disproportionate weight in your assessment of matters. You need to go through the steps I have just outlined in deciding whether you are sure the convictions do establish a propensity to be associated with firearms and, if so, then you can decide how far that helps you in deciding the other matters you have to decide. Members of the Jury, there you are." The Grounds of Appeal Bowman The arguments for Bowman advanced during the appeal departed radically from the written grounds of appeal. The appellant's earlier contentions, based on what the judge was alleged to have said (and not said) on the issue of propensity during his ruling, were abandoned. Instead, in oral argument before this court Mr Sherrard Q.C. emphasised that the present offences were allegedly committed on 10 June 2012 with the trial ending on 20 December 2012, and the convictions relied on related to events on 17 October 1990, a considerable number of years earlier. It is stressed that the judge had scant information, summarised above, as to the circumstances in which those offences had been committed. Against that background, it is contended that the judge erred in acceding to the prosecution's application under gateways (d) and (g). In the event, the case was not left to the jury under gateway (g), and Mr Sherrard submitted that later events proved the judge had been wrong to admit the conviction on this basis (the attack on the character of Hussain) because Hussain later pleaded guilty to the drugs offence which was the issue about which the questions as to his character had been directed. It is suggested that rather than his character having been attacked, the questions simply related to whether he was telling the truth about his involvement with Aslam and his participation in the events of 10 June 2012. Turning to whether the appellant's 1990 convictions, which included an offence of possessing a firearm without a certificate, should have been left to the jury on the basis that they were relevant to a matter in issue between the prosecution and the defence, Mr Sherrard suggested that gun crime is not as uncommon in the part of the country where this offence was committed as the judge remarked. It is argued that this is not in any sense an unusual event. Additionally, Mr Sherrard submitted that the prosecution had been unable to provide sufficient meticulously accurate information about the 1990 convictions. In this regard he relied on R v M [2012] EWCA Crim 1588; [2012] 2 Cr. App. R 25, page 316. In that case bad character evidence was admitted concerning a number of robberies. However, there was an issue as to whether the prosecution had proceeded against the appellant through to conviction as regards all of the robberies on which the prosecution sought to rely. Accordingly, although the prosecution had a summary of the circumstances of the alleged offences, there was a live issue as to whether they were previous convictions at all. It would appear that later investigations demonstrated that the appellant may have been correct in his assertion that he had not been convicted of the entirety of the offences relied on by the prosecution. It was against that background that the Lord Chief Justice, Lord Judge, observed: "15. When such an issue arises it is imperative that the judge is supplied with meticulously accurate information about a defendant's previous convictions and that, whatever other considerations may apply, the jury should not be misinformed in any way which might suggest that the defendant's previous convictions are worse, and more serious, than in truth they are. That is what happened here." In summary, it is submitted that these are convictions from a considerable time ago, in relation to which the prosecution had little information, and there was only one previous firearms offence. It is additionally suggested that it was unfair on Bowman for Lennon's conviction to have been admitted. Lennon For Lennon, Mr Winter QC (who did not appear at trial) also suggests the judge erred in his decision. He has advanced a number of separate points. "An important matter in issue" First, it is contended that the appellant's trial counsel should not have conceded that the admissibility threshold under gateway (d) had been crossed. It is suggested that the appellant's trial counsel had been confused on this issue, in that he wrongly accepted that the conviction was prima facie admissible, and that he erred in limiting his submissions to the sole issue as to whether it should be excluded as an exercise of the judge's discretion. It is argued that the requirement of section 101(l)(d) CJA, that the bad character is "...relevant to an important matter in issue between the defendant and the prosecution" means that the prosecution must adduce primary evidence of the alleged matter so as to establish factually the 'issue between the defendant and the prosecution", before any question of the admission of bad character arises. It is only when the issue has been demonstrated in this way that the jurisdiction under section 101(l)(d) to admit evidence of bad character is triggered. It is contended that as a matter of law and logic the fact that someone has been convicted of a previous crime is incapable of itself of proving that he committed the crime in relation to which he is on trial. Therefore, it is argued that on the facts of this case the prosecution needed to adduce primary evidence that the Appellant was in possession of the gun when he left London before the court could consider the issue of admissibility. In support of this argument Mr Winter has reminded the court of two oft-quoted passages from the judgment of Rose LJ (VP) in R v Hanson [2005] 2 Cr App R 21; [2005] EWCA Crim 824, that "[e]vidence of bad character cannot be used simply to bolster a weak case, or to prejudice the minds of a jury against a defendant" [18] and "[t]he starting point should be for judges and practitioners to bear in mind that Parliament' s purpose in the legislation, as we divine it from the terms of the Act, was to assist in the evidence based conviction of the guilty, without putting those who are not guilt y at risk of conviction by prejudice " [4]. Mr Winter contends that there was no evidence as regards the gun sufficient to establish a relevant issue between the defendant and the prosecution, and in the event it is argued his convictions served no greater purpose than to create the risk of a conviction founded simply on the basis of prejudice. Put shortly, it is argued that there was no evidence that the appellant was in possession of the gun until he left 49 - 51Clarkson St, at which stage there was undoubted evidence – indeed it was admitted – that Bowman was holding it. It is argued that there was no proper basis for the jury to have concluded that he had been in possession of it when he left London. Therefore, the appellant submits that the one of the essential triggers for section 101(1)(d) was absent and there was no proper basis for the judge to admit the evidence of his previous conviction, given the prosecution only sought a conviction of the appellants if Bowman had taken the gun into 49 – 51 Clarkson Street. Indeed, it is suggested that Mr Nathan should have submitted there was no case for the appellant to answer (although no ground of appeal has been advanced on this basis). Finally on this point, it is observed that this was not an issue to which the judge gave any consideration during his ruling when he concluded that the appellant's previous conviction was "material which the jury could if they thought fit use as some additional material to help them decide this matter in issue between the parties, namely whether the gun was brought from London and if so whether [the Appellant ] was aware of its presence and if so whether he could be said to be jointly in possession of it". The conviction did not establish propensity As quoted above, the judge directed the jury that they could conclude from the evidence of the previous conviction that the appellant had a propensity to use or be associated with firearms so as to make it more likely that he was in possession of it on this occasion. Mr Winter argues that this particular previous conviction did not establish propensity on the part of the Appellant to commit a crime such as that alleged in this case. In this context also, Mr Winter relies on the judgment of this court in Hanson. Rose LJ set out guidance for determining propensity as follows: "7. Where propensity to commit the offence is relied upon there are thus essentially three questions to be considered: (1) Does the history of conviction(s) establish a propensity to commit offences of the kind charged? (2) Does that propensity make it more likely that the defendant committed the offence charged? (3) Is it unjust to rely on the conviction(s) of the same description or category; and, in any event, will the proceedings be unfair if they are admitted? 8. In referring to offences of the same description or category, s.103(2) is not exhaustive of the types of conviction which might be relied upon to show evidence of propensity to commit offences of the kind charged. Nor, however, is it necessarily sufficient, in order to show such propensity, that a conviction should be of the same description or category as that charged. 9. There is no minimum number of events necessary to demonstrate such a propensity. The fewer the number of convictions the weaker is likely to be the evidence of propensity. A single previous conviction for an offence of the same description or category will often not show propensity. But it may do so where, for example, it shows a tendency to unusual behaviour or where its circumstances demonstrate probative force in relation to the offence charged (compare Director of Public Prosecutions v P (1991) 93 Cr.App.R. 267 at 279, [1991] 2 A.C. 447 at 460E to 461A). Child sexual abuse or fire setting are comparatively clear examples of such unusual behaviour but we attempt no exhaustive list. Circumstances demonstrating probative force are not confined to those sharing striking similarity. So, a single conviction for shoplifting, will not, without more, be admissible to show propensity to steal. But if the modus operandi has significant features shared by the offence charged it may show propensity. 10. In a conviction case, the decisions required of the trial judge under s.101(3) and s.103(3) , though not identical, are closely related. It is to be noted that the wording of s.101(3) —"must not admit"—is stronger than the comparable provision in s.78 of the Police and Criminal Evidence Act 1984 —"may refuse to allow". When considering what is just under s.103(3), and the fairness of the proceedings under s.101(3) , the judge may, among other factors, take into consideration the degree of similarity between the previous conviction and the offence charged, albeit they are both within the same description or prescribed category. For example, theft and assault occasioning actual bodily harm may each embrace a wide spectrum of conduct. This does not however mean that what used to be referred to as striking similarity must be shown before convictions become admissible. The judge may also take into consideration the respective gravity of the past and present offences. He or she must always consider the strength of the prosecution case. If there is no or very little other evidence against a defendant, it is unlikely to be just to admit his previous convictions, whatever they are." It is submitted that the admission of the evidence of the previous conviction did not fall within that guidance. Instead, the conviction established that the appellant, having been assaulted in a public house, then went away and later returned with a gun in order to exact revenge against his assailants and others who were in and near the public house. It is said it did not establish that he had a propensity to take a firearm with him when concluding a drug, mobile phone or other illegal deal. Therefore, it is argued that this single conviction for possessing a firearm in markedly different circumstances was not capable of establishing propensity on the appellant's part to conduct drug, mobile phone or other unspecified illegal deals whilst in possession of a firearm. A weak prosecution case It is suggested the judge failed to consider the strengths, or more importantly the weaknesses, of the prosecution case in deciding whether to admit the evidence. It is argued that he therefore failed to comply with the requirement to do so set out at paragraph 10 of Hanson: "[the judge] must always consider the strength of the prosecution case. If there is no or very little other evidence against a defendant, it is unlikely to be just to admit his previous convictions, whatever they are. " Prejudice Section 101(3) of the CJA prohibits the admission of evidence of bad character under subsection (l)(d) if the admission of the evidence would have such and adverse effect on the fairness of the proceedings that the court ought not to admit it. It is suggested that in light of the lack of evidence that the appellant had been in possession of the gun when he left London, the evidence that he had previously been in possession of a gun with intent to endanger life was significantly prejudicial. It is submitted this explains why the jury convicted him. It is argued that it follows that the prejudice was overwhelming such that it adversely affected the fairness of the proceedings. It is contended that these submissions apply equally in relation to the admission of Bowman's previous conviction, in that the combined effect of the convictions of both appellants significantly aggravated the effect of the bad character evidence. Once the jury knew that both men had previous convictions for possessing firearms a fair trial was impossible. Discussion Bowman As set out above, the judge explained to the jury that the "very important issue in this case between both defendants and the Prosecution [was] whether this gun was brought from London by the defendants and taken into the house by Bowman or whether it was produced in the house by Aslam and taken from him by Bowman. Another important issue, assuming you conclude the gun was brought from London, is whether Lennon knew about it and its intended use." Against the background that in the judge's assessment it is a rare event for offences to be committed by individuals carrying loaded and working firearms, the judge directed the jury that as regards Bowman his conviction potentially established that he was prepared, albeit a long time ago, to be involved with a group of people who between them had in their possession a firearm in the boot of the car when they were travelling to commit an affray. The judge indicated that the suggested relevance of this evidence was that it demonstrated a propensity or a tendency on Bowman's part to use firearms to commit offences. Although this earlier offending occurred in 1990, in the earlier case and in the present trial there was the distinctive feature that the gun was allegedly carried in a motorcar in order to enable the occupants to commit another offence (viz. affray and robbery). The question is whether it was an impermissible exercise of discretion for the judge to admit this suggested evidence of bad character. In R v Brown [2012] EWCA Crim 773, this court upheld a trial judge's decision to admit a single conviction for dangerous driving that had been committed a number of years before when the defendant was charged with dangerous driving when he was attempting to flee from the police. Gross LJ, giving the judgment of the court, observed that the principal question in situations such as the present on appeal is whether the judge's conclusion was soundly based in law, recognising the wide discretion given to trial judges in this area. He observed: "25. […]We repeat that which has been said before, that there is no rule of law precluding a single previous conviction giving rise to a conclusion of propensity. Obviously where there is only one previous conviction and especially where it is some time ago, then caution is needed where it is sought to rely upon that previous single offence in order to found a propensity argument. We do not, with respect, read the observations of the Vice President in Hanson at paragraph 9, to which Mr Ley drew our attention, as going any further than that. Similarly, with regard to the decision in the case of R v M [2006] EWCA Crim 3408, [2007] Crim.L.R 637, the decision goes no further than saying that this court will interfere where a judge was plainly wrong and thus by inference proceeding outside the ambit of a proper discretion in admitting a previous conviction. It may be noted that almost nothing was known in that case about the single previous conviction and it was some 20 years old. Here, in a case where the appellant gave a version of the facts along the lines that we have already summarised, we do see a proper basis for the judge having admitted the 2002 conviction. As Miss Purnell summarised it, in both cases he had driven at excessive speed, lost control and damaged property. As we have already observed, some judges might have declined the prosecution application; this judge did not and we cannot say she was in error in the course she adopted." In this regard we refer also to the recent decision of this court in R v Burdess [2014] EWCA Crim 270. In that case this court upheld the trial judge's decision to permit the prosecution to introduce a single previous conviction for rape when the previous rape and the index offence had in common a distinctive and unusual feature, namely that "that sexual intercourse took place in circumstances where there was an acute risk of immediate discovery if the man was committing rape rather than participating in consensual sexual intercourse" [12]. In the present case, for the reasons we have already rehearsed, we consider that there are relevant distinctive features in common between the two incidents. The older case of R v M [2006] EWCA Crim 3408 serves to highlight a more restrictive approach. However, it is recognized that judges have a broad discretion in this regard, with which this court will only interfere if the judge erred in his decision. Rose LJ in Hanson stressed that "If a judge has directed himself or herself correctly, this Court will be very slow to interfere with a ruling […] as to admissibility […]" [15]. In our judgment, notwithstanding the submissions of Mr Sherard, the court had been provided with the critical background facts as regards the 1990 offence, in the kind of detail that frequently is put before the jury when previous convictions are admitted. Given the circumstances of the earlier offence had been explained by the appellant, the problems that had occurred in R v M (2012) were not present: it was accepted that these were convictions and the basic facts of the firearms offence were before the court. We readily accept that some judges may have reached a different decision, but in our judgment the judge addressed the correct questions and we do not conclude that he erred in exercising his discretion in admitting this conviction. The judge's directions to the jury were faultless, and we particularly stress that he reminded the jury of the defence arguments on this issue and he directed the jury that this evidence went no further than demonstrating a relevant propensity to be associated with firearms and that it did not prove the allegations faced by the appellant on the present indictment. In all the circumstances this conviction was properly admitted and we dismiss Bowman's appeal against conviction. Lennon We are unable to accept Mr Winter's suggested approach to the "important matter in issue", namely that the prosecution should first have adduced primary evidence that the appellant was in possession of the gun when he left London before the court could properly consider admitting his previous conviction. The CJA does not contain such a precondition. Section 101(1)(d) is not directed at evidential sufficiency but instead it principally concerns the relevance of the evidence that it is proposed should be introduced, and particularly it focuses attention on the issue of whether the bad character evidence will throw light on the real issue or issues in the case. In R v Bullen [2008] EWCA Crim 4; [2008] 2 Cr App R 25, at paragraph 29, this court emphasised the centrality of relevance in this regard: "Nevertheless, for all the change in the law, the test is still relevance: see s. 101((1)(d) itself, and the introductory language of s.101 itself: 'is admissible if, but only if … (d) it is relevant to an important matter in issue …'" (see also paragraph 33). We repeat, the statute does not create the additional admissibility hurdle of requiring that the important matter in issue has been made out by prima facie evidence. The time to test the sufficiency of the evidence is by way of a dismissal application (schedule 3 Crime and Disorder Act 1998), a submission of no case to answer or when considering the "fairness" provisions (section 78 Police and Criminal Evidence Act 1984 or sections 101(3) or 103(3) of the CJA). Therefore, for the purposes of strict admissibility, when resolving whether the evidence is to be admitted as relevant to an "important matter in issue" the court does not, as a discrete question, need to satisfy itself as to the strength of the prosecution's case as regards the particular "matter". We are fortified in this conclusion by the decision in Hanson, in that the court in that case only considered the consequences of evidential weakness in the context of applying sections 101(3) and 103(3) rather than when addressing section 101(1)(d) (see paragraph 10 of the judgment set out at [50]): "(the judge) must always consider the strength of the prosecution case. If there is no or very little other evidence against a defendant, it is unlikely to be just to admit his previous convictions, whatever they are". We address hereafter whether this was a weak case against Lennon. The appellant's conviction in 2005, following a trial, concerned an incident in which Lennon was ejected from a public house after a disturbance: he was assaulted and received head injuries. Shortly afterwards, he returned carrying a handgun. At least one shot was fired. He then left the public house and approached two customers, and he behaved in a threatening manner towards them. He then re-entered the bar, still holding the gun. Although there are obvious differences between the two offences (principally the earlier offence did not involve a drugs robbery), there are also notable similarities. Most particularly, in both cases it was alleged that the appellant was prepared to carry and discharge a loaded firearm in public and he behaved in an entirely reckless and violent manner, with no attempt to hide his identity. We note also that the previous offending occurred about 7 years before the instant offence. As the judge highlighted in his directions to the jury, in the earlier case Lennon had been in possession of a firearm with the intention of causing people to fear he would use violence against them. That conviction tended to demonstrate that Lennon had ready access to firearms and that he was willing to use them in connection with other criminal activity. In all the circumstances, in our judgment these factors established a proper basis for the judge to admit this conviction, and although not all judges would have made the same decision, the judge did not err in the exercise of his discretion. Put otherwise, this single conviction may properly have helped the jury resolve an important matter in issue in the case – given the similarities in circumstances – namely whether the gun was brought from London by the defendants and taken into the house by Bowman or whether it was produced in the house by Aslam and taken from him by Bowman. This was not a weak case. Even prior to Bowman giving evidence, there was sufficient evidence for the jury to be sure that Bowman brought the gun to West Yorkshire from London. This was the result of the combined effect of the apparent careful planning of the visit over several days; the events in Clarkson Street, both in Aslam's house and on the street (in this context it is important to bear in mind there was no evidence – until Bowman gave evidence – of the gun being in the possession of anybody other than Bowman); the retention of the gun in the car until they abandoned it in Todwick, when it was thrown away and the car was abandoned; and the recovery of the holster from the foot well of the car carrying Bowman's fingerprints. There was a clear case to answer on that basis, and once Bowman gave evidence, if the jury rejected his account, that would have added a further platform on which the jury would have been entitled to be sure that Bowman had brought the gun from London, as part of a joint enterprise robbery. In all the circumstances, the judge approached the prosecution's application appropriately, and he gave the jury a careful direction as to how they should approach this evidence and its relevance. The judge carefully weighed the defence submissions on the potential prejudice of these convictions and his decision was, in all the circumstances, entirely sustainable. We dismiss Lennon's appeal against conviction.

civil appellate jurisdiction civil appeals number. 258 -279 of 1961. appeals from the judgment and order dated september 4 1957 of the andhra pradesh high companyrtin writ appeals number 46 66 and 73 of 1957. v. r. tatachari and p. d. menumber for the appellants. ram reddy for respondents in appeals number. 258 265 267 271 273 275 and 279 of 1961. 1962. april 17. the judgment of the companyrt was delivered by gajendragadkar j.--this group of twenty. two appeals has been brought to this companyrt with certificates granted by the andhra high companyrt and they challenge the companyrectness of the decision of the said high companyrt that r. 3 in sch. iii of the citizenship rules 1956 is ultra vires. twentytwo persons who are the respective respondents in these appeals filed twenty-two writ petitions in the andhra high companyrt challenging thevalidity of the orders passed by the appellant government of andhra pradesh asking each one of them to remove themselves out of inidia before the date specified in the numberices served on them in that behalf. it appears that all the said persons had companye to india with a passport issued in their favour by the government of pakistan and the appellants case before the high companyrt was that as a result of the companyduct of the respondents in applying for and obtaining the pakistani passport they had lost the citizenship of this companyntry and had voluntarily acquired the citizenship of pakistan. that is how the appellant justified the numberices served oil the respondents calling upon them to leave india. the respondents on the other hand companytended that s.9 of the citizenship act 1955 57 of 1955 and r. 3 in sell. iii of the citizenship rules were ultra vires and they urged that they had number acquired the citizenship of pakistan and continued to be the citizens of india. these writ petitions were tried by bhimasankaran j. the learned judge held that the impugned section and the rule were intra vires and he came to the companyclusion that as a result of s.9 read with r.3 in sch. iii of the citizenship rules as soon as it is shown that a person has acquired a passport from the pakistan government there is an automatic statutory cesser of his citizen-hip of india. in the result the learned judge upheld the validity of the orders of deportation passed by the appellant against the respondents and dismissed the writ petitions without companyts. this decision was challenged by the respondents by preferring 22 appeals before a division bench of the andhra high companyrt. the division bench which heard these appeals held that s. 9 was intra vires but found that r. 3 of sch. 3 of the citizenship rules was ultra vires. in its opinion the said rule was outside the authority companyferred on the central government by s. 9 1 and italso companytravened art.19 of the companystitution. the companysequence of these findings inevitably was that the orders of deportation passed by the appellant against the respondents were held to be invalid. that is why the appeals preferred by the respondents were allowed and a writ of mandamus was issued directing the appellant to forbear from enforcing the said orders of deportation. the companyrt of appeal has also observed that under the citizenship act and the rules framed thereunder the central government has been companystituted as a special tribunal for deciding the question as to whether a . person has acquired the citizenship of a foreign companyntry or number and so before issuing the orders of deportation it was necessary that the appellant should have obtained a decision of the central government on the point about the status of the respondents. the high companyrt accordingly made it clear that its decision in the appeals in question would number preclude the central government from determining the question whether the respondents have voluntarily acquired the citizenship of anumberher companyntry within the meaning of s. 9 1 but it added that in deciding the question the central government must ignumbere r. 3 of sch. iii which in its opinion was ultra vires. it is against this decision of the division bench about the invalidity of the impugned rule that the appellant has companye to this companyrt. the question about the validity -of section 9 of the citizenship act and of r. 3 in sch. iii of the citizenship rules has been recently companysidered by this companyrt in petitions number. 101 and 136 of 1959 and 88 of 1961 and this court has held that both s. 9 2 and r. 3 in sch. 3 are intra vires. the point raised by the appellant in these appeals is therefore companycluded -in its favour by this decision. this position is number disputed by the respondents. that raises the question about the proper order to be passed in the present appeals. it has been urged before us by mr. tatachari for the appellant that the effect of oar decision in the case of izhar ahmad khan is that as soon as it is shown that a person has acquired a passport from a foreign government his citizenship of india automatically companyes to an end and he companytends that in such a case it is number necessary that the central government should hold any enquiry and make a finding against the person before the appellant can issue an order of deportation against him. in our opinion this companytention is clearly misconceived. in dealing with the question about the validity of the impugned section and the rule this companyrt has numberdoubt stated that the proof of the fact that a passport from a foreign country has been obtained on a certain date companyclusively determines the other fact that before that date he has voluntarily acquired the citizenship of that companyntry. but in appreciating the effect of this observation it must be borne in mind that in all the cases with which this companyrt was then dealing the question about the citizenship of the petitioners had been expressly referred to the central government and the central government had made its findings on that question. it was after the central government had recorded a finding against the petitioners that they had acquired the citizenship of pakistan that the said writ petitions came before this companyrt for final disposal and it is in the light of these facts that this companyrt proceeded to consider the companytention about the validity of the impugned section and the impugned rule. it is plain therefore that the observations on which mr. tatachari relied were number intended to mean that as soon as it is alleged that a passport has been obtained by a person from a foreign government the state government can immediately proceed to deport him without the necessary enquiry by the central government. indeed it is clear that in the companyrse of the judgment this companyrt has emphasised the fact that the question as to whether a person has lost his citizenship of this companyntry and has acquired the citizenship of a foreign country has to be tried by the central government and it is only after the companytrul government has decided the point the state government can deal with the person as a foreigner. it may be that if a passport from a foreign government is obtained by a citizen and the case fall3 under the impugned rule the companyclusion may follow that he has acquired the citizenship of the foreign companyntry but that companyclusion can be drawn only by the appropriate authority authorised under the act to enquire into question. therefore there is no doubt that in all cases where action is proposed to be taken against persons residing in this companyntry on the ground that they have acquired the citizenship of a foreign state and have lost in companysequence the citizenship of this companyntry it is essential that that question should be first companysidered by the central government. in dealing with the question the central government would undoubtedly be entitled to give effect to the impugned r. 3 in sch. iii and deal with the matter in accordance with the other relevant rules framed under the act. the decision of the central government about the status of the person is the basis on which any further action can be taken against him. therefore we see no substance in the argument that the orders of deportation passed by the appellant against the respondents should be sustained even without an enquiry by the central government about their status. that is why we think in substance the direction of the high companyrt is right though the high court was in error in holding that the central government should hold the enquiry without reference to r. 3. in the result the appeals succeed on the main point of law and the decision of the high companyrt that the impugned r. 3 in sch.

Lord Justice Longmore: Introduction On 2nd and 3rd July 2001, Richard Keith Sutton was convicted of 32 out of a total of 47 counts of sexual abuse and sentenced to 14 years imprisonment. On 30th January 2004, this Court referred Mr Sutton's application for leave to appeal to the Full Court and ordered that, if leave to appeal were granted, the appeal should be heard immediately. On 16th and 17th December we heard full argument on all matters. We decide that Mr Sutton should have leave to appeal and will now refer to him as "the appellant". Between July 1976 and November 1981, the appellant was a care worker at Hand House at the St Thomas More home in Southport, which was run by an organisation called the Nugent Care Society. It is alleged that while he was there he abused PH, born in 1964, between September 1980 and October 1981 and PD, born in 1965, between December 1980 and June 1981. In the case of PH, the appellant was convicted on 3 counts of indecent assault and one specific count of buggery but acquitted of various specimen buggery counts over a period and a specific count of buggery alleged to have occurred after PH had been pushed or fallen downstairs; a verdict of Not Guilty on 2 other counts had been entered at the close of the prosecution case. The appellant was sentenced to a total of 4 years on the counts of which he was convicted. The appellant was convicted of 10 counts of indecent assault on PD for which he was sentenced to 12 months concurrent on each count and concurrent with the sentence on other offences in relation to other offenders. The appellant moved to become Deputy Head of Parkside Children's Home in the Wirral between November 1981 and November 1987. He was there employed by Wirral Borough Council. Here he met the female complainant, PV, who was born on 9th December 1965, and was at Parkside between November 1978 and January 1984. Thereafter she moved out and lived at various addresses at Halfway House in Borough Road and Devonshire Road. The appellant was convicted of 5 offences of indecent assault on PV, 4 of them at Parkside and one at Halfway House for which he was sentenced to 18 months concurrent. He was also convicted on two counts of rape, one on PV's first day at Halfway House and the other at Devonshire Road. For the first of these rapes he was sentenced to 6 years imprisonment and for the second 5 years concurrent. The four year sentence for buggery of PH was consecutive to those sentences. Between November 1987 and March 1990, the appellant was head of a school known as St Vincent's. No allegations of abuse were made in respect of this period. Thereafter he was head of Othona Children's Home in Southport, again run by the Nugent Care Society, and he was convicted of 1 count of buggery and 7 counts of indecent assault on JA, born 21st August 1978 for which he received a sentence of 4 years consecutive to the other offences making a total of 14 years imprisonment. The appellant's defence was that none of the alleged offences had occurred. The three main general grounds of appeal are that:- (1) there were insufficient warnings given to the jury of the particular care which they should take and the caution they should exercise in relation to allegations which depended on the unsupported evidence of the complainants; (2) there was insufficient warning given to the jury about the care they should take by reason of the antiquity of the alleged events and the delay in bringing them to court; (3) the police, in the course of conducting "Operation Care" in relation to allegations of abuse in Merseyside homes, including the allegations against the appellant, may have encouraged the complainants to come forward and make allegations of abuse but to play down their intention of claiming compensation (whether through the courts or by application to the Criminal Injuries Compensation Authority) by saying at the trial that they were unaware of their rights and had no intention of making any claims. There are further grounds of appeal specific to each complaint:- (1) in relation to PH, that the conviction on the specific count of buggery was inconsistent with the appellant's acquittal of subsequent specimen counts of buggery and the further specific count; (2) in relation to PD, that he had said (both before and after the trial) to a third party that he intended to make false charges of indecent assault; (3) in relation to PD and PV, that their applications for compensation post-trial, after PD had said in evidence that he did not know he had any claim to compensation and PV had said she would make no claim, make their evidence unreliable; (4) that JA had retracted his evidence since the trial and that, if his diary had been disclosed to the jury at trial, they would have appreciated that he would invent serious allegations and that he was a liar. Evidence It is unfortunately necessary to say something of the evidence in the case in order to understand the individual grounds of appeal. The various complaints all emerged as part of the large scale police inquiry in the North West of England in relation to children's homes, known as "Operation Care", which resulted in a number of trials and subsequent appeals of which this case is one. PH (Counts 1-15) PH was 16 when he went to St Thomas More's in September 1980 where he stayed for 13 months, leaving in October 1981. He said he had been there for 2-3 years but, as the judge told the jury, that was manifestly and completely inaccurate. He said it was a very unpleasant place to be in and that the appellant was known as Big Bird. He described him as an 'evil bastard' whom he saw regularly and who abused him. The first occasion was when he was in bed in his dormitory and the appellant came in and was nice, asking if he wanted anything. The appellant asked him to touch his private parts which PH eventually did. He said that that happened on numerous occasions. The appellant would then do the same thing to him. That was the subject matter of count 1, a specimen count. After that first time it got more serious. The appellant would get an erection and the complainant was forced to masturbate him on numerous occasions either in the dormitory or in the toilets. That was count 2, again a specimen count. Sometimes two others, bullies, were present in the toilets when he was being abused and they also took part. On more than one occasion he was forced to suck the appellant's penis. That was count 3, again a specimen count. The complainant said he was threatened with a beating if he did not do what was asked. On one occasion in the dormitory the appellant got him to fondle him and said "I'm going to bum you". He then buggered PH (count 4). That happened on several other occasions either in the dormitory or in the toilets (counts 5-8, specimen counts). He was buggered again on several occasions by the appellant and 'Big Sid' a resident who got on well with the appellant. A third man was present on most occasions. He would be buggered up against the wall by more than one person but would not know which one it was. Lots of laughing went on and although he screamed nobody ever came (counts 9-12, specimen counts). At one point he had a broken leg, which was in plaster. He was in bed with another boy, cuddling together for comfort because they were both scared and the appellant dragged him out of bed and then pushed him down the stairs where be was buggered on the floor at the bottom of the stairs (count 14). On his admission to St Thomas More at aged 16 PH was over 6 feet tall and weighed 11½ stone. The judge commented that he was "no shrinking violet". PH accepted the reality which was that he had been at St Thomas More for just over a year and he further accepted that during that time he had absconded for a total of 143 days. PH's first contact with Operation Care in relation to the appellant was a note from DC Neil who later asked him about his time in care and whether he had any complaints. He thought he mentioned St Thomas More's first but the appellant's name was not mentioned until later. He was not prompted with the appellant's name nor did the police say anything about him specifically. PH agreed that in April 1995 he made a statement complaining of buggery in St Aiden's, another care home, by a man called Dick. He also said he had been sexually abused by his father. He agreed that he was making applications for criminal injuries compensation and taking civil proceedings against the local authority and the Nugent Care Society. He said he suffered rectal bleeding following the abuse by the appellant, Big Sid and Joe Bugner or Buckner (count 13) and was taken to hospital. He said he may have become confused between St Aiden's and St Thomas More's. He agreed that he had appeared before the courts on 11 occasions and had seen many probation officers but had not disclosed the fact of his abuse in the care system. Re-examined he said he could not say whether or not he complained to his social worker, Mr Ruddock, about what was happening but did tell him he was unhappy. He had made a complaint about Dick because he understood he was still abusing young people and wanted to get him back for what he did and the same reasons applied to the appellant. The appellant was convicted of counts 1-4 (by a majority 11:1). He was acquitted by the jury or by direction of the other 10 counts against him. PD (Counts 16-25) PD was 15 when he went to St Thomas More's and was there from December 1980 until June 1981. At the time of the trial in 2001 he was serving an 8 year prison sentence imposed in October 1998 for burglaries of dwelling houses, often in circumstances where the residents were present. At St Thomas More's he thought he shared a dormitory with 4-5 other boys and remembered the appellant by the name of 'Big Bird' saying he was big and over 6 foot tall. The appellant would play fight with the boys and started lifting the complainant between the legs from behind or from the front saying "I'm only playing". One day the complainant was alone in the music room and the appellant came in, shutting the door. He grabbed PD's hand, pulling it towards his groin. The appellant mentioned early weekend leave and opened his button putting the complainant's hand on his underpants on his penis and making him masturbate him. He kept saying that he would get weekend leave. The appellant ejaculated. This was count 16. After that, masturbation occurred sometimes 2-3 times a week (counts 17-20, specimen counts). Sometimes there were some weeks when nothing happened. The appellant tried to make him suck his penis in the staff room but PD did not want to do that. The appellant made the complainant masturbate him and fondled him. When he ejaculated he pushed PD's head down and told him to kiss his penis which he did (count 21). That happened on a further 3-4 occasions (counts 22-25). PD would be sitting on a chair with the appellant standing in front of him with his penis out. He would push PD's head down to his penis and make him kiss it. PD started running away to get away from him. He had just become sexually active himself and was confused but knew he should not be doing what he was with the appellant; it was the promise of weekend leave that made him carry on. Cross examined PD denied that he was telling lies and said he was unaware of the possibility of financial gain. He did not hold any vendetta against the appellant and had no desire for publicity. He agreed that he had led a life of crime but said he did not blame it on the appellant or on the care system. He was put in the St Thomas More home by the Juvenile Court and was not going to school at the time. He agreed that at the time he was described as untruthful. Asked to explain the reasons for his late complaint, he said they were embarrassment, that he thought he would not be believed, that his mother had felt guilty at putting him in care and he wanted to spare her the angst of discovering that he had been sexually abused while in that situation. Both his parents had recently died and it was for that reason he thought he should move on and disclose what had happened. He made his witness statement on 19th January 2000 whilst at Long Lartin Prison having received a proforma letter from the police. He agreed that at one point he told a social worker that he was enjoying life at St Thomas More's. He also agreed that he absconded on a number of different occasions and was later sent to a detention centre where a report by the governor said he did not like St Thomas More's because he was bullied. He had no recollection of PH at St Thomas More's. He had not made a criminal injuries claim nor a civil claim against the local authority. Whilst being escorted back to St Thomas More's after he had absconded, he had thought of telling the local policeman about the abuse but did not because he knew that the officer fancied his sister and he did not want anything to get back to his family. The appellant was convicted on all counts concerning PD. PV (Counts 26-35) PV was 12 when she went to Parkside in November 1978. The appellant became deputy head there in November 1981. She got on well with him at first and at the age of 16 she moved into the 'warden's house' a building divided into flats to enable residents to learn living independently. The appellant came to her flat on many occasions, initially for a cup of tea and to see how she was getting on. He came one Christmas and she could smell alcohol on him. He sat next to her putting his arm round her and then he took her hand and put it on top of his hard penis over his trousers. He started rubbing her hand on himself saying it was nice and he liked her. He asked if he could "come", which he did. He still had his trousers on. This was count 26. She was frightened and did not want to do it, telling him to get off but he did not. That happened a few times. On another occasion in the appellant's office they had a big fight and she kicked his shins trying to get him off but he sat her on the chair next to him and she again masturbated him (count 27). That happened on a few occasions, usually in the warden's house (count 28, specimen count). The incidents were not always over clothing and sometimes he would take his penis out, putting it in her hand and she would masturbate him into the sink (count 30, specimen count). In January 1984 when she was 18 the appellant helped her to move into a halfway house at Borough Road. He grabbed her and started kissing her before forcing her to the floor where he pulled her jeans off and had sexual intercourse with her. She told him she did not want it but she could not move her hands as they were under his chest. He was very big and when he penetrated her she felt a sharp pain. She had not had sex before. He told her he loved her and then left. Afterwards she threw her clothes in the bin (count 31 – rape). After that he came again to Borough Road and the same thing happened, sexual intercourse and masturbation (count 32 – indecent assault – specimen count). In May 1984 she moved to a flat in Devonshire Road and the appellant would call after his shift. Sometimes he called two or more times a day and sexual intercourse and masturbation occurred. She did not consent to any of it and he knew that but took no notice even though she kicked, punched and screamed at him (Counts 32 and 33). On one occasion when he came to the flat she made coffee and although she told him she did not want to do it they had sexual intercourse on the floor (Count 34-rape). She later discovered she was pregnant and the appellant told her to have an abortion and there was no need for discussion as to who was the father. (It was agreed that on 7th January 1986 she had had a termination in the tenth week of pregnancy.) The appellant took her to the hospital and brought her home again. After that no further intercourse occurred but masturbation carried on (count 35, specimen count). He then took a job in Formby and she did not see him again. She agreed that in her youth she was angry, rebellious and aggressive and most difficult at Parkside. She regarded herself as being quite tough, saying that people could not push her around. She had access to a social worker, Nora Griffiths and was seeing her when the appellant was abusing her but did not confide in her. She accepted that by going to Parkside to be with the appellant she may have given the impression of being attached to him but said she did that so that she would not be on her own with him if he came over to the warden's house. On the occasion of the fight she was telling him to leave her alone. Anyone hearing the noise would be used to it because she was known for screaming and kicking. She agreed that on the occasion of the first rape, the appellant would know that the resident warden, Maggie, lived next door but it was her recollection that Maggie said she would leave them to settle in. She did not say anything at the time and people dealing with her had no idea of the distress she was suffering. The appellant never sought to disguise the fact that he was calling on her regularly and if she had visitors he would just say he was calling to see how she was getting on. In February 1984 she was convicted of assaulting a police officer but she did not disclose what was going on. She agreed that the appellant did not hide his involvement in taking her to and collecting her from the clinic after her termination. She denied that her pregnancy had anything to do with a boyfriend, Ray Rich, with whom she had had sexual intercourse on one occasion. In 1997 she told a counsellor, Vicky Bithell, about the abuse. That was the first time she had spoken of it and she made a statement to the police implicating other individuals in the care system. One of those Simkins, pleaded guilty to indecent assault and the police told her she could claim compensation. She did not name the appellant until after Simkins' trial in January 2001. She had not made any criminal injuries claim. KR, PV's female partner, said that she had known PV since she was 12 years old. She visited her 3-4 times a week at Devonshire Road. Sometimes the appellant was present when she arrived or would turn up, staying for hours, not speaking but following PV around. She thought his behaviour bizarre and weird and a lot of other people noticed what was going on. PV never told her that she was being sexually abused and the first she heard of it was after the Simkins trial. The appellant was unanimously convicted of courts 26-28 and 30-35. He was acquitted on count 29 by direction of the judge. JA (Counts 36-47) JA went to Othona in January 1993 when he was 14. He said that the appellant seemed a nice chap, outgoing, big and friendly. They went for trips out and on one occasion they went to a caravan at Squirrel Park in the Formby area. Once in the caravan they had a drink and the appellant put his arms round him and started kissing him on the mouth and unbuttoning his shirt, kissing his chest and feeling his body. He pulled his jeans down and performed oral sex on him (the complainant) but he did not ejaculate. This was count 37, the first of 8 counts of indecent assault). They got on the bed. He was on his stomach and the appellant raised him to his knees and then inserted his penis inside him (count 36, the first and only count of buggery). He did not like it and told the appellant it hurt but he said "It'll be OK, you'll get used to it after a while". On numerous other occasions sexual activity took place, the next being 2 days later in the office when the appellant unbuttoned his (the complainant's) trousers and performed oral sex on him (count 38). The appellant was a nice man, not rough with him. He looked after JA, taking him for drives and giving him a couple of pounds every now and then to buy lager. JA just did what he did to please the appellant and to keep him looking after him. He thought the benefits might stop if he did not go along with it. JA said that oral sex took place in the office about four times with JA lying on the desk and the appellant performing oral sex on him. Then the appellant would take his penis out and get JA to masturbate him (counts 40-41, specimen counts). There was an occasion when they went for a drive on the Southport coastal road and the appellant pulled JA's trousers down and performed oral sex on him. The appellant wanted JA to put his (JA's) finger in his (the appellant's) anus and whilst he did that the appellant did the same to JA (counts 45-46). On another occasion one of the side flats was being decorated and he was alone with the appellant who unbuttoned JA's shirt and kissed his chest. JA undressed to his shorts and lay on the floor whereupon the appellant masturbated him and he did the same to the appellant. They got into the '69 position' and tried to have anal intercourse but it did not work and so they performed oral sex on each other (counts 42-43). Cross examined JA agreed that he was serving life imprisonment for murder. That had involved JA and another befriending a homosexual man, going back to his flat, holding a knife to his throat, tying him up and bundling him into a trunk, leaving him to suffocate. He said that he specialised in that type of offence. When sentenced in 1997 the trial judge recommended that he serve a minimum of 16 years' imprisonment. In March 1996, JA agreed he was convicted of 10 offences of robbery. He agreed that over the years he had been interviewed many times by social workers and probation officers but had not disclosed the offences involving the appellant. He first told a probation officer of the offences about 2 years ago although initially did not name the appellant. He was aware of the Criminal Injuries Compensation Authority but had not made any application for compensation because of his record. It was the probation officer who contacted the police about the allegations. He thought he had been crossed by the probation officer and initially refused to see the police when they came to interview him. Prison records were produced and showed that in December 1998 JA disclosed that he was sexually abused by the appellant when aged 15. The appellant was unanimously convicted of counts 36-38, 40-43 and 45-46. He was acquitted by direction of the judge of 3 counts. Detective Constable Neil then gave evidence and said he interviewed the appellant between April 1999 and March 2001 and he vigorously maintained his innocence in respect of all allegations. In the course of the investigation the police sent out 155 letters to former residents of St Thomas More's. Of that number 125 did not reply. Only two of the complainants in this case (PH and PD) came forward as a result of receiving letters. The appellant gave evidence. He described the routine at the Home and said that he remembered PH as a persistent absconder. He confirmed that he was known at the Home as 'Big Bird' or 'Buzby´ and remembered somebody called 'Sid' whose name may have been Russell Williams. He was not a resident but may have visited friends at the home. He thought he might have taken PH to the Lakes once for a day out. Lights went out at 10 pm and there may have been pillow fights but he did not take part in them nor did he regard such activity as grooming youngsters. If PH had screamed in pain others would have heard him. He could offer no reason why PH should make the allegations against him and did not think he would have put up with such treatment because he was a mouthy, loud, big boy who could lose his temper. He did not remember him injuring his foot or being in plaster. He took residents, individually and as groups, to his home for a visit and this included PH. He never molested PH. He had no specific recollection of PD but said he did not molest him. As for the music room described by PD he said it was more like a corridor and did not have chairs as described by PD and no private facilities to commit such offences. He was not aware of any vendetta or dislike that PD may have acquired against him. He remembered PV as having moments of being extremely troublesome and volatile who was objectionable to everybody, kicking, spitting, fighting and using foul language. Two weeks after he arrived at the Home she had a fight with one of the other residents. If anything of a violent or disruptive nature had occurred when she lived downstairs in the Warden's flat, it would have been heard upstairs. When he helped her move into Borough Road nothing happened and he left her on the basis that he would not abandon her but pop in from time to time if she wanted. He tried to go once a week for half an hour and other people at Parkside knew he was calling on her. She would ring on occasion asking him to go. He remembered friends being there when he visited, but he denied he was there for hours as KR had said. As for her pregnancy, he did not ask who the father was but simply advised her to go to her GP. He gave her advice about drinking and paying her way and occasionally took her small quantities of food. He remembered JA at Othona and spoke to him about his behaviour. He denied he had had a caravan, or access to one, at Squirrel Park in Formby. He had no recollection of a flat being decorated in Othona where JA had said some of the offences had taken place. Whilst at Othona he did not know that JA had a history of sexual abuse from previous residences. He was not surprised that PH had not confided about the abuse he had suffered from Mr Dick or that PV had not disclosed to him her abuse at the hands of Mr Simkins. Although his caring for PV after she left Parkside was not part of his contract he did it out of a sense of duty and conscientiousness if young people asked him. Cross examined about a child care review held at Parkside on 20th May 1981 when it was recorded that PV had become very attached to him and that such contact should be reduced, he said that in the geographical sense he did not go out of his way to go and see her. Initially he called once a week but that was reduced to occasions when she telephoned asking to see him and he would stay 10-20 minutes or less if she had friends there. There was, in fact, some evidence from the Parkside log of PV phoning on 5th December 1985 and a message for him to phone her on 10th January 1986. By that time he thought the 'crush' crises was over and things had moved to a greater maturity between himself and PV. He did not remember seeing KR there at PV's place and said he visited other people over a period of years after they had left. He might have pecked PV on the cheek as a form of affection when saying goodbye. He did not arrange any specific care after her termination. On the day of her move (the first allegation of rape) he did not see any residents but thought he saw Maggie the house mother. He was sad and sick at PV's allegations because he had spent a lot of time trying to help her and could think of no reason why she should make them. He had made no records of taking children on trips out of the establishment. He did not remember 'Sid' as a bully in the home. None of his visits to see PV or others were recorded but there was no sinister reason for that. The appellant called witnesses on his behalf: Diane Williams was interposed during the evidence given by the appellant. She worked in the care system and in 1994 was deputy team leader. The appellant was her superior. She remembered the name 'JA' but could not put a face to him. The appellant responded well to the boys and had a good relationship with them. She never heard any complaint about him. Pauline Riley, George Lynch, Margaret Austell, Jack Nuttall, Helen Johnson, Michelle Kanavan, Ann Matteo all worked with the appellant and gave positive evidence of his work at the Home as did Michelle Burnside who was resident at St Vincent's for 4 years and Darren Levy a resident at Parkside for 4 years. Mrs Jane Sutton (the appellant's wife) gave evidence attesting to their normal sex life and the fact that her husband had not made any unorthodox sexual demands or indicated any homosexual inclinations. Application to adduce new evidence Mr Anthony Jennings QC for the appellant applied to adduce no less than 26 items of new evidence. We received all this evidence de bene esse and indicated we would rule on his application in the course of our judgment. It is convenient to do so before considering the grounds of appeal upon which reliance is placed. In relation to PH, application was made to adduce (1) his school report of 7th April 1981 and (2) his statement of 1st November 1999 made for the purposes of civil proceedings. Both these documents were available and were disclosed at the time of trial. They are, moreover, peripheral to the issues raised by the grounds of appeal and we have therefore decided not to allow reference to be made to these documents. Next, application is made to adduce (3) a letter of 25th November 1999 written by Detective Superintendent Robbins to PH's solicitors which was not disclosed at trial. This letter is central to ground 9 of the Grounds of Appeal and we have decided that the appellant should have leave to adduce that letter. The Crown contended that if such leave was given, they would wish to adduce a statement from Detective Sergeant Thomas of 24th November 2004 more fully set out hereafter and Mr Jennings said that he would not object to our reading that statement. Next the appellant sought to adduce (4) evidence of PH's application of 2nd September 1999 to the Criminal Injuries Compensation Authority ("CICA"), received by them on 10th September 1999 and (5) the outcome of such application, dated 11th December 2001, in the sum of £3,750. The application was made before the appellant's trial but the award was made after that trial. We have decided that both the application and the outcome should be adduced in evidence. In relation to PD, application was made to adduce:- (6) his criminal antecedents; (7) various social enquiry reports and parole board decisions in relation to his offending; (8) a statement from Ms Barbara Taylor of 8th January 2001 relating to PD's frequent absconding; (9) PD's application to CICA for compensation of 13th November 2001 (made after the appellant's trial); (10) PD's authority for the initiation of civil proceedings dated 19th January 2000; (11) A statement to police from a social worker John Donnelly of 8th November 2000 that he had visited a certain Lee Dugdale two days previously in prison in relation to a trial in which Dugdale was an intended complainant. Dugdale had told him (among other things) that while he was being moved from HMP Long Lartin to HMP Garth on 6th or 7th September an unidentified male fellow prisoner had informed Dugdale that he was making abuse allegations to claim compensation; (12) A statement of DC Peter Thomas of 13th November 2000 in which he said he was following up the statement made to John Donnelly and went to see Lee Dugdale on 9th November 2000. Dugdale identified the prisoner with whom he was travelling from HMP Long Lartin as PD and repeated that PD had said he was going to make false complaints to get financial compensation. When asked if he would make a written statement, Dugdale said he wanted nothing more to do with the police and walked out of the room. This statement was part of the unused material and was available to the defence at trial, although John Donnelly's statement (No 11 above) was not, since the Crown did not appreciate its possible relevance in its anonymised form; (13) A statement of Lee Dugdale of 10th September 2001 made after the trial without saying to which person the statement was made. It repeated the allegation in relation to PD and did not say whether Dugdale was prepared to give evidence. The application to include this statement included a further application to admit a statement of 12th August 2003 from Jane Hutcheson assistant solicitor in Bindman & Partners (the appellant's now solicitors) in which she said she had visited Dugdale in HMP Blakenhurst on 5th August 2003 and that he had read and confirmed the statement of "10th October 2002" (sic). She added that Dugdale was not willing to attend and give evidence in the appellant's appeal because, as he put it, fellow inmates objected to what they viewed as his "giving evidence for nonces". Despite this Mr Jennings for the appellant originally hoped pursuant to a witness order of this court to call Dugdale in person in support of his statement. Unfortunately he was badly stabbed (causing a chronic abscess of the right lung) shortly before this appeal was due to be heard and could not attend court. Mr Jennings therefore applied to adduce his evidence in statement form, pursuant to sections 23-26 of the Criminal Justice Act 1988 on the basis that he was unfit to attend. The Crown submitted that, if this statement were to be received in evidence they would wish to adduce evidence from Detective Sergeant Thomas in accordance with his statement of 14th December 2004 to the effect (1) that, although Dugdale had claimed to be a victim of alleged abusers and had apparently been prepared to be a witness at the trial of other alleged abusers, he did not give evidence at any of the trials; and (2) that on 18th December 2000 the Crown Prosecution Service advised that Dugdale should not be used in any future trials. D/S Thomas was, with our permission, called to give his evidence subject to our ultimate ruling; he confirmed this evidence but said he was unable to say why the CPS had given the advice which they did. The Crown further relied on the fact that by 23rd August 204, Dugdale had been convicted of or pleaded guilty to 70 offences. (14 & 15) A letter from a firm of solicitors to Barnardo's of 4th May 2004 together with a copy of Barnardo's log of 5th April 2001 in which it is suggested that PD's social worker was unhappy that Barnardo's were counselling PD before trial. These were not available at the trial; (16) A report of Helen Roberts, Forensic Clinical Psychologist, about PD dated 12th June 2003 (and thus unavailable at trial) in which she stated, inter alia, that PD's principal problem was drug abuse but also said that he had said he had told the matron at St Thomas's of his abuse. The significance of this is that at trial he had said he had never told anyone of the alleged abuse; (17) A pre-sentence report compiled for Leeds Crown Court on 20th June 2003 showing that PD explained his criminal behaviour as being due, at any rate in part, to abuse while in care. This was not available at trial. We have decided to receive items (6), (7), (9), (10) and (14)-(17) on the basis that they were not available at the trial (save for (10) which, however, needs to be seen now in the context of (9)). Item (8) was available and disclosed at trial; it could have been presented in evidence but was not. The jury, however, knew perfectly well that PD was a persistent absconder; whether the number of times he absconded was 24 as put to him or rather more as item (8) might suggest was of little consequence. Items (11)-(13) are, however, the critical items in relation to the counts in relation to PD. We have decided that it would not be right to admit these items. (11) goes nowhere since PD is not identified; (12) was available at trial and disclosed to the defence. If the defence had wanted to call Dugdale at trial they could have done so. In the light of Dugdale's reluctance to attend he would have to have been the subject of a witness summons and could well have been a highly dangerous witness to call. It is not in the least surprising that he was not called. It is no doubt unfortunate that he could not be called before us due to his medical condition but it would not, in our judgment, be right to admit, pursuant to the 1988 Act, a potentially controversial hearsay statement which cannot be challenged by cross-examination, when the evidence to which it relates was available but not called at the trial. In relation to PV application was made to adduce:- (18) Records of telephone messages left for the appellant at Parkside showing that PV had telephoned and wanted to speak to him. An agreed schedule of these calls was compiled for the purpose of this appeal showing that calls had been made on 10th April, 13th April and 19th July 1984, 21st June, 2nd July and 13th November 1985 and 10th July and 27th August 1986, being 8 calls over a period of 2 years and 4 months; (19) PV's application to CICA made on 20th July 2001, 17 days after the conclusion of the trial; (20) PV's award from CICA in the sum of £16,500. We have decided we should receive these items, as further evidence on this appeal. In relation to JA application was made to adduce:- (21) A report dated 15th December 1998 made by Probation Officer Pete Nowell on JA after he had received a life sentence for murder on 31st July 1997. This referred to abuse JA had purportedly received at the hands of the appellant; (22) A statement of 16th December 2004 from the journalist David Rose saying that together with Claire Curtis-Thomas, MP for Crosby, he visited JA at HMP Wakefield on 20th September 2001 (10 weeks after the appellant's conviction) and that JA had made it clear that he had been lying when he gave evidence at the appellant's trial. Mr Rose gave oral evidence to us in accordance with this statement and said that he had made notes of his meeting (which he produced) and had sent those notes to Mr Chris Saltrese who was "then" acting for the appellant. He had seen a copy of JA's subsequent signed statement of 24th September 2001 retracting his evidence which he believed Mr Saltrese prepared for JA to sign; (23) A statement of 24th November 2004 from Mr Chris Saltrese who said that, with Ms Curtis-Thomas MP, he visited JA on 24th September 2001 taking with him a typed statement prepared from information obtained by Mr Rose. He read through the statement with JA who made two small amendments and then signed it. He gave oral evidence to us confirming his statement but, rather remarkably, said (1) that he thought JA's statement had been prepared by Mr Rose and (2) that he had never asked JA if he was prepared to come to court to give evidence in accordance with his statement; (24) The statement of JA dated and signed by him of 24th September 2001 in which he said that the appellant had never abused him and that everything he (JA) had said in court (and to the police) was a fabrication from beginning to end. He claimed that the reason for these lies was that the police had told him in prison that, if he did not say the appellant had abused him, he would be accused of targeting gay men in the course of his crimes and, therefore, be classed as a sex offender required to participate in a sex offender treatment programme; (25) A copy of JA's diary compiled while in prison awaiting trial for murder describing how he had killed his victim in terms which amounted to an admission of murder; (26) The decision of the Criminal Case Review Commission on 17th May 1999 refusing to refer JA's conviction for murder to the Court of Appeal. We do not see the relevance of items (21), (25) and (26); both items (21) and (25) were, in any event, available at the appellant's trial for use, if anyone had thought them relevant. Items (22)-(24) were not available at trial and, if JA's retraction is inherently credible, should, we think, now be received in evidence. The problem with them is that JA, despite being available, has said that he is not willing to come to this court in support of his September 2001 statement. We do not, however, think that it would be right, in all the circumstances, to refuse to receive items (22)-(24) (and the accompanying oral evidence of Mr Rose and Mr Saltrese); we will accordingly admit this evidence as evidence that JA made the statements which he is recorded as having made. In due course we shall consider the effect of having admitted this evidence. We accordingly turn to the grounds of appeal. Grounds of Appeal Some grounds of appeal raise particular points in relation to particular complainants; others are general grounds. We will take the general grounds first (grounds (7)-(11)). One point must, however, first be emphasised. In the appellant's perfected advice it appeared that there might be some criticism of the defence team at trial. This criticism was never a ground of appeal and, by the end of the hearing, Mr Jennings for the appellant had accepted that any criticism he had of the defence team was not sufficient to constitute a ground of appeal. Inadequate warning about relying on unsupported evidence of the complainants (Ground 7) Now that juries no longer have to be directed about corroboration as a matter of law, the question whether any warning about relying on unsupported evidence of complainants in sex cases should be given and, if so, what the terms of such warning should be is very much a matter for the trial judge, see R v Makanjuola [1995] 2 Crim App Rep 469. In the present case the judge made four separate points about the approach which the jury should adopt to the complainant's evidence. He first reminded the jury (6A-F) that the male complainants all had previous convictions, two of them having "very serious" convictions of offences of violence and dishonesty. The female complainant, though of good character in a formal sense was rebellious, aggressive and angry about having been brought up in care. For these reasons the jury should approach the witnesses' evidence "with particular caution". Secondly the judge pointed out (6F-7B) that none of the complainants' evidence in relation to any particular count was supported by any other evidence; he added:- "So you must approach each complainants' evidence with care for the reasons I have indicated and have regard to the criticisms which are made of each of those witnesses." Thirdly he reminded the jury (7B-C) that they had to be sure that the witnesses were individually honest and accurate before they could convict. Fourthly (7D-8C) he said that, even though the defence did not suggest that there was any collusion between the complainants, the jury should consider the question of collusion and that, if they thought there might have been collusion, the evidence of relevant witnesses would be worthless. Mr Jennings for the appellant submitted that the case called for a much stronger warning about the dangers of relying on unsupported evidence. We do not agree; it was for the judge to gauge the strength of the warning he was to give the jury in the context of the case as a whole. The warning he gave was significant; this court would be wrong to criticise judges who gave warnings which might be somewhat different in terms from the warnings that individual judges of this court might have given. The warning that the judge gave was comprehensive and entirely adequate for its purpose. It is to be noted that the jury had no difficulty in acquitting the appellant of a number of counts. Mr Jennings then submitted that if the judge had known the facts that we have now admitted as further evidence particularly the facts (1) that PD and PV had made compensation claims after saying in PD's case that he did not know he could and in PV's case that she would not do so and (2) that JA had retracted his evidence, he would have given a stronger warning. This seems to us to be the wrong approach. If subsequently admitted evidence causes us to doubt the safety of the convictions that is sufficient for the appellant's purpose; if it does not do that, it would not be right to use the "new" evidence as a ground for saying that an enhanced or strengthened warning should have been given and that, in its absence, the convictions are unsafe. Inadequate warning about the consequence of delay in making complaints (Ground 8) Mr Jennings made a sustained attack on the inadequacy of the delay warning given in this case. In the light of that attack we should set out in full the part of the summing-up which deals with delay (4A-5H):- "One factor in this case which you must consider in conjunction with the standard of proof is the question of delay. This case has been concerned with events which allegedly took place a long time ago. The oldest counts, the PH counts, 20 years ago in round figures, the most recent counts, JA, up to eight years ago. You must have in mind that the defendant may have been prejudiced by the delay and such possibility must be in your minds when you decide whether the prosecution have made you sure in respect of each or any of these counts. A number of factors arise which you must consider. Firstly, ask yourselves this; why did these matters not come to light sooner so they could have been tried within a year or two years of the allegations arising? Does the fact that these allegations arise at this point of time reflect on the reliability of the complainants? Or does the fact that these charges have arisen at this time suggest recent invention of the complaints, recent fabrication, as it is sometimes called? That is the first thing. Secondly, make allowance for the fact that memory obviously fades, memories on all sides fade over a period of 20 years and as a result evidence of about certain aspects of the case may be vague and may be unspecific. Thirdly, from the defence point of view the older a charge is the more difficult it may be for the defendant to answer it. You have become aware during the course of this evidence that both sides have had access to large numbers of documents and files from Social Service departments, from Nugent Care, from hospitals, from doctors and so on, psychiatrists and psychologists and even the Prison Service. Those records have been used extensively during the course of the evidence to try to cast light on the events of many years ago but in the nature of things those records are on occasions incomplete and inconclusive. Where there has been ambiguity, where there has been doubt in relation to those records it has been impossible to resolve such doubt because generally speaking the witnesses responsible for creating those records are untraceable. So bear that in mind. You may well take the view that in a case of this sort delay is entirely understandable, that in the nature of things people who have been the victims of this sort of abuse, if indeed it happened, store it away for years and it comes out later for some particular reason, the complaint is prompted by something. But even if you believe that the delay is understandable if you think the defendant has been put at a real disadvantage by the fact that these charges come to light in 2001, for trial at least, then you must take that into account when considering whether the prosecution has proved its case in relation to each of these charges." There are two main criticisms. The first is that, contrary to the JSB standard direction, the judge made no effort to single out particular instances where the absence of records or witnesses might have prejudiced the appellant. The second is that such good effect as the direction might have had was nullified by that part of the direction which said that the jury might take the view that the delay which had occurred was understandable. In relation to the first complaint, the most relevant prejudices which the judge ought to have highlighted were said to be:- (1) the absence of the register of St Thomas More's home, which might have enabled the appellant to say where he was on particular days; (2) the absence of hospital records which could have confirmed whether PH had been admitted for an anal injury; (3) the death of the headmaster of St Thomas More's thus preventing any inquiry whether PH had complained to him; (4) the death of the matron there who could not confirm whether (as the subsequent psychological report of Helen Roberts of June 2003 had indicated) PD had made a complaint to her. As far as written records are concerned, there were as the judge said "large numbers of documents and files" from (among others) hospitals, doctors, Nugent Care and Social Services departments. In this context, the absence of the St Thomas More register was peripheral at best particularly for the help it might give as to the appellant's (rather than the complainants') movements. One incident after which PH was taken to hospital was that alleged in count 14 in relation to which PH said he had been pushed downstairs by the appellant and then buggered at the bottom of the stairs. That was a count of which the appellant was (for whatever reason) acquitted, so it is difficult to see how any gap in hospital records could have prejudiced the appellant as matters have turned out. The absence of relevant hospital records cannot make unassociated counts unsafe. Insofar as PH claimed there were other hospital visits, such visits were not associated with any particular count. Moreover, once judge and jury have a "large number" of contemporary documents, it is difficult for a judge to highlight the absence of a particular record without indicating how a defendant might be affected. In such cases a general warning is adequate. Absence of evidence from the headmaster and the matron is equivocal at best. If they had said no complaint had been made, it is difficult to see how the appellant's case could be bettered; if they had said complaints were made that might or might not have affected the complainants' credibility at trial. The jury could have taken the view that, even if the complainants had forgotten that they had made such complaints, the complaints did in fact support the complainants' evidence. One can understand the judge's reluctance to highlight the absence of evidence from the matron or headmaster on this topic. Complaint was also made that the direction on delay was tied to the direction on the burden of proof. We think that the judge was justified in dealing with delay in this manner. To the extent that delay results in the absence of evidence (which is the appellant's complaint), that absence of evidence means that a jury will sometimes feel that it cannot be sure that the complainant's evidence is reliable. It is, in this way, an aspect of the need for the jury to be satisfied that the prosecution has made out its case. This is confirmed by R. v Smith (unreported, 20th December 1999, No 99/01664), one of the cases relied on by Mr Jennings in support of his proposition that the judge should direct the jury as to particular reasons why a defendant may have suffered delay in a particular way. In that case Evans LJ said (page 17):- "The judge's primary concern should be to ensure that the jury pays 'conscientious' regard to the burden and standard of proof . . . The reason is, in our view, that the jury should be reminded that the fact of delay means that the evidence should be scrutinised with particular care, before they can conclude that they are sure that the defendant is guilty of the specific offence or offences charged against him." and later (page 22):- "Care must be taken to ensure that the burden of proof is not effectively reversed." Subject to the second main complaint, we consider that the direction on delay was sufficiently tailored to the facts of the case and was an adequate direction. That leaves the complaint that the judge nullified the effect of the direction by inviting the jury to think that the delay was understandable. This is an unfair categorisation of the judge's final paragraph. The jury can hardly have failed to ask themselves why the delay had occurred since the absence of prior complaints figured largely at the trial and it is well known that complaints of abuse do sometimes surface long after the incidents constituting that abuse have occurred. It is not impossible that some members of the jury might think that delay (for whatever reason) is understandable. Any judge would wish to set that understanding in its proper context and that is what Judge Lewis did by saying that, even if the jury believed that the delay was understandable, they should take into account (viz. in the defendant's favour) any real disadvantages into which the defendant had been put by the fact that the charges came to light in 2001, "when considering whether the prosecution has proved its case in relation to each of those charges". Read as a whole, this direction does not nullify the delay direction; it expands and amplifies it. Again, one must remember that the appellant was acquitted on a number of counts. Non-Disclosure (Ground 9) In the course of what may be called the Williams-Rigby/Lawson appeal to this court in early 2003, [2003] EWCA Crim 693, a case where the appellants had been members of staff at the SG Residential Community Home near Liverpool between 1976 and 1984, certain documents were disclosed by the Crown which Mr Jennings says should have been available to the defence at the appellant's trial in 2001. The documents do not seem to have played any part in the decision of the court on those appeals; most of the documents deal with the position of Detective Superintendent Robbins who was the senior detective in charge of "Operation Care" investigating cases of alleged child abuse in Merseyside and, after retirement, worked for a firm of solicitors Abney Garsden MacDonald ("AGM") assisting them to co-ordinate claims for civil compensation by victims of alleged abuse, whether brought against local authorities in charge of schools or homes where abuse allegedly took place or made in the form of applications to CICA. These documents are said to show that D/S Robbins was aware that complainants in the Operation Care cases had made statements in support of compensation claims and that solicitors exchanged their clients' statements with other solicitors whose clients were also making claims. It is further said that when Mr David Rose, the journalist to whom we referred in item (23) above, put to D/S Robbins that he asked solicitors to advise their clients to postpone making claims for compensation until the conclusion of criminal proceedings, he had agreed that he had done that in order to make the complainants' evidence look more credible in the criminal court and justified his conduct by saying that he was just trying to get a conviction. In the event no application to call Mr Rose to give evidence in respect of this statement was made but we were asked to admit and have now decided to admit in evidence the letter of 25th November 1999 from D/S Robbins to PH's solicitors about his case. In that letter D/S Robbins said that he could not release PH's statement since the police were still investigating his alleged abuse. He said (correctly as it turned out) that the conclusion of the investigation and any prosecution would be months away and added:- "In any event I always advice caution regarding the commencement of compensation claims as defence lawyers have suggested victims' evidence may be tainted by monetary gain." In fact PH did make a compensation claim before trial and was cross-examined about it. Disclosure has now been made of other similar letters written to solicitors for complainants and one of 25th February 1999 to a particular complainant (not in the present case) advising him not to begin civil proceedings until he had given evidence in the criminal trial. Also disclosed is the fact that in 1997 Mr Garsden of AGM had written to D/S Robbins saying that an exchange of correspondence could "damage the prosecution case" a remark which D/S Robbins said, in a letter to Mr Garsden of 25th November 1997, "will be seized upon". A police policy document and power point slide of 24th August 1998, perhaps intended to be shown to solicitors for complainants, stated:- "It must be remembered that it has been a consistent defence tactic to allege that victims are motivated to make allegations by potential financial reward. Any investigation should negate this from the outset by ensuring that no discussion takes place on this subject between the investigator and the victim." Disclosure has also been given by the Crown of a solicitors' attendance note of 3rd December 1998 in which a Mr Peter Cromer of Liverpool Social Services said that he felt it was advantageous in criminal proceedings if witnesses could answer "No" to a question whether they had made a compensation claim. It appears, moreover, that there was a suggestion made by a complainant in the Williams-Rigby trial (but about 3 years after that trial had taken place) that all the complainants in that case were brought into a room and told by a police officer (not suggested to be D/S Robbins) that if the issue of compensation was raised they should say that they had not made a claim. In response to the suggestion that the Crown should have disclosed all this material before the appellant's trail and that the defence could have, therefore, been more forcefully placed before the jury than it was, the Crown also disclosed a synopsis of the material held on what was called the "HOLMES indexing system", a computer system created to cope with the numerous claims being investigated by "Operation Care". This showed that PH was the only complainant in the present case to whom or to whose solicitors a letter was sent of any similar nature to those in fact sent by D/S Robbins to Messrs Pictons on 25th November 1999. We have already indicated that the Crown also submitted that we should receive a statement from the Deputy to the Senior Investigating Officer of Operation Care, Detective Sergeant Graham Thomas of 24th November 2004 explaining how he had interrogated the HOLMES Indexing system and also Operation Care civil litigation databases and had elicited that out of 776 letters held on such systems only 9 other letters worded similarly to the letter of 25th November 1999 could be traced; none of the 9 letters referred to any person who was a complainant against the appellant. Mr Jennings did not object to our reading this statement of D/Sgt Thomas, provided that we paid the requisite regard to the new documents which he complained had not been disclosed. Mr Jennings then submitted that the combined effect of this material was that the police, complainants' solicitors and employees of social services were advising complainants not to apply for compensation before trial and to deny being interested in compensation since they had not yet made any claim. The material ought to have been disclosed and the defence could then have investigated with complainants and police officers "whether there had been police irregularity in respect of compensation". The result would have been that the appellant's defence would have been more forcefully deployed before the jury. We cannot accept these submissions. Of course, police priming of witnesses would be irregular in the highest degree but there is no evidence of that having happened in the present case. The highest that Mr Jennings can legitimately put his argument on the material relevant to this appeal is to say that D/S Robbins perhaps suggested to some complainants' solicitors that any claim for compensation should await the outcome of criminal proceedings. PH (the only complainant in this case to whom the suggestion was made) in fact did make a claim before the criminal proceedings concluded; PD and PV, to whose solicitors no such letters were written, did not but made their claims soon afterwards. JA, the murderer, has never made a claim – not surprisingly. We do not see how the appellant's case could have been materially improved by disclosure of the material now sought to be relied upon. We would, however, add that even if the police had generally discouraged complainants' solicitors from instituting civil proceedings before the conclusion of criminal proceedings, we would not consider it irregular for the police to have made the suggestion which they did. A criminal trial is, of course, not an ideal venue to investigate police irregularity at the best of times. The issue for this jury, as they must have been very well aware, was whether the fact that PH had made a claim for compensation and the fact that PD, PV and JA might make such a claim in the future made their evidence unreliable. In relation to those counts on which the appellant was convicted, the jury decided that the evidence of the complainants was reliable and their verdicts followed accordingly. It must be remembered that even if the complainants were motivated to give evidence of abuse by the hope or expectation of compensation that does not, of itself, make their evidence untrue or unreliable. It is, of course, a perfectly acceptable tactic on the part of the defence to suggest that a complainant may be motivated by the prospect of compensation and that such motive may make that complainant's evidence unreliable. We cannot see that it is an unacceptable tactic for complainants to defer (or for their solicitors to advise them to defer) making a final decision on whether to claim compensation until after the conclusion of the trial. Whether their evidence is therefore unreliable is just one of the many difficult decisions a jury has to make in a case such as the present. That is what we have juries for. It would not be right for this court to decide that the hope of compensation makes the evidence of a witness suspect and set aside a conviction for any such reason. Eliciting "Expert Evidence" from Appellant (Ground 10) The objection here is that counsel for the Crown at trial (not Mr Riordan QC) asked inappropriate questions of the appellant with a view to establishing the reason for delay on the part of the complainants in making their complaints. In particular the appellant was asked about "the three guilts" which it was suggested might be felt by complainants and deter them from complaining. This would be a matter for evidence from an expert in child abuse, if it were to be placed before a jury at all and the Crown had never proposed to adduce such evidence as part of its case. In these circumstances Mr Riordan accepted before us that such questions should not have been put to the appellant. We cannot accept, however, that the convictions are unsafe for this reason. A colleague of the appellant, called on his behalf, gave some evidence of the guilt experienced by the victims of sexual abuse and she had had training in the field of child protection. Although Mr Jennings submitted that she was not technically an expert qualified to give opinion evidence to the jury, it is difficult to imagine any objection to her cross-examination being sustained. In fact no objection was made to the questioning of this colleague (nor indeed to the questioning of the appellant himself). The judge did not refer to this questioning in his summing-up and we do not consider that the appellant was placed in an unfair position in the context of the trial as a whole. Cross-examination of Appellant which implied a sexual liaison with one of the witnesses called on his behalf (Ground 11) The relevant witness was interposed during the appellant's own evidence because she was going on holiday. After the evidence was given, the Crown suggested to the appellant that she had given such evidence because she had had a sexual relationship with the appellant. No such suggestion had been put to the witness while she was giving evidence. Mr Riordan accepts that the cross-examination of the appellant was inappropriate. The appellant strenuously denied the suggestion however; no reference to the suggestion was made in the remainder of the trial. We cannot accept that the convictions are unsafe for this reason. We turn, therefore, to the grounds affecting the individual complainants. PH: inconsistency between verdicts of conviction on count 4 and verdicts of acquittal on counts 5-8 (Ground 1) and counts 9-15 (Perfected Advice, para. 12) Count 4 was a specific count of buggery, occurring on PH's bed in a dormitory at St Thomas More's; counts 5-8 were specimen counts of buggery which were alleged to have occurred on many other occasions in the dormitory or in the toilets. On these counts the appellant was acquitted; there were other specimen counts of buggery relating to occasions when one or more other (older) boys were said to be present, laughing, joking and threatening PH; on these counts, the appellant was also acquitted either by the jury at the end of the trial or (in the case of counts 13 and 15) on the direction of the judge. It is well accepted that, if inconsistency is alleged, it is for an appellant to show that the verdicts are such that no reasonable jury could arrive at the conclusion reached, see R v Durante 56 Cr. App R 708. This is always difficult and in this case it is impossible. The jury were sure that PH's evidence as to the first act of buggery was reliable; they may well have thought that his evidence of later specimen acts of buggery was exaggerated or too indefinite to be sufficiently reliable for a conviction. In our judgment there is not even a logical inconsistency between the conviction on count 4 and the acquittals on counts 5-15, let alone anything to show that no reasonable jury could have arrived at the decision of this jury. Mr Jennings pointed to various inconsistencies in PH's evidence but that of itself cannot come anywhere near to demonstrating that the verdicts were inconsistent. PD: The "fresh evidence of Dugdale" shows that PD had a motive to lie (Ground 2) Now that we have decided that we ought not to receive the hearsay "evidence" which Dugdale could, in any event, only give by way of written statement, this ground falls away. PD: his subsequent application for compensation shows that PD had a further motive to lie (Ground 3) In evidence PD said that he did not know that he could claim compensation until the appellant's counsel had mentioned it in cross-examination and that he had not done so. We have admitted evidence that he did make such a claim on 13th November 2001. His claim was in fact refused because of his record. PD's solicitors have also confirmed that he intends to sue the Nugent Care Society in respect of his abuse. We have already observed that the hope or expectation of compensation does not, of itself, make the evidence of a complainant unreliable. There is no reason why, even if a complainant intends to make a claim, he or she should do so before criminal proceedings are concluded. If a complainant is asked whether he intends to make a claim and says that he did not know that he could claim compensation, it is for the jury to assess whether such answer is or may be truthful and whether, if they think that that evidence is or may be untruthful, that affects the reliability of the evidence of the acts of abuse. Counsel then appearing for the Crown said in his speech that the latter 3 complainants said they had no intention of making any application for compensation and that that was not why they were giving evidence. Counsel then appearing for the defence reminded the jury that there was a potential for a change of heart after the trial as far as compensation was concerned. The jury heard the evidence and the submissions; the fact is that they convicted after such evidence had been given and such submissions were made. That does not mean that the convictions are, in any way, unsafe. The other evidence we have received in relation to PD is all peripheral. Although it does appear that PD did not use his account of sexual abuse to curry favour with the authorities before the trial, his parole report of 17th February 2001 does refer to it. Given the obligation of those administering the parole system to understand the background of an offender and his offending in order to assess risk to the public, it is not surprising that the parole report includes that information. This cannot, however, show that his evidence at trial was false or unreliable. It is, no doubt, unfortunate that the matron whom he said in 2003 he had told of his abuse, has died; but that can hardly affect the reliability of his evidence; if the jury had heard defence counsel putting that to PD, they would either have concluded that his telling the matron supported his evidence or that he was inventing the incident when he told Mrs Roberts about it. PV: subsequent application for compensation shows a motive to lie (Ground 4) The only difference between this ground and the previous ground is that PV did not claim to be ignorant of her possibility of compensation but merely stated that she did not intend to claim it. She in fact sent a claim to CICA 17 days after trial on a form which she must have previously received and, in due course, she obtained an award in the sum of £16,500. There is thus no difference of substance between her position and that of PD and this ground of appeal is dismissed for the same reason. We decided to admit the evidence of the number of telephone messages left for the appellant by PV at Parkside since it has emerged since the trial that there were more of these than had been originally thought. This fact does not, however, cause us to think that the convictions in relation to PV are unsafe. PV had denied making any calls (Summing-up 36B). It was known that there were in fact some calls and that fact was put to her and referred to by defence counsel in his speech (888F) and the judge in his summing-up (57D and 59E). The fact that it now transpires there were more calls than previously thought is of no consequence. PV was also cross-examined about her straitened financial circumstances, her failure to mention her abuse at earlier stages in 1997 and March 1998 when she made allegations in respect of other individuals and her previous history. All these matters were before the jury; yet they decided she was a witness of truth. The convictions in relation to her are not unsafe. JA: his retraction and diary evidence (Grounds 5 and 6) The convictions in relation to JA are rather different, although we do not consider the diary evidence to be of any consequence. We have already expressed our reservations about admitting the evidence of Mr Rose and Mr Saltrese about JA's retraction of his evidence at trial. We have nevertheless decided that we ought to admit the evidence of that retraction as contained in his signed statement. In most cases this court would expect a victim, who sought to retract evidence which he had given at trial, to come to court and explain why he gave evidence which he now says was untrue. As a prisoner serving a life sentence, an order could be made for his production but the court would have no effective sanction over him, if he were produced and continued to decline to give evidence. This matter was raised before the court on 30th January 2004 when Mr Jennings told the court, without dissent from Ms Loftus, that an approach to JA on behalf of the Crown had been made and that JA had refused to co-operate. Thus the current position is that he has refused to confirm or deny that he retracts his evidence. This parallels the position before trial when, having made an initial statement to the police, he sought to retract it. In the event, however, he did give his evidence to the court. The court is therefore left in a state of complete uncertainty on the vital question whether his evidence at trial was reliable. All that can be said is that JA has had every opportunity to come to court and support the evidence he gave at trial but he has declined to do so. In the peculiar (and, we believe, unprecedented) circumstances of this case, we have decided that we cannot be sure that the appellants' convictions on the counts relating to JA are safe. It follows that those convictions which together carried a sentence of 4 years imprisonment will be quashed. Conclusion Since it has never been suggested that any of the complainants have colluded together and since it was never suggested either that the jury could use a conviction on any count in relation to any one complainant as support for convicting the appellant on any count relating to any other complainant, it does not seem to us that the unsafety of the conviction in relation to the counts concerning JA can have any effect on the safety of the convictions in relation to the other complainants. Mr Jenning's argument to contrary effect must be rejected. It follows that the appellant's sentence will be reduced from 14 years to 10 years imprisonment. To that extent his appeal is allowed.

Lord Justice Auld : The appellant, Mrs Frances Muriel Street, appeals from a decision of the Employment Appeal Tribunal affirming the determination of the Sheffield Employment Tribunal turning on the meaning of the requirement of "good faith" in making disclosures in the public interest that are "qualifying" disclosures under section 43B of the Employment Rights Act 1996 ("the 1996 Act"), and, therefore, "protected" disclosures under sections 43A and 43C to 43H of the Act. Dismissal of a worker on account, or principally on account, of him having made such a protected disclosure is, by section 103A of the 1996 Act, deemed to have been an unfair dismissal for the purposes of that Act. Those provisions were inserted in a new Part, Part IVA, of the Act by section 1 of the Public Interest Disclosure Act 1998, the purpose of which is clearly stated in its long title: "An Act to protect individuals who make certain disclosures of information in the public interest; to allow such individuals to bring action in respect of victimisation; and for connected purposes." They relate to "any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show" among other things the commission or likely commission of a criminal offence or a failure or likely failure by a person to comply with any legal obligation to which he is subject (Section 43A and 43B(1) (a) and (b)). Section 103A of the 1996 Act provides in effect for an "automatic" entitlement to be regarded as unfairly dismissed for the purpose of the Act if the reason, or if there is more than one, the principal reason, for the dismissal is that he made what the Act defines, in section 43A, as a "protected disclosure", that is, one of various sorts so specified in section 43B, the degree of protection qualifying for the purpose varying according to different circumstances specified in sections 43C to 43H. It should be noted that if a disclosure does not qualify for protection, that is, an automatic entitlement to be regarded as unfairly dismissed, the worker is still entitled to pursue his claim for unfair dismissal before an Employment Tribunal under Chapter 2 of Part X of the 1996 Act in the ordinary way. In this case Mrs Street, who had worked as an administrator for the Derbyshire Unemployed Workers Centre ("the Centre") from 1989, was dismissed by the Centre in January 2001 after making a series of allegations against the manager of the Centre. She made a claim to an Employment Tribunal maintaining that she was entitled to be regarded as unlawfully dismissed under section 103A. The Tribunal dismissed her claim, holding that, in making the disclosure, she had lacked the good faith required under section 43C(1) or 43G(1)(a). The Employment Appeal Tribunal upheld that ruling and remitted the case back to the same Employment Tribunal for it to consider a claim of "ordinary" unfair dismissal. The scheme of the "whistle-blowing" provisions in the 1996 Act is to encourage and protect employees to, and who, report concerns about malpractice in the work-place and elsewhere. The Act provides a three tiered disclosure regime under which, if the "whistleblower" is to secure the automatic protection of section 103A, his responsibility for justifying his disclosure is set progressively higher according to the distance of the person to whom he makes it from the main subject or object of his complaint. In all of them, save for section 43D – disclosure to legal adviser - the minimum requirement for protection is that the disclosure is made "in good faith". Thus, in section 43C, all that a worker who makes a disclosure to his employer or to another responsible person, or under section 43E – disclosure to a Minister of the Crown - has to do to qualify to for automatic protection is to show that his disclosure was made "in good faith". One of the disclosures under consideration in this case was made to a member of the Centre's Management Committee, and was thus a candidate for protection under section 43C. The second tier of disclosure, in which greater justification is required for protection, is that provided by section 43F - disclosure to a prescribed person – where, in addition to showing that the disclosure was made "in good faith", the worker must show that he reasonably believed that the malpractice of which he complained falls within the description of the matters in respect of which that person is prescribed and that his complaint is "substantially true". None of Mrs Street's disclosures under consideration in this case falls within this category. The third tier of protection, with which this appeal is mainly concerned, is that provided for in section 43G – "Disclosure in other cases" - where the "whistleblower" has to do much more to justify his automatic protection.[1] In addition to showing that he made the disclosure "in good faith" under section 43G(1)(a), he must show that it was made: i) in the reasonable belief that the information disclosed, and any allegation contained in it, were substantially true" (section 43G(1)(b)); ii) it was not made for purposes of personal gain" (section 43G(1)(c); iii) satisfaction of any one of a number of specified conditions going to the worker's reasonable belief that he would suffer detriment or that evidence of the subject matter of his complaint would be concealed (section 43G(1)(d)); and iv) "in all the circumstances of the case, it was reasonable for him to make the disclosure" (section 43G(1)(e)), in the determination of which, regard must be had to a number of factors in a non-exhaustive list in section 43G(3), including the identity of the person to whom the disclosure was made, the seriousness of the failure complained of and whether it was continuing or was likely to continue. It is plain from that summary of the relevant provisions that; 1) the conditions in section 43G(1) are cumulative, that is, that a disclosure is only a "qualifying disclosure" if all of them are met; 2) the conditions in section 43G(2) are disjunctive, that is, it is sufficient if any one of them is met; 3) there is some overlap between them all; and 4) in making separate and cumulative provision in section 43G(1) for "good faith" in (a), reasonable belief in the truth of the disclosure in (b) and reasonableness of the disclosure in all the circumstance in (e), the draftsman has allowed for circumstances in which the disclosure, though made with reasonable belief in its truth, would not qualify for protection because it was not made in good faith and/or reasonably. Looking at the provisions overall, Mummery LJ has given the following useful narrative account of their requirements in paragraph 4 of his judgment in ALM Medical Services v Bladon [2002] EWCA Civ 1085, with which Sir Andrew Morritt V-C and Rix LJ agreed: "The provisions can only be invoked if the relevant disclosure satisfies certain requirements. In outline they are as follows: i) A disclosure of information only qualifies for protection if, in the reasonable belief of the worker making the disclosure, it tends to show one or more things specified in section 43B(a) to (f); for example, that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject; or that the health or safety of any individual has been, is being or is likely to be endangered. ii) The disclosure must be made in accordance with the provisions of ss 43C to 43H: for example, the worker must make the disclosure in good faith to his employer (s 43C). iii) Disclosure by a worker 'in other cases' may be also protected under s 43G, if certain cumulative requirements are met: it must be made in good faith, he must reasonably believe that the information disclosed, and any allegation contained in it, are substantially true, he must not make the disclosure for the purposes of personal gain. iv) In such 'other cases' one or more of the conditions set out in section 43G(2) must also be met. They require that at the time he makes a disclosure, the worker reasonably believes that he will be subjected to a detriment by his employer if he makes a disclosure to his employer or that he reasonably believes that it is likely that evidence relating to the relevant failure will be concealed or destroyed if he makes a disclosure to his employer, or that the worker has previously made a disclosure of substantially the same information to the employer. v) There is also a requirement that, in all the circumstances of the case, it is reasonable for the worker to make the disclosure. Section 43G(3) sets out the factors to which regard must be had, in particular, in determining whether it is reasonable for the worker to make the disclosure: e.g. the identity of the person to whom disclosure is made, the seriousness of the relevant failure, whether the relevant failure is continuing or is likely to occur in the future and any action which the employer, to whom previous disclosure was made, has taken or might reasonably be expected to have taken as a result of the previous disclosure." The Facts Mrs Street began employment with the Centre in May 1989 and was dismissed on 30 January 2001. She was initially employed as a part-time administrative assistant, and from 1993 onwards as a full-time administration worker. The Centre is a voluntary non-profit-making organisation providing advice and assistance to unemployed, unpaid or low-paid people in North East Derbyshire. The management of the Centre is conducted by a Management Committee made up of persons, not employed by it, but who are elected or co-opted onto the Committee by the various bodies that fund it. Those include the Chesterfield Borough Council ("the Borough Council") and the North East Derbyshire District Council ("the District Council"). At all relevant times, the co-ordinator (effectively the manager) of the Centre was Mr Colin Hampton. His assistant was a Mr Pemberton, and there were five other paid staff, including Mrs Street. On 22nd May 2000 Mrs Street wrote to the Treasurer of the Borough Council, a Mr Richard Earlam, making various allegations against Mr Hampton, a disclosure within section 43G. She headed her letter "Private and Confidential under Whistle Blowers Legislation", and alleged that: i) Mr Hampton had committed a fraud in setting up an allegedly secret account, namely the Chesterfield and District Trade Union Council ("TUC") Contingency Account into which some £16,000 had allegedly been transferred by the Trade Union Safety Team ("TRUST") of which Mr Hampton was Treasurer, so that, it was alleged, it would appear for the purposes of any means tested funding that TRUST had fewer assets than was the case. This allegation had been made earlier in March 2000 by a Mr Richard Easson, former Treasurer of the TUC, at the annual general meeting of the TUC attended by Mrs Street. The TUC was a separate organisation from the Centre, but the Centre had been established by the TUC and both organisations shared the aims of the wider Labour movement. ii) Mr Hampton had made trips abroad during his working time for the Centre, but for the benefit of other organisations. Again, it appears that this allegation had been made before, this time in an anonymous letter of November 1999, written by a Mr French to Mr Earlam, making various allegations against Mr Hampton. The Centre, in response to that letter, had called upon Mr Hampton to respond to the allegations, and he had done so by a letter of 10th January 2000. In the light of his explanation, the Centre had taken no further action. iii) Mr Hampton had frequently instructed Mrs Street to do work for other organisations in her normal working hours for the Centre. Mr Earlam responded by letter of 25 May 2000. He stated that it would be difficult for the Borough Council to investigate the allegations because it did not have powers of entry or inspection of documents. He suggested that her letter could be shown to the Chairman of the Centre's Management Committee, Councillor Kendellen, or that he, Mr Earlam, could raise the issues with Councillor Kendellen on a non-attributable basis. Mrs Street, in her reply of 19 June 2000, rejected his suggestions, stating that she had no confidence in the Centre's Management Committee. She also referred to Mr Hampton's recent barring of District Councillor Patricia Williams from meetings of the Centre's Management Committee (but of which she remained a member), for having allegedly breached the Centre's equal opportunities policy and also complained that he had used an item of correspondence against another employee, Mr Derek Skinner, in breach of the Data Protection Act 1998. Mr Earlam's response was to suggest that they should meet, but she declined to do so. In the latter part of June 2001, Mrs Street showed Councillor Williams copies of the two letters she had written to Mr Earlam, a disclosure falling within section 43C of the 1996 Act as Councillor Williams had been a member of the Centre's Management Committee. She also showed Councillor Williams a copy of what purported to be a report of the Centre's staff meeting of 9 June 2000. That report recorded an incident during the meeting when a volunteer, Sarah Roy, had behaved in a way demonstrating disrespect towards persons with learning disabilities. In her note Mrs Street commented that she found it strange that Mr Hampton had not remonstrated with Ms Roy over the incident, and contrasted his treatment of Councillor Williams in barring her from the Centre for alleged comparable conduct, namely her harassment of a Mr Skinner's estranged partner (a matter to which the Employment Tribunal was to make express reference in its extended reasons for its determination). At a meeting of the Centre's Management Committee on 11th October 2000, the Vice-Chairman, Mr Johnson, reported the allegations of impropriety against Mr Hampton. The Committee resolved on an investigation to be carried out by an independent person, namely, Mr John Burrows, a Councillor of the Borough Council and Chairman of its Standards Committee. The Centre then invited Mr Burrows to conduct the investigation, but did not do so in writing and gave him no specific terms of reference. Mr Burrows investigated three separate issues, the first two arising out of Mrs Street's section 43G disclosures to Mr Earlam, namely the alleged use by Mr Hampton of work-time for the Centre when abroad and the issue of the Centre's staff being used for non-Centre work, and the third, Mrs Street's section 43C disclosure to Councillor Williams, in her suggestion of his double standards in his implementation of the Centre's Equal Opportunities Policy. The Centre did not instruct Mr Burrows in relation to the allegation of fraud - apparently that was considered to be a matter for the TUC. Mrs Street declined Mr Burrows' request to interview her for the purpose of his investigation. His report exonerated Mr Hampton and was critical of her for failing to co-operate with the investigation her allegations had prompted. He described her as being at best misguided and at worst malicious. He stated that the allegations were unfounded and possibly required serious disciplinary proceedings to be taken against her. Mr Burrow's report was presented to the Centre's Management Committee at a meeting on 18 December 2000, at which the Committee seemingly concluded that Mrs Street's allegations against Mr Hampton were unfounded. By letter of the same date, the Centre's Committee's Assistant Co-ordinator, a Mr Pemberton, wrote to her suspending her from work pending an investigation of the "serious matters" to which Mr Burrows had referred. In a subsequent letter, Mr Pemberton invited her to a "fact-finding" interview on 11 January 2001. She attended the interview with her union representative and gave an explanation for her disclosures to Mr Earlam and Councillor Williams and for her refusal to co-operate with Mr Burrow's investigation. She said that she had gone to Mr Earlam, as Treasurer of the Borough Council, and to Councillor Williams, a member of the Centre's Management Committee, because she had feared that otherwise there would be a cover-up and that she would be victimised. And she said that she had not co-operated with Mr Burrow's investigation because she had not regarded him as truly independent, and because she thought of him as a friend of Mr Hampton. On 25th January 2001 Miss Street attended, again with a union representative, a disciplinary interview at the Centre. Following that interview, Mr Pemberton wrote to her informing her that the Centre had summarily dismissed her for gross misconduct and breach of trust on the basis of her "unfounded and libellous" allegation against Mr Hampton and her refusal to co-operate with Mr Burrows' investigation. Mrs Street's internal appeal against that dismissal was ultimately unsuccessful. Prior to its determination, she sought, in early February 2001, interim relief from the Nottingham Employment Tribunal maintaining that she had been unfairly dismissed on account of her disclosures and that she was entitled to automatic protection from unfair dismissal under sections 43C, 43G and 103A of the 1996 Act. The Employment Tribunal's Determination The Employment Tribunal found that Mrs Street's various disclosures to Mr Earlam and Councillor Williams were qualifying disclosures under section 43B(1)(b) of the 1996 Act, as they were disclosures that she had reasonably believed tended to show that Mr Hampton had failed to comply with legal obligations to which he was subject, namely his contract of employment with the Centre. The Tribunal then considered whether those qualifying disclosures became protected disclosures under any of the sections 43C to H. It held that the disclosure to Councillor Williams fell to be considered under section 43C (disclosure in good faith to employer or other responsible person) and those to Mr Earlam, under section 43G (disclosure in good faith in other cases not covered by section 43C-F, but subject to the additional requirements set out in section 43G(1)(b) to (e) that I have mentioned). The Tribunal concluded that none of Mrs Street's three disclosures was protected, because none had been made in good faith. In relation to her two disclosures to Mr Earlam, it found that, notwithstanding its finding that she had not made them in good faith (a), she had satisfied the other requirements of the section, namely she had reasonably believed in the substantial truth of her allegations (b), she had not made the disclosures for personal gain (c), she had satisfied one of the conditions in section 43G(2), namely that she had reasonably believed she would be subject to a detriment if she had reported the matters to her employer (d), and that in all the circumstances it had been reasonable of her to make the disclosures (e). Thus, as in the case of her disclosure to Mrs Williams, her claim that her disclosures to Mr Earlam were protected foundered on the Tribunal's finding that she had not made them in good faith. On the issue of good faith, the critical issue for the Tribunal was, therefore, what exactly is meant by that requirement, common to all, save one, of the forms of protected disclosure provided for in section 43C-H, and what, if anything, it adds to the requirement of reasonable belief in its substantial truth in section 43F(1)(b)(ii) and 43G(1)(a) and, in the latter case, to the other requirements specified in section 43G(1), in particular, not for personal gain (c) and reasonableness (e). Mrs Street's case was that good faith simply meant "honestly" and added nothing to that concept, where, in addition, a reasonable belief in the substantial truth of the allegation is required. The Centre's case was that the requirement of good faith in those provisions must require something more or different from a reasonable belief in the truth of the allegations, as otherwise there would be no need for its inclusion in them. The Tribunal clearly took the view that, although there was some overlap between the requirements of good faith and of reasonable belief in the honesty of the content of a disclosure, that of good faith did add something, namely a consideration of motive. Having taken into account the circumstances surrounding Mrs Street's allegations, including their timing and her failure to co-operate with the later investigation, it concluded that none of them had been made in good faith, but had instead been motivated by her personal antagonism towards Mr Hampton. It, therefore, dismissed her claim to automatic protection under section 103A from dismissal. This is how it approached that matter of law in paragraph 13(a) of its extended reasons: "We note that … good faith is the first matter which is required. It seems to us that there must be a certain degree of overlap between the concept of good faith in Section 43G(1)(a) and the reasonable belief in the substantial truthfulness as set out in Section 43G(1)(b). We find that applicant's allegations were as far as she was aware, true and in that sense we find that she has complied with sub-section (1)(b). The question of how that information is used is of course a separate matter going back to the issue of good faith. There has been no suggestion that the applicant made the disclosure for personal gain. We then consider the matters set out in Section 43G(2) of which really the only relevant part is sub-section '(a) that, at the time he makes the disclosure the worker reasonably believes that he will be subjected to a detriment by his employer if he makes a disclosure to his employer …'. We find that such was the applicant's view of Mr Hampton that she did believe that a disclosure made to her employer would at best be ineffective and at worst would lead to what she believed had happened to others namely that if one was not for Mr Hampton one was perceived as being against him. Turning to Section 43G(3) we find that a disclosure to someone in Mr Earlam's position namely Treasurer of the Local Authority which was a major founder of the respondent can properly be regarded as reasonable. Accordingly, in general terms we find that the applicant satisfies the vast majority of the conditions imposed by section 43G." Before moving on to the Tribunal's consideration of good faith, I should say something about its favourable finding to Mrs Street on the issue of reasonableness ((e)) and, for this purpose, set out some of the potentially material factors in the non-exhaustive list of factors to which it was required, by section 43G(3), to have regard: "… (a)" the identity of the person to whom the disclosure is made, (b) the seriousness of the relevant failure, (c) whether the relevant failure is continuing or is likely to occur in the future, …" It will be noted from the concluding words of the Tribunal's reasoning on the issue of reasonableness that the only matter to which it appears to have had regard was the identity of the recipient of her disclosure, namely the reasonableness of making it to someone in Mr Earlam's position as the Treasurer of the Local Authority as a major funder of the Centre, as if that was enough for the purpose. It may be that it overlooked the fact that it was required, in the words of section 43G(1)(e), to have regard to "all the circumstances of the case", not just those potential candidates listed in section 43G(3). It may be that it confused its enquiry as to reasonableness under those provisions with that under section 43G1)(d) and (2) where satisfaction of any one of the conditions in section 43G(2) would suffice. It may be that it took the view that, although it had found, in considering the issue of good faith, that Mrs Street had made her attack on Mr Hampton in bad faith fuelled by her personal antagonism to him, it had to put that out of its mind when considering whether her conduct was "in all the circumstances of the case … reasonable …" If so, as will appear, I consider that it erred in those respects. The Tribunal then went on to consider on the evidence before it, whether Mrs Street had acted in good faith when she wrote her two letters to Mr Earlam. In paragraph 13(b) of its extended reasons, it found that she had not acted in good faith for the following reasons: 1) her second disclosure to Mr Earlam contained a passing reference to something that she knew to be untrue (i.e. not sufficient to affect the allegation's "substantial" truth for the purpose of section 43G(1)(b)); 2) many of the matters about which she had complained had occurred or had ceased to occur many years before; 3) she had learned of the secret fund allegation in March 2000, but had done nothing about it until her first disclosure letter on 22nd May 2000; 4) her perception that some of her colleagues had been got rid of by Mr Hampton; 5) and her failure to cooperate with Mr Earlam or the Centre or Mr Burrows' investigation after having made her disclosures. Having set out those matters, the Tribunal expressed its conclusion in the following terms: "Accordingly in those circumstances we conclude that none of the disclosures made can be regarded as made in good faith but were instead motivated by the applicant's personal antagonism towards Mr Hampton fuelled in particular by his perceived treatment of Mr Skinner's and Councillor Williams' cases. It therefore follows that the applicant has not made a Protected Disclosure and accordingly that cannot be the reason for her dismissal…." The Employment Appeal Tribunal The Employment Appeal Tribunal upheld the Employment Tribunal's holding and analysis at paragraphs 25 to 27 of its decision: "25. As to good faith, we hold that there is a compelling finding of fact in the passage…[i.e. that in paragraph 29 above]. The Tribunal clearly had in mind the competing situations, that is, a faultless good faith disclosure and a disclosure made purely out of personal antagonism. It decided to reject the former description and accept the latter. There can be few areas on which the judgment of an Employment Tribunal is more fact-sensitive than in conducting such an exercise. As a matter of law, we see no question arising about that particular holding. Thus, it destroys the case (which would otherwise have been perfectly made by the Applicant) for a successful claim under section 103A. 26 We reject the contention that the simple finding that the Appellant believed the material, as far as she was aware, as being a complete answer. There is nothing inconsistent in an Applicant holding such a belief that the material is true and yet promoting it for reasons which are based upon personal antagonism. It seems to us that what Lord Denning had in mind, albeit in a different context [Secretary of State for Employment v ASLEF (No 2) [1972] 2 QB 455, at 492B-E (see paragraph 41 below)], was that the motive for which a person does a particular act can change its character from good to bad, and so here. 27. We do not think that the slight overlap that there may be between section 43G(1)(a) and (b) and section 43[G](3) destroys the essential focus, recognised as fundamental in this case, on whether the Applicant acted in good faith. Thus, it is important for the Tribunal to assess motive and, as often, this matter is one of fact for it to determine in its own appreciation. …. 29. Thus, the finding of lack of good faith in this case is one which was open to the Tribunal, having directed itself correctly as we hold. We agree that good faith involves the deployment of an honest intention and, just as in public law, actions of a person can be vitiated if a purpose is advanced not in accordance with the statute, here section 43G. [my emphasis] "30. It is not, in our view, the purpose of the Public Interest Disclosure Act to allow grudges to be promoted and disclosures to be made in order to advance personal antagonism. It is, as the title of the statute implies, to be used in order to promote the public interest. The advancement of a grudge is inimical to that purpose. …" It should be noted that the Tribunal, in paragraph 29, was content with the proposition that good faith involves the deployment of an honest intention. The Submissions Mr Joel Donovan, on behalf of Mrs Street, appeared at first in his submissions to accept that the requirement of good faith in section 43G(1)(a) is distinct from that of reasonable belief in the truth of disclosure in section 43G(1)(b). The distinction that he purported to draw was that, in addition to a reasonable belief in the truth of the disclosure, for it to be made in good faith a worker must make it "honestly" or with "with honest intention". But when pressed by the Court in the course of his submission as to the meaning of "honestly" or "with honest intention" in this context and its distinction, if any, from reasonable belief in the truth of the information disclosed, he said that they are virtually "indivisible" in meaning. He suggested that, if motivation is relevant, it would have to be both malicious and predominant to amount to bad faith. However, he submitted that the Employment Tribunal, in finding that Mrs Street had believed in the truth of her allegations, accepted "in effect" that she had acted "honestly" or "with honest intention" and, thereby, in good faith. Mr Donovan suggested that the Tribunal, in going on to find that nevertheless, Mrs Street lacked good faith, simply illustrated that it had wrongly considered "in good faith" to mean something more than or different from "honestly" or "with honest intention". He focused on the implicit reference to motive by the Employment Tribunal, in its extended reasons, namely "that how … [the] information is used is … a separate matter going back to the issue of good faith". He maintained that, whilst such a consideration might relate to the requirement of reasonableness in section 43G(1)(e) on which the Tribunal had expressly found in Mrs Street's favour, it was a distinct issue from "with honest intention", and the Tribunal had wrongly ignored or muddled the distinction. In his submissions, Mr Donovan drew on and adopted the written submissions to the Court of Public Concern at Work ("Public Concern"), which it made, with the permission of the Court, as an interested party. Public Concern is an independent charity and a legal advice centre established in 1993 specialising in advising both employees and employers on "whistleblowing". It is popularly known as "the whistleblowing charity". The main thrust of its submission on this appeal, for which the Court is grateful, was that it would seriously damage the purpose of the 1998 Act and the protection it provides in the public interest to "whistleblowers" if ulterior motivation, in particular the promotion of a grudge, were to deprive a disclosure of the quality of having been made in good faith. It urged the Court to look at the general application of the Act, in particular, the protection that it provides against pre-dismissal reprisals. Its primary submission was that a disclosure made in good faith under the Act means simply one that is made honestly, that is with a view to something being done about the failure disclosed, and that where it is made with mixed motives, the good faith requirement is satisfied where it is made honestly in that sense even if accompanied by an ulterior motivation, such as a personal grudge. Alternatively, Public Concern suggested that, if an ulterior motive can vitiate the requirement of good faith, even where the disclosure is made honestly in the above sense, it should only have that effect where: 1) it is so "wicked or malicious" that it approaches "dishonesty"; and 2) it is the predominant motive for the disclosure. Whilst Mr Donovan had reservations that the threshold to bad faith should be put as low as "approaching" dishonesty, he was prepared to accept Public Concern's propositions as a "fall-back" submission should he fail in his primary one that motivation is irrelevant to the issue of good faith. At the very least, he argued, bad motivation should only negative good faith where it is the predominant motivation – and substantially so. Here, he said, the Employment Tribunal, at the very least, erred in failing to apportion in this way between good and bad motivations and in taking an "all-or-nothing" approach. He relied in that respect on the express requirement in section 43G(1)(c) that the disclosure, if it is to be protected, must not be made for purposes of personal gain. He argued that a provision referring to such specific form of ulterior motive would be otiose if motive were relevant to the issue of good faith in section 43G(1)(a). Public Concern advanced the same argument in its written submission to the Court. However, as Mr Donovan acknowledged, motivation is highly relevant to the requirement of reasonableness in section 43G(1)(e). Indeed, he conceded that if Mrs Street had fulfilled all the requirements, in which he substituted the words "honesty" or "with honest intention" for in good faith, but had made the disclosure out of pique or a grudge, as the Employment Tribunal found, she still risked being found to have acted unreasonably within section 43G(1)(e), having regard to the non-exhaustive list of factors in section 43G(3). Yet, as he acknowledged, albeit softly, the Tribunal had strangely absolved her of any unreasonableness, whilst at the same time found that she had not acted in good faith because of her personal antagonism towards Mr Hampton. In making that submission, he acknowledged that the Tribunal may have muddled the two requirements of good faith and reasonableness or may not have considered the issue of reasonableness under section 43G(1)(e) and (3) sufficiently widely. In short, he acknowledged that an ulterior motive could be a factor going to the reasonableness of disclosure and that, therefore, the best Mrs Street could hope for if she succeeded in this appeal on the good faith issue would be a remission of the issue of her disclosures to Mr Earlam under section 43G to the Employment Tribunal to reconsider the matter under the heading of reasonableness. (No such need for remission would arise in the case of the disclosure to Mrs Williams because that is governed by section 43C, which does not include a requirement of reasonableness.) However, Mr Donovan maintained that there was a separate and important question as to the meaning of the requirement of good faith in these provisions that went beyond its application along with the clutch of other cumulative requirements in section 43G, namely whether it amounts to a requirement of "purity of motive". Such an interpretation, he submitted would significantly weaken – or indeed subvert – the purpose of the 1998 Act from which the provisions in the 1996 Act derive, of protecting those who make disclosures of information in the public interest from victimisation. He suggested that it cannot be a proper interpretation of the provisions to hold that a "whistleblower" loses that protection by reason of bad motivation, even in tiny part, towards his employer, however serious the failure disclosed, however understandable his antagonism and however reasonable it may have for the disclosure to have been made to someone other than the employer. Mr Colin Bourne, on behalf of the Centre, submitted that the separate but cumulative imposition by section 43G(1) of, inter alia, the requirements of in good faith and reasonable belief in truth, means that in good faith must mean something additional to or other than a reasonable belief in the truth of the information disclosed. He argued that, having regard to the nature of the wrongdoing in respect of which disclosures are specified in section 43B as qualifying for protection, the requirement of good faith must mean that the disclosure should be made for the purpose of disclosing one or more of those wrongdoings, not for some other ulterior motive such as personal antagonism to the person the subject of the disclosure, as the Employment Tribunal had found in this case. He submitted, therefore, that the Employment Appeal Tribunal correctly did not interfere with the fact-finding function of the employment tribunal. As to the written submissions of the Public Concern at Work, Mr Bourne suggested that they overstate the risk of undermining the protection Parliament intended to confer on those making disclosure in the public interest. He said that where, as here, an Employment Tribunal has found that the worker, in making the disclosure(s) was motivated "by … personal antagonism" towards the person, it does not advance the public interest to protect such conduct. Conclusions Shorn of context, the words "in good faith" have a core meaning of honesty. Introduce context, and it calls for further elaboration. Thus in the context of a claim or representation, the sole issue as to honesty may just turn on its truth. But even where the content of the statement is true or reasonably believed by its maker to be true, an issue of honesty may still creep in according to whether it made with sincerity of intention for which the Act provides protection or for an ulterior and, say, malicious, purpose. The term is to be found in many statutory and common-law contexts, and because they are necessarily conditioned by their context, it is dangerous to apply judicial attempts at definition in one context to that of another. This is so even in closely related legislation such as the Sex Discrimination Act 1975, the Race Relations Act 1976 and the Disability Discrimination Act 1995, in which sections 4(2), 2(2) and 55(4) prevent as being discriminatory for the relevant purpose treatment prompted by an allegation that is "false and not made in good faith". In such a formulation which is concerned with the stark difference between truth or falsity, not, as here "reasonable belief in …[its substantial truth]", the notion of "good faith" is the only vehicle for considering the honesty or dishonesty of the allegation. For those reasons, I do not consider that it is helpful to turn in this context to some of the more distant examples of the use of the expression that have been cited to us, including: In Secretary of State for Employment v ASLEF [1972] 2 QB, 455, CA, where the issue was whether ASLEF had caused or would cause its members to breach their contracts of employment under the Industrial Relations Act 1971 by "working to rule", per Lord Denning MR, at 492 B-E, and Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd & Ors [1991] 2 All E 597, in the wholly different context of whether a company's refusal to consent to an increase in pension benefits was subject to an extra-contractual obligation to act in good faith, per Sir Nicholas Browne-Wilkinson V-C, 606d-e, 607d-f and 608d-e. I should, however, say something about one other example, Central Estates (Belgravia) Ltd v Woolgar; Liverpool Corporation v Husan [1972] 1 QB 48, CA, which concerned the meaning of "in good faith" in the Leasehold Reform Act 1967 on the issue whether motivation is relevant to whether something is done or said in good faith, Lord Denning's words in that context, at 55, are a frequent point of reference: "… under this statute a claim is made 'in good faith' when it is made honestly and with no ulterior motive. …" However, the issue in that case was whether claims by two tenants under the 1967 Act to acquire the freehold and an extended lease of their respective properties were made in good faith so as to enable them to defeat their respective landlords' claims for re-entry and forfeiture for breach of covenant under their leases. The issue was, therefore, the good faith of a claim, which does not necessarily involve consideration of the truth of any statement of fact in making it, and where motive, or honesty of motive was all. It is thus understandable that Megaw LJ in that context equated "in good faith" with "honestly", saying, at 57: "The words 'in good faith', in my opinion, mean 'honestly'. A claim is not made honestly if it is made with the intention of committing a criminal offence, or of facilitating the future commission of a criminal offence. It does not make it any the less a dishonest claim because the intended criminal offence is itself not what is called an offence involving dishonesty." Whereas in Mrs Street's case, the issue is the good faith of a disclosure containing a statement of fact - an allegation. If it falls within section 43C it involves no separately identified issue as to its truth or reasonable belief in its truth or other indicia of honesty. If it falls within section 43G there is required, in addition to good faith, reasonable belief in its truth, no motive of personal gain, on the contrary a good reason for not disclosing to the employer, and reasonableness. In short, these provisions may require Employment Tribunals on occasion to distinguish between good faith and honesty in a way not called for in Central Estates, notwithstanding Lord Denning's seemingly conjunctive rather than disjunctive use of the words "honestly and with no ulterior motive". I say "may" require such a distinction because where a statement is made without reasonable belief in its truth, that fact would be highly relevant as to whether it was made in good faith; see, for example, Darnton v University of Surrey [2003] IRLR 133, per Judge Serota, QC, at para 24, as indeed it would also be highly relevant as to its reasonableness. Mr Donovan accepted – indeed he prayed in aid - that degree of overlap between good faith, reasonable belief in substantial truthfulness and reasonableness in all the circumstances. But it does not necessarily follow that, where a statement is made in that belief, it necessarily follows that it is made in good faith or reasonably. Where, as in a statutory provision like section 43G(1), the parliamentary draftsman has included the notion of good faith among a set of cumulative conditions of the qualification in question, it is plain that he contemplated that the notion of good faith should be capable of adding, according to the circumstances, something to that of reasonable belief in truth, as Mummery LJ appears to have accepted in his analysis of these provisions in ALM Medical Services v Bladon, at para 4(iii) (see paragraph 11 above). It is noteworthy too that in section 43G, and also in section 43F, good faith is the first of the cumulative conditions stipulated. Nevertheless, giving focus to Mr Donovan's concern that some bad motivation, some personal antagonism towards the employer, could, under the banner of bad faith, deprive him of protection even if he met all the other requirements of section 43G, it is important to start as Public Concern have stressed, with the context of the 1998 Act, the purpose and long title of which, for convenience, I repeat: "An Act to protect individuals who make certain disclosures in the public interest; to allow such individuals to bring action in respect of victimisation; and for connected purposes." Public Concern, in its written submission, suggested that the practical difficulty posed by any suggestion that a grudge or personal animosity or other motive is a bar to protection would be to cause a worker, considering making a disclosure in the public interest, to fear that he might lose protection and discourage him from doing so. And, as it suggested, such a state of mind is often integral to claims of this sort. That is especially so, as a claim can only be brought under the Act once the worker making it has been dismissed, and it is, therefore, easy for his employer to identify and allege. However, the authorities that Public Concern cited in support of its contention are not in point. The first was In re A Company [1989] 3 WLR 265, which concerned a company's claim to restrain by way of interlocutory injunction a former employee from disclosing to a regulatory body its confidential material which he maintained showed impropriety by the company (see now, and cf, section 43J of the 1996 Act). The issue of motive arose not, as in Mrs Street's case, out of any conditional obligation imposed by law to make such disclosure in good faith, but out of an assertion inessential to the company's cause of action, based on the confidentiality of the information, that the former employee was motivated by malice. Scott J, as he then was, rejected the notion that either confidentiality of information or motivation of malice entitled the company to restrain disclosure of such information to a regulatory body, and, at 269, made the following comment on which Public Concern relied: "… It may be the case that the information proposed to be given, the allegations proposed to be made by the defendant to F.I.M.B.R.A., and for that matter by the defendant to the Inland Revenue, are allegations made out of malice and based upon fiction or invention. But if that is so, then I ask myself what harm will be done. F.I.M.B.R.A. may decide that the allegations are not worth investigating. In that case, no harm will have been done. Or F.I.M.B.R.A. may decide that an investigation is necessary. In that case, if the allegations turn out to be baseless, nothing will follow the investigation. And if harm is caused by the investigation itself, it is harm which is implicit in the regulatory role of F.I.M.B.R.A.. …" However, it seems to me that that comment was more of a practical observation on the facts of the case than a proposition of law. And even if could be regarded as such a proposition or a pointer to the law, it would be both obiter and would say nothing about the effect of ulterior motive for doing something which, if it is to have a specific legal effect, the law requires to be done in good faith. Equally uninstructive on the issue of good faith as it is raised in Mrs Street's case was Public Concern's reliance on British Steel Corporation v Granada Television [1981] AC 1096, HL, for the general proposition that the common law's underlying approach to public interest disclosures is that motive is generally irrelevant. On the broad point of construction by reference to the stated purpose of the 1998 Act, the reasoning of the Employment Appeal Tribunal, at paragraph 30 (see paragraph 30 above) is to the point. Its purpose is not to allow persons to advance personal grudges, but to protect those "who make certain disclosures in the public interest"; namely those specified in section 43B of the 1996 Act. And it has to be remembered that even if a worker might be deterred from making a relevant disclosure because of concern that his employer might raise against him a suggestion of bad faith in the sense of a mix of motives, including personal antagonism, or fails in his section 103A claim on that account, all is not lost. His automatic protection provided by that section is lost, but he can still maintain an "ordinary" claim for unfair dismissal against his employer in which a mix of motives may not be fatal to his claim. Turning more closely to the construction and effect of the cumulative conditions of protection set out in section 43G, even if one defines "in good faith" as requiring simply "honesty of intention", that still requires more than a reasonable belief in the truth of the allegations made. The draftsman must be taken to have intended some additional, even if partially overlapping, requirement with that of reasonable belief in the truth of the disclosure, when continuing in section 43G(1)(a) the requirement of good faith in the earlier provisions of Part IVA of the 1996 Act. As to overlap, I have already noted that the absence of a reasonable belief in the truth of a disclosure may be capable of indicating bad faith. Why else would a worker make such a disclosure if he did not reasonably believe in is truth? There is, as I have also noted, and Mr Donovan has acknowledged, scope for overlap between the requirement of good faith and that of reasonableness in section 43G(1)(e). There is a similar problem of overlap, which does not arise on the finding of the Tribunal in this case, namely that between a disclosure not made in good faith and one made for personal gain. Depending on the width of the construction of the latter and its nature in any particular case,[2] there is clearly scope for motivation of personal gain to negative good faith. But it may be a sufficiently justified motivation to pass the good faith requirement but not that of the absence of motivation of personal gain. So, depending on the outcome, it may be academic where personal gain is the, or the main, motivation for disclosure, whether it also serves to negative good faith – the disclosure loses its protection anyway. And here the specific requirement of the absence of a motivation of personal gain in section 43G(1)( c ) may not be otiose any more than that of reasonableness in section 43G(1)(e), depending on the circumstances, for example where the ulterior motive is not for personal gain and might be considered reasonable, but is not made for any of the purposes for which section 43B provides protection. It is against that large but not total overlap, or of "overkill", or sheer untidiness of drafting on the part of the parliamentary draftsman of section 43G, that the Court must consider the argument of Mr Donovan and Public Concern, that the requirement in section 43G(1)(c) of the disclosure not having been made for purposes of personal gain would be otiose if motive were relevant to the requirement of good faith. It follows that, in my view, section 43G provides a collection of partially overlapping requirements, any one of which, if not fulfilled, will defeat a worker's right to maintain that his disclosure is "protected" within the meaning of the Act. Whether, in the circumstances of any particular case, the claim is defeated on that account is essentially a matter for the Employment Tribunal to assess on a broad and common-sense basis as a matter of fact, in the light of each of requirements in paragraphs (1)(a) to (e) of the section. Whether it approaches the question through one or more than one of those requirements and whether or not they overlap is essentially a matter for its evaluation on the evidence before it. In considering good faith as distinct from reasonable belief in the truth of the disclosure, it is clearly open to an Employment Tribunal, where satisfied as to the latter, to consider nevertheless whether the disclosure was not made in good faith because of some ulterior motive, which may or may not have involved a motivation of personal gain, and/or which, in all the circumstances of the case, may or may not have made the disclosure unreasonable. Whether the nature or degree of any ulterior motive found amounts to bad faith, or whether the motive of personal gain was of such a nature or strength as to "make the disclosure for purposes of personal gain" or "in all the circumstances of the case" not reasonable, is equally a matter for its assessment on a broad basis. When I first drafted this judgment I was of the view that, in the case of the requirement of "in good faith" (I say nothing in this respect about motivation of personal gain because it is not an issue in the appeal), such an assessment should not, in my view, be cluttered with notions of predominance or degrees of predominance, as suggested by Public Concern and adopted by Mr Donovan as a "fall-back" submission. In each case the answer one way or the other might be a "judicial elephant" emerging from the Tribunal's consideration of all the evidence. I considered that it could be unhelpful, often unreal when the countervailing considerations are of quite a different nature, and unduly prescriptive to introduce into the exercise an explicit formula of the sort suggested by Public Concern that an ulterior motive should only negative good faith when it is so wicked and/or malicious as to be or to approach dishonesty and is the predominant motive for the disclosure. However, I began to have second thoughts when considering the sort of circumstances to which Employment Tribunals should have regard, and the possibly different weight it might have to attach to some of them, when conducting this imprecise exercise, especially having regard to the overlapping requirements whether a disclosure was made in good faith, not for personal gain and reasonably. Such an exercise could require the Tribunal to consider and evaluate the cumulative effect of a wide range of factors such as how serious and how wide-ranging are the effects of the failure, how old it is and the potential for disproportionate damage it could do to the employer whether the allegation turns out to be true or false. The Tribunal would also have to keep in mind what is common-place in such a context, that a failure or refusal by an employer to remedy a perceived failure of duty and/or injustice to a worker is often likely to engender in him an understandable resentment or antagonism that may grow if the matter is not remedied quickly. That, in itself, should not necessarily be regarded as negativing good faith if, when making the disclosure, the worker is still driven by his original concern to right or prevent a wrong. On further reflection, it seems more in keeping with the declared public interest purpose of this legislation, fair and a more useful guide to Employment Tribunals in conducting this sometimes difficult, sometimes straightforward, exercise – depending on the facts - to hold that they should only find that a disclosure was not made in good faith when they are of the view that the dominant or predominant purpose of making it was for some ulterior motive, not that purpose. I have also been prompted to that view by the analysis, to which Mr Donovan drew our attention, of Lord Diplock in Horrocks v Lowe [1975] AC 135, at 150, a case of defamation, of the state of mind required to constitute malice so as to deprive a defendant of the defence of qualified privilege: "Even a positive belief in the truth of what is published on a privileged occasion – which is presumed unless the contrary is proved - may not be sufficient to negative express malice if it can be proved that the defendant misused the occasion for some purpose other than that for which the privilege is accorded by the law. The commonest case is where the dominant motive which actuates the defendant is not a desire to perform the relevant duty or to protect the relevant interest, but to give vent to his personal spite or ill will towards the person he defames. If this be proved, then even positive belief in the truth of what is published will not enable the defamer to avail himself of the protection of the privilege to which he would otherwise have been entitled. There may be instances of improper motives which destroy the privilege apart from personal spite. A defendant's dominant motive may have been to obtain some private advantage unconnected with the duty or the interest which constitutes the reason for the privilege. If so, he loses the benefit of the privilege despite his positive belief that what he said or wrote was true. [my emphases] Judges and juries should, however, be very slow to draw the inference that a defendant was so far actuated by improper motives as to deprive him of the protection of the privilege unless they are satisfied that he did not believe that what he said or wrote was true or that he was indifferent to its truth of falsity. The motives with which human beings act are mixed. They find it difficult to hate the sin but love the sinner. Qualified privilege would be illusory, and the public interest that is meant to serve defeated, if the protection which it affords were lost merely because a person, although acting in compliance with a duty or in protection of a legitimate interest, disliked the person whom he defamed or was indignant at what he believed to be that person's conduct and welcomed the opportunity of exposing it. It is only where his desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that 'express malice' can properly be found." Now, I acknowledge that the fit is not exact between the circumstances in which, in defamation, malice may defeat a defence of qualified privilege and in which, in this legislation, want of good faith may deny a worker's disclosure of its protected status. First, in defamation, positive belief in the truth of the statement, whether reasonably held or not, suffices as a starting point. Second, malice is a sharper concept than bad faith and, on the whole, sets a higher threshold of proof than might be required for other or lesser forms of bad faith. Nevertheless, it seems to me a useful pointer for Employment Tribunals to look at Lord Diplock's analysis as he expressed in the first of the two paragraphs in that passage in his references to the "dominant motive". They should similarly, in my view, look for the "dominant" or "predominant" purpose of a disclosure when considering whether it was made in good faith. However, I would not go so far as to fine-tune that test by adopting the proposal of Public Concern and/or the "fall-back" submission of Mr Donovan that there should be high degree of predominance, possibly, as Mr Donovan suggested, expressed in minimum percentage terms. Nor, with respect, am I persuaded along that route by Lord Diplock's suggestion to like effect in the concluding words of second paragraph of the passage above that it is only when a defamer's. "desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that 'express malice" can properly be found" [my emphasis] I say that because that formulation seems to go further than his proposition of "dominance" or "predominance" of malicious motive in the first paragraph, and also because of what, depending on the facts, may often be the higher threshold necessary for the proof of malice in defamation than bad faith in this legislation. In my view, where, as here, the Employment Tribunal was driven on the evidence to conclude, as it did, that none of Mrs Street's disclosures "could be regarded as made in good faith, but were instead motivated by … [her] personal antagonism toward Mr Hampton", it is plain, as the Employment Appeal Tribunal stated in paragraph 25 of its judgment, that it found that such personal antagonism was her dominant, if not her sole, motive. In my view, the Employment Appeal Tribunal was right not to interfere with that finding. Looked at against the broader public policy interest behind this legislation, protection of such powerfully motivated disclosures could not be said in the circumstances to serve or encourage subversion of the Act's declared overall purpose of the Act of protecting those "who make certain disclosures of information in the public interest". Accordingly, I would dismiss the appeal. Lord Justice Jacob: I agree. Lord Justice Wall: I have had the opportunity of reading Auld LJ's judgment in draft, and I am in complete agreement with him that this appeal should be dismissed for the reasons he gives. I add a short judgment of my own largely because this appeal raises directly the important question of what is meant by "good faith" where it appears in Part IVA of the Employment Rights Act 1996 (ERA 1996). On this point we not only heard argument from the bar, but admitted a document from Public Concern at Work (colloquially known as "the whistle-blowing charity") to which Auld LJ refers at paragraph 34 of his judgment. I should, however, like to preface my remarks by expressing my gratitude to counsel on both sides (both of whom appeared pro bono) for the clear and helpful way they advanced their respective arguments. I am in no doubt at all that, on the facts of this case, the Employment Tribunal was entitled to reach the conclusion that the disclosures made by the Appellant were not made in good faith but were instead motivated by her personal antagonism towards Mr Hampton fuelled in particular by his perceived treatment of Mr Skinner's and Councillor Williams' cases. They were, moreover, in my judgment, entitled to reach that conclusion whilst at the same time making a finding that the Appellant reasonably believed that the information disclosed, and any allegation contained in it, were substantially true (ERA 1996, section 43G(1)(b)). Furthermore, in my judgment, the Tribunal approached the case in exactly the right way. Having recited the facts in some detail and with great care, they then set out the relevant sections of the Statute and proceeded to work their way through them. They asked, firstly: did the appellant make a protected disclosure or disclosures? They then continued: In order to assess this question, we direct ourselves that the scheme of the legislation is that we must first look to the content of what is disclosed (whether it is a qualifying disclosure) and then if appropriate consider the person or persons to whom the disclosure was made together with an assessment of the motive and means by which the disclosure is made. The Tribunal then proceeded conscientiously to perform that exercise. When they reached section 43G they found that the Appellant "in general terms satisfied the vast majority of the conditions imposed by section 43G". That, however, left good faith, which they then examined. They then gave clear reasons for their conclusion (identified in paragraph 3 of this judgment) that the Appellant was not acting in good faith. Auld LJ has summarised in paragraph 29 of his judgment the findings of fact they made in reaching that conclusion and which I need not repeat. The issue of whether or not a protected disclosure is made in good faith is, self-evidently and pre-eminently an issue of fact for the Employment Tribunal sitting as the industrial jury. Here, there was manifestly material upon which the Tribunal could make appropriate findings of fact: they did so, and explained why they did so. There is no suggestion that their findings were perverse. Accordingly, unless the Tribunal have committed an error in law in their application of the Statute, their decision is unimpeachable. For the Appellant, Mr Donovan's primary argument was that "in good faith" meant "honestly". For this proposition, he relied principally on the judgment of Megaw LJ in Central Estate (Belgravia) Ltd v Woolgar; Liverpool Corporation v Husan [1972] 1 QB 48 at 57. Accordingly, he submitted, once the Tribunal had found that the provisions of section 43G(1)(b) were satisfied, that should have been the end of the matter so far as good faith was concerned: a person who is acting honestly cannot be acting in bad faith. For all the reasons given by Auld LJ, I am unable to accept this argument in the context of section 43G of the 1996 Act. In my judgment it is manifest that a person may reasonably believe that the information disclosed and any allegation contained in it are substantially true, and still not make the disclosure in good faith. If good faith in section 43G meant simply a reasonably belief in the truth of the information disclosed, the inclusion of good faith in the check-list of factors contained in section 43G(1)(a) to (e) would be otiose. Moreover, good faith is a question of motivation, and as a matter of general human experience, a person may well honestly believe something to be true, but, as in the instant case, be motivated by personal antagonism when disclosing it to somebody else. If, however, good faith is not to be equated with honest belief in the truth of the disclosure, how is it to defined? This is the point which I have found most difficult in the case. I am firmly of the view that it is not the function of appellate courts to superimpose a gloss onto the plain words of a Statute. The mischief of such a course is obvious. Forensic attention thereafter tends to focus on the gloss rather than the words of the Statute, with the result that a body of jurisprudence swiftly develops on what is meant by the gloss. Like Auld LJ, therefore, my initial instinct was to treat the concept of good faith as a form of judicial elephant: difficult to define, but readily identifiable through the good sense and fact finding capabilities of Employment Tribunals. That would have been my preferred course, possibly leaving the question of mixed motivation in making a protected disclosure until it specifically arose for decision. Having listened to the argument, however, including Mr Donovan's adoption of the submission made by Public Concern at Work, and having read Auld LJ's judgment, I am reluctantly persuaded that this will not do, and that this court should address (albeit in a limited and cautious form) the extent to which mixed motivation can undermine the protection given to the disclosures identified in section 43B(1) of the 1996 Act. Part IVA of the 1996 Act protects the disclosure of information relating to the issues identified in section 43B. The primary purpose for the disclosure of such information by an employee must, I think, be to remedy the wrong which is occurring or has occurred; or, at the very least, to bring the section 43B information to the attention of a third party in an attempt to ensure that steps are taken to remedy the wrong. The employee making the disclosure for this purpose needs to be protected against being victimised for doing so; and that is the protection the Statute provides. Motivation, however, is a complex concept, and self-evidently a person making a protected disclosure may have mixed motives. He or she is hardly likely to have warm feelings for the person about whom (or the activity about which) disclosure is made. It will, of course, be for the Tribunal to identify those different motives, and nothing in this judgment should derogate from the proposition that the question for the Tribunal at the end of the day as to whether a person was acting in good faith will not be: did the applicant have mixed motives? It will always be: was the complainant acting in good faith? In answering this question, however, it seems to me that Tribunals must be free, when examining an applicant's motivation, to conclude on a given set of facts that he or she had mixed motives, and was not acting in good faith. If that is correct, how is it to be done? I can see no more satisfactory way of reaching such a conclusion than by finding that the applicant was not acting in good faith because his or her predominant motivation for disclosing information was not directed to remedying the wrongs identified in section 43B, but was an ulterior motive unrelated to the statutory objectives. It would, of course, be folly to attempt to list what could constitute ulterior motivation or bad faith. The present case provides one example. Ulterior motivation, I am satisfied, is something that Tribunals will be able both to identify and to evaluate on the facts of the individual case. In these circumstances, I am persuaded by paragraph 57 of Auld LJ's judgment that it should be open to Tribunals when looking at the question of good faith under the 1996 Act Part IVA to conclude that an applicant was not acting in good faith if his or her predominant motivation was not to achieve the primary objective which I have identified in paragraph 71 of this judgment. In my judgment, this provides sufficient protection for whistleblowers, and does not undermine the protection given by the Act. It recognises that human beings have mixed motives. It will, I hope, enable Tribunals to make assessments on a straightforward analysis of the evidence. For these reasons, which complement those given by Auld LJ, I too would dismiss this appeal. Order: The appeal be dismissed There be no order as to costs Note 1   See also section 43H “Disclosure of exceptionally serious failure”    [Back] Note 2   Note section 43L(2) of the 1996 Act, which provides that any reward payable by or under any enactment for a disclosure is not to be regarded as personal gain for this purpose.    [Back]

Mr Justice Field: Introduction This is a trial of a number of preliminary issues arising out of proceedings brought by the Claimant ("Centrica") for breach of an agreement dated 28 January 2002 ("the JPA"), as amended, under which the counterparty, Accenture plc, contracted to design, supply, install and maintain a new IT system ("the Jupiter System"), including an automated billing system based on pre-packaged SAP IS-U software. Under the JPA, the Jupiter System was to be delivered in 5 software releases, the third of which ("Release 3") was to be the billing system. GB Gas Holdings Limited is a subsidiary of Centrica plc which was originally part of the British Gas Corporation. Through its subsidiary, British Gas Trading Limited, Centrica supplies gas and electricity to residential customers in England and Wales. In 2002, at the time of the execution of the JPA, Centrica plc supplied energy to 18.8 million customers (13.4 million gas accounts and 5.4 million electricity accounts) and each month was issuing approximately 5 million bills. The first defendant ("Accenture") became a party to the JPA by a novation dated 24 November 2003. Accenture carries on business as a global management consulting, technology services and outsourcing company. The other defendants are guarantors of Accenture. The roll out of Release 3 was considerably delayed. There were disputes between the JPA parties over the functional and system performance of Releases 1 and 2 and there were concerns about: (i) the adequacy of the testing regime in respect of Release 3; (ii) the future development of Releases 4 and 5; and (iii) Accenture's cashflow problems. A settlement of these disputes was agreed on 29 June 2004, the formal terms of which were set out in Contract Change Note 165 ("CCN 165") dated 19 July 2004. Under CCN 165: i) Centrica agreed to pay an additional £10 million to the overall amount payable to Accenture under the JPA (Clause 1.1). ii) Accenture agreed to provide an additional 18,000 man days towards completion of Release 3 (Clause 1.5). iii) Accenture agreed to a three to four month pilot of Release 3B with live users for which the parties were to agree a set of objective pilot acceptance criteria to identify any faults in relation to Release 3B during the pilot. It was also agreed that the relevant warranties under clause 15 of the JPA would not start to run until after completion of the pilot and the start of the migration of accounts from the old billing systems to the new one, rather than at the start of the pilot. iv) Releases 4 and 5 were suspended. On 21 December 2005, the parties agreed that the planned migration of 2 million customer accounts from existing billing systems to the new system should be conducted in two phases, comprising 1.25 million customer accounts at the end of December 2005 and 0.75 million customer accounts during February 2006. Between December 2005 and March 2006 4.5 million customer accounts were migrated to Release 3B. The Warranty Provisions in the JPA and the Amended JPA On 31 March 2006, the JPA was amended by the Jupiter Programme Contract Amendment No.1. The amended agreement is called hereafter "the Amended JPA". The amendments that are especially relevant to this trial are those to the warranty provisions contained in Clause 15 of the JPA. The drafting technique in the original Clause 15 was to set out what was warranted and then to provide what was to happen in the case of a breach of a warranty depending on whether the breach involved a "Fundamental Defect" (as defined) or a "Material Defect" (as defined). To that end, Clauses 15.2, 15.3 and 15.4.1 – 15.4.6 of the JPA provided: 15.2 Release Warranties 15.2 .1 Subject as provided below Accenture warrants to Centrica that (i) for the duration of the Initial Warranty Period: (a) each Release will comply in all material respects with its Statement of Release Requirements separately and when combined with the previously delivered Releases; and (b) completion of each Release will not materially adversely affect functionality achieved in any previously delivered Releases; (ii) in respect of the Release(s) which implement the Billing System (currently planned to be Release 3), for the duration of the Full Warranty Period: (a) each Release will comply in all material respects with its Statement of Release Requirements separately and when combined with the previously delivered Releases; and (c) completion of each Release will not materially adversely affect the functionality achieved in any previously delivered Releases. and in respect of this Clause 15.2.1(ii) only with regard to any functionality, processes, End User or data volumes which do not occur or are not used, operated or introduced during the Initial Warranty Period 15.2.2 Without limiting Clause 15.2.1, for the relevant Warranty Period: (i) a Release will be free from material design and material programming and material implementation errors; and (ii) a Release will meet in all material respects the Statement of Release Requirements to give Centrica the capability to achieve competitive advantage and the System will be capable of providing the Benefits. 15.3 Warranty Process The Parties shall agree, prior to 31 July 2002 or (if earlier) the Acceptance Date for Release 1, a process for the notification and rectification of claims under Clauses 15.1.1, 15.2.1 and 15.2.2 including processes for (i) the categorisation of such warranty claims as being within the scope of Clauses 15.1.1, 15.2.1 or 15.2.2 (ii) the prioritisation of and tracking of such claims, and (iii) acceptance by Centrica of rectifications and/or work arounds delivered by Accenture and if the Parties fail to agree such a process within a reasonable time, the matter shall be referred to the Dispute Resolution Procedure. 4 Level of Effort 15.4.1 Accenture will fix Material Defects and Fundamental Defects to the level of effort set out in this Clause 15.4 during the relevant Warranty Period. 15.4.2 Material Defects Upon being notified by Centrica of a Material Defect Accenture shall promptly take all steps reasonably necessary to correct the Material Defect breach provided always that for the avoidance of doubt in no event shall the cost spent on fixing (being calculated on either the Time and Materials Basis or the Maintenance Daily Rate, whichever is relevant to the appropriate personnel being used) exceed the cap on liability set out in Clause 16. This shall constitute Accenture's entire liability and Centrica's sole and exclusive remedy for a Material Defect. For the avoidance of doubt, the only situation in which Centrica shall have a claim for damages for a Material Defect shall be if Accenture does not promptly take all steps reasonably necessary to correct the breach, and nothing in this Clause 15.4.2 shall remove Centrica's right to terminate this Agreement in accordance with its terms. 15.4.3 Fundamental Defects Upon being notified by Centrica of a Fundamental Defect Accenture shall do what a commercial, reasonable and prudent organisation using the System to carry on its business would do when acting in its own best interests (having due regard to the costs necessary and benefits likely from correcting the Fundamental Defect) provided always that in no event shall the cost spent on fixing (being calculated on either the Time and Materials Basis or the Maintenance Daily Rate, whichever is relevant to the appropriate personnel being used) exceed the cap on liability set out in Clause 16. This shall constitute Accenture's entire liability and Centrica's sole and exclusive remedy for a Fundamental Defect. For the avoidance of doubt, the only situation in which Centrica shall have a claim for damages for a Fundamental Defect shall be if Accenture does not promptly use the endeavours set out in this Clause 15.4.3 to correct the breach and nothing in this Clause 15.4.3 shall remove Centrica's right to terminate this Agreement in accordance with its terms. 15.4.4 Reduction in Cap The effort expended by Accenture in meeting its obligations under this Clause 15 will be calculated on either the Time and Materials Basis or the Maintenance Daily rate, whichever is relevant to the appropriate personnel being used, and will be treated as liability of Accenture and will count towards and reduce the aggregate liability cap set out in Clause 16. Accenture shall agree an action plan for fixing particular breaches of warranties with Centrica, implement such plan and keep Centrica informed as to the amount of money spent. 15.4.5 Data and Documentation Notwithstanding Accenture's obligations under Clauses 15.1.1, 15.2.1 and 15.2.2 in relation to defects under Clause 5 (Data Audit, Cleansing, Matching, Conversion and Migration) Accenture will only be obliged to fix errors and to remedy the causes and consequences of such errors and then only errors notified during the Initial Warranty Period. In relation to Documentation defects shall be dealt with in accordance with Clause 7.1.4. 15.4.6 Material Defects and Fundamental Defects caused by Centrica Accenture shall charge Centrica on a Time and Materials Basis or the Maintenance Daily rate, whichever is relevant to the appropriate personnel being used, for the correction of any Material Defects or Fundamental Defects notified by Centrica to the extent arising from or caused by:- (i) defects in the Centrica System and/or Legacy System not caused by Accenture; (ii) Centrica computer operator error or omission after Go-Live; and (iii) diagnosis and/or rectification of problems not associated with the System and not caused by Accenture. Under Clause 16 of the JPA each party's aggregate liability to the other arising from or in connection with the JPA was made subject to a number of financial caps depending on the type of claim in question. In the case of claims relating to the Billing System, the cap is the higher of (a) £25 million and (b) 100% of the VAT exclusive Project Fees invoiced by Accenture to Centrica as at the date of the claim. In the Definitions clause of the JPA (Clause 1.1) "Fundamental Defect" and "Material Defect" are respectively defined as: "Fundamental Defect" means a fundamental breach of Clauses 15.2.1 and/or 15.2.2 and/or 15.1.1(i) (to the extent a breach of Clause 15.1.1(i) would also constitute a breach of Clauses 15.2.1 and 15.2.2 had it occurred during the Warranty Period) in relation solely to the release(s) relating to the Billing System (currently planned to be Release 3) which causes a severe adverse effect on the British Gas Business; "Material Defect" means a breach of Clauses 15.1.1 (i) (to the extent a breach of Clause 15.1.1(i) would also constitute a breach of Clauses 15.2.1 and 15.2.2 had it occurred during the Warranty Period), 15.2.1 and/or 15.2.2 which has or is likely to have an adverse effect on the British Gas Business, and which is not a Fundamental Defect; Under the amended Clause 15 in the Amended JPA, the warranties given by Accenture apply in relation to Release 3B only (save for the words in square brackets in Clause 15.2.1(i) set out above) and endure for a specified period beginning on 23 December 2005 and ending on 28 February 2007 ("the Warranty Period"). Further, under the amended Clause 15.4, Accenture is no longer under any obligation itself to fix Material Defects but instead is obliged during the warranty period to fund the fixing by Centrica of such defects and any other defects caused by Accenture that are not Fundamental Defects, with moneys paid under this obligation counting towards and reducing the aggregate liability cap set out in Clause 16. In respect of Fundamental Defects, the obligation on Accenture is made subject to a notice in writing by Centrica of the Fundamental Defect and to Centrica having provided such analysis and detail as is reasonably practicable as to its reasons for believing there is a Fundamental Defect in relation to Release 3B. That obligation was referred to at the trial as an obligation to "fix" but this is a somewhat inaccurate description. The obligation is to do what a commercial, reasonable and prudent organisation using the System to carry on its business would do when acting in its own best interests (having due regard to the costs necessary and benefits likely from correcting the Fundamental Defect), which sometimes will require Accenture to fix the defect and other times not. (Hereafter, I refer to what Accenture has to do under Clause 15.4.3 as "the prescribed steps"). These amendments reflect the fact that disputes as to the implementation of the JPA had broken out between the parties and it had been agreed that: (i) Releases 4 and 5 were to be cancelled; (ii) Accenture should move off site with Centrica taking over operational responsibility for the Jupiter system, including its implementation, day-to-day operation and maintenance; (iii) employees of Accenture were to be transferred to Centrica; and (iv) with certain exceptions, including any right accruing to Centrica to pursue the warranty provisions in Clauses 15.2 to 15.4, Accenture was to be released from all other claims in connection with the JPA. The definitions of "Fundamental Defect" and "Material Defect" in the JPA were not amended by the Amended JPA. Clauses 15.2 to 15.4 as amended provide: 15.2 Release Warranties 15.2.1 Subject as provided below Accenture warrants to Centrica that (i) for the duration of the Warranty Period: (d) each Release will comply in all material respects with its Statement of Release Requirements separately and when combined with the previously delivered Releases; and (e) completion of each Release will not materially adversely affect functionality achieved in any previously delivered Releases; (ii) in respect of the Release(s) which implement the Billing System (currently planned to be Release 3), for the duration of the Warranty Period: (a) each Release will comply in all material respects with its Statement of Release Requirements separately and when combined with the previously delivered Releases; and (f) completion of each Release will not materially adversely affect the functionality achieved in any previously delivered Releases. 15.2.2 Without limiting Clause 15.2.1, for the relevant Warranty Period: (i) a Release will be free from material design and material programming and material implementation errors; and (ii) a Release will meet in all material respects the Statement of Release Requirements to give Centrica the capability to achieve competitive advantage. 15.3 [Not used]. 15.4 Level of Effort 15.4.1 Accenture will fix Fundamental Defects to the level of effort set out in this Clause 15.4 during the relevant Warranty Period. 4.2 Material Defects Accenture shall have no obligation to fix Material Defects during the Warranty Period, but has agreed to fund the fixing of Material Defects and any other defects caused by Accenture that are not Fundamental Defects, by Centrica that might arise during the Warranty Period, which defects shall be determined by reference to the scope definition document set out in Schedule 21 and, in relation to Material Defects by reference to Clause 15.2 ("Defects") in the following circumstances and subject to the following conditions: (i) the Centrica JAM Team (funded solely by Centrica) will comprise a 30 Full Time Equivalents team ("the Fix Team") which are intended to be sufficient to fix Defects that might arise during the Warranty Period (for the avoidance of doubt, this is in addition to the capacity provided by Accenture and Centrica for the Maintenance Release Development Services; (ii) "Full Time Equivalents" for the purposes of this Clause 15 means an appropriately qualified, productive and skilled person working a 8 hour day (where productive means the expenditure of no more than an average of 5 days per Defect); (iii) in the event that average effort required to fix such Defects exceeds 30 Full Time Equivalents then Centrica shall pay for such additional resource up to a cost of £100,000 and thereafter Accenture shall pay Centrica for such additional resource, in each case on the basis of hours worked multiplied by £460 per 8 hour period worked and lesser periods shall be prorated accordingly; (iv) the additional effort for the purpose of this Clause 15.4.2 shall not include and Accenture shall not pay for time spent by Centrica on the following activities; (a) business effort; (b) design authority; (c) management; (d) merge of fixes into future code stream; (e) Change requests; (v) the additional effort for the purposes of this Clause 15.4.2 shall only be payable by Accenture where: (a) Centrica has used reasonable endeavours to confirm that the code change required is to remedy a Defect rather than to implement a change to an agreed design; (b) there is reasonable evidence that the Defect was present in the code as at 23 December 2005 as a result of actions by Accenture or that the fix effort is required to remedy a Defect caused by the implementation of a Change Request by Accenture in any of RJ313, 314, 314.2 and 315; (c) Centrica has used reasonable endeavours to accurately prioritise the impact of the Defect in accordance with the classifications set out in (f) below; (d) Centrica has provided adequate time reporting of effort spent on fixes of Defects; (e) if within a calendar month Centrica is at any stage likely to exceed 30 Full Time Equivalents in order to fix Defects, Centrica shall promptly advise the Accenture Client Partner; (f) Only Categories P1, P2, P3 or clusters of P4 as defined below shall be included: Fault Priority Abbreviation Definition Priority 1 P1 Fault is of such severity that activities cannot continue at any level. (All users out). Priority 2 P2 i) Fault prevents an entire business process from being completed or, ii) Prevents a team of business users from performing their role in its entirety. Priority 3 P3 Fault impacts designed process so significantly that the workarounds required to complete a process are not sustainable at volume ramp up. Priority 4 P4 Fault impacts the designed process and requires workaround to complete, however in isolation there is no risk to volume ramp up (g) Centrica is managing the fix team effectively and efficiently so as to minimise as far as reasonably practicable the average effort required to fix Defects and the utilisation of FTEs in any month. (vi) The payment obligation set out in this Clause 15.4.2 shall be Accenture's sole liability and Centrica's sole remedy with respect to Defects. (vii) The Parties shall meet on a monthly basis to review the number of Defects and effort expended to fix such Defects. (viii) Any invoices delivered by Centrica shall be payable by Accenture within 30 days of receipt. 4.3 Fundamental Defects Upon being notified in writing by Centrica of a Fundamental Defect (and subject always to Centrica having provided such analysis and detail as is reasonably practicable as to its reasons for believing there is a Fundamental Defect in relation to Release 3B) Accenture shall do what a commercial, reasonable and prudent organisation using the System to carry on its business would do when acting in its own best interests (having due regard to the costs necessary and benefits likely from correcting the Fundamental Defect) provided always that in no event shall the cost spent on fixing (being calculated on a Time and Materials Basis, and for the purposes of calculating Centrica's time and materials costs for fixing Fundamental Defects Centrica shall only be entitled to multiply the number of days worked by relevant Centrica personnel as follows: £150 per day for business personnel; £550 per day for business IS personnel; and £460 per day for Centrica JAM personnel) exceed the cap on liability set out in Clause 16. This shall constitute Accenture's entire liability and Centrica's sole and exclusive remedy for a Fundamental Defect. For the avoidance of doubt, the only situation in which Centrica shall have a claim for damages for a Fundamental Defect shall be if Accenture does not promptly use the endeavours set out in this Clause 15.4.3 to correct the breach and nothing in this Clause 15.4.3 shall remove Centrica's right to terminate this Agreement in accordance with its terms. 4.4 Reduction in Cap The effort expended by Accenture in meeting its obligations under this Clause 15 will be calculated on a Time and Materials Basis, and will be treated as liability of Accenture and will count towards and reduce the aggregate liability cap set out in Clause 16. Any moneys paid by Accenture to Centrica pursuant to Clause 15.4.2 shall count towards and reduce the aggregate liability cap set out in Clause 16. Accenture shall agree an action plan for fixing particular breaches of warranties with Centrica, implement such plan and keep Centrica informed as to the amount of money spent. 4.5 Data and Documentation Notwithstanding Accenture's obligations under Clauses 15.1.1, 15.2.1 and 15.2.2 in relation to defects under Clause 5 (Data Audit, Cleansing, Matching, Conversion and Migration) Accenture will only be obliged to fix errors and to remedy the causes and consequences of such errors and then only errors notified up until 30 June 2006. In relation to Documentation defects shall be dealt with in accordance with Clause 7.1.4. 4.6 Fundamental Defects caused by Centrica Accenture shall charge Centrica on a Time and Materials Basis, for the correction of any Fundamental Defects notified by Centrica to the extent arising from or caused by:- (i) defects in the Centrica System and/or Legacy System not caused by Accenture; (ii) Centrica computer operator error or omission after Go-Live; and (iii) diagnosis and/or rectification of problems not associated with the System and not caused by Accenture. The release of Accenture in respect of all claims other than claims in respect of the Release 3B warranties was provided for in Clause 27.4B (b) as follows: Release of Accenture: Centrica and each of its affiliates hereby release Accenture, and each of its respective subsidiaries, divisions, parents and affiliated corporations or partnerships, and each of their directors, officers, shareholders, agents, employees, partners, representatives, attorneys, successors and assigns, from the "Released Claims". The Released Claims were then set out with the proviso: provided, however, that Released Claims shall not include: (i) ….(ii) …(iii) …or (iv) any right accruing to Centrica now or in the future to pursue the warranty provisions in Clauses 5.2.2, 7.1.3, 7.1.4 and 15.2 to 15.4 hereof (the "Warranty Provisions"), in relation to a Release or Deliverable under a Release, is expressly reserved. It is also appropriate to note that in Clause 21.3 (that deals with termination for default) it is provided: For the purposes of this Clause 21.3, the commission of a "material breach" shall include the commission of a series of related or unrelated breaches of this Agreement which, taken together, constitute a material breach of this Agreement. The emergence of problems with the new billing system Considerable problems with Release 3B began to emerge around June 2006. On 23 October 2006 an Accenture team that had gone back on site to investigate these problems produced a report setting out the results of its initial investigations. Increasing numbers of customer accounts were going unbilled and customer satisfaction was falling off. This was being caused in significant part by a backlog of "work items". "Work items" are called "exceptions" in the SAP-ISU programme. They refer to a feature invariably found in automated billing systems that requires manual intervention in certain circumstances before a bill is issued. An example might be an exception generated by an erroneous meter reading which has been entered incorrectly by the meter reader. Since critical data does not conform to what the system is expecting, the system suspends the billing cycle until the matter has been investigated and resolved by a business operative known within Centrica as a Customer Service Assistant or "CSA". Centrica estimates that Release 3B generated between 4.5 million and 6.6 million "unnecessary" exceptions in 2006 and between 8 and 18 million in December 2007. On 17 November 2006 Accenture presented a study into the exceptions generated by Release 3B which recorded that between 23 October and 2 November 2006 Release 3B had generated 1.2 million new exceptions. The result was a massive backlog of unresolved exceptions. The Notification Letter of 12 February 2007 By letter dated 12 February 2007 ("the Notification Letter"), Centrica notified Accenture of certain Fundamental Defects pursuant to Clause 15.4.3 of the Amended JPA and gave what it says was such analysis and detail as was reasonably practicable at that stage in relation to those defects. It was stated in the Notification Letter that the most serious Fundamental Defects related to "the large numbers of technical and business exceptions, management information and controls, insufficient hardware capacity, excessive workflow, and Jupiter integration". The Notification Letter then gave details of eight Fundamental Defects – Design of User inboxes; Management Information; Hardware capacity; SAP Archiving; Transactional and reporting systems sharing a common infrastructure; Excessive workflow; Business and technical exceptions; and Jupiter integration. In the Conclusion the Notification Letter stated: The information set out in this letter represents our best understanding and analysis of the matters which are currently causing us extreme concern. At this stage we cannot rule out the possibility that other Fundamental Defects will emerge as we further implement and use the System… Furthermore, at this stage we are not in a position to fully particularise all aspects of defects we have identified, although we have given here what particulars are reasonably practicable and clearly further issues are likely to arise…. In accordance with Clause 15.4.3 of the JPA Accenture is required to commit to the process of identifying remedies and implementing them, failing which Centrica will make its own arrangements to do so and recover the costs from Accenture by way of damages…. Accenture's refusal to take any steps under Clause 15.4.3 Notwithstanding the Notification Letter, Accenture has refused to take any steps under Clause 15.4.3 of the Amended JPA. In its view, it was under no legal obligation to do so. Its position was, and is, that there were no Fundamental Defects in Release 3B, that the Notification Letter was ineffective to "trigger" Accenture's obligations under Clause 15.4.3 and that those obligations expired on 28 February 2007. Centrica's claim against Accenture Faced with this stance, Centrica has issued proceedings against Accenture in which it alleges that: (I) the massive backlog of unresolved exceptions that was generated in the wake of Release 3B was a breach of the Clause 15.2.2(i) and 15.2.2(ii) warranties in the Amended JPA; and (II) the breaches complained of have caused Centrica enormous damage due to: (a) the need to employ thousands of additional staff to try to resolve the exceptions and to deal with rising volumes of contact with complaining and dissatisfied customers; (b) the writing-off of millions of pounds in respect of unbilled or late-billed supply of gas and/or electricity; and (c) the cost of investigating and rectifying the exceptions problem including the cost of purchasing significantly more powerful hardware and third party software. Centrica pleads that Accenture's overall design of Release 3B contained two basic and critical design errors in relation to the generation of exceptions and the adequacy of accurate automation within Release 3B -- "the Exceptions Error" and "the Automation Error". It contends that each of these basic errors was a fundamental breach of warranty within the meaning of the Amended JPA, and either individually or in combination, caused a severe adverse effect on the British Gas Residential Business and therefore constituted a Fundamental Defect (or Fundamental Defects) for the purposes of the Amended JPA. Centrica also asserts that there were 23 individual breaches of warranty in respect of the design, programming and implementation of Release 3B in addition to the Exceptions Error and the Automation Error. The identification and particularisation of these individual breaches was completed only after the sending of the Notification Letter. Centrica alleges that these breaches are either manifestations of, or evidenced, the Exceptions and Automation Errors and are themselves material design, programming and implementation errors in Release 3B. Centrica does not allege that they individually constitute fundamental breaches of warranty or Fundamental Defects. In summary, Centrica pleads: A. There were 6 fundamental breaches of warranty:- (i) the Exceptions Error; and/or (ii) the Automation Error; and/or (iii) the combination of the Exceptions Error and the Automation Error; and/or (iv) the individual material errors in combination; and/or (v) the combination of the individual material errors which manifested or evidenced the exceptions error; and/or (vi) the combination of the individual material errors which manifested or evidenced the automation error. B. Each of the above six fundamental breaches of warranty caused a severe adverse effect on the British Gas Residential Business such that each constituted a Fundamental Defect. C. Alternatively, the six fundamental breaches of warranty in combination caused a severe adverse effect on the British Gas Residential Business such that there were one or more Fundamental Defects. Accenture's contentions (in brief) Accenture contends that individual breaches of warranty asserted by Centrica cannot be combined whether for the purpose of establishing a fundamental breach or for the purpose of establishing a Fundamental Defect pursuant to Clause 15.4.3 of the Amended JPA. Instead, Accenture was only liable to do anything under Clause 15.4.3 if Centrica could establish, at the time it notified Accenture: (i) of the individual breaches of warranty of which Accenture was guilty; and (ii) that any such individual breach of warranty was in and of itself a "fundamental" breach of warranty which had already caused a severe adverse effect on the British Gas Residential Business. Accenture also contends that the obligation on it to take the steps specified in Clause 15.4.3 would only be triggered if Centrica served a timely notice specifying in respect of each individual fundamental breach relied on: (i) what warranty or warranties it was alleged had been breached; (ii) with what requirements of the Statement of Release Requirements ("the SoRR") it was alleged that Release 3B did not materially comply; (iii) the nature of the alleged material design, programming or implementation errors; and (iv) the severe adverse effect that was alleged to have resulted from each breach. Accenture also disputes Centrica's contention that the Notification Letter stands to be construed against the background of what Accenture knew of the defects at the time the letter was received. As to Centrica's damages claim, Accenture pleads that its liability for damages for Fundamental Defects under Clause 15.4.3 of the Amended JPA is limited to: (i) losses suffered after Accenture was notified of the Fundamental Defect(s); (ii) losses suffered after a reasonable time to allow Accenture to comply with its obligation; and (iii) losses calculated on the Time and Materials basis set out in Clause 15.4.3 in relation to its own obligation to fix (and not Centrica's right to claim damages). Accenture also pleads that a number of items of loss for which Centrica claims damages are irrecoverable by virtue of Clause 16.2 of Amended JPA which excludes liability for "any losses, damages, costs or expenses whatsoever to the extent that these are indirect or consequential…". The Preliminary Issues to be decided It was in the light, inter alia, of these rival contentions, that Burton J ordered the trial of, inter alia, the following preliminary issues: 1. On a true construction of the Amended JPA:- 1.1 In order for there to be a Fundamental Defect, does each individual breach of warranty proved by Centrica have to constitute a "fundamental" breach of warranty, or can a "fundamental breach of warranty be constituted by the breaches of warranty proved by Centrica? 1.2 In order for there to be a Fundamental Defect can the consequences of individual fundamental breaches of warranty alleged by Centrica be aggregated for the purposes of determining whether there was a severe adverse effect on the British Gas Business in order to constitute a "Fundamental Defect" or must an individual fundamental breach of warranty by itself cause a "severe adverse effect" without regard to the overall effect of different breaches? 2. In order "for a "fundamental" breach of warranty" to constitute a "Fundamental Defect", must the breach have caused an actual "severe adverse effect" on the British Gas Business before it was notified to Accenture under Clause 15.4.3? Or was it sufficient if, at the time of notification, the breach had started to cause or would cause a "severe adverse effect" if left unremedied? 3. On a true construction of the Amended JPA, to what extent is it legitimate to take into account the parties' prior knowledge of alleged defects in Release 3 when determining whether the letter of 12 February 2007 was a valid notice, in order to interpret it? 4. In order to provide valid notification under Clause 15.4.3, was Centrica required to state in the notification: (i) what warranties it was alleging had been breached; and/or (ii) with what requirements of the SoRR it was alleged that Release 3B did not materially comply; and/or (iii) the nature of the alleged material design, programming or implementation errors; and/or (iv) the severe adverse effect that was alleged to have resulted from each breach? 5. What is the correct basis for calculating the damages which can be claimed by Centrica for a Fundmental Defect under the terms of the Amended JPA? In particular:- 5.1 Is Centrica entitled to recover as damages its costs incurred in relation to the alleged Fundamental Defect before Accenture was notified of the alleged Fundamental Defect? 5.2 Are the losses recoverable by Centrica in relation to any alleged Fundamental Defect limited to those suffered after the expiry of a reasonable time for Accenture to comply with its obligations under Clause 15.4.3 following notification? 5.3 Is Centrica's entitlement to recover losses limited to losses calculated on a "Time and Materials Basis" in accordance with Clause 15.4.3? 6. In respect of the damages claim and the classes of loss claimed by Centrica in Schedule A, are any of those claims of loss excluded under Clause 16.2 of the Amended JPA? If so, are they nevertheless (as a matter of principle) recoverable as sums expended in mitigation of Centrica's losses? In addition to these six issues, there are four additional issues concerned with Centrica's Hardware claims with which I shall deal later in a later judgement. Issues 1 to 4 Issues 1 to 4 raise questions of the true construction of Clause 15.4.3 of the Amended JPA. The modern approach to the construction of written instruments is that propounded by Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, at 912H- 913 E. The court is concerned to ascertain "the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract." As for the admissible background or "matrix of fact", Lord Hoffmann said: Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. The factual matrix The material on which Centrica relies as constituting the factual matrix of Clause 15.4.3 of the Amended JPA is voluminous. It is identified in a pleading called Statement of Facts which is some 85 pages in length. In my judgement the relevant background includes: (i) the "high level" processes and functions which play a role in bills being sent to customers by a utilities provider in the UK; (ii) the nature of a utilities billing system, including the automated processes involved; (iii) the history of the Jupiter Project leading up to the JPA and the Amended JPA, including: the Project Jupiter Qualification Report; the Memorandum of Understanding; the Programme Definition phase; the invitation to bid process; the design and development of Release 3; Release 3 documentation; the Release 3 SoRR; (iv) CCN 165; (v) the findings I make below on the oral evidence; and (vi) the events leading up to the conclusion of the Jupiter Programme Contract Amendment No.1 and the changes introduced by that agreement to the implementation of the billing system and the handling of defects. Clause 15.4.3 also has to be construed against the background of the Amended JPA as a whole, including in particular certain relevant Recitals and clauses contained in the main body of the contract, and certain paragraphs contained in Schedule 1 to the contract. During the Programme Definition Phase in the lead up to the execution of the JPA there was produced the Jupiter Programme Definition Report in June 2001. This recorded, inter alia, that "business processes will be re-designed to deliver a common customer focused experience…" It also summarised a list of 14 business requirements for billing, including bill production, account maintenance, payment methods, payments received, meter readings and customer enquiry. The specific definition of these 14 requirements was worked out in subsequent documents, including (i) the "PD04 - Business Requirements" Report dated 27 April 2001, which set out the operational, functional and technical conditions of the Jupiter Project and 24 key systems of a billing system generally; (ii) the PD06 – "Functional Requirements" Report dated 12 April 2001, which set out all of the Jupiter Programme's functional and non-functional requirements including 116 energy billing functional requirements; (iii) the Release 3 Scope Document dated 7 January 2002, which contained a detailed specification of the requirements to be met by Release 3 and set out in Appendix A the benefits to be achieved by the requirements; and (iv) the Release 3 SoRR that was finalised after the execution of the JPA but before the execution of the Amended JPA. This latter document was based on the Release 3 Scope Document and set out: (i) in great detail the functional and non-functional requirements and system service levels that Release 3 had to deliver; and (ii) the stipulated "Business Capabilities". I have already touched on the events leading up to the conclusion of the Jupiter Programme Contract Amendment No.1 and the changes introduced by that agreement to the implementation of the billing system and the handling of defects. The relevant facts are these. There had been disputes between Centrica and Accenture concerning the implementation of the first two Releases and Accenture claimed large sums were due for work which it contended were not covered by the JPA, whilst Centrica claimed that they were covered by the agreement. These disputes were settled on terms that the parties would be released from all claims arising out of the JPA except for warranty claims in respect of Release 3B and upon payment of an additional £10 million to Accenture. Working relations between the parties had deteriorated to the point that Centrica had decided that Accenture should leave the site and it (Centrica) would take over JAM (Jupiter Application Maintenance) and migration of the billing system and its stabilisation, with a number of Accenture employees moving over to join Centrica's large team of experienced computer technicians. In addition, Releases 4 and 5 were cancelled. By the time of the Amended JPA, 4.5 million customer accounts had been migrated on to the new system but there were 12.5 million accounts still to be migrated. I find on the evidence that amongst the automated processes involved in a utilities billing system there are very likely to be billing and control processes such as: (i) reading meters; (ii) creating meter read request files and handling the automated loading of meter reads into the billing process; (iii) identifying incorrect meter readings; (iv) calculating bills based on actual or estimated meter readings; (v) sending invoices to be printed; (vi) receiving payments and managing payments adjustments; (vii) handling key financial postings; (viii) handling customers moving house; and (ix) handling interaction between the utility and its customers. I heard live evidence on the factual matrix from Ms Fiona O'Hara, Director of Operations in Accenture's Resources Operating Unit with responsibility for Europe, Africa and Latin America; Mr Nigel Barnes, a Senior Executive at Accenture leading the UK technology architecture practice; Mr Richard Barton, the lead consulting partner at Deloitte for the utilities sector; and Dr Mark Watmough, Managing Director of Barnsnape Consulting Services Ltd, a consultancy with specialist knowledge in the design and implementation of billing systems for utilities. Ms O'Hara, Mr Barnes and Dr Watmough were called by Accenture, Mr Barton by Centrica. Mr Barton and Dr Watmough gave evidence as experts. Parts of Mr Barnes's evidence were in the nature of expert evidence but I admitted them upon his assurance that he gave this evidence in an independent capacity subject to the duties owed to the court by an expert witness. Ms O'Hara's evidence was concerned with events leading up to CCN 165 and the Jupiter Programme Contract Amendment No 1. Much of the evidence given by the remaining witnesses was directed to whether Accenture had made errors in designing the new billing system, but this was not an issue for decision in the trial. In respect of the evidence that was relevant, it was common ground that a retail concern's billing system is at the heart of the concern and is business critical because cash flow will be significantly impacted if the system does not work. Mr Barton and Dr Watmough also agreed that a utility's billing system is complex, Dr Watmough speaking of "the labyrinth of the complexity of the billing system." I also accept Mr Barnes's evidence that the billing system involved inter-related processes and sub-processes and an error in one process can affect a related process (Day 2, p 67). Mr Barnes also agreed that it was quite common to have defects which in combination created an aggregated defect (Day 2, p 69). Dr Watmough accepted that: (i) design errors in one of a large number of processes involved in an automated billing system can have an impact on other parts of the business and numbers of design errors in different processes can cumulatively impact on other processes; (ii) exceptions not designed-in can occur as customers' accounts are migrated on to the new system and it can be very difficult to identify precisely what is causing those exceptions; (iii) when the system is running for real with the data flows operating, that end-to-end environment can be complicated and if something goes wrong it can be very hard to find out why; (iv) what might seem to be a trivial non-function might with a greater amount of understanding turn out to be more important; and (v) the people who implement new billing system contracts would appreciate it may be difficult to tell which errors revealed in the migration process are important and which are trivial. Dr Watmough also accepted what is set out under the heading C1. General purpose and function of a utilities billing system in the Statement of Facts. In summary it is there stated: (i) the basic function of a utilities billing system is to generate bills for gas customers and electricity customers and to process payments from those customers; (ii) generating a bill includes calculating the amount payable by the customer having regard to the product - gas or electricity – the difference between the last and the present meter reads, tariff, payment arrangements and causing the bill to be issued by reference to the customer's details; and (iii) to generate bills the system must be able to handle (a) "new joiner" when someone becomes a customer for the first time; (b) "customer changes" when an existing customer changes his current arrangements; (c) "change of tenancy" when an existing customer notifies a change of address and the final meter reading; (d) "leaver" when an existing customer terminates his supply contract; and (e) "consume and pay": the billing system calculates the bill on the basis of the actual or estimated meter reading and allocates payment to the appropriate customer's account. Mr Vos QC for Accenture invited me to make findings on the evidence that went beyond those that were relevant for the purposes of this trial but which he said would assist the parties generally. I decline this invitation. The evidence was given for the specific purpose of determining the selected preliminary issues and it is inappropriate in my opinion to make findings for any other purpose. The contractual context Turning to the contractual context of Clause 15 in the Amended JPA, the pertinent provisions in relevant part in the Amended JPA are: Recital (A) The Centrica Group (hereinafter defined), of which Centrica is a member, has instigated a programme to improve its ability to provide excellent customer service, retain customers, cross sell to them within the Centrica Group and increase market share. This programme is referred to as "the Jupiter Programme". As part of implementing the Jupiter Programme, Centrica intends to implement a number of new systems and processes in the British Gas Business (as hereinafter defined), including new integrated customer relationship management and billing systems. The implementation of these new systems and processes and other services to be performed by Accenture under this Agreement are referred to as "the Jupiter Project", and is the subject of this Agreement. Recital (D) Accenture has represented that it has expertise and skill advising on the acquisition of computer hardware and software, systems integration and maintenance, project management and the provision of services envisaged by this Agreement and Centrica has already engaged Accenture to provides its services in the past. The parties have since discussed and negotiated the implementation of the Jupiter Project and prior to the signature of this Agreement, Accenture has performed services for Centrica in relation to the Jupiter Project under various arrangement letters… Recital (E) The Parties have agreed to work in a collaborative manner and the success of the Project will depend upon both parties performing their obligations under this Agreement. To this end, the Parties recognise that the following behaviours will be encouraged: (i) mutually respect and trust each other; (ii) act openly and honestly towards each other; (iii) accept joint responsibility for finding appropriate solutions to problems as set out in this Agreement; (iv) work together to achieve mutually beneficial objectives; and (v) respect the balance between the home and work lives of each Party's staff who work on the Project. Recital (F) Accenture will assume responsibility for the implementation and success of the Jupiter Project for the cost set out in Clause 1.4.1 and will ensure that: (i) the System meets the Business Capabilities as reflected in the Statement of Release Requirements; Recital (H) Accenture has represented that a project like the Jupiter Project would result in the delivery of financial benefits to Centrica in the form of reduced overheads, greater market share and increased income generation. Clauses 1.4 and 1.5[1] Clause 1.4 Scope and Objectives The objectives of the Jupiter Project are: 1.4.1 to develop and implement the Business Capabilities (including Hardware and Third Party Software) at the total cost set out in Schedule 3; 1.4.3 for Accenture to provide the Services to Centrica for the benefit of the British Gas Business and Centrica IS and to meet the Business Capabilities, which include improving Centrica's ability to provide excellent customer service, improving customer retention and cross selling, in each case at reduced costs; Clause 1.5 The parties intend to work together in good faith in accordance with their respective obligations set out in this Agreement to achieve the objectives of the Jupiter Project as set out in Clause 1.4 above. The parties will use reasonable endeavours to help, co-operate and liaise with each other to facilitate the provision of the Services and swift resolution of any issues provided that nothing in this Clause 1.5 is intended to diminish or affect either party's other obligations under this Agreement. Clause 2 Accenture's Obligations 2.1 Accenture must ….. 2.1.1[2] for each Release produce a Statement of Release Requirements to reflect the Business Capabilities in accordance with Clause 3; Clause 3[3] 3.2 Preparation of Statement of Release Requirements 3.2.1 The Target Release Schedule will be prepared by Accenture and agreed by the Parties by 31 May 2002 and will then form Schedule 1, Appendix 1. 3.2.2 In relation to each Release, Accenture shall prepare and deliver, with Centrica's input and assistance (as provided pursuant to Clause 12.2 and 12.3), in accordance with the Project Plan (as amended from time to time by written agreement between the Parties and approved by the Jupiter Steering Group) a draft Statement of Release Requirements including: (i) an updated Capability Statement; (ii) the detailed requirements which will reflect the Business Capabilities for that Release; (vii) the objectives of a Work Package; (viii) the total approved cost of that Release (including Hardware and Third Party Software); (x) the desired service levels (including the Service Levels) and non-functional characteristics for that Release; (xi) the projected Benefits to be realised by that Release, the timing of such realisation and any relevant revised baselines from which to measure the Metrics (as described most fully in section 4.3.1(iii) of Schedule 3); and (xii) the Data Migration Services contemplated by Clause 5 to be performed that Release. 3.2.8 For the avoidance of doubt, Accenture must deliver the non-functional requirements set out in section 3.3 of Schedule 1 in every Release (having regard to the introductory statement in section 3.3 of Schedule 1) except to the extent: (i) any non-conformance with such non-functional requirements is set out in the Capability Statement for a particular Release; and (ii) the Jupiter Steering Group has accepted such non-conformance in writing. 3.2.9 For the avoidance of doubt, other than to the extent any non-conformance, omission or inconsistency between the Statement of Release Requirements and the Business Capabilities is specifically set out in the relevant Capability Statement and accepted by the Jupiter Steering Group in accordance with this Clause 3, Accenture shall be obliged to ensure that the Statements of Release Requirements for all the Releases, when taken together, fully reflect all the Business Capabilities. Schedule 1 to the Amended JPA is also relevant background and was heavily relied on by Mr Onions QC for Centrica. This sets out, inter alia: (i) the parties' intentions as to the Business Capabilities of the System; (ii) the services required of the System by Centrica including a "best-of-breed" replacement billing system incorporating billing functionality in respect of the entire British Gas Business and to be installed and implemented without adversely affecting the standard of service of the British Gas Business; (iii) 16 specific requirements and 59 common requirements for the billing system; (iv) the performance requirements to be met by the billing system including being able to administer 16,270,000 customers in 2005. Issue 1 1. On a true construction of the Amended JPA:- 1.1 In order for there to be a Fundamental Defect, does each individual breach of warranty proved by Centrica have to constitute a "fundamental" breach of warranty, or can a "fundamental" breach of warranty be constituted by the breaches of warranty proved by Centrica? 1.2 In order for there to be a Fundamental Defect can the consequences of the individual fundamental breaches of warranty alleged by Centrica be aggregated for the purposes of determining whether there was a severe adverse effect on the British Gas Business in order to constitute a "Fundamental Defect" or must an individual fundamental breach of warranty by itself cause a "severe adverse effect" without regard to the overall effect of different breaches? Mr Vos QC submitted that the words of Clause 15.4.3 and of the definitions of Fundamental Defect and Material Defect should be given their ordinary meaning against the background that: (a) after the amendment of Clause 15.4.3 there remained a vital distinction between Material Defects and Fundamental Defects; (b) Accenture was now to be off site with no obligation to fix Material Defects but only an obligation to fund their rectification above an agreed level; (c) the migration of the remaining 12 million customer accounts and the installation, implementation and maintenance of the system were to be done by Centrica; and (d) the amendments to Clause 15 reflected a full compromise agreement between the parties of claims under the JPA. In his submission, Clauses 15.2.1 and 15.2.2 created separate and distinct warranties and it was clear from the foregoing that a Fundamental Defect could only be constituted by a single fundamental breach of a particular warranty which in and of itself causes a severe adverse effect on the British Gas Business. If it had been the intention that breaches of warranty and/or their effects could be aggregated, Clause 15.4.3 would have spelt this out but, in contrast to Clause 21.3, it did not do so. Centrica's construction of Clause 15 to the effect that: (i) a fundamental breach of warranty could be established by aggregating separate breaches of warranty; and (ii) a Fundamental Defect could be established by aggregating the effects of separate breaches of warranty, was therefore wrong. In particular, it flew in the face of the distinction drawn in the Amended JPA between Material Defects and Fundamental Defects. Those two categories were mutually exclusive. Once a Material Defect, always a Material Defect: there was no scope for a Material Defect later to become a Fundamental Defect whether by a process of aggregation or otherwise. In particular, if a claim is made by Centrica for the cost of rectifying a Material Defect and that claim is paid, the defect in question cannot later surface as a Fundamental Defect because the liability in respect thereof will have been discharged. Further, Centrica's aggregation contentions were wholly inconsistent with the notice requirements prescribed in Clause 15.4.3 since a written notice had to specify the Fundamental Defect(s) relied on and Centrica had to provide such analysis and detail as is reasonably practicable as to its reasons for believing there is a Fundamental Defect. Mr Vos contended that there was nothing unreasonable or unfair with the construction he advanced. Centrica had taken over the migration, maintenance, installation and implementation of the system when it was to be expected that defects would emerge and that those defects would likely be Material Defects at worst. Centrica was therefore on the spot and its team was as expert as the Accenture team that had been removed from the site. Mr Onions QC submitted that the effect of the words "and/or" in the definition of Fundamental Defect ("a fundamental breach of Clauses 15.2.1 and/or 15.2.2 and/or 15.1.1(i)") was that Clause 15.4.3 expressly provided that a "fundamental breach" could be constituted by a breach of one or more (in combination) of Clauses 15.2.1 and/or 15.2.2 and/or 15.1.1(i). He also submitted that the warranties given by Accenture in each of the subparagraphs of Clause 15.2 were composite in nature so that for each subparagraph there was one warranty that could be breached in the separate ways there provided for. Thus the effect of Clause 15.2.2 (i) was that material design errors, programming errors and implementation errors were all part and parcel of one breach of warranty and constituted the extent of that one breach. Clause 21.3 was concerned with something quite different from that dealt with in Clause 15.4.3 and was not inconsistent with Centrica's aggregation case. Further, the notice required by Clause 15.4.3 was one that simply stated that there was a Fundamental Defect or Defects. In addition, Centrica had to provide such analysis and detail as was reasonably practicable as to its reasons for believing there is a Release 3B Fundamental Defect. For reasons I give later when dealing with Issues 3 and 4, I agree with Mr Onions' submissions as to the requirements of a Clause 15.4.3 notice. I am also of the view that there is considerable force in his other submissions but the matter does not stop there because, as Mr Onions argued, Clause 15.4.3 must be construed in light of the following features of the relevant background. It was Accenture's contractual responsibility to install a billing system that was free of material design, programming and implementation errors and to do so without adversely affecting the standard of service of the British Gas Business. Further, as both parties must have realised when the JPA was concluded and amended: (i) the new billing system was immensely complex and involved inter-related processes and sub-processes; (ii) an error in one process could affect a related process; (iii) it was quite common to have defects in a billing system which in combination created an aggregated defect; (iv) design errors in different processes could cumulatively impact on other processes; (v) exceptions not designed-in could occur as customers' accounts are migrated and it could be very difficult to identify precisely what was causing those exceptions; (vi) if something went wrong when the system was running for real with the data flows operating it could be very hard to find out why; (vii) what appeared at first to be trivial non-functions could turn out to be more important; and (viii) the billing system was of critical importance to Centrica: if it failed to function properly to a significant degree there could be a serious impact on Centrica's revenues. In my opinion, the meaning which Clause 15.4.3 would convey to a reasonable person having the background knowledge I have set out is: (1) a fundamental breach of warranty can be constituted by individual breaches of warranty all falling within the same subparagraph under Clause 15.2.1 or Clause 15.2.2; and (2) the consequences of such individual fundamental breaches of warranty can be aggregated for the purposes of determining whether there was a severe adverse effect on the British Gas Business. In reaching this conclusion I have given careful consideration to all of Mr Vos' submissions, particularly those that focused on the distinct regimes established under the JPA for Material Defects and Fundamental Defects. In my judgement, the categories of Material Defects and Fundamental Defects are not mutually exclusive. There is no obligation under the JPA on Centrica to classify an apparent breach of warranty as either a Material Defect or a Fundamental Defect and I can see nothing in the agreement that prevents Centrica from asserting that a breach is a Fundamental Defect when to begin with they thought that the effects of the breach did not justify such an assertion, and may even have attempted to fix it. Nor do I see why Accenture should not come under the Clause 15.4.3 obligation even though they have paid a claim on the basis that the breach was a Material Defect. That obligation will not inevitably involve the further expenditure of money and if it does, it will go, together with the earlier expenditure, to reduce the Clause 16 cap. Issue 2 In order "for a "fundamental" breach of warranty" to constitute a "Fundamental Defect", must the breach have caused an actual "severe adverse effect" on the British Gas Business before it was notified to Accenture under Clause 15.4.3? Or was it sufficient if, at the time of notification, the breach had started to or would cause a "severe adverse effect" if left unremedied? The definitions of Material Defect and Fundamental Defect use different language when specifying the effects that a breach of warranty must have to constitute the defect in question. Thus, the Material Defect definition uses the words "which has or is likely to have an adverse effect on the British Gas Business…", whereas the Fundamental Defect definition uses the words "causes a severe adverse effect on the British Gas Business." [Emphasis supplied] Mr Vos submitted that this difference in language is deliberate and that it follows that in the case of a Fundamental Defect the breach of warranty must actually have occurred before notification under Clause 15.4.3. Mr Onions submitted that the word "causes" encompasses "could cause" and "will cause". He drew an analogy with anticipatory breach cases which establish that an obligee can treat the contract as repudiated before a breach has actually occurred where it can be shown that the breach would have occurred if the contract had not been rescinded. I prefer Mr Onions' submissions to those of Mr Vos. I decline to accept that the contractual intention was that Accenture came under no obligation to take the prescribed steps where a severe adverse effect had not yet actually been suffered but was inevitably going to be suffered. Issues 3 and 4 3. On a true construction of the Amended JPA, to what extent is it legitimate to take into account the parties' prior knowledge of alleged defects in Release 3 when determining whether the letter of 12 February 2007 was a valid notice, in order to interpret it? 4. In order to provide valid notification under Clause 15.4.3, was Centrica required to state in the notification: (i) what warranties it was alleging had been breached; and/or (ii) with what requirements of the SoRR it was alleged that Release 3B did not materially comply; and/or (iv) the nature of the alleged material design, programming or implementation errors; and/or (v) the severe adverse effect that was alleged to have resulted from each breach? I propose to deal with Issue 4 first because this is the more important of the two and its determination impacts on the practical significance of Issue 3. Mr Vos argued that the words used in Clause 15.4.3 should be given their ordinary, natural meaning without the application of any special rule of construction such as the contra proferentem rule. So construed, it was clear, he argued, that a valid Clause 15.4.3 notification had to be in writing and (i) identify the fundamental breach which is causing the claimed severe adverse effect on the British Gas Business; and (ii) Accenture had to be provided with such analysis and detail as is reasonably practicable as to Centrica's reasons for believing there is a Fundamental Defect in relation to Release 3B. He submitted that the words in brackets in Clause 15.4.3 do not cut back the notification requirement; instead they provide an additional conditional precedent to the notification. As for requirement (i), Mr Vos contended that the notice must identify: (a) the fundamental breach relied on by specifying the warranty broken and the particular requirement of the SoRR if that is the breach alleged; and (b) the serious adverse effect allegedly caused. This construction was supported, he argued, by the purpose of the notice. Accenture, who it was known would be off site, needed to be able to determine whether complaint was being made about a defect that fell within Clause 15.4.3 and also needed to consider what "a commercial, reasonable and prudent organisation using the System to carry on its business would do when acting in its own interests". The words in brackets were added because the previous Clause 15.3 had been deleted and it was accordingly to be presumed that the sort of detail given in the forms used under the old Clause 15.3 was intended to be given in a Clause 15.4.3 notification. On the question whether the contra proferentem rule applied when construing Clause 15.4.3, Mr Vos argued that under the Amended JPA the parties had agreed a complete release of their respective claims against each other (see Clause 27.4B (a) & (b)) on terms inter alia that Accenture should be subject to the prescribed steps obligation under Clause 15.4.3. It followed that that clause was not an exclusion clause and did not limit a liability that would exist but for the clause. There was also no evidence that the clause had been introduced at the behest of Accenture. Further, the rule only applied where there was doubt or ambiguity as to the meaning of the words in question, and here there was neither. Mr Vos also submitted that his construction of the notice requirements should not be regarded as unfair and/or over-burdensome. Centrica had a 30 strong JAM team and had agreed to the clause knowing that it (Centrica) would be carrying out the migration of 12 million odd customer accounts and that this migration process posed a significant risk of problems in the implementation of the billing system. Mr Onions submitted that the commercial purpose of Clause 15.4.3 was to provide for a mechanism whereby Accenture fixed Fundamental Defects so as to ensure that Centrica received the stipulated benefits of the new billing system, and if Accenture's construction were correct that purpose would be defeated. It would be defeated because, as the parties must have contemplated when the Amended JPA was concluded, it could be very difficult and time-consuming to discover what breach or breaches of warranty were causing the malfunctioning of the system in question, and the Warranty Period extended only to 28 February 2007. Mr Onions went so far as to submit that if Accenture's construction were correct, Clause 15.4.3 would be a trap for the unwary. Mr Onions observed that Clause 15.4.3 does not expressly state that the detail of the fundamental breach Accenture say is required should be provided. In his submission, what is required is a written statement that there is a Fundamental Defect together with the provision of the information called for by the words in brackets. In supplying that information, ie the analysis and detail that is reasonably practicable as to Centrica's reasons for believing there is a Fundamental Defect, Centrica would be letting Accenture know what it (Centrica) knew, which chimed with the prescribed steps that Accenture had to take. Mr Onions further submitted that since under Clause 15.4.3 Accenture's prescribed steps obligation was subject to a notice served before the end of the Warranty Period, and since Accenture is excused from further liability if it takes those steps, Clause 15.4.3 was in the nature of an exclusion clause to the benefit of Accenture and should be construed contra proferentem. The release reflected in Clause 27.4B did not apply to liability under the Release 3B warranties. Clause 15.4.3 accordingly diminished what would otherwise be Accenture's warranty obligations. In my judgement, Mr Onion's submission that what is required by Clause 15.4.3 is a written statement that there is a Fundamental Defect and the provision of such analysis etc as to Centrica's belief there is a Fundamental Defect is correct. My reasons are as follows. (1) Clause 15.4.3 must be construed contra proferentem: it is an exclusion clause excluding or limiting what otherwise would be Accenture's liability at common law for breach of the Release Warranties and there is doubt as to the meaning of the words "upon being notified in writing of a Fundamental Defect…". (2) Clause 15.4.3 does not expressly require specification of any particular breach of warranty or the severe adverse effect but refers only to a written notification "of a Fundamental Defect" and the provision of such analysis etc as to the reasons for the belief there is a Fundamental Defect. (3) The overall purpose of Clause 15.4.3 would be seriously impaired if Accenture's construction were correct; that purpose being to provide for a regime for the fixing by Accenture of Fundamental Defects if this is what a commercial, reasonable and prudent organisation would do, so that Centrica has the benefit of a billing system that is in accordance with contractual requirements. (3) The parties must or ought to have appreciated that: (a) when the system is running for real it can be very hard to find out why something is wrong; and (b) it could be difficult to tell which errors are important and which trivial. (4) The obligation to do what a commercial, reasonable and prudent organisation would do admits of the possibility that an enquiry should be made into the cause of the malfunction identified in the reasons given for believing there is a Fundamental Defect. I should add that I would have reached the same conclusion even if Clause 15.4.3 were not construed contra proferentem. Accordingly, my answer to the questions posed by Issue 4 is No. I turn to Issue 3. It is clear from Mannai Investment Co Ltd v Eagle Star Life Assurance Co. Ltd [1997] AC 749 that a notice must be construed in the light of the relevant background when determining its meaning. Centrica argues that its dealings with Accenture concerning the defects that emerged between June 2006 and February 2007 are relevant background for construing the Notification Letter. I agree. Once the Notification Letter has been so construed, it will then be appropriate to consider whether it satisfies the written notification and provision of information requirements imposed by Clause 15.4.3; see Trafford MBC v Total Fitness [2002] EWCA Civ 1513 at para 49. It should be noted that I have not been asked to determine whether the provision of such analysis etc as to Centrica's reasons for believing there is a Fundamental Defect must be in writing. Nor is the issue whether the Notification Letter complies with the trigger requirements of Clause 15.4.3 before the court. Issue 5 5. What is the correct basis for calculating the damages which can be claimed by Centrica for a Fundmental Defect under the terms of the Amended JPA? In particular:- 5.1 Is Centrica entitled to recover as damages, its costs incurred in relation to the alleged Fundamental Defect before Accenture was notified of the alleged Fundamental Defect? 5.2 Are the losses recoverable by Centrica in relation to any alleged Fundamental Defect limited to those suffered after the expiry of a reasonable time for Accenture to comply with its obligations under Clause 15.4.3 following notification? 5.3 Is Centrica's entitlement to recover losses limited to losses calculated on a "Time and Materials Basis" in accordance with clause 15.4.3? This issue raises the question whether Accenture's warranty obligations are free-standing so that they can found a claim for damages at large at common law if Accenture fails promptly to take the prescribed steps, or whether such a failure by Accenture entitles Centrica to recover damages measured only by Accenture's prescribed steps obligation. In common with his argument under Issue 4 that the contra proferentem rule had no application to the construction of Clause 15.4.3, Mr Vos submitted that the prescribed steps obligation was carved out of the general release in Clause 27.4B so that there was no other surviving obligation on Accenture for fundamental breach of warranty. It followed, he argued, that the relevant breach for damages purposes if Accenture failed promptly to use the endeavours set out in Clause 15.4.3 was that breach and not a breach of the Release Warranties provided for in Clauses 15.2.1 and 15.2.2. And this being so, Centrica was not entitled to recover damages for its costs in relation to a fundamental breach incurred before the prescribed steps obligation was engaged or for losses incurred before the expiry of a reasonable time for Accenture to comply with its Clause 15.4.3 obligations. Moreover, such damages as Centrica was entitled to recover were to be calculated on a "Time and Materials Basis" in accordance with Clause 15.4.3. Mr Vos drew attention to the fact that the words "for a Fundamental Defect" appear in the sentence "This shall constitute Accenture's entire liability and Centrica's sole and exclusive remedy for a Fundamental Defect" and in the later sentence beginning "For the avoidance of doubt, the only situation in which Centrica shall have a claim for damages for a Fundamental Defect shall be if Accenture does not promptly use the endeavours set out in this Clause 15.4.3 …". It followed, submitted Mr Vos, that the words "a Fundamental Defect" in the later sentence had the same meaning as in the earlier sentence. In other words, "for a Fundamental Defect" is shorthand for Accenture's prescribed steps obligation and has this meaning in both sentences. Mr Vos also submitted that if the intention had been to convert the prescribed steps obligation back to an obligation to pay damages for breach of warranty, the last sentence would not have used the words "for the avoidance of doubt" but would have provided for the restoration of the warranty obligation. I am unpersuaded by Mr Vos' submissions. In my judgement, the Release warranty obligations including the obligation to pay damages for the breach thereof were not merged in the prescribed steps obligation. Considerably clearer words would have had to have been used before it could be concluded that Centrica had relinquished its right to recover damages for defects that ex hypothesi had caused a severe adverse effect on Centrica's business. The words "shall have a claim for damages for a Fundamental Defect" in the final sentence of Clause 15.4.3 mean "a claim for damages at large at common law for a fundamental breach of Clauses 15.2.1 and/or 15.2.2 and/or 15.1.1(i) which causes a severe adverse effect on the British Gas Business". It is to be noted that Centrica accepts that the Clause 16 cap applies to the damages they seek to recover at common law for breach of the Release Warranties. For the reasons I have given, I answer Yes to Issue 5.1 and No to Issues 5.2 and 5.3. Issue 6 In respect of the damages claim and the classes of loss claimed by Centrica in Schedule A, are any of those claims of loss excluded under Clause 16.2 of the Amended JPA? If so, are they nevertheless (as a matter of principle) recoverable as sums expended in mitigation of Centrica's losses? The question I have to decide is whether the items of loss listed below are irrecoverable under Clause 16.2 of the Amended JPA which provides: 16.2 Consequential Loss Subject to Clause 16.7 or as otherwise expressly provided in this Agreement, in no event shall either Party be liable whether in contract, tort (including negligence) or otherwise in respect of any of the following losses or damages: 16.2.1 loss of profits or of contracts arising directly or indirectly; 16.2.2 loss of business or of revenues arising directly or indirectly; 16.2.3 any losses, damages, costs or expenses whatsoever to the extent that these are indirect or consequential or punitive; save that this Clause 16.2 shall not apply in the event that either party terminates this Agreement other than in accordance with Clause 21. It was common ground that the words "directly" and "indirectly" in Clause 16.2 referred respectively to the first and second limb of the rule in Hadley v Baxendale (1854) 9 Exch 341: "Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of it." Gas Distribution charges (in the region of) of £18,700,000 Accenture contends that this item, although dressed up in different language, is a claim for loss of revenue or loss of profits and is therefore excluded under Clauses 16.2.1 and 16.2.2. Accenture also submits that this is a type of indirect or consequential loss within the second limb of Hadley v Baxendale. Centrica pleads in paragraphs 14 to 15 of its Statement of Facts in relation to Losses ("the Losses Statement") that it purchases gas wholesale from distributors and is charged for this gas according to the volume of gas supplied to its customers. Centrica transmits electronically customer meter reads to the distributors which they use for calculating their charges to Centrica. As a result of the alleged automation error in Release 3B, gas distributors were not provided with meter data for about 15% of Centrica's customers' gas consumption and charged Centrica on the basis of an over-estimation of consumption for these customers. Centrica seek damages in respect of the charges based on the over-estimation. In my judgement, accepting the allegations made in the Losses Statement as if they were proved, this item of loss has arisen as a direct result of the automation error and falls within the Hadley v Baxendale first limb. Further, it is not a claim for revenue but for charges Centrica has paid which it would not have paid but for the alleged automation error. Accordingly, I find that this item is not irrecoverable under Clause 16.2. Compensation paid to customers: £8,000,000 Centrica alleges that as a result of the alleged severe disruption to its new billing system it suffered serious reputational damage. It estimates that as a result of the defects in Release 3B about 770,000 more customers left Centrica between March 2006 and March 2007 than would have left at historical rates of customer loss. Centrica further alleges that as a result of this reputational damage it paid £8 million in compensation to its customers between these dates to reflect the billing difficulties and poor customer service they had received. Accenture contends that the sum paid out was paid ex gratia and is plainly an indirect or consequential loss. Mr Vos cited paragraphs 21 – 25 of Lord Hoffmann's judgement in The Achilleas [2009] 1 AC 61. In my judgement this item of loss is neither indirect nor consequential but falls within the first limb of Hadley v Baxendale. Having regard to the Amended JPA overall and to the relevant background, including Recital (A) I think it plain that one of the purposes of the new billing system was to improve customer relations and customer services. It is equally plain that in the context of the Amended JPA, Accenture assumed responsibility for losses in terms of compensation paid to customers if the billing system failed to perform as it was intended it should perform. Accordingly, assuming that Centrica's factual allegations are true, I find that this item of loss is recoverable. Additional Borrowing Charges: £2,000,000 Centrica pleads due to the late billing or non-billing of customers as a result of Accenuture's breach of warranty, Centrica's revenue was reduced and between July 2006 and October 2007 it was forced to incur £2 million in additional borrowing charges to finance its business. The billing system was at the heart of Centrica's business. Its revenues depended on it operating efficiently. Breaches of warranty that delayed the issuing of bills or the non-issuance of bills were bound in my opinion to have an adverse impact on Centrica's revenue with the very likely consequence that there would have to be borrowing to make up for the loss of revenue. In my judgement, this loss falls within the first limb of Hadley v Baxendale and is not excluded by Clause 16.2. Cost of chasing debt not due: £387,287 Centrica pleads that it incurred this sum chasing debt from its customers which in fact was not due, but which Centrica thought was due as a result of errors in Release 3B. Accenture submits that this loss is indirect and/or consequential. I disagree. In my opinion, if the alleged breaches of warranty are proved, this loss would have flowed naturally and in the ordinary course of events from those breaches. Additional stationery and correspondence costs: £107,120 Centrica pleads that in September 2006 it established an Incident Management Team ("IMT") to investigate "hot topics" arising from Release 3B that were causing particular distress to its customers and contributing to an increase in customer call volumes. IMT wrote to customers to update them on the progress of these "hot topics" and in doing so incurred stationery and correspondence costs of £107,120. For the reasons I gave in concluding that the compensation paid to customers was not irrecoverable under Clause 16.2, I find that this item loss too is not excluded by Clause 16.2. Costs of Mitigation This question does not strictly arise since I have found that none of the above items of loss is excluded by Clause 16.2. If it had been necessary to answer the question I would have held that the sums in issue were not recoverable as sums expended in mitigation. In my judgement, sums spent in mitigating loss that is indirect or consequential must in logic be sums paid in respect of indirect or consequential loss, and for that reason would be irrecoverable under Clause 16.2. CONCLUSION For the reasons given above, I answer the Issues dealt with in this judgement as follows: 1.1 No. A "fundamental" breach of warranty can be constituted by individual breaches of warranty all falling within the same subparagraph under Clause 15.2.1 or Clause 15.2.2 of the Amended JPA. 1.2 Yes. The consequences of individual fundamental breaches of warranty alleged by Centrica can be aggregated for the purposes of determining whether there is a severe adverse effect on the British Gas Business. 2. No. It is sufficient if at the time of notification the breach would cause a "severe adverse effect" if left unremedied. 3. The letter of 12 February 2007 can be construed against the background of the parties' prior knowledge of alleged defects in Release 3 in order to determine its meaning. The question can then be decided whether, so construed, it is a valid notice. 4 (i) No 4. (ii) No 4. (iii) No 4. (iv) No 5. The damages recoverable by Centrica for a Fundamental Defect are damages at large at common law. 5.1 Yes 5.2 No 5.3 No 6. None of the items of loss dealt with in answering this Issue is excluded under Clause 16.2. Note 1    Following the Jupiter Programme Contract Amendment No 1, the provisions contained in clauses 1.4 and 1.5 applied only in respect of the warranties contained in clause 15.     [Back] Note 2   Following the Jupiter Contract Amendment No.1, the parties were discharged from the obligations contained in this clause.    [Back] Note 3   Following the Jupiter Contract Amendment No.1, the parties were discharged from the obligations contained in this clause.    [Back]

OPINION OF ADVOCATE GENERAL CRUZ VILLALÓN delivered on 29 March 2012 ( ) Case C-616/10 Solvay SA v Honeywell Fluorine Products Europe BV, Honeywell Belgium NV, Honeywell Europe NV (Reference for a preliminary ruling from the Rechtbank ’s-Gravenhage (Netherlands)) ‛Judicial cooperation in civil matters — Jurisdiction and the recognition and enforcement of judgments — Regulation (EC) No 44/2001 — Action for infringement of a European patent — Special and exclusive jurisdiction — Article 6(1) — More than one defendant — Article 22(4) — Validity of patent called into question — Article 31 — Provisional or protective measures’ 1. The Rechtbank ’s-Gravenhage (District Court, The Hague) (Netherlands), seised of actions for infringement of a European patent against companies established in different Member States, followed by a claim for provisional relief (a cross-border prohibition against infringement), is referring several questions to the Court of Justice for a preliminary ruling on the application of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ( ) to disputes relating to intellectual property rights. 2. The very specific questions from the referring court ( ) encapsulate some of the main issues ( ) raised by the application of that regulation to cross-border disputes concerning European patents ( ) and thus provide an opportunity for the Court of Justice to clarify its most significant judgments on the matter in regard to Articles 6(1), ( ) 22(4) ( ) and 31 ( ) of Regulation No 44/2001. I – Legal framework 3. Pursuant to Article 3 of Regulation No 44/2001, and notwithstanding the principle established by Article 2 of that Regulation, persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Articles 5 to 24 of the Regulation. 4. Article 6 of Regulation No 44/2001 provides that a person domiciled in a Member State may be sued in another Member State: ‘… (1) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; …’ 5. Article 22 of Regulation No 44/2001 provides: ‘The following courts shall have exclusive jurisdiction, regardless of domicile: … (4) in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State; …’ 6. Finally, Article 31 of Regulation No 44/2001 provides: ‘Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.’ II – Facts in the main proceedings 7. On 6 March 2009, Solvay SA, a company established in Belgium and holding European patent EP 0 858 440, valid in more than one Member State, ( ) brought an action in the Rechtbank ’s-Gravenhage in the Netherlands for infringement ( ) of several national parts of the patent, in particular against three companies originating from two different Member States, Honeywell Fluorine Products Europe BV, established in the Netherlands, and Honeywell Belgium NV and Honeywell Europe NV, established in Belgium, ( ) for marketing a product manufactured by Honeywell International Inc. (HFC-245) that was identical to the product under the above patent. 8. In the course of the proceedings, on 9 December 2009 Solvay SA lodged an interim claim against the defendants in the main proceedings, seeking provisional relief in the form of a cross-border prohibition against infringement for the duration of the main proceedings. ( ) 9. As the defendants in the main proceedings had raised the defence of invalidity of the national parts of the patent concerned in the interim proceedings, without, however, having brought or even declared their intention of bringing actions for invalidity, and contested the competence of the Dutch court to hear both the main proceedings and the interim proceedings, the Rechtbank ’s-Gravenhage decided to stay the proceedings and refer to the Court of Justice for a preliminary ruling a question on the interpretation of Article 6(1) of Regulation No 44/2001 and several questions on Articles 22(4) and 31 of Regulation No 44/2001. III – The questions referred 10. The questions raised by the Rechtbank ’s-Gravenhage are as follows: ‘(1) Regarding Article 6(1) of Regulation No 44/2001: In a situation where two or more companies from different Member States, in proceedings pending before a court of one of those Member States, are each separately accused of committing an infringement of the same national part of a European patent which is in force in yet another Member State by virtue of their performance of reserved actions with regard to the same product, does the possibility arise of “irreconcilable judgments” resulting from separate proceedings as referred to in Article 6(1) of the Regulation? (2) Regarding Article 22(4) of Regulation No 44/2001: (a) Is Article 22(4) of the Regulation applicable in proceedings seeking provisional relief on the basis of a foreign patent (such as a provisional cross-border prohibition against infringement), if the defendant argues by way of defence that the patent invoked is invalid, taking into account that the court in that case does not make a final decision on the validity of the patent invoked but makes an assessment as to how the court having jurisdiction under Article 22(4) of the Regulation would rule in that regard, and that the application for interim relief in the form of a prohibition against infringement shall be refused if, in the opinion of the court, a reasonable, non-negligible possibility exists that the patent invoked would be declared invalid by the competent court? (b) In order for Article 22(4) of the Regulation to be applicable in proceedings such as those referred to in the preceding question, must the defence of invalidity be subject to procedural requirements in the sense that Article 22(4) of the Regulation is only applicable if invalidity proceedings before the court having jurisdiction under Article 22(4) of the Regulation are already pending or are to be commenced — within a period to be laid down by the court — or at least that a summons in that regard has been or is being issued to the patent holder, or does it suffice if a defence of invalidity is merely raised and, if so, are requirements then laid down in respect of the content of the defence put forward, in the sense that it must be sufficiently substantiated and/or that the conduct of the defence must not be deemed to be an abuse of procedural law? (c) If question 1 is answered in the affirmative, does the court, after a defence of invalidity has been raised in proceedings such as those referred to in question 1, retain jurisdiction in respect of the infringement action with the result that (if the claimant so desires) the infringement proceedings must be stayed until the court having jurisdiction under Article 22(4) of Regulation [No 44/2001] has given a decision on the validity of the national part of the patent invoked, or that the claim must be refused because a defence that is essential to the decision may not be adjudicated, or does the court also lose its jurisdiction in respect of the infringement claim once a defence of invalidity has been raised? (d) If question 1 is answered in the affirmative, can Article 31 of Regulation [No 44/2001] confer on the national court jurisdiction to adjudicate on a claim seeking provisional relief on the basis of a foreign patent (such as a cross-border prohibition against infringement), and against which it is argued by way of defence that the patent invoked is invalid, or (should it be decided that the applicability of Article 22(4) of the Regulation does not affect the jurisdiction of the Rechtbank to adjudicate on the infringement question) jurisdiction to adjudicate on a defence claiming that the foreign patent invoked is invalid? (e) If question 4 is answered in the affirmative, what facts or circumstances are then required in order to be able to accept that there is a real connecting link, as referred to in paragraph 40 of the Van Uden v Deco-Line judgment, between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought?’ 11. The applicant and defendants in the main proceedings, the Federal Republic of Germany, the Hellenic Republic, the Kingdom of Spain and the Commission have submitted written observations. Representatives of Solvay SA and Honeywell Fluorine Products Europe BV and agents for the Kingdom of Spain and the Commission were heard at the hearing on 30 November 2011. IV – Analysis 12. It must be observed from the outset that, in so far as Regulation No 44/2001 now replaces, in relations between the Member States, ( ) the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, ( ) the interpretation given by the Court as regards the Convention also applies to the regulation, where its provisions and those of the Brussels Convention may be treated as equivalent. ( ) Moreover, it is clear from recital 19 in the preamble to Regulation No 44/2001 that continuity in interpretation between the Brussels Convention and that regulation should be ensured. A – The main action and the interpretation of Article 6(1) of Regulation No 44/2001 13. By its first question, the referring court asks the Court, in essence, whether it can declare itself competent on the basis of Article 6(1) of Regulation No 44/2001. To be more precise, it is seeking clarification as to whether, in view of the fact that it is seised of actions against an undertaking established in the Netherlands and two undertakings established in Belgium, there is a possibility of irreconcilable judgments which would justify its jurisdiction on the basis of that provision. 14. Article 6(1) of Regulation No 44/2001 provides for the possibility for an applicant to sue several defendants before the court where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. ( ) 15. The Court established the requirement for such a connecting link in its interpretation of Article 6(1) of the Brussels Convention ( ) and it was then incorporated in the wording of Article 6(1) of Regulation No 44/2001 ( ) in order to ensure that the exception to the principle of jurisdiction of the courts of the Member State in which the defendant is domiciled could not call the very existence of that principle into question. 16. The Court has also explained that, for decisions to be regarded as contradictory, it is not sufficient that there be a divergence in the outcome of the dispute, but that divergence must also arise in the context of the same situation of law and fact. ( ) 17. It is, moreover, for the national court to assess, in the light of all the necessary factors in the case-file, whether there is a connection between the different claims brought before it, that is to say, a risk of irreconcilable judgments if those claims were determined separately. ( ) 18. In its judgment in Roche Nederland and Others, however, the Court found that parallel actions for infringement in different Member States, which, in accordance with Article 64(3) of the Munich Convention, must be examined in the light of the national law in force, ( ) are not in the context of the same legal situation ( ) and hence any divergences between decisions cannot be treated as contradictory. ( ) 19. In other words, it appears that, in principle, the conditions for application of Article 6(1) of Regulation No 44/2001 cannot be met when the actions for infringement are based on a European patent. 20. From that point of view the Court’s case-law in Roche Nederland and Others has been strongly criticised, ( ) in that it considerably reduces the scope of Article 6(1) of Regulation No 44/2001 ( ) in the field of industrial property. ( ) It is widely considered ( ) to weaken the protection of holders of European patents ( ) and also to be incompatible with Article 69 of the Munich Convention. ( ) 21. Should the position therefore be that the issue raised by the present case ultimately comes down to a decision either to uphold or to overturn the case-law in Roche Nederland and Others? 22. I do not think so. It seems to me that, as the Federal Republic of Germany, the Kingdom of Spain and the Commission have all argued, it is possible to adopt a more nuanced approach, carefully circumscribing the scope of the case-law in Roche Nederland and Others. 23. In fact, the legal situation at issue in the main proceedings is different from that at issue in Roche Nederland and Others, in so far as the defendants in the main proceedings, established in the Netherlands and Belgium, are separately accused of marketing the same infringing products in the same Member States and hence infringing the same ‘national parts of the European patent’ as are applicable in the latter Member States. 24. To determine the relevance of those arguments, it may be useful to consider the situation that would arise if Article 6(1) of Regulation No 44/2001 were to be declared inapplicable. The Dutch referring court would be competent to deal with the action against the defendant in the main proceedings established in the Netherlands, and a Belgian court would have to be seised by the applicant in the main proceedings of an infringement action against the two defendants in the main proceedings established in Belgium, in accordance with Article 2 of the Regulation. ( ) 25. The two courts would each have to examine the alleged infringements in the light of the different national legislation governing the various ‘national parts of the European patent’ alleged to have been infringed by applying the lex loci protectionis principle. ( ) They would, for instance, be called upon to assess according to the same Finnish law the infringement of the Finnish part of the European patent by the three defendants in the main proceedings by the marketing of an identical infringing product in Finland. 26. It is true that, in those circumstances, they would be required to give decisions in the context of the same legal situation, the infringement of the same national part of a patent defining the scope of that patent’s protection in the same terms, ( ) but might deliver diametrically opposite judgments. 27. In other words, Article 6(1) of Regulation No 44/2001 would not be applicable to a bundle of infringement actions relating to different companies established in different Member States, since they concern acts carried out in different Member States that infringe different national parts of a European patent governed by different laws. ( ) On the other hand it might, if the condition of an identical situation of fact is met, be applicable to a bundle of infringement actions against different companies established in different Member States if they relate separately to acts carried out in the same Member State that infringe the same national part of a European patent governed by the same law. ( ) 28. It should, however, be pointed out that the special rules on jurisdiction in Regulation No 44/2001 are to be interpreted by the national court ( ) having regard for the principle of legal certainty, which is one of the objectives of the regulation; that implies that Article 6(1) of Regulation No 44/2001 is to be interpreted ‘in such a way as to enable a normally well-informed defendant reasonably to foresee before which courts, other than those of the State in which he is domiciled, he may be sued’. ( ) 29. In those circumstances, I propose that the Court answer the first question from the referring court by ruling that Article 6(1) of Regulation No 44/2001 is to be interpreted as meaning that it is applicable in an action for infringement of the European patent involving several companies established in different Member States when the actions relate separately to acts carried out in the same Member State that infringe the same national part of a European patent governed by the same law. B – The interim proceedings 30. In its second series of questions the referring court asks, in essence, whether the fact that a defence of invalidity of a patent has been raised in interim proceedings for a cross-border prohibition against infringement, in parallel to main proceedings for infringement, is sufficient, and, if so, under what formal or procedural conditions, for Article 22(4) of Regulation No 44/2001 to become applicable, with the result that, firstly, the court dealing with the case has to decline jurisdiction for the main proceedings on the basis of Article 25 of Regulation No 44/2001 and, secondly, as a consequence, it is required to consider its competence to adjudicate on the interim proceedings on the basis of Article 31 of Regulation No 44/2001. 1. Interpretation of Article 22(4) of Regulation No 44/2001 31. The first series of questions regarding the scope of the provisions of Article 22(4) of Regulation No 44/2001 are to be considered in the light of the grounds and the operative part of the GAT judgment. ( ) 32. In that judgment, the Court ruled that, having regard to its objective and its position within the scheme of the Convention, ( ) Article 16(4) of the Brussels Convention was to be interpreted as meaning that the rule of exclusive jurisdiction laid down in that article concerns all actions relating to the registration or validity of a patent, whether the question is raised through an action or a plea in objection, and irrespective of the stage of the proceedings in which it is raised. 33. Without going back to the raison d’être of those provisions, it may be emphasised that that solution was justified by three series of considerations relating to the basis and purpose of the system established by the Brussels Convention: ( ) firstly, the binding nature of the exclusive jurisdiction established by Article 16(4) of the Brussels Convention; ( ) next, the need to avoid multiplying the heads of jurisdiction, in order to ensure the predictability of the rules of jurisdiction, and consequently legal certainty, ( ) and, lastly, the need to avoid multiplying the risk of conflicting decisions, which the Brussels Convention sought specifically to avoid. ( ) 34. The Federal Republic of Germany, the Hellenic Republic, the Kingdom of Spain and the Commission, endorsing in that respect some of the points made by the referring court, agree, in substance, that courts seised of an interim application, as in the main proceedings, are not ruling on the merits or the existence of the infringement (subject-matter of the main proceedings) or on the validity of the patent (defence raised in the interim proceedings); on the contrary, they normally confine themselves to consideration of whether the conditions for granting the interim measure sought have been fulfilled. Since any examination of the validity of a patent is prima facie and does not lead to any final decision, there is therefore no risk of conflicting decisions. 35. However, that view has to be discussed particularly in the light of paragraph 30 of the GAT judgment, in which the Court has commented very specifically on the issue of the effects of decisions on the applicability of Article 16(4) of the Brussels Convention. It was argued that, since the effects of a decision ruling indirectly on the validity of a patent were limited to the parties to the proceedings under German law (inter partes effect), there could be no risk of conflicting decisions. The Court rejected that argument in terms that were both very general and very radical. 36. Emphasising that the effects associated with such a decision are determined by national law and that, in several Contracting States, the decision to annul a patent has erga omnes effect, it took the view that ‘in order to avoid the risk of contradictory decisions, it is therefore necessary to limit the jurisdiction of the courts of a State other than that in which the patent is issued to rule indirectly on the validity of a foreign patent to only those cases in which, under the applicable national law, the effects of the decision to be given are limited to the parties to the proceedings’. It ruled that that was not possible, since ‘such a limitation would … lead to distortions, thereby undermining the equality and uniformity of rights and obligations arising from the Convention for the Contracting States and the persons concerned’. ( ) 37. Should it therefore be considered that the GAT judgment, requires the referring court to decline jurisdiction in the circumstances of the main proceedings? In my view, the answer should be more nuanced and should take account of procedural reality. 38. It must be stressed that only three situations are likely to arise, depending on whether the validity of the patent has been called into question in both the main proceedings and the interim proceedings (hypothesis (a)), or only in the main proceedings (hypothesis (b)) or only in the interim proceedings (hypothesis (c)). 39. In hypotheses (a) and (b) the GAT case-law is applicable; the court seised must therefore, in accordance with Article 25 of Regulation No 44/2001, decline jurisdiction for the main proceedings and consider the possibility of granting the provisional measure applied for on the basis of Article 31 of Regulation No 44/2001. 40. In hypothesis (c), there are two possible scenarios. The defendant may not have had the opportunity to raise the question of the validity of the patent in the main proceedings, for instance because the provisional measure was adopted before the main action started ( ) (situation (c1)). It is also possible that the defendant did have that opportunity but did not consider it appropriate to take advantage of it (situation (c2)); that seems to correspond to the situation in the main proceedings, which is for the referring court to determine. 41. In situation (c1), the court seised must be able to consider the application for a provisional or protective measure and grant it if appropriate, but in full compliance with the GAT case-law. That means that such a provisional measure can be adopted only if, within a reasonable period, the court seised is also seised of main proceedings relating to the measure applied for, an action for infringement under an application for prohibition of infringement, in the context of which compliance with the GAT case-law can be ensured, and hence strictly on the condition that it does not have any final effect. 42. In situation (c2), on the other hand, the argument derived in the interim proceedings from the invalidity of the patent in question cannot, in principle, lead the court seised to decline jurisdiction for the main proceedings in accordance with Article 25 of Regulation No 44/2001. In that situation, it may be assumed that the argument derived from the invalidity of the patent in question is a delaying tactic; it is for the defendant to establish that it has brought proceedings for a declaration of invalidity before the competent court. The court seised may therefore adopt the provisional measure applied for in accordance with its national law, provided that it is competent for the substance. 43. Accordingly, I suggest to the Court that it rule that Article 22(4) of Regulation No 44/2001 is to be interpreted as meaning that the rule of exclusive jurisdiction that it lays down is not applicable when the validity of a patent is raised only in interim proceedings, in so far as the decision likely to be adopted at the end of those proceedings does not have any final effect. 2. Interpretation of Article 31 of Regulation No 44/2001 44. The opinion on this point is delivered only in the alternative, in the event that the Court decides that the referring court is not competent to hear the action on the substance, in accordance with Article 22(4) of Regulation No 44/2001, or is not competent to hear the whole of the action on the substance, in accordance with Article 6(1) of the Regulation. 45. In fact, as indicated by settled case-law, ( ) the court having jurisdiction as to the substance of a case under one of the heads of jurisdiction laid down in the Brussels Convention, and subsequently in Regulation No 44/2001, also has jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions. ( ) 46. It is apparent from the Court’s case-law that Article 31 of Regulation No 44/2001, like Article 24 of the Brussels Convention before it, constitutes an autonomous right of jurisdiction, ( ) complementary to the rights of jurisdiction established in Articles 2 to 24 of Regulation No 44/2001. ( ) None the less, in so far as that article provides for an exception to the system of jurisdiction established by Regulation No 44/2001, it must be strictly interpreted, ( ) the exercise of ‘provisional jurisdiction’ being subject to certain conditions laid down in the Court’s case-law, relating to the nature of the rights to be protected and the purpose and subject-matter of the measures sought. ( ) 47. The provisional measures must, firstly, fall within the scope of Regulation No 44/2001, restricted to the notion of civil and commercial matters. In view of the diverse range of such measures in the various Member States, that categorisation is to be determined not by their inherent nature but by the nature of the rights that they safeguard. ( ) That is without any doubt the case with infringement actions, to which the general rules of Regulation No 44/2001 apply, ( ) and with provisional applications for a cross-border prohibition against infringement, such as that in the main proceedings. ( ) 48. The measures capable of being adopted on the basis of Article 31 of Regulation No 44/2001 must, moreover, be of a provisional nature, that is to say be intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as to the substance of the matter. ( ) That chiefly implies that a provisional measure adopted on the basis of Article 31 of Regulation No 44/2001 is for a limited period. 49. The Court has emphasised in very general terms that the court called upon to authorise such a measure must act with ‘particular care … and detailed knowledge of the actual circumstances in which the measure is to take effect’, which means that it must ‘place a time-limit on its order’ and, more generally, ‘make its authorisation subject to all conditions guaranteeing the provisional or protective character of the measure ordered’, ( ) normally until a decision is taken on the substance. 50. Moreover, and specifically for the purpose of ensuring that measures adopted on the basis of Article 31 of Regulation No 44/2001 are of a provisional or protective nature, in Van Uden, ( ) the Court laid down an additional condition, namely the existence of a real connecting link between the subject-matter of the provisional measures sought and the territorial jurisdiction of the Member State of the court seised, ( ) a point very specifically referred to in the last question referred by the national court. 51. Until now the Court has not directly had the opportunity to explain what those two conditions meant as regards intellectual property rights. 52. Since the preliminary application in question in the main proceedings was made after a main action had started, so that the condition of restriction of the scope of the measure adopted ratione temporis may be considered to be potentially fulfilled, I shall look in particular at the condition of existence of a real connecting link. 53. That condition, which has been criticised, ( ) is interpreted in various ways. ( ) Some take the view that that requirement is a restriction on the extraterritorial effect of the provisional measures adopted. Others believe that the condition implies that the measure adopted produces its effects, at least partially, in the Member State of the court seised. Hence the condition in no way acts as a restriction on the scope ratione loci of the measure adopted; on the contrary, the measure can produce its effects in Member States other than the State of the court seised and thus have extraterritorial scope. ( ) It is more a condition of minimum territorial localisation of the provisional measure sought. The existence of a real connecting link should thus be considered chiefly in the light of the enforcement procedures of the Member State of the court seised. ( ) 54. Indeed, it seems to me that it may be accepted that the court of a Member State that is hypothetically not competent to deal with the substance of the case can declare itself competent to authorise a provisional measure based on Article 31 of Regulation No 44/2001 only in so far as that measure has an effect in the territory of the Member State concerned and can be enforced there. It is for that same court to assess whether that real connecting link exists, since it is in the best position to do so. 55. Accordingly, I suggest that the Court rule that Article 31 of Regulation No 44/2001 is to be interpreted as meaning that a national court may not authorise a provisional measure having no effect in its territory, which it is incumbent on that court to decide. V – Conclusion 56. In conclusion, I propose that the Court answer the questions referred by the Rechtbank ’s-Gravenhage by ruling, 1. principally: (a) Article 6(1) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters is to be interpreted as meaning that it applies in an action for infringement of the European patent involving several companies established in different Member States when the actions relate separately to acts carried out in the same Member State and infringe the same national part of a European patent governed by the same law. (b) Article 22(4) of Regulation No 44/2001 is to be interpreted as meaning that the rule of exclusive jurisdiction that it lays down is not applicable when the validity of a patent is raised only in interim proceedings, in so far as the decision likely to be adopted at the end of the proceedings has no final effect. 2. In the alternative: Article 31 of Regulation No 44/2001 is to be interpreted as meaning that a national court cannot authorise a provisional measure that produces no effect in its territory, which it is incumbent on the court to decide. ( ) Original language: French. ( ) OJ 2001 L 12, p. 1. ( ) These questions were, moreover, raised very shortly after the publication by the European Commission of a proposal for a regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) of 14 December 2010 (COM(2010) 748 final), (‘the proposal for a recast of Regulation No 44/2001’). For a discussion of the proposal, see Heinze, C. A., ‘Choice of Court Agreements, Coordination of Proceedings and Provisional Measures in the Reform of the Brussels I Regulation’, Rabels Zeitschrift für ausländisches und internationales Privatrecht, 2011, Vol. 75, p. 581. ( ) Issues raised by the Commission in its report to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 of 21 April 2009 (COM(2009) 174 final, point 3.4). See also Green Paper on the review of Regulation No 44/2001 of 21 April 2009 (COM(2009) 175 final, points 4 and 6) and European Parliament Resolution of 7 September 2010 on the implementation and review of Regulation No 44/2001 (OJ 2011 C 308 E, p. 36, point 22). ( ) See, in particular, Fernández Arroyo, D., Compétence exclusive et compétence exorbitante dans les relations privées internationales, RCADI, 2006, Vol. 323, in particular p. 95, points 80 et seq; Leible, S. and Ohly, A. (ed.), Intellectual Property and Private International Law, Mohr Siebeck, 2009 ; Schauwecker, M., Extraterritoriale Patentverletzungsjuridiktion — Die internationale Zuständigkeit der Gerichte außerhalb des Patenterteilungsstaates für Verletzungsverfahren, Carl Heymanns Verlag, 2009; Nourissat C. and Treppoz E., Droit international privé et propriété intellectuelle — Un nouveau cadre pour de nouvelles stratégies, Lamy, Axe Droit, 2010 ; Winkler, M., Die internationale Zuständigkeit für Patentverletzungstreitigkeiten, Peter Lang, 2011. ( ) Case C-539/03 Roche Nederland and Others [2006] ECR I-6535. ( ) Case C-4/03 GAT [2006] ECR I-6509. ( ) Case C-391/95 Van Uden [1998] ECR I-7091. ( ) Specifically, Denmark, Ireland, Greece, Luxembourg, Austria, Portugal, Finland and Sweden. Switzerland and Liechtenstein should also be included. ( ) ‘The main proceedings’. ( ) ‘The defendants in the main proceedings’. ( ) ‘The interim proceedings’. ( ) In the case of the Kingdom of Denmark, see the Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed at Brussels on 19 October 2005 (OJ 2005 L 299, p. 62). ( ) OJ 1972 L 299, p. 32, ‘the Brussels Convention’. ( ) See, in particular, Case C-292/08 German Graphics Graphische Maschinen [2009] ECR I-8421, paragraph 27, and Case C-406/09 Realchemie Nederland [2011] ECR I-9773, paragraph 38. ( ) Case 189/87 Kalfelis [1988] ECR 5565, paragraph 12; Case C-51/97 Réunion européenne and Others [1998] ECR I-6511, paragraph 48; and Roche Nederland and Others, paragraph 20. ( ) Kalfelis, paragraph 12. ( ) As the Court pointed out in Roche Nederland and Others, paragraph 21. ( ) Roche Nederland and Others, paragraph 26; Case C-98/06 Freeport [2007] ECR I-8319, paragraph 40; and Case C-145/10 Painer [2011] ECR I-12533, paragraph 79. ( ) Freeport, paragraph 41, and Painer, paragraph 83. ( ) Paragraph 30. ( ) Paragraph 31. ( ) Paragraphs 32 and 35. ( ) See, in particular, European Max-Planck Group on Conflict of Laws in Intellectual Property (CLIP), Intellectual Property and the Reform of Private International Law: Sparks from a Difficult Relationship, IPRax, 2007, No 4, p. 284; points 78 to 85, and the case-law cited in point 78 of the Opinion delivered by Advocate General Trstenjak in Painer; see also Muir Watt, H., ‘Article 6’, in Magnus, U. and Mankowski, P., Brussels I Regulation, 2nd ed., Sellier, European Law Publishers, 2012, p. 313, No 25a; Noorgård, M., ‘A Spider without a Web? Multiple Defendants in IP Litigation’, in Leible, S. and Ohly, A. (ed.), p. 211; Gonzalez Beilfuss, C., ‘Is there any Web for the Spider? Jurisdiction over Co-defendants after Roche Nederland’, in Nuyts, A. (ed.), International Litigation in Intellectual Property and Information Technology, Kluwer Law International, p. 79. ( ) Some critical authors, however, were able to acknowledge that that case-law had ended years of insecurity and helped to improve harmonisation in Europe. See, to that effect, Kur, A., ‘Are there any Common European Principles of Private International Law with regard to Intellectual Property’, in Leible, S. and Ohly, A., op. cit., pp. 1 and 2. ( ) In particular, Hess, B, et al., Report on the Application of Regulation Brussels I in the Member States (Study JLS/C4/2005/03), Ruprecht-Karls-Universität Heidelberg, September 2007, No 204, p. 104 (‘Heidelberg Report’). ( ) The Commission itself highlighted the difficulties arising from that case-law in its report of 21 April 2009 on the application of Regulation No 44/2001 (point 3.4). The Green Paper on the review of Regulation No 44/2001 at first adopts a very cautious approach to the issue, also taking account of Roche Nederland and Others, paragraphs 36 to 38. In any event, it must be observed that it did not propose any amendment to Article 6 of Regulation No 44/2001 in its proposal for recasting of Regulation No 44/2001, even though its aim was merely to identify a number of deficiencies of the current system and to remedy them pending the creation of the unified litigation system for European and Community patents. See, on that point, Opinion 1/09 of 8 March 2011, Opinion delivered pursuant to Article 218(11) TFEU ECR I-1137, in which the Court held that the envisaged agreement creating a unified patent litigation system (‘European and Community Patents Court’) is not compatible with the provisions of the TEU and TFEU. ( ) Heidelberg Report, p. 338, No 825 et seq. ( ) Heidelberg Report, p. 340 , No 833 et seq. ( ) The advisability of bringing actions based on Article 5(3) of Regulation No 44/2001 was not discussed in that case and is not therefore considered in this Opinion. ( ) See, on that point, points 97 and 118 of the Opinion of Advocate General Léger in Roche Nederland and Others. ( ) See, to that effect, Blumer, F., ‘Patent Law and International Private Law on both Sides of the Atlantic’, World Intellectual Property Organisation (WIPO) Forum on Private International Law and Intellectual Property, Geneva, 30 and 31 January 2001 (WIPO/PIL/01/3). ( ) In Roche Nederland and Others, paragraph 33, the Court in fact took the view that a connection could not be established ‘between actions for infringement of the same European patent where each action was brought against a company established in a different Contracting State in respect of acts which it had committed in that State’. ( ) It should be pointed out that the Court has ruled that Article 6(1) of Regulation No 44/2001 was applicable despite the fact that the actions to be consolidated did not have an identical legal basis. See Freeport, paragraphs 31 to 47. ( ) Case C-103/05 Reisch Montage [2006] ECR I-6827, paragraph 24. ( ) See Reisch Montage, paragraph 25; see also, in regard to Article 5(1) of the Brussels Convention, Case C-26/91 Handte [1992] ECR I-3967, paragraph 18; Case C-440/97 GIE Groupe Concorde and Others [1999] ECR I-6307, paragraph 24; and Case C-256/00 Besix [2002] ECR I-1699, paragraphs 24 to 26; on the forum non conveniens claim, Case C-281/02 Owusu [2005] ECR I-1383, paragraph 40; on Article 24 of the Brussels Convention, Case C-104/03 St Paul Dairy [2005] ECR I-3481, paragraph 19. ( ) Paragraphs 13 to 31. ( ) Paragraphs 20 to 24. ( ) For the raison d’être of those provisions, reference will be made to the numerous works of legal literature. ( ) Paragraphs 26 and 27. ( ) Paragraph 28. ( ) Paragraph 29. ( ) On the subject of Regulation No 44/2001, see Case C-420/07 Apostolides [2009] ECR I-3571, paragraph 41. ( ) Although that might appear an absurd hypothesis, in the case of interim proceedings assumed as such, one might say by their nature, to be added to parallel main proceedings, it may none the less occur, as I shall emphasise below. ( ) Van Uden, paragraphs 22 and 48, and Case C-99/96 Mietz [1999] ECR I-2277, paragraph 41. ( ) It should be noted that those provisions are incorporated in a new provision in the proposal for a recast of Regulation No 44/2001, namely Article 35. ( ) Van Uden, paragraph 42. See, in particular, Pertegás Sender, M., ‘Article 24 of the Brussels Convention: a particular Reading for Patent Infringement Disputes?’, in Fentiman, R. et al., L’espace judiciaire européen en matières civile et commerciale, Bruylant, 1999, p. 277; Pertegás Sender, M., Cross-Border Enforcement of Patent Rights, Oxford University Press, p. 130, No 3.138. ( ) On that provision, see the report by Mr P. Jenard on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, signed in Brussels on 27 September 1968 (OJ 1979 C 59, p. 1, in particular p. 42), and the explanatory report by Professor Fausto Pocar on the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007 (OJ 2009 C 319, p. 1, paragraph 124). ( ) On Article 24 of the Brussels Convention, see St Paul Dairy, paragraph 11. ( ) Van Uden, paragraph 46, and Mietz, paragraph 47. ( ) Case 143/78 de Cavel [1979] ECR 1055, paragraph 8; Case C-261/90 Reichert and Kockler [1992] ECR I-2149, paragraph 32; Van Uden, paragraph 33; and Realchemie Nederland, paragraph 40. ( ) Case 288/82 Duijnstee [1983] ECR 3663, paragraph 23. ( ) Although the Court ruled that it was for the referring court to verify whether that is in fact the case. See St Paul Dairy, paragraph 10. ( ) Reichert and Kockler, paragraph 34; Van Uden, paragraph 37; and St Paul Dairy, paragraph 13. ( ) Case 125/79 Denilauler [1980] ECR 1553, paragraphs 15 and 16; Reichert and Kockler, paragraph 33; and Van Uden, paragraph 38. ( ) Paragraph 40. ( ) It should be explained that, even though the Court did not formally and explicitly refer to that condition in its subsequent judgments, it did mention it in Mietz, paragraph 42. ( ) Notably by the Commission, echoing the legal literature, in its report on the application of Regulation No 44/2001 (cited above) and in its Green Paper on the review of Regulation No 44/2001 (cited above). In its resolution of 7 September 2010 (cited above), the European Parliament ‘urges that a recital be introduced in order to overcome the difficulties posed by [that] requirement’. For an overall view, see Dickinson, A., ‘Provisional Measures in the “Brussels I” Review: Disturbing the Status Quo?’ in Journal of Private International Law, 2010, Vol. 6, No 3, p. 519. ( ) See, in particular, Pertegás Sender, M., ‘Cross-Border Enforcement of Patent Rights’, op. cit., paragraph 3.158; Janssens, M.-C., ‘International Disputes Involving Intellectual Property Rights: How to Take the Hurdles of Jurisdiction and Applicable Law’, in Dirix, E., and Leleu, Y.-H., The Belgian report at the XVIIIth Congress of Washington of the International Academy of Comparative Law, Bruylant, 2011, No 46, pp. 611 and 640. ( ) The Court, moreover, pointed that out in Case C-256/09 Purrucker [2010] ECR I-7349, paragraph 85, referring on that point to the explanatory report by Dr Alegría Borrás on the Convention, drawn up on the basis of Article K.3 of the Treaty on European Union, on Jurisdiction and the Recognition and Enforcement of Judgments in Matrimonial Matters (OJ 1998 C 221, p. 27, paragraph 59). See also Denilauler, paragraph 17. ( ) The proposal for a recast of Regulation No 44/2001 (cited above, paragraph 3.1.5, recital 25) provides that the free circulation of provisional measures ordered by a court having jurisdiction as to the substance should be ensured, whereas the effects of provisional measures adopted by a court not having jurisdiction as to the substance should be confined to the territory of the Member State concerned. See also Article 99 of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1) and Article 103 of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (OJ 2009 L 78, p. 1).

COURT OF APPEAL FOR ONTARIO CITATION: Ma v. Ottawa (City), 2019 ONCA 142 DATE: 20190222 DOCKET: C65978 Hourigan, Benotto and Huscroft JJ.A. BETWEEN Chuang Ma Appellant and City of Ottawa Respondent Chuang Ma, in person Jeremy Wright, for the respondent Heard: February 21, 2019 On appeal from the judgment of Justice Robert Beaudoin of the Superior Court of Justice, dated September 6, 2018. APPEAL BOOK ENDORSEMENT [1] The appellant appeals from the endorsement of the motion judge dismissing his action pursuant to r. 2.1.01. [2] We see no basis to interfere with the decision of the motion judge. The essence of the appellant’s claim is that the Ottawa Police Service ought to have prevented an unnamed person from putting up posters stating that he was a spy. The motion judge correctly concluded that the respondent is not responsible at law for the torts of the officers of the Ottawa Police Service. The claim does not disclose a cause of action and is frivolous, vexatious and an abuse of process. The appeal is dismissed. The appellant shall pay the respondent’s costs of the appeal in the all-inclusive sum of $100.

Case C-294/05 European Commission v Kingdom of Sweden (Failure of a Member State to fulfil obligations – Duty-free imports of military equipment and of dual‑use goods for civil and military use) Summary of the Judgment 1. Community law – Scope – No general exception excluding measures taken for reasons of public security (Arts 30 EC, 39 EC, 46 EC, 58 EC E, 64 EC, 296 EC and 297 EC) 2. Own resources of the European Communities – Establishment and making available by the Member States – Duty-free imports by a Member State of military equipment and of dual use goods for civil and military use (Council Regulations No 1552/89, as amended by Regulation No 1355/96, Arts 2 and 9 to 11, and No 1150/2000, Art. 2 and 9 to 11) 1. Although it is for Member States to take the appropriate measures to ensure their internal and external security, it does not follow that such measures are entirely outside the scope of Community law. The only articles in which the Treaty expressly provides for derogations applicable in situations which may affect public safety are Articles 30 EC, 39 EC, 46 EC, 58 EC, 64 EC, 296 EC and 297 EC, which deal with exceptional and clearly defined cases. It cannot be inferred that the Treaty contains an inherent general exception excluding all measures taken for reasons of public security from the scope of Community law. The recognition of the existence of such an exception, regardless of the specific requirements laid down by the Treaty, would be liable to impair the binding nature of Community law and its uniform application. Furthermore, the derogations provided for in Articles 296 EC and 297 EC must, in the same way as derogations from fundamental freedoms, be interpreted strictly. As regards, more particularly, Article 296 EC, although that article refers to measures which a Member State may consider necessary for the protection of the essential interests of its security or of information the disclosure of which it considers contrary to those interests, that article cannot however be read in such a way as to confer on Member States a power to depart from the provisions of the Treaty based on no more than reliance on those interests. Consequently it is for the Member State which seeks to take advantage of Article 296 EC to prove that it is necessary to have recourse to that derogation in order to protect its essential security interests. (see paras 43-45, 47) 2. A Member State which has failed to establish and pay to the Commission of the European Communities own resources which were not collected in the period from 1 January 1998 until 31 December 2002, in relation to imports of war material and goods for civil and military use, and has failed to pay default interest arising from the failure to pay those own resources to the Commission has failed to fulfil its obligations under, respectively, Article 2 and Articles 9 to 11 of Regulation No 1552/89 implementing Decision 88/376 on the system of the Communities’ own resources, as amended by Regulation No 1355/96, until 31 May 2000, and, after that date, the same articles of Regulation No 1150/2000, implementing Decision 94/728, on the system of the Communities’ own resources. A Member State cannot be allowed to plead the increased cost of military material because of the application of customs duties on imports of such material from third countries and thereby seek to avoid, at the expense of other Member States who collect and pay the customs duties on such imports, the obligations which the principle of joint financing of the Community budget imposes on it. That conclusion holds good a fortiori in respect of imports of dual use material for both civil and military use. (see paras 48, 53-54, operative part) JUDGMENT OF THE COURT (Grand Chamber) 15 December 2009 (*) (Failure of a Member State to fulfil obligations – Duty-free imports of military equipment and of dual‑use goods for civil and military use) In Case C‑294/05, ACTION under Article 226 EC for failure to fulfil obligations, brought on 20 July 2005, European Commission, represented by L. Ström van Lier, P. Dejmek and G. Wilms, acting as Agents, with an address for service in Luxembourg, applicant, v Kingdom of Sweden, represented by A. Kruse and A. Falk, acting as Agents, defendant, supported by: Federal Republic of Germany, represented by M. Lumma, acting as Agent, Republic of Finland, represented by J. Heliskoski, acting as Agent, Kingdom of Denmark, represented by M.J. Molde, acting as Agent, interveners, THE COURT (Grand Chamber), composed of V. Skouris, President, A. Tizzano, J.N. Cunha Rodrigues, K. Lenaerts, E. Levits and C. Toader, Presidents of Chambers, C.W.A. Timmermans, A. Borg Barthet (Rapporteur), M. Ilešič, J. Malenovský and U. Lõhmus, Judges, Advocate General: D. Ruiz-Jarabo Colomer, Registrar: C. Strömholm, Administrator, having regard to the written procedure and further to the hearing on 25 November 2008, after hearing the Opinion of the Advocate General at the sitting on 10 February 2009, gives the following Judgment 1 By its application, the Commission of the European Communities asks the Court to declare that, by failing to declare and pay own resources which were not collected in the period from 1 January 1998 until 31 December 2002, in relation to imports of war material and goods for civil and military use, and by failing to pay default interest arsing from the failure to pay those own resources to the Commission, the Kingdom of Sweden has failed to fulfil its obligations under Article 2 and Articles 9 to 11 of Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ own resources (OJ 1989 L 155, p. 1), as amended by Council Regulation (EC, Euratom) No 1355/96 of 8 July 1996 (OJ 1996 L 175, p. 3; ‘Regulation No 1552/89’), and the same articles of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities’ own resources (OJ 2000 L 130, p. 1). Legal context Community legislation 2 Article 2(1) of Council Decision 88/376/EEC, Euratom, of 24 June 1988 on the system of the Communities’ own resources (OJ 1988 L 185, p. 24) and of Council Decision 94/728/EC, Euratom, of 31 October 1994 on the system of the European Communities’ own resources (OJ 1994 L 293, p. 9), provides: ‘Revenue from the following shall constitute own resources entered in the budget of the Communities: … (b) Common Customs Tariff duties and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries and customs duties on products coming under the Treaty establishing the European Coal and Steel Community; ...’ 3 Article 20 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1, the ‘Community Customs code’), provides: ‘1. Duties legally owed where a customs debt is incurred shall be based on the Customs Tariff of the European Communities. … 3. The Customs Tariff of the European Communities shall comprise: (a) the combined nomenclature of goods; ... (c) the rates and other items of charge normally applicable to goods covered by the combined nomenclature as regards: – customs duties … (d) the preferential tariff measures contained in agreements which the Community has concluded with certain countries or groups of countries and which provide for the granting of preferential tariff treatment; (e) preferential tariff measures adopted unilaterally by the Community in respect of certain countries, groups of countries or territories; (f) autonomous suspensive measures providing for a reduction in or relief from import duties chargeable on certain goods; (g) other tariff measures provided for by other Community legislation. ...’ 4 Article 217(1) of the Community Customs Code states: ‘Each and every amount of import duty or export duty resulting from a customs debt, hereinafter called “amount of duty”, shall be calculated by the customs authorities as soon as they have the necessary particulars, and entered by those authorities in the accounting records or on any other equivalent medium (entry in the accounts). ...’ 5 In the context of making available to the Commission the Communities’ own resources, the Council of the European Union adopted Regulation No 1552/89, applicable during the period at issue in this case until 30 May 2000. That regulation was replaced as from 31 May 2000 by Regulation No 1150/2000 which consolidates Regulation No 1552/89 but does not alter its content. 6 Article 2 of Regulation No 1552/89 provides: ‘1. For the purpose of applying this Regulation, the Community's entitlement to the own resources referred to in Article 2(1)(a) and (b) of Decision 88/376/EEC, Euratom shall be established as soon as the conditions provided for by the customs regulations have been met concerning the entry of the entitlement in the accounts and the notification of the debtor. 1a. The date of the establishment referred to in paragraph 1 shall be the date of entry in the accounting ledgers provided for by the customs regulations. …’ 7 Article 9(1) of that regulation provides: ‘In accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened in the name of the Commission with its Treasury or the body it has appointed. This account shall be kept free of charge.’ 8 Under Article 10(1) of that regulation: ‘After deduction of 10% by way of collection costs in accordance with Article 2(3) of Decision 88/376/EEC, Euratom, entry of the own resources referred to in Article 2(1)(a) and (b) of that Decision shall be made at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established in accordance with Article 2 of this Regulation. ...’ 9 Article 11 of Regulation No 1552/89 provides: ‘Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the Member State concerned at the interest rate applicable on the Member State’s money market on the due date for short-term public financing operations, increased by two percentage points. This rate shall be increased by 0.25 of a percentage point for each month of delay. The increased rate shall be applied to the entire period of delay.’ 10 Under Article 22 of Regulation No 1150/2000: ‘Regulation (EEC, Euratom) No 1552/89 shall be repealed. References to the said Regulation shall be construed as references to this Regulation and should be read in accordance with the correlation table set out in Part A of the Annex.’ 11 Thus, apart from the fact that Regulations Nos 1552/89 and 1150/2000 contain references to Decision 88/376 and Decision 94/728 respectively, Article 2 and Articles 9 to 11 of those two regulations are, in essence, identical. 12 The rate of 10% specified in Article 10(1) of Regulation No 1150/2000 was raised to 25% by Council Decision 2000/597/EC, Euratom, of 29 September 2000 on the system of the European Communities’ own resources (OJ 2000 L 253, p. 42). 13 Recital (1) of the preamble to that decision states: ‘The European Council meeting in Berlin on 24 and 25 March 1999 concluded, inter alia, that the system of the Communities’ own resources should be equitable, transparent, cost-effective, simple and based on criteria which best express each Member State’s ability to contribute.’ 14 Council Regulation EC No 150/2003 of 21 January 2003 suspending import duties on certain weapons and military equipment (OJ 2003 L 25, p. 1), adopted on the basis of Article 26 EC, states in recital (5) of the preamble: ‘In order to take account of the protection of the military confidentiality of the Member States it is necessary to lay down specific administrative procedures for the granting of the benefit of the suspension of duties. A declaration by the competent authority of the Member State for whose forces the weapons or military equipment are destined, which could also be used as a customs declaration as required by the Customs Code, would constitute an appropriate guarantee that these conditions are fulfilled. The declaration should be given in the form of a certificate. It is appropriate to specify the form which such certificates must take and to allow also the use of means of data processing techniques for the declaration.’ 15 Article 1 of that regulation provides: ‘This Regulation lays down the conditions for the autonomous suspension of import duties on certain weapons and military equipment imported by or on behalf of the authorities in charge of the military defence of the Member States from third countries.’ 16 Article 3(2) of that regulation states: ‘Notwithstanding paragraph 1, for reasons of military confidentiality, the certificate and the imported goods may be submitted to other authorities designated by the importing Member State for this purpose. In such cases the competent authority issuing the certificate shall send before 31 January and 31 July of each year a summary report to the customs authorities of its Member State on such imports. The report shall cover a period of 6 months immediately preceding the month on which the report has to be submitted. It shall contain the number and issuing date of the certificates, the date of importation and the total value and gross weight of the products imported with the certificates.’ 17 Article 8 of Regulation No 150/2003 states that that regulation is to apply as from 1 January 2003. Pre-litigation procedure 18 By letter of 20 December 2001 the Commission advised the Kingdom of Sweden that the fact that the imports at issue had, since 1998, been exempted from customs duties had caused the Community to suffer a loss of own resources. The Commission called upon the Member State to calculate the amounts which had not been collected in respect of the budgetary years subsequent to the 1998 financial year and to make those amounts available to it by 31 March 2002. The Commission also advised the Swedish authorities that default interest was payable from that date, pursuant to Article 11 of Regulation No 1150/2000. 19 In its reply of 11 March 2002 the Kingdom of Sweden expressed the view that it was entitled, on the basis of Article 296(1)(b) EC, not to collect customs duties when military equipment and goods intended both for civil and military use were imported. 20 By letter of 31 March 2003 the Commission renewed its original request relating to imports of the products in question prior to 1 January 2003, the period subsequent to that date being covered by Regulation No 150/2003. 21 In its reply of 3 September 2003 the Kingdom of Sweden maintained its position and declared that it did not intend to comply with the Commission’s request. 22 By letter of 17 October 2003 the Commission gave formal notice to the Kingdom of Sweden that it should make available to it the own resources which were payable to the Commission under Article 26 EC and Article 20 of the Community Customs Code, since the Kingdom of Sweden had, contrary to the terms of those articles, unilaterally exempted imports of dual–use goods for both civil and military use. 23 In its reply of 15 December 2003, the Kingdom of Sweden maintained its position. 24 On 9 July 2004, after consideration of the Kingdom of Sweden’s reply, the Commission issued a reasoned opinion for each of the infringement proceedings, namely those relating to the fact that imports of material intended for specifically military use were exempted from duty and those relating to the fact that dual‑use goods for both civil and military use were exempted from duty, and called upon that Member State to take the measures necessary to achieve compliance within a period of two months from the date of receipt. In its reply of 3 September 2004 the Kingdom of Sweden repeated and expanded upon the arguments previously submitted. 25 Taking into account what the Kingdom of Sweden had said, the Commission took the view that the Kingdom of Sweden had not complied with the reasoned opinion and brought this action. 26 By order dated 13 September 2007, the President of the Court allowed the applications for leave to intervene of the Federal Republic of Germany, the Republic of Finland and the Kingdom of Denmark in support of the forms of order sought by the Kingdom of Sweden. The action Arguments of the parties 27 The Commission claims that the Kingdom of Sweden is wrong to rely on Article 296 EC to justify the refusal to pay customs duties, since the collection of such duties does not threaten the essential security interests of that Member State. 28 The Commission considers that measures which establish derogations or exceptions, such as in particular Article 296 EC, must be interpreted strictly. Accordingly, the Member State concerned which claims that Article 296 EC applies and which proposes to derogate from Article 20 of the Community Customs Code, where the general principle of the levying of duties as fixed under Article 26 EC is stated, should demonstrate that it can satisfy all the conditions laid down in Article 296 EC. 29 The Commission rejects as unfounded the Kingdom of Sweden’s argument relating to the fear of disclosure of information supplied in the customs declaration and to the fear that monitoring procedures might lead the Community institutions to jeopardise military confidentiality. 30 The Commission adds that the Kingdom of Sweden was perfectly capable of organising the collection of the customs duties at issue in such a way as to safeguard the confidentiality of transmitted information, by, for example, making a military authority responsible for acting as the competent customs authority. 31 The Commission considers that the Kingdom of Sweden has not established in what respect the commitments it entered into under international agreements, on the one hand, and its obligations with regard to own resources, on the other, were incompatible. The same is true of the argument that the Kingdom of Sweden’s international cooperation projects and essential interests of its security and defence policy were seriously jeopardised by those obligations. 32 The Commission states that the Kingdom of Sweden’s failure to collect the customs duties in question creates a disparity among the Member States in relation to their respective contributions to the Community budget. Moreover, the fact that a Member State exempts imports of military material and dual‑use goods for both civil and military use from customs duties in order to reduce their cost is evidence of a failure by that Member State to fulfil its obligations in respect of the joint co‑financing of the Community budget. 33 The Commission claims that it is for the Kingdom of Sweden to provide specific and detailed evidence that the measures which it has taken, which deprive the Community budget of own resources, were indispensable for the protection of the essential interests of its security. The Kingdom of Sweden has not provided any such evidence. Furthermore, the fact that other Member States, whose situation is comparable to that of the Kingdom of Sweden, collect and pay customs duties on import duties of military material without thereby imperilling their security deprive the Kingdom of Sweden’s arguments on that point of any weight. 34 The Commission also observes that while Regulation No 150/2003, based on Article 26 EC, establishes a means whereby the obligation to collect customs duties on imports of certain military equipment can be suspended, by introducing a system of certificates or customs declarations, there is, on the other hand, no general provision in that regulation which confers on Member States the right freely to determine which goods may be exempted. 35 The Kingdom of Sweden considers that Article 296 EC permits it to take measures for the protection of the essential interests of its security. Pursuant to that article, the Kingdom of Sweden was therefore justified in exempting imports of military material from customs duties. The purpose of that article is to ensure that Member States have freedom of action in certain areas affecting national defence and security. The fact that Article 296 EC is among the general and final provisions of the EC Treaty confirms its general scope and its effect on all provisions of general scope within the Treaty and within secondary Community law. 36 In support of its claim that Article 296(1)(b) EC is applicable, the Kingdom of Sweden argues that the effect of levying customs duties when military equipment is imported is that the acquisition of such equipment becomes more expensive and consequently, the operational capacity of its armed forces is reduced. The additional direct costs imposed on the national defence budget, because of the customs duties at issue, impinge on the Kingdom of Sweden’s freedom of action in the area of acquisition of defence material. 37 The Kingdom of Sweden considers that a consequence of its military neutrality is that national defence has a strategic role within its security policy. Accordingly, because of its surface area, the Kingdom of Sweden is dependent on cooperation at international level if it is to meet the national security and defence objectives. The Kingdom of Sweden argues in that regard that the obligation of confidentiality, by which it considers itself bound, precludes it sending information about the imported goods to the Commission and that any failure on its part to honour that obligation would be likely to jeopardise the pursuit of cooperation and trading relations in the military field with certain third countries. 38 The Kingdom of Sweden is of the opinion that the adoption of Regulation No 150/2003 upholds the need to respect the security interests of Member States and their right to rely on confidentiality where that is necessary. 39 The Kingdom of Sweden considers that, before the entry into force of Regulation No 150/2003, there was no provision of Community law which permitted a Member State, should the need arise for it to do so, to take measures necessary for the protection of the essential interests of its security when military material was imported. According to the Member State, those interests were covered by Article 296 EC and the Kingdom of Sweden had no other choice but to establish, at national level and on the basis of Article 296 EC, an exemption from import duties when military material was imported. Findings of the Court 40 The Community Customs Code provides for the charging of customs duties on imports of products for military use, such as those at issue, from third countries. There is no provision of the Community customs legislation which, in respect of the period of imports at issue, namely from 1 January 1998 to 31 December 2002, provided for any specific exemption from customs duties on imports of products of that type. Consequently, in respect of that period, nor was there any express exemption from the obligation to make payment to the competent authorities of the duties which were payable, accompanied, as appropriate, by payment of default interest. 41 It can moreover be inferred from the fact that Regulation No 150/2003 provided for the suspension of customs duties on certain weapons and military equipment from 1 January 2003 that the Community legislature started from the assumption that an obligation to pay those customs duties existed prior to that date. 42 The Kingdom of Sweden has not at any time denied the existence of the imports at issue during the period under consideration. The Kingdom of Sweden has confined itself to challenging the Community’s entitlement to own resources while arguing that, pursuant to Article 296 EC, the obligation to pay customs duties on armaments imported from third countries would cause serious damage to its essential security interests. 43 According to the Court’s settled case-law, although it is for Member States to take the appropriate measures to ensure their internal and external security, it does not follow that such measures are entirely outside the scope of Community law (see Case C‑273/97 Sirdar [1999] ECR I‑7403, paragraph 15, and Case C‑285/98 Kreil [2000] ECR I‑69, paragraph 15). As the Court has already held, the only articles in which the Treaty expressly provides for derogations applicable in situations which may affect public safety are Articles 30 EC, 39 EC, 46 EC, 58 EC, 64 EC, 296 EC and 297 EC, which deal with exceptional and clearly defined cases. It cannot be inferred that the Treaty contains an inherent general exception excluding all measures taken for reasons of public security from the scope of Community law. The recognition of the existence of such an exception, regardless of the specific requirements laid down by the Treaty, would be liable to impair the binding nature of Community law and its uniform application (see Case C‑186/01 Dory [2003] ECR I‑2479, paragraph 31 and case-law there cited). 44 Furthermore, the derogations provided for in Articles 296 EC and 297 EC must, in accordance with settled case-law in respect of derogations from fundamental freedoms (see, inter alia, Case C‑503/03 Commission v Spain [2006] ECR I‑1097, paragraph 45; Case C‑490/04 Commission v Germany [2007] ECR I‑6095, paragraph 86; and Case C‑141/07 Commission v Germany [2008] ECR I‑6935, paragraph 50), be interpreted strictly. 45 As regards, more particularly, Article 296 EC, it must be observed that, although that Article refers to measures which a Member State may consider necessary for the protection of the essential interests of its security or of information the disclosure of which it considers contrary to those interests, that Article cannot however be read in such a way as to confer on Member States a power to depart from the provisions of the Treaty based on no more than reliance on those interests. 46 Furthermore, in the area of value added tax, the Court declared in Case C‑414/97 Commission v Spain [1999] ECR I‑5585 that there had been a failure to fulfil obligations on the ground that the Kingdom of Spain had not shown that the exemption from that tax on imports and acquisitions of arms, ammunition and equipment exclusively for military use, an exemption provided for by Spanish legislation, was justified, under Article 296(1)(b) EC, by the need to protect the essential interests of the security of that Member State. 47 Consequently it is for the Member State which seeks to take advantage of Article 296 EC to prove that it is necessary to have recourse to that derogation in order to protect its essential security interests. 48 In the light of those considerations, a Member State cannot be allowed to plead the increased cost of military material because of the application of customs duties on imports of such material from third countries and thereby seek to avoid, at the expense of other Member States who collect and pay the customs duties on such imports, the obligations which the principle of joint financing of the Community budget imposes on it. 49 As regards the argument that the Community customs procedures are not capable of safeguarding the security of the Kingdom of Sweden, in the light of the confidentiality requirements contained in agreements entered into with exporting States, it must be stated, as correctly observed by the Commission, that the implementation of the Community customs system requires the active involvement of Community and national officials, who are bound when necessary by an obligation of confidentiality, when dealing with sensitive data, which is capable of protecting the essential security interests of Member States. 50 Furthermore, the level of specificity to be attained in the declarations which Member States must periodically complete and send to the Commission is not such as to lead to damage to the interests of those States in respect of either security or confidentiality. 51 In those circumstances, and in accordance with Article 10 EC which obliges Member States to facilitate the achievement of the Commission’s task of ensuring compliance with the Treaty, Member States are obliged to make available to the Commission the documents necessary to permit inspection to ensure that the transfer of the Community’s own resources is correct. However, as the Advocate General stated in point 168 of his Opinion, such an obligation does not mean that Member States may not, on a case-by-case basis and by way of exception, on the basis of Article 296 EC, either restrict the information sent to certain parts of a document or withhold it completely. 52 In the light of the foregoing, the Kingdom of Sweden has not shown that the conditions necessary for the application of Article 296 EC are satisfied. 53 The foregoing arguments, to the effect that Article 296 EC is not applicable in relation to imports of material for specifically military purposes, hold good a fortiori in respect of imports of dual‑use material for both civil and military use. 54 It follows from the foregoing that, by failing to make payment to the Commission of own resources which were not collected in the period from 1 January 1998 until 31 December 2002, in relation to imports of war material and goods for civil and military use, and by failing to pay default interest arising from the failure to pay those own resources to the Commission, the Kingdom of Sweden has failed to fulfil its obligations under, respectively, Article 2 and Articles 9 to 11 of Regulation No 1552/89 prior to 31 May 2000 and, after that date, the same articles of Regulation No 1150/2000. Costs 55 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 to be awarded against the Kingdom of Sweden and the latter has been unsuccessful, the Kingdom of Sweden must be ordered to pay the costs. 56 In accordance with the first paragraph of Article 69(4) of the Rules of Procedure, the Federal Republic of Germany, the Republic of Finland and the Kingdom of Denmark which have intervened in the proceedings, must bear their own costs. On those grounds, the Court (Grand Chamber) hereby: 1. Declares that, by failing to declare and pay to the European Commission own resources which were not collected in the period from 1 January 1998 until 31 December 2002, relating to imports of war material and goods for both civil and military use, and by failing to pay default interest arising from the failure to pay those own resources to the European Commission, the Kingdom of Sweden has failed to fulfil its obligations under Article 2 and Articles 9 to 11 of Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ own resources, as amended by Council Regulation (EC, Euratom) No 1355/96 of 8 July 1996, until 31 May 2000 and, after that date, the same articles of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities’ own resources. 2. Orders the Kingdom of Sweden to pay the costs. 3. Orders the Federal Republic of Germany, the Republic of Finland and the Kingdom of Denmark to bear their own costs. [Signatures] * Language of the case: Swedish.

Dr. ARIJIT PASAYAT, J Challenge in this appeal is to the judgment of Customs, Excise and Gold Control Appellate Tribunal, Mumbai in short CEGAT . In this case the CEGAT followed the order passed in the case of Srikumar Agencies who was one of the respondents in Civil Appeal Nos. 4872-4892 of 2000. By our separate judgment today in Civil Appeal Nos.

Mr Justice Tugendhat : The Claimant in this action is a NHS Foundation Trust. The Defendants are all NHS Primary Care Trusts. The Fourth Defendant hosts a procurement service for the NHS in the north east of England. The Defendants are contracting authorities for the purposes of the Public Contracts Regulations 2006 ("the Regulations"), the EU Directive 2004/18 on the co-ordination of procedures for the award of public works contracts, public supply contracts and public service contracts ("the Directive") and the applicable EU Treaty principles. The Claimant has for some time been providing diabetic retinopathy screening services ("DRS") in parts of north east England, but it is not the only provider. In October 2011 the Defendants invited tenders for contracts to provide DRS in the north of Tyne and Gateshead regions. The Claimant submitted tenders. By letters dated 3 February 2012 the Claimant was informed that its tender had been unsuccessful. The successful tenderer was Medical Imaging UK Limited ("MIUK"). THE REGULATIONS Regulations 47A and 5(2)(a) provide that the Defendants as contracting authorities, owed the Claimant, as an economic operator, the following duties under regulation 4(3) in relation to the procurement exercise: "A contracting authority shall (in accordance with article 2 of the Public Sector Directive) – (a) treat economic operators equally and in a non-discriminatory way; and (b) act in a transparent way". The Claimant alleges that the Defendants have acted in breach of their duties under regulation 4(3) and in breach of the similar duties under the Directive. By regulation 47C a breach of the duty owed in accordance with regulation 47A is actionable by any economic operator which, in consequence, suffers or risks suffering loss or damage. There is no dispute that for the purposes of this litigation the Claimant is an economic operator. An economic operator is defined as a contractor, a supplier or a services provider: regulation 4(1). A "service provider" is defined in regulation 2 as a person who "offers on the market services and (a) who sought, who seeks, or who would have wished (i) to be the person to whom a public services contract is awarded; …" There are strict time limits for starting proceedings set out in regulation 47D. The general rule under regulation 47D(2) is that proceedings must be started within 30 days beginning with the date when the economic operator first knew, or ought to have known, that grounds for starting the proceedings had arisen. The court may extend the time limit where the court considers there is good reason for doing so. But the court must not exercise that power so as to permit proceedings to be started more than three months after the date when the economic operator first knew or ought to have known that grounds for starting the dealings had arisen: regulation 47D(4), (5). If an economic operator issues a claim form challenging the decision to award a contract subject to the Regulations, that has the effect that the contracting authority is required to refrain from entering into the contract: Regulation 47G. But by regulation 47H the court has the power to bring that suspensory effect to an end. That is what the Defendants are asking this court to do now. It is common ground that the effect of Regulation 47H(2) is that the issue has to be determined by the court in accordance with the principles applicable to the grant of an interim injunction as laid down in American Cyanamid v Ethicon Ltd [1975] AC 396. There are thus three basic questions: (1) Does the Claimant's claim raise a serious question to be tried? If the answer to that question is Yes, then (2) Would damages be an adequate remedy for a party (whether the Claimant or one of the Defendants) injured by the court's grant of, or by its failure to grant, an injunction? (3) If not, where does the "balance of convenience" lie? In the context of litigation under the Regulation, it is common ground that in considering the last question the court is entitled to have regard to the interests not only of the immediate parties to the litigation, but also to the public interest, where the interests of the public are or may be affected one way or the other (ALSTOM Transport v Eurostar International Ltd [2010] EWHC 2747 (Ch) para [80]. On 9 March 2012 the Claimant issued its claim form. On 30 March 2012 it served its Particulars of Claim. On 27 April the Defendants served their Defence. On 11 June 2012 the Claimant served a Reply. Both sides to this dispute raise issues of delay. The Defendants say that the claim has been brought outside the period permitted by the Regulations. The Claimant denies that, and argues that the Defendants delayed in the issue of the application notice issued on 1 June 2012, which is now before the court, and by which the Defendants ask the court to bring to an end the suspension automatically imposed by Regulation 47G(1). THE PROCUREMENT PROCESS The Defendants invited bidders to complete a template which the Claimant completed and dated 25 November 2011. The invitation to tender was dated 21 October 2011. It is a long detailed document. It states that the contract for NHS North of Tyne was to procure a single service provision for DRS for approximately 38,500 patients across Newcastle North Tyneside and Northumberland. It states that the number of people diagnosed with diabetes has been steadily increasing at a rate of about 5% per annum and it is expected that this trend is forecast to continue into the foreseeable future. It continues as follows: "As such the number of people eligible to be offered retinal screening is likely to continue rising for a number of years to come. The service is expected to actively work as part of the integrated pathway of diabetic care and help to reduce the risk of sight loss amongst people with diabetes aged 12 years and over. The current service is provided through a complex set of arrangements with multiple providers using various models of delivery which no longer meets national requirements. Following procurement the current diabetic retinal screening service will be fully decommissioned and replaced with an new fit-for-purpose service which is expected to commence on 1 October 2012". The word "eligible" is important. The eligible population is not the same as the total population. The total population of people diagnosed with diabetes may include people who are not eligible for screening for one reason or another. An obvious reason would be if they were already blind. Some of the boxes in the template had been pre-populated with information. The service to be provided under the proposed contract is stated to commence on 1 October 2012 and to run for three years until 30 September 2015. The invitation to tender sets out in a spreadsheet information on how bids will be scored. Each of nine sections is divided into a number of different questions. Section 9 is headed Finance. In that section there are three questions which are given a maximum weighting totalling 30% of the final score. In the event the total score given to the Claimant was 62.38% and the total score given to MIUK was 85.2%, a difference of over 23%. In the section Finance the score given to the Claimant was 0% and that given to MIUK was 30%. But the scores in this section are given according to which is the best bidder. Thus in relation to the activity level, the bidder with the highest activity will be awarded the maximum score of 10% and the lowest activity will be awarded the minimum 0%. The Claimant was awarded 0% in each of the three questions under the heading Finance. It is not easy to foresee what difference it would make if the Claimant were to be found at trial to be correct in the criticisms that it makes of the procurement process. In the Financial Model template there are six relevant columns. The sixth column gives the grand total over the three year expected period of activity for the provision of the service to what is said in the first column to be the "Total North of Tyne diabetic population estimate" (underlining added). The four columns in the middle give the estimated activity in each of the four periods making up the three year total (the first and fourth are for periods of less than 12 months). One row of the template is pre-populated with the total estimated diabetic population increasing from year to year. There is below that a row in which the bidder is invited to insert the numbers the bidder will screen. There is then a row which expresses the bidder's figure as a percentage of the pre-populated figure. And finally there is a row which indicates the "distance from minimum activity (percentage less/percentage greater)". The figures entered by the Claimant for each period fall below the minimum activity required by the Defendant. The shortfall is between 9% and 4.4%. In the invitation to tender the Defendants had specified that the minimum required activity was screening of 80% of the total North of Tyne diabetic population. The figures inserted by the Claimant were shown in the document to amount to between 72.7% and 76.5% of the figures inserted by the Defendants in the pre-populated row. There is no dispute that the template was perfectly clear on this point: it referred to the "Total Population". However, the Claimant considered that it was an error on the part of the Defendants. As pleaded in the Particulars of Claim, there is a standard specified by the National Diabetic Screening Programme. One of the documents provided by the Defendants to tenderers was the Service Specification prepared by Vivienne Braithwaite and dated 13 October 2011. In paragraph 8.1, under the heading "Performance Management Framework Indicators" it lists a number of indicators. Against each indicator there is listed a threshold, a method of measurement and the frequency of monitoring. One of the indicators listed is "Uptake of Screening". The specified threshold is "80% of eligible people with diabetes receive a conclusive screening test" (underlining added). The introductory words in that paragraph set out what is to happen where performance falls outside the standard. In their Defence the Defendants admit that "a certain, albeit a small, proportion of persons falling within" the total population would not be eligible for the screening programme. But the Defendants deny that is relevant to the completion of the financial model template. They admit that the 80% key performance indicator ("KPI") in the service specification reflects the national standard which the Defendants are required to report against, but state that the financial template did not incorporate that. They designed their template to require bidders to state how many persons within the total population estimate they would screen in each year of the contract. There are other points made in the Particulars of Claim. But having regard to the percentage of points awarded in scoring each question, it is the issue arising in the Finance section which is by far the most significant in this case. If the Claimant cannot succeed on that point, it does not at present appear that it could succeed solely on the others. In spite of the admitted clarity of the template, the Claimant points to a number of documents in which it alleges there appears to be confusion on the part of the Defendants between the total population and the eligible population. The Claimant alleges that this confusion even occurs in one sub-paragraph of the Defence. That led to a late exchange of evidence including a statement from Vivienne Braithwaite by which the Defendants asserted that there was no confusion on their part, save an admitted confusion which had occurred in the writing of a letter dated 17 February 2012. The Claimant submits that this alleged confusion on the part of the Defendants arguably amounts to a breach of duty under Regulation 4(3). Reference is made to SIAC Construction v Mayo County Council [2001] 3 CMLR 59 para 42 where the Court of Justice of the European Communities said: "…the award criteria must be formulated in the contract documents or the contract notice in such a way as to allow all reasonably informed and normally diligent tenderers to interpret them in the same way". The Defendants have also adduced a witness statement from Mr Hildred of MIUK. That evidence is primarily directed to the balance of convenience. But in the last paragraph he states that MIUK considered that the Financial Model Template was clear in requiring the bidder to offer a minimum level of activity under which 80% of the total diabetic population would be screened on the basis of the total population estimates given in the template. The evidence for the Claimant on this issue is in the form of witness statements from Professor Taylor. He is Professor of Medicine and Metabolism and Director of Magnetic Resonance Centre, Campus for Ageing and Health, University of Newcastle. It is clear that he has very great experience in the development of processes for DRS, and in delivery of DRS, amongst other things. He states that it was as early as mid November 2011 that his attention was drawn to what appeared to be an error in the financial model template for the Defendants' tender document. He states that in a total population of people with diabetes the number excluded for purposes of screening is most commonly 5-15%. He thinks that it would be impossible to screen 80% of a total population. Referring to the NHS UK Atlas of Variation, where statistics on the point are given, he notes that only a very small number of services appear to deliver at better than 80% of a total population, and he expresses the view that these are outlying entries which are probably due to data entry or other statistical anomalies. The pre-populated box for the first full year of the contract contained the figure 44,829 (a figure calculated after allowing for the annual increase of 5% already referred to). From his own knowledge of the area, he states that he knew that that corresponded to the total number of diabetics within the North of Tyne region. From this he calculated that the eligible population would be 38,720. In his opinion the total population, the figure given in the template, bore no relevance to the universally used standard, and he therefore suspected a mistake. He suspected that the figure that the template should have contained was the figure for the eligible population. Accordingly, on 18 November 2011 the Claimant addressed a question to the Defendants: "we have a concern that the 80% figure relates to the whole diabetic population and the actual performance figure is based on those eligible for screening. We are therefore not sure whether this is an oversight or whether this is how you wanted that tab to be recorded". The answer was less than clear, but the Claimant put in their tender nevertheless, still assuming that the figure in the pre-populated box for the first complete year had been intended to be 38,750 (with the other three boxes adjusted correspondingly). There is more to the evidence than what I have summarised above. But Mr Williams makes two main submissions in relation to what Professor Taylor recounts. First he submits that this evidence does not disclose an arguable breach of the duty that arises under the Regulation. Second, he submits that even if it does, then it is plain that the Claimant knew the relevant matters in mid or late November 2011, and so that the 30 day time limit for commencing proceedings, and the maximum extension of time which a court is empowered to grant (three months after the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen), had both expired before the issue of the claim form on 9 March 2012. Mr Oldham submits that time did not begin to run until the letter of 17 February 2012 from the Defendants in which it is admitted that the writer confused the eligible population with the total population. In my judgment Mr Williams had very much the better of this argument on both of these points. However, the threshold in the first of the three questions to be asked according to Cyanamid is a low one, and I prefer not to decide the case on the basis that there is no seriously triable issue. I indicated in argument that it was likely that I would decide the case on the second and third questions. That is what I propose to do. DELAY BY THE DEFENDANTS The explanation given by the Defendants for their decision to issue this Application Notice on 1 June, and not before, is as follows. The DRS services currently commissioned are provided partly by the Claimant (for over 14,000 patients) and partly by Northumbria Healthcare NHS Foundation Trust ("NHCFT") (for over 22,000 patients). This fragmented arrangement is itself a cause for concerns about inequalities and accessibility in the service. The existing contracts expire on 30 September 2012. On 17 May NHCFT indicated by e-mail, and on 22 May confirmed by letter, that it is unable to provide an extension to its contract beyond 1 October. While the Claimant has offered to provide the service hitherto provided by NHFCT, as well as the service it is currently providing, the Defendants do not consider that suitable arrangements are, or can be put, in place. This is a factor to be considered under the balance of convenience. Mr Oldham submits that the Defendants should have foreseen this earlier, assuming in their favour that it is a real problem. In so far as the Claimant criticises the Defendants for delay in making this application, I see no basis for the criticism. The communications from NHCFT speak for themselves, and on an application such as the present one there is no basis for me to doubt that that is what has led to the making of the application at this time. I do not accept that the Defendants are to be criticised for not making the application earlier. THE ADEQUACY OF DAMAGES AS A REMEDY The evidence for the Claimant contains little on the question whether damages would be an adequate remedy for it. The primary concern of the Claimant's witnesses appears to be for the delivery of the service to the population in need of it. Professor Taylor believes that the award of the contract to MIUK will lead to a loss of clinical performance. This is a legitimate concern for a person in his position, and Professor Taylor's views must be given great weight. Nothing in this judgment should be taken as a criticism by me of the views he has expressed. Although the public interest is a relevant consideration in deciding where the balance of justice lies, it is not for me to decide on this application whether or not the Defendants would have been better advised to act in the manner which Professor Taylor thinks most advantageous for the public. The fact remains, that little is said for the Claimant to explain whether, and if so why, damages would not be an adequate remedy to it in its capacity as the economic operator, which is the capacity in which it sues. I accept that if the Claimant is not awarded this contract, it will not only suffer direct loss, but it may also suffer an indirect effect in its ability to win or perform other contracts, and in the maintenance of its existing structures. Mr Oldham submits, and I accept, that there is a public interest in the Regulations being observed. It is regrettable if a claimant may have a good ground for challenging the award of a contract, but that ground cannot in practice be pursued so as to lead to compliance with the Regulations. Damages are not a substitute for the procurement process being implemented according to the Regulations. But in my judgment Mr Williams is correct in his submission that the Claimant has not made out a case that damages would not be an adequate remedy for the loss that I accept it is likely to suffer as a result of any wrongdoing it may prove. For the Defendants it is submitted that the procurement process was instituted to address concerns that had been raised independently about the existing service. They rely on prejudice to the exercise of their functions, and their view as to what is in the best interests of the population of patients which the DRS is to serve. The Claimant has offered to provide the service hitherto provided by NHCFT. But even if that offer were acceptable (and the Defendants do not accept that it is), it is a short term interim solution. It would involve staff being transferred from NHCFT to the Claimant and then, again, from the Claimant to MIUK or to another service provider if this litigation does not ultimately lead to the award of the contract to the Claimant. In my judgment damages would not be an adequate remedy for the Defendants. BALANCE OF JUSTICE The Defendants submit that the continuation of the suspension would have an effect not only upon prospective patients, but also upon those who are providing and will provide the service. For example, optometrists' contracts require a 3 month period of notice, and notice was due to be served on 30 June. A number of concerns about current arrangements were raised by the External Quality Assessment Process operated by NHS Diabetic Eye Screening Programme. The Claimant's proposal that it should provide an interim service would in effect put the Defendants in the position of awarding to the unsuccessful bidder the contract which it had chosen to award to MIUK. This is not just either to the Defendants or to MIUK. I cannot decide on this application where the best interests of the diabetic population lie. The Defendants do not have a choice whether to provide the service or not. So it would not be just for the court to put the Defendants in the position where they had in practice no choice but to enter into a short term contract with the Claimant when they assert that they do not consider that that would be the proper course. The Claimant submits that what the Defendants should have done is to obtain an early date for a trial, when the matter can be resolved on the merits, and not on the Cyanamid principles. There are cases in which issues under the Regulations might be capable of resolution at a speedy trial. In the present case I am not convinced that that is so, having regard to the way that the Claimant advances its case. Disclosure of documents is required, but has not yet taken place. The parties have not delayed unduly in the exchange of statements of case, but the long vacation is nearly upon us. The issues raised require the court to investigate statistics with the assistance of experts in the field on both sides. It would be a serious matter for the court to conclude that the Defendants' witnesses have misunderstood the statistics as Professor Taylor alleges that they have. These are matters which can require prolonged consideration if the court is properly to understand them. The case advanced by the Claimant seems to me to involve novel issues of law. It is not unreasonable for Mr Williams to submit, as he does, that there could be delays in the form of possible amendments of case or even appeals. The prospect of the merits of the dispute being resolved before the end of the year is not good. A delay of a year or more in the commencement of a contract which was due to commence on 1 October 2012, and to run for three years, is a very significant delay. In my judgment, for the reasons advanced for the Defendants by Mr Williams, in the circumstances as they now are, the balance of justice falls in favour of lifting the suspension. CONCLUSION For these reasons this application succeeds and the suspension will be lifted.

FIFTH SECTION CASE OF MILENOVIĆ v. SLOVENIA (Application no. 11411/11) JUDGMENT STRASBOURG 28 February 2013 FINAL 28/05/2013 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Milenović v. Slovenia, The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of: Mark Villiger, President,Angelika Nußberger,Boštjan M. Zupančič,Ann Power-Forde,André Potocki,Paul Lemmens,Helena Jäderblom, judges,and Claudia Westerdiek, Section Registrar, Having deliberated in private on 5 February 2013, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 11411/11) against the Republic of Slovenia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Slovenian national, Mr Goran Milenović (“the applicant”), on 9 February 2011. 2. The applicant was represented by Mr B. Gvozdić, a lawyer practising in Sežana. The Slovenian Government (“the Government”) were represented by their Agent, Mrs B. Jovin Hrastnik, State Attorney. 3. The applicant complained, in particular, of a violation of Article 6 of the Convention, in so far as he had not been afforded a public hearing at which he and the witnesses could have been heard. 4. The application was communicated to the Government on 21 November 2011. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1968 and lives in Ankaran. He owns a bar located in Koper, Slovenia. A. First set of proceedings before Ilirska Bistrica Local Court (concerning the alleged offence of 1 June 2008) 6. On 14 November 2008 the Market Inspectorate of the Republic of Slovenia (hereinafter referred to as “the Inspectorate”) issued a notice informing the applicant that he had been accused of operating his bar at 2.15 a.m. on 1 June 2008, which was allegedly outside regular opening hours. The Inspectorate also noted that this information had been received from Koper Police Station. In accordance with the relevant provisions of the Minor Offences Act governing summary proceedings, the applicant was requested to submit a written statement within five days. 7. On 19 November 2008 the applicant submitted a written statement in which he disputed the allegation that his bar had been open at 2.15 a.m. He further pointed out that there had been no customers in the bar at that time and that the police had not approached him when the alleged offence had been observed. He proposed that he and two employees who had worked in the bar that evening be heard by the court. 8. On 25 November 2008 the Inspectorate, without examining the applicant or the proposed witnesses, issued a decision finding the applicant guilty of committing a regulatory offence under point 3 of section 21(1) of the Hospitality Industry Act. As regards the opening hours, it referred to the “Rules on criteria for determining opening hours of restaurant facilities and farms providing hospitality services” (hereinafter referred to as “the Rules”) and section 12 of the Hospitality Industry Act, and noted that the applicant’s bar had operated beyond the statutory opening hours without having requested an extension of opening hours (see paragraph 24 below). It imposed a fine of 1,200 euros (EUR) and ordered the reimbursement of costs in the amount of EUR 100. It also drew the applicant’s attention to the possibility of imprisonment if the fine was not paid. 9. On 28 November 2008 the applicant lodged a request for judicial review in which he alleged that the facts had been wrongly established and that his rights enshrined in Article 29 of the Slovenian Constitution had been violated. He disputed the allegation that his bar had been open and that he had had customers at the time in question. He emphasised, among other things, that the police had not approached him on the date the offence had allegedly been committed and that he and the witnesses had not subsequently had an opportunity to be heard by the Inspectorate. Moreover, the decision had not provided any explanation as to why his proposal to give evidence had been rejected; nor had it stated the permitted opening hours for the applicant’s bar or specified the time during which he had allegedly been in breach of the relevant regulation. The applicant again proposed that he and the aforementioned witnesses be heard by the court. 10. As the Koper Local Court, which was competent to decide on the applicant’s request, was experiencing a substantial backlog, the applicant’s case was transferred to the Ilirska Bistrica Local Court, which on 12 January 2010, referring to section 65 of the Minor Offences Act, delivered a judgment rejecting the applicant’s request. It took into account the notice of 14 November 2008, the impugned decision and “the facts, which had been directly observed by police officers on the spot.” The court found that the circumstances of the alleged offence had been properly established by the Inspectorate and that the applicant had had an opportunity to express his opinion on the charges but had not taken it. It also found that the Inspectorate had adequately addressed the issue of bar opening hours for owners who did not have a licence for extended opening hours. The court drew the applicant’s attention to the fact that no appeal lay against the judgment. The judgment was served on the applicant on 26 January 2010. 11. On 15 March 2010 the applicant lodged a constitutional appeal. Relying on Article 29 of the Constitution and Article 6 of the Convention, he alleged in particular that his defence rights had been breached in that he had not had an opportunity to adduce evidence or to be heard before the court. In addition, he complained that the Ilirska Bistrica Local Court had come to a different decision from the Koper Local Court on the same matter (see paragraph 20 below). Lastly, the applicant maintained that the issue at stake concerned the minimum safeguards that should be respected in summary proceedings, and was therefore of constitutional importance. He pointed out that sanctions in regulatory offences were often more severe than those in traditional criminal proceedings, and the accused had considerably fewer procedural rights and no remedies apart from judicial review. 12. The Constitutional Court dismissed the applicant’s constitutional appeal on 6 January 2011, referring to point three of section 55b (1) of the Constitutional Court Act, read together with point four of section 55a (2) of that Act. The Constitutional Court’s decision was served on the applicant on 12 January 2011. B. Second set of proceedings before Ilirska Bistrica Local Court (concerning the alleged offence of 5 October 2008) 13. On 13 November 2008 the Inspectorate issued a notice informing the applicant that he had been accused of operating his bar on 5 October 2008 at 3.45 a.m., which was allegedly outside regular opening hours. The Inspectorate also noted that this information had been received from Koper Police Station. The applicant was asked to submit a written statement within five days, in accordance with section 55 (4) of the Minor Offences Act. 14. On 19 November 2008 the applicant submitted a written statement in which he disputed the allegation that his bar had been open at 3.45 a.m. and submitted that a private party had been held there. He also maintained that the police had not approached him when the alleged offence had been observed. Lastly, the applicant proposed that he and two employees who had been working in the bar during the evening be heard. 15. On 26 November 2008 the Inspectorate, without examining the applicant or the proposed witnesses, issued a decision finding the applicant guilty of committing a regulatory offence under point 3 of section 21 (1) of the Hospitality Industry Act. As regards the opening hours, it referred to the Rules and section 12 of the Hospitality Industry Act and noted that the applicant’s bar had been open beyond the statutory opening hours without requesting a license for extended opening hours. It imposed a fine of EUR 1,200 euros and ordered the reimbursement of costs in the amount of EUR 100. It also drew the applicant’s attention to the possibility of imprisonment for failure to pay the fine. 16. On 1 December 2008 the applicant lodged a request for judicial review in which he alleged that the facts had been wrongly established and that his rights enshrined in Article 29 of the Slovenian Constitution had been violated. He disputed the allegation that the bar had been open at the time in question and emphasised, among other things, that the police had not approached him on the day the offence was allegedly committed, and that he and the witnesses had not subsequently been heard by the Inspectorate. Moreover, the decision had not provided any explanation as to why his proposal to give evidence had been rejected. The applicant again proposed that he and the aforementioned witnesses be heard by the court. 17. Also in this case the jurisdiction was transferred to the Ilirska Bistrica Local Court, which on 12 January 2010, referring to section 65 of the Minor Offences Act, delivered a judgment rejecting the applicant’s request for judicial review. It took account of the notice of 13 November 2008, the impugned decision, the applicant’s statement of 19 November 2008 and the facts in the case which had been directly observed by police officers on the spot. The court found that the circumstances of the alleged offence had been properly established by the police and that the applicant had had an opportunity to express his opinion on the charges. The court noted that “the applicant had alleged that there had been a private party in the bar which he had not organised”. It found that the Inspectorate had adequately addressed the issue of bar opening hours for owners who did not have a licence for extended opening hours. The court also drew the applicant’s attention to the fact that no appeal lay against the judgment. The judgment was served on the applicant on 26 January 2010. 18. On 15 March 2010 the applicant lodged a constitutional appeal adducing the same arguments as in the first set of proceedings. 19. On 6 January 2011 the Constitutional Court dismissed the applicant’s constitutional appeal. The decision was served on the applicant on 12 January 2011. C. Proceedings before the Koper Local Court 20. In the third set of proceedings concerning another offence of operating the bar beyond regular opening hours, on 17 September 2008 the Koper Local Court upheld the applicant’s request for judicial review of the Inspectorate’s decision concerning the offence which had allegedly been committed at 1.40 a.m. on 2 December 2007. The Koper Local Court quashed the Inspectorate’s decision on the grounds that it lacked any information as to the applicant’s registered opening hours. This information was, in the court’s view, essential in establishing whether the bar had been open beyond the registered opening hours. II. RELEVANT DOMESTIC LAW 21. For the relevant provisions of the Minor Offences Act and the Constitutional Court Act see Suhadolc v. Slovenia, ((dec.) no. 57655/08, 17 May 2011). In addition, the following domestic provisions are relevant to the present case. 22. Article 29 of the Slovenian Constitution, which concerns legal guarantees in criminal proceedings, reads as follows: “Anyone charged with a criminal offence must, in addition to absolute equality, be guaranteed the following rights: - the right to have adequate time and facilities to prepare his defence; - the right to be present at his trial and to conduct his own defence or to be defended by a legal representative; - the right to present all evidence to his benefit; - the right not to incriminate himself or his relatives or those close to him, or to admit guilt.” 23. The relevant provisions of the Hospitality Industry Act (Zakon o gostinstvu, Official Gazette 93/2007) read as follows: Section 12 “Criteria for the determination of the opening hours of restaurants and bars ... shall be provided in rules issued by the Ministry ... A restaurant or a bar owner ... shall set his opening hours in line with the above-mentioned rules and shall register them at the local authority that has jurisdiction over these matters. ...” Section 21 “A company or an individual owner shall be punished for an offence with a fine of no less than EUR 1,200 and no more than EUR 40,000 if ... – he does not set his opening hours or fails to register them with the local authority that has jurisdiction over these matters; if he does not operate within the set opening hours; ...” 24. The Rules on criteria for determining opening hours of restaurant facilities and farms providing hospitality services (“the Rules”, Pravilnik o merilih za določitev obratovalnega časa gostinskih obratov in kmetij, na katerih se opravlja gostinska dejavnost, Official Gazette no. 78/99 with amendments) in force at the relevant time, in so far as relevant, read as follows: Section 3 “An owner of a restaurant facility, bar ... shall set his regular opening hours ... as follows: ... – restaurants, bars, cafeterias and agri-tourism farms between 6 a.m. and 2 a.m. the following day. ...” THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION AS REGARDS THE LACK OF A HEARING 25. The applicant complained under Article 6 of the Convention that his right to a public hearing at which he could defend himself, examine evidence and have evidence examined, had been breached in the proceedings before the Ilirska Bistrica Local Court. Article 6, in so far as relevant, reads as follows: “1. In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...” 3. Everyone charged with a criminal offence has the following minimum rights: (c) to defend himself in person or ....; (d) to examine or have examined witnesses against him ...; ...” A. Admissibility 26. The Government argued that the part of the application relating to the second set of proceedings before the Ilirska Bistrica Local Court should be rejected as manifestly ill-founded. 27. The Court disagrees with the Government and finds that the above complaint concerning both sets of proceedings before the Ilirska Bistrica Local Court 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 28. The applicant argued that he had not been given an opportunity to be heard in the proceedings before the Ilirska Bistrica Local Court. He cited the Court’s judgment in Flisar v. Slovenia, no. 3127/09, 29 September 2011. He also argued that despite his requests, the court had not heard the relevant witnesses. 29. The Government argued that the applicant had had an opportunity to present evidence in his favour in his reply to the Inspectorate as well as in his request for judicial review. With respect to the second set of proceedings before the Ilirska Bistrica Local Court, the applicant had claimed that a private party had been held in his bar. In the Government’s view, the issue as to whether a private party was considered as “operation of the bar” was of a legal nature. It had therefore been unnecessary to hear the applicant and examine witnesses in this set of proceedings. As regards the first set of proceedings, the Government argued that the timing of the offence had been obvious from the Inspectorate’s notice and decision. The applicant had failed to show that he had had permission to open his bar at the time in question. 30. The Court notes that the applicable principles concerning the right to an oral and public hearing are outlined in the judgments in the cases of Jussila v. Finland ([GC], no. 73053/01, §§ 40-45, ECHR 2006‑XIII) and Flisar v. Slovenia (cited above, §§ 33-35). 31. As to the present case, the Court observes that the impugned domestic proceedings were conducted pursuant to the Minor Offences Act. It further notes that, as in the Flisar case, the offences in question were observed by police officers in person, who had then informed the Inspectorate of their findings. The applicant was invited to reply to the charges, which he did. Disputing the allegation that the bar had been operating at the time in question, he requested that he and two employees be heard. In both sets of proceedings complained of by the applicant, the Inspectorate, without taking the proposed evidence or explaining why they had refused to hear it, imposed a fine of EUR 1,200 on the applicant. The applicant challenged those decisions before the local court, which was required to examine the facts and the law in both cases. The applicant disputed the facts on which the imposition of the fine had been founded, requesting again that he and two witnesses be heard, this time before the court. The local court did not hear the evidence requested by the applicant. Like the Inspectorate, it based its judgments on the police’s finding that the applicant’s bar had been operating beyond 2 a.m. and the finding that the applicant had not had permission for extended opening hours. While the Court could accept that the latter point was verifiable on the basis of written evidence or the lack of it, the former point – that is the question whether the applicant’s bar had actually been open at the time in question – concerned facts allegedly observed by the police but disputed by the applicant. 32. In both sets of proceedings complained of, the authorities made no reference to any evidence other than the police allegations which would confirm that the bar had been open at the disputed time. In this connection the Court reiterates that when officers’ observations are the sole basis for a conviction, an oral hearing may be essential for the protection of the accused person’s interests in that it can put the credibility of the police officers’ findings to the test (see Berdajs v. Slovenia (dec.), no. 10390/09, 27 March 2012). The Court furthermore does not find persuasive the Government’s argument that, in the second set of proceedings, the issue of whether the applicant’s bar was operating in breach of the Rules was of a merely legal nature owing to the applicant’s acknowledgement that a private party had been held there. It notes that the domestic court had given no explanation as to the significance of the applicant’s statement to this effect and that the Government did not refer to any relevant legislation or courts’ established practice indicating that the holding of a private party was, as a matter of principle, considered tantamount to operating the bar. 33. The Court lastly notes that while the local court decided not to grant the applicant’s requests to hear evidence, no reasons were provided in the judgments as to why the hearing was considered unnecessary (see, mutatis mutandis, Gabriel v. Austria, no. 34821/06, § 31, 1 April 2010; Kugler v. Austria, no. 65631/01, § 52, 14 October 2010; and, by contrast, Jussila, cited above, § 48). 34. In view of the above, the Court finds that there has been a violation of Article 6 § 1 of the Convention on account of the lack of a public hearing before the Ilirska Bistrica Local Court at which the applicant and the witnesses could have been examined. The Court does not find it necessary to consider the case separately in the light of Article 6 § 3 (c) and (d) (see, mutatis mutandis, Kallio v. Finland, no. 40199/02, § 52, 22 July 2008, and Hannu Lehtinen v. Finland, no. 32993/02, § 50, 22 July 2008). II. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION ON ACCOUNT OF THE DIVERGENCES OF THE COURTS’ DECISIONS 35. The applicant complained that the Ilirska Bistrica Local Court, on the one hand, and the Koper Local Court (see paragraph 20 above), on the other, had reached different conclusions in his cases, which were identical in terms of facts and the arguments he had developed in his requests for judicial review. This, in the applicant’s view, rendered the proceedings before the Ilirska Bistrica Local Court unfair. Article 6, in so far as relevant, reads as follows: “In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...” 36. The Government contested the applicant’s argument. They insisted that the two sets of proceedings concerned different situations and could not be compared. In particular, the proceedings before the Koper Local Court concerned the operation of the bar at 1.40 a.m., which might have been within regular opening hours. For that reason, the lack of any information as to the registered opening hours of the bar led to the Inspectorate’s decision being quashed. 37. The applicant argued that the Koper Local Court had required that facts concerning the bar’s regular opening hours be set out in the Inspectorate decision, as this was considered to be an element of the offence, whereas the Ilirska Bistrica Local Court had not insisted on that. 38. The Court takes note of the Government’s arguments based on the difference in the factual background of the proceedings before the Ilirska Bistrica Local Court and those before the Koper Local Court. It further notes that the Inspectorate’s decisions issued in the first and second set of proceedings, unlike the one issued on 17 September 2008, referred to the relevant provisions of the Hospitality Industry Act and the Rules. They included an explanation as to the fact that the applicant’s bar had been operating beyond the regular opening hours stipulated in the Rules and that he had not requested an extension of opening hours (see paragraphs 8 and 15 above). The Inspectorate’s third decision, which was quashed by the Koper Local Court, concerned a situation in which the applicant’s bar had been open within the time-limit stipulated in the Rules. The situations cannot therefore be considered similar, and the Ilirska Bistrica Local Court’s judgments do not appear arbitrary (see, by contrast, Ştefănică and Others v. Romania, no. 38155/02, § 34, 2 November 2010). 39. Having regard to the foregoing, the Court finds that the above complaint is unsubstantiated and should be rejected as manifestly ill-founded, pursuant to Article 35 §§ 3 (a) and 4 of the Convention. III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION 40. The applicant further complained under Article 13 of the Convention that no effective remedies had been available to him to challenge his conviction. As the judicial review had been inadequate, there had been no possibility to appeal; a constitutional appeal could have been lodged in exceptional circumstances but had not been available in cases such as his. Lastly, he complained that the administrative authorities and the local court had not given reasons for their decisions, which had compromised his right to an effective remedy. 41. In the light of all the material in its possession, and in so far as the matters complained of are within its competence, the Court finds that they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention or its Protocols. 42. It follows that 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. IV. 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 EUR 2,600 in respect of pecuniary damage, which consisted of the sums paid for the fines and the costs incurred in the domestic proceedings complained of. 45. The Government argued that the applicant had failed to prove that he had actually paid the above amount with respect to the penalties and fees imposed on him in the domestic proceedings. Moreover, they argued that there had been no causal link between the alleged violation and the damage sought, because even if the applicant had been heard and the witnesses examined by the court, the result might not have been any different. They requested the Court not to award any damages in the event of the finding of a violation. 46. The Court cannot speculate as to the outcome of the proceedings concerned had there been no violation of the Convention (see Pélissier and Sassi v. France [GC], no. 25444/94, § 80, ECHR 1999-II). It therefore rejects the claim in respect of pecuniary damage. As regards non-pecuniary damage, the Court, in the absence of any claim by the applicant makes no award under this head. B. Costs and expenses 47. The applicant also claimed EUR 688.53 for costs and expenses incurred before the Court. 48. The Government argued that this claim was neither specified nor supported by any documentation. 49 According to the Court’s case-law, an applicant is entitled to 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. The Court notes that in the present case the applicant did not explain his claim or submit supporting documents or detailed information showing that the costs claimed had been actually and necessarily incurred (see S.I. v. Slovenia, no. 45082/05, § 87, 13 October 2011). The Court therefore rejects this claim. FOR THESE REASONS, THE COURT 1. Declares unanimously the complaint concerning the lack of a hearing under Article 6 of the Convention admissible and the remainder of the application inadmissible; 2. Holds unanimously that there has been a violation of Article 6 § 1 of the Convention on account of the lack of a hearing before the Ilirska Bistrica Local Court; 3. Holds unanimously that there is no need to examine separately the applicant’s above-mentioned complaint under Article 6 § 3 (c) and (d) of the Convention; 4. Dismisses by six votes to one the applicant’s claim for just satisfaction. Done in English, and notified in writing on 28 February 2013, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Claudia WesterdiekMark VilligerRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Lemmens is annexed to this judgment. M.V.C.W. PARTLY DISSENTING OPINION OF JUDGE LEMMENS I agree with the judgment insofar as it relates to the admissibility and the merits of the complaints (operative points 1 to 3). However, I respectfully disagree with the decision on just satisfaction (operative point 4). The majority dismisses the claim for just satisfaction. In my opinion the violation found, resulting from the inability for the applicant to present his views and to question the only witness against him, is of such a nature that the Court should award the applicant just satisfaction of some kind. It may be true that in his submission to the Court he referred only to “pecuniary” damage, but it is difficult for me to imagine that in doing so he implicitly indicated that he was not asking for any just satisfaction for “non-pecuniary” damage. Neither do I think that the Court should attach decisive weight to the way the applicant formulated his claim.

JUDGMENT The complainants, Time (formerly known as Granville Technology Group Limited) are well known retailers of Personal Computers (PCs). The defendants, Computer 2000 (formerly known as Frontline Distributors Limited) are also well known as sellers and distributors of PCs. The Part 20 defendants, IBM United Kingdom Limited (IBM) are well known wholesale suppliers of PCs. IBM are part of an American owned Group. This action, and some related actions, concern the supply of PCs known as Blue Lightning PCs supplied by IBM to Time and Computer 2000. The main applications before me are applications by Computer 2000 and IBM that the claim in this action by Time should be dismissed as an abuse of the process of the court. But there are also applications for specific disclosure of documents relating to the main application. Those latter applications are made by Time against Computer 2000 and by Time against IBM. The applications for specific disclosure were first opened before me on Friday 11 January, 2002 in the afternoon. Due to lack of time, I adjourned those applications and heard and decided one of them on Friday 18 January, 2002. The other of the two applications I adjourned to be heard by another judge. I was asked by Time to look at the disputed documents to determine the application but it was strongly represented to me that I would be prejudiced by looking at documents marked “without prejudice”. I made that order late in the morning. It was not until 4.30 pm that application was made to another judge to hear the application on the following Monday and he was not available on that day. It may have appeared at the beginning of the day on the Monday that there were no other TCC judges available but judges soon became available on the Monday due to last minute settlements but no application was made to one of them on the Monday. The main application came on for hearing on Tuesday 22 January and I took the initiative of finding another judge and suggested that junior counsel made the application for disclosure to him while Leading Counsel continued with the main applications. That judge pointed out that there was no formal application and no evidence in support and finally adjourned the application for lack of time. The application was not pursued further after 22 January. The main application continued on 22, 23, and 24 January, 2002. By way of introduction, it is necessary to consider a certain amount of history. In reviewing that history, I shall for the most part refer to the parties by their latest names even though those were not the names that they had at the time. The Blue Lightning PCs were manufactured by one of the companies in the IBM Group in 1992/1993. By an agreement dated 20 May, 1994, IBM sold 20,160 Blue Lightning PCs to Computer 2000 on the basis that Computer 2000 would be an exclusive distributor of Blue Lightning PCs in the UK. In August, 1994, Time, Computer 2000, and IBM all agreed that Time should take over as exclusive distributor of Blue Lightning PCs in the UK. IBM agreed to sell to Time and thereafter Time bought from IBM 27,576 PCs of which 20,252 were Blue Lightning PCs and Computer 2000 transferred to Time its surplus stock of 4,030 Blue Lightning PCs. So Time acquired 24,282 Blue Lightning PCs in all. The Blue Lightning PCs acquired by Time direct from IBM came in 3 batches. The Blue Lightning PCs acquired from Computer 2000 comprised the 4th batch. The computers contained in all 4 batches are identical with each other and all are alleged to have had the same 2 faults: First, a chip associated with the mother board was allegedly defective. Second, there was alleged to be a fault in the hard disk. In 1994/1995 Time and Computer 2000 received complaints from customers regarding the Blue Lightning PCs. Both sought compensation from IBM. On 5 June, 1996, Computer 2000 and IBM agreed to compromise Computer 2000’s claim for £240,394. The compromise included the following terms: “Frontline (Computer 2000) undertakes and warrants that it will not at any time commence, advance, maintain or pursue any claim or assist or encourage a third party in any claim against the IBM companies in relation to the agreement or any similar agreements between IBM Companies and third parties. Frontline shall keep the terms and existence of this deed confidential and shall not disclose any details to a third party unless under a legal or regulatory duty to do so.” Time did not reach a compromise at that stage. On 17th November, 1998, Time commenced proceedings in the TCC against IBM (the 1998 Action). Service of the writ was delayed for negotiations and it was served in April, 1999. The 1998 action related only to the Blue Lightning PCs bought direct from IBM by Time. The action did not include any claim in respect of Blue Lightning PCs bought by Time from Computer 2000. Time and IBM were the only parties. The main complaint in the 1998 action was a design defect in the chipset of the Blue Lightning PCs. There was a subsidiary complaint regarding the hard disk. Both were pleaded as giving rise to breaches of contract due to lack of merchantability and lack of fitness for purpose. Various heads of damage were claimed in the 1998 action. However, much the largest head was for £10.5 million for “Loss of profit on lost sales” as set out in Schedule 2 to the Re-Amended Statement of Claim. As that Schedule shows, the claim is for loss of profit on 35,000 PC sales. That claim was not put as a claim in respect of a failure to sell the 20,252 Blue Lightning PCs bought direct from IBM. The claim is that Time’s business generally was damaged both by disruption to the work of Time’s staff and by damage to Time’s reputation by adverse publicity. In particular, it was said, many repeat orders were lost. On 4 August, 1999, at the first Case Management Conference in the 1998 Action, Judge Humphrey LLoyd Q.C. ordered that there should be a trial of Preliminary Issues as to two points taken by IBM in their Defence, concerning First, an exclusion clause and Second the identity of the contracting parties. In the present hearing, counsel for Time submitted that there was no point in joining Computer 2000 for the trial of those Preliminary Issues. There was no evidence that that was the reason for not joining Computer 2000 at the outset nor at that stage. Later events showed that it was not the reason for not joining Computer 2000. Those two points taken by IBM were later dropped and on 8 November, 1999, Judge Lloyd ordered a trial of Preliminary Issues on technical matters relating to the alleged defects. The hearing was set for May, 2000 later put off to 7 July, 2000. Computer 2000 had a clear interest in being joined in the 1998 action at that stage if not earlier because this trial of Preliminary Issues raised issues identical with issues raised in the current action with which I am concerned. Computer 2000 did not know about the 1998 action so they could not apply to be joined. In January, 2000, IBM disclosed some documents that Time says showed that IBM and its parent company knew before the contracts between IBM and Time and Computer 2000 that the Blue Lightning PCs contained a defective chip and that hence representations made by IBM were fraudulent. In making the current application, IBM deny fraud, and whether representations were or were not fraudulent is not an issue in these applications. Time suspected that IBM’s parent company, IBM Corporation (IBM US) was directing IBM. On 11 April, 2000, Time amended its Particulars of Claim against IBM, but in the words of a written submission made by an attorney for Time in later proceedings in the US, “deliberately chose not to allege fraud against IBM UK or IBM US”. In an affidavit sworn in those later proceedings in New York, Mr. Mohsan, the Managing Director of Time described his thinking in January and February, 2000. He said: “I considered bringing proceedings against IBM Corporation in early February 2000. At that stage I retained my current New York counsel – Mendes & Mount – and asked them to consider the form of any claim against IBM Corporation. During early 2000, I realised that I had been tricked into buying what I had been told were leading edge PCs. I then conducted further enquiries which led me to believe that IBM US directed IBM UK to sell the chips with known defects. Thereafter I intended to pursue IBM Corporation for pecuniary damages as a result of their fraud. Only when I was sure that I could settle the UK action and still retain the right to pursue IBM Corporation in New York did I agree to allow my lawyers to sign the UK Settlement agreement.” Mr. Hope, the In-house counsel for Time, whose evidence was adopted by Mr. Mohsan, said that the reason for not joining Computer 2000 as a defendant at the outset of the 1998 action was that the outcome was uncertain and Time did not want to increase the costs by joining a party that did not know about the defects. In the view of Mr. Hope and Mr.Mohsan, the documents disclosed in January 2000 together with some documents obtained from the manufacturers of the chip (a company referred to as FTDI) and disclosed by Time in February 2000, substantially increased Time’s prospects of success. Mr. Hope’s evidence in that regard and his explanation for not joining Computer 2000 now that Time thought that the outcome was much more likely to be favourable was as follows: “All of these matters are relevant to the circumstances of the present case against Frontline. They amount to clear evidence in support of Time's case that the PCs were defective and there was a known risk of problems when used in conjunction with software that utilised the DMA chip in a particular way. These circumstances once known to Time in about February 2000 made and make it difficult for Frontline to gainsay the problems with the PCs in the way that IBM had consistently denied them prior to and during the original proceedings. By the stage that Time had discovered this relevant evidence, the trial of the preliminary issues was listed for hearing in May 2000. Even though the trial was subsequently re-listed for hearing on 10th July 2000, it was far too late to bring in Frontline in time for the trial. The trial date would have been lost, taking pressure off IBM, and there was potential for removing the focus and direction of the litigation. Moreover, Time considered that there was greater chance of settlement with Frontline in later proceedings, if either it had proved its case against IBM first, or if the case against IBM was out of the way. Although Time would probably not have been able to tell Frontline what its terms of settlement were, the very fact that Frontline would know that the case had been resolved to avoid the matter going to trial would be a strong indication that Frontline might have difficulty in avoiding liability because IBM had felt the need to settle the case.” The evidence of Mr. Mohsan and his US attorney concerning their thinking about bringing proceedings against the US parent company, together with other later events to which I shall refer, show that Mr Mohsan’s thinking about joining Computer 2000 was even more devious than was suggested by Mr.Hope. If the 10 July 2000 date had been vacated, it is likely that the trial of the Preliminary Issues would have been restored at an early date after that. On the Friday before the trial of the Preliminary Issues relating to technical matters was due to start, Friday 7 July, 2000, Time and IBM settled the 1998 action for £6 million. That sum was paid on Friday 21 July, 2000. The written agreement of settlement between IBM and Time included the following: “IBM will pay, within 15 days after the execution of this Agreement. and Time will accept £6,000,000 in full and final settlement of all claims by Time and its affiliated companies against IBM of whatever nature, whether or not yet asserted, wherever they could be brought relating to the facts and matters in the Proceedings including, in particular, the three contracts for the sale of personal computer systems dated 27 May 1994, 15 August 1994 and December 1994. Subject to any obligations of law, the existence and terms of this settlement agreement shall remain confidential between the Parties and their legal advisers.” The initials IBM were defined in the agreement as referring to IBM UK. In the affidavit in the US proceedings to which I have referred, Mr. Mohsan said that if IBM had requested a release in favour of IBM US he would not have settled for such a term. Having paid substantial sums to the companies to whom they had sold Blue Lightning PCs in full and final settlement of their respective claims, IBM thought that as far as they were concerned that was an end of the matter, but they were mistaken. On 24 July, 2000, (the Monday after the Friday on which they received the payment of £6m. from IBM) Time sent to Computer 2000 a letter before action on Time’s headed notepaper signed by Time’s In-House Legal Counsel , Mr. Richard Hope. On 14 August, 2000, Time issued proceedings valued at £2.2 million against Computer 2000. Oddly, those proceedings were issued in the Central London County Court. They were transferred to the TCC. On 16 August, 2000, Time issued a complaint in the United States District Court, Southern District of New York against International Business Machines Corporation (IBM US) the parent company of IBM UK. In that action, Time claimed US $54 million. Time alleged that IBM US had continued to market Blue Lightning PCs knowing that they contained a defective chip and in doing so made fraudulent misrepresentations. The complaint alleges that Time became aware of the fraud in January 2000. Those proceedings were the proceedings contemplated by Mr. Mohsan in the discussions he had with his New York counsel in February 2000. The US action relates to all 4 batches of Blue Lightning PCs, both those acquired direct from IBM and those acquired from Computer 2000. The American proceedings have been dismissed by the New York Court on the ground of forum non conveniens. Other points taken to dispute jurisdiction, including the settlement agreement, have not been decided. One of the points taken in IBM’s Notice of Application was that Time was prevented by its settlement agreement from bringing these proceedings. It was submitted on behalf of IBM that the settlement with Time of “all claims against IBM of whatever nature” “relating to the facts and matters” in the 1998 action does bar the present action. The claim in this action, it is said, plainly does relate to those “facts and matters”. In the conduct of the 1998 action, the solicitor for IBM asked for documents relating to the computers bought by Time from Computer 2000 so that he could try to separate out the damage that might have flowed from those computers from the generality of the loss alleged by Time. Moreover, in the Particulars of Claim in the current action, at paragraph 62, express reference is made to the 1998 action albeit no claim is made for damages in respect of it. It is also submitted that this is a “claim of whatsoever nature” against IBM because, although in the first instance the claim had to be directed at Computer 2000, the intended purpose was that IBM should be joined as Part 20 Defendants thus making it a claim against IBM. For that argument to succeed, it is necessary for IBM to demonstrate that Mr. Mohsan had that intention. In that regard it is necessary to consider evidence that also relates to more general allegations of abuse of process of the court. Mr.Hochhauser Q.C. submitted that on its true construction the settlement agreement did not prevent Time from taking proceedings against Computer 2000. He compared the settlement agreement with Time with the settlement agreement with Computer 2000. He also cited the decisions in Cape v. Dalgleish v. Fitzgerald (unreported) 15 November, 2000; Jameson v. CEGB [2000] 1 AC 455; and Heaton v. Axa Equity & Law [2000] 3 WLR 1341 at 1369 to 1371. In those cases, old law was restated, that where there are successive contracts, an agreement by A to release B from further liability does not release C unless the agreement says so, though the case is different where one joint tortfeasor is released. Those decisions do not assist in deciding whether the construction for which counsel for IBM contend is correct. I accept the submissions made on behalf of IBM with regard to the settlement agreement. This action does “relate to the facts and matters” in the 1998 action. It concerns the same model of computer and the same alleged defects. Time bought computers from both IBM and Computer 2000 in compliance with the arrangements to transfer the distributorship. To assess the damages in the current action, it will be necessary to consider the same disruption of Time’s business as would have fallen for consideration in the 1998 action if it had not been settled. It will also be necessary to hear evidence concerning the settlement of the 1998 action. This is a “claim against IBM of whatever nature”. Whether it is a claim against IBM by Time or only a claim against IBM by Computer 2000 is a matter to be considered in the light of all the evidence that I have read. When the action began it was on its face only a claim against Computer 2000 but IBM submit that on the evidence that has since come to light it was in truth an action brought to make a claim against IBM. I shall review that evidence, but I say at once that I accept that submission. Mr. Nicholas Stadlen Q.C. on behalf of IBM submitted that even if Time were not restricted by contract in this way, Time should, in the circumstances of this case, be prevented by the court from proceeding with the action against Computer 2000. Mr. Stadlen submits that Time held back from proceeding with the US action until satisfied that the settlement with IBM did not prevent Time from proceeding against IBM US and that is relevant because Time did the same thing in the action against Computer 2000. Mr. Stadlen, like Mr. Mill on behalf of Computer 2000, submits that from the outset of this action and earlier, Mr. Mohsan has always intended that this action should be simply a means of extracting more money from IBM. It is said on behalf of IBM and Computer 2000 that Mr. Mohsan believed that after initial resistance IBM would be too embarrassed to allow a complaint about Blue Lightning PCs to come to court. Time could not sue IBM direct in respect of the Blue Lightning PCs bought by Time from Computer 2000, but Mr.Mohsan determined to get money for those PCs from IBM through Computer 2000. I accept those submissions. They are supported by the evidence before me including the witness statements of Mr. Mohsan and other witnesses that were filed on behalf of Time. It has been said that Mr. Mohsan used Computer 2000 as a pawn to get at IBM. Mr. Mohsan denies that, saying that Computer 2000 throughout acted independently and on their own legal advice. There is a certain amount of word-chopping here about what is meant by a “pawn”. I agree that Computer 2000 did throughout act on their own legal advice. But Mr. Mohsan from the outset encouraged Computer 2000 to do what he wanted, and they did do what he wanted, by joining IBM as Part 20 defendant to this action. In order to proceed with that Part 20 claim, Computer 2000 allege, prompted by Mr.Mohsan, that the settlement agreement between Computer 2000 and IBM should be rescinded because before the sale of the Blue Lightning PCs IBM knew that a chip in the motherboard was defective and made representations about them that they knew to be false alternatively which they made negligently as to whether they were true or false. The evidence is to be found both in contemporary documents and in conversations between representatives of Time and Computer 2000. Time’s letter before action dated 24 July 2000 included the following: “Whilst we are not able to provide you with copies of documents disclosed by IBM in connection with other proceedings (to which both IBM and Time Group Limited were parties), we are able to supply you with a copy of the papers provided to us by FTDI, the designers of defective DMA chip. As you can see from these papers, it is clear that the defect in the word count register was identified in 1993 - over a year before the contract between you and Time and, moreover, the IBM commissioned FTDI to develop a fix to the defect in the word count register. The fixed chip had the reference number 82C3480XMVL (the XMVL chip). Remarkably, however the XMVL chip did not find its way into the Blue Lightning PCs, notwithstanding the fact that the XMVL chip went into production from August 1993. Whilst we appreciate that you operated at all times in complete ignorance of the deception practised by IBM, the fact of the matter is that our claim in respect of the 4,030 PCs must be directed in the first instance to you, the party from whom we acquired the PCs. We must leave it to you to pursue any claim over against IBM should you wish to go down that route.” Those passages about deception were in no way relevant to Time’s then proposed action against Computer 2000 since that action lay simply in contract. But the passages were a clear hint as to how to join IBM in the proceedings and pass the claim on to them despite Computer 2000’s settlement agreement with IBM. The original claim form in this action also alleged that IBM knew of the defect before selling the Blue Lightning PCs , and Particulars of Claim substituted on 4 June 2001 spelt out in greater detail that Time had been misinformed by IBM before buying the Blue Lightning PCs. Shortly after the letter before action and before the issue of proceedings against Computer 2000, Mr.Mohsan spoke on the telephone to Mr. Tiltman, the General Manager of Credit of Computer 2000. Mr. Tiltman said of that conversation: “It is my recollection of events following receipt of a letter from Time Group advising us of their intention to take legal action against us and prior to the issue of the writ, I had a telephone conversation with Tahir Mohsan in which he advised me that this was a business issue and he hoped it would not affect our existing trading relationship. Time Group were still a customer and utilising their account and credit line. He explained to me that it was not Computer 2000 that he wished to seek redress from but IBM. He felt IBM were at fault but for legal reasons he had to take action against us. This he said would force IBM to take responsibility. It was an amicable conversation and Tahir Mohsan was at pains to make it clear he did not have an issue with Computer 2000”. In response to that evidence, Mr, Mohsan said: “Mr Tiltman correctly says in his witness statement that Time's action against Frontline was a business issue and that for legal reasons, Time had to take action against Frontline to seek redress in respect of the Blue Lightning PCs sourced from Frontline. I emphasised that although Time had contracted with Frontline, it did not blame Frontline, but that it was IBM's fault and IBM should take responsibility for it.” Mr.Mohsan was more explicit in a telephone conversation with Mr. Anthony Taylor, Finance Director of Computer 2000, very shortly after the letter before action. In a witness statement, Mr.Taylor said: “I have no doubt whatsoever that Time has brought these second proceedings in order to make an additional recovery from IBM, and that it has used C2000 as a “Pawn” in its attempt to pursue IBM. Time's managing Director, Tahir Mohsan has made this absolutely clear to me both in telephone conversations and in correspondence. Details of this are as follows. My first telephone phone call with Mr. Mohsan was very shortly after the letter before action. In this phone call, Mr. Mohsan told me that Time was going to issue proceedings against C2000, but that it had no interest in making any recovery from C2000. The call was amicable and Tahir was almost apologetic for having imposed the litigation on C.2000. He told me that C2000 should bring Third party proceedings against IBM as IBM would then agree to pay to get rid of the litigation.” As to that telephone call, Mr. Mohsan did make a small challenge to the words used, but he confirmed that he said that he hoped that Frontline would not suffer financially and that Frontline should look to IBM for reimbursement. Mr.Mohsan said: “I have had several conversations with Tony Taylor. At no time in any of those conversations have I said that Time is not interested in making a recovery of damages from Frontline. Indeed Time's only recourse in these proceedings is to make a recovery from Frontline: it cannot recover from IBM, only Frontline can make a recovery from IBM. I did say to Mr Taylor that I hoped Frontline should not suffer financially as a result of the proceedings and that Frontline should look to IBM for reimbursement.” In the same witness statement, Mr.Taylor said: “Following this phone call, I instructed Computer 2000’s solicitors to seek to mediate with Time. However, Time refused to mediate without IBM being made a party to the mediation”. That statement is misleading if it is read as meaning that the first suggestion of the involvement of IBM in mediation came from Time. In a witness statement dated 10 January, 2002, Mr. Taylor clarified the matter. Correspondence shows that Mr. Taylor was considering Time’s suggestion that Computer 2000 should join IBM in the proceedings and it was he, Mr. Taylor, who suggested a mediation involving IBM and it was after he made that suggestion that Time agreed to a mediation but insisted that if there was to be a mediation all parties including IBM should be involved. IBM refused to get involved and Time let the matter drop. There were letters dated 9, 10, 21, 22 August and 14 September, 2000 passing between Computer 2000, Time and IBM on this topic. On 11 September, 2000, Mr. Mohsan telephoned Computer 2000 asking to speak to Mr. Taylor but instead spoke to Miss Sue Margetts, Mr. Taylor’s PA. She noted the conversation and transmitted her note to Mr.Taylor by e-mail as follows: “Tahir from Time called with the following message: He is concerned that our solicitor is not senior enough within Morgan Cole to handle the case. He feels she does not understand the dynamics of the case or appreciate the time constraints the case is under. We must issue a writ against IBM as the case is now just over 6 years old and we are running out of time. IBM have also sent a letter to Morgan Cole telling us to “go away”. Tahir needs to see this but our solicitor has not had instructions from us to let him see it. Tony – Tahir would like you to escalate the case within Morgan Cole and arrange for the Writ to be issued.” Mr.Mohsan challenged that summary of his telephone message only by saying that by the words, “escalate the case within Morgan Cole” he meant, put the case in the hands of someone more senior within Morgan Cole. Even with that meaning, which I accept, the message is clear that he wanted IBM to be brought into the action as a matter of urgency. If this had been a straightforward action against Computer 2000, Mr. Mohsan would have had no interest in seeing the letter from IBM nor would he have had any interest in IBM being joined as a party. Indeed, joining IBM as a party would inevitably increase the costs and would probably slow the action down. Mr. Taylor’s statement continues: “Following this e-mail I spoke to Mr Mohsan by telephone. I cannot recall the exact date of the call but I remember Tahir once more made it very clear to me that he didn't want Computer 2000 to suffer financially due to this action, and that he had no choice but to include us in his attempt to recover monies from IBM. On several subsequent telephone conversations the exact dates of which I cannot recall Mr Mohsan made similar remarks and left me in no doubt that he did not want Computer 2000 to suffer any loss but his intention was to recover damages from IBM.” On 28 February, 2001, Computer 2000 showed their independence by issuing an application applying for an order that the claimants’ claim be struck out pursuant to CPR 3.4(2) on the grounds that “the Statements of Case disclose no reasonable grounds for bringing or defending the claim and the failure of the claimant to particularise the claim represents an abuse of the court’s process”. Citing Jameson v. Smith and Morris [2001] EWCA Civ 1264 counsel for Time relied on that application as one of his grounds for an application that Computer 2000’s present application should be struck out. I rejected Time’s application in that regard. In Jameson’s Case, the Court of Appeal was considering a case where the second application was an attempt to appeal from the decision on the first application. Here the second application is totally different from the first, and indeed in the first application the words “abuse of the court’s process” need not have been used at all. I will not repeat here the reasons I gave for rejecting other submissions made on behalf of Time at that stage. Computer 2000’s application to dismiss came before me on 4 May, 2001. I adjourned that application to 18 June, 2001. Before that return date, Time repleaded its case and Computer 2000 accepted that in the circumstances it was not necessary to proceed with its application and withdrew it. On 4 May, 2001, Computer 2000 were clearly considering joining IBM as a Part 20 defendant because on that day Computer 2000 applied for an order that IBM, as a non-party, should make disclosure of certain documents. I ordered that notice of that application should be given to IBM and that that application also should be adjourned to 18 June, 2001. On 18 June, 2001 I made a provisional order that IBM should disclose certain documents with permission to apply to set the order aside and on 2 July, 2001 I rejected IBM’s application that my order should be set aside. At about this time, between the hearings in May and July 2001, Time through their solicitor Mr. George Menzies made a further attempt to persuade Computer 2000 to join IBM. Mr. Menzies spoke on the telephone to Mr. Andrew Gass, the Vice President of the Northern Region of Computer 2000. Mr.Menzies and Mr.Gass had met earlier on an unrelated matter. Mr.Gass in a witness statement said that Mr.Menzies said that: “he wanted me to speak to Computer 2000 to advise them that Time had no real interest in pursuing a legal case against Computer 2000, but rather were using it in order to win moneys from IBM. He also stated that he was aware of the existence of an agreement between Computer 2000 and IBM …. that potentially limited the actions that Computer 2000 could take against IBM, but that he felt that Time and Computer 2000 acting together could circumvent this.” Mr.Menzies responded to that evidence with a statement that broadly agreed with Mr.Gass. He said: “I asked him if he was prepared to speak to Frontline to facilitate a meeting between Time and Frontline for a discussion of how to progress the case. I said that Time considered IBM rather than Frontline was to blame and Time had no real complaint about Frontline's conduct but would like an opportunity to explain its case to Frontline, in particular to explain the complex evidential basis on which Frontline might be able to join IBM as a third party. I explained to Mr Gass that, in my view, rather than attack Time, Frontline would be better advised if it directed its energies against IBM. I suggested that if Frontline involved IBM there was an opportunity to find a solution whereby Frontline might not be ultimately left out of pocket. This seemed to me to be a perfectly legitimate and proper proposal to make.” In his second witness statement, made after the opening submissions, Mr. Menzies said: “I make this 2nd witness statement in order to clarify my 1st witness statement. It has been said in submissions made by IBM's Counsel that because my 1st witness statement did not specifically deny the words attributed to me in Mr Gass's statement that I must be taken to have agreed that I used those words. This is incorrect. For the avoidance of doubt I did not say that Time had "no real interest in pursuing a legal case against Computer 2000" but were "using it in order to win monies from IBM' nor did I say that "Time and Computer 2000 acting together could circumvent" the agreement between IBM and Computer 2000. Those words are not mine and I did not use them. What 1 actually said in my conversation with Mr Gass is set out in my 1st witness statement”. I accept what Mr.Menzies says in his second witness statement, but I also accept that Mr.Gass was accurate in his statement of the impression that that the conversation made on him, though he may not be word perfect in his account. It is clear from the first statement of Mr. Menzies that: (a) Time did not want Computer 2000 to suffer financially. (b) Time wanted Computer 2000 to join IBM as a third party. (c) Time wanted an opportunity to explain to Computer 2000 how to get round the Computer 2000 settlement agreement with IBM, which must have been the misrepresentation point. After the hearing on 2 July, 2002, having diverted Computer 2000’s first attack on Time’s case, Time made a yet more urgent attempt to persuade Computer 2000 to join IBM. After the hearing on 2 July, 2001, outside court, the solicitor to Time read out to solicitor and counsel for Computer 2000 a draft of a letter that he said was going to be sent by Mr. Mohsan to Computer 2000. The draft has since been reluctantly disclosed and is in the following terms: “DRAFT LETTER STRICTLY PRIVATE & CONFIDENTIAL (NOT T0 BE SHOWN IN ANY CIRCUMSTANCES TO IBM) TONY TAYLOR WITHOUT PREJUDICE SUBJECT TO CONTRACT Dear Tony, TIME V. COMPUTER 2000 Later today, our respective solicitors are appearing in court in an effort to secure access to evidence which will be helpful both to Computer 2000 and to Time. Needless to say, IBM are making every possible effort to put procedural obstacles in our way. Happily, however, our respective legal teams, both solicitors and Counsel are to the extent permitted by the Rules co-operating in seeking to resist IBM’s approach. So as to make this approach easier and indeed to put it on a formal footing, I would like to propose that we enter into an agreement along the following lines: 1. Time agrees that it will not seek to make any claim against Computer 2000 which is greater than Computer 2000’s recovery in its Part 20 proceedings against IBM. 2. Computer 2000, in turn, undertakes to use its best endeavours, (which Time appreciates may not succeed) to pursue Part 20 proceedings against IBM using all available evidence and, in turn, agrees to co-operate with Time in terms of litigation tactics. I, of course, appreciate that in advocating the above approach I am foregoing the prospect of making any recovery against Computer 2000 in the event that Computer 2000 is unsuccessful in joining IBM into these proceedings as a Part 20 Defendant or in the event that having joined IBM as a Part 20 Defendant, Computer 2000 is unsuccessful in those Part 20 proceedings. That is a risk, however, that I am prepared to take based on my belief that you will be successful both in joining IBM and in successfully pursuing Part 20 proceedings. In saying this, I do not expect IBM to wish to have a trial in any form which will introduce into the public domain its shady handling of the Blue Lightning issue. My experience of pursuing IBM in the past is that, after an enormous amount of bluff and bluster, they settle when the risk of publicity and public scrutiny becomes unavoidable. I have no doubt they will approach this particular piece of litigation in the same way. My risk is accordingly a minimal one and I hope therefore that the approach outlined above is one that we can both work within. Yours sincerely, Tahir Mohsan” A letter based on that draft letter was sent, but not in identical terms. Mr. Taylor in his witness statement said: “These ‘phone calls culminated in a letter which Mr. Mohsan sent to me dated 10th July 2001. This letter was headed: “STRICTLY PRIVATE AND CONFIDENTIAL (NOT TO BE SHOWN IN ANY CIRCUMSTANCES TO IBM)” it stated: “Further to my recent telephone conversation, I would suggest the following: 1. Time agrees that it will not seek to make any claim against Computer 2000 which is greater than Computer 2000’s recovery in its Part 20 proceedings against IBM. 2. Computer 2000, in turn, undertakes to use its best endeavours, (which Time appreciates may not succeed) to pursue Part 20 proceedings against IBM using all available evidence and, in turn, agrees to co-operate with Time in terms of litigation tactics.” Mr. Mohsan then continued with a paragraph in the same terms as the last paragraph of the draft letter and concluded: “In order to move this forward, I require you to send me a letter back, without prejudice subject to contract, that strongly agrees with this in principle “ Mr. Taylor continued: “Needless to say, I did not send a letter back as requested by Mr Mohsan. This letter set down in black and white what Mr Mohsm had previously explained to me - i.e. that the purpose of proceedings against C2000 was to get a recovery from IBM not C20OO. Time was using the claim against C2000 as a tactic to drive IBM to the negotiating table and force it to pay further money to Time. Needless to say, I regarded Mr. Mohsan's proposal as unacceptable. I did not respond to it in writing as requested. I had one further phone call with him in which I told him that C2000 would not enter such an arrangement.” Counsel for Time submits that the draft letter shows that the true purpose of the letter of 10 July, 2001 was a perfectly reasonable attempt to solicit co-operation in the face of what were described as IBM’s attempts to raise “procedural difficulties”. On the other hand, counsel for IBM and Computer 2000 submit and I agree that both the draft and the letter of 10 July, 2001 as sent together with what preceded them show that Mr. Mohsan from the outset had no interest in suing Computer 2000 unless Computer 2000 joined IBM in the proceedings and were successful against IBM. Mr. Mohsan relies on the fact that Computer 2000 did not accept the offer, but that does not help him or Time. The letter and its draft, together with the evidence of the telephone calls, reveal Time’s purpose in suing Computer 2000, namely to get IBM to settle a second time to avoid the embarrassment of appearing in court. Moreover the opening words of the letter itself, “Further to our recent telephone conversation …” link the letter with Mr. Mohsan’s recent telephone conversation and corroborate Mr. Taylor’s account of that and other telephone conversations. The letter of 10 July was plainly sent because Mr. Mohsan thought that Computer 2000 needed more encouragement to join IBM as a party to the action. In their opening submissions, counsel for both IBM and Computer 2000 criticised Mr. Hope’s witness statement. In particular, they pointed out that while Mr. Hope said that Time was entitled to sue IBM alone in the 1998 action without joining Computer 2000 he did not say why Time took that course. After those submissions, further witness statements were put in from Mr. Mohsan and his solicitor but neither in those statements nor in any other statement was it said why Time chose to sue IBM alone in the 1998 action. I put to Mr.Stadlen, and he agreed, that there may be circumstances in which it might be quite proper for a claimant to sue a defendant on the basis that the defendant would join a Part 20 defendant and the only effective recovery would be from the Part 20 defendant. For example, where there is a chain of contracts and the first defendant in the chain has no means to pay the claimant. Another example would be where a wife sues her husband who was the negligent driver of a car in which she was the passenger, intending to be recompensed by her husband’s insurers. But if there were nothing wrong with such a course it would be done openly and not under such headings as we saw to the letter of 10 July, 2001. The result of the course of action taken by Time is that both IBM and Computer 2000 have been prejudiced. IBM have been prejudiced because, if Time had during the negotiations to settle the 1998 action revealed their intention to sue Computer 2000 with a view to pursuing IBM again, IBM would either have insisted on having a term in the settlement agreement excluding such a course or would have gone ahead on 10 July 2000 with a trial of the technical issues for which they were geared up. Instead, if this action proceeds, they will have to fight those technical issues and others at some time in the future, having paid substantial sums of money to avoid doing so in the past. Computer 2000 are prejudiced because: (a) A senior executive destroyed all Computer 2000’s relevant documents after the settlement with IBM after being assured by another senior executive that they would no longer be needed. Time say that they will provide documents to Computer 2000 but Computer 2000 do not know what additional relevant documents have been destroyed. There are classes of documents that Time will not be able to supply, for example complaints from customers. (b) By failing to join Computer 2000 as defendant to the 1998 action, Time gave itself a lead of 2 years in the preparation of documents, evidence and experts’ reports and if this action proceeds Computer 2000 will have to try to catch up long after the event. (c) In evidence and early submissions, Computer 2000 also made a point that they may have been prejudiced in their ability to call the oral evidence of certain witnesses. That point was fairly effectively destroyed and was not mentioned in closing submissions for Computer 2000. However, it remains true that the evidence of witnesses is likely to have been dimmed and witnesses for Computer 2000 will not be able to refresh their memory from documents that were destroyed. Further, by failing to bring its claims against IBM and Computer 2000 together in one action in 1998, Time has impeded the administration of justice and made it probably impossible to do justice in this case. Each action has taken up a considerable amount of time in case management, first by His Honour Judge Humphrey Lloyd Q.C. (the 1998 action) and then in this action by myself. More importantly, I do not see how the damages for loss of sales can be assessed except by an apportionment between IBM and Computer 2000 and I do not see how that can be done without both parties being before the court in the same trial and considering the evidence regarding Time’s loss of sales that would have been brought in the 1998 action. Moreover, the settlement between IBM and Time introduced further difficulty. The formulation of the action against Computer 2000 is very similar to the 1998 action. The alleged breaches are identical and the principal head of loss in both cases is “loss of profits on lost sales”. In the present action, the lost sales are said to have been 6000 as opposed to 35,000 in the 1998 action and Time asserts that this loss has not been recovered from IBM. If the claims were limited to the costs of recompensing individual customers or upgrading or scrapping individual PCs, I can understand that, if Time’s records were adequate for the purpose (and from what I have seen previously they are not) it might be possible to separate the claim against Computer 2000 from the claim against IBM. But the main claim is that both of them contributed to a general loss of business by Time due to distraction of Time’s staff and injury to Time’s reputation. If both claims were tried together one might try to make an overall assessment and then apportion in some way. But the position is now complicated by the two settlements, in particular the settlement with Time. What is it that Time has been paid for already? It was a broad brush settlement and I suspect that no one will be able to give a satisfactory answer to that question. One would have to consider how much of the £6 million related to loss of sales and how much related to other heads of claim. The governing principles of law are to be found in Henderson v. Henderson (1843) 3 Hare 100 as explained in more recent cases, particularly Bradford & Bingley Building Society v. Seddon [1999] 1 WLR 1482 and Johnson v. Gore Wood & Co. [2001] 2 WLR 72. So far as concerns the first submission made by the parties, the basic test is twofold: (1) could the issues raised in the second action have been raised in the first action? (2) should those issues have been raised in the first action? The answer to the first question is undoubtedly, Yes. Time accept that they could have joined Computer 2000 in the first action where so many issues overlapped with the second action. Attention has therefore been concentrated on the second question, should the issues raised in the second action have been raised in the first? Time raise another point. Time submit that IBM has no locus standi to object to Time bringing the second action because Time did not sue IBM in the second action. Computer 2000 could have brought an independent action against IBM independently and, subject to the point about the settlement agreement with IBM, IBM could not have had such an action stayed as an abuse of process and would have had to litigate the same matter twice. However, that is not what happened. Time rely on a dictum of Sir Robert Megarry V-C to the effect that the rule in Henderson v. Henderson applies only when the parties to the two actions are the same. IBM take as their starting point in the authorities the speech of Lord Bingham in Johnson v. Gore Wood & Co. At page 82, Lord Bingham cited Henderson v. Henderson. Lord Bingham said: “This form of abuse of process has in recent years been taken to be that described by Sir James Wigram V-C in Henderson v Henderson 3 Hare 100, 114-115. “In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time”. Thus the abuse in question need not involve the reopening of a matter already decided in proceedings between the same parties, as where a party is estopped in law from seeking to relitigate a cause of action or an issue already decided in earlier proceedings, but, as Somervell LJ put it in Greenhalgh v Mallard [1947] 2 All ER 255, 257, may cover "issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them”. A series of cases, mostly in recent years, has explored this form of abuse.” Lord Bingham then went on to review a number of those cases. In the course of that review he said, at page 83: “In Brisbane City Council v Attorney General for Queensland [1979] AC 411 the Privy Council expressly endorsed Somervell LJ's reference to abuse of process and observed, at p 425: "This is the true basis of the doctrine and it ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation." Then at page 89 in the last paragraph Lord Bingham said: “It may very well be, ….that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.” At page 91, Lord Bingham cited with approval the dictum of Sir Robert Megarry V-C on which Time rely with regard to Third Parties. Lord Bingham said: “Two subsidiary arguments were advanced by Mr. Ter Haar in the courts below and rejected by each. The first was that the rule in Henderson v Henderson 3 Hare 100 did not apply to Mr. Johnson since he had not been the plaintiff in the first action against GW. In my judgment this argument was rightly rejected. A formulaic approach to application of the rule would be mistaken. WWH was the corporate embodiment of Mr. Johnson. He made decisions and gave instructions on its behalf. If he had wished to include his personal claim in the company's action, or to issue proceedings in tandem with those of the company, he had power to do so. The correct approach is that formulated by Sir Robert Megarry V-C in Gleeson v J Wippell & Co Ltd [19771 1 WLR 510 where he said, at p 515: “Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase 'privity of interest."' On the present facts that test was clearly satisfied. The second subsidiary argument was that the rule in Henderson v Henderson 3 Hare 100 did not apply to Mr. Johnson since the first action against GW had culminated in a compromise and not a judgment. This argument also was rightly rejected. An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, indeed, that outcome would make a second action the more harassing”. I have extended the quotation from Lord Bingham’s speech to include Mr.Ter Haar’s second subsidiary argument because of Lord Bingham’s comment that the settlement of the first action would often make the second action the more harassing because that is what I believe has happened here. The settlements of the first action and of Computer 2000’s claim before action have made it the more difficult to disentangle the damages claims. But I return to the first point. Counsel for Time relies on the speech of Lord Millett in Johnson v. Gore Wood at page 118: “There is, of course, no doubt that Mr. Johnson could have brought his action as part of or at the same time as the company's action. But it does not at all follow that he should have done so or that his failure to do so renders the present action oppressive to the firm or an abuse of the process of the court. As May L.J. observed in Manson v. Vooght [1999] BPIR 376, 387 it may in a particular case be sensible to advance claims separately. In so far as the so-called rule in Henderson v Henderson suggests that there is a presumption against the bringing of successive actions, I consider that is a distortion of the true position. The burden should always rest on the defendant to establish that it is oppressive or an abuse of process for him to be subjected to the second action.” And at page 119, Lord Millett said: “The rule in Henderson v Henderson 3 Hare 100 cannot sensibly be extended to the case where the defendants are different. There is then no question of double vexation. It may be reasonable and sensible for a plaintiff to proceed against A first, if that is a relatively simple claim, in order to use the proceeds to finance a more complex claim against B. On the other hand, it would 1 think normally be regarded as oppressive or an abuse of process for a plaintiff to pursue his claims against a single defendant separately in order to use the proceeds of the first action to finance the second, at least where the issues largely overlap so as to form, in Sir James Wigram V-C's words, at p 115, "the same subject of litigation". Particular care, however, needs to be taken where the plaintiff in the second action is not the same as the plaintiff in the first, but his privy. Such situations are many and various, and it would be unwise to lay down any general rule. The principle is, no doubt, capable in theory of applying to a privy; but it is likely in practice to be easier for him to rebut the charge that his proceedings are oppressive or constitute an abuse of process than it would be for the original plaintiff to do so.” Two earlier decisions of the Court of Appeal were referred to by Lord Bingham without disapproval, namely Bradford & Bingley Building Society v. Seddon [1999] 1 WLR 1482 and C. v. Hackney London Borough Council [1996] 1 WLR 789.It was suggested in argument that those authorities are in conflict as to the law on abuse of process where different parties are involved. Indeed, in Bradford & Bingley Building Society at page 1492, Auld L.J. expressed some disapproval of the judgment of Simon Brown L.J. in the earlier case of C. v. Hackney London Borough Council. However, Mr. Mill Q.C. on behalf of Computer 2000 has shown that Simon Brown L.J. was dealing with a plea of res judicata and I am satisfied that, notwithstanding the comments of Auld L.J. there is no conflict between the statements of Simon Brown L.J. regarding the strict doctrine of res judicata and what was said by Auld L.J. regarding the wider concept of abuse of process of the court as it is now understood. The decision of Bradford & Bingley Building Society v. Seddon was not expressly disapproved by Lord Millett or any other member of the House of Lords in Johnson v. Gore Wood and is binding on me. In Johnson v. Gore Wood, Lord Bingham, with whom Lords Goff, Cooke and Hutton agreed, cited with approval passages from the judgment of Auld L.J. in Bradford & Bingley Building Society v. Seddon that made it plain that the Court of Appeal there decided that a second action against a defendant who had not been a party to the first action may in some circumstances be an abuse of the process of the court. After summarising the facts of Bradford & Bingley Building Society v. Seddon, Lord Bingham said at page 88: “An application to strike out the third party claim was upheld by the judge and Mr. Seddon appealed. In the course of a judgment with which Nourse and Ward LJJ agreed, Auld LJ said, at pp 1490-1491: "In my judgment, it is important to distinguish clearly between res judicata and abuse of process not qualifying as res judicata, a distinction delayed by the blurring of the two in the courts' subsequent application of the above dictum [of Sir James Wigram V-C in Henderson v Henderson Hare 100]. The former, in its cause of action estoppel form, is an absolute bar to relitigation, and in its issue estoppel form also, save in 'special cases' or 'special circumstances': see Thoday v Thoday [19641 P 181, 197-198, per Diplock LJ, and Arnold v National Westminster Bank plc [19911 2 AC 93. The latter, which may arise where there is no cause of action or issue estoppel, is not subject to the same test, the task of the court being to draw the balance between the competing claims of one party to put his case before the court and of the other not to be unjustly hounded given the earlier history of the matter. Thus, abuse of process may arise where there has been no earlier decision capable of amounting to res judicata (either or both because the parties or the issues are different) for example, where liability between new parties and/or determination of new issues should have been resolved in the earlier proceedings. It may also arise where there is such an inconsistency between the two that it would be unjust to permit the later one to continue." It is plain from that citation and in particular from the words in brackets in the last paragraph that Lord Bingham was approving the decision of the Court of Appeal in Bradford & Bingley Building Society v. Seddon that abuse of process may arise when the parties or the issues in the two actions are different. At page 1491, Auld L.J. spelt out his decision on this point in greater detail: “In. my view, it is now well established that the Henderson rule, as a species of the modern doctrine of abuse of process, is capable of application where the parties to the proceedings in which the issue is raised are different from those in earlier proceedings. Indeed, it is inherent in Sir James Wigram V-C.'s reasoning that, as a general rule all persons who are to be sued should be sued at the same time and in the same proceedings where such a course is reasonably practicable, and whenever it is so and is not taken then, in an appropriate case the rule may be invoked so as to render the second action an abuse: see, e.g., Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] A.C. 581; Bragg v. Oceanus Mutual Underwriting Association (Bermuda) Ltd. [1982] 2 Lloyd's Rep. 132; North West Water Ltd. v. Binnie & Partners [1990] 3 All E.R. 547; M.C.C. Proceeds Inc. v. Lehman Brothers International (Europe) [1998] 4 All ER 675 and per Potter L.J. in Morris v. Wentworth-Stanley [1999] 2 W.L.R. 470, 481” I should add that when Sir Robert Megarry V-C in Gleeson used the words cited by Lord Bingham, he was considering a question of issue estoppel or res judicata and was not considering the wider issues of abuse of process of the court raised in Johnson. I find that as a matter of law it may be an abuse of the process of the court to bring a second action on issues related to issues that have already been raised in a prior action even where the defendant in the second action is not the same as the defendant in the first action. Even if I were wrong on that finding of law and the law is as submitted by counsel for Time, I would hold that this case is an exception to the rule for which counsel contends. Even in the estoppel case of Gleeson Sir Robert Megarry V-C, in line with previous authority, indicated that there might be an estoppel where the defendants are different “if there is a sufficient identity between the defendant and the third party”. On the facts of the present case there was such “sufficient identity”. Here the intention of Time was to make a claim in the second action against the very same defendants as were sued in the first action, but Time could only do that by the roundabout route of suing Computer 2000. This is not simply a case of a claimant first suing defendant A and then in another action suing defendant B who had nothing more than a trading relationship with defendant A as was the case in Gleeson. As a matter of procedure, counsel for IBM relies on CPR 3.4(2). That rule authorises the striking out of a statement of case if it appears to the court that the statement of case is an abuse of the court’s process. The Practice Direction under that Rule, 3PD paragraph 1.7 authorises a party to make application under CPR 3.4 if he believes that an opponents case has no real prospect of success. CPR Part 20.10 provides that a party on whom a Part 20 claim is served becomes a party if he is not a party already. Counsel for IBM submits that in this litigation, Time is plainly an opponent of IBM and therefore IBM is entitled to bring this application. I accept that that is correct as a matter of procedure, but that does not override the issues of substantive law with which I have already dealt. For all these reasons, I reject the submission that IBM has no locus standi to make its application. Before returning to the facts of this case, there are certain principles that should be restated as particularly relevant to this case: (a) The decision “should be a broad merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focussing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.” See per Lord Bingham in Johnson v. Gore Wood. (b) The categories of abuse of process are not closed: per Lord Diplock in Hunter v. Chief Constable of the West Midlands Police [1982] AC 529 at 536D, and per Stuart-Smith LJ in Ashmore v. British Coal [1990] QB 338 at 352D, and per Sir David Cairns in Bragg v. Oceanus Mutual [1982] 2 Lloyds Rep 132, 137, 138-139. (c) It is serious matter to dismiss an action for abuse of process of the court. (d) However, when abuse is revealed, the court has a duty, not a discretion, to dismiss the action: per Lord Diplock ibid. (e) There is no presumption against successive actions in contract raising similar issues. There are cases where it is perfectly proper to bring successive actions for breach of contract raising similar issues against different parties: per May L.J. in Manson v. Vooght [1999] BPIR 376 at 387 – 388. (f) There are cases where it is perfectly proper to bring an action against a defendant intending that the only effective recovery shall be from a third party joined by that defendant. (g) The onus of proof of abuse is on the party alleging abuse of the process of the court: per Lord Bingham in Johnson v. Gore Wood at page 90. (h) There is a public interest in finality in litigation including the public interest in efficiency and economy in the conduct of litigation: ibid. As to the facts, Counsel for Time submitted: “It is accepted that Time could have included Frontline in the original proceedings in 1998 but it is submitted that it was entitled to take the view that there were legitimate reasons for not pursuing Frontline at that time. These were: 1) Frontline and IBM were separate suppliers and did not need to be sued together. Time was not keen on having to fight two suppliers together. 2) Time took the view that the case against IBM on the motherboard or DMA defect was one where IBM knew about its product in a way that Frontline could not. Time believed that there was a motherboard defect but knew relatively little about its nature, but IBM asserted that it was a software incompatibility problem. There was a risk that Time could be proved wrong when disclosure against IBM took place. It was unattractive to sue Frontline at that time until the motherboard defect became clearer with the risk of having to pay Frontline's costs as well as IBM'S; 3) The case on the DMA defect developed and only properly emerged by the end of January/February 2000. Until then it was not known that IBM had discovered the defect which was acknowledged by manufacturer of the DMA chip, had ordered a revised chip to be made, but then took a risk in selling the defective chip in PCs sold to OEM customers such as Frontline and Time. Nor did Time know until then that IBM put out an official statement that misleadingly asserted that the problem was to do with recent games rather than accept that one of the PC components was defective. When this evidence emerged it became clear that Time had a strong enough case to warrant proceedings against Frontline; 4) By that time, it was too late to join Frontline in time for the preliminary issue to be held in May, and subsequently re-listed for July. It would mean losing the date for the trial of that preliminary issue, potentially removing the focus of the litigation on a point of substance which was likely to result in a finding of liability against IBM and taking the legitimate pressure off IBM to settle the case earlier rather than later. 5) It was considered that a separate claim against Frontline might be easier to settle once the IBM claim was out of the way and if IBM had settled that might be a warning signal to Frontline that IBM’s case had been weak.” That argument by counsel for Time and by Mr.Mohsan in his witness statements is based on an underlying assumption that Time wanted to recover one set of damages from IBM and another set of damages from Computer 2000. But I reject that assumption. Time wanted to recover two sets of damages from IBM, either directly of indirectly. For that reason I reject those submissions. In any event, the extra costs of joining Computer 2000 pale into insignificance in relation to the sums in issue in this action. Moreover, even if one were to accept the rest of the argument, the possibility of losing the trial date in July is of little importance when set against the stated intention of Time to use a decision of the court to which Computer 2000 was not a party, but in which Computer 2000 could have been invited to participate, to bring pressure to bear on Computer 2000 to settle. The July trial could almost certainly have been relisted for October, 2000. My finding that Mr. Mohsan intended by this action to seek a further payment from IBM, taken together with the construction that I have put on the settlement agreement between IBM and Time leads to the conclusion that Time is barred by contract from pursuing this claim in addition to what I have said about abuse of the process of the court. It has been said that by their long delay in issuing this application Computer 2000 acquiesced in these proceedings and should not be allowed to have them dismissed. In this connection, Counsel for Time relies on a passage in the speech of Lord Bingham in Johnson v. Gore Wood at page 93: “[The defendant’s] failure to strike out over a long period of time is potent evidence not only that the action was not seen as abusive at the time but also that, on the facts, it was not abusive. The indicia or true abuse are not so obscure that an experienced professional party, advised by leading counsel …, will fail to recognize them”. In the case before me, Computer 2000 is not a professional party and I do not know when leading counsel was first instructed on their behalf, but they have throughout been advised by very competent solicitors and junior counsel and the point is the same. However, the delay is explained by the third witness statement of Miss Tonge, solicitor for Computer 2000. In that witness statement she explained that Time’s case was initially pleaded in such vague terms that Computer 2000 did not know what it was about. That was, of course, compounded by the destruction of their documents. It was not until 4 June 2001 that a comprehensible case was presented, after an application to the court. Moreover, before applying to the court to dismiss fro abuse of the process of the court, Computer 2000 needed to know what were the previous proceedings referred to in the letter before action. Computer 2000 had to apply to the court for permission to inspect the court file in the previous proceedings and that permission was granted on 19 June, 2001 and documents were disclosed after that date. Time and IBM did not release to Computer 2000 a copy of the settlement agreement between them until 16 November, 2001. In the circumstances, although they might have issued their application about two weeks earlier, they can hardly be blamed for the rest of the delay. It is a very serious matter to stop any litigation, but I have no doubt that in this case it is the right thing to do. The totality of the evidence shows that the conduct of actions brought by Mr. Mohsan has been tricky and devious. He has sought so to engineer court procedures as to pressure IBM into making further payment by way of settlement when IBM thought that they had achieved finality of settlement on payment of large sums of money. He thought that he could achieve that by presenting them with the prospect of further embarrassment by the prospect of exposing them to trial in open court. I consider that the conduct of Time has been an abuse of the process of the court. I add one matter that does not form part of my reasoning for reaching this conclusion. I am comforted in the conclusion that I have reached by the consideration that on previous occasions when I have considered this action in detail I have formed the view that the damages alleged are highly speculative and difficult to prove. 90. Finally, I should say something about the unresolved application by Time for further disclosure of documents for which IBM and C2000 claim privilege and they also say that the documents are irrelevant to this application. Mr. Hochhauser Q.C. for Time said in relation to the application for further disclosure that he “reserved his position”. Time and those representing them suspect that the documents may show some collusion of a discreditable nature between IBM and C2000. Quite apart from the unsatisfactory form of that application and the lack of evidence in support of it, it has to be said that even if those documents did disclose some form of collusion, that would not affect the public interest that this action should be dismissed. ORDER: Claim and Part 20 claim dismissed. Claimant to pay the costs of the defendant and Part 20 defendant of the claim and Part 20 Claim such costs to be the subject of detailed assessment on an indemnity basis. Claimant to make interim payments on account of costs in the sums of £50,000 to the solicitors for the defendants and £100,000 to the solicitors for the Part 20 defendants by 4 p.m. on 25 February, 2002. Permission to appeal on the merits. Permission to appeal on costs refused. © 2002 Crown Copyright

WARNING The President of the panel hearing this appeal directs that the following should be attached to the file: An order restricting publication in this proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or (4) or 486.6(1) or (2) of the Criminal Code shall continue. These sections of the Criminal Code provide: 486.4(1)       Subject to subsection (2), the presiding judge or justice may make an order directing that any information that could identify the victim or a witness shall not be published in any document or broadcast or transmitted in any way, in proceedings in respect of (a)     any of the following offences; (i)      an offence under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1, 172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02, 279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or (ii)      any offence under this Act, as it read at any time before the day on which this subparagraph comes into force, if the conduct alleged involves a violation of the complainant’s sexual integrity and that conduct would be an offence referred to in subparagraph (i) if it occurred on or after that day; or (iii)     REPEALED: S.C. 2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49). (b)     two or more offences being dealt with in the same proceeding, at least one of which is an offence referred to in paragraph (a). (2)     In proceedings in respect of the offences referred to in paragraph (1)(a) or (b), the presiding judge or justice shall (a)     at the first reasonable opportunity, inform any witness under the age of eighteen years and the victim of the right to make an application for the order; and (b)     on application made by the victim, the prosecutor or any such witness, make the order. (2.1) Subject to subsection (2.2), in proceedings in respect of an offence other than an offence referred to in subsection (1), if the victim is under the age of 18 years, the presiding judge or justice may make an order directing that any information that could identify the victim shall not be published in any document or broadcast or transmitted in any way. (2.2) In proceedings in respect of an offence other than an offence referred to in subsection (1), if the victim is under the age of 18 years, the presiding judge or justice shall (a) as soon as feasible, inform the victim of their right to make an application for the order; and (b) on application of the victim or the prosecutor, make the order. (3)     In proceedings in respect of an offence under section 163.1, a judge or justice shall make an order directing that any information that could identify a witness who is under the age of eighteen years, or any person who is the subject of a representation, written material or a recording that constitutes child pornography within the meaning of that section, shall not be published in any document or broadcast or transmitted in any way. (4)     An order made under this section does not apply in respect of the disclosure of information in the course of the administration of justice when it is not the purpose of the disclosure to make the information known in the community. 2005, c. 32, s. 15; 2005, c. 43, s. (3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22,48; 2015, c. 13, s. 18. 486.6(1)       Every person who fails to comply with an order made under subsection 486.4(1), (2) or (3) or 486.5(1) or (2) is guilty of an offence punishable on summary conviction. (2)     For greater certainty, an order referred to in subsection (1) applies to prohibit, in relation to proceedings taken against any person who fails to comply with the order, the publication in any document or the broadcasting or transmission in any way of information that could identify a victim, witness or justice system participant whose identity is protected by the order. 2005, c. 32, s. 15. COURT OF APPEAL FOR ONTARIO CITATION: R. v. Simpson-Fry, 2022 ONCA 108 DATE: 20220203 DOCKET: C62658 Tulloch, Pardu and Harvison Young JJ.A. BETWEEN Her Majesty the Queen Respondent and Jamie Simpson-Fry Appellant Jamie Simpson-Fry, acting in person Avene Derwa, for the respondent Heard: January 13, 2022 by video conference On appeal from the convictions entered by Justice Joseph A. De Filippis of the Ontario Court of Justice, dated December 19, 2014. REASONS FOR DECISION [1] The appellant was convicted of sexual assault, forcible confinement, uttering threats, and breach of probation arising from an unprovoked attack on a stranger. The sentencing judge found the appellant to be a dangerous offender and sentenced him to indeterminate custody. [2] The appellant appealed both his conviction and sentence. His sentence appeal was bifurcated and was heard on September 17, 2021, after which it was dismissed: R. v. Simpson-Fry , 2021 ONCA 647. [3] Before this panel, only the conviction appeal was pursued. The appellant initially advanced two main grounds of appeal, both on the basis of a wrongly procured guilty plea, resulting in his conviction on the current charges. [4] His first ground of appeal was that of ineffective assistance of counsel. Under this ground, the appellant asserted that he was misled by his trial counsel to follow a trial process and procedure that impeded his rights to a full answer and defence. In his notice of appeal, he claimed that at trial he wanted to challenge the statement of facts that was read into evidence by the Crown, but he was advised against doing so. As a result, he acceded to the incorrect facts and did not take the stand in his defence, nor call any evidence, leaving no opportunity to contest the charges against him. In oral argument before this panel, the appellant indicated that he was no longer pursuing his ineffective assistance of counsel claim but still argued that he was misled in proceeding with his trial in the way that it unfolded, by not contesting the statement of facts read into evidence by the Crown. The core of his argument is an attack on the trial procedure advanced by both the defence and the Crown at trial and accepted by the trial judge. [5] Second, the appellant claims that the trial judge was biased and misapprehended the evidence. He claims that the trial judge essentially “rubberstamped” comments and opinions from the complainant, the police, and two psychiatrists. [6] We would not give effect to any of the appellant’s arguments, and as such, for the following reasons, we dismiss the appeal. [7] The underlying facts which give rise to this appeal are not in dispute. On October 13, 2013, at 2:30 a.m., the complainant was walking home alone. The complainant observed a stranger, who later turned out to be the appellant, stumbling, and he appeared drunk. He asked her for directions and a cigarette, and the complainant attempted to evade him. He then grabbed her from behind. The appellant threatened to break her neck if she screamed, pushed her onto a nearby front lawn, and brutally raped her. During the assault, the appellant was mumbling and stated that he was very drunk. Following the assault, he told her to get up and said he would kill her if she ever told anyone about what happened. [8] The complainant reported the incident to her parents and the police. She was then transported to a hospital where a sexual assault examination was conducted. Swabs of her skin and clothing were taken for DNA comparisons, which subsequently matched the DNA profile of the appellant. [9] At trial, the appellant attempted to plead guilty, but he indicated that he had been too intoxicated at the time to remember the incident and what happened. As such, he was not in a position to contest the Crown’s evidence. The trial judge refused to accept the guilty plea on those terms. The appellant then changed his plea to not guilty, and he consented to a process in which the Crown would read out a statement of facts on which the prosecution’s case was based, after which defence counsel would decline to make submissions contesting the charges. At the trial, defence counsel explained that the appellant “was severely intoxicated” and “blacked out… as a result of excessive drinking combined with the drug GBH.” As a result, the appellant submitted that he was not in a position to contest the charges, raise the defence of consent, or contest the DNA evidence implicating him. The appellant waived the reading of the formal election, called no evidence, and made no submissions. [10] The trial judge summarized the trial procedure that was followed at trial, at para. 2 of the sentencing decision: The defendant had indicated he wished to plead guilty to the charges on the basis that he could not confirm or deny the facts alleged because of intoxication. I declined to accept such a plea… On consent, the Crown read in the evidence that would have been given by witnesses and filed photographs and other exhibits. The Defence elected not to challenge the prosecution evidence, or call other evidence or make submissions. On this basis I was satisfied that the Crown had proven guilt beyond a reasonable doubt. [Citations omitted.] [11] In essence, the hearing proceeded by way of what this court has described as the functional equivalent of nolo contendre . While a formal plea of nolo contendre is not possible under the Criminal Code , R.S.C. 1985, c. C-46, its functional equivalence has developed in Ontario courts, as explained in R. v. Anderson , 2021 ONCA 333, at para. 53: The procedure is invoked frequently, but not exclusively, when the adequacy of the case for the Crown depends on certain evidence the admissibility of which is contested by the accused and is subject to pre-trial challenge and a ruling on admissibility. If the evidence is admitted, under a plea of not guilty, the accused accepts the case for the Crown, whether based on an agreed statement of facts or otherwise, and adduces no defence evidence. A finding of guilt follows. When this occurs, the accused preserves the right to challenge the evidentiary ruling on appeal, a right foreclosed if the plea had been guilty and could not be set aside on appeal. [12] As advised by this court in Anderson , at para. 54, the presiding judge confirmed with the appellant that he understood the potential legal risks of proceeding in this fashion. The purpose of doing so is to protect the fairness of the proceedings and prevent an unreliable verdict: see R. v. R.P ., 2013 ONCA 53, 295 C.C.C. (3d) 28, at para. 66; see also R. v. D.M.G. , 2011 ONCA 343, 105 O.R. (3d) 481, at para. 59. Under s. 655 of the Criminal Code , the appellant admitted to the facts as read in by the Crown. The Crown also tendered photographic evidence and the complainant’s statement to police. [13] The trial record reflects considerable efforts by the parties to ensure that the appellant understood the legal ramifications of the process followed. As mentioned, at a pre-trial meeting, the trial judge explained the option for the appellant to plead not guilty but admit to evidence read in by the Crown and waive his right to challenge it. The appellant would be convicted if the trial judge was satisfied that the essential elements had been proven. At the hearing, the Crown again explained the process that would be followed and its implications. At trial, the trial judge reminded the appellant of their discussion at the pre-trial meeting, and the appellant confirmed that he remembered the discussion. The appellant also confirmed that he did not have any questions about the process as it was explained by the Crown. [14] We therefore cannot agree that the appellant was unaware of the impact of admitting the facts. Accordingly, we see no error in the way the trial proceeded or on the part of the trial judge. [15] It follows that we equally reject the appellant’s submission that the trial judge was biased or “rubberstamped” evidence from witnesses. The appellant chose not to challenge the evidence, adduce other evidence, or make any submissions. The appellant cannot now complain that the trial judge accepted uncontested evidence. The trial judge was entitled to do so in the circumstances, and we see no error in his decision. [16] The appeal is dismissed. “M. Tulloch J.A.” “G. Pardu J.A.” “A. Harvison Young J.A.”

Mr Justice Hamblen : Introduction This action concerns reinsurance claims made by the Claimant ("Gard"), a Bermudan company, against the First Defendant ("Advent"), a Lloyd's syndicate, and the Second Defendant ("Glacier Re"), a Swiss reinsurer. The original policy insured Devon Energy Corporation (a US company) in respect of inter alia property and business interruption risks, initially for the period from 1st July 2003 to 1st September 2005. The period was extended to 1st September 2007 by an endorsement dated 4th August 2005, which stipulated that there be a combined single limit of US$400 million "any one accident or occurrence in respect of losses arising out of a Named Windstorm in the Gulf of Mexico". Gard insured 12.5% of this risk (i.e. US$50 million). Prior to confirming its participation in the underlying risk, in early August 2005, Gard placed an order with its broker, the Lloyd's brokers, Agnew Higgins Pickering & Company ("AHP"), for excess of loss reinsurance to reinsure its whole proposed 12.5% line in respect of losses in excess of a deductible of US$250m (100%). This was a renewal of reinsurance which Gard's predecessor had had for the period to 1 September 2005. Gard reinsured the risk under two excess of loss reinsurance slips, under each of which the reinsurers agreed to "pay up to Original Package Policy limits / amounts / sums insured excess of USD250,000,000 (100%) any one occurrence of losses to the original placement" ("the Sum Insured clause"). The two placements were made by AHP as follows: (1) London market underwriters (Advent, Ascot, Map and Axis) subscribed to a slip in respect of a reinsurance order of 7.5% of the whole ("the London Market slip"). (2) Glacier Re signed a slip in respect 100% of a reinsurance order of 5% of the whole ("the Glacier Re slip"). In September 2005, Devon Energy Corporation sustained damage to its insured interests in the Gulf of Mexico by reason of Hurricane Rita and presented a claim against Gard under the original policy up to the full limits of the policy. The claim was subsequently settled in a global sum of US$365 million, of which Gard bore 12.5%. Following settlement of the underlying claim, Gard made claims against its reinsurers. It calculated the reinsurance claim on the basis that the US$250m deductible in the Sum Insured clause is a deductible which is referable to 100% property values, and so where a claim is made in respect of property in which Devon had less than 100% interest, the deductible falls to be "scaled" to reflect the lower interest. For a short period the entire market disputed the scaling of the deductible. However Axis and Ascot soon paid on the claim as presented. Glacier Re and two of the four Lloyd's reinsurers, Advent and Map, continued to dispute that the basis of scaling the deductible was correct and, argued, instead, that the full deductible should be applied. After proceedings were issued, Map agreed to accept the scaling approach. Glacier Re paid the sum it considered was due under the Glacier Re slip, namely US$5,750,000, on the basis that the excess attachment point was US$250 million and has declined to pay the balance on the grounds that it is not so obliged. Indeed, Glacier Re contends that it was not liable for any part of the claim and claims to be entitled to recover the sum so paid. Procedural history The current action was commenced by a claim form issued on 25th March 2007. Three defendants were named in that claim form, Advent, Map and Glacier Re. The claim form was served on Glacier Re on 26th June 2007. Glacier Re objected to the jurisdiction of the English Court. That objection however was held in abeyance, because on 13th September 2007, the current proceedings against Glacier Re were stayed, in consequence of Glacier Re having earlier commenced proceedings in Switzerland (on 14th May 2007), seeking repayment of sums paid under the Glacier Re reinsurance contract on the grounds that Glacier Re was not liable to indemnify Gard. On 17th April 2008, Gard obtained permission to amend its Particulars of Claim (removing Map as a defendant) and to add the broker, AHP, as a defendant. The claim against the broker is for damages in the event that Advent's and/or Glacier Re's defences to the reinsurance claims are successful. In June 2009, the Swiss Federal Court dismissed an appeal by Glacier Re, holding that the Swiss Court did not have jurisdiction, because Gard was not domiciled in Switzerland. As a consequence of the Swiss Federal Court judgment the stay of the action ordered in September 2007 was lifted and the English Court is again seised of the claim against Glacier Re. Glacier Re's objections to the jurisdiction of the English Court now therefore need to be addressed. The grounds of jurisdiction asserted by Gard Gard seeks to establish the Court's jurisdiction pursuant to article 5(1) and/or 6(1) of the Lugano Convention (being the applicable jurisdiction regime as between the United Kingdom and Switzerland). Gard argues that: (1) The Court has jurisdiction pursuant to article 5(1) because the relevant contractual obligation was to be performed in London pursuant to an alleged custom and practice of the London market. (2) The Court has jurisdiction pursuant to article 6(1), because the claim against Glacier Re is intrinsically connected with the claim against Advent and AHP. Glacier Re takes issue with both of these grounds and submits that the Court must or should decline jurisdiction. In those circumstances, Gard would be permitted to sue Glacier Re in its country of domicile, Switzerland, pursuant to article 2 of the Convention. It is well established that provisions, such as Article 5(1) and 6(1), which allow a defendant to be sued in a country other than that of his domicile, are to be construed narrowly. The burden of proof in the present case rests on Gard. It must establish a good arguable case that the case falls within Article 5(1) or 6(1). This has been said to mean that it has "a much better argument than the defendants, on the material available at present" - see Bols Distilleries BV v Superior Yachts Services Ltd [2006] UKPC 45, [2007] 1 WLR 12 at [28]. Before addressing these issues, the matter of applicable law needs to be considered. Applicable law There is a dispute between the parties as to whether the law applicable to the Glacier Re reinsurance contract is Swiss law (as Glacier Re contends) or English law (as Gard contends). In order to determine the applicable law, reference is to be made to articles 3 and 4 of the Rome Convention (as incorporated by the Contracts (Applicable Law) Act 1990). Article 3 provides that: "A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case." The London Market slip is subject to an express choice of English law and jurisdiction. There is no such express choice in the Glacier Re slip. Gard, however, contends that there is an implied choice of English law in the Glacier Re slip. It is said that this implied choice is made clear by the following: (1) The slip was in English, in a London market form. The slip also used specific London Market wording. It is well established that such matters are sufficient to demonstrate an implied choice of law. (2) Both parties were clearly aware that the Glacier Re slip was part of facultative reinsurance protection intended to provide consistent and coherent reinsurance cover to such participants on the primary insurance cover as ordered reinsurance. This could only be achieved if the same applicable law applied to all the lines that were written on the reinsurance (which then fell to be allocated by the brokers). Both Gard and Glacier Re must therefore be taken to have agreed that English law should govern the Glacier Re reinsurance as well as the Lloyd's reinsurance. This is disputed by Glacier Re on the following grounds: (1) The choice of policy form (the J(A) form being a mere policy jacket) and the London market clauses were incidental to the scope and operation of the Glacier Re reinsurance contract. (2) The absence of an express choice of English law is indicative that English law was not intended to apply to the Glacier Re slip. London market placements now commonly require the insertion of an express choice of law clause. The fact that the London market slip refers expressly to English law and the Glacier Re slip does not militate against the argument that English law is the chosen law. (3) There was therefore no (express or implied) choice of English law. On the contrary, the choice of Swiss law as the applicable law is reasonably demonstrated, the most telling factor in favour of a choice of Swiss law being the fact that the slip was placed entirely ("100% of order") in the Swiss market with a Swiss reinsurer, Glacier Re. Placing a reinsurance contract in a particular market invariably points to that market's legal system as the chosen law, as is often said when slips are placed in the London market. (4) Alternatively, however, there is no such choice, the applicable law is the law of the country with which the Glacier Re slip has its closest connection. That country is Switzerland, pursuant to the presumption in article 4(2) of the Rome Convention, there being no closer connection with England. (5) Accordingly, the Glacier Re reinsurance contract is governed by Swiss law. I am satisfied that Gard have established at least a good arguable case that English law is the applicable law. First, the circumstances of the placement point towards a choice of English law. The underlying policy was a London market policy which would have been governed by English law, as was not disputed. The expiring reinsurance was part of a London market reinsurance programme which would also have been governed by English law. The replacement reinsurance programme was also likely to be primarily a London market placement. This was borne out by the renewal endorsement signed by the leading Lloyd's underwriter, a copy of which was provided to Glacier Re. AHP were London based Lloyd's brokers who were offering Glacier Re a share of an existing reinsurance programme. As stated in their email to Glacier Re of 11 August 2005: "We place a reinsurance for certain participants on the Primary Package…Due to certain participants reducing their line size we are looking for more capacity and would be delighted if you would take a look at this reinsurance.." That Glacier Re were aware that they were being asked to share in an existing reinsurance programme is borne out by their response of the same day: "Referring to our conversation earlier today we thank you very much for offering us a share on the XS Fac R/I Policy for the Primary Package Policy. As discussed we are pleased to offer you a line of 5% subject to a total discount of 10%. Please advise." In reality therefore this was not a Swiss market placement. It was a case of a Swiss reinsurer being invited to participate in a London market placement. Secondly, the use of a Lloyd's slip and policy points towards a choice of English law. As stated in the Giulano and Lagarde report on the Rome Convention, in respect of Article 3(1): "For example the contract may be in a standard form which is known to be governed by a particular system of law even though there is no express statement to this effect, such as a Lloyd's policy of marine insurance ..." - see also: Dicey and Morris (14th ed) vol 2, pp. 1708-1710. Glacier Re submitted that this comment was directed at policies such as the SG form. However, in Tiernan v Magen Insurance Company [2000] IL Pr 517 a similar point was rejected by Longmore J who held that the same considerations apply to a Lloyd's policy of reinsurance. As stated in Vesta v Butcher [1986] 2 Lloyd's Rep 179 per Hobhouse J at 196: "there remains something surprising and improbable about the fact that a Lloyd's slip and Lloyd's policy are governed by anything other than English law" In the present case a Lloyd's policy J(A) form was used and the slip was a Lloyd's brokers slip structured in a manner common to Lloyd's. Thirdly, the slip incorporated a number of London market wordings, such as LSW196A, CL 356A, CL 365 and LSW 1001. The significance of doing so has been stressed in a number of cases – see, for example, Gan v Tai Ping [1998] IRLN 7 (Cresswell J), affd [1999] Lloyd's Rep IR 229 (CA); Aegis v Continental Casualty (Cresswell J, 11 May 2006). Further, the wording included provisions which have particular relevance to and resonance of English law. For example, the Notice of Cancellation clause provides for return of balance of premium, thus varying the position which would otherwise arise as a matter of English law, that the whole premium was earned on inception of the risk. The Conditions were also expressed in terms well known under English law, namely "Subject to all terms, clauses, conditions as Original and to follow the original in every respects..". In the Aegis case Cresswell J regarded such a provision as involving the use of "terminology which associates it with the law of England" (at para. 40). Article 5(1) Article 5(1) of the Lugano Convention provides that: "A person domiciled in a Contracting State may, in another Contracting State, be sued: 1. in matters relating to a contract, in the courts for the place of performance of the obligation in question …" Gard sues Glacier Re for an indemnity under the reinsurance contract embodied in the Glacier Re slip. The "obligation in question" is the obligation on which Gard's claim is based, namely the obligation to pay a claim under the reinsurance contract. The place of performance of that obligation is determined in accordance with the law governing the reinsurance contract, as determined by the lex fori (English law). Under English law the general rule is that the place of performance is where the creditor resides. Gard resides in Bermuda and accordingly Glacier Re contends that Article 5(1) is inapplicable. Gard contends that neither party contemplated that claims payments would be made to Gard in Bermuda. Its case is that the common intention was that payments should be made to AHP in London and relies on the following: (1) The fact that both parties were aware that Gard had instructed the London broker, AHP, to place and administer the reinsurance. It was clear from the form and terms of the slip and the circumstances of the placing that the reinsurance was to be administered by AHP in accordance with London market practice. (2) The London Market practice in respect of risks is for brokers to pay premiums and collect claims (and engage in net accounting). See O'Neill and Woloniecki, the Law of Reinsurance (2nd ed.) paras 11-24-11-25 (pp. 608-9). See also Grace v Leslie & Godwin Financial Services Ltd [1995] LRLR 472 per Clarke J at 477; Citadel Insurance [1982] 2 Lloyd's Rep 543, at 548; Deutsche v La Fondiara [2001] 2 Lloyd's Rep 621 per David Steel J at 625). (3) In this case, both parties would have been aware that it would be impractical not to follow London market practice, and to make payments either direct to Glacier Re in Switzerland or to Gard in Bermuda. (4) Moreover, all payments made by the reinsured, Glacier Re and the other reinsurers under the reinsurance slips and their predecessors were paid to AHP in London. This included the interim payment in respect of this claim. (5) Gard accordingly contends that it was an implied term of the Glacier Re reinsurance (implied as obvious or necessary) that claims would be paid to AHP in London. Accordingly there is jurisdiction under Article 5(1). Glacier Re disputes this and contends as follows: (1) There is no evidence of a market custom or practice that claims would be paid to the broker, AHP, in London, let alone evidence satisfying the stringent demands of proof of a custom imposing a legal obligation. In fact, the English legal position in respect of the payment of claims is to the contrary. Further, Glacier Re's evidence is that it was not aware of any such custom or practice. (2) In any event, the slip refers only to Glacier Re's obligation to pay the Sum Insured and the only counterpart or payee identified is Gard. It follows that, in the absence of any contrary provision, Glacier Re is obliged to pay Gard, not AHP, and that payment to Gard, not AHP, would discharge any such obligation. (3) Further, the position under the Glacier Re slip stands in contrast to the London Market slip, which contains a subscription agreement requiring the management of claims in accordance with the Lloyd's 2005 Claims Scheme (absent from the Glacier Re slip). I am not satisfied that Gard have established a good arguable case that the English court has jurisdiction under article 5(1). I agree with Glacier Re that it is necessary for Gard to establish an obligation to pay claims to the brokers in London. A practice of doing so is insufficient. Gard relies on Grace v Leslie & Godwin Financial Services Ltd [1995] LRLR 472, at 477 in which Clarke J held on the evidence before him that it was the universal practice of Lloyd's brokers to collect claims when called upon to do so and that this was an ordinary incident of the duty of a Lloyd's broker. However, even if a broker may be under an obligation to the insured/reinsured to collect claims when requested to do so it does not necessarily follow that the insurer/reinsurer is contractually bound to pay all claims to the broker. There are cases where it has been held that payment falls to be made to the broker rather than to the principal, as in the case of Citadel Insurance [1982] 2 Lloyd's Rep 543, at 548. However, as pointed out by Robert Goff LJ in The "Stolt Marmaro" [1985] 2 Lloyd's Rep 428 at 436: "There were however features of that case regarding the position of the brokers, and in particular regarding calculation by them of quarterly balances of account and the resulting remittances to be made under the cover which was being operated by them, which are absent from the present case. I do not think therefore that the Citadel Insurance case provides any direct authority to guide us. It may be that, in practice, claims would in fact be paid by underwriters to the brokers in London in a case such as the present; but there is no evidence before us of any binding practice to that effect, and I do not feel able to say that there was a term of the contract requiring this to be done." In my judgment, the position is similar here. There are no particular features of the reinsurance which support the implication of the term alleged and there is insufficient evidence of practice or custom to found the required implication. Article 6(1) Article 6(1) of the Lugano Convention provides that: "A person domiciled in a Contracting State may also be sued: 1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled." It is common ground that, in the light of the ECJ decision in Kalfelis v Schroeder, Muenchmeyer, Hengst & Co [1988] ECR 5565, the issue under Article 6(1) is whether the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Gard relies on the judgment of Gross J in ET Plus SA v Welter [2006] 1 Lloyd's Rep 251 in which he summarized the correct approach as follows: "i) The test now contained in article 6(1) of the Regulation, codifies the effect of the earlier decision of the Court of Justice of the European Communities ("the European court") on the Brussels Convention in Kalfelis v Schroeder, Muenchmeyer, Hengst & Co [1988] ECR 5565 , at page 5584 (para 12), namely: whether there is such a connection between the claims at the time when they are instituted that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings ("the Kalfelis test"). The risk of irreconcilability may arise from potential conflicting findings of fact or from potential conflicting decisions on questions of law: Gascoine v Pyrah [1994] IL Pr 82 , at 93. While article 6(1) constitutes an exception to the general rule contained in article 2 (that the defendant's domicile governs jurisdiction) and must not be abused, it does not follow that article 6(1) is so subservient to article 2 that it could only be invoked in special circumstances: Gascoine v Pyrah , at 94". Glacier Re submits that regard must also be had to the recent ECJ decision in Roche Nederland BV v Primus (C-539/03) [2006] ECR I-6535; [2007] ILPr 9 in which the Court indicated the outer limits of "irreconcilability" for the purposes of article 6(1) in the following terms: "even assuming that the concept of irreconcilable judgments for the purposes of the application of Article 6(1) of the Brussels Convention must be understood in the broad sense of contradictory decisions, there is no risk of such decisions being given [in this case] ... As the Advocate General observed ... in order that decisions may be regarded as contradictory it is not sufficient that there be a divergence in the outcome of the dispute, but that divergence must also arise in the context of the same situation of law and fact". Gard contends that this test is satisfied in respect of Gard's claims against Advent and against Glacier Re. In particular: (1) Both claims raise the same issue of construction, namely what is the correct meaning of the phrase "USD 250,000,000 (100%)". If the claims were to be heard in different jurisdictions, there is a risk that the different Courts might reach different conclusions on this central construction issue, particularly if, as I have held, the matter is to be approached on the basis that English law is the applicable law. (2) Irrespective of the proper law, any Court which hears the claims will have to hear evidence and make findings of fact on factual matrix issues. Since the slips were placed pursuant to the same reinsurance order and against the same background, the evidence and factual issues will be the same or substantially the same. If these factual issues are canvassed before different Courts there is a clear risk of inconsistent findings of fact. (3) Leaving aside the construction issue and factual matrix, the claims are also connected by the fact that both reinsurance defendants allege that AHP made misrepresentations to them or failed to make proper disclosure. Any Court which hears the claims will therefore have to hear evidence and make findings of fact on what was and what should have been said by AHP during the placing. Since the two slips were placed as part of a single placing exercise (with the same placing information), the same evidence will be relevant for each case. If these issues are canvassed before different Courts there is a clear risk of inconsistent findings of fact. (4) Further, the close connection test is also satisfied in respect of Gard's claims against Glacier Re and against AHP. The case against Glacier Re will require the Court to consider Glacier Re's allegations as to what AHP said (and did not say) to Glacier Re during the placing and the evidence about this. So too will the Claimant's contingent claim against AHP. If these claims are not heard together then two Courts will have to hear evidence on the same matters and there will be a risk of inconsistent and irreconcilable judgments on issues of fact. Glacier Re denies that there is a risk of irreconcilable judgments resulting from the proceedings in England (without Glacier Re as a defendant) and any proceedings instituted against Glacier Re in Switzerland. In relation to the claim against Advent Glacier Re contends as follows: (1) The two slips, the London Market slip and the Glacier Re slip, are entirely separate contracts based on separate presentations of the risk to different underwriters in different insurance markets. (2) The terms of each slip are not the same, although they share a number of common provisions. In particular, the London market underwriters made a number of manuscript amendments to the London Market slip after the risk was placed with Glacier Re in Switzerland. (3) The London Market slip contains a detailed Subscription Agreement as between the London market underwriters which regulates the agreement of contractual amendments and the handling of claims on behalf of the entire subscribing market. The Glacier Re slip contains no such subscription agreement. (4) There is no reference in the Glacier Re slip to the London market placement (having been made after Glacier Re had agreed to a 100% reinsurance order). (5) The issues arising in respect of the claims against Advent and Glacier Re are different. Advent relies on specific exchanges between the syndicate and AHP. These exchanges are not relevant to the claim against Glacier Re. (6) Both claims give rise to an issue of construction, namely the proper interpretation to be given to the Sum Insured provision in each slip. Even if the issue could be formulated and determined in precisely the same terms, that is insufficient reason to hold that there is a risk of an irreconcilable judgment (the same contractual provisions are regularly interpreted by different courts in different countries at different times). In any event, in this case the issues of construction would be formulated and determined in different terms, because the factual matrix surrounding the negotiation of the Glacier Re slip is necessarily different from the factual matrix surrounding the presentation to the London market underwriters, being dependent on the actual or constructive knowledge of each of the reinsurers. Glacier Re contends that there is no risk of irreconcilable judgments involving AHP for the following reasons: (1) The claims against Glacier Re and AHP do not share a common basis. The claim against Glacier Re is a claim by Gard for an indemnity under the Glacier Re reinsurance contract. By contrast, the claim against AHP is concerned with the agency relationship between AHP and Gard and whether AHP observed an applicable duty of care in the discharge of its agency services with respect to the reinsurance contract. Given that there is an entirely separate legal and factual relationship in issue between the two claims, there can be no sufficient degree of connection between them to justify the application of article 6(1). (2) Further, the claim against AHP is made by Gard only if Glacier Re is not liable to indemnify Gard under the reinsurance contract. Therefore, the Swiss Court would determine Glacier Re's liability under the Glacier Re slip prior to the determination of AHP's liability in England. (3) There is an additional reason why the Court cannot assume jurisdiction pursuant to article 6(1) by reference to the claim against AHP. The time at which the relevant nexus should exist is the date of the original issue of the claim form, namely on 25th March 2007, not the date on which the claim form is amended or re-issued to effect the addition of further defendants. This follows first from the prescription laid down by the ECJ in Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co (Case 189/87) [1988] ECR 5565, para. 12, in requiring the actions to be "related when the proceedings are instituted" (emphasis added) and from the House of Lords' interpretation of the word "sued" in both articles 2 and 6(1) of the Lugano Convention. Such a construction was adopted by the House of Lords in the interests of uniformity and predictability (both objectives of the Lugano Convention). (4) Accordingly, as no claim had been brought against AHP at the time of the initiation of the proceedings against Glacier Re in March 2007, it follows that the Court did not have jurisdiction to hear the claim against Glacier Re under article 6(1) at that time. That defect could not be rectified by the joinder of AHP as an additional defendant in April 2008. I am satisfied that Gard have at least a good arguable case that the Court has jurisdiction under article 6(1). Gard's claims against Advent and Glacier Re turn on the proper construction of the Sum Insured Clause in the reinsurances. That clause is in precisely the same terms in both contracts, which contracts were placed as part of a common reinsurance programme. The issue of construction falls to be determined under English law. There is no material difference between the terms of the two contracts and so the legal issue to be determined in both cases is the same. It is unlikely that issues of fact will have a major bearing on the resolution of that issue of construction. If, for example, one has regard to the pleaded matters relied upon by Advent in its pleading in relation to the construction issue, they are all matters which would apply equally to Glacier Re. The general factual matrix in relation to both placements is likely to be the same, so to that extent there will be common issues of fact. To the extent that there are differences in the factual background they are unlikely to alter the court's conclusion as to the proper construction of the words used. There is therefore a real risk of divergence of outcome in the context of the same situation in law and in fact. A further connection between the claims is provided by the contingent claim against AHP. Such a claim is only likely to arise if Gard's claim fails on the construction issue. As a claim which is largely dependent on the outcome on the construction issue it therefore has a common basis. Moreover, this contingent claim makes the consequences of differing judgments particularly serious. If, for example, Gard's claim against Glacier Re failed in Switzerland and it pursued a claim against AHP in this country, if the English Court reached a different conclusion on the issue of construction then its contingent claim against AHP might well fail, leaving Gard to fall between two jurisdictional stools. I also consider that, as Gard submits, the claim against AHP is likely to involve common issues of fact and therefore a risk of inconsistent findings of fact. Nor do I accept that the claim against AHP is to be ignored since it was not party to the proceedings when first issued. AHP has always been domiciled here and under English law and procedure the claim is deemed to have been commenced at the same date as the original action. Even without consideration of the claims against AHP I am therefore satisfied that jurisdiction under article 6(1) has been established, but all the more clearly so if those claims are taken into account. Finally, Glacier Re contended that the Court should exercise its discretion to decline jurisdiction under article 6(1) even if there were shown to be a risk of irreconcilable judgments. In this connection, it was submitted that regard should be had to the lack of connection between the reinsurance contract on the one hand and England on the other. The original risks were located in the Gulf of Mexico; the reinsured is domiciled in Bermuda; and Glacier Re is domiciled in Switzerland, where the risk was presented. The only connection to England is supplied by the brokers, AHP. I reject this contention. It is overwhelmingly just, convenient and expedient that Gard's claims against Advent, Glacier Re and its consequent contingent claim against AHP be determined in one jurisdiction. Conclusion I am accordingly satisfied that the Court has jurisdiction over the claim against Glacier Re and reject its jurisdictional challenge.

LORD JUSTICE SCHIEMANN: This is the judgment of the Court. Introduction 1. The appeal raises issues under Article 8 of the European Convention on Human Rights, Paragraph 8 of the Secretary of State for the Home Department's policy guidelines on deportation and removal known as DP 3/96, and the correct approach of Courts to a challenge made to an administrative decision when a Convention right is engaged. Since this judgment was in draft another division of this court (The Master of the Rolls, May and Laws LJJ) has pronounced on many of the questions which were argued in front of us - R (on the application of Mahmood) v Secretary of State for the Home Department [2000] All ER (D) 2191. The judgments in that case broadly accord with the conclusions which we had reached before we saw them. 2. The Respondents to this appeal, Peter Isiko and Susan Isiko applied for orders of certiorari to quash decisions made by the Secretary of State to remove them from this country dated the 9th November, 1999, and the 7th January 2000, respectively. On the 11th August 2000 Hidden J quashed both decisions. The Secretary of State appeals against those Orders. 3. The family, marital and immigration history of the Respondents can be summarised as follows. Because of the complexity of the family relationships, the family members are referred to by their first names. Peter and Susan have at least since 24.05.1992, had no permission under our immigration law to remain in the U.K.. At a time when they both knew that the immigration authorities were likely to deport them, they married each other. Since then, they have divorced and Peter has married Wendy, a British citizen, again at a time when they knew that the immigration authorities were likely to deport him. Deporting Peter and Susan to Uganda, where each of them was born, is likely to have the following effects. They and their child Shemy will all go to Uganda. Peter will be separated from Wendy and their daughter Selina; this is because Wendy will not wish to leave the U.K. because there is living here Wendy's child by a former husband. Clearly this course of action will probably have adverse effects on a number of family relationships. The legality of the policy contained in Paragraph 8 of DP 3/96 4. Although both the policy and its implementation in the present case preceded the coming into force of the Human Rights Act 1998 there are a number of considerations which make it sensible to treat the present case as though the Act had been in force at all relevant times - see in this context the judgments in Mahmood. The Secretary of State was content that we should do so. In the light of this, and since our conclusion is that what has happened in the present case is compatible with the Convention, we proceed on this basis. Paragraph 8 of DP 3/96 is in these terms: "Where a person marries after the commencement of enforcement action, removal should normally be enforced. The criteria set out in Paragraph 5 do not apply in such cases. Paragraph 284 of the Immigration Rules makes it clear that one of the requirements for the extension of stay as the spouse of a person present and settled in the United Kingdom is that "the marriage has not taken place after a decision has been made to deport the applicant or he has been recommended for deportation or has been given notice under Section 6(2) of the Immigration Act 1971". Marriage cannot therefore in itself be considered a sufficiently compassionate factor to militate against removal. Detailed enquiries in order to ascertain whether the marriage is genuine and subsisting should not normally be undertaken. The onus is on the subject to put forward any compelling compassionate factors that he/she wishes to be considered which must be supported by documentary evidence. Only in the most exceptional circumstances should removal action be stopped and the person allowed to stay." 5. The policy overall is concerned with the interplay of immigration and marriage, and Paragraph 8 sets out that the policy is that where a person marries after the commencement of enforcement action against him, removal should normally be enforced. In such circumstances, marriage is not regarded as being in itself a sufficiently compassionate factor to mitigate against removal. Only in the most exceptional circumstances should removal action be stopped, and the person allowed to stay. Immigration policy has been delegated by Parliament to the Home Secretary, and many factors will play their part in framing that policy. Amongst those factors will be those contained in Article 8(2) of the ECHR. That Article reads as follows:- 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There should 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. 6. We must first consider whether the implementation of the policy contained in paragraph 8 of DP 3/96 will always be unlawful under the Human Rights Act 1998 when it interferes, as it usually will, with family life. The answer to this is in the negative. The policy as such is lawful. This is rightly accepted by the immigrant. 7. In R v SSHD, ex parte Ahmed and Patel [1998] INLR 570 Lord Woolf M.R. (with whom the other members of the court agreed) said at page 577, speaking of the policies contained in DP 3/96: "Putting on one side the effect of Article 8 of the ECHR, it can be said that in general these policies are not ones which could be open to challenge as being inappropriate in themselves ..... They are dealing with those who are in this country in circumstances when they have no entitlement to be here. In relation to this category of person, the Secretary of State has to take into account that he must not be seen to be giving encouragement to the breach of the Immigration Rules. He also has to have regard for the need to be fair to those who comply with the Immigration Rules who wait their turn to come to this country lawfully. On the other hand they take into account that where a person marries someone who has the right of abode in this country and particularly if they have children, their removal may have extremely adverse consequences not only on the individual against whom enforcement action is to be taken but also their spouses and children." 8. So far as the ECHR is concerned, the jurisprudence makes clear that it is legitimate for a State to have an immigration policy and the mere fact that its implementation will interfere with family life does not render unlawful every such act of implementation. That is clear from a number of the decisions of the European Court of Human Rights. 9. In Abdulaziz and Others v United Kingdom (1985) 7E.H.R.R. 471 the Court said at Page 494: "67. The Court recalls that, although the essential object of Article 8 is to protect the individual against arbitrary interference by the public authorities, there may in addition be positive obligations inherent in an effective "respect" for family life. However, especially as far as those positive obligations are concerned, the notion of "respect" is not clear-cut: having regard to the diversity of practices followed and the situations obtaining in the Contracting States, the notion's requirements will vary considerably from case to case. Accordingly, this is an area in which the Contracting Parties enjoy a wide margin of appreciation in determining steps to be taken to ensure compliance with the Convention with due regard to the needs and resources of the community and of individuals. In particular, in the area now under consideration, the extent of a State's obligation to admit to its territory relatives of settled immigrants will vary according to the particular circumstances of the persons involved. Moreover, the Court cannot ignore that the present case is concerned not only with family life but also with immigration and that, as a matter of well established international law and subject to its treaty obligations, a State has the right to control entry of non-nationals into its territory. 68. The Court observes that the present proceedings do not relate to immigrants who already had a family which they left behind in another country until they had achieved settled status in the United Kingdom. It was only after becoming settled in the United Kingdom as single persons, that the applicants contracted marriage. The duty imposed by Article 8 cannot be considered as extending to a general obligation on the part of a Contracting State to respect the choice by married couples of a country of their matrimonial residence and to accept the non-national spouses for settlement in that country". 10. The court drew attention to the fact that each of the applicants knew at the time of their marriage that their husband's immigration position was precarious. 11. In Ajayi and Others v The United Kingdom (Application 27663/95 (20.06.99) (Unreported) the Court specifically considered the policy in DP 2/93, the predecessor of DP 2/96 and expressed in similar terms. The Court said at Page 11: "Another important consideration will also be whether the marriage, albeit manifestly not one of convenience, was contracted at a time when the parties were aware that the immigration status of one of them was such that the persistence of the marriage within the host State would from the outset be precarious. The Court considers that where this is the case it is likely only to be in the most exceptional circumstances that the removal of the non-national spouse would constitute a violation of Article 8." 12. The Court cited Abdulaziz. The Court found that there were no elements concerning respect for family life which in the circumstances of the case outweighed valid considerations relating to the proper enforcement of immigration controls. 13. In Aftab and Others v Norway [2000] May 4th (Application No 32365/96) the Court said at Page 5: "The Court reiterates that it is for the Contracting States to maintain public order, in particular by exercising their right as a matter of well-established international law and subject to their treaty obligations, to control the entry and residence of aliens. For that purpose they are entitled to order the expulsion of persons convicted of criminal offences." And on page 6: "In the light of the above elements, the Court considers that in concluding that the public interest in the First Applicant's expulsion from Norway to Pakistan was preponderant, the authorities of the Respondent State acted within their margin of appreciation. The Court finds that the interference with the Applicant's right to respect for private and family life was supported by relevant and sufficient reasons, was proportionate for the purposes of Article 8(2) and could reasonably be viewed as necessary in a democratic society." 14. It is clear that the European Court of Human Rights has recognised that many factors play a part in immigration policy, that those factors are likely to differ between one country and another, that the State has the right to control entry of non-nationals into its territory, and that the elected Government of the country concerned is entitled to lay down and enforce a general policy which does not offend the principle of proportionality. The implementation of the policy: the role of the Secretary of State and the Courts 15. To say that the policy itself is lawful does not have as a consequence that every act of implementation of the policy is inevitably lawful. That again is common ground. Cases can arise where deportation would be a disproportionate response to the breach of immigration control - see, for instance, B v Secretary of State for the Home Department [2000] ImmAR 478 a decision of this court. 16. There is however a dispute between the parties as to the proper approach of this court when considering the lawfulness of a decision taken by the Secretary of State in the course of implementing the policy. A. The parties' submissions 17. Mr John Howell Q.C., appearing for the appellant Home Secretary, submitted that the general approach of the judgments in B should not be followed, and that, since this was based on a concession or assumption it was not binding on us. He submitted that in B it may have been overlooked that the Courts may not be as well placed as the Secretary of State to consider the weight to be given on wider grounds to the prevention of disorder and crime when they are considering the deportation of those who have committed serious offences. That was recognised, he submitted, by the Court of Appeal in Ali Dinc [1999] INLR 256 and is reflected in Parliament's decision to entrust the final decision on deportation in cases involving the deportation of convicted criminals who have served their sentence not to the court but to the Secretary of State. 18. Ali Dinc was a case, decided before B, where this court (Stuart-Smith, Henry and Robert Walker LJJ) allowed an appeal from Sedley J. Henry L.J., with whom the other two Lords Justices agreed, pointed out that the Secretary of State was "better placed to take a wider policy-based view on the key question as to whether removal could be justified as "necessary in the interest of a democratic society". 19. Mr Howell submitted that this applied to a number of situations where the Convention itself saw a tension between the rights of the individual and the interests of the larger community. Thus he pointed out by way of example that under Article 1 of the First Protocol it was provided that no-one should be deprived of his possessions except in the public interest and subject to conditions provided by law but that this provision did not in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest. This, he submitted, required there to be a reasonable relationship of proportionality between the means employed and the aims sought to be realised. The ECHR will examine whether the means chosen could be regarded as reasonable and suited to achieving the legitimate aim being pursued, regard being had to the need to strike a fair balance. It does not consider whether deprivation is in its judgment the best solution for dealing with the problem among those available. The essence of his case was that there was a whole series of ingredients which go into striking the balance which Article 8 requires to be struck and the person best equipped to strike that balance in principle was the Secretary of State and the task of the court was to see whether in so doing he had gone outside legitimate perimeters. He pointed out that the guidance contained in documents such as DP3 was itself the result of a balancing exercise carried out by the Secretary of State. 20. He submitted that the function of the court was to form a supervisory judgment on the legality of any decision or action of the Secretary of State. The question for the court was not what it might do in the circumstances if it had been entrusted with the Secretary of State's responsibilities: it was whether a decision or action of the Secretary of State which was impugned was incompatible with Convention rights. In making any such assessment, the nature of the right, interests and judgments involved must be borne in mind. He submitted that in the discretionary area referred to by Lord Hope of Craighead in Kebilene [1999] 3 W.L.R.972 , 993-4 in a passage which we shall shortly cite, the judgment involved in immigration control and deportation was assigned unambiguously by Parliament to the Secretary of State. This was because he was in a far better position to make the policy judgment involved, for which he was democratically accountable, and to assess the weight to be given to them in striking the required balance in any particular case than the court. 21. Mr Ian Macdonald QC, appearing for the immigrant, while he accepted the approach of Lord Hope of Craighead in Kebilene, relied in particular on passages in the judgments of this Court in B which we will shortly identify, and submitted before us what he had successfully submitted below, namely, that when a challenge is made to a decision on human rights grounds the Court must examine the facts of each case that comes before it, consider the merits of the competing submissions, balance the compassionate circumstances against the public interest involved, and, while giving what he sometimes called "a degree of respect" and sometimes called "due deference" to the primary decision maker, must reach its own conclusion in every case as to where the balance falls. If there is an appeal then the appellate court must carry out exactly the same exercise as the judge of first instance. The Court, Mr Macdonald submits, is in just as good a position to make a judgment as the original decision maker. He submits that once an interference with family rights is shown then the Applicant's human rights must be upheld unless the Secretary of State can show that the interference is justified. He submits that it is for the Secretary of State to bring the relevant material which has influenced him in making the policy and in coming to the individual decision to the attention of the Court. On the facts of this case, as Mr Macdonald puts it, the balance falls on the side of the fence of the Applicants. B. Discussion on the proper approach by the Court 22. In B the Appellant, a citizen of Italy, had been brought up in and had lived in the United Kingdom for over 35 years. He had been convicted of offences of indecent assault on both his daughter and his son. The Secretary of State concluded that he should be deported. The facts of the case were unusual in that the Appellant had lived in this country since he was seven years old and the whole of his family lived here. He had visited Italy only twice in the past twenty years. 23. Sedley LJ said: "17. ..... [The test of proportionality] In essence amounts to this : a measure which interferes with a Community or human right must not only be authorised by law but must correspond to a pressing social need and go no further than is strictly necessary in a pluralistic society to achieve its permitted purpose; or, more shortly, must be appropriate and necessary to its legitimate aim. ..... 18. It follows that among the issues of law for this Court in a case such as the present is the question whether deportation constitutes a proportionate response to the Appellant's offending. Being a question of law, it has to be answered afresh, even if reaching an answer involves taking a much closer look than we are accustomed to at the merits. I would turn first to the factual basis of these before returning to the important question of how much deference is due to the Immigration Appeal Tribunal's appraisal of them." 24. He then quoted parts of the well known passage from the speech of Lord Hope of Craighead in R v DPP, ex parte Kebiline to which we have already referred: "By conceding a margin of appreciation to each national system, the court has recognised that the Convention, as a living system, does not need to be applied uniformly by all States but may vary in its application according to local needs and conditions. This technique is not available to them national courts when they are considering Convention issues arising within their own countries. But in the hands of the national courts also the Convention should be seen an expression of fundamental principles rather than as a set of mere rules,. The questions which the courts will have to decide in the application of these principles will involve questions of balance between competing interests and issues of proportionality. In this area difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society. In some circumstances it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention. This point is well made in Human Rights Law and Practice (1999) p. 74, para 3.21, of which Lord Lester of Herne Hill Q.C. and Mr. David Pannick Q.C. are the general editors, where the area in which these choices may arise is conveniently and appropriately described as the "discretionary area of judgment". It will be easier for such an area of judgment to be recognised where the Convention itself requires a balance to be struck, much less so where the right is stated in terms which are unqualified. It will be easier for it to be recognised where the issues involve questions of social or economic policy, much less so where the rights are of high constitutional importance or are of a kind where the courts are especially well placed to assess the need for protection". 25. The case is currently under appeal to the House of Lords. It was a case where the SSHD refused to grant a failed asylum seeker from Turkey exceptional leave to remain. He alleged that there was a grave risk of torture should he be sent back. The Secretary of State disagreed. This court held that the question for the court was whether the material before the court compelled a different conclusion from that arrived at by the Secretary of State. The court answered that question in the negative while leaving open the question whether the court itself would have come to the same conclusion. 26. Sedley LJ said in B at paragraph 25: "Simon Brown L.J. pointed out [in Turgut] that on the coming into force of the Human Rights Act 1998 "the threshold of irrationality will have to be lowered" in relation to Convention rights, but that even before that time arrived the court, at least in the case before it, was "hardly less well placed than the Secretary of State himself to evaluate the risk" in the light of the relevant materials." There were in that case some 1500 pages of material before the court. Sedley L.J. continued:- "26. In the present case much the same is true. The Home Secretary's decision is superseded in its entirety by the Tribunal's. The Tribunal's decision includes (a) findings of primary fact derived chiefly from oral evidence, (b) inference from findings of fact, (c) propositions of law and (d) reasoning leading to its conclusions. The first of these elements must be treated with the respect always accorded to findings of primary fact from oral testimony. The second can readily scrutinised and evaluated. The third and fourth, are matters entirely open on appeal. It is to be noted that in the present case, in contrast with many cases decided by the Tribunal, little if anything turns on the conditions obtaining in Sicily or elsewhere in Italy. If it were otherwise - if, that is, the Tribunal's fund of knowledge about conditions elsewhere in the world had been drawn upon - this court would have expected to defer to at least that much of the decision save to the extent that it could be shown to be wrong. 27. But once we have taken the primary facts from the Tribunal this is a case in which we are as well placed as that Tribunal to decide what to make of them. Moreover, the Tribunal has in my view got the law wrong in a potentially important respect: for reasons set out earlier in this judgment Article 8 of the European Convention is not superfluous once EU law has been considered. Interference with free movement is one thing; interference with family and private life is another. Even where, as here, both arise from the same deportation they enhance the private interests against which public policy is to be set and to which deportation must be a proportionate response. ........ 36. I have no doubt that the Home Secretary's view that deportation was nevertheless merited was legitimately open to him: even the additional factor of near-lifelong residence here would not necessarily have lead this Court to intervene on traditional public law grounds. But our public law, for reasons I have explained, now has to accommodate and give effect to the requirements of EU law and, through EU law, of the European Convention. It means making up our own minds about the proportionality of the public law measure - not simply deciding whether the Home Secretary's or the Tribunal's view of it is lawful and rational. B was an appeal from a decision of the Immigration Appeal Tribunal which dismissed an appeal by an applicant against a decision of the Secretary of State to deport him. In that case there was agreement between the parties as to the law which had to be applied. Thus Sedley L.J. said at paragraph 6 "It is common ground that, since the duty of the Immigration Appeal Tribunal is to allow an appeal if it considers that the Home Secretary's discretion ought to have been differently exercised, the Tribunal's decision has the status of a first instance decision replacing that of the Home Secretary. It is also common ground - and this is a matter of considerable significance - that among the questions of law which may arise on further appeal to this Court is the question whether to deport infringes the principle of proportionality." Simon Brown L.J. said at paragraph 47: "It was common ground before us that proportionality involves a question of law and that, on a statutory appeal of this nature, the court is required to form its own view on whether the test is satisfied, although, of course, in doing so it will give such deference to a Tribunal's decision as appropriately recognises their advantage in having heard the evidence..... It would not be proper for us to say that we disagree with the Tribunal's decision on proportionality but that, since there is clearly room for two views and their view can not be stigmatised as irrational, we can not interfere." 27. That measure of agreement between the parties in relation to that case, is, in our judgment, of importance. 28. Since submissions were made to us in the present case judgments have been delivered in Mahmood, a decision of the Master of the Rolls, May LJ and Laws LJ, in which, so far as one can judge from the report of the judgments which we have seen, B v SSHD was not cited. 29. The approach of this court in Mahmood was arguably marginally different from that adopted by consent in B. The first judgment was delivered by Laws L.J.. He said this:- "32. I turn lastly to the second important issue which I identified at the outset. Miss Webber submitted that this court was in as good, or effectively as good, a position as was the Secretary of State to decide whether Art. 8 ECHR was fulfilled in this case. I assume she meant that we could decide, as readily as the Secretary of State, whether the applicant's removal would constitute a denial of or disrespect for family life under Article 8 (1), or was not justified by the conditions specified in Article 8 (2). 33. This submission seems to me to engage a question of some constitutional significance. Much of the challenge presented by the enactment of the 1998 Act consists in the search for a principled measure of scrutiny which will be loyal to the Convention rights, but loyal also to the legitimate claims of democratic power. In this case Miss Webber's submission comes close to the proposition that the court should stand in the shoes of the Secretary of State and re-take the decision in the case on its merits. In fairness, when tested, she disavowed such a proposition. But in that case her submission is without principle: the courts are in as good a position as the Secretary of State to decide; but they must not decide as if they were his surrogate. This antitheses at the same time commends but deprecates the imposition by the courts of their own views of the merits of the case in hand. It is of no practical assistance and lacks intellectual coherence. The Human Rights Act 1998 does not authorise the judges to stand in the shoes of Parliament's delegates, who are decision-makers given their responsibilities by the democratic arm of the state. The arrogation of such a power to the judges would usurp those functions of government which are controlled and distributed by powers whose authority is derived from the ballot-box. It follows that there must be a principled distance between the court's adjudication in a case such as this, and the Secretary of State's decision, based on his perception of the case's merits. For present purposes that principled distance is to be found in the approach I have taken to the scope of judicial review of this case, built on what the common law has already done in Smith, Launder and Lord Saville. For the future, when the court is indeed applying the Convention as municipal law, we shall no doubt develop a jurisprudence in which a margin of discretion (as I would call it) is allowed to the statutory decision-maker; but in the case of those rights where the Convention permits interference with the right where that is justified by reference to strict criteria (Arts. 8 - 11, paragraph 2 in each case) its length will no doubt be confined by the rigour of those criteria in light of the relevant Strasbourg case-law, and the gravity of the proposed interference as it is perceived here. But that is for the future." May L.J. simply said "I agree". The Master of the Rolls said:- "37. Laws L.J. has referred to statements of Lord Bingham M.R. in Ex.p. Smith [1996] QB 517 at 554; Lord Woolf in R v Lord Saville exp. A [1999] 4 AER 860 at 872 and Lord Hope of Craighead in Ex p. Launder [1997] 3 AER 961 at 998. These all addressed the question of the approach to the reviews of executive discretion in circumstances where human rights were at stake but where the Minister was not required as a matter of domestic law to comply with the Convention. They support the application of three principles to that situation. (1) Even where human rights were at stake, the role of the Court was supervisory. The Court would only intervene where the decision fell outside the range of responses open to a reasonable decision-maker. (2) In conducting a review of a decision affecting human rights, the Court would subject the decision to the most anxious scrutiny. (3) Where the decision interfered with human rights, the Court would require substantial justification for the interference in order to be satisfied that the response fell within the range of responses open to a reasonable decision-maker. The more substantial the interference, the more that was required to justify it. 38. I consider that the first principle remains applicable were the Court reviews an executive decision which is required to comply with the Convention as a matter of law. The Court does not substitute its own decision for that of the executive. It reviews the decision of the executive to see whether it was permitted by law - in this instance the Human Rights Act 1998. In performing this exercise the Court has to bear in mind that, just as individual States enjoy a margin of appreciation which permits them to respond, within the law, in a manner that is not uniform, so there will often be an area of discretion permitted to the executive of a country before a response can be demonstrated to infringe the Convention. [ He then cited the passage in the speech of Lord Hope in R v DPP ex p Kebeline which we have already cited and continued]: 39. As to the second principle to be derived from the authorities referred to above, that principle also remains applicable where the Convention is directly in play. The decision must be subjected to the most anxious scrutiny. It is the third principle that requires modification where a decision is reviewed that was required, pursuant to the 1998 Act, to comply with the Convention. In such circumstances the Court can no longer uphold the decision on the general ground that there was "substantial justification" for interference with human rights. Interference with human rights can only be justified to the extent permitted by the Convention itself. Some Articles of the Convention brook no interference with the rights enshrined within them. Other Articles qualify the rights, or permit interference with them. Thus Articles 8, 9, 10 and 11 contain second paragraphs which permit interference with rights in accordance with the law and insofar as necessary in a democratic society in the interests of specified legitimate aims. 40. When anxiously scrutinising an executive decision that interferes with human rights, the Court will ask the question, applying an objective test, whether the decision-maker could reasonably have concluded that the interference was necessary to achieve one or more of the legitimate aims recognised by the Convention. When considering the test of necessity in the relevant context, the court must take into account the European jurisprudence in accordance with Section 2 of the 1998 Act." Having considered a number of cases including Abdulaziz he continued: 55. From these decisions I have drawn the following conclusions as to the approach of the Commission and the European Court of Human Rights to the potential conflict between the respect for family life and the enforcement of immigration controls: (1) A State has the right under international law to control the entry of non-nationals into its territory, subject always to treaty obligations. (2) Article 8 does not impose on a State any general obligation to respect the choice of residence of a married couple. (3) Removal or exclusion of one family member from a State where other members of the family are lawfully resident will not necessarily infringe Article 8 provided that there are no insurmountable obstacles to the family living together in the country of origin of the family member excluded, even when this involves a degree of hardship for some or all members of the family. (4) Article 8 is likely to be violated by the expulsion of a member of the family that has been long established in a State if the circumstances are such that it is not reasonable to expect the other members of the family to follow that member expelled. (5) Knowledge on the part of one spouse at the time of marriage that rights of residence of the other were precarious militates against a finding that an order excluding the latter militates against a finding that an order excluding the latter spouse violates Article 8. (6) Whether interference with family rights is justified in the interests of immigration will depend on (i) the facts of the particular case and (ii) the circumstances prevailing in the State whose action is impuned. He concluded: "67. In summary, having subjected the decision of the Secretary of State to anxious scrutiny, I find that there were reasonable grounds for his conclusion that deportation of the appellant is necessary in the interests of an orderly and fair control of immigration and that his right to respect for his family life was not violated. For these reasons I agree that this appeal should be dismissed." C. Our conclusion as to the proper approach by the Court 30. In our respectful judgment the approach in Mahmood is the correct approach in these cases. It is not entirely clear whether, read as a whole, the judgments in B are at variance with it, particularly since there is no indication that Sedley L.J. disagreed with the approach of Lord Hope of Craighead in Kebilene. If there is a difference between them then we consider that we are at liberty to follow the approach in Mahmood even if, as may be the case, the court in Mahmood, was not referred to the judgments in B. That is because the court in B proceeded on the basis of a proposition of law which was not the subject of consideration by that court. In such circumstances a later court is not bound by it - see Kadhim v The Housing Benefit Board London Borough of Brent the judgment of this court (Schiemann, Buxton LJJ, Jacob J) 20.12.2000. 31. In our judgment the position is as follows 1. Where the Court reviews a decision which is required to comply with the Convention by the Human Rights Act 1998 it does not substitute its own decision for that of the executive. It reviews the decision of the executive to see if it was permitted by law - in this instance the Human Rights Act. In performing this exercise the Court has to bear in mind that, just as individual States enjoy a margin of appreciation which permits them to respond within the law in a manner which is not uniform, so there will often be an area of discretion permitted to the executive of a country which needs to be exceeded before an action must be categorised as unlawful. In this area difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society. In cases involving immigration policies and the rights to family life, it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose decision is said to be incompatible- see Mahmood para 38. 2. Where, as here, a fundamental right is engaged the court will, applying the law as it was established prior to the coming into force of the Human Rights Act 1998, insist that this fact be respected by the decision maker, who is required to demonstrate either that his proposed action does not in truth interfere with the right, or if it does, that there exist considerations which may reasonably be accepted as amounting to a substantial objective justification for the interference. The graver the impact of the decision in question upon the individuals affected by it, the more substantial the justification that will be required.- Mahmood paragraph 19. 3. This more intrusive mode of supervision will in broad terms and in most instances suffice as the beginning of a proper touchstone for review when the Convention is in play - Mahmood para 30. 4. Within the framework of the approach outlined above the court can give the due deference to the primary decision maker which Mr MacDonald accepts that it should give. In the framework suggested by him the concept is too vague to be of any practical use as a judicial tool. The facts of the present case 32. We have already summarised them but it may be useful to set them out more fully in the form of a chronology. 26.08.56 Peter Isiko (Peter) born in Uganda 15.05.60 Peter's second wife, Wendy, born in the United Kingdom. 03.08.67 Susan Isiko (Susan) born in Uganda. 23.09.87 Susan arrives in the United Kingdom as a visitor. 23.12.87 Susan granted leave to remain as a visitor until 23.09.88. 25.02.88 Samuel Watkins ("Sam"), the son of Wendy and her then husband born in the UK. 15.04.88 Susan applies for asylum. 18.12.90 Peter by deception granted leave to enter as a student until 31.10.91. 01.03.91 Susan's claim for asylum refused. 05.03.91 Susan lodges appeal against refusal of asylum. 1. Peter applies for an extension of his student visa. Nov. 91 Susan returns to Uganda Dec 91 Peter meets Wendy and starts relationship with her. 12.12.91 Susan, by deception granted entry clearance to join Peter in the UK. 24.05.92 Peter and Susan served with illegal entry papers. 03.08.92 Susan's asylum appeal heard by Special Adjudicator. 12.08.92 Susan's asylum appeal dismissed. 14.08.92 Peter and Susan marry. 21.10.92 Immigration Appeal Tribunal hear Susan's appeal against decision of the Special Adjudicator. 30.10.92 IAT remit case for hearing de novo. 12.01.93 Peter and Susan apply for asylum. 27.08.93 Special Adjudicator dismisses remitted appeal. 13.09.93 Shemy is born to Peter and Susan. 11.01.94 Wendy and Sam's father divorce. 21.07.94 Peter arrested and charged with rape. 16.06.95 Selina born to Peter and Wendy. 08.11.95 Peter convicted of rape and sentenced to serve six years imprisonment. 29.12.96 Susan travelled to Amsterdam. Her 1993 asylum claim lapses. Susan is refused entry and returned to UK by the Dutch authorities. She makes further asylum application. 10.10.97 Peter and Susan divorced. 05.11.97 Peter's asylum claim refused. 10.11.97 Susan's 1996 asylum claim refused. Susan refused leave to enter. 10.07.98 Special Adjudicator dismisses Peter's asylum appeal. 07.08.98 Special Adjudicator dismisses Susan's asylum appeal in respect of 1996 claim. 31.03.99 Peter marries Wendy whilst in prison. 11.06.99 Peter applies for leave to remain on basis of marriage. 28.10.99 Secretary of State refuses Peter's application on grounds set out in DP 3/96. 01.11.99 Removal directions set for Susan and Shemmy to take effect on 2.12.99. 03.11.99 Removal directions for Peter to take effect on 19.12.99. 05.11.99 Peter released from prison. 33. In a lengthy witness statement made on 25th April 2000, the details of which it is not necessary to repeat, Miss Arnold of the Immigration and Casework Directorate of the Home Office, sets out the reasoning leading to the Secretary of State's conclusions in these cases. She refers to the immigration history of Peter and Susan, described, rightly, by Hidden J as "deplorable". Both Peter and Susan gained entry to this country by deception. Since then Peter has been convicted of the very serious criminal offence of rape. Peter knew when he married Wendy, as did Wendy, that the Secretary of State intended to remove him. His asylum claim was a baseless device to postpone his removal. The Secretary of State had considered the compassionate circumstances put forward but in addition to the facts set out above the Secretary of State had to consider the public interest contained in the policy, that public interest being fully explained in the witness statement. The approach of the Judge 34. The judge approached the matter in the way in which he had been invited to on behalf of the applicant, namely, by considering whether there was a pressing need to remove the two applicants which was so important that it justified breaking up a family and applying his own judgment. He said this in paragraph 40. Mr Macdonald complains that the only legitimate aim of removal put forward by the Secretary of State .... is the need for a firmer, faster and fairer immigration control. It is not spelt out how effecting such a policy translates into one of the legitimate aims in Article 8(2) of the ECHR. There can not be a pressing need, for example, to remove the two applicants in order to protect the economic wellbeing of the United Kingdom; there can not be a need so pressing that it justifies the breaking up of a complex family network and interfering with the happiness and wellbeing of the innocent parties (see B v SSHD Court of Appeal 18th May 2000, case 2000/0012/C). I regard this argument as a compelling one. 35. The judge did not have the advantage of the decision in Mahmoud which had not been promulgated. In that case Laws LJ referred to another marriage case Ex parte Hashim an unreported decision by Jackson J at first instance. Jackson J had adopted an approach rather similar to that adopted by Hidden J. in the present case and had come to the conclusion that there would be no harm to the enforcement of immigration control if persons who fulfilled all the requisites for the grant of entry clearance were granted permission to enter notwithstanding that they had arrived without entry clearance. . Laws LJ said this in paragraph 26: "No matter that the immigrant in the individual case, having arrived here without the required entry clearance, may be able to show .... that the Home Office accepts that he meets the rule's substantive requirements; it is simply unfair that he should not have to wait in the queue like everyone else. At least it is unfair unless he can demonstrate some exceptional circumstance which reasonably justifies his jumping the queue. Here, the Secretary of State found no such exceptional circumstance. In my judgment that was an entirely reasonable conclusion. Accordingly, applying the standards of judicial review appropriate as a matter of common law to cases involving fundamental freedoms, I would conclude that the ... decision is not vitiated by any error of law." 36. It is clear that the mere fact that the presence of an individual and his family in this country will not in itself constitute a threat to one of the interests enumerated in Article 8(2) of the Convention does not prevent a decision to enforce a lawful immigration policy which applies in the individual's case from being lawful. 37. It is clear from Mahmood that, even in cases where Article 8 is in play, the function of the Court is to see whether the decision taker has exceeded the discretion given to him. To this question, perfectly understandably, the judge did not apply his mind. 38. Having considered the public policy considerations set out in the witness statement put in on behalf of the Home Secretary and the compassionate circumstances relating not only to the applicant's for judicial review but also to their various children we conclude that the decision which the Home Secretary made was one which he was in law entitled to make. In those circumstance we allow the appeal. Order: 1. Appeal allowed. 2. No order as to costs. 3. Leave to appeal to the House of Lords refused. 4. Community Legal Services Regs 2000 Assessment of 2nd Claimant's costs. (This order does not form part of approved judgment)

Leave granted. These appeals are directed against the impugned judgment and order dated 4th March, 2010 in Writ Petition C No. 950 of 2010 and impugned judgment and order dated 2nd July, 2010 in Writ Petition C No.3382 of 2010 passed by the High Court of Guwahati, allowing the writ petitions filed by the respondent No.1 whereby Assam Public Service Commission hereinafter referred to as respondent No. 3 was directed to examine the entitlement - 1 - of respondent No.1 by taking into account the identity card produced by him. We may numberice the bare essential facts necessary for the determination of the companytroversy involved in these appeals . The respondent No. 3 issued an advertisement on 10th August, 2006 bearing advertisement No.6/2006, announcing its intention to hold the preliminary examination of the Combined Competitive Examination, 2006 for screening candidates for the Main Examination for recruitment to various posts educated in the advertisement. The last date for the receipt of the companypleted application forms was fixed as 11th September, 2006. In this advertisement, although, posts had been reserved for various categories such as OBC MOBC, SC, ST P and ST H , but there was numberreservation in favour of the disabled candidates as required under the Persons with Disabilities Equal Opportunities, Protection of Rights and Full Participation, Act,1995. - 2 - Consequently, a Public Interest Litigation being P.I.L. No.61/2006 was filed in the High Court by Order dated 13th March, 2007. The High Court by an interim order directed respondent No.3 number to companyduct any examination during the pendency of the petition. By order dated 13th March, 2007, the High Court directed respondent No.3 to make a fresh advertisement on the basis of the requisitions to be received from the Government of Assam respondent No.2 incorporating reservation of 3 for persons with disabilities. In companypliance with the orders of the High Court dated 13th March, 2007, respondent No. 3 issued a companyrigendum on 5th June, 2007 reserving three per cent vacancies for Physically Handicapped persons, in terms of Persons with Disabilities Equal Opportunities, Protection of Rights and Full Participation, Act,1995. Applications were invited for one post in the Assam Civil Service Class-I Jr. Grade from persons suffering from Locomotor Disability, in companynection with the companyduct of Combined - 3 - Competitive Preliminary Examination, 2006 for screening candidates for the Main examination for the posts already mentioned in the earlier advertisement No. 6/2006. It is evident that this companyrigendum was issued in companytinuation of advertisement No. 6/2006 dated 10th August, 2006. It was provided therein that candidates, who had applied earlier to the advertisement No. 6/2006 dated 10th August, 2006, need number apply again but the candidates with Locomotor Disability must produce supporting documents in the office of the Assam Public Service Commission or in the examination hall before the companymencement of the examination. The Last date for submission of the applications under the companyrigendum was 6th July, 2007. Respondent No.1 had applied in response to the advertisement dated 10th August, 2006. Since there was numberrequirement for submission of any details with regard to any disability, he had number submitted any disability certificate. Although, in view of the companyrigendum, respondent No.1 was number required to make an application afresh, he was required to produce necessary supporting - 4 - documents in the office of the Commission or in the examination hall before the companymencement of the preliminary examination. Respondent No.1 had been certified by the District Medical Board, Dhubri, to be physically disabled to the extent of 50 on 21st January, 2004. On the basis of this certificate, respondent No.1 was issued an identity card by the District Social Welfare Officer, Dhubri on 18th February, 2004 which specified his disability to be Locomotor Disability to the extent of 50. The preliminary examination was held on 23rd September, 2007. We may numberice here that respondent No.1 did number submit the mandatory documents, to substantiate his candidature in the seat reserved for candidates with Locomotor Disability, on or before 6th July, 2007, i.e., the last date for submission of applications. He also did number submit the mandatory documents even at the time when he appeared in the preliminary examination. Therefore, he appeared in the examination as a general category candidate. - 5 - Both the appellant and respondent No.1 successfully participated in the preliminary examination. The advertisement had clearly specified that candidates who are declared by the Commission to have qualified for admission to the Main examination will have to apply again in the prescribed application form, which will be supplied to them. It was the claim of respondent No.1, that he had specifically indicated in Column No. 11 of his application in the prescribed form for the Main examination that he suffers from Locomotor Disability upto 50. According to him, he had submitted the certificate dated 21st January, 2004 issued by the District Medical Board, Dhubri. Being satisfied Respondent No.3 had permitted him to appear in the Main examination. Having successfully companypleted the written examination, both the candidates, i.e., appellant and respondent No.1, were called for interview on 1st December, 2008. It was the case of respondent No.1 that he had produced the necessary documents in support of his claim - 6 - of Locomotor Disability to the extent of 50, along with the other certificates and testimonials at the time of interview. The Commission, respondent No. 3, published the list of selected candidates on 15th June, 2009. The name of respondent No.1 did number appear in the said list. In fact, the appellant was shown to have been selected for appointment in the Assam Public Service Commission as a physically handicapped candidate. Respondent No.1 made an application under the provisions of Right to Information Act, 2005 before the appropriate authority seeking the details of the marks scored by him as well as the details of the marks obtained by other physically handicapped candidates called for the interview. From the information supplied to him, respondent No. 1 came to know that he had scored 817 marks, whereas the appellant had scored 695 marks. Respondent No. 1 thereafter made a representation dated 14th September, 2009 addressed to the Chairman of respondent No.3 as well as the Secretary of the Commission making a grievance that his candidature had been - 7 - arbitrarily rejected, even though, he had scored more marks than appellant in the examination. It appears that respondent No. 1 had also reiterated that his claim for being companysidered in the Locomotor Disability category, was duly supported by the necessary documents, i.e., certificate issued by the District Medical Board, Dhubri dated 21st January, 2004 and the identity card issued by the District Social Welfare Officer. He had further stated that at the time of interview, he had produced the necessary documents in support of his claim. According to respondent No. 1, on 4th December, 2009, the Deputy Secretary of the Commission respondent No.3 had informed him that the identity card showing respondent No. 1 to be suffering from Locomotor Disability was number submitted alongwith the application form for the Main examination, though the same was a companypulsory document. Respondent No. 1 was accordingly asked to submit the same to the Commission as early as possible on receipt of the companymunication dated 4th December, 2009. Respondent No. 1 replied vide his letter - 8 - dated 10th December, 2009 addressed to the Deputy Secretary of the Commission, stating that all necessary documents showing that he is a physically handicapped person suffering from Locomotor Disability were submitted alongwith the application form of the Main examination. Respondent No. 1 also reiterated his claim that all documents were verified by the Commission at the time of interview on 1st December, 2008. In the letter dated 10th December, 2009, respondent No. 1 also mentioned that as directed by the Deputy Secretary of the Commission, an attested companyy of the ID card issued to him by the District Social Welfare Officer, Dhubri is being forwarded. It would be relevant to numberice here that the select list dated 15th June, 2009 was challenged in Writ Petition No. 2755 of 2009 and other companynected cases. The aforesaid writ petition was disposed of by the High Court by remitting the matter back to respondent No.3 to take a fresh decision and publish a revised list. The reservation in the category of Locomotor Disability was number the issue before the Court - 9 - in the aforesaid writ petition. The procedural anomaly related to women candidates. Subsequently, respondent No. 1 filed Writ Petition No. 67 of 2010 seeking a direction to include his name in the fresh list to be issued by the respondent No.3, Commission. This writ petition was dismissed by the High Court being premature on 7th January, 2010. Thereafter, on 5th February, 2010, the Commission published a revised list, wherein name of respondent No. 1 was again number included in the list of candidates selected for the appointment. Respondent No. 1, therefore, challenged the select list by Writ Petition No. 950 of 2010. The writ petition was filed on 8th February, 2010. The High Court granted an ex-parte order on 11th February, 2010 directing respondent No.3 number to issue the appointment posting orders to the appellant. In the companynter affidavit filed to this writ petition, respondent No.3 specifically stated that the documents had - 10 - number been submitted by the respondent No. 1 within the prescribed time. On 14th March, 2010, the writ petition filed by respondent No. 1 was allowed. A direction was issued to respondent No.3 to reconsider the matter afresh based on the identity card submitted on 10th December, 2009. We may numberice here that this direction had been issued by the High Court in spite of the categoric assertion made by the respondent No.3 that the candidature of the respondent No. 1 had been rejected on the basis of the resolution dated 8th January, 2010. In its meeting dated 8th January, 2010, respondent No.3 had resolved that respondent No. 1 did number submit the identity card along with the form. This was vital to support the claim of respondent No.1 to be companysidered for the post reserved for the candidates having Locomotor Disability. Therefore, his candidature was rejected for number-fulfillment of an essential companydition. However, pursuant to the directions issued by the High Court in its order dated 4th March, 2010, respondent No.3 in its meeting held on 21st May, 2010 again thoroughly examined the matter relating to the entitlement of respondent No. 1 for final selection as a - 11 - physically handicapped Locomotor Disability candidate. Upon a thorough scrutiny and re-examination of the facts and the material on record, the claim of respondent No. 1 was number accepted. The name of appellant was duly reiterated as the candidate selected for appointment. A companymunication to that effect was sent to the appellant as well as respondent No. 1 on 31st May, 2010. At this stage, respondent No. 1 filed Writ Petition No. 3382 of 2010 challenging the minutes dated 21st May, 2010 and the companymunication dated 31st May, 2010. The aforesaid writ petition has been allowed by the High Court with observations that respondent No.3 was under a legal obligation to examine the petitioners entitlement for selection by taking into account his identity card. The High Court numberices that the resolution of the respondent No.3 companytained in the minutes of the meeting dated 21st May, 2010 would indicate that the Commission had resolved number to companysider the case of respondent No. 1 for selection for appointment against the solitary post earmarked for physically handicapped candidates on the ground that the - 12 - identity card, which was required to be submitted by respondent No. 1 at different stages. The High Court has held that the aforesaid decision, is number rendered in the light of the directions given by the High Court in Paragraph 13 of the order dated 4th March, 2010 passed in Writ Petition C No. 950 of 2010. It has been observed by the High Court that the question of belated submission of the identity card having been already answered by the Court and directions having been issued to take into account the same, the Public Service Commission companyld number have acted in the manner it has done. This writ petition was, therefore, allowed with the following observations- For the aforesaid reasons, we set aside the resolution dated 21.5.2010 of the Commission as well as the companymunication dated 31.5.2010 and direct that the Public Service Commission will number examine the entitlement of the petitioner by taking into account the identity card produced by him. For the purpose of clarification, we deem it appropriate to add that while companysidering the case of the petitioner the acceptability, veracity or otherwise of the companytents of the identity card and the effect of the said companytents, if found to be acceptable, would be companysidered by the Commission. - 13 - These directions are challenged by the appellant in these appeals. We have heard the companynsel for the parties. Mr. Jayant Bhushan, learned senior companynsel, appearing for the appellant herein submits that in the advertisement dated 5th June, 2007, one post was reserved for person suffering from Locomotor Disability only. The advertisement also further provided that those who applied earlier in response to advertisement No.6/2006 dated 10th August, 2006 need number apply again, but the candidates with Locomotor Disability must produce supporting documents in the office of Assam Public Service Commission or in the examination hall before companymencement of the examination. The advertisement further provided that candidates who are declared by the Commission to have qualified for admission to the main examination will have to apply again in prescribed - 14 - application form, which will be supplied to them. All candidates applying in the category of persons with Locomotor Disability upto 50 were required to send a certificate of Locomotor Disability from the appropriate authority. According to Mr. Bhushan, respondent No. 1 did number submit the necessary certificate in the office of the respondent No. 3 or in the examination hall before companymencement of the examination. In fact, he did number submit even the ID card till after the interview. By the time, he submitted the ID card, even the Select List of the successful candidates had been published. Since respondent No. 1 had number submitted the requisite disability certificate within the stipulated period as provide in the advertisement, respondent No. 3 rejected his candidature for valid reasons in its resolution dated 8th January, 2010. Mr. Bhushan submits that direction issued by the High Court are companytrary to the settled principle of law that there can be numbervariation in the companyditions of eligibility as laid down in the advertisement, unless a specific stipulation - 15 - is made about any particular companydition being relaxable at the discretion of the companycerned authority. Learned senior companynsel submits that the High Court has erred in holding that the rigour of Article 14 would number be automatically applicable to the domain of appointment in public office where the employer must strive to pick the best talent available. To achieve such result, the employer must be companyferred a wide discretion to act in relaxation of the rigour of the terms of an advertisement. The requirements spelt out in an advertisement for appointment in public service must, therefore, number to be understood to be inflexible leaving numberroom for elasticity. Learned senior companynsel further submitted that the High Court failed to appreciate that claim of respondent No. 1 had been rejected upon due companysideration by respondent No. 3 after according him an adequate opportunity by resolution dated 8th January, 2010. According to the learned senior companynsel, the High Court has proceeded on the erroneous assumption that the - 16 - Commission had itself treated candidature of many candidates to be provisional on account of the fact that requisite certificates of age or educational qualifications had number been submitted along with the application form. According to Mr. Bhushan, the High Court has wrongly companycluded that the Public Service Commission had itself treated the companydition about the submission of necessary certificates to be number mandatory and inflexible requirements. According to the learned senior companynsel, the aforesaid companyclusion of the High Court is factually incorrect. The learned senior companynsel submits that respondent No.3 had in fact rejected the candidature of respondent No.1 strictly in accordance with the instructions issued in the Information to the candidates on the Combined Competitive Main Examination. Instruction No. 13 clearly stipulates that any application form received without all or some of the enclosures is liable to be summarily rejected. Any enclosure which was number sent - 17 - along with the application earlier but sent subsequently by the candidates will number be entertained. Thus candidates must ensure that the application form is properly filled in and is accompanied by all the relevant documents. Mr. Bhushan submits that in the case of respondent No. 1, he was required to submit an attested companyy of certificate of Locomotor Disability. The High Court records that the necessary certificate was number submitted by respondent No. 1 before the last date of receipt of applications, which was 11th September, 2006. Learned senior companynsel has also relied on a judgment of this Court in the case of Karnataka Public Service Commission Ors. Vs. B.M. Vijaya hankar Ors. 1 On the other hand, Mr. V. Hazarika, learned senior companynsel submits that the respondent No.3 reconsidered the entire issue after the High Court set aside the resolution passed by respondent No.3 on 8th January, 2010. Respondent No. 1 had to file W.P. C No. 950 of 2010 as 1 1992 2 SCC 206 - 18 - respondent No.3 again illegally rejected his candidatures. He, therefore, challenged the selection of the appellant. In the aforesaid writ petition, it was stated that in the application, respondent No.1 had specifically mentioned against Column No. 11 of the application form that he suffers from Locomotor Disability upto 50. He had submitted a certificate issued by the District Medical Board, Dhubri dated 21st January, 2004 in support of his claim to be a physically handicapped person along with the identity card issued by the District Social Welfare officer. It was further his claim in the writ petition that he had qualified in the main examination and was called for interview by call letter dated 1st December, 2008. It was further the case of the respondent No. 1 that he had produced the necessary documents in support of his claim of Locomotor Disability to the extent of 50 along with the other certificates and testimonials at the time of interview. However, when the select list was published on 15th June, 2009, the name of respondent No.1 was number included therein. It was in fact - 19 - the appellant, who had been selected for appointment. It was also the case of the respondent No. 1 that the appellant had scored 695 marks whereas respondent No.1 had scored 817 marks in the examination. In spite of having scored higher marks, he was illegally and arbitrarily number selected. The respondent No.1 had, therefore, submitted a representation on 14th September, 2009 to respondent No. 3, seeking to question the selection of the appellant, who had scored lesser marks. In the representation, respondent No.1 had specifically stated that he had submitted the necessary supporting documents along with the application form. The said documents were verified at the time of interview on 11th December, 2008. The documents were also enclosed with the representation dated 14th September, 2009. Therefore, on 4th December, 2009, the Deputy Secretary of the Commission had informed respondent No. 1 that the identity card showing him to be suffering from Locomotor Disability was number submitted along with the application form for the main examination. Though the - 20 - same is a companypulsory document. Respondent No.1 was, therefore, asked to submit the same to the Commission as early as possible. On receipt of the companymunication dated 4th December, 2009, respondent No.1 through his letter dated 10th December, 2008 addressed to the Deputy Secretary of the Commission reiterated that the documents had already been submitted and verified by the Commission. However, he again sent an attested companyy of the identity card issued to him by the District Social Welfare Officer, Dhubri. Learned senior companynsel submits that taking into companysideration the aforesaid facts, the High Court companyrectly came to the companyclusion that respondent No. 3 had number specifically denied the claim of the appellant that he had produced the identity card at the time of interview on 11th December, 2008. The High Court had also taken into companysideration that the candidature of three other candidates, who had number submitted the necessary documents was treated as provisional. These candidates - 21 - were included in the select list. Therefore, the High Court has rightly companycluded that the companydition with regard to submission of certificates and testimonials along with the application or before the preliminary examination was number mandatory. The action of the respondent No.3 in rejecting the candidature in the resolutions dated 8th January, 2010 and 21st May, 2010 were rightly quashed by the High Court. Mr. Bhushan, in reply, submitted that upon a thorough examination of the entire fact situation, respondent No.3 in its resolution dated 21st May, 2010 has clearly observed that respondent No.1 was treated as a general candidate all along in the examination process and was number treated as physically handicapped with Locomotor Disability. The respondent No.3 also looked into the question whether any other candidate, who had number furnished any essential document with the application or at the time of interview but submitted them after the interview were accepted or number. Upon examination of the issue, respondent No.3 has observed that in fact the candidature - 22 - of one applicant namely Smt. Anima Baishya was specifically rejected as she had submitted the application before the Chairperson of respondent No.3 on 26th February, 2009, claiming herself to be a SC candidate for the first time. In the case of respondent No. 1, the identity card was submitted for the first time with the letter dated 10th December, 2009 much after the examination process was over. We have companysidered the entire matter in detail. In our opinion, it is too well settled to need any further reiteration that all appointments to public office have to be made in companyformity with Article 14 of the Constitution of India. In other words, there must be numberarbitrariness resulting from any undue favour being shown to any candidate. Therefore, the selection process has to be companyducted strictly in accordance with the stipulated selection procedure. Consequently, when a particular schedule is mentioned in an advertisement, the same has to be scrupulously maintained. There can number be any relaxation in the terms and companyditions of the advertisement unless such a power is - 23 - specifically reserved. Such a power companyld be reserved in the relevant Statutory Rules. Even if power of relaxation is provided in the rules, it must still be mentioned in the advertisement. In the absence of such power in the Rules, it companyld still be provided in the advertisement. However, the power of relaxation, if exercised has to be given due publicity. This would be necessary to ensure that those candidates who become eligible due to the relaxation, are afforded an equal opportunity to apply and companypete. Relaxation of any companydition in advertisement without due publication would be companytrary to the mandate of quality companytained in Articles 14 and 16 of the Constitution of India. A perusal of the advertisement in this case will clearly show that there was numberpower of relaxation. In our opinion, the High Court companymitted an error in directing that the companydition with regard to the submission of the disability certificate either along with the application form or before appearing in the preliminary examination companyld be relaxed in the case of respondent No. 1. Such a companyrse would number - 24 - be permissible as it would violate the mandate of Articles 14 and 16 of the Constitution of India. In our opinion, the High Court was in error in companycluding that the respondent No.3 had number treated the companydition with regard to the submission of the certificate along with the application or before appearing in the preliminary examination, as mandatory. The aforesaid finding, in our opinion, is companytrary to the record. In its resolution dated 21st May, 2010, the Commission has recorded the following companyclusions- Though Shri S. Khan had mentioned in his letter dated 10.12.2009 that he was resubmitting the Identity Card with regard to Locomotor Disability he, in fact, had submitted the documentary proof of his Locomotor Disability for the first time to the office of the A.P.S.C. through his above letter dated 10.12.2009. However, after receiving the Identity Card the matter was placed before the full Commission to decide whether the Commission can act on an essential document number submitted earlier as per terms of advertisement but submitted after companypletion of entire process of selection. The Commission while examining the matter in details observed that Shri S. Khan was treated as General candidate all along in the examination process and was number treated as Physically Handicapped with Locomotor Disability. Prior to taking decision on Shri S. Khan it was also looked into by the Commission, whether any other candidates any essential document relating to - 25 - right benefits etc. number furnished with the application or at the time of interview but submitted after interview was accepted or number. From the record, it was found that prior to Shri S. Khans case, one Smt. Anima Baishya had submitted an application before the Chairperson on 26.2.2009 claiming herself to be a S.C. candidate for the first time. But her claim for treating herself as a S.C. candidate was number entertained on the grounds that she applied as a General candidate and the caste certificate in support of her claim as S.C. candidate was furnished long after companypletion of examination process.

LORD JUSTICE RIX: These three appeals against sentence concern the sentencing guidelines for causing grievous bodily harm with intent (the offence of section 18 under the Offences Against the Person Act 1861) and in particular the phrase used in those guidelines "particularly grave injury". The three appellants are Scott Collins, Anthony Barrett and Darren Thompson who, on 26th January 2009 at the Central Criminal Court before His Honour Judge Morris QC and a jury, were convicted of the section 18 offence and on 17th February 2009 were sentenced in the case of Collins and Barrett to 14 years' imprisonment (with days on remand counting towards sentence) and in the case of Thompson to 10 years' imprisonment (also with days on remand to count towards sentence). They now appeal against sentence by leave of the single judge. The offence occurred on 8th June 2007 and arose out of what was originally a minor dispute involving the brother of the 26-year-old complainant, a Mr Hatton, and the appellant Collins. It appeared that about a week before that day, Mr Hatton's brother had been assaulted in a public house in Romford and believed Collins to be the man responsible. On that evening, 8th June 2007, Hatton had a conversation in the same public house with Collins' mother which upset her and was reported by her to Collins. Collins, as a result, contacted Barrett and Barrett in turn contacted Thompson, the three of them agreeing to attend the public house in order to confront Hatton. Although it was disputed at trial that Collins and Thompson knew that Barrett was bringing a gun to their meeting, the jury accepted that they did know and on these appeals it is accepted on all sides that the basic situation was that these three men agreed to assemble to confront Hatton with one of them, to the knowledge of the others, bringing with him a firearm to use in that confrontation. So it was that at shortly after 10 pm that night a confrontation took place. Hatton became involved in an argument with Collins. Hatton made the error perhaps of punching Collins and indeed knocking him to the floor which was taken by the three as a sign for action. Barrett produced the gun and shot Hatton. Hatton initially continued to confront him and then retreated back into the public house, which they were outside of, but Barrett and Collins ran after him and Barrett shot him a second time in that second phase of the action. The appellants ran from the scene. The incident was captured on CCTV. Both shots fired at Hatton found their marks. One was to the abdomen and passed close to the liver and right kidney. The liver was described in the medical evidence as being "shaved". That bullet went through the colon, perforating it in a number of places. The second bullet was to the left area of the groin where the bullet could not safely be removed and where it still remains. Although it appears that the victim of this shooting entered hospital conscious and alert, he remained in hospital for a total of 10 days and in the course of that time suffered a colostomy, although fortunately that was in his case an operation which could be reversed, and he re-entered hospital some months later for its reversal. The medical evidence described that reversal in itself as being major surgery. The shooting was at close range and it is accepted that the bullets fired were aimed at the areas that they entered. Indeed it is submitted that it is to be taken into account on behalf of the appellants that the shots were not fired at head or heart. Collins was born on 11th February 1986 and thus was 21 at the time. Barrett was born on 5th June 1981 and was 26. Thompson was of the same age. Collins and Barrett were relatively lightly convicted. Thompson was more seriously convicted, having sentences in his past for attempted robbery and possession of a firearm. Nevertheless, the judge accepted that his responsibility was less than that of the two others. A pre-sentence report in his case described his motivation for committing the offence as one of misplaced loyalty towards Barrett and it appears that his offending was often linked to peer pressure and distorted decision-making skills. A pre-sentence report in the case of Collins said that he continued to refuse to accept any responsibility for what had happened, although he did express his regret for Hatton's injuries. In the case of Barrett, a pre-sentence report said that he accepted that he had committed the offence and appeared to be remorseful. He also had character references. In his sentencing remarks the learned judge observed that the injuries suffered by the victim could easily have been fatal and that if they had been all three appellants would have been facing convictions for murder. On the question of dangerousness he concluded that that threshold had not been crossed and therefore turned towards the determinate sentences which he should impose. He then immediately addressed the sentencing guidelines of the Sentencing Guidelines Council for this offence. He emphasised, as is always important to bear in mind, that they were guidelines and no more. It was accepted before him that all the ingredients, save (it was submitted) one, involved in the highest category under this offence were present in the present case. The factors taking a case into the highest level of this offence are that life-threatening or particularly grave injury has been incurred as a result of premeditated action involving the use of a weapon acquired prior to the offence and carried to the scene with the specific intent of injuring the victim. All those factors, it was accepted, were in play, save that it was submitted that the injuries caused to Mr Hatton were neither life-threatening nor particularly grave. The starting point for that first level is 13 years' custody with a sentencing range of 10 to 16 years. The second level in the case of section 18 distinguishes between on the one hand life-threatening or particularly grave injury which has not been premeditated and, on the other hand, premeditated injury involving the use of a weapon acquired prior to the offence and carried to the scene with specific intent of injuring the victim but where no life-threatening or particularly grave injury was caused. The judge recorded that although it was accepted before him that the injuries were potentially fatal they were said to be neither life-threatening nor in fact particularly grave. The judge disagreed with those submissions. He was satisfied that Mr Hatton had suffered particularly grave injuries - in fact he used the gloss "particularly serious" but there was no doubt that he was referring to the variable of particularly grave injury -- and that it was largely as a result of the swift and efficient medical intervention which he received that he was able to make as good a recovery as he did. He was satisfied the case therefore fell into the highest category of that offence. He then turned to the following additional aggravating features in the case, which he identified as being first that the three appellants went as a group or gang to carry out the offence; secondly, that the weapon in play was a loaded firearm; and thirdly, that two shots had been fired at the victim on two separate occasions in vital parts of his body. In effect he treated Collins as the organiser, Barrett as the gunman (albeit known to be by all three) and Thompson as the person brought along for further support. In the end he sentenced the three to 14 years, 14 years and 10 years respectively as we have indicated. On this appeal the submission is renewed that the victim's injuries were not particularly grave. The judge did not say that they were life-threatening, but it is accepted that they were potentially life-threatening, repeating a concession made before the judge. What is the difference between a particularly grave injury and any injury for the purpose of a section 18 offence, which by definition must be a serious one? The guidelines themselves throw no particular light upon that question. Miss Humphreys QC on behalf of Barrett submits that the critical feature for a particularly grave injury is that it should be permanent and the injuries in the present case are contrasted, on behalf of the appellants as a whole, with permanent injuries such as the loss of an eye or of a limb. It is also accepted by at least one of the counsel before us in a written advice that multiple fractures could be described as particularly grave. Nevertheless, at the end of the day Miss Humphreys, who had most clearly advanced the categorisation of particularly grave injuries as being permanent ones, accepted that a non-permanent injury may be particularly grave. We would add that a permanent injury also may not be particularly grave - one obvious example being a scar, and there may be many others that one could think of. Miss Humphreys also accepted that an injury may escalate from being merely serious to the particularly grave because of its subjective effect on a particular person. If that is correct, and we have no need to decide that question in this case because the victim in this case with something amounting possibly to bravado has declined to effect a victim impact statement, there is no sign that it has had any long-lasting effect upon him. Mr Wilson on behalf of Thompson submitted that if one had regard to the responses to consultation which had preceded the advice which perhaps originally came from the Sentencing Advisory Panel, all of which led in due course to the guidelines of the Sentencing Guideline Council, it could be submitted, as he did, that the guidelines had introduced the language, not present before, of particularly grave injury added to cover a concern of consultees relating to permanent injury. We have already given our reasons, however, for considering that particularly grave and permanent injuries are not glosses of one another. The language of the guidelines is particularly grave. In our judgment, like that of the judge, these were particularly grave injuries. They were bullet wounds to vital parts of the body. Ignoring those vital organs which the bullets so nearly affected but did not, as we do for the moment, one at least of the bullets nevertheless perforated the colon in several places and led to two major operations - one a colostomy and the other a reversal of a colostomy. In our judgment, on any view of the matter these were particularly grave injuries. They were also, and this is relevant to an overall view of the gravamen of the matter, potentially lethal, particularly as they arose out of gun shots aimed at vital parts of the body, even if a part of the body different from the head or the heart - the closeness with which the first bullet passed to the liver and kidney indicates the point. On any view therefore this offence falls within the SGC's highest category for section 18. It has not been submitted to us that even if because of the presence of particularly grave injuries this offence was within the highest category of the guidelines, nevertheless the judge placed it too high within the broad range of that category by choosing the sentences that he did, at any rate in the case of Collins and Barrett. We have nevertheless considered that question for the sentencing range at this highest level is a broad one. Nevertheless in our judgment this was a most serious example of this category of offence. We emphasize as the judge did the fact that the three men went as a gang or group and that not content with one shot, two shots were fired but not in quick succession as may well happen when a firearm is used, but at separate stages or phases of the incident as a whole. These are serious aggravating features. However, as serious as any an aggravating feature is the fact that the weapon used, and the sentencing guidelines only refer generally to "a weapon", was a loaded firearm. These courts have repeatedly and also very recently emphasised the seriousness of even the possession, let alone the use, of such firearms. In Attorney General's Reference 58 to 66 of 2002 this court said that a sentence of seven to eight years after a trial would be appropriate for the offence of possession of a firearm with intent, even when that firearm was not in fact fired. The recent decision in which Lord Judge, CJ, gave the judgment in Wilkinson [2009] EWCA Crim 1925, has most recently re-emphasised the seriousness of the use of firearms. Lord Judge there remarked that deterrence and punitive sentences are required and should be imposed in such circumstances. The importance of the use of a firearm is also emphasised in the statutory provisions relating to murder. Where a firearm is used the murder in question is immediately taken up to that category of sentencing for the purpose of minimum periods which starts at 30 years. Therefore, there were in this case the most aggravating of features. When we take into account the particularly grave injuries which the victim suffered and the aggravating features to which we have referred, in particular the use of a loaded firearm and its use twice in separate phases of the assault on Mr Hatton, we have no doubt that these sentences were properly imposed and indeed deserved. For these reasons these appeals are dismissed.

This judgment will dispose of three appeals, being Criminal Appeal Nos. 974 of 2008, 975 of 2008 and 981 of 2011 SLP Crl 4898 of 2008. The facts are being taken from the paper book of Criminal Appeal No. 974 of 2008 entitled Gurmail Singh State of Punjab. The facts leading to these appeals are as under 3.1 Sohan Singh, P.W., the companyplainant, and his company accused Nachhattar Singh and Parshotam Singh, are Crl.A. No.974 of 2008 REPORTABLE married to real sisters. Nindo is the daughter of Sher Singh, accused. Darshan Singh accused is the son of Sher Singh. A few days prior to the incident which happened on the 25th March, 1996 a message was received with regard to the proposed marriage of the son of Parshottam Singh accused, on which the accused had got together in his house to celebrate the occasion by taking liquor. At about 1000p.m. the accused came out in the street and raised a lalkara that they would teach the companyplainant party a lesson for having teased Nindo. At that time accused Gurnam Singh and Gurmail Singh were both armed with small knives kirch and Sher Singh, Nachhattar Singh, Parshottam Singh, Dharampal Singh and Avtar Singh were armed with lathis. Sohan Singh came out into the street to persuade them number to abuse and that they would sort out the dispute in the morning. While he was still talking to the accused Rajwinder Singh PW and Baljinder Singh also arrived there. Nachhattar Singh, Sher Singh, Dharam pal Singh and Avtar singh then raised a lalkara saying that they should number be allowed to go alive and should be taught a lesson for having teased Nindo. Gurnam Singh thereupon gave a knife blow on the right side of the abdomen of Baljinder Singh and when Rajwinder Singh came forward to help Baljinder Singh, Gurmail Singh Crl.A. No.974 of 2008 REPORTABLE gave a knife blow on the right side just below his chest whereas Gurcharan Singh gave a knife blow on the lower portion of his right flank. Rajwinder Singh fell down whereupon Sher Singh gave a dang blow on his right shoulder. In the meantime, the women folk came out into the street and hurled brickbats in selfdefence. As a companysequence of this companynter attack the accused ran away from the spot. Baljinder Singh and Rajwinder Singh were shifted to the A.P. Jain Hospital at Rajpura in a truck but the former succumbed to his injuries on the way. After investigation, the accused, eight in number were broguht to trial for offences punishable under Sections 302/149, 302, 324/149 and 323/149 of the IPC. The prosecution placed primary reliance on the evidence of Sohan Singh PW 5, Rajwinder Singh PW6, the injured eye witnesses, and also on the evidence of Dr. Charanjit Singh, PW1 whereby he, had at the initial stage, declared Rajwinder Singh unfit to make a statement, Dr. S.M. Birdi who had companyducted the medical examination on the injured and Dr. O.P. Agarwal PW 4 who had companyducted the post mortem on the dead body of Baljinder Singh. The accused in their defence, pleaded false implication and further that the dispute had arisen because of some election rivalries. Some of the accused also claimed alibis. The trial companyrt on a Crl.A. No.974 of 2008 REPORTABLE companysideration of the evidence, acquitted Avtar Singh, Dharam Pal Singh, Nacchtar Singh and Parshottam Singh whereas Gurnam Singh, Gurmail Singh, Gurcharan Singh and Sher Singh were companyvicted for having companymitted the murder of Baljinder Singh. This judgment has been affirmed by the High Court leading to these appeals by way of special leave. Before us, the main argument raised by the learned companynsel for the appellants is that even assuming the prosecution case to be true the matter would still number fall within the definition of murder but would fall be culpable homicide number amounting to murder punishable under Section 304 Part I of the IPC. It has also been submitted that in the facts and circumstances of the case, the provisions of Section 34 of the IPC were number made out as there was numberintention on the part of the accused to companymit murder. It has finally been submitted that Sher Singh accused, appellant was similarly situated as those acquitted by the trial companyrt as the injury attributed to him on the shoulder of Rajwinder Singh companyld have caused as a result of a scuffle during the incident and was number possible with a lathi. Crl.A. No.974 of 2008 REPORTABLE The learned companynsel for the State has, however, supported the judgment of the trial companyrt. Mr. D.P. Singh has submitted that in the light of the judgments of this Court reported as Virsa Singh State of Punjab AIR 1958 465, Laxman Karlu Nikalje The State of Maharashtra 1968 3 SCR 685, Harjinder Singh v. Delhi Administration AIR 1968 867, Randhir Singh alias Dhire v. State of Punjab 1981 4 SCC 484, Tholan v. State of Tamil Nadu 1984 2 SCC 133 the injury caused to the deceased would number fall under clause thirdly of Section 300 and as such the companyviction ought to have been recorded under 304 Part I or II of the Indian Penal Code. We have companysidered the submissions very carefully and have examined the judgments aforesaid with the assistance of the learned companynsel. It is true that clause thirdly of Section 300 of the IPC deals with a case where the intention was to cause the very injury found on the dead body. In the case of Virsa Singh, Laxman Karlus case and Arun Nivalji Mores case, the injuries had been caused on number vital parts but the death had occurred because of the fact that some artery beneath the injured part had Crl.A. No.974 of 2008 REPORTABLE been cut. The Court, in that eventuality, held that it companyld number have been presumed that the appellants wanted to cause that very injury which ultimately led to death. It is true that in Randhir Singhs case the injury had been caused by a kassi on the head of the deceased. It appears, however, that what had weighed very heavily with the Court was the fact that attack was number pre-planned, the accused was only 18 years of age and the kassi had been brought by his father and given to him to cause a blow on the victim, only one injury had been caused and that the death had occurred after six days of the incident. In Tholans case it was held that though the injury had been caused in the chest but the facts were that the appellant had number intended to give the blow with a knife in the chest. In the case before us, we find that a lalkara had been raised by the accused threatening retribution on account of the misbehaviour of Darshan Singh, son of Sher Singh with Nindo a few days earlier and that the accused had been drinking together in the house of Parshottam Singh and had thereafter companye out leading to the incident. It has been held in all the afore-cited cases that the question as to whether the injury had been caused with the intention to cause death would be a matter of objective satisfaction of the Court. We Crl.A. No.974 of 2008 REPORTABLE are, therefore, of the opinion, that the injury in the present case had been caused directly and deep into the stomach of the deceased, a very vital part, which had led to death within a short time. It cannot, therefore, be said that there was numberintention to cause that very injury which had led ultimately to the death of the deceased. In a somewhat similar situation, it has been held in Arun Nivalaji More v. State of Maharashtra 2006 2 SCC 613 that where the injury had been caused in the stomach which was a vital part of the body, it companyld be said that the injury had been caused with the intention of causing death in the background of the facts that preparations for the attack on the deceased had earlier been made. We number take up the question of companymon intention in the facts of the case. Once again it needs to be highlighted that the accused were all of one family and they were annoyed with the members of the victim family as they had teased Nindo. They also lived close together in the same locality and had companye out armed and raised a lalkara that the opposite party be done away with and that the injuries had been caused thereafter. It is also clear that several injuries had been caused to Rajwinder Singh PW as well and that one Crl.A. No.974 of 2008 REPORTABLE injury had been proved fatal for Baljinder Singh. A case of companymon intention is, thus, spelt out. We, however, find some merit in the argument of the learned companynsel that Sher Singh appellant should be given the benefit of doubt in the circumstances.

Lord Justice Gage: This is a reference by HM Solicitor General of a sentence which she regards as unduly lenient. She seeks the leave of the court to refer the sentence to this court. We grant leave. The offender, Amar Brahimi, is aged 16. He was born on 6th December 1991. On 18th May 2008 he pleaded guilty to two offences: first, possession of a prohibited weapon, namely a handgun, which had a barrel of less than 30 cms in length contrary to section 5(1)(aba) of the Firearms Act 1968; secondly, possession of ammunition without a firearm certificate contrary to section 1(1)(b) of the Firearms Act. On 13th June he was sentenced to a 12-month detention and training order on each count concurrently. He had been in custody for 70 days at the time of the sentence. The judge made allowance for this period when passing sentence. The facts are as follows. On Tuesday 4th March 2008 police officers executed a search warrant under section 23 of the Drugs Act 1971 at the home address of the offender. During the search floor boards were lifted in the hallway of the premises. There, a white sock was found containing a converted 8 millimetre blank firing pistol hidden beneath the floor boards. The offender told the police that he would talk about the gun at interview after he had spoken to a solicitor. It was later discovered that within the pistol's magazine was a round of ammunition capable of being discharged. In addition, there was recovered from the offender's wardrobe a set of body armour. The offender was arrested. He was detained at South Norwood police station where he was interviewed. He gave the following account. He said that an incident had occurred in October/November 2007 where three men entered his home armed with a firearm and assaulted his father and brother, hitting them repeatedly over the head with the firearm. As a result of this incident, a boy, who he did not name, save only to say he was called John, gave him the firearm wrapped in the sock as protection should the assailants ever return. He knew it was a gun. Initially he said that he did not know whether it was real. However, he said that he looked at the handle and may be touched it and looked at it again a couple of weeks later. He accepted that he had it for his own protection. He said he was considering giving the weapon back to John but did not consider taking it to a police station. He thought that it was an offence to have a weapon. He bought the body armour for his protection approximately two months before his arrest. The firearm was examined by the Forensic Science Service. It was found to be a modified blank firing 8 millimetre pistol. Originally it had a solid barrel to prevent the discharge of any projectile. When recovered the barrel had been replaced with a piece of steel tubing making it possible for bulletted ammunition to be fired. Accordingly, it was classified as a firearm as defined in section 57(1) of the Firearms Act 1968 and as a prohibited weapon by virtue of section 5(1)(aba) of the Firearms Act 1968. The magazine was also examined. It was found to contain an improvised projectile. The firearm was test fired with that particular projectile, among others, and found capable of discharging projectiles with sufficient force to cause lethal injury. Accordingly, the projectile was classified as ammunition as defined under the provisions of section 1(1)(b) of the Firearms Act. So far as the offender is concerned, as we have said, he was 16 years old at the date of the offence and the date of the sentence. He has a number of previous convictions, including offences of violence and possession of weapons, namely two offences of a robbery in 2005, for which he received a six month referral order for each offence; possession of an offensive weapon, a bladed article, on school premises in 2006, for that he received a supervision order of 12 months; and common assault, committed in February 2008, for which he was remanded on police bail on the same day and sentenced on 11th April 2008 for this offence to a fine of £100 and subject to a compensation order of £10. There was a pre-sentence report before the court. In that report the author commented on his assessment of the risk posed by the offender at paragraph 4.1. The author of the report said: "Through the commission of this offence, it is clear that Amar was in contact with more criminally entrenched, sophisticated offenders than himself. However, the level of his association and involvement with them remains unclear and it is, therefore, difficult to determine whether reoffending of this magnitude is imminent and whether Amar will cause serious harm when he is released. 4.2. Amar has stated on many occasions that the firearm was never used by him and that he was merely in possession of it. However, by his own admission, he has stated that he would have used the weapon to prevent harm being caused to himself and his family and, having not thought through the implications of this, this is very concerning. Amar has previous minor offences involving violence recorded against him and this offence represents a significant escalation in seriousness, with the common and underlying features of recklessness, impulsiveness and a lack of understanding about the longer term consequences prevailing throughout." Finally, at paragraph 4.4 it is stated: "In the absence of this, it is my view that this somewhat naive and immature young person will struggle with leading a law aiding life on his release. For all these reasons, I would currently assess Amar as presenting a high risk of reoffending and high risk of serious harm." The judge in the course of discussions with prosecuting counsel correctly identified that the offence attracted a minimum term of three years' detention in the absence of exceptional circumstances. In the course of his sentencing remarks he referred to the previous attack on the offender's family. He found that the offender's possession of the firearm in the light of the previous attack, coupled with his age and immaturity, amounted to exceptional circumstances. He said: "Now, I have decided that I can just consider this as an exceptional case, but it is a very borderline decision. And I do take into account your age and immaturity, alongside the explanation -- which has not been disputed and is referred to in the pre-sentence report as well -- as to how you came into possession of the weapon. And it is not a case where you actually used it or were on your way to use it; I have taken that into account as well despite all the negative things that I have said about you." Accordingly he passed the sentence to which we have referred. The Solicitor General identifies the following aggravating features which appear to be present. The firearm was real; the firearm was loaded, capable of discharging the projectile with lethal force; it was a prohibited weapon with no lawful use; the weapon was kept with a view to use; the offender has previous convictions for violence and weapons, and the offence was committed whilst he was on police bail for the common assault to which we have referred. The following mitigating features are identified as being present. The offender was 16 years old when the offence was committed, he admitted the offences in interview and pleaded guilty and the firearm was not used. The Solicitor General through counsel on her behalf, Mr Aldred, draws attention to a number of decisions of this court to which we will refer briefly later in this judgment. It is submitted that the judge was wrong to find exceptional circumstances. So far as the offender is concerned, Mr Akinsanya, who appears on his behalf, has said everything that can possibly be said in his favour in concise and persuasive submissions. Principally his submission is that the judge in this case, a very experienced judge, was fully aware that the appropriate sentence, absent exceptional circumstances, was one of a minimum term of three years. Before him were all the facts of the offence and he reached the conclusion that he was able in the circumstances to find that there were exceptional circumstances. The submission is that this court should not interfere with that finding. Mr Akinsanya accepts that the authorities would appear to suggest that the sentence was unduly lenient. However, he submits that if this court were to take that view it should exercise its discretion not to interfere with the sentence. As we have said, we have been referred by counsel for the Solicitor General to a number of decisions of this court. They are R v Jordan [2005] 2 Cr App R(S) 44, Attorney General's Reference No 5 of 2005 [2005] EWCA Crim 880, R v Rehman and another [2006] 1 Cr App R(S) 77, R v Blackall [2006] 1 Cr App R(S) 22, and R v Lucas [2007] 2 Cr App R(S) 81. These cases comment on the principles involved where mandatory minimum terms apply. They also provide examples where the court has found either that there were exceptional circumstances justifying the imposition of a sentence of less than the minimum term, or that no such exceptional circumstances existed. In Rehman the court said in the judgment given by Lord Woolf, Lord Chief Justice, that the court should adopt a holistic approach. It would not look at each circumstance separately. At paragraph 11 the judgment contains the following passage: " ... it is not appropriate to look at each circumstances separately and to conclude that it does not amount to an exceptional circumstance. A holistic approach is needed. There will be cases where there is one single striking feature, which relates either to the offence or the offender, which causes that case to fall within the requirement of exceptional circumstances. There can be other cases where no single factor by itself will amount to exceptional circumstances, but the collective impact of all the relevant circumstances truly makes the case exceptional." Later in the judgment the court stated what the proper approach of this court should be when considering a decision that there were exceptional circumstances. At paragraph 14 the court stated: "The section makes clear that it is the opinion of the court that is critical as to what exceptional circumstances are. Unless the judge is clearly wrong in identifying exceptional circumstances when they do not exist, or clearly wrong in not identifying exceptional circumstances when they do exist, this court will not readily interfere." The other decisions show that age on its own will not provide an exceptional circumstance: see Lucas. Mr Aldred on behalf of the Solicitor General points to the fact that the facts in Lucas were not dissimilar to the facts in the instant case. In that case the court refused to hold that there were exceptional circumstances for interfering with a mandatory minimum term. In the case of Blackall the fact that an offender has in his possession a firearm for the purpose of defending himself was held not to be a circumstance amounting to exceptional circumstances. As we have said, the judge in the case before us described the decision as to whether there were facts justifying a finding of exceptional circumstances as a "borderline" one. With respect to this very experienced judge, we disagree. Whilst it is understandable that the court should wish to find exceptional circumstances in view of the offender's age, in our judgment neither of the two factors, namely the age of the offender nor his reason for possessing the firearm, either on their own or cumulatively can amount to exceptional circumstances. We should add that the judge did not appear to have had the benefit, as we have had, of the citation of the authority. If he had, in our judgment, he would probably have reached a different conclusion. These are very serious offence. The prevalence of crimes involving firearms committed by young offenders in areas of our cities requires substantial sentences to be passed even in the case of young offenders. Taking into account the facts of these offences, the offender's previous convictions and the assessment of him by the author of the pre-sentence report, we would have expected a sentence at first instance of rather more than three years to have been passed and probably in the region of four years or more. Taking into account the offender's guilty plea and the element of double jeopardy, we quash the sentence of 12 months' detention and training order passed by the judge and for it substitute a term of three years' detention pursuant to section 91 of the Powers of the Criminal Courts (Sentencing) Act 2000. Accordingly, the reference is allowed to that extent. In arriving at that conclusion we also take into account the time that he spent on remand.

Judgment of the Court (Fifth Chamber) of 19 September 2002. - Tulliasiamies and Antti Siilin. - Reference for a preliminary ruling: Korkein hallinto-oikeus - Finland. - Taxation of imported used cars -First paragraph of Article 95 of the EC Treaty (now, after amendment, first paragraph of Article 90 EC) - Sixth VAT Directive. - Case C-101/00. European Court reports 2002 Page I-07487 Summary Parties Grounds Decision on costs Operative part Keywords 1. Tax provisions - Internal taxation - System of taxation of imported used cars - Determination of taxable value - Reference to the Community Customs Code - Whether permissible - Variation according to the marketing stage - Condition of permissibility - Amount of the tax not exceeding the residual tax incorporated in the value of a similar vehicle on the domestic market (EC Treaty, Art. 95, 1st para. (now, after amendment, Art 90 EC, 1st para.)) 2. Tax provisions - Internal taxation - System of taxation of imported used cars - Tax equal to the tax due on a similar new vehicle during the first six months after registration or bringing into use and reduced in linear fashion from the seventh month - Not permissible (EC Treaty, Art. 95, 1st para. (now, after amendment, Art 90 EC, 1st para.)) 3. Tax provisions - Internal taxation - System of taxation of imported used cars - Flat-rate calculation of the actual depreciation on the basis of general and abstract criteria - Conditions of permissibility - Exclusion of any discriminatory effect - Publication of the criteria - Possibility of challenging the application of the flat-rate calculation in individual cases (EC Treaty, Art. 95, 1st para. (now, after amendment, Art. 90 EC, 1st para.)) 4. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Prohibition of levying other national charges which can be characterised as turnover taxes - Meaning of turnover taxes - Scope - Finnish duty called value added tax levied on car tax - Excluded (Council Directive 77/388, Art. 33) 5. Tax provisions - Internal taxation - System of taxation of imported used cars - Tax charged on car tax - Condition of permissibility - Amount of the tax not exceeding the residual tax incorporated in the value of a similar vehicle on the domestic market (EC Treaty, Art. 95, 1st para. (now, after amendment, Art. 90 EC, 1st para.)) Summary $$1. The first paragraph of Article 95 of the Treaty (now, after amendment, the first paragraph of Article 90 EC) allows a Member State to apply to used vehicles imported from another Member State a system of taxation under which the taxable value is determined by reference to the customs value as defined by Regulation No 2913/92 establishing the Community Customs Code and Regulation No 2454/93 laying down provisions for the implementation of Regulation No 2913/92, but precludes the taxable value from varying according to the marketing stage where this may result, at least in certain cases, in the amount of the tax on an imported used car exceeding the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory. ( see para. 61, operative part 1 ) 2. The first paragraph of Article 95 of the Treaty (now, after amendment, the first paragraph of Article 90 EC) precludes a Member State from applying to used cars imported from another Member State a system of taxation under which the tax on those vehicles - is equal, during the first six months from the registration or bringing into use of the vehicle, to the tax charged on a similar new vehicle, and - is equal, from the 7th to the 150th month of use of the vehicle, to the tax on a similar new vehicle, with a linear reduction by a percentage of 0.5% per full calendar month, since such a system of taxation does not take the actual depreciation of the vehicle into account and does not provide a guarantee that the amount of tax it determines will in no case exceed the residual tax incorporated in the value of a similar used car already registered in the national territory. ( see para. 80, operative part 2 ) 3. Where a Member State applies to used cars imported from other Member States a system of taxation under which the actual depreciation of the vehicles is defined in a general and abstract way on the basis of criteria laid down by national law, the first paragraph of Article 95 of the Treaty (now, after amendment, the first paragraph of Article 90 EC) requires that system of taxation to be arranged in such a way, making allowance for the reasonable approximations inherent in any system of that type, as to exclude any discriminatory effect. That requirement presupposes, first, that the criteria on which the flat-rate method of calculating the depreciation of vehicles is based are made public and, second, that the owner of a used vehicle imported from another Member State is able to challenge the application of a flat-rate method of calculation to that vehicle, which may mean that its particular characteristics have to be examined in order to ensure that the tax applied to it does not exceed the residual tax incorporated in the value of a similar used vehicle already registered in the national territory. ( see para. 89, operative part 3 ) 4. A tax such as that under Paragraph 5 of the Finnish law on car tax, described in national law as value added tax on car tax, does not constitute value added tax within the meaning of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, in the version of Directive 92/111 amending Directive 77/388 and introducing simplification measures with regard to value added tax, and is compatible with Article 33 of that directive. ( see para. 107, operative part 4 ) 5. The first paragraph of Article 95 of the Treaty (now, after amendment, the first paragraph of Article 90 EC) precludes the levying of a tax such as that under Paragraph 5 of the Finnish law on car tax, which is payable on car tax, in so far as the amount charged as such a tax on a used car imported from another Member State exceeds the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory. ( see para. 117, operative part 5 ) Parties In Case C-101/00, REFERENCE to the Court under Article 234 EC by the Korkein hallinto-oikeus (Finland) for a preliminary ruling in the proceedings pending before that court brought by Tulliasiamies, Antti Siilin, on the interpretation of the first paragraph of Article 95 of the EC Treaty (now, after amendment, the first paragraph of Article 90 EC) and of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), 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), THE COURT (Fifth Chamber), composed of: P. Jann, President of the Chamber, S. von Bahr, A. La Pergola, M. Wathelet (Rapporteur) and C.W.A. Timmermans, Judges, Advocate General: C. Stix-Hackl, Registrar: L. Hewlett, Principal Administrator, after considering the written observations submitted on behalf of: - Mr Siilin, by P. Snell, oikeustieteen kandidaatti, - the Finnish Government, by T. Pynnä and E. Bygglin, acting as Agents, - the Commission of the European Communities, by E. Traversa and I. Koskinen, acting as Agents, having regard to the Report for the Hearing, after hearing the oral observations of Mr Siilin, the Finnish Government and the Commission at the hearing on 12 September 2001, after hearing the Opinion of the Advocate General at the sitting on 25 October 2001, gives the following Judgment Grounds 1 By order of 15 March 2000, received at the Court Registry on 17 March 2000, the Korkein hallinto-oikeus (Supreme Administrative Court) referred to the Court for a preliminary ruling under Article 234 EC six questions on the interpretation of the first paragraph of Article 95 of the EC Treaty (now, after amendment, the first paragraph of Article 90 EC) and of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), 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) (the Sixth Directive). 2 Those questions were raised in two appeals to the Korkein hallinto-oikeus, one by Mr Siilin and the other by the Tulliasiamies (Customs Agent), against a decision of the Uudenmaan lääninoikeus (Uusimaa Provincial Administrative Court) in proceedings between Mr Siilin and the Finnish customs authorities concerning the tax levied on the import into the Republic of Finland of a used car which he had acquired in another Member State. The national legal background 3 The relevant provisions of national law are in the Autoverolaki (Law on car tax, 1482/1994) of 29 December 1994, in the version applicable in 1998, and the Arvonlisäverolaki (Law on value added tax, 1501/1993), as amended by laws 1483/1994, 1486/1994 and 1767/1995. 4 Paragraph 1 of the Autoverolaki provides that car tax must be paid before the registration or bringing into service of private cars and other classes of vehicles. The provisions of the Tieliikennelaki (Road Traffic Law, 267/1981) lay down the criteria for classifying motor vehicles in the various classes. 5 Under Paragraph 6(1) of the Autoverolaki: Car tax shall be payable on the amount of the car's taxable value less FIM 4 600. The amount of tax shall however always at least be 50% of the car's taxable value. 6 Paragraph 7 of the Autoverolaki provides: On an imported used vehicle, tax shall be charged on an equivalent new vehicle, reduced however by 0.5% thereof for each completed calendar month calculated from the date on which the vehicle has been registered or in use for six months to the date of the tax declaration. If the date of first registration of the vehicle or the date of first bringing into use cannot be reliably stated, the period of use shall be calculated from the end of the year of manufacture. The tax shall be reduced only for the first 150 months of use. If an equivalent new vehicle cannot be identified, the tax shall be determined on the basis of the tax on the new vehicle most nearly equivalent as regards technical and other characteristics. ... The provisions of this paragraph shall not apply to vehicles if ... 25 years or more have passed from the end of the year of manufacture. 7 Paragraph 10 of the Autoverolaki states that an imported vehicle is to be regarded as a used vehicle if, according to reliable indications, it has been driven for more than 10 000 km and if it has been registered abroad for longer than six months. 8 Paragraph 11 of the Autoverolaki provides: The basis of the taxable value of an imported vehicle shall be its acquisition value to the taxpayer less the amounts mentioned in Paragraph 16. The acquisition value of an imported vehicle shall be: 1. in accordance with the Customs Code of the European Community (Council Regulation (EEC) No 2913/92 of 12 October 1992 [establishing the Community Customs Code, OJ 1992 L 302, p. 1, "the Customs Code"]), for a vehicle imported as other than Community goods, the customs value within the meaning of the Customs Code and Commission Regulation (EEC) No 2454/93 of 2 July 1993 [laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, OJ 1993 L 253, p. 1, "the implementing regulation"]; and 2. the value of a vehicle imported as Community goods, which shall be determined in accordance with the provisions of point 1 as far as applicable. All costs directly or indirectly incurred by the taxpayer before tax in respect of the vehicle in bringing it to Finland or to the taxpayer's first place of storage in Finland, and also customs duty if payable in respect of the vehicle, shall be included in the taxable value. The taxable value of a vehicle manufactured in Finland, if the manufacturer is a taxpayer, shall be the price of the vehicle at the place of manufacture defined on the basis of the costs of manufacture of the vehicle. ... 9 It is apparent from the order for reference that the system of taxation laid down by the Autoverolaki, as it applied in March 1998 and hence to the facts at issue in the main proceedings, was the subject of a letter of formal notice from the Commission. The Finnish Government replied on 29 June 1998 that it intended to draw up by autumn 1998 the necessary proposals for amending the provisions of that law which had been criticised by the Commission. 10 The Law amending the Autoverolaki (1160/1998) entered into force on 15 January 1999, and amended inter alia the percentage of the monthly tax reduction on a used vehicle. The percentage of the reduction, which had previously been fixed at 0.5% of the tax on an equivalent or nearly equivalent new vehicle, thus became 0.6% for the first 100 months of use, 0.9% for the next 100 months and 0.4% after that, those two percentages being calculated on the residual value of the tax at the end of the preceding month. However, the amending law does not apply to the facts at issue in the main proceedings, and is thus not material to the present proceedings. 11 Paragraph 5 of the Autoverolaki provides that the person liable to pay car tax is also to be liable to pay value added tax on the car tax, the amount of which - corresponding to a percentage of the car tax - is laid down by the Arvonlisäverolaki. 12 Under Paragraph 102(1)(4) of the Arvonlisäverolaki: The taxpayer may deduct, in respect of a taxable business activity: ... 4. value added tax paid on car tax under the Autoverolaki. 13 Paragraph 102(1)(4) of the Arvonlisäverolaki applied for one year only. It was repealed by Law 1767/1995 of 29 December 1995, which entered into force on 1 January 1996. 14 Paragraph 102b of the Arvonlisäverolaki provides: The right to deduct value added tax levied on car tax shall be conditional on a debit decision which shows the amount of tax payable. 15 It is apparent from Paragraph 141(5) of the Arvonlisäverolaki that the deductions of tax referred to in Paragraph 102(1)(4) of that law are allocated to the month during which the tax is paid. The main proceedings and the questions referred for a preliminary ruling 16 On 2 March 1998 Mr Siilin bought from a garage in Germany, at a price of DEM 7 350, a used Mercedes Benz car (model 190 2.0 diesel). The car had been brought into use on 13 November 1986 and had done 180 000 km. It had an automatic transmission and a sunroof. 17 On 20 April 1998 Mr Siilin imported the car into Finland and declared it to the Helsinki district customs board (the customs office) for the purposes of car tax. 18 By decision of 20 April 1998 (the assessment notice), the customs office determined the amount of car tax payable by Mr Siilin at FIM 46 288 and the amount of value added tax on that tax (at the rate of 22%) at FIM 10 183, making a total of FIM 56 471. 19 That amount was calculated by the customs office on the basis of a comparison between Mr Siilin's used car and a car of the same make, of a different model (C 220 D) but with technical characteristics very similar to those of the model of Mr Siilin's car. The list price for the reference car as a new car in Germany was DEM 41 100 excluding tax. The customs office added to that price DEM 2 200 for the automatic transmission and DEM 1 680 for the sunroof. The taxable value was thus fixed at DEM 44 980, or FIM 136 851 after conversion. Pursuant to the Autoverolaki, a flat-rate reduction of FIM 4 600 and an amount of FIM 85 963, corresponding to a depreciation coefficient of 65%, were deducted from that amount. 20 On 21 April 1998 Mr Siilin paid the customs office the car tax and the value added tax thereon. He then brought proceedings against the assessment notice in the Uudenmaan lääninoikeus, which had jurisdiction. 21 He submitted, first, that the amount of the tax fixed for the car he had imported was greater than the amount of the residual tax incorporated in the value of a car already on the Finnish market, registered new in Finland and similar in age, characteristics and condition. He claimed that the tax levied was therefore discriminatory and contrary to Article 95 of the Treaty. Citing the judgments in Case C-345/93 Nunes Tadeu [1995] ECR I-479 and Case C-375/95 Commission v Greece [1997] ECR I-5981, he argued that the depreciation of a car cannot be linear and that its value falls by more than 5% a year. 22 He submitted, second, that the charging of value added tax on the car tax was contrary to the Sixth Directive, so that that tax should not be applied. 23 He therefore sought, first, annulment of the assessment notice as regards the value added tax on the car tax. He sought, second, for the case to be remitted to the customs office as regards the car tax, in order for that tax to be fixed in such a way as not to exceed the amount of residual tax incorporated in the value of a car already on the Finnish market, registered new in Finland and similar in age, characteristics and condition. 24 The customs office submitted that Mr Siilin's action should be dismissed, arguing that the car tax and the value added tax on that tax had been determined in accordance with Finnish law. 25 In its decision of 3 June 1999, the Uudenmaan lääninoikeus found that it was in accordance with Paragraph 5 of the Autoverolaki to determine the amount of tax on Mr Siilin's car by referring to the tax on a new car with similar technical and other characteristics and making a reduction as provided for by that law. 26 Noting, however, that the car in question was a used car imported into the Republic of Finland from another Member State, the Uudenmaan lääninoikeus pointed out that in Nunes Tadeu the Court had ruled that it was contrary to Article 95 of the Treaty for a Member State to charge on used cars from other Member States a tax which, being calculated without taking the vehicle's actual depreciation into account, exceeded the residual tax incorporated in the value of similar used cars already registered in the national territory. 27 The Uudenmaan lääninoikeus held that in this case the car tax had been calculated without the customs office examining the actual depreciation of Mr Siilin's car or checking whether the amount of car tax fixed for that vehicle exceeded the residual tax incorporated in the value of a similar used car of the same make and year registered in Finland. It therefore set aside the assessment notice as regards the car tax and remitted the case to the customs office to determine the amount of that tax. 28 As regards the value added tax on the car tax, the Uudenmaan lääninoikeus held that it was not contrary to the Sixth Directive to levy it, since it was not a tax which by its essential properties constituted value added tax within the meaning of that directive or a turnover tax prohibited by Article 33 of the directive. 29 However, having set aside the part of the assessment notice which concerned the car tax because of its excessive amount, the Uudenmaan lääninoikeus considered that the value added tax on that tax might also have been set too high. It therefore set aside the assessment notice and remitted the case to the customs office with respect to the value added tax as well. 30 Two applications were made to the Korkein hallinto-oikeus for leave to appeal against the decision of the Uudenmaan lääninoikeus. 31 One application, by the Tulliasiamies, sought for the decision of the Uudenmaan lääninoikeus to be set aside with respect both to the car tax and to the value added tax thereon. The other application, by Mr Siilin, related only to the part of the decision concerning the value added tax on the car tax. He sought for the decision to be set aside in that respect and a declaration that such value added tax should not be charged in relation to the car he had imported. 32 In those circumstances, the Korkein hallinto-oikeus decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: Car tax 1. Under Paragraph 11 of the Autoverolaki, in determining car tax on a vehicle imported as Community goods, the basis of the taxable value is the transaction value of the vehicle for the taxable person. The transaction value is the customs value within the meaning of the Customs Code and implementing regulation so far as applicable. May [Article 95 of the Treaty] be interpreted as meaning that such national legislation relating to the determination of the taxable value for car tax purposes is not discriminatory, taking into account in particular that the taxable value of a vehicle will be a different amount depending on the marketing stage at which the importer of the vehicle operates, that is, whether he operates as a wholesaler, a retailer or a consumer? 2. Under Paragraph 7(1) of the Autoverolaki, the basis of the tax levied on an imported used car is the tax on an equivalent new vehicle, with the reductions as laid down in that provision. Under the old law 1482/1994, the tax charged on an imported used car was the tax on an equivalent new car reduced by 0.5% for every complete calendar month calculated from the time when the vehicle had been registered or had been in use for six months, and the tax was reduced for only the first 150 months of use. Under the current law 1160/1998, the tax charged on an imported used car is the tax on an equivalent new car reduced by 0.6% per month of use for the first 100 months of use and then for the next 100 months by 0.9% per month of use of the residual value calculated at the end of each preceding month, and for subsequent months of use by 0.4% of the residual value calculated at the end of each preceding month. Months of use are taken as complete calendar months from when the vehicle was first put into use or registered. May [Article 95 of the Treaty] be interpreted as meaning that such national tax legislation is not discriminatory, taking into account in particular that - the starting point is the tax on an equivalent new car, - under the previous law the tax was reduced only after a period of six months, and - under both the previous and current law the tax is reduced linearly as described above? 3. In addition to using the bases of calculation prescribed in the national tax legislation, is it always necessary to establish a vehicle's individual characteristics to ensure that the levying of car tax does not lead, in the individual case, to discrimination contrary to [Article 95 of the Treaty]? Value added tax payable on car tax 4. May the [Sixth Directive] be interpreted as meaning that the tax called value added tax payable on car tax under Paragraph 5(1) of the Autoverolaki and Paragraph 1(5) of the Arvonlisäverolaki is value added tax within the meaning of the [Sixth Directive], taking into account that under national legislation the tax is levied exclusively on the basis of car tax? 5. If the answer to Question 4 is in the negative, may such a tax nevertheless be regarded as a tax or charge the levying of which is permitted under Article 33 of the [Sixth Directive]? 6. If such national tax provisions are not regarded as contrary to the [Sixth Directive], may [Article 95 of the Treaty] be interpreted as meaning that those tax provisions are not discriminatory within the meaning of that article? The questions relating to car tax 33 The first three questions seek to ascertain whether the first paragraph of Article 95 of the Treaty allows a Member State to apply to used vehicles imported from another Member State a tax having the characteristics of the car tax at issue in the main proceedings. Question 1 34 By its first question the national court asks essentially whether the first paragraph of Article 95 of the Treaty allows a Member State to apply to used vehicles imported from another Member State a system of taxation under which the taxable value, determined by reference to the customs value as defined by the Customs Code and the implementing regulation, is defined differently depending on the marketing stage at which the importer of the vehicle operates. Observations submitted to the Court 35 Mr Siilin claims that new cars are imported into Finland essentially by official importers, inasmuch as, for the same new car, the price offered to consumers by an official importer is substantially lower than the price paid by an individual who imports the vehicle directly into Finland. The latter price includes the margins added in the distribution channels in the seller's Member State, which represent on average 30% of the purchase price. 36 He further claims that the residual tax incorporated in the value of a used car already on the Finnish market is lower than the tax on a used car imported by a private individual, as a result of taking into account the marketing stage at which the importer of the vehicle operates. 37 He thus claims that the tax on a new car imported by an official importer of the make is calculated on the basis of the actual price at which the importer has bought it and is included in the price at which the new car is sold to the final consumer, of which it accounts for 26% to 30%. It is therefore not the sale price of the new car to the consumer, which includes the distributor's margin (generally 25% of the sale price, according to Mr Siilin) and other ancillary sums, which is taken into account to calculate the Finnish tax on a new car imported in that way. 38 By contrast, according to Mr Siilin, to calculate the tax payable on the import of a used car by an individual, the taxable value is determined by reference to the selling price to the consumer of a similar new car. The difference between that method of calculation and the method described in the preceding paragraph for the importation of a new car by an official importer has the effect that the taxable value of a used car is overestimated in relation to that of a new car and that the tax on imported used cars represents 40% to 70% of the price paid by a consumer for the purchase in Finland of a similar used car. 39 According to Mr Siilin, the determination by the Finnish authorities of the taxable value of an imported used car by reference to its customs value, taking into consideration the marketing stage at which the importer operates, has the result in practice that the tax on such a car amounts to at least double, proportionally, the tax levied on a similar car imported new by the official importer of the make in Finland and subsequently sold on the Finnish market as a used car. 40 The Finnish Government submits, on the other hand, that Article 95 of the Treaty does not preclude taxation such as the car tax levied in Finland, according to objective criteria, on both new and used vehicles (Case 319/81 Commission v Italy [1983] ECR 601, Case 106/84 Commission v Denmark [1986] ECR 833, and Case 196/85 Commission v France [1987] ECR 1597). 41 In particular, the car tax may not be regarded as contrary to Article 95 of the Treaty because the marketing stage is taken into account in determining the taxable value of the vehicles. The Finnish Government submits on this point that both the taxable value of a new car and that of a used car are determined by reference to the Community customs legislation. The taxable value of a new car is determined as a rule according to the method set out in Article 29 of the Customs Code, namely by using the actual transaction value of the goods. According to the Government, the use of that value can lead, in the case of two similar new cars, to different taxable values depending on the price paid and the distribution stage. To determine the taxable value of a used car, the most commonly used procedure of those provided for in Article 31 of the Customs Code is, where the person liable for the car tax is a consumer, that which takes as a reference the lowest price, excluding tax, to the consumer of a similar new car, either in the country of purchase of the used car or on the Finnish market. 42 The Commission submits that Article 95 of the Treaty does not preclude the application by a Member State of a system of taxation under which the amount of the car tax on a used car imported from another Member State is determined on the basis of the tax applicable, at the time of import of the used car, to a reference new car with a reduction calculated according to the age of the vehicle following rules laid down by law, provided that two conditions are satisfied. 43 First, the reference car must be identical in all respects to the imported used car, that is, it must be of the same model and type as the imported car and must be similar in its other characteristics. If such a car is no longer on sale on the date of taxation of the imported new car, the reference car must be a car of the same type and model put on sale earlier. In that case the value of the reference car might be adjusted to take account of inflation. 44 Second, the car tax thus determined must not exceed the residual tax incorporated in the value of similar used cars already registered in the Member State of import. 45 The Commission argues, on the other hand, that Article 95 of the Treaty precludes the application by a Member State of a system of taxation under which the various marketing stages are taken into account, if that has the consequence that the amount of tax on an imported used car differs from the average amount of the residual tax incorporated in the value of used cars already registered in the national territory. 46 It regards the judgment in Case C-68/96 Grundig Italiana [1998] ECR I-3775 as of relevance here, even though that case did not relate to taxation in the automobile sector, as it concerned an Italian tax on audiovisual and photo-optical products. In paragraph 16 of that judgment the Court ruled that the prohibition of discrimination laid down in Article 95 of the Treaty is infringed where a tax is assessed on the value of a product if, in the case of the imported product alone, assessment criteria are taken into consideration which are likely to increase its value in relation to the corresponding domestic product. 47 The Commission contends that taking into account the marketing stage at which the importer operates in order to determine the transaction value and hence the taxable value of an imported used car concerns an assessment factor referred to in Grundig Italiana and thus infringes Article 95 of the Treaty, since it results in an unjustified increase in the value of the vehicle, which is incompatible with the principle of non-discrimination. 48 The Commission also put forward at the hearing an example with figures to show the discriminatory effect of the car tax for imported used vehicles. After paying the equivalent of EUR 3 758 in Germany to buy his used car, Mr Siilin had to pay in Finland the equivalent of EUR 7 785.08 as car tax and EUR 1 712.64 as value added tax on the car tax. His car thus cost him, in total, EUR 13 255.74. By contrast, the average price on the Finnish market of a used car similar to Mr Siilin's but registered when new in Finland was, at the material time, EUR 9 500, that being confirmed by the certificate of the value of Mr Siilin's car issued by Auto-Data Oy on 21 April 1998. Referring to the document from the Motor Vehicle Sector Information Centre, entitled Composition of the price of a private car, produced by Mr Siilin in annex to his reply to the Court's questions, the Commission states that, on 1 January 1997, car tax represented 29.28% of the retail price of a car. It concludes that the amount of residual tax incorporated into the value of a used car comparable to Mr Siilin's, EUR 9 500, amounted to EUR 2 850 at most. It therefore says that Mr Siilin had to pay more than EUR 13 000 for the used car he imported, whereas he would have paid only EUR 9 500 for a similar car bought on the Finnish market. Findings of the Court 49 The Court observes, at the outset, that the Autoverolaki refers to the Customs Code and implementing regulation in order to determine the taxable value of a used car at the various marketing stages. Consequently, as the Advocate General says in point 60 of her Opinion, the difference in taxable value according to marketing stages derives from the application of the Community legislation on customs value. 50 The Court has previously held that the mere reference to the Customs Code for determining taxable value is not in itself contrary to the Treaty (see Case C-228/98 Douanias [2000] ECR I-577, paragraph 45). 51 The Court's case-law relating to the taxation of imported used vehicles should also be recalled. 52 Article 95 of the Treaty seeks to guarantee the complete neutrality of internal charges as regards competition between products already on the domestic market and imported products (see, to that effect, Case C-47/88 Commission v Denmark [1990] ECR I-4509, paragraph 9, and Nunes Tadeu, paragraph 18). 53 According to settled case-law, the first paragraph of Article 95 of the Treaty is infringed where the tax charged on the imported product and that charged on the similar domestic product are calculated in a different manner on the basis of different criteria which lead, if only in certain cases, to higher taxation being imposed on the imported product (Commission v Greece, paragraphs 20 and 29, Case C-213/96 Outokumpu [1998] ECR I-1777, paragraph 34, and Case C-393/98 Gomes Valente [2001] ECR I-1327, paragraph 21). 54 In particular, it is contrary to the first paragraph of Article 95 of the Treaty to levy a tax on imported used vehicles based on a value which is higher than the real value of the vehicle with the result that imported used vehicles are taxed more heavily than similar used vehicles which are on sale on the domestic market (see, to that effect, Commission v Denmark, paragraph 22). In taxing used vehicles, their actual depreciation must therefore be taken into account. 55 Thus the Court has held that the charging by a Member State of a tax on used cars from another Member State is contrary to the first paragraph of Article 95 of the Treaty where the amount of the tax, being calculated without taking the vehicle's actual depreciation into account, exceeds the residual tax incorporated in the value of similar used vehicles already registered in the national territory (see Nunes Tadeu, paragraph 20, and Gomes Valente, paragraph 23). 56 Moreover, in order to determine whether products are similar within the terms of the prohibition laid down in the first paragraph of Article 95 of the Treaty, it is necessary to consider whether they have similar characteristics and meet the same needs from the point of view of consumers (see Case C-265/99 Commission v France [2001] ECR I-2305, paragraph 42 and the case-law cited). 57 A system of taxation of vehicles such as that at issue in the main proceedings is characterised by the taking into account of different marketing stages in so far as, in the case of a used car already registered in the national territory, car tax may have been paid on it when new on the basis of the purchase value of the new car to the official importer, excluding his profit margin and that of any dealers or retailers, whereas the car tax payable for used cars imported by private individuals is calculated on the basis of the purchase price, to the consumer, of a similar new car, which is as a rule higher than that paid by the official importer. 58 Examining whether such a system of taxation is compatible with the first paragraph of Article 95 of the Treaty involves verifying that the amount of tax charged on imported used cars does not exceed the residual tax incorporated in the value of a similar used car already registered in the national territory. That presupposes that the taxable value, defined in both cases by reference to the value of a new vehicle, is assessed in the same way for both terms of the comparison, without taking into account the different marketing stages. 59 As that is not necessarily the case in the system of taxation at issue in the main proceedings, it cannot be ruled out - as is confirmed by the calculations submitted to the Court by the Commission and not challenged by the Finnish Government - that the tax levied on the used car imported by a private individual, such as Mr Siilin, calculated on the basis of the sale price to the consumer of a similar new vehicle, may exceed the residual tax incorporated in the value of a similar used car already registered in the national territory. That would be the case, for instance, if the latter vehicle had been taxed when new, taking into consideration a marketing stage where its value was lower. 60 A system of taxation such as that at issue in the main proceedings does not therefore exclude altogether the possibility of imported used cars being subjected, in certain cases, to tax in an amount exceeding the residual tax incorporated in the value of a similar used vehicle already registered in the national territory. 61 Consequently, the answer to the first question must be that the first paragraph of Article 95 of the Treaty allows a Member State to apply to used vehicles imported from another Member State a system of taxation under which the taxable value is determined by reference to the customs value as defined by the Customs Code and implementing regulation, but precludes the taxable value from varying according to the marketing stage where this may result, at least in certain cases, in the amount of the tax on an imported used car exceeding the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory. Question 2 62 By its second question, the national court essentially seeks to know whether the first paragraph of Article 95 of the Treaty precludes a Member State from applying to used cars imported from another Member State a system of taxation under which the tax on those vehicles - is equal, during the first six months from the registration or bringing into use of the vehicle, to the tax charged on a similar new vehicle, and - is equal, from the 7th to the 150th month of use of the vehicle, to the tax on a similar new vehicle with a linear reduction by a percentage of 0.5% per full calendar month. Observations submitted to the Court 63 Mr Siilin, having argued that a system of taxation of imported used vehicles which takes into consideration the marketing stage at which the importer operates is contrary to Article 95 of the Treaty, contends that the monthly reductions provided for in Paragraph 7 of the Autoverolaki are only of marginal importance in assessing the residual proportion of tax incorporated in the value of a similar used car already registered in the national territory. They do not make it possible to avoid discrimination, since the new vehicle used as a reference for calculating the tax on the imported used car and the equivalent new vehicle imported by the official importer have different taxable values from the outset. 64 After noting that the Court has already ruled that the reduction of such a tax cannot be linear (Commission v Greece, paragraph 22), Mr Siilin concludes that the reductions laid down in Paragraph 7 of the Autoverolaki are contrary to Article 95 of the Treaty. 65 Relying on Nunes Tadeu, he submits that the amount of tax on an imported used car must be calculated on the basis of the tax paid on first registration of a similar car, and that it must be reduced in the same proportions as the reduction in the actual value of the used car. 66 Mr Siilin submits, consequently, that the car tax has discriminatory effects for imported used cars and is therefore contrary to Article 95 of the Treaty. 67 The Finnish Government contends that, in the context of assessing the compatibility of the car tax with Article 95 of the Treaty, it is not important that the tax on used cars is determined by reference to the tax on a similar new car. The essential point, according to the Court's case-law, is that the reductions applied according to the age of the vehicle correspond to its real depreciation. 68 The Finnish Government submits that in practice the real depreciation of vehicles is virtually linear, so that no argument based on Community law can call into question the reductions laid down in Paragraph 7 of the Autoverolaki for calculating the value of imported used vehicles. 69 The Commission submits that Article 95 of the Treaty precludes the application by a Member State of a system of taxation under which - the reduction in the tax on the reference vehicle is determined linearly and the actual depreciation of the used car is not taken into account; or - the first six months from the registration or bringing into use are left out of the determination of the depreciation of the used car, and its actual depreciation is not taken into account; or - the particular features of the vehicle are not taken into account in the taxation, if the result is that the amount of tax applied to an imported used car is greater than the residual tax incorporated in the value of a similar used car already registered in the Member State concerned. 70 Thus, according to the Commission, the failure to take into account the depreciation of the vehicle during the first six months from its registration or bringing into use does not correspond to reality. Similarly, a system of taxation under which, on the expiry of those first six months, the (theoretical) tax on the reference vehicle is reduced in linear fashion is contrary to Article 95 of the Treaty, since it does not permit the actual depreciation of the car to be taken into account. 71 The Commission acknowledges that it is impossible to determine by a universal formula the actual depreciation of a vehicle, which depends on a number of factors which may vary by country or by the type or model of car. Since Mr Siilin's car was imported into the Republic of Finland in 1998, it is necessary, in order to determine the actual depreciation of the reference vehicle, to consider the situation observed at that time in that Member State. 72 The Commission observes in this respect that the Finnish Government has drawn attention to studies carried out in 1998 to assess the average monthly depreciation of some 30 models of car on the Finnish market. In June 1998 the Finnish Government stated to the Finnish Parliament that, on the basis of those studies, the Autoverolaki was to be amended to make the system of reducing the tax according to the vehicles' age correspond more closely to the depreciation observed in the Finnish market. The Commission is therefore surprised that the Finnish Government should intervene in the present case to defend a tax assessment of April 1998 and maintain that the application of the system of tax reductions in force at that time is compatible with the requirements of Article 95 of the Treaty. Findings of the Court 73 To answer the second question, it must be examined, first, whether the first paragraph of Article 95 of the Treaty allows national legislation to take the value of a new vehicle as the basis for determining the taxable value of an imported used vehicle. 74 It should be noted that it is settled case-law that the vehicle used as a reference for calculating the tax on an imported used car must be a similar vehicle. 75 Products such as cars are similar for the purposes of the first paragraph of Article 95 of the Treaty if their characteristics and the needs which they serve place them in a competitive relationship, with the degree of competition between two models depending on the extent to which they meet various requirements regarding price, size, comfort, performance, fuel consumption, durability, reliability and other matters (Commission v France, paragraph 43). 76 As the Advocate General observes in point 71 of her Opinion, the reference vehicle must be the one whose characteristics are closest to those of the imported vehicle, which implies that account must be taken of the model, type and other characteristics such as drive and equipment. 77 Second, it must be examined whether the first paragraph of Article 95 of the Treaty allows national legislation concerning the taxation of imported used cars to provide for a reduction of tax which is linear and does not begin until the expiry of the first six months from the registration or bringing into use of the car. 78 It should be noted that, in paragraph 22 of Commission v Greece, the Court observed that the annual depreciation in the value of cars is in general considerably more than 5%, that that depreciation is not linear, especially in the first years when it is much more marked than subsequently, and that vehicles continue to depreciate more than four years after being put into circulation. It should be added that a vehicle starts to depreciate as soon as it is bought or brought into use. 79 In those circumstances, a system of taxation under which the tax on an imported used car corresponds to the tax on a similar new car, reduced by 0.5% a month from the expiry of six months from the registration or bringing into use of the car, is not compatible with the requirements of the first paragraph of Article 95 of the Treaty, since it does not take into consideration the actual depreciation of the used car. 80 The answer to Question 2 must therefore be that the first paragraph of Article 95 of the Treaty precludes a Member State from applying to used cars imported from another Member State a system of taxation under which the tax on those vehicles - is equal, during the first six months from the registration or bringing into use of the vehicle, to the tax charged on a similar new vehicle, and - is equal, from the 7th to the 150th month of use of the vehicle, to the tax on a similar new vehicle, with a linear reduction by a percentage of 0.5% per full calendar month, since such a system of taxation does not take the actual depreciation of the vehicle into account and does not provide a guarantee that the amount of tax it determines will in no case exceed the residual tax incorporated in the value of a similar used car already registered in the national territory. Question 3 81 By its third question, the national court is essentially asking whether, if a Member State applies to used cars imported from other Member States a system of taxation under which the actual depreciation of vehicles is defined in a general and abstract way on the basis of criteria laid down by national law, the first paragraph of Article 95 of the Treaty requires the individual characteristics of each vehicle to be examined in order to ensure that the amount of tax applied never exceeds the residual tax incorporated in the value of a similar used car already registered in the national territory. Observations submitted to the Court 82 According to the Finnish Government, it is not necessary, in order to take account of vehicles' depreciation, to provide for individual assessments of the value of each of them. A method of calculation defined by statute suffices, if it is based on objective criteria and if it may be regarded as not obstructing the working of the internal market. The Government thus submits that it is compatible with the first paragraph of Article 95 of the Treaty to calculate the reduction of the car tax payable in Finland on the basis of the average depreciation of vehicles. 83 The Commission refers to the Gomes Valente judgment, according to which, it claims, a system of taxation based on general criteria is compatible with the first paragraph of Article 95 of the Treaty provided that it is free from any discriminatory effect and that owners of imported used cars have a procedure available for challenging the application to their vehicles of the calculation method based on general criteria. 84 The Commission submits that those conditions presuppose that the criteria for calculating the tax are publicised, which was not the case for the taxation system at issue in the main proceedings. The Finnish authorities neither published nor communicated to persons who so requested the results of the studies which they rely on for the purpose of determining the taxable value of imported used cars and depreciation according to age. Nothing in the official documents or the case-file shows that the studies carried out on the Finnish market were objective and scientifically reliable. Moreover, the Finnish tax authorities refused to transmit information which would make it possible to calculate the amount of tax on new cars and the amount of the residual tax incorporated in the value of used cars already registered in the national territory. Findings of the Court 85 It may be seen from Gomes Valente, paragraph 26, that a system of taxation of imported used cars which takes into account the actual depreciation of the vehicles on the basis of general criteria is compatible with the first paragraph of Article 95 of the Treaty only if it is arranged in such a way, making allowance for the reasonable approximations inherent in any system of that type, as to exclude any discriminatory effect. 86 On this point, the Court has already mentioned the factors of depreciation which may be taken into account so that the flat-rate method of calculating the tax on imported used cars reflects precisely their actual depreciation and is best able to attain the objective of taxation on such cars which, making allowance for the reasonable approximations inherent in any system of that type, does not exceed the amount of the residual tax incorporated in the value of similar used vehicles already registered in the national territory (see Gomes Valente, paragraph 28). 87 For such a system to be compatible with the first paragraph of Article 95 of the Treaty, the criteria on which the flat-rate method of calculating the depreciation of vehicles is based must, in any event, be made known to the public. 88 Furthermore, such compatibility also presupposes that the owner of an imported used vehicle is able to challenge the application of a flat-rate method of calculation to that vehicle in order to demonstrate that it leads to taxation exceeding the amount of the residual tax incorporated in the value of similar used vehicles already registered in the national territory (Gomes Valente, paragraph 32). 89 The answer to Question 3 must therefore be that, where a Member State applies to used cars imported from other Member States a system of taxation under which the actual depreciation of the vehicles is defined in a general and abstract way on the basis of criteria laid down by national law, the first paragraph of Article 95 of the Treaty requires that system of taxation to be arranged in such a way, making allowance for the reasonable approximations inherent in any system of that type, as to exclude any discriminatory effect. That requirement presupposes, first, that the criteria on which the flat-rate method of calculating the depreciation of vehicles is based are made public and, second, that the owner of a used vehicle imported from another Member State is able to challenge the application of a flat-rate method of calculation to that vehicle, which may mean that its particular characteristics have to be examined in order to ensure that the tax applied to it does not exceed the residual tax incorporated in the value of a similar used vehicle already registered in the national territory. The questions relating to value added tax 90 By its fourth to sixth questions, the national court seeks to ascertain whether the tax called value added tax payable on car tax constitutes, first, value added tax within the meaning of the Sixth Directive and is, second, compatible with Article 33 of that directive and the first paragraph of Article 95 of the Treaty. Questions 4 and 5 91 By its fourth and fifth questions, which should be taken together, the national court essentially asks whether a tax such as that at issue in the main proceedings, described in national law as value added tax on car tax, constitutes value added tax within the meaning of the Sixth Directive and whether it is compatible with Article 33 of that directive. Observations submitted to the Court 92 Mr Siilin and the Commission both contend that the tax payable on car tax constitutes value added tax within the meaning of the Sixth Directive. According to Mr Siilin, it has features identical to those of value added tax. Thus it can be deducted in the way provided for in Paragraph 102(1)(4) of the Arvonlisäverolaki. Moreover, it is of a general nature. 93 The Commission submits, without explaining its position in more detail, that the tax on car tax, as described by the national court, satisfies all the criteria of value added tax. It points out that this Finnish tax, introduced in December 1995 by Paragraph 5 of the Autoverolaki, was expressly provided for in the Arvonlisäverolaki, that it was stated in the various draft laws proposed in 1994 that this was value added tax, and that the aim was that the consumer should pay, in respect of cars imported directly from abroad, value added tax in addition to car tax. 94 The Commission also submits that it is apparent from the proposal for the law introducing the tax on car tax that it was intended to compensate for the impact on tax revenue of the abolition, on the accession of the Republic of Finland to the European Union, of the charging of customs duty on goods coming from other Member States. It was thus estimated that, if a decision were not made to levy a tax on car tax, a loss of several hundred million Finnish marks would be discernible in value added tax receipts. 95 The Commission adds that the charging of the tax on car tax is contrary to the Sixth Directive, in particular Article 2, Article 7(1) read in conjunction with Article 10, and Article 28a. First, the tax is contrary to Article 2 of the Sixth Directive because it is charged in the absence of any of the events giving rise to value added tax under that provision. It is levied in respect neither of a commercial transaction performed by a taxable person in the national territory nor of an import within the meaning of Article 2. Next, the tax is not charged following the arrival of the goods on Community territory or their import into Finland. Finally, it is not value added tax charged on intra-Community acquisitions within the meaning of Article 28a of the Sixth Directive. 96 The Finnish Government submits that, despite its name, the tax on car tax charged at the value added tax rate is not to be regarded as value added tax within the meaning of the Sixth Directive and is not prohibited by Article 33 of that directive. 97 It argues that that tax, which is laid down by a provision of the Autoverolaki and calculated in accordance with the provisions of that law, is charged independently of value added tax. Above all, it does not have the essential characteristics of value added tax. In particular, the tax on car tax is not of general application, it arises exclusively on payment of car tax, it is accordingly levied only once, and it is not charged on the added value of goods or services. Findings of the Court 98 It should be noted, to begin with, that categorisation as value added tax within the meaning of the Sixth Directive depends not on the name given to a national tax in the legislation introducing it, but on whether it has the essential characteristics of value added tax within the meaning of that directive. 99 The Court has held that among the essential characteristics of value added tax are the following features: it applies generally to transactions relating to goods or services; it is proportional to the price charged by the taxable person in return for the goods and services which he has supplied; it is charged at each stage of the production and distribution process, including that of retail sale, irrespective of the number of transactions which have previously taken place; the amounts paid during the preceding stages of the process are deducted from the tax payable by a taxable person, with the result that the tax applies, at any given stage, only to the value added at that stage and the final burden of the tax rests ultimately on the consumer (see Joined Cases C-338/97, C-344/97 and C-390/97 Pelzl and Others [1999] ECR I-3319, paragraph 21 and the case-law cited). 100 A tax such as the tax payable on car tax described by the national court does not have those features. 101 First, the tax on car tax does not constitute a general tax since it is not intended to catch all economic transactions in the Member State concerned (see, to that effect, Case C-208/91 Beaulande [1992] ECR I-6709, paragraph 16, and Case C-130/96 Solisnor-Estaleiros Navais [1997] ECR I-5053, paragraph 17). It is apparent from Paragraph 5 of the Autoverolaki, read in conjunction with Paragraph 1 of that law, that the tax on car tax in fact concerns only a limited class of goods, namely certain vehicles. It does not, therefore, apply generally to transactions relating to goods or services. Moreover, it arises exclusively on payment of the tax payable on the registration or bringing into use of such vehicles. 102 Second, the amount of the tax on car tax is not proportional to the price of the goods. Only indirectly does that amount depend on the price of a vehicle. As the Finnish Government observes, the basis of assessment to the tax is not the value of the vehicle but the amount of car tax, which is itself calculated on the basis of the price of the vehicle. 103 Third, and finally, the tax on car tax does not have to be paid at each stage in the production and distribution process, which is however necessary for a tax to be categorised as value added tax (see Case 295/84 Rousseau Wilmot [1985] ECR 3759, paragraph 15, Case C-347/90 Bozzi [1992] ECR I-2947, paragraph 12, and Case C-437/97 EKW and Wein & Co. [2000] ECR I-1157, paragraph 49), but only on the charging of car tax. Moreover, the effect of the tax is not to tax the added value at a particular stage of production and distribution, but the total value. 104 The compatibility with Article 33 of the Sixth Directive of the tax on car tax will now be considered. 105 Article 33 of the Sixth Directive precludes the maintenance or introduction of stamp duties or other types of taxes, duties or charges which have the essential characteristics of value added tax. The Court has held that that provision does not preclude the maintenance or introduction of a tax where it does not have any of those characteristics (see EKW and Wein & Co., paragraph 23 and the case-law cited). 106 In that the tax on car tax does not have the essential characteristics of value added tax within the meaning of the Sixth Directive, it is not contrary to the provisions of Article 33 of that directive. 107 The answer to Questions 4 and 5 must therefore be that a tax such as that at issue in the main proceedings, described in national law as value added tax on car tax, does not constitute value added tax within the meaning of the Sixth Directive and is compatible with Article 33 of that directive. Question 6 108 By its sixth question, the national court asks essentially whether the first paragraph of Article 95 of the Treaty precludes the levying of a tax such as that at issue in the main proceedings, which is payable on car tax. Observations submitted to the Court 109 The Finnish Government submits that the tax on car tax is compatible with Article 95 of the Treaty, since it applies to all vehicles in the same way. 110 According to the Commission, the tax on car tax constitutes a charge having equivalent effect to customs duties, contrary to Articles 23 EC and 25 EC. In practice, the tax prevents an individual who is not liable to value added tax from importing new and used cars into Finland. 111 However, should the Court hold that the tax on car tax does not constitute a charge having equivalent effect, the Commission submits that the tax produces discriminatory effects as against imported used cars, in so far as, pursuant to Paragraph 102(1)(4) of the Arvonlisäverolaki, a person liable to value added tax is entitled to deduct the tax on car tax in connection with a taxable business activity, while in practice a private consumer who has bought a used car in another Member State is not entitled to do so. Such a consumer is consequently in a less advantageous situation that a purchaser of a used car already registered in the national territory, who does not have to pay either car tax or the tax on car tax, inasmuch as those taxes have already been paid in respect of the car when new. The tax on car tax is thus incompatible with Article 95 of the Treaty, since it does not apply to used cars already registered in the national territory, on which car tax has already been paid, but to used cars imported from another Member State. Findings of the Court 112 As regards the assessment of the compatibility with the first paragraph of Article 95 of the Treaty of a tax such as the tax on car tax, it must be noted that that tax, like the tax on which it is charged, is levied only once, prior to the registration or bringing into use of a vehicle in Finland. Such a tax does not therefore have to be paid in respect of a used car which has already been subjected to it when it was registered or brought into use when new on the basis of its value at that time. 113 The Commission's argument that the tax on car tax is contrary to the first paragraph of Article 95 of the Treaty because it applies not to used cars already registered in the national territory but to used cars imported from another Member State must therefore be rejected. It is also immaterial that such a tax is deductible in connection with the exercise of a business activity. 114 As the tax provided for in Paragraph 5 of the Autoverolaki is based specifically on car tax, its compatibility with the first paragraph of Article 95 of the Treaty must be assessed according to the same criteria as the compatibility of car tax with that provision. Consequently, that provision of the Treaty precludes a tax such as the tax on car tax where the amount charged by way of that tax on an imported used car exceeds the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory. 115 As regards categorisation as a charge having equivalent effect, it is settled case-law, most recently set out in Case C-234/99 Nygård [2002] ECR I-3657, paragraph 17, that the provisions relating to charges having equivalent effect and those relating to discriminatory internal taxation cannot be applied together, so that the same charge cannot, under the system established by the Treaty, belong to both those categories at the same time. 116 Since the tax on car tax constitutes discriminatory internal taxation in so far as the amount charged as such a tax on an imported used car exceeds the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory, it cannot at the same time constitute a charge having equivalent effect. 117 The answer to Question 6 must therefore be that the first paragraph of Article 95 of the Treaty precludes the levying of a tax such as that at issue in the main proceedings, which is payable on car tax, in so far as the amount charged as such a tax on a used car imported from another Member State exceeds the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory. Decision on costs Costs 118 The costs incurred by the Finnish Government and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court. Operative part On those grounds, THE COURT (Fifth Chamber), in answer to the questions referred to it by the Korkein hallinto-oikeus by order of 15 March 2000, hereby rules: 1. The first paragraph of Article 95 of the EC Treaty (now, after amendment, the first paragraph of Article 90 EC) allows a Member State to apply to used vehicles imported from another Member State a system of taxation under which the taxable value is determined by reference to the customs value as defined by Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code and Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Regulation No 2913/92, but precludes the taxable value from varying according to the marketing stage where this may result, at least in certain cases, in the amount of the tax on an imported used car exceeding the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory. 2. The first paragraph of Article 95 of the Treaty precludes a Member State from applying to used cars imported from another Member State a system of taxation under which the tax on those vehicles - is equal, during the first six months from the registration or bringing into use of the vehicle, to the tax charged on a similar new vehicle, and - is equal, from the 7th to the 150th month of use of the vehicle, to the tax on a similar new vehicle, with a linear reduction by a percentage of 0.5% per full calendar month, since such a system of taxation does not take the actual depreciation of the vehicle into account and does not provide a guarantee that the amount of tax it determines will in no case exceed the residual tax incorporated in the value of a similar used car already registered in the national territory. 3. Where a Member State applies to used cars imported from other Member States a system of taxation under which the actual depreciation of the vehicles is defined in a general and abstract way on the basis of criteria laid down by national law, the first paragraph of Article 95 of the Treaty requires that system of taxation to be arranged in such a way, making allowance for the reasonable approximations inherent in any system of that type, as to exclude any discriminatory effect. That requirement presupposes, first, that the criteria on which the flat-rate method of calculating the depreciation of vehicles is based are made public and, second, that the owner of a used vehicle imported from another Member State is able to challenge the application of a flat-rate method of calculation to that vehicle, which may mean that its particular characteristics have to be examined in order to ensure that the tax applied to it does not exceed the residual tax incorporated in the value of a similar used vehicle already registered in the national territory. 4. A tax such as that at issue in the main proceedings, described in national law as value added tax on car tax, does not constitute value added tax within the meaning of the 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, in the version of Council Directive 92/111/EEC of 14 December 1992 amending Directive 77/388 and introducing simplification measures with regard to value added tax, and is compatible with Article 33 of that directive. 5. The first paragraph of Article 95 of the Treaty precludes the levying of a tax such as that at issue in the main proceedings, which is payable on car tax, in so far as the amount charged as such a tax on a used car imported from another Member State exceeds the amount of the residual tax incorporated in the value of a similar used car already registered in the national territory.

original jurisdiction writ petitions number. 353 and 354 of 1970. petition under art. 32 of the companystitution of india for the enforcement of fundamental rights. k. sen and naunit lal for the petitioners in both the petitions . c. chagla and r. n. sachthey for respondent number 1 in p. number 353 of 1970 . l. sibbal advocate-general punjab and r. n. sachthey for respondent number 1 in w. p. number 354 of 1970 . m. tarkunde harbans singh and k. r. nambiar for res- pondent number 2 in w. p. number 353 of 1970 . kuldip singh and harbans singh for respondent number 2 in w. p. number 354 of 1970 . the judgment of the companyrt was delivered by jaganmohan reddy j. these two writ petitions under article 32 challenge the vires and companystitutionality of sections 4 2 and 5 of the punjabi university act 35 of 1961 as amended hereinafter called the university or the act as the case may be . it is also prayed that i the numberification of the punjab government number 5592-ed- 1 2e /59/12447 dated 13-5-1969 extending the area in which the university shall exercise its powers and ii the circular of the university number 8617-8661 gs misc. dated 15- 6-70 as modified by circular number 9866-989g dsg dated 2-7-70 enclosing the decision of the senate sub-committee dated 1-7-70 be quashed as being illegal unconstitutional and void. the petitioners are educational institutions founded by d. v. companylege trust and society registered under the societies registration act as an association companyprised of arya samajis. these companyleges were affiliated to the punjab university before the reorganisation of the state of punjab in 1966. the university had been companystituted in 1961 and by a numberification dated june 30 1962 it was given jurisdiction over a radius of 10 miles from the office of the university at patiala which seat had earlier been numberified on 30-4-1962 as a seat of the university. as the writ petitioners were number within the 10 miles radius of the university they companytinued to be affiliated to the punjab university. after the reorganisation the punjab government by numberification dated 13-5-1969 issued under sub-section 1 of section 5 of the act specified the districts of patiala sangrur bhatinda and rupar as the areas in which the university exercised its power and under sub-section 3 of the said section 30th june 1969 was numberified as the date for the purpose of the said section. the effect of this numberification was that the petitioners were deemed to be associated with and admitted to the privileges of the university and ceased to be associated in any way with or to be admitted to any privileges of the punjab university. it may also be mentioned that the central government by a numberification dated 12-9-1969 in exercise of the powers conferred on it by section 72 of the reorganisation act directed that the punjab university companystituted under the punjab university act 1947 shall cease to function and operate in the areas of the very four districts regarding which the punjab government had earlier issued a numberification under section 5 of the act. thereafter the university by the impugned circular dated 15- 6-1970 issued to all the principals of the companyleges admitted to the privileges of the university declared that punjabi will be the sole medium of instruction and examination for the pre-university even for science group with effect from the academic session 1970-71. later the university by a letter dated 2-7-1970 informed the principals that a decision of the senate sub-committee dated 1-7-1970 as enclosed therewith was made giving relaxation in some special cases of pre-university students seeking admission for the year 1970. this enclosure was in punjabi an english translation of which would show that the relaxation was to permit students who had passed their matriculation examination with english as their medium of examination to be taught and to answer examination papers in the english medium at pre-university level only so long as the other universities and school bodies of punjab did number adopt punjabi as their medium of instruction. on 7-10-70 the university made a further modification and it was decided by the senate that english be allowed as an alternative medium of examination for all students for the courses for which the university had adopted the regional language as the medium. it was however understood that qualifying in the elementary punjabi paper would as already decided by the university be obligatory in the case of such students offering english medium as had number studied punjabi as an elective or optional subject even upto the middle standard. the resolution of 1-7-1970 further decided that student availing themselves of the facilities given thereunder will have to pass a companypulsory companyrse in punjabi of 50 marks of which a minimum of 25 marks will be required to pass that companyrse. it is alleged that as a result of these numberifications and resolutions of the university the petitioners companyleges have to teach all subjects including science subjects in punjabi and their students have to write examinations in the gurumukhi script except in the cases exemptedin the resolution of the senate sub-committee dated 1-7-1970. it was therefore submitted that the numberification dated 15-6- 1970will result in the lowering of educational standards inasmuch as the students who have passed matriculation examination in hindi will be handicapped in studying their subjects in punjabi and writing answers in gurumukhi script that the students who have to prepare their subjects and write answers in punjabi alone in the university examination will be at a disadvantage in seeking admission to professional companyleges such as the engineering companylege medical companylege business management companylege and other colleges and in the study of science subjects and that the students who passed examination through punjabi medium will be handicapped in the companypetitive examinations for the i. a. s. in research work and in various other fields. it is further stated that the impugned numberification has also resulted in lowering the standard in all respects as there is i numbercoordination for teaching science subjects and other subjects in higher classes like b. a. and b.sc. through the medium of punjabi ii numbercorresponding arrangements have been made for answering papers in the examination for admission to the indian institute of technumberogy and all india institute of medical sciences and other companypetitive examinations for central services. the main companytention of the petitioners however was that section 4 2 of the act does number empower the university to make punjabi the sole medium of instruction that it is number within the legislative power of the state under entry 11 of list ii to make punjabi the sole medium of instruction which power in fact vested in the union parliament under entry 66 of list i and that companysequently the provisions of section 4 2 and the numberification and the circulars referred to above are ultra vires and unconstitutional. in so far as the medium of instruction in punjabi with gurumukhi as the script is sought to be imposed on the educational institutions established by the arya samajis a religious denumberination they also offend arts. 26 1 29 1 and 30 1 of the companystitution. a preliminary objection has been urged on behalf of the respondents that in a petition under article 32 only where it is shown that there is a violation of fundamental right that the validity of the legislation or of the legislative competence can be raised and determined but in these cases as there is numberviolation of article 14 26 29 and 30 of the constitution the petitioners ought number be allowed to challenge the vires of the act on the ground of the companype- tence of the legislature to enact the impugned law. this question .has been dealt with fully in the batch of petitions in which we have just pronumbernced judgment where we had also companysidered the companytentions of the learned advocate general of punjab and shri tarkunde the learned counsel for respondents 2 in this behalf and hence we do number purpose again to reiterate the reasons in support of the conclusion that a petition under article 32 in which petitioners make out a prima facie case that their fundamental rights are either threatened or violated will be entertained by this companyrt and that it is number necessary for any person who companysiders himself to be aggrieved to wait till the actual threat has taken place. on the. other objection that the arya samaj is neither a linguistic or religious minumberity number is it a religious denumberination we held that it was unnecessary to go into the question of whether it is a separate religious denumberination for the purpose of article 26 1 a or a linguistic minumberity for the purposes of article 30 1 because in our view it would be sufficient for the petitioners if they companyld establish that they had a distinct script of their own and they were a religious minumberity to invoke the protection of article 29 1 and 30 1 . we had in those writ petitions held that what companystitutes .a linguistic or religious minumberity must be judged in relation to the state inasmuch as the impugned act is a state act and number in relation to the whole of india. in this view we rejected the several companytentions which are also urged in these petitions namely that hindus being a majority in india are number a religious minumberity in punjab and held that the arya samajis who are part of the hindu companymunity in punjab are a religious minumberity and that they had a distinct script of their own the devnagri which entitled them to invoke the guarantees under the aforesaid provisions of the companystitution. it may be numbericed that the petitioners did number companyplain at the time when the numberification under sub-section 1 3 of section 5 of the act was published on the 13th may 69 as a result of which their companyleges became affiliated to the university and ceased to be -affiliated to the punjab university. it is only after one academic year had gone by that they filed these petitions in september70. it was earlier pointed out that the central government also had in exercise of the powers under section 72 1 of the reorganisation act given the necessary directions for the disaffiliation of the companyleges which included those of the petitioners in the area numberified by the state government from the punjab university. numbercon- tention can therefore be urged as was urged in the cases disposed of earlier that the state government has numberpower to issue a numberification under sub-section 1 3 of section 5 of the act to disaffiliate the petitioners from the punjab university in the absence of a direction from the central government in that behalf number can any question arise in this case that the legislature was number companypetent to enact section 5 until other provision was made by the union parliament in respect of the functioning and operation of the pun-jab university over the areas over which it had prior to the reorganisation jurisdiction because the university was companystituted prior to the reorganisation act by a state act in which section 5 had already vested the state government with powers under subsection 1 3 of section 5 of the act. in view of this position the affiliation of the petitioners with the punjab university is valid and cannumber be challenged. the main ground of attack by the petitioners is that section 4 2 of the act does number companyfer a power on the university to make punjabi the sole medium of instruction and if it does then the state legislature has numbercompetence to enact such a provision because that power is vested in the union parliament under item 66 of list i. in any case the circular and the numberification referred to offend the petitioners right to companyserve their script and administer their institutions in their own way. the university does number deny that it had adopted punjabi. language as the sole medium of instruction and for examinations but it seeks to justify it on the ground that it is the national policy of the government of india that the energetic development of indian languages and literature is a sine qua number for educational and cultural development. unless this is done the creative energies of the people will number be released standards of education will number improve knumberledge will number spread to the people and the gulf between the intellegentia and the masses will remain if number widened further. the observations of the education company- mission in its report for 1964-66 as well as from the report of the companymittee of members of parliament on education in 1967 were referred to in support of this policy in furtherance of which the second respondent says that it adopted a phased programme for switch over from english to punjabi as sole mediumof instruction. for pre-university with effect from academic session 1970-71. it is therefore clear that when the university issued the circular of 15-6-970 it intended to make punjabi the exclusive medium of instruction as well as for examination. the use of the word sole in the circular would mean and imply that it is exclusive. in relation to the examination the medium being punjabi would mean that the script to be used is exclusively gurumukhi. number the directive for the exclusive use of the language and script as the medium of instruction and for examination in all colleges affects the petitioners companyleges which as we said are institutions maintained by a religious minumberity and directly infringes their right to companyserve their script and administer their institutions. the relaxation made subsequently in the earlier directives of the university makes little difference because in order to be allowed to take english as an alternative medium of examination it is obligatory for a student to have passed the matriculation examination with english as the medium of instruction and that unless he has studied punjabi as an elective or optional subject even upto the. middle standard he is required to qualify in the elementary punjabi paper. this concession however does number benefit students with hindi as their medium and with devnagri as their script because for them punjabi medium is obligatory in the pre-university courses. if as is companytended that teaching in the regional language which means in the mother tongue accelerates the pace of educational and cultural development and makes for improvement and excellence of educational standards this criteria is equally applicable to the religious or linguistic minumberities or to any other section of the citizens who have a distinct language script and culture and whose right to companyserve them and to administer their institutions are guaranteed under article 29 1 and 30 1 of the companystitution. the right of the minumberities to establish and administer educational institutions of their choice would include the right to have a choice of the medium of instruction also which would be the result of reading article 30 1 with article 29 1 . but if the university compulsorily affiliates such companyleges and prescribes the medium of instruction and examination to be in a language which is number their mother tongue or requires examination to be taken in a script which is number their own then it interferes with their fundamental rights. it is true as is contended by the learned advocate for the second respondent numberlinguistic minumberity can claim that the university shall companyduct its examinations in the language or script which the minumberity institutions have a right to adopt but in such a case it must number force those institutions to compulsorily affiliate themselves and impose on them a medium of instruction and script number their own. this companyrt had in the state of bombay v. bombay education society ors. 1 while dealing with a circular issued by the state 1 1955 1 s. c. r. 568. of bombay prohibiting the admission to a class where english is used as the medium of instruction of any pupil who is number an anglo-indian and citizens of number-asiatic descent held that the state had number the power to prohibit companytrary to the rights guaranteed under article 29 2 the admission of students to anglo indian schools whose mother tongue was number english. das j. as he then was delivering the unanimous judgment of the companyrt observed at page 586.- where however a minumberity like the anglo- indian companymunity which is based inter alia on religion and language has the fundamental right to companyserve its language script and culture under art. 29 1 and has the right to establish and administer educational institutions of their choice under art. 30 1 surely then there must be implicit in such fundamental right the right to impart instruction in their own institutions to the children of their own companymunity in their own language. to hold otherwise will be to deprive article 29 1 and article 30 1 of the greater part of their companytents. the state must therefore harmonise its power to prescribe the medium of instruction with the rights of the religious or linguistic minumberity or any section of the citizens to have the medium of instruction and script of their own choice by either providing also for instruction in the media of these minumberities or if there are other universities which allow such companyleges to be affiliated where the medium of instruction is that which is adopted by the minumberity institutions to allow them the choice to be affiliated to them. when the companyntry has been reorganised and formed into linguistic states it may be the natural outcome of that policy to allow companyleges established by linguistic and religious minumberities giving instructions in the medium of language adopted by the universities in other states to affiliate to them or if it wants companyleges including the minumberity institutions to be affiliated to it to make provi- sion for allowing instruction to be given and examination to be companyducted in the media and script of the minumberities when it imposes a regional language as the medium of instruction for the university. numberinconvenience or difficulties administrative or financial can justify the infringement of the guaranteed rights. it is also worthy of numbere that no state has the legislative companypetence to prescribe any particular medium of instruction in respect of higher education or research and scientific or technical instructions if it interferes with the power of the parliament under item 66 of list i to companyrdinate and determine the standards in such institutions. in the gujarat university ahmedabad v. krishna ranganath mudholkar 1 the respondent whose medium of instruction in the first year arts class in st. xaviers companylege affiliated to the gujarat university was english was refused admission to intermediate arts companyrses to study for the examination through the english medium in view of the provisions of the university and certain statutes framed by the senate which were subsequently amended. one of the provisions challenged was section 4 27 which empowered the university to promotethe development of the study of gujarati and hindi in devnagri script or both as a medium of instruction and examination. prior to the amendment the proviso permitted that english may companytinue to be the medium of instruction and examination for a period number exceeding ten years but in 1961 it was amended and certain other periods were fixed and power given to implement the provisions. the details of the amendment are number relevant for our purpose. the high companyrt of gujarat issued writs number to enforce the provisions of sections 4 27 and the other provisions which were challenged. in a appeal two questions were urged before this court 1 whether the university had the power under the act to prescribe gujarati or hindi or both as exclusive medium or media or instruction and examination and 2 whether legislation authorising the university to impose such media was companystitutionally valid in view of entry 66 of list i of the vii schedule. it was held by the majority subba rao j. as he then was dissenting that 1 neither under the gujarat university act as originally enacted number as amended in 1961 was the university empowered to impose gujarati or hindi as the exclusive medium of instruction. that this was the intention was clear because of the use of the indefinite article a immediately preceding the medium of instruction while in the proviso in relation to english being companytinued the definite article the preceded the medium of instruction to make that the exclusive medium for the periods specified. 2 while item 11 of list ii and item 66 of list i may overlap recourse must be had to a harmonious companystruction and where they overlapped union legislation must prevail over the state legislature and since medium of instruction is number an item in the legislative list it necessarily falls within item ii of list ii as also within items 63 to 65 of list i. it was also of the view that insofar as it is a necessary incident of the power under item 66 it must be deemed to be excluded from item ii of list ii. in the result disagreeing with the gujarat high court that act 4 of 1961 insofar as it amended the proviso to section 4 27 is invalid because it was beyond the competence of the state legislature the order of the high court relating to the invalidity 1 1963 1 supp. s. c. r. 112. of the statutes insofar as they purported to impose gujarati and hindi or both an exclusive medium or media of instruction and the circulars enforcing those statutes was confirmed. in chitralekha v. state of mysore 1 also it was held that entries 65 and 66 of list i give the union power to secure that the standard of research etc. is number lowered at the hands of any state or states to the detriment of national progress and the power of the state legislature must be so exercised as number to directly encroach upon the power of the union under that entry. subba rao j. as he then was speaking for the majority referring to the gujarat case with reference to a passage extracted from page 139 of the report observed at page 379 this and similar other law made by the state by virtue of entry ii of list ii of the seventh schedule to the companystitution makes impossible or difficult the exercise of the legislative power of the parliament under the entry companyordination and determination of standards in institutions for higher education or research and scientific and technical institutions reserved to the union the state law may be bad. numberdoubt in the judgment of the majority in the gujarat case there are certain observations which might appear to suggest that the legislative power under item 66 list i and item 11 list ii may be dependent on certain variable factors which however they said were being made on certain abstract considerations placed before them. that this was so was further emphasised when it was observed at page 143 we have numberspecific statute the validity of which apart from the one which we will presently mention is challenged. in any case the actual decision in the case turned on the interpretation of section 4 27 of the gujarat university act and as we have earlier numbericed it was held disagreeing with the high companyrt that the university was number vested with the power to prescribe gujarati or hindi as the exclusive medium and the provision which attempted to do so were struck down as invalid. the decision however did number express any opinion on the alleged infringement of the fundamental rights of the petitioners under article 29 1 and 30 1 of the companystitution. applying the decision to facts of this case there is no difficulty in holding that section 4 3 of the act which is in similar terms to section 4 27 of the gujarat act by the use of the indefinite article a prefixed to the word medium does number require 1 1964 6 s. c. r. 368. punjabi to be made the exclusive medium of instruction. this companyclusion is further reinforced by the nature of the power which is only to progressively adopt it as a medium of instruction and examination for as many subjects as possible. the university by adopting punjabi as the sole or exclusive medium for the companyleges affiliated to the university numberwithstanding the companycessions granted acted in excess of the power companyferred on it. while the university can prescribe punjabi as a medium of instruction it cannumber prescribe it as the exclusive medium number companypel affiliated companyleges established and administered by linguistic or religious minumberities or by a section of the citizens who wish to companyserve their language script and culture to teach in punjabi or take examination in that language with gurmukhi script. the university act having compulsorily affiliated these companyleges must of necessity cater to their needs and allow them to administer their institutions in their own way and impart instructions in the medium and write examination in their own script.

B. Sinha, J. The Central Government floated a Scheme known as Integrated Child Development Service ICDS Programme in the year 1975. It is funded by the Central Government. Its application, however, is at the hands of the respective States. Anganwadi workers are appointed from amongst the local inhabitants. Selection is made by a companymittee. Under the Scheme, about one hundred Anganwadi workers are required to be recruited from each of the urban and rural projects and 50 for the tribal projects, whereas one for each Anganwadi Worker is to be appointed as a helper. The staff pattern for ICDS Project is stated in para 3.1.18 of the Scheme which is as under 3.1.18 Staff for ICDS Project Presently, a numbermal ICDS project has one post each of CDPO, Assistant, Statistical Assistant, Clerk Typist, Driver and Peon. Thus the present staff has 3 ministerial hands, namely, the Statistical Assistant, Assistant and LDC. For manning these 3 posts, the State Governments UTs can chose any 3 suitable class III Category C posts and designations such as Senior Clerk, UDC, Jr. Clerk, LDC, Accountant, Accounts Clerk etc. and let these 3 posts be manned by them. These posts can carry pay scales as per State Governments rules and this Ministry will provide funds fully for all such posts. The redesignation of these posts would depend upon the nature and the type of work involved at the project headquarters and the precise types of personnel whom the State Government companysider fit for such work. Anganwadi workers filed an application purported to be under Section 15 of the Administrative Tribunals Act, 1985 for short the Act before the Karnataka State Administrative Tribunal. In one of such applications being Nagarathna B.K. Others v. The Secretary, Social Welfare Dept. Others 1992 K.S.L.J. 177, it was held that the said application was number maintainable. Correctness of the said decision came to be questioned. The matter was referred to a larger bench of the Tribunal. By reason of the impugned judgment, the Tribunal held the said application to be maintainable opining that although Anganwadi workers and helpers are paid honorarium, they hold civil post. The State of Karnataka is before us questioning the companyrectness of the said judgment. This Court issued numberice to Union of India also. It has also filed a companynter affidavit. Mr. Sanjay R. Hegde, learned companynsel appearing on behalf of the appellants, took us through the scheme and submitted that whereas certain posts are sanctioned and created, bulk of them are number sanctioned and required to be filled up from amongst the volunteers from the companymunity. It was companytended that they merely act as companyduit to implementation of some welfare schemes. They may have to work for a maximum period of 4 and years. They are number holders of civil posts. They can companytest elections. It was submitted that for filling up of the said posts, numberadvertisement is required to be made, number the provisions of the recruitment rules are required to be companyplied with. Ms. Rekha Pandey, learned companynsel appearing on behalf of Union of India would support the companytention of Mr. Hegde supplementing that Anganwadi workers are appointed on a budget scheme and if it is to be held that they and their helpers who were to work as volunteers to render certain services, are treated to be State Government or Central Government employee, the scheme itself would become number-functional. The scheme of the Central Government, it was pointed out, is an All India scheme and in the event the judgment of the Tribunal is upheld, the same would lead to serious financial implications. Ms. Indira Jaisingh, learned senior companynsel appearing on behalf of the respondents, on the other hand, would submit that the question as to whether Anganwadi workers hold civil post or number must be companysidered having regard to the tests laid down by this Court in determination of the relationship of employer and employee. The learned companynsel would urge that casual railway employees, parttime employees having been held by this Court to be holders of civil post, there is numberreason as to why the respondents would be treated differently. It was submitted that Anganwadi workers must number be paid wages less than the minimum wages fixed by the State as the same would amount to beggary. Emoluments of an employee, the learned companynsel would urge, must be fair and reasonable. It was further submitted that the numberenclature of payment is number decisive. Our attention in this companynection has also been drawn to the definition of post as companytained in Section 3 k of the Act. The Scheme was floated by the Central Government with certain objects. The staff pattern at the project level has been laid down in the Scheme itself. What would be meant by sanctioned post is evident from paragraph 3.1.18 of the Scheme as numbericed hereinbefore. Indisputably Anganwadi workers and helpers were number to be appointed on a pay scale. They are to be paid honorarium. The amount of honorarium has since been increased and just at present is as under Anganwadi Workers Qualification Experience 1975-76 1.4.78 1.7.96 2.10.92 16.5.97 1.4.02 Non Matriculate 100/- 125/ 225/- 350/- 438/- 938/- Matriculate 150/- 175/- 275/- 400/- 500/- 1000/- Non Matriculate with 5 years exp. 250/- 375/- 469/- 969/- Matriculate with 5 years exp. 300/- 425/- 531/- 1031/- Non Matriculate with 10 yrs. Exp. 275/- 400/- 500/- 1000/- Matriculate with 10 yrs. Exp. 325/- 450/- 563/- 1063/- Anganwadi Helpers Helpers 35/- 50/- 110/- 200/- 260/- 500/- The Scheme is on a year to year basis. The Scheme although is to be directly under the companytrol of the State Governments, the financial burden is to be borne by the Central Government. There is numberfixed criteria as regards honorarium. Some States pay honorarium as fixed by the Central Government but some others pay additional honorarium from their own resources. Union of India has also companystituted a Review Committee pursuant to its recommendations the following benefits have been granted The Anganwadi Workers and Helpers have been allowed paid absence on maternity for a period of 135 days vide letter dated 28.12.2001 ii. The U.O.I. initiated a scheme, on a year to year basis for awards for selected Anganwadi workers on the basis of their dedication and performance. The scheme for award for Anganwadi workers was first introduced for 2000- 2001 and thereafter extended for 2002-2003 is under process. The scheme provides for Award at the Central-level companyprising of cash of Rs. 25,000/- and a citation for 20 Anganwadi Workers, and Awards at the State-level companyprising of cash of Rs. 2,500/- and a citation for 1275 selected Anganwadi Workers. iii. The State Governments have been requested vide letter dated 28.02.2001 to companysider and implement the following recommendations of the companymittee, which call within the purview of the States- State UT Government should companytribute some monetary incentive to these workers for the additional work assigned to the Anganwadi Workers and Helpers under various schemes and programmes. Anganwadi Workers and Helpers Welfare Fund may be set up by the State UT Governments at the State UT level out of the companytribution from Workers Helpers and State UT Governments. State UT Governments should provide group insurance facilities to Anganwadi Workers and Helpers. The honorary companytribution in Anganwadi centers by Anganwadi Workers and Helpers should be treated as additional qualifications for recruitment as primary school teachers, ANMs and other such village based positions. Specific quota for recruitment in these positions may be fixed up. Recommendations of the Committee have also been directed to be implemented by the States which would fall within their purview. The posts of Anganwadi workers are number statutory posts. They have been created in terms of the scheme. It is one thing to say that there exists a relationship of employer and employee by and between the State and Anganwadi workers but it is another thing to say that they are holders of civil post. We are number oblivious of the fact that their presence in their respective villages is extremely important. They are supposed to make significant companytribution to the society. They, we understand, are required to carry a large number of activities, primarily amongst them being the welfare of the children. In a written submission, the interveners state that Anganwadi workers as of necessity are required to perform a large number of functions. We, however, are number inclined to companysider the companyrectness or otherwise of the said statements made before us for the first time. No material in this behalf was brought on the records of the Tribunal. The Tribunal proceeded to deliver its judgment applying certain principles and overruling the decision of the Division Bench, the companyrectness whereof falls for our decision. We, as at present advised, are number inclined to enlarge the scope of this appeal and, thus, refuse to go to the factual details of the matter, particularly, when they do number form part of the records. Before we advert to the rival companytentions of the parties, we intend to examine the decision of this Court whereupon strong reliance has been placed by the learned companyrse for the respondents. In State of Assam Ors. v. Shri Kanak Chandra Dutta 1967 1 SCR 679 the question before a Constitution Bench was as to whether a Mauzadar appointed for the purpose of companylection of revenue under a system prevailing in the Assam Valley would be holder of a civil post. Answer to the said question was rendered in the affirmative opining The question is whether a Mauzadar is a person holding a civil post under the State within Art. 311 of the Constitution. There is numberformal definition of post and civil post. The sense in which they are used in the Services Chapter of Part XIV of the Constitution is indicated by their companytext and setting. A civil post is distinguished in Art. 310 from a post companynected with defence it is a post on the civil as distinguished from the defence side of the administration, an employment in a civil capacity under the Union or a State. See marginal numbere to Art. 311. In Art. 311, a member of a civil service of the Union or an all-India service or a civil service of a State is mentioned separately, and a civil post means a post number companynected with defence outside the regular civil services. A post is a service or employment. A person holding a post under a State is a person serving or employed under the State. See the marginal numberes to Arts. 309, 310 to 311. The heading and the sub-heading of Part XIV and Chapter I emphasise the element of service. There is a relationship of master and servant between the State and a person holding a post under it. The existence of this relationship is indicated by the States right to select and appoint the holder of the post, its right to suspend and dismiss him, its right to companytrol the manner and method of his doing the work and the payment by it of his wages or remuneration. A relationship of master and servant may be established by the presence of all or some of these indicia, in companyjunction with other circumstances and it is a question of fact in each case whether there is such a relation between the State and the alleged holder of a post. In the companytext of Arts. 309, 310 and 311, a post denotes an office. A person who holds a civil post under a State holds office during the pleasure of the Governor of the State, except as expressly provided by the Constitution. See Art. 310. A post under the State is an office or a position to which duties in companynection with the affairs of the State are attached, an office or a position to which a person is appointed and which may exist apart from and independently of the holder of the post. Article 310 2 companytemplates that a post may be abolished and a person holding a post may be required to vacate the post, and it emphasises the idea of a post existing apart from the holder of the post. A post may be created before the appointment or simultaneously with it. A post is an employment, but every employment is number a post. A casual labourer is number the holder of a post. A post under the State means a post under the administrative companytrol of the State. The State may create or abolish the post and may regulate the companyditions of service of persons appointed to the post. Applying the said principles of law, it was held that a Mauzadar holds a civil post under the State as i the State has the power and the right to select and appoint him ii he is subordinate to public servant iii he receives remuneration by way of a companymission and sometimes a salary iv there exists a relationship of a Master and a Servant v he holds an office on the revenue side of the administration to which specific and onerous duties in companynection with the affairs of the State are attached vi the office falls vacant on the death or removal of the incumbent vii he is a responsible officer exercising delegated powers of Governement viii he is appointed revenue officer. Anganwadi workers, however, do number carry on any function of the State. They do number hold post under a statute. Their posts are number created. Recruitment rules ordinarily applicable to the employees of the State are number applicable in their case. The State is number required to companyply with the companystitutional scheme of equality as adumbrated under Articles 14 and 16 of the Constitution of India. No process of selection for the purpose of their appointment within the companystitutional scheme existed. We do number think that the said decision has any application in the instant case. Our attention has also been drawn to a decision of this Court in Union of India and Others v. Deep Chand Pandey and Another 1992 4 SCC 432 wherein casual employees were found to companye within the purview of Section 14 1 of the Act holding An examination of Section 14 and Section 3 q clearly indicates that the Act companyers a very wide field, and there is numberhing to suggest that the provisions dealing with the jurisdiction of the Tribunal should receive a narrow interpretation In that case, the employees were seeking temporary status. They had claimed their right to companytinue in employment. In view of the nature of claim, it was opined by this Court that the application under Section 14 of the Act was maintainable. Local bodies employees having regard to the numberification issued under the Act were also held to companye within the purview of the Act in R.N.A. Britto v. Chief Executive Officer and Others 1995 4 SCC 8 wherein following Shri Kanak Chandra Dutta supra it was held that the Panchayat Secretaries having regard to the provisions of the Karnataka Village and Local Boards Act are government servants, stating Another significant provision is Sub-section 2 of Section 80 of the Act which says that subject to the provisions of Rules made under the proviso to Article 309 of the Constitution, the qualifications, powers, duties, remuneration and companyditions of service including disciplinary matters of such Secretary shall be such as may be prescribed. The provisions in the Act to which we have adverted, clearly show that several functions which were required to be performed by the State are entrusted to the Panchayats. They also show that the properties vested in the Panchayats and the funds of the Panchayat are that of the Government and those companylected by way of tax or fee by exercising the power of taxation vested in the Panchayat by the Government. Above all, provisions of the Act make it abundantly clear that the Panchayats have to function under the ultimate companytrol of the State Government. When it companyes to the Secretaries of the Panchayats appointed under the Act, their selection for appointment, their termination from service, their liability for transfer and all other companyditions of their services are as provided for under the Rules made under the Act or other rules made under Article 309 of the Constitution in respect of services of the State Government servants. When Sub-section 2 of Section 80 of the Act to which we have adverted states that subject to the provisions of Rules made under the proviso of Article 309 of the Constitution, the qualifications, powers, duties, remuneration and companyditions of service including disciplinary matters of such Secretary shall be such as may be prescribed, it leaves numberroom for doubt that the Secretaries of the Panchayats are Government servants, like other Government servants, who are subjected to the Rules to be made under the proviso to Article 309 of the Constitution as regards their service companyditions. The said decision ex facie cannot be said to have any application in the instant case. Reliance has also been placed by Ms. Jaisingh on State of U.P. and Others v. Chandra Prakash Pandey and Others 2001 4 SCC 78. The question which was involved therein was appointment of Kurk Amins on salary basis for realization of dues of companyperative society. Again following Shri Kanak Chandra Dutta supra , it was held that Kurk Amins having been appointed by the State for the purpose of companylection of revenue would be holders of civil post. We may, however, numberice that the Bench referred to a decision of this Court in The Superintendent of Post Offices and Others v. P.K. Rajamma 1977 3 SCC 94 where extra-departmental agent was held to be number a casual workers but holds a post under the administrative companytrol of the State. In P.K. Rajamma supra , a 3-Judge Bench of this Court made a distinction between a post held under the administrative companytrol of a State and another who is a casual workers. Each of the decisions referred to hereinbefore centers round application of a statute. In all those cases, posts are statutory ones. Terms and companyditions of services of the holder of the posts were governed by statutes. However, rules framed under proviso to Article 309 of the Constitution of India are number attracted in the case of the respondents. They are appointed under a scheme which is number of a permanent nature although might have companytinued for a long time. Appointments made under a scheme and recruitment process being carried out through a companymittee, in our opinion, would number render the incumbents thereof holders of civil post. Our attention has number been drawn to any rule or regulation governing the mode of their recruitment. Some statements in this behalf have been made by the interveners but for the reasons stated hereinbefore, we cannot enter thereinto. A distinction must be made about a post created by the Central Government or the State Governments in exercise of their power under Articles 77 or 162 of the Constitution of India or under a statute vis--vis cases of this nature who are sui generis. Terms and companyditions of services of an employee may be referable to acts of appropriate legislature. The matter may also companye within the purview of Article 309 of the Constitution of India as proviso appended thereto companyfers power upon the President or the Governor of a State or other authority, who may be delegated with such power, to make rules during the interregnum. The result of an appointment being made in violation of the Constitutional scheme has recently been numbericed by a Constitution Bench of this Court in Secretary, State of Karnataka and Others v. Umadevi 3 and Others 2006 4 SCC 1. One of the questions which was raised before us was in regard to the right of an Anganwadi worker to companytest an election. They are indisputably free to do so. A holder of a civil post may number be entitled thereto. In Satrucharla Chandrasekhar Raju v. Vyricherla Pradeep Kumar Dev and Another 1992 4 SCC 404, this Court while companysidering the provisions of Article 191 1 a of the Constitution of India in relation to the posts held by the employees of an Integrated Tribal Development Agency opined that their employees would number be holder of office of profit although the State exercises companytrol thereover holding It is also necessary to bear in mind that the Government is undertaking several projects and activities including companymercial activities through the companyporations and local bodies exercising some companytrol over such companyporations or bodies. In that view of the matter they may companye within the meaning of the State envisaged in Article 12 but that may number be a decisive factor in deciding the issue. As a matter of fact Section 10 of the Representation of People Act as well as Article 58 2 of the Constitution of India do indicate that all persons employed in such undertakings, companyporations or local bodies cannot be deemed to suffer disqualification for companytesting the elections except to the extent indicated therein. This aspect also has been companysidered in some of the abovementioned decisions. If a strict and narrow companystruction is to be applied that amounts to shutting off many prominent and other eligible persons to companytest the elections which forms the fundamental basis for the democratic set-up. Therefore several factors as indicated above depending upon the facts of each case have to be taken into companysideration in deciding whether a particular person is disqualified by virtue of his holding an office of profit before companycluding that such an office is under the Government The decision, therefore, is an authority for the proposition that those employees who companye within the meaning of Article 12 of the Constitution of India are number necessarily government servants. Afortiori the State in terms of a scheme may exercise companytrol over a section of the persons working but thereby only, they do number become entitled to protection under Article 311 of the Constitution of India. Reference to the provisions of the Minimum Wages Act, in our opinion, is also number apposite. The said Act is applicable to the workmen working in the industries specified therein. It is number the case of the respondents that the ICDS programme would companystitute an industry or Anganwadi workers are industrial workmen. There cannot be any doubt whatsoever that it is one thing to say that the State would be liable to pay minimum wages irrespective of its financial companystraints but it is another thing to say that as to whether such a claim can be raised in respect of those who are working under a project. It is number a case where the companycept of minimum wage, living wage or fair wage can be brought in service. Different tests applied even for determining the relationship of employer and employee have recently been numbericed by this Court in District Rehabilitation Officer Ors. v. Jay Kishore Maity Ors.2006 11 SCALE 545. In that case, in almost similar project, the employees appointed by the District Rehabilitation Centre claimed themselves to be the Central Government employees. Each case, therefore, has to be companysidered on its own merits. This Court cannot determine a lis only on sympathy. In Ramakrishna Kamat and Others v. State of Karnataka and Others 2003 3 SCC 374 albeit in the light of right of regularization in service, this Court opined It is clear from the order of the learned single Judge and looking to the very directions given a very sympathetic view was taken. We do number find it either just or proper to show any further sympathy in the given facts and circumstances of the case. While being sympathetic to the persons who companye before the companyrt the companyrts cannot at the same time be unsympathetic to the large number of eligible persons waiting for a long time in a long SIC seeking employment See also Maruti Udyod Ltd. v. Ram Lal and Others, 2005 2 SCC 638, State of Bihar Ors. v. Amrendra Kumar Mishra, 2006 9 SCALE 549 and Regional Manager, SBI v. Mahatma Mishra, 2006 11 SCALE It is also number a case where the doctrine of parity of employment can be invoked. It is true that numberenclature of a term of payment is number decisive but the substance is as was held in Jaya Bachchan v. Union of India and Others 2006 5 SCC 266, but the question has to be determined having regard to the issue involved. We are companycerned herein with only one question, viz., whether the respondents are holders of any civil post.

MR JUSTICE GOLDRING: On the evening of 13th July 2002 Mrs Holden, the Respondent to this appeal, was on a package holiday in Souz in Tunisia organised by the Appellant when she fell down some stairs at the El Casar Hotel where she and her family were staying. She was on her way down from the ground floor to the restaurant. She fell from the third step going down the remaining nine to the bottom. She sustained a blunt head injury and fractures to her left thumb and her right radius. On 21st February 2005 at Southampton County Court Mr Recorder Gibbons QC held the appellant holiday company liable. He awarded Mrs Holden £5, 721. 01 damages plus no less than £13, 355. 63 costs. The Appellant submits he was wrong to do so. THE APPLICABLE LAW It was agreed that the Appellant was liable to the Respondent for the proper performance of its obligations under the holiday contract by reason of Regulation 15 of The Package Travel, Package Holidays and Package Tours Regulations 1992. By that Regulation, in the context of a package holiday: "The other party to the contract is liable to the consumer for the proper performance of the obligations under the contract, irrespective of whether such obligations are to be performed by that other party or by other suppliers of services but this shall not affect any remedy or right of action which that other party may have against those other suppliers of services. " It is unnecessary to read further from the Regulation given the issues in the present case. In reflection of the Defendants' obligation the contract had a term to this effect: "We accept responsibility for any death, bodily injury or illness or illness caused to you as a result of proven negligent acts and/or omissions of our employees, agents, suppliers and sub-contractors. We accept responsibility for any damage caused to you as a result of any failure to perform, or improper performance of the services we have agreed to provide you". It was agreed too that to succeed in her action the Respondent had to prove on the balance of probabilities that the Appellant failed to carry out its obligations with reasonable skill and care; See Hone v Going Places Leisure Travel Ltd. [2001] EWCA Civ 947. It was suggested in the skeleton argument submitted to the Recorder on behalf of the claimant that the doctrine of res ipsa loquitur applied. It plainly did not. It has not been suggested to me that it did. The duty of care owed by the Respondent is that set out by Phillips J as he then was in Wilson and Best Travel [1993] 1AER, 353. The applicable position was summarized at page 358B in the following terms: "What is the duty of a tour operator in a situation such as this? Must he refrain from sending holidaymakers to any hotel whose characteristics insofar as safety is concerned fail to satisfy the standards, which apply in this country? I do not believe that his obligations in respect of the safety of his clients can extend this far. Save where uniform international regulations apply there are bound to be differences in the safety standards applied and in respect of the many hazards of modern life between one country and another. All civilised countries attempt to cater for these hazards by imposing mandatory regulations. The duty of care of a tour operator is likely to extend to that local safety regulations are complied with. Provided they are I do not consider that the tour operator owes a duty to boycott a hotel because of the absence of some safety feature which should be found in an English hotel, unless the absence of such a feature might lend a reasonable holidaymaker to decline to take a holiday at the hotel in question. " THE RECORDER'S DECISION Why Mrs Holden fell down the stairs. It was agreed and plain from the photographs that the stairs were of a marble matt finish. There was a rail running down the side. The Recorder first had to decide why Mrs Holden fell down them. She alleged that she had slipped on a fluid left on the step as a result of someone having spilt some drink when going up or down the stairs. In her witness statement she spoke of children going up and down the stairs to a games room. The Recorder put it in this way, in paragraphs 3 and 5 of his judgment: "The first issue I have to decide is whether Mrs Holden simply missed her footing or whether she slipped on something. It seems to me, looking at the photographs in the bundle of documents, that the stairs are safe. They are of some sort of matt finish, either natural or applied, and it seems to me to be highly unlikely that she either tripped or missed her footing, so clearly there was a spillage of some colourless and odourless liquid". In paragraph 5 he said this: "The most probable sequence of events in my judgment is as follows, that someone went down the stairs into the restaurant carrying a drink in some sort of open container, spilt some of it and the individual was followed very shortly afterwards by the Claimant, husband and grandchild. " In the skeleton argument submitted on behalf of the Appellant Miss Prager, who represented the Appellant before me today, submitted that the Recorder was not entitled so to find. In that skeleton argument it is submitted that Mrs Holden said that she did not know why she slipped and inferred it was the result of spillage. There was no reason to believe the liquid was colourless or odourless. It seems to me that the Recorder was entitled to make the finding he did on this topic for the broad reasons he expressed. Was the appellant liable for the fall? The Claimant next had to prove that the appellant was liable for the fall. The Recorder in paragraph 9 of his judgment said this: "The second point is whether there was a tortious failure to clean. It is self-evident there was. In my judgment if there was not a system there should have been, if there was a system it should have included the person at the door of the restaurant having as part of their job description instructions to check the stairs periodically and if anybody arrived in the restaurant carrying a drink in an open container. " If I follow his reasoning it was as follows. He found the hotel was alert to the perils of people carrying drinks down the stairs. In paragraph 4 he said this: "The hotel was clearly alert of the perils of people moving about the building carrying drinks. This is important when one considers the issue of local standards of safety dealt with later in this judgment. As one goes into the restaurant I was told there was somebody present just inside the door although no doubt to meet and greet the customers but also under instructions to discourage people from taking drinks out of the restaurant into other parts of the hotel, although safety does not seem to be the paramount consideration. There was a price differential meaning that drinks were more expensive in the restaurant than the other eight or nine bars in the hotel but this was clearly a safety issue as well". In short, he appeared to find the fact that someone was present inside the restaurant door was some evidence of the hotel's knowledge of a safety issue of the danger; in other words of drinks being spilled. Miss Prager submits, it seems to me with justification, that that paragraph reflects some confusion. The evidence was that guests were permitted to carry drinks around. They were not permitted to take them into or from the restaurant. That had nothing to do with safety. It was because there was a price difference. The hotel was not by that policy recognising any peril to a guest from spilt drinks. Any system should not therefore have been assessed by reference to such a recognised peril in the terms referred to by the Recorder. In his submissions Mr Collins on behalf of the Respondent submitted that when the Recorder used the word 'peril' he was doing no more than simply dealing with the issue of foreseeability; he was saying no more than that this was a foreseeable accident. It seems to me the real issue is whether by permitting guests to carry drinks up or down these steps to the limited extent it did, the hotel was negligent having regard to any system it might have for dealing with possible spillage on the stairs. The Recorder next found that there was no, or no adequate, system for dealing with possible spillage on the stairs. He said this in paragraph 6: "Clearly the hotel, however well staffed it is or however many staff it has, cannot be expected to be monitoring the stairs the whole time. On the other hand the individual just inside the door to the restaurant ought in my judgment to have been under instruction that if anybody arrived in the dining room carrying a drink other than in a closed container they should do what would take only a moment or two, which is to check the stairway, which is only two flights, for any spillages, and that clearly was not done. " In paragraph 9 he said this: "In my judgment if there was not a system there should have been. If there was a system it should have included the person at the door of the restaurant having as part of their job description instructions to check the stairs periodically and if anybody arrived in the restaurant carrying a drink in an open container. " What the Recorder appeared to be saying in those two paragraphs was this. The person at the bottom of the stairs cannot reasonably be expected to monitor them all the time. Periodic monitoring was all that was required. However he should check for possible spillage each time a customer came into the restaurant carrying a drink in an open container. I assume also he must have had in mind that that person should check each time a customer left the restaurant carrying such an open container. In paragraph 10 the Recorder then said this: "Faced with those findings it should be absolutely inevitable that if the Claimant can satisfy the legal requirements in this case that she must succeed. " In paragraph 11 he said: "This judgment should be considered incorporating Regulation 15 of The Package Travel, Package Holidays and Package Tours Regulations 1992... I have also been pointed to several cases on behalf of the Defendants. " In Paragraph 12 he said: "Because this hotel was abroad a number of assumptions which normally we would make in this sort of case cannot be made. The first is that the Occupier's Liability Act clearly does not run in Tunisia and secondly because of the broad spread of accommodation and methods of classification it is not for the defendant to prove compliance with local standards and, as the text book puts it, common sense is not enough. There is no substitute for evidence. " What the Recorder in those paragraphs appears to be saying is this. A self-evidently tortious failure to clean is not enough. The fact the accident happened in Tunisia must be taken into account. As to the self-evident tortious failure to clean, he is saying that had the accident happened in the United Kingdom there would have been negligence. There was no liability in such circumstances in Tunisia unless there was by local standards. Miss Prager submits that even applying English standards the duty set by the Recorder was unrealistically high. She submits it is an absurdly high burden. It is too onerous to expect at meal times somebody to be employed to check each time a person comes down the stairs; with a drink (or for that matter goes up the stairs). At meal times many people must come down and up the stairs. The Recorder then turned to whether the Claimant had proved there was a breach by the standards of Tunisia, as he was required to do. There had been no specific evidence adduced on behalf of the Claimant regarding that. There was no evidence of local custom or local regulations. In paragraph 13 the Recorder said this: "So a number of issues arise here. The first is that the Hotel El Ksar as opposed to [The] Soviva is a four star rather than a three star hotel. " I interpolate; the Claimant, the Respondent, and her family had originally been staying at the Soviva. They were moved because of problems to the Hotel El Ksar. I continue: "The Defendants say that what the Complainant contracted for was the three star Soviva Hotel. In my view that will not do. The duty may have been to provide a three star standard, and if that meant moving the party to a four star hotel then the party are entitled to expect the hotel to meet four-star standards. Furthermore in the Defendants' standard terms and conditions as well the broad disclaimer about varying standards abroad they set out their star system ranged from two to five stars. " It seems to me, and neither Mr Collins nor Miss Prager have substantially submitted to the contrary, that whether it was a three or four star hotel is unlikely to be material. It is likely, and I say this without the help of any evidence, that Tunisian standards of safety do not significantly vary between a three star and a four star hotel. In paragraph 14 the Recorder said this: "One must be careful of drawing on one's own experience, but in my view an oblique or interesting glimpse of local standards is that the first thing that happened to the Claimant when she was taken into hospital locally was that she had a CT scan of her head. This is rather more than you would necessarily get in this country if you had taken a tumble down nine marble steps. " It does seem to me the matters set out in paragraph 14 are relevant to the issue. In paragraph 15 he said this: "It seems to me inferentially that the Defendants also take a keen interest in health and safety issues. The two witnesses called by the Defendants, Miss Walter who was number two in the hierarchy, says in her statement, "I carry out regular orders to ensure the safety of our guests and check the quality of the fixtures, fittings and facilities. The same applies to the person who I also heard from, Miss Yarwood, who in a sense is the top person in the country who is the quality co-ordinator responsible for health and safety in all First Choice properties in Tunisia. " In paragraph 16 he said this: "Going back for a moment to the terms and conditions, as Miss Prager pointed out of course, the Defendants take holidaymakers worldwide to a very large variety of destinations in very large number. She goes on to say that what one can infer from that is that the star system lays down the lowest common denominator amongst the various hotels at the various destinations to which the defendant takes people. " In paragraph 17 he said: "Nevertheless in my view by what I find to be the prevailing Tunisian standards, a four star hotel should, as I have said, have a safety system and protocol in place which includes periodic inspections and responding to people walking round with bottles or glasses or whatever to check the stairs for not only liquid but broken glass or anything like that. That is the standard by which I will judge the hotel, the Defendants' own standards of a four star hotel when clearly all employees are under instructions to take a keen interest in safety. " Miss Pager submits that it was not open to the Recorder to consider the degree of systems of safety so far as the Appellant was concerned in the way that he did. Mr Collins submits that his observations regarding Miss Walter and Miss Yarwood are evidence from which he was entitled to infer that the Tunisian standard of safety was such as referred to by them; in other words that they were there reflecting in the high care which they took, the Tunisian safety standards. I am afraid I do not agree. It does not seem to me that one can infer a local standard from what may well be a higher standard in a particular hotel or by a particular company in particular circumstances. It is no substitute for evidence of what is local custom and what maybe the local regulations. In paragraph 18 the Recorder said this: "One other point. Where the change of hotels comes into play was the Claimant's evidence there were a lot of children in the hotel going up and down stairs with drinks, there was a games room on the lower ground floor and there was building work going on. The point was made by Miss Prager that maybe she - that is to say the Claimant - was confusing the two hotels. I think she probably was because it was pointed out this was not a child orientated hotel. It does not seem to me that it makes any difference to the fact that in order to keep their part of the bargain the Defendants put the party into a four star hotel for the second week of their holiday, and as I have already indicated they were keen on health and safety issues and in my view what happened to the unfortunate Claimant was eminently foreseeable in the absence of a system or at least a system that included periodic checking of the stairs". In paragraph 19 he said this: "So far as the case law is concerned, Mr Collins who represents Mrs Holden points out that all the decided cases that were cited by the Defendant are all dealing with what one might call equipment failures, that is lifts, emergency shoots, patio doors and so forth. This case is either about a system, a lack of it, or the failure to make sure that it operated properly. " The Recorder did not there indicate whether he was accepting Mr Collins' submission. It seems to me to be irrelevant so far as the issues that the Recorder had to decide. Finally, in paragraph 20, the Recorder said this: "Interestingly enough the case of Cook deals with a hotel in Fuerteventura, the Claimant slipping on the dance floor and fracturing her wrist, and despite the Defendants' protestations that they did their best to inspect the dance floor, the disc jockeys gave warnings and so forth. In fact it was the judge's finding there was no system and no warning, whatever local standards prevail. The Claimant it is said by the Defendant failed to prove the prevailing local standards. So far as the judgment is concerned what in effect it said was that the Defendant completely failed to meet the standards which he pleaded he had maintained in its defence. This is exactly the same situation in this case. " The Recorder did not in terms deal with some of the defence evidence. In her witness statement Lisa Walters, who was the representative of the Appellant company in the resort, said this in paragraph 13: "In the event there was a spillage in the hotel it would be cleaned straight away. The hotel has a lot of cleaning staff cleaning and monitoring the public areas and they work well into the evening. There is always staff in the vicinity so if there was a spillage it would be reported and dealt with very quickly. The cleaning standards at the hotel are very good". In her witness statement Claire Yarwood, the quality co-ordinator of the Appellant company, said this in paragraph 11: "Drinks can be purchased in the restaurant but the hotel does not allow guests to take the drinks in or out of the restaurant as you are only allowed to purchase drinks in the restaurant. A member of staff stands at the entrance to the door to welcome the guest into the restaurant and they stop drinks being taken out. I understand that Mr Holden has alleged that guests were carrying drinks down stairs to the games room. This is incorrect. " I need not read further from that paragraph. In paragraph 12 she said this: "The hotel has housekeeping staff available throughout the day cleaning the public areas and they work well into the evening". And finally in paragraph 16 she said this: "First Choice has had guests staying at the hotel since its refurbishment in 2000 and • this is the only incident of its kind that I can recall of guests slipping on any of the stairs in the hotel. " Mr Collins emphasises the limits of the evidence of those witnesses so far as the practise at the hotel was concerned. Neither was in the hotel on the day of the accident. Neither could say that she had seen the stairs cleaned on that day. Neither could therefore say, submits Mr Collins, that there was on the day in question an adequate system in operation. He submitted (and accepted it was a point of pleading) that the Defendant had never raised in its defence that there was a safe system. In short he submitted that provided he succeeded on the complainant's behalf in proving that the accident had happened in the way she alleged then he was bound to succeed. It seems to me that the issues in the case, however precisely pleaded, were absolutely clear to both the claimant and to the Recorder. The way the Recorder dealt with them was not in the limited manner relied on by Mr Collins. It is not the approach that I shall adopt. In response to Miss Prager's submissions that an absurdly high standard was being set by the Recorder, Mr Collins submitted, first, that it was not, and, second, if it was, that it was unnecessary for him to go so far as setting such a standard. It was on the evidence clear, and he was entitled to find, that on the day in question there was no system and that therefore the Claimant should succeed. MY VIEW It seems to me this issue can be shortly put. Assuming the Claimant slipped on liquid as the Recorder found, has she proved on the balance of probability that in failing to have a system such as that adumbrated by the Recorder the hotel fell below the standards of safety of a Tunisian hotel. The Recorder appears to have found that there was a falling below the standards of safety, first because in England a failure to have such a system would self-evidently amount to a breach of duty, and, second, it did so in Tunisia for the following reasons. This was a four star hotel. Medical care in Tunisia was to a high standard. The Defendant itself was keenly interested in matters of safety. It could therefore be inferred that safety standards in Tunisia were to a high standard. On the basis of the report of the decision in Cook the Defendant had failed to prove that it had a reasonable system in operation. It seems to me that there are problems in the Recorder's analysis. I agree with Miss Prager when she submits that the standard set by him was unrealistically high, even assuming the accident had happened in England. There is no dispute but that the steps were safe. They were non-slip. There was a handrail. There was, (although the Claimant said she was unaware of it) available a lift. Although on the evidence people might on occasion carry drinks up or down the steps, there was no proper basis to find that there was a recognised spilling hazard to the extent the Recorder found. There was no question, of children spilling drinks when going down to a games room as originally alleged. The only reason a person was at the bottom of the stairs was to stop people bringing drinks into the restaurant for reasons of profit and not safety. There was nothing to suggest that drink frequently was spilt. There had never on the evidence been an accident before. Although the witnesses could not speak as to the precise system that day the evidence was that the hotel was regularly cleaned. It seems to me that to require the person at the bottom of the stairs to check in the way the Recorder indicated was to set too high a standard. Be that as it may, it is for the Claimant to prove that the Defendant fell short of the standards applicable in Tunisia. As I have said, no evidence in that regard was adduced by the Claimant. The matters relied upon by the Recorder to which I have just referred do not in my view substantively help in that regard. In short it seems to me that this appeal should succeed. (11: 55 am)

FIRST SECTION CASE OF GENI SRL v. ITALY (Application no. 32662/96) JUDGMENT STRASBOURG 19 December 2002 FINAL 19/03/2003 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 Geni Srl v. Italy, The European Court of Human Rights (First Section), sitting as a Chamber composed of: MrC.L. Rozakis, President,MrsF. Tulkens,MrG. Bonello,MrP. Lorenzen,MrsN. Vajić,MrsS. Botoucharova, judges,MrG. Raimondi, ad hoc judge,and Mr S. Nielsen, Deputy Section Registrar, Having deliberated in private on 5 December 2002, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 32662/96) against the Italian Republic lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Geni Srl (“the applicant”), an Italian company, on 26 July 1996. 2. The applicant was represented by Mrs C. M. Cialdini, a lawyer practising in Rome. The Italian Government (“the Government”) were represented by their Agent, Mr U. Leanza, and by their co-Agent, Mr V. Esposito. 3. The applicant complained under Article 1 of Protocol No. 1 that it had been unable to recover possession of its flat within a reasonable time. Invoking Article 6 § 1 of the Convention, it further complained about the length of the eviction proceedings. 4. The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11). 5. The application was allocated to the Second Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1 of the Rules of Court. Mr V. Zagrebelsky, the judge elected in respect of Italy, withdrew from sitting in the case (Rule 28). The Government appointed Mr G. Raimondi as ad hoc judge to sit in his place (Article 27 § 2 of the Convention and Rule 29 § 2). 6. On 22 March 2001 the Court declared the application admissible. 7. On 1 November 2001 the Court changed the composition of its Sections (Rule 25 § 1). This case was assigned to the newly composed First Section. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 8. The applicant is the owner of an apartment in Rome, which it had let to L.L.D.L. 9. In a registered letter of 20 November 1984, the applicant informed the tenant that it intended to terminate the lease on expiry of the term on 31 December 1986 and asked her to vacate the premises by that date. 10. On 5 June 1986, it served a notice to quit on the tenant, but she refused to leave. 11. In a writ served on the tenant on 12 June 1986, the applicant reiterated its intention to terminate the lease and summoned the tenant to appear before the Rome Magistrate. 12. By a decision of 30 June 1986, which was made enforceable on 20 November 1986, the Rome Magistrate upheld the validity of the notice to quit and ordered that the premises be vacated by 31 December 1987. 13. On 17 March 1990, the applicant served notice on the tenant requiring her to vacate the premises. 14. On 9 June 1990 it served notice on the tenant informing her that the order for possession would be enforced by a bailiff on 15 June 1990. 15. Between 15 June 1990 and 25 September 1996 the bailiff made thirty-two attempts to recover possession. Each attempt proved unsuccessful, as, under the statutory provisions providing for the staggering of evictions, the applicant was not entitled to police assistance in enforcing the order for possession. 16. On 6 May 1997, the applicant sold the apartment. II. RELEVANT DOMESTIC LAW 17. The relevant domestic law is described in the Court's judgment in the case of Immobiliare Saffi v. Italy [GC], no. 22774/93, §§ 18-35, ECHR 1999-V. THE LAW I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 AND OF ARTICLE 6 § 1 OF THE CONVENTION 18. The applicant complained that it had been unable to recover possession of its flat within a reasonable time owing to the lack of police assistance. It alleged a violation of Article 1 of Protocol No. 1 to the Convention, which provides: “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.” 19. The applicant also alleged a breach of Article 6 § 1 of the Convention, the relevant part of which provides: “In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...” 20. The Court has on several previous occasions decided cases raising similar issues as in the present case and found a violation of Article 1 of Protocol No. 1 and Article 6 § 1 of the Convention (see Immobiliare Saffi, cited above, §§ 46-66; Lunari v. Italy, no. 21463/93, 11 January 2001, §§ 34-46; Palumbo v. Italy, no. 15919/89, 30 November 2000, §§ 33-47). 21. The Court has examined the present case and finds that there are no facts or arguments from the Government, which would lead to any different conclusion in this case. The Court refers to its detailed reasons in the judgments cited above and notes that in this case the applicant had had to wait for approximately six years and eleven months from the first attempt of the bailiff and then it sold the flat. 22. Consequently, there has been a violation of Article 1 of Protocol No. 1 and of Article 6 § 1 of the Convention in the present case. II. APPLICATION OF ARTICLE 41 OF THE CONVENTION 23. 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. Pecuniary damage 24. The applicant sought reparation for the pecuniary damage it had sustained, which it put at 385,000,000 Italian lire (ITL) [198,835.91 euros (EUR)], the sum of ITL 150,000,000 [EUR 77,468.53] being the compensation for the unavailability of the flat, the sum of ITL 165,000,000 [EUR 85,215. 39] being the price of the sale of the flat reduced by 30%, the sum of ITL 50,000,000 [EUR 25,822.84] being the loss of rent for the period from 31 December 1986 (the term of expiration of the lease) to 6 May 1997 (the date of the sale), the sum of ITL 20,000,000 [EUR 10,329.14], being the legal costs and expenses incurred in the domestic proceedings and before the Court. 25. The Government stressed that the applicant had failed to adduce evidence of any pecuniary damage sustained. As regards the costs incurred in the domestic proceedings, the Government argued that the costs of the proceedings on the merits were not related to the alleged violations and that the costs incurred during the enforcement stage were due only for the period that was regarded as being a disproportionate interference with the applicant's right of property. 26. The Court considers that the applicant must be awarded compensation for the pecuniary damage resulting from the loss of rent (see Immobiliare Saffi, cited above, § 79). Having regard to the means of calculation proposed by the applicant, the Court, in the light of the evidence before it and the period concerned, decides to grant EUR 7,000 under this head. As regards the costs of the enforcement proceedings, the Court considers that they must be reimbursed in part (see the Scollo v. Italy judgment of 28 September 1995, Series A no. 315-C, p. 56, § 50). It considers, however, that only the costs relating to the delay in the eviction must be reimbursed and, accordingly, decides to award the applicant the sum of EUR 2,000. B. Non-pecuniary damage 27. The applicant claimed ITL 50,000,000 for the non-pecuniary damage. 28. The Government submitted that no compensation under this head is possible, the applicant being a company and not a private individual. 29. The Court recalls that it has stated in its Comingersoll judgment that it cannot exclude the possibility that a commercial company may be awarded compensation for non-pecuniary damage (Comingersoll S.A. v. Portugal [GC], no. 35382/97, ECHR 2000-IV, § 35). Whether an award should be made will depend on the circumstances of each case. In the circumstances of the present case, however, the Court finds that it has not been established that the applicant company has suffered any non-pecuniary damage as a result of the duration of the eviction procedure. It therefore dismisses this claim. C. Legal costs 30. The applicant has also asked for compensation for legal costs in the proceedings before the Court (see § 24 above). 31. According to the Court's case-law, an award can be made in respect of costs and expenses only in so far as they have been actually and necessarily incurred by the applicant and are reasonable as to quantum (see, for example, Bottazzi v. Italy [GC], no. 34884/97, § 30, ECHR 1999-V). In the present case, on the basis of the information in its possession and the above-mentioned criteria, the Court considers that EUR 2,000 is a reasonable sum and awards the applicant that amount. D. Default interest 32. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention; 2. Holds that there has been a violation of Article 6 § 1 of the Convention; 3. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, the following amounts: (i) 9,000 EUR (nine thousand euros) for pecuniary damage; (ii) 2,000 EUR (two thousand euros) for legal costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 4. Dismisses the remainder of the applicant's claim for just satisfaction. Done in English, and notified in writing on 19 December 2002, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Søren NielsenChristos Rozakis Deputy RegistrarPresident

FOURTH SECTION CASE OF RUSNÁKOVÁ v. SLOVAKIA (Application no. 63999/00) JUDGMENT (Friendly settlement) STRASBOURG 27 May 2003 This judgment is final but it may be subject to editorial revision. In the case of Rusnáková v. Slovakia, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: SirNicolas Bratza, President,MrM. Pellonpää,MrsV. Strážnická,MrR. Maruste,MrS. Pavlovschi,MrL. Garlicki,MrJ. Borrego Borrego, judges,and Mr M. O’Boyle, Section Registrar, Having deliberated in private on 6 May 2003, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 63999/00) 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 a Slovakian national, Mrs Renáta Rusnáková (“the applicant”), on 26 November 2000. 2. The Government of the Slovak Republic (“the Government”) were represented by Mr P. Vršanský, their Agent. 3. On 18 June 2002 the Fourth Section decided to communicate 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. 4. On 14 and 18 February 2003, the Government and the applicant respectively submitted formal declarations accepting a friendly settlement of the case. THE FACTS 5. On 24 February 1999 the applicant claimed before the Prešov District Court that the maintenance which her former husband had been earlier ordered to pay in respect of their two minor children should be increased. 6. The first hearing in the case was scheduled for 24 May 2000. 7. On 1 June 2000 the Constitutional Court found that the Prešov District Court had violated the applicant’s constitutional right to have her case examined without undue delay. In its finding, the Constitutional Court held, in particular, that what was at stake for the applicant required special diligence and that the District Court had remained inactive for approximately fifteen months. The Constitutional Court considered irrelevant that the delay was due to the heavy workload of the judges. 8. On 8 November 2000 the Prešov District Court increased the maintenance due by the applicant’s former husband with retroactive effect. 9. The applicant appealed and claimed that the increase awarded should be higher. 10. On 31 May 2001 the Prešov Regional Court delivered a judgment by which it increased the sums which the applicant’s former husband was to pay. The Regional Court’s judgment was served on the applicant on 25 July 2001. THE LAW 11. The applicant complained that the length of the proceedings had been incompatible with the “reasonable time” requirement, provided in Article 6 § 1 of the Convention, which reads as follows: “In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal...” A. Admissibility 12. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. The Court therefore declares this complaint admissible. B. Solution reached 13. On 14 February 2003 the Court received the following declaration signed by the Agent of the Government: “I declare that, with a view to securing a friendly settlement of the above-mentioned case, the Government of the Slovak Republic offer to pay 30,000 (thirty thousand) Slovakian korunas to Mrs Renáta Rusnáková. This sum is to cover any pecuniary and non-pecuniary damage as well as costs, and it will be payable within three months from the date of delivery of the judgment by the Court pursuant to the Article 39 of the European Convention on Human Rights. This payment will constitute the final resolution of the case. This declaration does not entail any acknowledgment by the Government of a violation of the European Convention on Human Rights in the present case. The Government further undertake not to request that the case be referred to the Grand Chamber under Article 43 § 1 of the Convention.” 14. On 18 February 2003 the Court received the following declaration signed by the applicant: “I note that the Government of the Slovak Republic are prepared to pay me the sum of 30,000 (thirty thousand) Slovakian korunas covering pecuniary and non-pecuniary damage and costs with a view to securing a friendly settlement of the above-mentioned case pending before the European Court of Human Rights. I accept the proposal and waive any further claims against the Slovak Republic in respect of the facts of this application. I declare that this constitutes a final settlement of the case. This declaration is made in the context of a friendly settlement which the Government and I have reached. I further undertake not to request that the case be referred to the Grand Chamber under Article 43 § 1 of the Convention after delivery of the Court’s judgment.” 15. The Court takes note of the agreement reached between the parties. It is satisfied that the settlement is based on respect for human rights as defined in the Convention or its Protocols (Article 37 § 1 in fine of the Convention and Rule 62 §§ 3 and 4 of the Rules of Court). 16. Accordingly, the case should be struck out of the list. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the application admissible; 2. Decides to strike the case out of the list; 3. Takes note of the parties’ undertaking not to request a rehearing of the case before the Grand Chamber. Done in English, and notified in writing on 27 May 2003, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Michael O’BoyleNicolas BratzaRegistrarPresident

Mr Justice Cranston: Introduction This is an application for permission to appeal from a decision of Senior Master Whitaker on 20 July 2011, when he refused the application of J Preston and Sons Ltd ("the appellant") to strike out a claim as an abuse of process. The claim is for damages and is brought by Julie Hurst on behalf of the estate of her father, Gordon Anderson. It arises out of his death from lung cancer. The claim alleges that the death was caused, in part, by her father's exposure to asbestos dust during his employment with the appellant between 1949 and 1988. J Preston and Sons Ltd admit that Mr Anderson was exposed to asbestos dust negligently or in breach of duty in the course of his employment. Their defence revolves around causation. In outline the case before the Master concerned whether the behaviour of Mr Anderson's then solicitor created a substantial risk that a fair trial of that issue was no longer possible. Background Mr Gordon Anderson was a pipefitter. He was in that job from about 1949 to 1988, employed by a company called J Preston & Sons Ltd of Chorley, and later by J Preston & Sons (Mechanical Services) Ltd. On his account, set out in a witness statement, he was exposed to asbestos dust and fibre during that employment. The company was awarded contracts for installing new boilers at several sites. He and his fellow employees had to remove asbestos lagging from the old boilers and apply asbestos to the newly installed boilers. Mr Anderson's account continued that from the early 1960's until 1988 the company sent him to work at an ICI plant at Cleverley, where he had to replace pipes and in the process strip off asbestos. Other pipe fitters were doing the same and there was much dust around. He thought it was blue asbestos (which the appellant denies). In the late 1970s, on his account, ICI took action when the dangers of asbestos became widely known and he did not knock off lagging any more. He had been undertaking that type of work at ICI for some 10-12 years. In his estimate, when working for J Preston & Sons companies, twenty percent of his time was spent on removing asbestos lagging and its reapplication. After 1988 Mr Anderson worked for an engineering company as a manager and was not exposed to asbestos. In early January 2008 Mr Anderson saw his GP, who recorded that he had an atypical chest pain and coughed a little phlegm. As a result the GP referred Mr Anderson for a chest X-ray at the Blackpool Victoria Hospital. The X-ray on 18 January 2008 detected a pattern which seemed to identify early pulmonary fibrosis. The GP told Mr Anderson about this possible diagnosis on 24 January and referred him to the Department of Respiratory Medicine at the hospital. There he was seen by a registrar on 7 February, who wrote to the GP: "Of note he is an ex-smoker having stopped smoking 13 months ago but unfortunately still has a 60-pack year history. He used to work in plumbing and pipefitting and had regular exposure to asbestos in the past. He tells me he was often involved in breaking down the lagging on boilers, which caused a thick fog of asbestos in the air with no protection … There is a possible early fibrosis …" On 28 February 2008 Mr Anderson had a CT scan at the hospital. It showed non-specific pulmonary fibrosis and some right hemidiaphragmatic pleural plaques, suggestive of previous asbestos exposure. There were no features indicating malignancy. The matter was then discussed by the hospital's multidisciplinary team for lung disease. In late March it concluded that Mr Anderson had mild sub-pleural fibrosis and calcified plaques, which would fit with his having asbestosis. In late April the consultant saw Mr Anderson and explained that the diagnosis was asbestosis and Mr Anderson might qualify for compensation. Mr Anderson made an initial inquiry of Mr Craig Howell, then a solicitor with Oliver & Co, in late May 2008. To Mr Howell it was a possible asbestos case, but before he could enter a conditional fee agreement with Mr Anderson it was necessary to clarify the diagnosis and the employer. Mr Howell requested that Mr Anderson sign forms of authority to access the medical records. On 13 June he wrote to Mr Anderson for the forms and to J Preston & Sons Ltd for details of Mr Anderson's employment. On 16 June 2008 Willis Ltd wrote to explain the corporate reorganisations involving the appellant and also that Eagle Star held some employer's liability policies of insurance. Mr Anderson returned the requisite forms. On 24 June 2008 Mr Howell applied for Mr Anderson's medical records and his Inland Revenue schedule to evidence his employment. Mr Howell received the medical notes from the Blackpool Victoria Hospital in August 2008 and concluded that he was dealing with a case of mild asbestosis. In early September Mr Howell undertook further work on Mr Anderson's employment history. On 9 September Mr Anderson signed a conditional fee agreement and gave a draft witness statement. On 6 March 2009 inquiries at Zurich Insurance plc ("Zurich") from November 2008 produced an apologetic but a positive response about insurance cover for Mr Anderson's former employer. On 21 April 2009 Mr Howell sent an "Urgent-Asbestos Related Disease Claim" to Zurich Insurance plc, which tracked the circumstances of Mr Anderson's exposure to asbestos set out in his draft witness statement, included the Inland Revenue schedule of Mr Anderson's employment history, made allegations of negligence and breach of duty and stated that Mr Anderson was to be referred to an expert doctor who would have full access to the medical records. There is a letter from Zurich dated 16 June 2009 requesting, inter alia, Mr Anderson's exposure history and the Inland Revenue schedule. Zurich said that it did not regard a joint expert as appropriate but reserved the right to instruct its own medical expert. Mr Howell says that he never received that letter, which the appellant accepts. Meanwhile, in April Mr Howell had instructed Dr Barber, a consultant respiratory physician. His examination of Mr Anderson occurred on 17 July 2009. Before Dr Barber's report was available Mr Anderson signed his witness statement. Then on 22 August Mr Anderson told Mr Howell that he had undergone a biopsy just under a week earlier and his GP had informed him that he had lung cancer. Mr Howell then wrote to the GP for up to date records, to forward to Dr Barber. Dr Barber's report, dated 11 September, contained a detailed occupational history, which included an estimate by Mr Anderson that he spent about 20 percent of his work from 1949 to the late 1970s handling asbestos in dusty conditions. Dr Barber concluded that "there has been ample cumulative exposure to confer a risk of all asbestos related diseases". He further commented that investigations "have included detailed pulmonary function studies and high resolution CT scanning which have confirmed interstitial lung fibrosis with absolute certainty …" Using the employment history which he took from Mr Anderson, Dr Barber concluded, on the balance of probabilities, that the lung fibrosis was asbestos-related, i.e. was asbestosis. If, as he suspected, Mr Anderson also had lung cancer, the overwhelming probability in Dr Barber's opinion was that it was a consequence of his exposure to occupational asbestos, along with his smoking history. On 9 October Mr Howell wrote a letter to Zurich marked "urgent", informing them of the presence of lung cancer and that there had been no response to his letter of 21 April. No response having been received from Zurich Mr Howell wrote again on 28 October. Those letters led to the appellant's solicitors, Keoghs, being instructed. They wrote to Mr Howell on 12 November, requesting a copy of Mr Anderson's witness statement regarding his exposure history and his up to date medical records. Mr Howell sent an Inland Revenue schedule of employment, and some medical records, but not the witness statement. A further letter from Keoghs, requesting Mr Anderson's witness statement, went unanswered. Mr Howell had instructed counsel to advise on the adequacy of Mr Anderson's witness statement before disclosing it. On 16 December Dr Barber confirmed his diagnosis of lung cancer and the part played by asbestos in causing it. Julie Hurst contacted Mr Howell on 18 December to inform him that Mr Anderson had gone into a hospice and was near the end of his life. Dr Barber's supplementary medical report in early January 2010 said that Mr Anderson could not be expected to live beyond Spring 2010. In fact Mr Anderson died on 24 January 2010. Again Julie Hurst telephoned Mr Howell's secretary with the information and also told her that there would be a post mortem. That was conducted on 29 January. On an examination of Mr Anderson's lungs and pleura, the consultant histopathologist found lung cancer in the right lung. The cause of death was identified as lung cancer and coronary heart disease. There was no mention of asbestosis. Mr Howell had written to Mr Anderson's widow on 28 January, informing her that the claim now needed to be pursued by the executor and asking if the coroner was involved. Keogh's letter to Mr Howell on 19 February, chasing up to date medical records and the witness statement, went unanswered. A further letter of 23 March led Mr Howell to inform Keoghs that Mr Anderson had died. That, he said, explained the delay in replying. Keoghs immediately wrote to enquire whether there would be an inquest into Mr Anderson's death. In a supplementary report dated 27 May 2010 Dr Barber reviewed the post-mortem report. He concluded that no confidence could be placed in the pathologist's report because it had not addressed the clear evidence of asbestosis during Mr Anderson's life. No attempt had been made on autopsy to confirm that diagnosis either microscopically or histologically. Dr Barber commented that the fact remained that Mr Anderson undoubtedly had asbestosis. Mr Peter Deary was the expert instructed by Mr Howell to calculate the asbestos dose Mr Anderson had sustained. In his report of 5 June 2010, Mr Deary cautioned about the paucity of evidence, since there were no available results from sampling asbestos dust, and because the exposure went back over 50 years. Working from Mr Anderson's statement, Mr Deary calculated that Mr Anderson's asbestos dose from 1945 to 1961 was 100 fibres/ml-weeks. He then assumed that the ICI work in removing asbestos lagging from pipes occupied half a day a week, over the 13 years from 1961-1974, yielding an exposure period of 312 days and a calculation of 3120 fibres/ml-weeks. It was not until August 2010 that Keoghs were informed of the post mortem findings. The claim was issued on 11 October 2010. The defence was served a month later. In late December 2010 Keoghs applied on behalf of the appellant to strike out the claim as an abuse of process. Strike out application and the Master's decision As formulated by Mr Rawlinson QC for the hearing before the Master, the basis of the strike out application was that there was a substantial risk that a fair trial was no longer possible and thus the claim constituted an abuse of process. The acts complained of were those of Mr Anderson's legal advisers. They were four fold: first, they delayed serving Mr Anderson's witness statement until after he died; secondly, they did not serve Dr Barber's report in a timely manner; thirdly, they failed to inform the appellant about the date of the inquest; and fourthly, they took no steps to ensure the preservation of histopathological samples by the coroner's pathologist: para [11] of the Master's judgment. The appellant's submission was that on the legal authorities, when persons with lung cancer claimed compensation for asbestosis they had to prove that an exposure to asbestos had more than doubled the existing risk of developing lung cancer: cf. Sienkiewicz v Greif (UK) Ltd; Willmore v Knowsley Metropolitan Borough Council [2011] UKSC 10; [2011] 2 AC 229. That could be done in various ways. First, a claimant could show the presence of asbestosis. In this case Dr Barber diagnosed asbestosis but the pathologist did not report fibrosis. Since no samples were secured the appellant had lost a potential defence that there was none. Secondly, a claimant could establish a sufficient fibre base or number of asbestos bodies within a fixed volume of lung tissue. In this case the possibility of excluding non asbestos related fibrosis was lost because there were no samples enabling the appellant to conduct its own histopathological review to check for fibres or bodies. Thirdly, a claimant could advance a history of sufficient exposure to asbestos which could be corroborated by an expert. In this case Mr Anderson's witness statement was necessarily impressionistic. As to Mr Deary's expert report, not only did it post-date Mr Anderson's death, it also contained a number of errors, for example, assuming that Mr Anderson had been at ICI for 13 years. By not disclosing Mr Anderson's witness statement before his death, the appellant was deprived of the opportunity of questioning Mr Anderson in writing or on commission. Thus the appellant's submission was that it was being asked to accept the uncorroborated version of exposure advanced by Mr Anderson before his death without the ability to cross examine him. They were also being asked to accept the estimate given by Mr Deary of how many fibre years exposure Mr Anderson underwent even though this assessment contained a guess (half a day a week) as to how long one job took. There was no evidence of that in the witness statement and Mr Anderson's solicitors never asked him to clarify. The appellant simply had to accept that Mr Anderson exhibited fibrosis, as referred to by Dr Barber. Yet Dr Barber's report was obtained in breach of the Pre-Action Protocol for Disease and Illness Claims in that no option was given to the appellant to consider the joint instruction of an expert. Fibrosis had not been investigated at the post mortem. In terms of the legal tests the appellant had simply to assume that there was a sufficiently high fibre count so as to more than double the risk. The claimant's solicitors ignored repeated requests for witness evidence and chose to keep the appellant in the dark about first, the imminence of Mr Anderson's death, secondly, his death, thirdly, the post mortem and fourthly, the failure to obtain samples at the post mortem. In response to these submissions the Master reviewed the legal authorities and then stated what he understood to be the test for a strike out: "10 The basic principle is that in order to be able to apply the sanction of strike out, I have to find, first of all, that there was conduct amounting to abuse of process and secondly in addition, that there is a substantial risk that there cannot be a fair trial and that the trial would be unsatisfactory. I then have to decide whether the only appropriate sanction is the striking out of the claimant's statement of case." The Master then isolated what he thought were the two major points in the case. First, nothing was done by Mr Howell after he found out in August 2009 that this was not a mild asbestos case, but an asbestos induced lung cancer case, to ensure that better evidence was taken from Mr Anderson as to his exposure. Nor was the appellant put in a position to obtain that information from Mr Anderson because at no time was Mr Howell keeping himself up to date with Mr Anderson's state of health. In addition, Mr Howell was not passing on any such information to the appellant. It knew nothing more than that Mr Anderson had been diagnosed with lung cancer. The appellant was not told of Mr Anderson's death or that there was to be a post mortem so that the coroner could be requested to take lung samples for histopathological examination. Mr Howell also failed to inform the coroner of the need for samples, by alerting the family that this was a potential asbestos induced lung cancer case. The Master then turned to the facts. Mr Anderson's accepted exposure to asbestos in breach of duty and that his medical notes, and the diagnosis of asbestos, should have been available to the Coroner's pathologist: [18]-[19]. In the judgment of the Master, in accordance with the relevant rules and guidance that should have led to tissue samples being kept by the pathologist: [19]. However, there was a clear diagnosis of asbestosis by the hospital, which was confirmed by Dr Barber: [22]. As to the coroner's pathologist not discovering fibrosis, the Master thought it was questionable that any regard had been paid to Mr Anderson's medical records, given the recorded history of asbestos exposure and the diagnosis of asbestosis recorded in them: [25]. In the Master's judgment the appellant had not sufficiently taken on board that at the time of the lung cancer diagnosis there had been a firm diagnosis of asbestosis and a substantial exposure to asbestos dust in his employment. If a person was diagnosed with lung cancer, that was ipso facto taken to be caused to the extent necessary to recover damages in law from the asbestos exposure: [26]. Whatever Mr Howell did or did not do there was never any real prospect of the appellant persuading the Master, on the balance of probability, that Mr Anderson did not have asbestosis and that therefore his lung cancer was not asbestos related. "The diagnosis of asbestosis was firm and persuasive and the history was one of substantial exposure in well known circumstances and for good measure the deceased also exhibited pleural plaques": [28]. The Master considered what the appellant had submitted were Mr Howell's failures. At the outset he rejected the submission that any of the alleged failures meant there was a substantial risk that there could not be a fair trial: [28]. What Mr Howell conceded in cross-examination was of no assistance. Even if Mr Howell had fallen short there was no real prospect of the appellant showing that Mr Anderson did not suffer from asbestosis and that there was a substantial risk of a fair trial not being possible: [29]. As to the alleged flaws on Mr Howell's part, the Master first considered the pathologist's not retaining lung tissue samples. Mr Howell could not be faulted in failing to anticipate that, given the medical records and the duty on pathologists under rule 9(1) of the Coroners Rules 1984 to preserve material which in their opinion bear on the causes of death. If the appellant had been informed of the impending post-mortem it was a matter of debate whether its legal representatives would have written to the coroner. "I would have though it likely that they would have anticipated that the coroner's pathologist would do his job": [31]. As to, secondly, Mr Howell's failure to forward Mr Anderson's witness statement once his death was known to be imminent, the Master concluded that that should have been done. However, that was to enable the appellant to make the inquiries it thought appropriate and did not necessarily bear on the possibility of a fair trial: [32]. Mr Howell could have been criticised if he had not forwarded the medical report on lung cancer if the appellant had requested it, but that was not what had happened: [33]. The appellant's case In advancing the appellant's case before me Mr Rawlinson QC submitted that the Master had applied the wrong legal test. He asked whether the conduct of Mr Anderson's solicitor amounted to an abuse of the process of the court as a separate and anterior question to considering whether such an abuse created a substantial risk of an unfair trial. The correct test was to consider whether, in all the circumstances, the conduct complained of amounted to an abuse because it created the substantial risk of an unfair trial. Having set himself the wrong test, Mr Rawlinson QC continued, the Master had failed to make any clear finding as to whether there had been conduct amounting to an abuse. Rather, he simply dismissed the appellant's application because the conduct complained of neither constituted a breach of rule or other order, nor created prejudice to the appellant. In Mr Rawlinson QC's submission the Master further erred because he found the absence of abuse using the logical progression: first, the lung cancer would be deemed to have been caused by asbestos exposure if asbestosis was present in Mr Anderson's lungs prior to death (a point with which the appellant agreed).; secondly, asbestosis was diagnosed in the lungs prior to death; and thirdly, that diagnosis was unassailable and hence there could never have been a defence to this claim. In fact, submitted Mr Rawlinson QC, the diagnosis of asbestosis in life was properly disputable. The conduct complained of caused prejudice to the appellant in that it prevented it from properly investigating that diagnosis. Thus the finding that the diagnosis was unassailable, if true, arose only as a direct result of the prejudice caused by the conduct about which the appellant complained. Mr Rawlinson QC contended the Master made no formal determination whether Mr Anderson's case was in breach of the rules or whether it needed to be in order for the strike out to be ordered. In fact there was no need for any breach of a rule to be proven for the matter to stand struck out if a substantial risk to a fair trial was created. In any event the Master failed to give adequate consideration to the breaches of the Pre-Action Protocol for Disease and Illness Claims and the practice direction controlling asbestos related cancers (CPR 3D), which places a duty on defendants to act with celerity and which thereby creates concomitant duties of openness on the part of a claimant. Having terminated his analysis upon the finding of no prejudice accruing to the appellant, the Master failed to exercise his judicial discretion in considering whether or not the abuse of process merited striking out the claim. Thus he failed properly to hold that the prejudice created could not be remedied otherwise than by striking out the claim. In Mr Rawlinson QC's submission, the Master wrongly made no reference to the many clear concessions obtained from Mr Howell in cross-examination. For example, Mr Howell accepted that he knew by August 2009 that Mr Anderson had been diagnosed with lung cancer but did nothing to contact the family until they informed him that Mr Anderson had been removed to a hospice. This failure arose from his assumption that lung cancers were relatively indolent cancers notwithstanding that he had in his possession medical records which showed that from September Mr Anderson was being reported as being very restricted in what he could do. It meant that it changed the way Mr Howell gathered evidence from what he would have done if he had been aware of Mr Anderson's deteriorating health. Mr Howell accepted that he would have obtained fuller evidence from Mr Anderson as to the level of exposure to dust. That in turn would have permitted an expert to seek to carry out a qualitative assessment of exposure during Mr Anderson's life. In cross-examination Mr Howell was asked about awaiting counsel's response before disclosing the witness statement to the appellant. Because counsel had not been told of the urgency the witness statement was available to be shown to the appellant only after Mr Anderson's death. That robbed the appellant of the chance to cross-examine Mr Anderson prior to his death. Counsel: "… Had you been aware that this lung cancer was in fact close to killing your client you would have dealt with this as if it were Mesothelioma wouldn't you?" Mr Howell: "Yes." When told that his client was close to death on 18 December 2009 Mr Howell did not explain to the family the need for post mortem samples to be taken. In failing to do this, he robbed the appellant of the opportunity to ask the coroner whether samples were being retained. Equally the appellant was not told about the imminent death or shown Dr Barber's report and so was not able to ask the coroner directly to keep samples. In cross-examination Mr Howell accepted that the witness statements should have been disclosed prior to death. Had he done so the appellant would have referred it to an expert, who would have posed questions relevant to determining quantitative exposure level. The Master made no express determination as to whether these matters raised had been proved and were capable of constituting prima facie grounds for considering striking out of the claim. Instead, submitted Mr Rawlinson QC, the Master seemed to have considered it to be a complete answer to the application that there had been, in life, a diagnosis of asbestosis. The appellant had not failed to take on board the diagnosis of asbestosis made during Mr Anderson's life but repeatedly attacked it. The pathologist had not noted fibrosis post mortem and thus it was possible that it did not exist. Had the appellant been informed that Mr Anderson had died they would have sought to ensure the retention of lung samples. Both the hospital diagnosis and Dr Barber's conclusion were reliant on Mr Anderson's own account of his exposure and there was no reason to accept that it was correct. The Master stated that the asbestosis was confirmed by biopsy, but that was not correct. The Master's reference to pleural plaques was off beam because plaques can be caused by very small exposures to asbestos dust. Thus they cannot have constituted evidence of a certain level of exposure to asbestos capable of causing lung cancer. It was wholly wrong for the Master to conclude since Mr Anderson had been diagnosed "firmly" with asbestosis there could be no prejudice arising out of the solicitor's failures. No abuse of process affecting fair trial The power to strike out is contained in CPR 3.4(2). "The court may strike out a statement of case if it appears to the court … (b) that the statement of case is an abuse of courts process or is otherwise likely to obstruct the just disposal of the proceedings. (c) that there has been a failure to comply with a rule, practice direction or court order." The court's inherent jurisdiction is preserved by CPR 3.4(5). In Logicrose v Southend United FC (1988) Times LR 5th March, Millett J dealt with an application to strike out because a document was not given on disclosure when it should have been disclosed. That could have been punished as contempt of court. The relevant document was disclosed as a result of the threat of a striking out. Millett J held that conduct amounted to an abuse of the process of the court "which would render any further proceedings unsatisfactory and prevent the court from doing justice." Before the court took that serious step it needed to be satisfied that there was a real risk of that happening. In that case Millett J held that, the document having been disclosed, a fair trial was possible. Millett J's observations were adopted in Arrow Nominees Inc v Blackledge [2001] BCC 59; [2002] BCLC 167. There shareholders of a company presented a petition under section 459 of the Companies Act 1985 complaining of unfairly prejudicial conduct of its affairs by the majority shareholder. One of the minority shareholders, Arrow Nominees, was controlled by a person who, on disclosure, revealed certain documents he had forged. The majority shareholder applied to strike out the petition as an abuse of process. The judge refused the application. During the trial it was shown that other documents had been forged. The judge refused a further application to strike out. The Court of Appeal allowed the appeal on this point. It held that the judge ought not to have allowed the trial to continue. Chadwick LJ said: "[54] But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled – indeed, I would hold bound – to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke." Both Logicrose and Arrow Nominees make clear that if a court is to strike out for an abuse of process under CPR 3.4 (2)(b) there has to be an abuse of the court's processes such as to render any further proceedings unsatisfactory or to prevent the court from doing justice between the parties. The threshold is high for striking out under this head. Even if the court finds that there is an abuse of process it might exercise its discretion and adopt a less draconian course than striking out the claim since a fair trial is still possible. It is in that sense that I read what Mr Rawlinson QC criticised as the two stage test adopted by the Master. There might be a use of the court's process "for a purpose or in a way significantly different from its ordinary and proper use", as Lord Bingham CJ characterised abuse of process in Attorney General v Baker [2000] 1 FLR 759, but it must place the fairness of the trial in jeopardy for there to be a striking out. The threshold seems even higher for using the court's inherent power to strike out for an abuse of process: cf. Raja v Van Hoogstraten (No 9) [2008] EWCA Civ 1444; [2009] 1 WLR 1143. Mr Rawlinson QC criticised the Master's focus on whether there was a breach of any rule or practice direction in the conduct of Mr Anderson's case. The Practice Direction on Pre-Action Conduct requires that unless the circumstances make it inappropriate, before starting proceedings parties should exchange sufficient information about the matter to allow them to understand each other's position and to make informed decisions about settlement and how to proceed (para 6). Paragraph 7 provides that before starting proceedings the claimant should set out the details of the matter in writing by sending a letter before claim to the defendant, and the defendant should give a full written response within a reasonable period. The Pre-Action Protocol for Disease and Illness Claims requires the claimant's letter before claim to include a clear summary of the facts on which the claim is based. The defendant must then provide a reasoned answer within 90 days. There is Practice Direction 3D for Mesothelioma claims but this is not relevant to cases such as Mr Anderson's. (Thus Mr Howell's answer in cross-examination about what he would have done if the case had been Mesothelioma, quoted earlier, takes the appellant's case no further). In Mr Anderson's case there was the detailed pre-action protocol letter on 21 April 2009 marked "Urgent-Asbestos Related Disease Claim". It contained information drawn from Mr Anderson's witness statement and information about Mr Anderson's other employment, as well as the allegations and the intention to obtain an expert medical report. It complied with paragraph 6 of the Pre-Action Conduct Practice Direction and the Pre-Action Protocol for Disease and Illness. The response to that from Zurich on 16 May 2009 did not reach Mr Howell. In any event it hardly complied with the requirements in the rules in terms of the response but simply requested information already given. Despite Mr Howell's chasing letters in October 2009, Zurich's next letter was in April 2010. Solicitors had become involved by November 2009 but they never provided a full response to the 21 April letter although they requested a copy of the witness statement. That the Master addressed the issue of a breach of the rules cannot be said, as Mr Rawlinson QC submitted, to have set himself on the wrong path. It was background to the appellant's arguments about the prejudice caused to it. The fact is that the 21 April 2009 letter set out Mr Anderson's case in considerable detail. If the other side had wanted clarification on any matters they could have requested it from that point. It will be recalled that Mr Howell's 9 October letter informed the appellant that it was a lung cancer case. The response was the request for the witness statement. All this places Mr Howell's behaviour in context when the appellant's representatives did not themselves comply as fully as they could have with the procedures. To establish that there was an abuse of process within CPR 3.4 (2)(b), Mr Rawlinson QC raised the various issues about Mr Howell's behaviour before the Master. All the allegations against Mr Howell were traversed. His cross-examination added nothing of substance and the Master was entitled to ignore it. First, it was said, Mr Howell did not send Mr Anderson's witness statement. There was no requirement in any rule or practice direction for the disclosure of the statement. The Master wisely noted that when a claimant is terminally ill it is desirable to send the witness statement. Here Mr Howell instructed counsel to advise in relation to the adequacy of the statement before disclosing it, a reasonable approach in a case where the appellant had been given a detailed account of exposure to asbestos in April 2009 and the appellant had provided no response or query in relation to that account. Then there were the various points made about the coroner and Mr Anderson's imminent death, such as the appellant employing an expert to calculate Mr Anderson's exposure to asbestos and examining Mr Anderson on commission about his exposure history. But Mr Anderson's exposure history was less important when there was the diagnosis of the treating doctors and Dr Barber's report. Moreover, there is an air of unreality in the submission that somehow the exposure history could be refined given that Mr Anderson's employment history went back to 1949. Mr Deary estimated a half day a week exposure, which seems reasonable in the circumstances. As to the failure to ensure that histopathological samples were preserved during the post mortem, the Master dealt with this, rightly in my view, by concentrating on the omissions of the pathologist. Mr Howell could not be faulted for anticipating that, where asbestosis had been diagnosed in life and there was in the medical notes a well documented history of exposure to asbestos dust, the pathologist would retain appropriate lung tissue samples. The Master referred to the Coroners' Rules 1984. He also noted the guideline on autopsy procedure produced by the Royal College of Pathologists, which states that the pathologist performing the autopsy should ascertain the relevant medical history. Thus Mr Howell was not to be criticised for failing to write to the Coroner or alerting the appellant to do so. As the Master observed, it was a matter of debate whether the appellant would have written to the Coroner if informed of the impending post mortem. The Master pungently expressed the point in his observation that it was highly likely that the appellant would have assumed that the Coroner's pathologist would do his job. Indeed, in the witness statement of the appellant's solicitor there is no assertion that the appellant would have contacted the Coroner if notified of the impending post mortem. That to my mind confirms the Master's conclusion. Finally, there was the Master's reasoning that in any event none of the complaints raised could prejudice a fair trial, because of the clear diagnosis of asbestosis in Mr Anderson's lifetime. In my view the Master was undoubtedly correct in this regard. Given that clear diagnosis there was no need to rely on Mr Anderson's exposure history or on any pathology samples. First, the multidisciplinary team for lung cancer at the Blackpool Victoria Hospital concluded in late March 2008 that, after examining Mr Anderson and conducting a chest x-ray and CT scan, his condition would fit asbestosis. The consultant advised him on 29 April that he had an asbestos related disease and that he could apply for compensation, hence Mr Anderson's instruction of Mr Howell. The only expert medical evidence before the Master was the report of Dr Barber, who interviewed and examined Mr Anderson and concluded (a) on the balance of probability that there was ample cumulative exposure to confer a risk of asbestos-related disease; (b) there was absolute certainty about interstitial lung fibrosis; (c) on the balance of probability he has asbestosis; and (d) if he had lung cancer the overwhelming probability was that it was also a consequence of his occupational asbestos exposure, along with smoking. The appellant did not adduce any medical evidence to dispute Dr Barber's conclusions. In their June 2008 letter Zurich had not indicated any intention to have their own expert examine Mr Anderson, nor did the appellants once they knew it was a lung cancer case in late 2009. In these circumstances the Master was entitled to draw conclusions based on Dr Barber's evidence, consistent as they were with the views of the hospital doctors who had been treating Mr Anderson. The only other medical evidence was from the pathologist who carried out the post-mortem but, as Dr Barber opined, he does not appear to have considered the medical records and the diagnosis of asbestosis contained in them to investigate that as a cause of death. The Master's error in relation to the biopsy was immaterial to all this. His reference to pleural plaques was correct, if irrelevant. In all the circumstances there was no abuse of process making a fair trial impossible. There was no error in the Master's conclusion to this effect. I dismiss the appeal.

Case T-272/02 Comune di Napoli (Italy) v Commission of the European Communities (European Regional Development Fund (ERDF) – Construction of an underground rail line in Naples (Italy) – Conclusion of Community financial assistance – Action for annulment – Legitimate expectations – Fairness – Statement of reasons) Judgment of the Court of First Instance (Fifth Chamber), 31 May 2005 Summary of the Judgment 1. Economic and social cohesion – European Regional Development Fund – Grant of Community financial assistance – Establishment of the legal and financial framework of the assistance in the Community decision – Beneficiary exceeding the expenditure initially provided for – No effect on the determination of the amount of the assistance (Council Regulation No 1787/84) 2. Economic and social cohesion – European Regional Development Fund – Grant of Community financial assistance – Amendment of the allocation of public expenditure intended for projects receiving assistance – Amendment not communicated to the Commission – Commission decision not adjusted to that amendment – Breach of the principle of the protection of legitimate expectations – None (Council Regulation No 1787/84) 1. Since the Commission Decision concluding the financial assistance granted from the European Regional Development Fund and the implied rejection of an application for correction of the account relating to other financial assistance granted from the same fund satisfies the principle that the legal and financial framework of each assistance must be strictly defined by the Community decision granting that assistance, the Commission is right to limit itself to paying the amount provided for by the latter, notwithstanding the fact that total public expenditure turns out to be higher than initially provided for. (see paras 46, 50) 2. Where there is Community financial assistance granted from the European Regional Development Fund, when it has not been shown that the relevant national authorities informed the Commission in due time, and with the detail that it was entitled to expect from the beneficiaries of such assistance, of the relevant amendments to the plans affected by the assistance, the absence of objections on the part of the Commission to those amendments cannot be taken to signify its acceptance that certain public expenditure was imputed to a project other than the one for which it was initially intended. It follows that, in order to challenge the lawfulness of the decision concluding the financial assistance, which impliedly rejects the application for correction of the account relating to the assistance, the beneficiary cannot rely on the protection of legitimate expectations since such a principle may be invoked only by an economic operator to whom an institution has given justified hopes. (see paras 62, 64) JUDGMENT OF THE COURT OF FIRST INSTANCE (Fifth Chamber) 31 May 2005 (*) (European Regional Development Fund (ERDF) – Construction of an underground rail line in Naples (Italy) – Conclusion of Community financial assistance – Action for annulment – Legitimate expectations – Fairness – Statement of reasons) In Case T-272/02, Comune di Napoli (Italy), represented by M. Merola, C. Tesauro, G. Tarallo and E. Barone, lawyers, applicant, v Commission of the European Communities, represented by L. Flynn and A. Aresu, acting as Agents, with an address for service in Luxembourg, defendant, APPLICATION for annulment of the decision of the Commission notified in a letter of 11 June 2002 to the Italian Ministry of Finance concluding the financial assistance granted from the European Regional Development Fund (ERDF) (Assistance No 850503066) and the implied rejection of an application for correction of the account relating to other financial assistance granted from the ERDF (Assistance No 850503067), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fifth Chamber), composed of P. Lindh, President, R. García-Valdecasas and J.D. Cooke, Judges, Registrar: J. Palacio González, Principal Administrator, having regard to the written procedure and further to the hearing on 6 July 2004, gives the following Judgment Facts 1 On 24 July 1981, the applicant approved plans submitted by Metropolitana di Napoli SpA for the construction of an underground rail line (Line 1) linking the Garibaldi and Colli Aminei stations in Naples (Italy). That line includes one particular section between the Dante and Vanvitelli stations and linking the Dante, Museo, Materdei, Salvator Rosa, Cilea and Vanvitelli stations. 2 By Decision C (88) 0166/038 of 16 February 1988 (‘the decision of 16 February 1988’), addressed to the Italian Republic, the Commission granted assistance from the European Regional Development Fund (ERDF), pursuant to Articles 20(2) and 22(4) of Council Regulation (EEC) No 1787/84 of 19 June 1984 on the European Regional Development Fund (OJ 1984 L 169, p. 1), as amended by Council Regulation (EEC) No 3641/85 of 20 December 1985 (OJ 1985 L 350, p. 40), for the completion of part of that project, namely the construction of the Museo-Cilea section and the Materdei station (‘Project No 850503067’). That assistance amounted to 50% of the eligible public expenditure in respect of Project No 850503067, (set at ITL 156 963 000 000), and therefore to a maximum of ITL 78 481 500 000 (‘Grant of Assistance No 850503067’). The total investment cost of that project was estimated at ITL 156 963 000 000. 3 By Decision C (89) 2178/021 of 21 December 1989 (‘the decision of 21 December 1989’), addressed to the Italian Republic, the Commission awarded, pursuant to the same provisions of Regulation No 1787/84, a second grant of ERDF assistance for the completion of another part of the Line 1 construction project, namely the construction of the Dante-Museo section and the Museo and Dante stations (‘Project No 850503066’). That assistance amounted to 35.22% of the eligible public expenditure for Project No 850503066 (set at ITL 227 153 000 000), and therefore to a maximum of ITL 80 000 000 000 (‘Grant of Assistance No 850503066’). The total investment cost of that project was estimated at ITL 227 153 000 000. 4 ERDF assistance (Grant of Assistance No 850503068) was also granted for the construction of the Cilea-Vanvitelli section and the Salvator Rosa and Cilea stations (Commission Decision C (87) 250/27 of 3 March 1987). The grant of that assistance is not in issue in the present action. 5 The applicant claims that, in their decisions approving the plans for the construction of Line 1, the Italian authorities concerned (namely the applicant on 24 July 1981, the Italian Ministry of Transport on 7 August 1982 and the Campagna Region (Italy) on 2 February 1983) ‘advocated a proposed amendment to the original plans submitted by [Metropolitana di Napoli] in respect of the Museo station (which fell within [Grant of Assistance No 850503066])’. The purpose of the amendment was to avoid carrying out the works in question at street level which would cause serious disruption to road traffic. 6 The applicant states that, during 1991 (it refers, more particularly, to ‘Municipal Decision No 257 of 14 May 1991’), those authorities decided to approve amendments to the original plans so as to place the Museo station underground and move it nearer to the Dante station. That entailed lengthening the Museo-Materdei section (from 638 metres to 1 160 metres), shortening the Dante-Museo section (from 450 metres to 405 metres) and increasing the cost of the works. 7 On 28 October 1999, the paying authority, in this case the Department of Development and Cohesion of the Italian Ministry of Finance, requested payment from the Commission of the balance of Grant of Assistance No 850503067. The paying authority stated that the total investment cost and the public eligible expenditure for Project No 850503067 was ITL 225 473 000 000 and that the balance to be paid was ITL 15 696 300 000, that is to say, the difference between the maximum amount specified in the decision of 16 February 1988 (ITL 78 481 500 000) and the amount already paid under that grant of assistance (ITL 62 785 200 000). 8 On the same date, the paying authority also submitted to the Commission a request for payment of the second tranche under Grant of Assistance No 850503066. 9 On 7 April 2000, Grant of Assistance No 850503067 was finally concluded (see paragraph 12 below). 10 On 26 February 2001, the paying authority sent the Commission a document relating to Grant of Assistance No 850503066 entitled ‘Extract of the inspection sheet of 11 January 2001’. That document states, inter alia: ‘8. The works carried out and the ERDF assistance granted Grant of Assistance … No 850503066 … was paid in the amount of [ITL] 80 billion for the construction of Line 1 of the Naples metro, in respect of the following works: – Museo station – Dante station – tunnel for the Museo-Dante line. The investment cost was estimated, at the date of the Community decision, at [ITL] 227 153 billion. It had been intended to make the Museo station and the Dante-Museo tunnels “at street level”, which would have brought major roads to a standstill for the duration of the works … The Ministry of Transport, the Campagna Region and the [applicant] took the view that that proposal was incompatible with the problems of inner-city traffic and requested that the plans be amended so that the Dante-Museo tunnels, and therefore the Museo station, be constructed undergound, thereby avoiding disruption to road traffic during the period of the works. Given the maximum incline of the tracks on that line, lowering the works necessitated the extension of the tunnel section uphill from the Museo station (the Materdei-Museo section, which was the subject of Grant of Assistance No 850503067). The plan appended hereto … clearly illustrates the change in the route and the new location of the Museo station. That relocation entailed shortening the Museo-Dante section (as is clear from the decision which is the subject of the present report). When the expenditure on the Materdei-Museo section [Grant of Assistance No 850503067] was audited, the cost of extending the line uphill from the Museo station (which arose, as stated above, from lowering the Museo station) was allocated to that section, which brought the total cost thereof to ITL 225 795 934 379 compared with a projected cost, according to the Community decision, of ITL 156 963 000 000, amounting to an overspend of ITL 68 832 934 379. It should be noted that (i) the division into sections is purely financial since this is a single project [and the sections] are closely interconnected both in terms of their realisation and functionally; (ii) the allocation of the expenditure incurred in extending the section uphill from the Museo station is due to lowering that station and physically relocating it; (iii) that relocation shortened the Museo-Dante line (from 450 to 405 metres); (iv) the total length of the tunnels constructed on those two sections (1 160 metres + 405 metres = 1 565 metres) is, as is clear from the plan appended hereto … , longer than that approved in the initial plans (638 metres + 450 metres = 1 088 metres); (v) the fact that the evidence in support of the expenditure relating to that extension was allocated to the Materdei-Museo section and not to the Museo-Dante section (which includes the cost of constructing the Museo station) is due to an error arising from the designation of the ERDF decisions; (vi) the effect of transferring the expenditure for that extension from the Materdei-Museo section to the Dante-Museo section is that the ERDF application No 850503067 (already concluded) nevertheless represents a substantial overspend; (vii) if that transfer was not acceptable, the evidence in respect of ERDF application No 850503066 would not be sufficient to exhaust the assistance in full, which would mean that part of the total assistance would not be financially covered; (viii) the assistance as a whole would be unjustifiably penalised with loss of part of the assistance (ERDF Application No 850503066) in spite of the fact that the overall plan necessitated more major works and the total expenditure incurred exceeded that which was projected and approved. Given those factors, we take the view that the [applicant’s] request to discharge, under the present grant of assistance, the part of the expenditure incurred as a result of lowering the Museo station, which was previously allocated to ERDF Decision No 850503067, is sensible, acceptable and justified.’ 11 In that same document, the paying authority envisaged two situations in which Grant of Assistance No 850503066 could be provided with ‘financial certification’, dependent upon whether a ‘transfer of expenditure’ was refused or granted. In the first case, (‘no transfer of expenditure’), the total eligible expenditure paid at the date of the inspection was ITL 187 181 583 042 and the balance of the assistance was ITL 1 161 353 547. In the second case (‘transfer of expenditure’), the total expenditure at the date of the inspection and the balance were ITL 230 957 083 and ITL 15 236 000 000 respectively. 12 By letter of 7 March 2001, the Commission replied to the letter of 26 February 2001 in the following terms: ‘… Grants of Assistance No 850503066 and No 850503067 were the subject of two separate applications by the Italian authorities and, consequently, of two separate Community decisions [Decisions C (89) 2178 021 of 21 December 1989 and C (88) 0166 038 of 16 February 1988 respectively]. On the basis of the documentation in our possession, it does not appear that the Italian authorities notified in due time the amendments to the plans entailing amendments to the financial structuring in each case. The Commission’s financial regulations require that budgetary commitments correspond exactly to payments made and to the legal obligations arising from specific Commission decisions. Grant of Assistance No 850503067 was concluded on 7 April 2000 pursuant to the request for final payment made by your Ministry on 28 October 1999. In light of the foregoing, we consider that the final discharge of Grant of Assistance No 850503066 will have to be made on the basis of the first situation (“no transfer of expenditure”), appearing on page 7 of the Extract of the inspection sheet appended to your letter referred to above. …’ 13 On 26 March 2001, the paying authority applied to the Commission for payment of the balance of Grant of Assistance No 850503066 in the sum of ITL 15 236 000 000 by instancing eligible public expenditure of ITL 227 153 000 000 and a total investment cost of ITL 230 957 000 000. 14 On the same day the paying authority also sent to the Commission a request for payment of the balance of Grant of Assistance No 850503067 in substitution of the request of 28 October 1999. The new balance claimed was still in the sum of ITL 15 696 300 000, but the total investment cost and the eligible public expenditure were ITL 185 252 000 000 and ITL 156 963 000 000 respectively. The applicant pointed out at the hearing that in making that request, the paying authority was seeking to obtain a correction not of the balance of that grant of assistance but of the certification of the eligible public expenditure in respect thereof. 15 At a meeting on 2 April 2001 the Commission reiterated to the paying authority the position set out in its letter of 7 March 2001. 16 On 11 May 2001, the Commission sent to the paying authority a proposal to conclude Grant of Assistance No 850503066 ‘based on the position adopted … in its letter … of 7 March 2001 and confirmed at the meeting of [2 April 2001]’. That proposal was based on eligible public expenditure of ITL 187 181 583 042 and ERDF assistance in the sum of ITL 65 922 645 280 (instead of the ITL 80 000 000 000 initially provided for) amounting to 35.22% of the eligible public expenditure. It requested the authorities concerned to notify it of any observations they might wish to make within a period of three weeks. 17 The paying authority and the Campagna Region submitted observations to the Commission by letters of 21 May and 5 June 2001 respectively. 18 By letter of 12 September 2001 addressed to the Italian Republic, the Commission confirmed the proposal made in its letter of 11 May 2001 and requested the Italian authorities to inform it of their final position within two months. 19 By letter of 6 December 2001, the applicant informed the Commission of its ‘complete and utter disagreement with the proposal to conclude [Grant of Assistance No 850503066]’. 20 In a report dated 13 March 2002, drawn up following a request for information from the Commission, the paying authority found that there was no overlap between the expenditure in respect of Grant of Assistance No 850503066 and that in respect of Grant of Assistance No 850503067. It stated that the figure of ITL 40 221 000 000, representing the difference between the total investment cost of Project No 850503067 specified in the letter of 28 October 1999 (ITL 225 473 000 000) and that stated in the application for correction of 26 March 2001 (ITL 185 252 000 000), related to the following costs: extension works on the Materdei-Museo tunnel, consolidation works following that extension and concession charges in respect of those extension and consolidation works. 21 In its report, the paying authority also pointed out that the application for correction of 26 March 2001 arose from ‘the need to transfer the allocation of the costs of extending the Materdei-Museo tunnel … to the finance provided by ERDF Grant of Assistance No 850503066 in so far as it was caused by lowering and relocating the Museo station’. It concluded that the request for payment of the balance of Grant of Assistance No 850503066, contained in the letter of 26 March 2001 (see paragraph 13 above), was ‘fully justified’. 22 By letter of 11 June 2002, copied to the applicant on 26 June 2002, the Commission informed the paying authority of ‘its final decision to conclude [Grant of Assistance No 850503066] in the manner indicated in its letter of 11 May 2001’ (‘the contested decision’). In particular, it stated: ‘It is clear [from the Report of 13 March 2002] that expenditure in the amount of ITL 39 971 416 958 previously declared in the context of [Grant of Assistance No 850503067] was reallocated to the final certificate [of Grant of Assistance No 850503066]. That expenditure relates to the extension of the Museo-Materdei tunnel. The Commission maintains that that expenditure cannot be allocated to [Grant of Assistance No 850503066] on the following grounds: – the Commission decisions relating to [Grants of Assistance No 850503066 and No 850503067] draw a clear physical distinction: – the decision … of 21 December 1989 makes provision for ERDF assistance for works to be carried out on the Dante-Museo section, including the Dante and Museo stations [Grant of Assistance No 850503066]; – the decision … of 16 February 1988 makes provision for ERDF assistance for works to be carried out on the Museo-Cilea section, including the Materdei station but excluding the stations of S. Rosa and Cilea [Grant of Assistance No 850503067]; – since the extension work on the Museo-Materdei tunnel referred to above was plainly carried out on the Museo-Cilea section, it therefore relates to [Grant of Assistance No 850503067] and is covered by the decision of 16 February 1988; – it is clear from the evidence available that the effect of the amendment to the plan made at the end of 1988/beginning of 1989 was to increase the expenditure chargeable to [Grant of Assistance No 850503067] and that the expenditure relating to the extension of the Materdei-Museo tunnel was not included in the cost of the assistance in question.’ 23 On 3 September 2002 the applicant lodged with the Commission an application for correction of the final payment of the balance of Grant of Assistance No 850503066 pursuant to Article 32(5) of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1), and requested that ‘the Italian authorities’ application of 26 March 2001 for correction of the accounts relating to [Grant of Assistance No 850503067]’ be upheld. The applicant stated in reply to a question put by the Court by way of a measure of organisation of procedure that, by decision of 25 September 2002, the Commission had announced that it was maintaining the view stated in the contested decision. Procedure and forms of order sought 24 By application lodged at the Registry of the Court of First Instance on 4 September 2002, the applicant brought the present action. 25 The Commission did not lodge a defence within the prescribed time-limit. However, because the applicant did not set out in the proper form the form of order sought, pursuant to Article 122(1) of the Rules of Procedure of the Court of First Instance, the Commission was allowed a further period within which to submit a defence. 26 On 19 December 2002, the Commission lodged a defence in which it confined itself to the following submissions: ‘1. By application lodged and entered in the Register of the Court of First Instance on 6 September 2002, [the applicant] brought an action for annulment of the [contested decision]. 2. In the introduction to the application (paragraphs 1 to 4, pages 3 and 4), [the applicant] states that on 3 September 2002, it made an administrative application for correction of the contested decision pursuant to the relevant provisions in force and that it was awaiting the outcome of that application. In that context, the applicant states that it brought “the present action as a precaution”, to prevent its action from becoming time-barred and that it reserved “the option to withdraw these proceedings should the Commission decide to reopen the procedure in respect of [Grant of Assistance No 850503066] and simultaneously grant the application for correction of the balance in respect of [Grant of Assistance No 850503067] which had been made to the paying authority on 26 March 2001”. 3. In that respect, the Commission notes that the relevant unit of the Directorate-General for Regional Policy and [the applicant] are in talks with a view to arriving at an amicable settlement. In those circumstances it is to be hoped that [the applicant] will soon be in a position reasonably to withdraw this application and that the Court, without giving judgment on the subject-matter of the dispute, can order that the case be removed from the register. 4. In the meantime, the Court is requested, with the consent of [the applicant], to stay the proceedings pursuant to Article 77(c) of the Rules of Procedure.’ 27 By order of 10 March 2003, the President of the Fifth Chamber of the Court of First Instance decided pursuant to Article 77(c) of the Rules of Procedure to stay the proceedings until 15 May 2003. 28 By letter of 9 May 2003, the applicant stated that it did not intend to lodge a reply. 29 As a measure of organisation of procedure pursuant to Article 64 of the Rules of Procedure, by letters of 26 September 2003, 8 December 2003 and 6 April 2004, the Court requested that the applicant disclose certain documents and reply to certain questions. The applicant complied with those requests within the prescribed time-limits. 30 The written procedure was closed on 23 December 2003. 31 The parties presented oral argument and their replies to the Court’s questions at the hearing on 6 July 2004. 32 The applicant claims that the Court should: – annul the contested decision; – order the Commission to pay the costs. 33 The form of order sought by the Commission reads as follows: ‘The Commission hopes that: – [the applicant] will soon be in a position reasonably to withdraw its application in the present case; – the Court is not called upon to give judgment on the subject-matter of the dispute and will be able to order removal of the case from the register; – in the meantime the Court can stay these proceedings; – the Court may make an order as to costs in accordance with the provisions of the Rules of Procedure.’ Law Preliminary observations 34 It is necessary to make certain preliminary observations on the purpose of Grants of Assistance No 850503066 and No 850503067 and of the decisions of 16 February 1988 and 21 December 1989. 35 To a large extent, the applicant bases its application on the premiss that the grants of ERDF assistance in the present case are ‘unitary in nature’. It claims that ‘the [Dante-Vanvitelli] line should as a whole be regarded as a single technical, functional and financial project’ and that the division of that line into three sections, namely the Dante-Museo, Museo-Cilea and Cilea-Vanvitelli sections, was for ‘purely financial reasons connected with the progress of the works and, thus, with the detailed rules for the payment of structural funds.’ 36 Those assertions cannot be accepted. It is clear from the file that each of those three sections, even if they form part of a greater investment project (namely, in addition to the Dante-Vanvitelli section, the completion of Line 1), constituted a separate project and that each of those projects received a specific grant of ERDF financial assistance. Those grants of financial assistance were contained in three separate Commission decisions, adopted at different times and, in particular, providing for different rates of intervention, and were themselves the result of three separate applications by the Italian authorities. 37 Thus, in respect more particularly of Grant of Assistance No 850503066, this formed the subject-matter of the decision of 21 December 1989, adopted pursuant to Application No 85/IT/03/064/CA lodged by the Italian authorities on 18 November 1985. The project in respect of which that assistance was granted was the construction of the Dante and Museo stations and the section between them. The completion of that project was originally planned for the period from 1 November 1989 to 30 June 1994. The rate of intervention was 35.22% of the total public expenditure incurred in respect of those works. 38 For its part, Grant of Assistance No 850503067 formed the subject-matter of the decision of 16 February 1988, adopted as a result of Application No 85/IT/03/065/CA lodged by the Italian authorities on 18 November 1985. The project in respect of which that assistance was granted was the construction of the Materdei station and the Museo-Cilea section. The completion of that project was originally planned for the period from December 1987 to December 1990. The rate of intervention was 50% of the total public expenditure incurred in respect of those works. 39 The applicant advances three pleas in law in support of its application. The first alleges an infringement of the principle of the protection of legitimate expectations, the second alleges an infringement of a ‘principle of substantive fairness’ and the third alleges a failure to state reasons. 40 It is convenient first to examine the plea alleging an infringement of a ‘principle of substantive fairness’. The second plea in law, alleging infringement of a ‘principle of substantive fairness’ 41 The applicant repeats, first of all, that the completion of the Dante-Museo and Museo-Materdei sections formed part of a single ‘technically, functionally and financially indissociable’ project. 42 It goes on to explain as follows: – first, the paying authority merely divided the total eligible expenditure ‘on the basis of the location of the works without taking account of the amendment’, which resulted in a significant increase in the ‘investment to be allocated, on that basis, to the Museo-Materdei section’ and, consequently, ‘a drastic and unjustified reduction in the cofinanced percentage [of Grant of Assistance No 850503067]’; – since a change in the allocation of the ‘total credit’ between the two grants of assistance in question, as a result of the imputation to Grant of Assistance No 850503067 of part of the credit payable under Grant of Assistance No 850503066 would have required the Commission to adopt a new decision, the paying authority preferred to apply for a correction of the detailed account for Grant of Assistance No 850503067, seeking to separate from it the expenditure occasioned by the extension of the section and to impute it to Grant of Assistance No 850503066; – in fact the paying authority took the view that ‘that expenditure could just as well be imputed on the basis of the functional criterion instead of the criterion of the location of the works [covered by Grant of Assistance No 850503066], since they had been incurred … as a result of the amendment to the plan for the Museo station, which came under [Grant of Assistance No 850503066]’; – consequently, in its application for payment of the balance of Grant of Assistance No 850503066, the paying authority referred to total expenditure in the sum of ITL 230 957 000 000 and simultaneously applied for correction of the detailed account for Grant of Assistance No 850503067; – whilst the increase in the expenditure declared to be eligible under Grant of Assistance No 850503067 did not result in an increase in the amount of that assistance, by contrast, the shortening of the Dante-Museo section resulted in a reduction in the amount of Grant of Assistance No 850503066. 43 In light of those various factors, the applicant considers that the Commission has demonstrated an excessive and unjustified formalism in rejecting the application for correction referred to above and by reducing the amount of Grant of Assistance No 850503066 ‘because of the lack of eligible expenditure (inasmuch as that expenditure had already been wrongly imputed [to Grant of Assistance No 850503067] in spite of the fact that the total expenditure incurred was higher than that provided for and it was acknowledged that the works were completed in accordance with the plans’. In so doing, the applicant submits that the Commission committed a manifest infringement of a ‘principle of substantive fairness’. 44 The applicant adds that, if the Commission had genuinely considered the ‘functional criterion for the allocation of expenditure’ applied by the paying authority in the application for correction to be unacceptable, it should have advised the Italian authorities in due time of that fact and informed them of the proper procedure to follow. It considers that the Commission could have overcome that purely formal problem and thus avoided causing it loss. 45 The Court considers that, contrary to the applicant’s assertion, the contested decision is fully justified and in no way demonstrates excessive formalism. 46 More particularly, that decision is justified by the need to ensure the proper operation of the Community system of financial assistance and the sound financial management of Community funds. It satisfies the principle that the legal and financial framework of each assistance must be strictly defined by the Community decision granting that assistance. 47 As the Commission rightly pointed out in the contested decision, the decisions of 16 February 1988 and 21 December 1989 make a ‘clear physical distinction’. It is clear from the file that the works relating to Project No 850503067, covered by the decision of 16 February 1988, referred to the completion of the Museo-Cilea section, including the Materdei station, but excluding the Salvator Rosa and Cilea stations, and that those relating to Project No 850503066, covered by the decision of 21 December 1989, related to the completion of the Dante-Museo section, including the latter two stations. 48 It is also clear from the file (see, more particularly, the document entitled ‘Extract of the inspection sheet of 11 January 2001’ referred to at paragraph 10 above and the report of the paying authority dated 13 March 2002 referred to at paragraph 20 above) that the expenditure in question in the present case relates exclusively to works carried out beyond the Museo station in regard to the extension of the Museo-Materdei line. 49 There is therefore no doubt that that expenditure and those works relate to Project No 850503067 and not to Project No 850503066. Moreover, that is how the paying authority at the outset understood matters to stand, having referred in its application of 28 October 1999 for payment of the balance of Grant of Assistance No 850503067 in the sum of ITL 225 473 000 000 representing the total investment cost and the eligible public expenditure, that is to say the entirety of the expenditure concerned. 50 Since the decision of 16 February 1988 made provision for assistance in the maximum amount of ITL 78 481 500 000, the Commission was right to limit itself to paying that amount notwithstanding the fact that total public expenditure for Project No 850503067 turned out to be higher than initially provided for. 51 Similarly, since the expenditure at issue in the present case could not be imputed to Project No 850503066 and had already been allocated to Project No 850503067, which had been concluded since April 2000, the Commission could not accept the ‘transfer of expenditure’ hypothesis advanced by the paying authority on 26 February 2001. It was therefore right to bring the amount of Grant of Assistance No 850503066 to ITL 65 922 645 280, that is to say 35.22% of the eligible public expenditure (ITL 187 181 583 042). 52 Furthermore, the Court finds that the paying authority’s attempt in the present case to obtain payment of the maximum amount of ITL 80 000 000 000 covered by the decision of 21 December 1989 merely by submitting an application for correction of the detailed account of the expenditure in respect of Project No 850503067 was not regular. 53 First, that application was submitted even though Grant of Assistance No 850503067 had been finally concluded for almost a year and the public expenditure in question had been imputed to Project No 850503067. 54 Second, and in any event, a mere application for correction of a detailed account, even when lodged in due time before the conclusion of Grant of Assistance No 850503067, would not have allowed the applicant to obtain the result sought. In fact, as the Commission stated more than once at the hearing, the relevant Italian authorities at the latest when they approved the amendments to the Dante-Vanvitelli section should have submitted to the Commission a formal request to amend the decisions of 16 February 1988 and 21 December 1989, containing a new estimate of the total investment cost and the eligible public expenditure for each of the two projects in question. Such a request would have resulted in a redefinition of the works in respect of each of the two projects or an adjustment of the amount of the two grants of financial assistance. 55 However, it cannot but be noted that no such formal request was ever made in the present case. The letter from Metropolitana di Napoli to the Commission of 8 November 1988 produced by the applicant in response to a written question from the Court was insufficient in that regard, as it was merely a presentation of the state of progress of the works on the various sections comprising Line 1. More particularly, as regards the Museo-Materdei section, that company essentially merely refers to the fact that the applicant intended to approve the ‘proposed amendment’. 56 Moreover, the applicant has adduced no convincing evidence in support of its assertion that the Commission ‘was kept permanently informed of the changes made to the original plan by the amendment [in question]’. The evidence made available by it to the Court in response to a written request for clarification of that point is, at most, probative of the fact that, when the Italian authorities submitted the applications for allocation of the ERDF assistance, the Commission was informed that, some years before, a study had been made of the possibility of not carrying out the construction works on the Museo station at street level. In the case of the ‘municipal decision’ to which the applicant refers in its first plea (see paragraph 61 below), which in all likelihood is Municipal Decision No 257 of 14 May 1991 (see paragraph 6 above), it suffices to note that, in addition to the fact that it is not in the file, there is no reason to believe that it was ever disclosed to the Commission. 57 Lastly, the Court considers that the applicant cannot seriously complain that the Commission did not inform the Italian authorities in due time that the criterion for imputing the expenditure that they were advocating was irregular and that it did not inform them of the correct procedure to follow. It is clear from the file that it was only on 26 February 2001 (see paragraph 10 above) that the paying authority for the first time submitted to the Commission its two hypothetical cases for imputation of the expenditure. However, as early as 2 April 2001 the Commission held a meeting with the paying authority at which the Commission set out the reasons why it considered that the ‘transfer of expenditure’ hypothesis should be rejected. Moreover, on 11 May 2001, the Commission sent the paying authority a proposal to conclude Grant of Assistance No 850503066, expressly referring to its letter of 7 March 2001 and to its meeting of 2 April 2001 (see paragraph 16 above). 58 It follows from all the foregoing considerations that the plea in law alleging an infringement of a ‘principle of substantive fairness’ cannot be upheld. The first plea in law, alleging infringement of the principle of the protection of legitimate expectations 59 The applicant alleges that by reducing the amount of Grant of Assistance No 850503066, as compared to the amount set out in the decision of 21 December 1989, and by rejecting the application for correction in respect of Grant of Assistance No 850503067, the Commission infringed the principle of the protection of legitimate expectations. 60 The applicant claims that, by its earlier conduct, the Commission gave rise to a reasonable expectation on the applicant’s part that the full amount comprised in Grant of Assistance No 850503066 would be paid to it. 61 In support of that assertion, the applicant refers to the following facts: – ‘the municipal decision amending the plans for the construction of the Museo station and the tunnel on the Museo-Materdei section’ was notified to the Commission; – the Commission was therefore informed of the technical need to move the Museo station nearer to the Dante station, which was to entail a shortening of the Dante-Museo section and a lengthening of the Museo-Materdei section and of the tunnel on that section, and an increase in the total length of the route; – the Commission never objected to that amendment to the plan or cast doubt on its expediency from a technical point of view or on its ‘financial soundness’; – the Commission never stated that that amendment ‘would, owing to division of the project ­– for financial reasons – into two grants of assistance, result in a reduction of the total amount of assistance notwithstanding the increase in investment’; – the works were completed according to the plans and within the prescribed time-limits; – the total expenditure incurred in the construction of the Dante-Vanvitelli section was not less but more than that originally provided for; – the applicant never intended the Commission to contribute to the additional expenditure arising from the amendment of the plan, but merely sought payment by it in full of the entirety of the amount originally comprised in the grants of assistance. 62 In that regard, the Court points out that, under the case-law, any economic operator to whom an institution has given justified hopes may rely on the protection of legitimate expectations (Case T-81/95 Interhotel v Commission [1997] ECR II-1265, paragraph 45, and Case T-126/97 Sonasa v Commission [1999] ECR II-2793, paragraph 33). 63 In the present case, the factors relied upon by the applicant were not such as to give rise to justified hopes on its part that it would receive the entirety of the amount provided for in the decision of 21 December 1989. 64 As already stated at paragraph 56 above, it has not been established that ‘the municipal decision amending the plan for the construction of the Museo station and the tunnel on the Museo-Materdei section’ was notified to the Commission. More generally, it has not been shown that the relevant Italian authorities informed the Commission in due time, and with the detail that it was entitled to expect from the beneficiaries of assistance, of the relevant amendments to the plans. The absence of objections on the part of the Commission to those amendments cannot in the circumstances be taken to signify its acceptance that certain public expenditure plainly within Project No 850503067 could nevertheless be imputed to Project No 850503066. 65 Still less can the Commission’s attitude be taken to mean that it was the paying authority itself which, in its request of 28 October 1999 for payment of the balance of Grant of Assistance No 850503067, had imputed that public expenditure to Project No 850503067, whilst waiting until 26 February 2001 to advance its argument that such expenditure in fact fell within Project No 850503066. 66 In any event, as already stated in paragraph 54 above, the outcome anticipated by the applicant could in any case only have been achieved following a formal application to amend the decisions of 16 February 1988 and 21 December 1989; no such application was made in the present case. 67 It follows that the plea in law alleging an infringement of the principle of the protection of legitimate expectations is unfounded. The third plea in law, alleging failure to state reasons 68 The applicant submits that the contested decision is vitiated by a failure to state reasons. 69 It submits, first, that in that decision, the Commission did not clearly and unequivocally set out the reasons for rejecting the application to correct the detailed account of Grant of Assistance No 850503067 or state the reasons why it found that the increase in expenditure resulting from the amendment to the plan should be imputed to that grant of assistance rather than to Grant of Assistance No 850503066. 70 Second, the applicant alleges that the contested decision does not clearly set out the reasons justifying the reduction of Grant of Assistance No 850503066 by comparison with the amount initially allocated. In support of that plea it cites Case C-189/90 Cipeke v Commission [1992] ECR I-3573, paragraphs 16 to 18, and Case T-450/93 Lisrestal and Others v Commission [1994] ECR II-1177. 71 In that regard it should be noted that, according to settled case-law, the statement of reasons 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 competent Community Court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context (see Case C-367/95 P Commission v Sytraval and Brink’s France [1998] ECR I-1719, paragraph 63, and the case-law cited). 72 It is perfectly clear from the contested decision that the Commission took the view that the decision of 21 December 1989 covered the works to be carried out on the Dante-Museo section, whereas the decision of 16 February 1988 covered the works to be carried out on the Museo-Cilea section, and that the expenditure in question in the present case should be exclusively imputed to Grant of Assistance No 850503067 on the ground that it concerned the works carried out on that section. It is also clear from the contested decision that the Commission found in those circumstances that that expenditure should be deducted from the expenditure declared in Grant of Assistance No 850503066, thereby reducing the amount initially agreed for that assistance. 73 Furthermore, it should be noted that in its letter of 7 March 2001 (see paragraph 12 above), the Commission had already clearly emphasised the distinctiveness of Grants of Assistance No 850503066 and No 850503067 and of its decisions to grant them, and the fact that the Italian authorities did not inform it in time of the amendments to the plans for the construction of the Dante-Vanvitelli line. 74 It follows that the plea in law alleging a failure to state reasons cannot be upheld. 75 In light of all the foregoing, the action must be dismissed. Costs 76 Under Article 87(2) of the Rules of Procedure, the unsuccessful party must be ordered to pay the costs if they have been applied for in the successful party’s pleadings. In this case the Commission requested the Court to make an order as to costs ‘in accordance with the provisions of the Rules of Procedure’. That form of order cannot be regarded as a request that the applicant be ordered to pay the costs (see, to that effect, Case C-255/90 P Burban v Parliament [1992] ECR I-2253, paragraph 26). The parties must therefore bear their own costs. On those grounds, THE COURT OF FIRST INSTANCE (Fifth Chamber) hereby: 1. Dismisses the action; 2. Orders the parties to bear their own costs. Lindh García-Valdecasas Cooke Delivered in open court in Luxembourg on 31 May 2005. Registrar President H. Jung P. Lindh * Language of the case: Italian.

Mr Justice Sales : Introduction This case concerns claims made by tenants of stalls, shops and offices at Smithfield Market in London ("the Market") for new business tenancies to be granted at rents and on terms to be determined by the Court under Part II of the Landlord and Tenant Act 1954 ("the 1954 Act"). The landlord is the Mayor and Commonalty and Citizens of the City of London, which is the formal designation of the local authority for the City of London. I will refer to the tenants collectively as "the tenants" and to the landlord as "the City". The Market is the well-known and historic principal meat and poultry market in London. For present purposes, three parts of the Market are in issue: the East Market, the West Market and the Poultry Market. The East Market and the West Market are buildings erected in the 1860s and subject to substantial renovation and redevelopment in the 1990s. In particular, new commercial office accommodation was built above the parts of the East Market and the West Market occupied by the tenants, which the City lets out to commercial tenants to generate rental income. The Poultry Market is a building dating from the early 1960s. It was not included in the redevelopment of the Market in the 1990s. There is also an extensive car park under the Market known as the Rotunda car park, because its entrance is by the rotunda just outside the Market, in front of St Bartholomew's Hospital ("the car park"). The car park was constructed by adaptation of what had previously been an underground railway station at the Market. That station ceased to be used in 1966, and in the early 1970s use of the car park commenced. It has space for 525 cars and vans. It is used by the tenants and the City, but is also open to the public to use in return for a charge. The tenants and the City are agreed that new business tenancies do fall to be granted to the tenants under the 1954 Act. They are also agreed that such new tenancies should be for a period of fifteen years (the maximum which can possibly be awarded under the 1954 Act). They are agreed in principle that the new tenancies should include a rent review clause, though they disagree about when rent reviews should occur (the City proposes a review after every five years, the tenants propose one after seven and a half years). They disagree about a range of other matters relevant to setting the rent and terms of the new tenancies to be awarded by the Court. In particular, the City proposes that there should be a basic rent set together with a service charge varying from year to year to reflect the actual running costs of the Market, divided up in an appropriate way between the tenants. The tenants propose instead that there should be a simple rent with no service charge. This is the judgment in the trial of two preliminary issues which have been ordered by Chief Master Winegarten to be determined in advance of the main hearing, which I set out in the order in which they were debated before me: i) Issue 1: Whether the tenants are entitled to have their rents reduced on account of income received by the City from any parts of the East and West Market buildings and the Poultry Market building of the London Central Markets in the City of London used for non-Market purposes (including income from the car park and offices let for non-Market purposes – i.e. from the commercial offices let to commercial tenants); and ii) Issue 2: Whether the rents to be fixed by the Court should be an all-inclusive rent (consisting of the maximum recoverable rent, service charge and uniform business rates for each unit) as under the existing leases or exclusive with the tenant's contribution to services covered by a separate service charge. (In fact, there is some variation in the position under the existing leases which I explain in greater detail below). Issue 1 involved consideration of the legal regime under which the City holds and operates the Market, in particular as set out in the Metropolitan Meat and Poultry Markets Act 1860 ("the 1860 Act") pursuant to which the Market in its modern form, with the East Market and the West Market, was constructed. Put shortly, the argument of the tenants is that the City is obliged to bring the relevant part of the income it receives from the commercial offices and the car park into account against the running costs of the Market, and so reduce the income which the City ought to be entitled to receive in the form of rent from the tenants when the Court sets the rent for the new tenancies to be awarded under the 1954 Act. Issue 2 concerns the way in which the payment obligations of the tenants under the new tenancies should be structured – by way of a simple fixed rent, as the tenants propose, or as a rent plus a variable service charge, as the City proposes. It became clear at the hearing that there is a comparatively narrow division between the parties on this issue. As a matter of basic principle to govern the setting of the rent and terms of the new tenancies, the tenants accept that the monetary payments to go to the City under the new tenancies ought to be set at a rate which should cover the overall cost to the City of running the Market, including the cost of maintaining the extensive services supplied by the City to enable the tenants to operate their businesses in conformity with demanding health and safety regulations and the cost of maintaining the fabric of the Market buildings. The City seeks by the service charge to cover the same costs. The main difference between the parties as regards Issue 2, then, is how the risks of future changes from any estimate regarding those costs of maintaining and operating the Market to be made now, at the start of the new tenancies, should be distributed between the parties under the terms of those tenancies. The tenants' position is that the best estimate should be made now of the future running and maintenance costs in relation to the Market for the relevant period to the next rent review (be it five years or seven and a half years) and an overall rental figure set by reference to those costs, as divided up in an appropriate way between the premises occupied by the tenants, and increasing year on year by reference to the general rate of inflation. The effect of this would be that the excess of any actual costs in that period over the estimated costs would have to be borne by the City as landlord, while any reduction in the actual costs in that period below the estimated costs would be for the credit of the City. The tenants say that payment obligations structured in this way would be fair and reasonable between the parties, because it is important that they as small businesses should have the benefit of certainty about how much they have to pay for their premises and because they are concerned that it may emerge in future that there is major expenditure required to restore and repair the old buildings which comprise the Market, in relation to possible concealed structural defects which go beyond anything known or expected at present. The tenants say that the risk of upward costs in future in relation to this, beyond estimates of such costs made now, should be borne by the City, as would occur if a simple rent is set by the Court. The tenants say that an arrangement on these lines is reasonable as between the parties because there has been a history of the City not maintaining the Market buildings in the past as it should have done, and the tenants should not have to bear the risks associated with undetected underlying structural problems which may have developed as a result. The tenants further say that most of the existing leases under which they hold their business premises from the City provide for there to be a simple rent and that the City has not made out a good case for changing from payment obligations structured in that way. The tenants also say that the City has run the Market in an inefficient way, without keeping costs under control as it should, and that to have a simple rent arrangement under the new tenancies is a reasonable way to ensure that the City bears the costs of its own inefficiencies. The City's position is that there should be a lower rent element under the new tenancies, but a high variable service charge element which is adjusted each year to cover the actual costs incurred by the City in maintaining and operating the Market, including supplying services to the tenants. That way, the City says, the tenants would bear the true operating costs properly attributable to running their businesses, and would bear the risks properly so attributable. The City says that there are many aspects of the costs of maintaining and operating the Market which could be kept under better control if the tenants had an economic incentive under the terms of the new tenancies to run their businesses in more efficient ways and to co-operate with the City to keep down operating costs. An example given by the City is the cost of cleaning services which are provided by the City under the terms of the existing leases and would be provided under the terms of the new tenancies. The City says that the staff employed by the tenants in their businesses do not have an incentive to take much care to take steps themselves to keep rubbish and mess to a minimum, relying on the cleaning service provided by the City at its cost to clean up after them. If the tenants had to pay the actual cost for this service, they would have an incentive to ensure that their staff were more careful in the way they carried on their businesses and this would reduce the overall cleaning costs to be met by the City and the tenants. The difference between the parties on Issue 2 is still narrower when one has regard to the context in which it falls to be determined, namely as one step on the path to determining the terms of the new tenancies and the rent to be paid under those tenancies. Where, under a lease negotiated between a willing landlord and willing tenant, the tenant is required to bear a higher degree of business risk, one may expect the reasonable rent to be adjusted downwards to some degree as a result (much in the way that a premium is paid to an insurance company for agreeing to bear the risk of possible but uncertain future events). Conversely, if under such a lease the risk is to be left with the landlord, one may expect the reasonable rent to be adjusted upwards to some degree as a premium to the landlord for assuming that risk. The expert evidence I heard confirmed this general point. The expert witness for the City said that if a simple rent were set, based on an estimate now of the future maintenance and running costs of the Market, it would in his view have to be adjusted upwards to reflect the risks being assumed by the City as landlord. The expert witness for the tenants arrived at the same conclusion, in effect, by saying that he would expect any current estimate of future maintenance and running costs which would be taken into account when assessing a simple rent figure to be set at the top end of the possible range of estimates so as to build in an allowance for the risk of future variance from the estimate to be borne by the landlord. A further variable should also be mentioned. The services provided by the City under the leases to the tenants have various components, and it is conceptually possible to divide them up as between coverage by a simple rent payment and coverage within a service charge element in different ways. I consider below whether a division of different elements might represent an appropriate approach to determining the terms of the new tenancies to be ordered under the 1954 Act. These considerations did cause me to question the value of taking Issue 2 as a preliminary issue separate from and in advance of final trial. However, the tenants had pressed for Issues 1 and 2 to be determined as preliminary issues and secured an order to that effect from the Court, against the objections of the City. The City did not seek to appeal against that order. I therefore took the view that I should seek to arrive at definite conclusions on the preliminary issues if I reasonably could. In the end, after reflecting on the arguments and evidence I heard, I consider I can make useful determinations and will do so. The proposals which the City put forward for determination of Issue 2 and the setting of the rent in due course included a proposal that there should be an inspection of the Market buildings by a neutral building surveyor to identify any issues relating to the soundness and repair of the fabric of the Market buildings (for example, the tenants pointed to an area around the entrance arch to one of the Market buildings where they said part of the cladding of the building appeared to be coming loose) and an acceptance that any structural repairs identified by that surveyor as necessary to put the fabric of the building in good repair should be for the City's account and not brought into the setting of the new rents. In that way, a large part of the risk of structural repairs would be borne by the City under its proposals. Not all the risk would be so borne, since the building surveyor might miss problems with the buildings which were latent and not apparent on his inspection or problems with the buildings might develop during the course of the new tenancies requiring work to be undertaken. However, the City submitted that this feature of its proposals supported its case that it would be appropriate to set a rent with a variable service charge, rather than a simple rent as the tenants contended. I heard evidence from the officials of the City most closely involved in the running of the Market and dealing with the tenants, Mr Tom Simmons (the former Solicitor and Town Clerk of the City, now retired) and Mr David Smith (the Director of Markets and Consumer Protection for the City). I heard evidence from various of the tenants, who tended to be prominent in the tenants' association which was responsible for handling negotiations with the City (the Smithfield Market Tenants' Association – "the SMTA"). At the request of the tenants, which was not opposed by the City, I conducted a site visit of the Market. I also heard evidence in relation to Issue 2 from two expert surveyors, Mr Malcolm Hull for the City and Mr James Marland for the tenants. The order for the hearing of the preliminary issues limited the expert evidence which could be adduced in these terms: "Each party shall be at liberty to adduce (for the purpose of [Issue 2]) the report of one expert valuation witness on the parties' respective contentions (in broad terms) concerning the effect upon the rent of there being an inclusive or exclusive figure. The intention of such evidence being to provide the Court with an indication of the range of views of the experts, but not for the Court finally to determine rental values." The parties were in agreement that the expert witnesses should be called to give evidence and be cross-examined, and I gave permission for this. There was no order permitting expert evidence to be called in relation to Issue 1. Despite this, the tenants adduced a witness statement from Mr Marland which gave his opinions about certain matters said to arise under Issue 1. I did not regard this as admissible expert evidence and Mr Rodger QC for the City properly did not take up time descending into a debate with Mr Marland in cross-examination of the views expressed in this statement. The legal framework under the 1954 Act Section 24 of the 1954 Act makes provision that where a business tenancy is due to expire the landlord or tenant can apply to the court for an order for the grant of a new tenancy. In this case, the tenants have made requests under section 26 of the Act for new tenancies and have applied to court under section 24 for orders for the grant of new tenancies. The City agrees that the court should order the grant of new tenancies. Section 33 of the 1954 Act provides that a new tenancy ordered under the Act "shall be such a tenancy as may be determined by the court to be reasonable in all the circumstances, being, if it is a tenancy for a term of years certain, a tenancy for a term not exceeding fifteen years". The City and the tenants are agreed that the term of the new tenancies should be fifteen years. Section 34(1) of the 1954 Act provides that the rent payable under such a new tenancy, if not agreed by the parties, "may be determined by the court to be that at which, having regard to the terms of the tenancy (other than those relating to rent), the holding might reasonably be expected to be let in the open market by a willing lessor", after disregarding certain matters set out in the subsection. In my judgment section 34(1) presupposes that the terms of the tenancy have to be determined and known before the court can determine the rent which is to be set, because the amount of the rent will critically depend upon the package of rights and obligations contained in the terms of the tenancy which is to be granted pursuant to the order of the court. This view is supported by authority: see O'May v City of London Real Property Co. Ltd [1983] 2 AC 726 ("O'May") at 740E per Lord Hailsham of St Marylebone LC; the O'May case in the Court of Appeal at [1981] 1 Ch 216, esp. at 226F-227D per Brightman LJ; and Cardshops Ltd v Davies [1971] 1 WLR 591, esp. 596C-D per Lord Widgery LJ. Section 35(1) of the 1954 Act is the provision which is directly relevant for the purposes of Issue 2. It provides: "The terms of a tenancy granted by order of the court under this Part of this Act (other than terms as to the duration thereof and as to the rent payable thereunder) … shall be such as may be agreed between the landlord and the tenant or as, in default of such agreement, may be determined by the court; and in determining those terms the court shall have regard to the terms of the current tenancy and to all relevant circumstances." The history of the Market and its legal basis The Market has a long and intricate legal history dating back to Medieval times. In 1444 the Crown granted a charter for a meat market for London at Smithfield. Over time, disputes arose between the City of London and the Crown and further charters were granted, which themselves led to disputes about the ultimate ownership of the land on which the Market now stands. Such disputes have been the subject of litigation between the City and the Crown in recent times: see The Crown Estate Commissioners v The Mayor and Commonality and Citizens of the City of London, Hoffmann J, unrep., 6 May 1992, and Court of Appeal, unrep., 19 May 1994. I do not need to dwell on this background, because the City and the tenants were agreed that the principal legal foundation for the operation of the Market as it exists today is the 1860 Act. The 1860 Act is a Victorian statute enacted before the creation of the Office of the Parliamentary Counsel in 1869 (the office of dedicated statutory drafters now available to the Government), which is not drafted with the precision and clarity which has come to be expected of statutory drafting since then. Part of the object of the Act was to make provision for the construction and operation of new buildings for the Market (in particular, the West Market and the East Market) despite the continuing dispute between the Crown and the City about the ownership of the land on which the new buildings were to stand. There was a long Preamble to the Act, as follows: "Whereas the present existing Markets for the Sale of Meat and Poultry and other Provisions in the City of London are small and confined, and inadequate to supply the Wants of the rapidly increasing Population of the Metropolis: And whereas it is expedient that larger and more convenient Markets should be provided, and that proper Approaches should be made thereto: And whereas Part of the Site of Smithfield, formerly used as a Cattle and Sheep Market, is conveniently situated and adapted for such new Markets: And whereas the Mayor, Aldermen, and Commons of the City of London, in Common Council assembled, are willing to provide such Markets, and to cause proper Approaches to be made thereto: And whereas Her Majesty in right of Her Crown and the Mayor and Commonalty and Citizens of the City of London respectively claim to be entitled to or interested in the ancient Site of Smithfield Market, and Her Majesty is willing, and the Mayor and Commonalty and Citizens have agreed, that such Provisions as are herein-after contained should be made for keeping open the Part of the ancient Site of Smithfield Market which is not otherwise expressly appropriated for the Purposes of this Act, and for appropriating the Residue of the said ancient Site in manner herein-after provided; but the same cannot be effected without the Aid and Authority of Parliament: May it therefore please Your Majesty that it may be enacted [etc]." As indicated in the Preamble, the 1860 Act was intended to provide a basis for the operation of the Market which left the resolution of the on-going dispute about the ownership of the site between the Crown and the City to one side. To that end, sections 8 and 9 of the Act provide as follows: "8. And whereas a Plan of Smithfield Market Place, showing the Alterations and Improvements authorized by this Act, has been deposited at the Office of Land Revenue Records and Inrolments, and has been signed by the Keeper of such Records and Inrolments: Be it enacted, That the Part of Smithfield Market Place which is coloured Red on the same Plan shall be for ever reserved and appropriated as an open public Place, subject to the Use of the same as a Market for the Sale of Hay and Straw in Carts or Waggons, and no Building or Erection shall at any Time be erected or made thereon (other than a Fountain and Dwarf Walls with Iron Rails, not exceeding in the whole Four Feet Six Inches in Height, at the Sides of the proposed Entrance to a Goods Stations, as shown on the same Plan, which proposed Entrance shall not be used for Railway Passengers); and the Parts of the said Market Place which are respectively coloured Green and Blue on such Plan shall be appropriated as or as an Addition to and shall be thrown into the adjoining public Streets; and the Land coloured Brown, Purple and Yellow on the said Plan shall be appropriated and used for the Purposes mentioned in the Ninth and Tenth Sections of this Act, and for no other Use or Purpose, and a Copy of such Plan shall be deposited at the Office of the Clerk of the Peace for the City of London with the other Documents referred to in this Act: Provided always, that nothing contained in this Act or appearing on the said Plan shall, subject to the Provisions of this Act, affect or prejudice any Estate, Right, or Interest of the Queen's Majesty, or of the said Mayor, Commonalty, and Citizens, to the whole or any Part of the Land coloured respectively Purple, Yellow and Blue on such Plan, it being alleged by the said Mayor, Commonalty and Citizens that such Land does not form Part of the ancient Site of Smithfield. 9. It shall be lawful for the Mayor, Aldermen, and Commons and they are hereby authorized to appropriate for the Purposes of this Act that Part of the ancient Site of Smithfield Market which is situate on the North Side of Long Lane, or any Part of such Site, and to erect, build, construct, and maintain on the Site so appropriated, or on any Part thereof, and on the Land by this Act authorized to be taken, a Market House and Market Place, or Market Houses or Market Places, for the Exposure and Sale of Meat and Poultry and other Provisions, in the Situation delineated on the Maps and Plans so deposited as aforesaid, together with such Houses, Shops, Stalls, Standings, Sheds, Buildings, Works, and Conveniences for the Purposes of the said Markets, and for the Accommodation of Persons resorting thereto, as they the Mayor, Aldermen and Commons may think necessary, all which said Market Houses and Market Places shall be deemed to be Public Markets." The parties agree that these provisions provide the legal basis for the City to operate the Market and to carry out works of construction and modification, and that section 8 has the effect of restricting the permissible user of the parts of the site coloured brown, purple and yellow on the plan to Market purposes. This is relevant to the resolution of Issue 1, because parts of the site coloured brown, purple and yellow on the plan fall within the land occupied by the West Market building, which has the car park below it and which was developed in the 1990s to include commercial offices above the market areas. Other provisions in the 1860 Act conferred powers of compulsory purchase on the City, enabling it to acquire land in the vicinity of the historic market to provide the area required for construction of the Market buildings and streets around it. Section 10 made provision for the creation of an underground railway station at the Market. When the Market buildings were constructed in the nineteenth century an underground station was constructed pursuant to this provision. In the 1960s and 1970s this ceased to operate as a station and was converted into the car park. Section 10 provides: "It shall be lawful for the Mayor, Aldermen, and Commons and they are hereby authorized and empowered to appropriate the whole or any Part of the underground Surface beneath the intended Market or Market Places, and the Buildings belonging thereto, and beneath so much of the Roads or Streets surrounding the said Market and Market Places as are to be purchased or taken under the Powers of this Act, for the Purpose of a Railway Station or Railway Terminus, with Lifts and Hoists communicating with the said Market and Market Places, to be used by any Railway Company, or any Persons desirous of constructing a Railway or Railways to such Market or Market Places, and to enter into any Contract or Agreement with any Railway Company or Persons for the Excavation, Building, and Erection of such Railway Station or Terminus, and of the Approaches thereto, and for the Lease of the same, at such Rent and upon such Terms and Conditions as shall be mutually agreed upon: Provided always, that the Station or Terminus shall not be used as a Passenger Station, except in connexion with the Market and for Market Purposes." Sections 14 and 15 provide: "14. The Ground and Soil of the Roads or Streets immediately surrounding or intersecting the said Market, and formed or made under the Powers of this Act, other than the Ground and Soil of such Roads and Streets as are coloured on the said Plan deposited at the Office of Land Revenue Records and Enrolments, and the Fee Simple and Inheritance thereof, shall be and are hereby vested in the Mayor, Commonalty and Citizens of the City of London; and the whole of the said Roads or Streets shall be under the Care, Management, Control, and Jurisdiction of and shall be paved, repaired, cleansed, lighted, and watched by and at the Expense of the Mayor, Aldermen, and Commons. 15. In case any Lands which shall be purchased and cleared by virtue of this Act shall not be wanted for the Site of the said Market, and shall not be laid into the Streets to be made, widened, or improved under the Authority of this Act, it shall be lawful for the Mayor, Aldermen, and Commons to appropriate the same to any other Purpose which they may think proper or expedient: Provided that it shall not be lawful for the Mayor, Aldermen, and Commons to appropriate any Part of the said Market House, except the underground Surface thereof, to any other than Market Purposes." Section 26 confers on the City a power to grant leases of shops and stalls in the Market. It is under this power that the existing leases have been granted to the tenants. Section 26 provides: "26. It shall be lawful for the Mayor, Aldermen, and Commons from Time to Time to demise and lease all or any of the Houses, Shops, Stalls, Standings, Sheds, Buildings, and Conveniences which may be provided under the Authority of this Act, and which in their Opinion may properly be exclusively occupied, for any Term or Number of Years not exceeding Twenty-one Years, and to demise and lease any House or Building which may be erected on any Land acquired under the Authority of this Act, and which may not be wanted for the Purpose of constructing the said Market, and also all or any Part of such Land, for any Term or Number of Years not exceeding Eighty Years, every Lease which may be granted under the Authority of this Act to take effect in possession, or within Three Months from the Time of granting the same." Section 34 provided for the City to fix a table of rents, not exceeding those set out in Schedule C to the Act. This regime was relaxed in 1963. Section 31 of the City of London Act 1963 ("the 1963 Act") provided that, notwithstanding anything in the 1860 Act, the City "may demand and recover in respect of the use of [the Market], or of any services provided by the Corporation in [the Market]s, such tolls, stallages, rents, dues or other payments as they may from time to time prescribe." It is under this provision that rents and service charges payable by the tenants have been set. Sections 32 and 33 of the 1860 Act gave powers for the City to charge tolls to traders, as set out in Schedules A and B to the Act. These are no longer levied. It is, however, relevant to set out sections 37 and 40 of the 1860 Act. Section 37 provides: "37. The Tolls which may be received by the Mayor, Aldermen, and Commons under Schedule (A.), by virtue of this Act, together with the Rent which shall be received by them from any Railway Company for the Use of the underground Station, or Terminus thereto, shall be applied in the first place in defraying the Cost and Expenses of collecting and receiving the said Tolls and Rent, and in the next place in Payment of the Interest and Principal of the Monies expended in the Purchase or Acquisition of Land for the Site of the said intended Market and Market Places, and of the Roads or Streets surrounding or intersecting or approaching the same, and in making the several Improvements in this Act authorized or required to be made; and when all such Principal Monies shall have been repaid, with all Interest which shall from Time to Time or at any Time have accrued in respect thereof, the Tolls in Schedule (A.) by this Act authorized to be taken shall cease and determine, unless Parliament shall in the meantime otherwise direct, and the Rents and other Monies which shall be received for the Use of the said Railway Station or Terminus shall be applied towards the Maintenance and Improvement of the said Market and Market Places; and in case the Tolls which may be received by the Mayor, Aldermen, and Commons under Schedule (A.), by virtue of this Act, together with the Rent which shall be received by them from any Railway Company for the Use of the underground Station or Terminus, shall at any Time be insufficient to defray the Costs and Expense of collecting and receiving the said Tolls and Rent, and the Interest of the Monies which may be borrowed on the Credit thereof, the Deficiency shall be made good by the Mayor, Commonalty and Citizens out of their own Monies, and such Sums of Money as may be paid and advanced by them for the Purposes aforesaid shall be repaid to them, with Interest after the Rate of Four per Centum per Annum from the Time of advancing the same out of any future Tolls or Rent which may be received by them." The effect of this section was modified by section 11 of the City of London (Various Powers) Act 1956, which provided that the tolls should continue after repayment of the principal and interest referred to in section 37 of the 1860 Act, and should be applied by the City "after defraying the cost and expenses of collecting and receiving the same towards the maintenance of the meat and poultry market and subject thereto shall be credited to the city's cash." Section 40 of the 1860 Act provides: "40. The Mayor, Aldermen, and Commons shall cause Books to be provided and kept, and full and correct Accounts to be entered therein of all Monies which may be raised or borrowed upon the Credit of the Tolls by the Mayor, Aldermen, and Commons, under the Authority of this Act, for the Purchase of Land, and for effecting the said Improvements, and of all Rent received from any Railway Company or other Persons for the Use of the underground Station or Terminus, and of all Tolls and other Monies received under Schedule (A.) to reasonable Charges of such Distress and Sale: Provided always, that nothing herein contained shall extend to prevent the Mayor, Aldermen, and Commons from suing for and recovering in any Court of Record any Sum of Money which shall become payable to them for or in respect of any such Toll or Payment as aforesaid, if Default be made in Payment thereof." Factual background The East Market and the West Market were built in the mid-nineteenth century under the authority given by the 1860 Act. The Poultry Market was built somewhat later in that century. The Poultry Market burned down in the 1950s and was reconstructed to a modern design in the early 1960s. The design involved installing a very large dome constructed in concrete. This was a novel design feature which has caused the Poultry Market to become a listed building. Although the East Market and West Market were substantially refurbished and redeveloped in the 1990s, at a cost to the City of about £70 million, the Poultry Market was not. The premises in the Poultry Market are more run-down than those in the East Market and West Market, and the roof of the Poultry Market requires extensive and expensive repair work. Under the City's proposals in these proceedings, the City will bear the cost of this. The refurbishment of the East Market and the West Market included the installation of elaborate refrigeration equipment, loading and handling bays and an overhead meat rail conveyor system for transporting animal carcasses to traders' shops, in order, inter alia, to comply with stringent new hygiene requirements introduced by the European Community. In or about 1981 (somewhat later in some cases) leases of stalls, shops and offices in the East and West Markets were entered into by the City and the tenants ("the early 1980s leases"). The leases were terminable on any quarter-day upon the giving of three months' notice. They provided for the tenants to pay a yearly rent plus a further sum by way of a service charge by reference to "all charges of whatsoever nature in respect of [the Market] … shown in the accounts in the books of [the City]", to be apportioned between tenants "to the intent that all the approved expenses of [the City] howsoever incurred that reasonably relate to the operation maintenance and functioning of [the Market] shall be reimbursed together with a charge for the administration …", and further sums for electricity consumed by the tenant and for use of the services of a cooling tower. It is this form of payment structure to which the City wishes to return under the tenancies to be ordered by the Court in these proceedings. Also in about 1981, various leases of stalls, shops and offices in the Poultry Market were entered into. I am concerned with those for units 205, 208, 219 and 222/223 ("the 1981 Poultry Market leases"). These were on terms closely similar to those in the early 1980s leases, and included provision for payment of rent and a variable service charge. The leases included provision for the City to give advance notice to the SMTA of the costs proposed to be included in the service charge, and provided that if the SMTA objected to any item of the costs there should be consultation and, in the absence of agreement, a reference to a body called the Estimates Committee for a binding decision. In the late 1980s the City had drawn up proposals for the refurbishment and redevelopment of the East and West Market buildings. The works were to be extensive and intrusive, and would require tenants to be moved around within the Market buildings as different parts of the buildings were subject to construction work and refurbishment. In these circumstances, the operation of the payment structure in the early 1980s leases, involving a rent payment and service charge payments, was felt to be inappropriate while the disruptive works continued. In 1987, therefore, the City and the tenants entered into supplementary agreements which modified the payment obligations under the early 1980s leases ("the 1987 endorsements"). In lieu of the rent and service charge payments in those leases, it was agreed that for the period 1 April 1988 to 31 March 1989 each tenant would pay "the total of the combined rent and estimated service charge" for the year to 31 March 1988, plus 9%; and that that overall composite figure increased at the rate of 9% each year would be paid thereafter. I accept the evidence for the City that these changes were intended to be temporary, to cover the period of the refurbishment. It seems that in relation to the 1981 Poultry Market leases, unit 205 was also made the subject of a similar 1987 endorsement. There was a longer period before commencement of the refurbishment works than had been anticipated. There were therefore further negotiations between the City and the SMTA with a view to replacing the 1987 endorsements, which as noted above had been intended as a temporary measure. In 1994 the City and the tenants entered into new agreements for leases in relation to the East Market and the West Market ("the 1994 agreements"). These agreements were again drafted in contemplation of significant disruption and decanting of tenants' businesses from time to time to different locations around the Market while the refurbishment works proceeded. They looked forward to the grant of new leases once the refurbishment works were finished, on terms from 1 October 2000 providing for payment of a rent plus a service charge; but in the meantime a simple all-inclusive rent was to be paid. Notwithstanding the making of the 1994 agreements, at meetings between the City and the SMTA in October 1994 disputes broke out whether they properly reflected what had previously been agreed between the City and the SMTA in relation to payment structure. The SMTA wanted there to be a simple rent, rather than an obligation to pay rent and a service charge. The SMTA wanted this arrangement to be in place under a ten year lease for each tenant. The City wanted to have a rent and service charge. The City's representatives maintained that there had been an understanding that there should be a compromise, with a simple rent arrangement for the first five years only and then a rent review on the assumption that a service charge would be payable (to cover repairs to common parts, heating, lighting, cleaning, ventilation and air conditioning of common parts, refuse collection, security and so forth). The result of this dispute was that the 1994 agreements were not given effect. The differences between the City and the tenants on this issue were not fully resolved. Eventually, from 2001 new leases were entered into in relation to premises in the East Market and the West Market (I refer to these as "the 2001 leases", though some were entered into later than this). These are the leases in relation to those buildings which are terminating and in relation to which the tenants seek new tenancies under the 1954 Act in these proceedings. The 2001 leases covered the period commencing on 1 January 2000 and expiring on 31 December 2009. The drafting of the 2001 leases with respect to rent and service charge payments reflected the fact that the parties remained in dispute about the payment structure to be adopted. Each lease incorporated a schedule which set out in paragraph 5(A) (entitled "Rent") a formula for an annual rent (a simple specified amount in the first year, subject to indexation in subsequent years) and in paragraph 5(B) (entitled "The Service Charge") a statement that the Service Charge "shall be outlay on" a range of matters and services, including "all repairs, decoration and maintenance appertaining to [the Market] together with the cost of the staff employed for this purpose"; heating, lighting and refrigeration of the common parts; refuse collection and cleaning of the common parts; security costs; that "all such other costs charges and expenses of whatsoever nature in respect of any service provided for the operation, maintenance and function of the [Market] … to the intent that all the approved expenses of [the City] incurred under the provisions [of the lease] that reasonably relate to the operation maintenance and functioning of [the Market] shall be reimbursed" and so forth. This reflected the payment structure proposed by the City. Clause 6(2) of the lease contained an obligation on the City to provide the services set out in paragraph 5(B) of the Schedule. However, in the body of the 2001 leases, clause 2 provided that the tenant was required to pay from the start date of the lease, "to the intent that this sum shall consist of the maximum recoverable rent, service charge and uniform business rates for the Premises", "the rent as set out in paragraph 5(A) of the Schedule". The effect of this was that, despite the elaborate specification of the service charge in the Schedule, the tenants were only obliged to pay a simple all-inclusive rent as specified in paragraph 5(A) of the Schedule. This reflected the payment structure preferred by the tenants. In each of the 2001 leases, clause 13 provided: "Upon service by the Landlords of notice to terminate this Lease under Section 25 Landlord and Tenant Act 1954 or upon service by the Tenant of a request for a new lease under Section 26 Landlord and Tenant Act 1954 then the parties shall enter into negotiations to determine whether this Lease shall be renewed on an all inclusive rent or on a separate rent and service charge and in the event that agreement is not reached then the parties shall apply to Court in accordance with the Landlord and Tenant Act 1954 in respect thereof." This provision was included as a way of recognising that the dispute between the parties regarding the appropriate payment structure to govern the tenancies under which stalls and shops in the East Market and West Market were to be held continued, notwithstanding the grant of the 2001 leases, and was to be treated as "parked" for the duration of those leases but with each side being at liberty to revive the argument when the time came to consider renewal of the tenancies under those leases. For good measure, in some of the 2001 leases an additional clause 14 was added in manuscript, to say: "The parties hereto certify that there is no Agreement for Lease to which this Lease gives effect." I infer that the tenants wished to include this provision in order to emphasise that the 2001 leases should not be regarded as the product of the 1994 agreements, which had contemplated that the payment structure would take the form of a rent and service charge from 2000 onward. In about 2001 the 1981 Poultry Market leases were also subject to variation by agreement. Under these variations ("the 2001 variations") the Poultry Market leases continued to have effect subject to variations to introduce payment terms similar to those contained in the 2001 leases. A definition of the service charge was introduced which corresponded to that in the 2001 leases: see para. [42] above. A figure and indexed calculation for rent corresponding to the model of the 2001 leases was also introduced (see para. [43] above), including the statement: "with the intention that for the period from and including 1 January 2000 to 31 December 2009 only the yearly rent shall include all contributions to the services charge referred to in [the Poultry Market leases as varied by the 2001 variations]" (my emphasis). Clause 2 of the 2001 variations provided that the relevant Poultry Market lease "shall continue in full force and effect in all other respects." The position in relation to the 1981 Poultry Market leases, therefore, is that they originally provided for payment of rent and a variable service charge, and by virtue of the 2001 variations provided for a simple all-inclusive rent for the period 1 January 2000 to 31 December 2009, but reverted to the same rent and variable service charge structure as from 1 January 2010. That appears to be true even in relation to unit 205, which had been the subject of the 1987 endorsement, because the 2001 variation referred back to the original lease of 1981 to vary its terms (without reference to the 1987 endorsement) and in clause 2 stated that it was that original lease which – subject to the 2001 variations – would have effect. Thus, as at the time of the applications to court in relation to units 205, 208, 219 and 222/223 in the Poultry Market, the leases applicable to them provided for a rent and variable service charge payment structure, unlike the leases then applicable in relation to the East Market and the West Market. I am also called on to consider the position in relation to units 217/218, 220, 207 and 221 in the Poultry Market. The leases for these units were granted between 2000 and 2002. Like the Poultry Market leases discussed above, they are terminable upon the giving of three months' notice to expire on a quarter-day. The leases for units 217/218 and 220 provide for a rent and separate variable service charge, but subject to the proviso in each case that for a defined period ("for the period from and including 06.03.2000 to 31.12.2009 only" for unit 217/218 and "for the period from and including 01.01.2002 to 31.12.2009 only" for unit 220 [my emphasis]) the rent payable should "include all contributions to the services charge". Thus, these units are in a position similar to that in relation to units 205, 208, 219 and 222/223, in that at the time of the applications to court a limited period for a simple all-inclusive rent to apply had come to an end and the payment structure provided for in the existing leases was of a rent and variable service charge. The leases for units 207 and 221 were both granted in 2000. In contrast to the leases for the other units in the Poultry Market discussed above, these leases did not provide for a general variable service charge, but only for rent plus a payment for electricity used in charging forklift trucks. These leases were also the subject of the 2001 variations, which defined the services which the City was to provide, introduced an indexation formula in relation to rent and stated that for a defined period ("for the period from and including 20.10.2000 to 31.12.2009 only" for unit 207 and "for the period from and including 01.01.2000 to 31.12.2009 only" for unit 221 [my emphasis]) "the yearly rent shall include the cost of all services" referred to in the leases as varied. The effect of the 2001 variations in relation to these units appears to be that the structure of the payment terms have now reverted to those in the leases granted in 2000, namely a simple rent without a general variable service charge. As appears from the figures in evidence, much the greater part of the services provided by the City relates to the day to day costs of running the Market, as opposed to the repair of the Market buildings. The City employs 13 full time maintenance staff, 16 cleaners and 22 security staff (whose duties include marshalling the unloading of vehicles making deliveries to the Market and monitoring compliance by traders with hygiene standards). It provides the energy required to refrigerate the delivery areas and the chilled water which assists with refrigeration of the tenants' cold stores. It maintains specialist equipment including a chilled water system and the meat rail in the East Market and the West Market on which carcasses are carried to the tenants' units. The City pays a proportion of the uniform business rates for the Market and meets the costs of meat inspection, cleaning and refuse collection. These all involve expense to the City for the purpose of enabling the tenants to trade from the Market. The cost of repairing and maintaining the Market buildings can, I think, fairly be described as being for the joint benefit of the City as freeholder and the tenants as long term occupiers of the Market. It was clear on the evidence that the tenants tend to hold tenancies in the Market for very long periods. This is something recognised in and reinforced by the proposals from both sides that the tenancies to be ordered by the Court in these proceedings should be for the maximum possible period, fifteen years. This is not a case where there is a high turnover of tenants, where the interest of the landlord in the fabric of the building which is let can more readily be regarded as entirely distinct from that of its tenants. The City accepts in its proposals that current dilapidations and disrepair in the Market buildings should be made good at its expense. One area of dispute between the parties, however, is how the cost of future repair of the buildings should be borne, as future dilapidations have to be made good or if further structural problems, unforeseen at the present time, emerge in the future and have to be put right. As mentioned above, under Issue 2 the tenants accept the principle that these costs – like the operating costs of the Market in relation to the carrying on of their businesses as referred to above – should be recovered from them under the tenancies to be ordered by the Court. The question is whether an allowance in relation to such costs should be made now and incorporated within a simple all-inclusive rent, or whether a lower rent with a variable service charge in relation to all these costs should be set. I accept the City's evidence that the Market has been run by the City for many years at a considerable loss of the order of between about £1 million and £1.5 million p.a., arrived at by comparing the cost to the City of providing the services referred to in the 2001 leases with the rental income received from the tenants. The City has been subsidising the running of the Market for the benefit of the tenants. If the agreed principle of recovery of costs is to be respected under the new tenancies to be ordered, the payments due from tenants will have to go up, whether as part of a simple rent or as part of the rent and variable service charge combination proposed by the City. The actual costs incurred by the City in maintaining and operating the Market have been running at more than £4 million p.a. for several years. Mr Marland, in giving evidence for the tenants, sought to suggest that the City had run the Market in an inefficient way, so increasing the costs which it has had to bear. He said that the buildings had been allowed over many years to deteriorate without planned preventive maintenance and that the City "has become incompetent and complacent in its management" of the Market, failing to contain costs and being inefficient in respect of the provision of services at the Market. In my assessment on the evidence, however, these suggestions are not sustainable. I consider that the City has operated the Market in terms of provision of services in a reasonably efficient way and as one would expect. The City has maintained a rolling programme of periodic maintenance and repairs, contrary to the suggestion by Mr Marland that they failed to undertake planned preventive maintenance. I reject his contention that the minor signs of dilapidation around the Market highlighted by him indicate a failure by the City to operate such a programme and to maintain the Market properly. They were consistent with the City maintaining a rolling programme of maintenance and repairs in a sensible and reasonable way to take account of ordinary wear and tear in a building which provides a very busy and physically demanding working environment. I was unpersuaded on the evidence before me that the City had been complacent, indifferent to costs and inefficient. Not least because the City has been subsidising the operation of the Market for many years, I consider that it has been properly alert to issues of costs and has taken reasonable steps to keep them under review and within proper bounds. Mr Marland's allegations to the contrary were not substantiated. It is convenient at this point to comment further on the expert evidence in this case on Issue 2. I found the expert evidence of only limited assistance. Neither Mr Hull nor Mr Marland were fully independent of the parties. Both of them had been involved in the on-going negotiations between the City and the tenants, and with both of them there was at times a flavour of advocacy for their side in their evidence. Having said this, I found Mr Hull on the whole to be a better witness on the points the experts could speak to than Mr Marland. Careful cross-examination by Mr Rodger exposed Mr Marland's evidence and report as containing careless factual inaccuracies and inconsistencies. I came to the conclusion that the proper resolution of the preliminary question set out in Issue 2 turned more substantially on legal submissions and consideration of principles of fairness and reasonableness rather than assessment of conflicting expert evidence. It is not necessary in this judgment to provide a full commentary on Mr Marland's evidence to highlight every point at which I found it implausible or unsustainable. I should, however, mention three particular points made by him in order to explain that I reject them. First, Mr Marland proposed a comparison between service costs at the Market and those at certain retail shopping centres in order to suggest that "It is frankly irrational to expect a wholesaler to pay service costs that are so much larger than those for a retailer". I do not consider that this was an appropriate comparative exercise. The two situations are very different, and the comparison ignores the extensive and specialist nature of the services which have to be provided at the Market in order for it to operate in compliance with legal hygiene standards. In my view, a more appropriate comparison was that proposed by the City with other similar markets operated by it, in particular the specialist fish market at Billingsgate where service charges are higher than at the Market. Whilst again there are significant differences between the markets, the comparison indicated that the cost of services at the Market is not exaggerated or out of line with what a reasonable landlord and tenant might expect. I consider that Mr Marland's evidence to the contrary was wildly overstated. Secondly, Mr Marland said that with a management record on the part of the City of the nature he sought to assert, "there is no prospect whatsoever that in the open market a tenant would be prepared to contemplate an exclusive rent with fully recoverable service charge." I do not accept this evidence. I am unpersuaded that the management record of the City was poor, so the predicate on which Mr Marland's opinion was based falls away. Further, I consider that even if there were a background of poor management, a tenant might well be prepared to accept such a payment structure if there were sufficiently robust mechanisms in place allowing him to review and participate in the setting of service standards and the costs associated with them – which is what the City proposes in this case – and if any additional risk were reflected in a reduction in the rental element to be paid. Thirdly, Mr Marland said that the tenants are small private businesses whose cashflow and resources inherently require a steady and predictable costs base and that tenants "will be able to bid on the basis of inclusive rents only". Again, I consider that his evidence was overstated and unsustainable. A degree of certainty and predictability is important for any business undertaking, including the City in its role as landlord of the Market as well as the tenants in running their businesses. The question is how risks in relation to future variations in the costs of operating and maintaining the Market ought reasonably to be distributed as between the City and the tenants. In that regard I observe that at various times, as set out above, tenants at the Market have been willing to carry on their businesses under terms providing for payment of a rent and a variable service charge and do not appear to have found it impossible or unduly burdensome to do so. The evidence was that traders at other markets, particularly Billingsgate (where the service charge element could be very high), accept such a payment structure. Businesses large and small – whether in the Market or outside - have to cope with some level of uncertainty about operating costs, and to that end prepare annual budgets, make provisions and have contingency plans and so forth. In my view, the City's proposals for a rent and variable service charge would provide a reasonable level of predictability for tenants, because there would be mechanisms for them to be involved in setting estimates and budgets of costs in advance. Some of the witnesses for the tenants referred to transactions they had entered into in the past few years to acquire the businesses operating in some of the units in the Market, in order to emphasise the need for business certainty and predictability of their costs over time so as to satisfy the banks which had provided them with loan finance. This evidence was not persuasive to tip the balance in favour of the tenants on Issue 2. Those who entered into these transactions did so knowing that the issue of the payment structure to be applied under new tenancies to be ordered by the Court was a matter for debate and legal argument, and hence knowingly accepted the risk that the conclusion on the appropriate payment structure might be adverse to them. In any event, there is no reason to think that their banks would be unfamiliar with or particularly uncomfortable with the usual budgeting process in relation to uncertain future costs which almost any business has to engage in and which the tenants would have to adopt if they are unsuccessful on Issue 2. Issue 1: analysis Mr Dingemans QC, who presented the argument for the tenants on this part of the case, submits that by virtue of the 1860 Act the City is obliged to apply the rental income derived from the commercial offices built during the refurbishment in the 1990s above the main market areas in the brown, purple and yellow parts of the site as marked on the plan referred to in the 1860 Act to Market purposes. The share of the commercial office rental income derived from that part of the site is about £300,000 p.a.. He also submits that the City is obliged to allocate the whole of the income derived from the car park (about £65,000 p.a.) to Market purposes; alternatively that it is obliged so to allocate the share of the car park income derived from the part of the site under the land coloured brown, purple and yellow on the plan. Mr Dingemans submits that all this is the effect of sections 8, 9 and 10 of the 1860 Act. The consequence, he says, is that the City is obliged to spend these sums on maintaining and operating the Market, with the result that the reasonable rent to be fixed under section 34 of the 1954 Act should be reduced to take account of these other sources of income for the City dedicated to Market purposes. In relation to the car park, in support of his primary contention that the whole income from it had to be allocated to Market purposes, Mr Dingemans made the submission that section 10 of the 1860 Act created a special regime for the underground surface of the Market site, and that section 37 has the effect that since the income from the car park is not "rent received … from any railway company for the use of the underground station", but is "other monies … received for the use of the … underground station or terminus", then the City is caught by the obligation in that provision that it "shall be applied towards the maintenance and improvement of the … Market and Market Places". He submits that this interpretation of section 37 is reinforced by consideration of section 40, which refers to "rent received from any railway company or other persons for the use of the underground station or terminus" (my emphasis), and hence contemplates that income might be received in relation to use of the area below ground level constituted by the underground railway station from persons other than a railway company referred to in the opening part of section 37. The underground station is now the car park, and Mr Dingemans says that money received by the City as car parking charges from people so using it has to be used for Market purposes as specified in the relevant part of section 37. If the submission based on section 37 is not accepted, Mr Dingemans submits in the alternative that such part of the car park income as is attributable to the area of the car park which lies under the parts of the site of the Market coloured yellow, brown and purple in the plan has – like the relevant portion of the rent from the commercial offices - to be applied for market purposes, by virtue of sections 8 and 9 of the 1860 Act. In my judgment, the basic contention of the tenants that the operation of these provisions of the 1860 Act has the effect that the rents to be set in relation to new tenancies under the 1954 Act should be lower is flawed and should be rejected. The answer to the question in Issue 2 is "No". Having said this, I should make it clear that Mr Rodger made certain submissions in support of such a conclusion which I do not accept. He submitted that the 1860 Act was not enacted for the benefit of traders in the Market and is not enforceable by them. I do not think that the latter part of this is right. The 1860 Act creates a set of public law obligations binding on the City, and anyone with a sufficient interest could seek to take legal proceedings by way of judicial review to ensure that the City properly abides by those obligations. Traders in the Market would have standing to bring such a claim, especially if it was designed to ensure that the City spent sums on the Market which could benefit them. Mr Rodger also submitted at one point – rather to my surprise - that the City had acted wholly unlawfully and ultra vires in relation to its powers under the 1860 Act when in the 1990s it built the commercial offices in the Market above the traders' premises and let them out. Therefore, he said, the rental income from those offices fell outwith the restrictions in the 1860 Act altogether. I do not accept this submission either. There was no evidence that the City deliberately set out to act unlawfully in the 1990s. In fact, it is clear that the proposal to refurbish the Market and to include commercial offices which could be rented out was intended to help make the Market financially viable for the future. I think that the natural presumption is that the City sought to act lawfully when it embarked on this major project. In my opinion, the better view is that the construction and letting of the offices to generate an income stream to help make the Market financially viable, where the offices would be something incidental to the overall operation of the Market and would not replace or overwhelm such operation (with the effect that the Market became a mere incidental part of an office block) was lawful under sections 8 and 9 of the 1860 Act. It was an activity and for a purpose falling within section 9, which authorises the City "to erect, build, construct and maintain on the site" the Market buildings "together with such … buildings … for the purposes of the [Market] … as [the City] may think necessary …". However, I consider that a consequence of this analysis is that the City is obliged by section 9 to use its income from the letting of the relevant part of the commercial premises, after deducting expenses, for the purposes of supporting the maintenance and operations of the Market. Unlike in relation to the letting of the Market units, which involves use of the Market land directly for Market purposes (and where the City is free, as a result of the 1963 Act, to charge whatever rents the market will bear and is not bound to use the proceeds for any particular purpose), the only way the incidental use of the Market land for commercial offices could be justified is if the proceeds of such use are used for Market purposes to help maintain the viability of the Market. If the City ceased to do that, and used the rental income from the relevant part of the commercial offices for other purposes, it would no longer be using the land for the purposes set out in section 9, as required by section 8. In other words, the continuing compliance by the City with its obligations under section 8 depends upon it continuing to put the relevant property and income derived from it to use for the Market purposes specified in section 9. I also found unpersuasive the further contention of Mr Rodger to the effect that once it had let the commercial offices to tenants, the City was no longer itself using those offices and could do what it liked with the income from them. Whatever might be the position as a matter of analysis of the technical position under the law of landlord and tenant as to who uses land which is demised to a tenant, I consider that the proper meaning and effect of sections 8 and 9 of the 1860 Act in a situation where the City builds commercial offices within the brown, purple or yellow parts of the plan for the purpose of creating a source of income to support the operation of the Market, and then leases them for a rent to achieve that end, is that the City remains bound to appropriate and use its remaining interest in the land (as the body which is authorised by the Act to exercise powers as the landlord of that land, and hence entitled to receive rent in relation to it) for Market purposes. That it can only do by using the rental income stream so created for Market purposes. Otherwise, the very purpose which makes the construction and letting of the commercial offices lawful in the first place would be capable of being undone at the whim of the City, contrary to the plain intention of the Act. The submission of the tenants breaks down, in my view, at a different point. There is no provision in any of the tenants' leases that the rent or service charge money which they pay to the City must itself be treated by the City as funds to be spent directly on Market purposes. Obviously the City is obliged to provide the services stipulated in the leases, and will have to spend money to do so. But the leases do not specify where that money is to come from. Nor is there any statutory limitation in the 1860 Act, as modified by the 1963 Act (see para. [30] above), on the amount which the City can charge its tenants, e.g. to restrict it to charging whatever might be the sum required to maintain and operate the Market after taking into account what it receives from letting the commercial premises or from the car park. In previous litigation concerning the Market, the Court held that "[The City], as the market authority, is entitled to seek to make a profit or to recover its costs or to minimise its losses": R v City of London Corporation, ex p. Brewster, Hidden J, unrep., 21 December 1993, transcript p. 25B-C. That proposition was not challenged by the tenants at the hearing before me. It is therefore open to the City to use money from the letting of the commercial premises and from the car park to meet (part of) its expenditure on the costs of maintaining and operating the Market – i.e. "for the purposes of the Market" as required by section 9 of the 1860 Act – and to pay the equivalent sums received as rent or service charges from the tenants into the City's general funds to use in other ways. The funds which the City does or is likely to receive from the letting of the relevant part of the commercial offices and from the car park – estimated by Mr Marland for the tenants at something less than £400,000 p.a. – is very much less than the £4 million p.a. or more which the City in fact expends or is likely to expend on maintaining and operating the Market. Accordingly, there is in fact no obstacle to the City proceeding to spend the full amount of the relevant commercial office and car park income on Market purposes, so freeing up a corresponding amount of money received as rent and service charges from the tenants to be spent on other purposes, as part of the general funds of the City. In addition, there is no limitation in the 1860 Act as to which Market purposes the income from the commercial offices and the car park should be spent on. It is open to the City to choose to spend that income on Market purposes (such as repair of the roof of the Poultry Market at a cost of about £5 million) which are unrelated to the direct provision of services to tenants under the new tenancies. Since the City is entitled to proceed in either of these ways, and is not under any legal obligation to use the relevant commercial office and car park income for the benefit of the tenants, in order to lower their rents, there is no reason why the existence of the obligations under the 1860 Act would be taken to be a matter causing a lower rent to be agreed by a notional willing landlord and a notional willing tenant for the purposes of setting rent under section 34 of the 1954 Act. I consider that this reasoning undermines the tenants' case on Issue 1 both in relation to the effect of sections 8 and 9 with respect to the share of income from the relevant part of the commercial offices and the share of income from the relevant part of the car park and in relation to their case in respect of the whole of the car park income under section 37. For completeness, however, I should mention that in any event I was unpersuaded by their argument based on section 37. The car park income is not money "received for the use of the … railway station or terminus", to which section 37 would apply. The railway station is no longer in use. The car park was constructed in its place. In my view, this was lawfully done by the City in exercise of its powers under section 9 of the 1860 Act. The construction and operation of the car park fell within the authorisation provided by section 9 for the construction and maintenance of "buildings, works and conveniences for the purposes of the [Market]". Section 9 is not restricted to construction work above ground, since it obviously covers the construction of foundations and basements under the surface of the land and section 15 of the 1860 Act contemplates that the land under the Market House constructed pursuant to section 9 is itself part of the Market House ("it shall not be lawful for [the City] to appropriate any part of the said Market House, except the underground surface thereof, to any other than Market purposes"). It is unnecessary and inappropriate to refer to section 37 of the 1860 Act for the legal foundation for the creation and operation of the car park. Issue 2: analysis In this section I will first address the tenancies in relation to the East Market and West Market as one group, then the tenancies in relation to all the Poultry Market leases apart from units 207 and 221 as a second group, and finally I will turn to units 207 and 221. The East Market and the West Market The leading authority in relation to the proper approach to determining the terms of a new tenancy under section 35 of the 1954 Act is O'May. The leading speeches in the House of Lords were delivered by Lord Hailsham of St Marylebone LC and Lord Wilberforce, with both of whom the other members of the Appellate Committee agreed. The case concerned, in the context of consideration of the terms of a new tenancy to be ordered by the court under the 1954 Act, an attempt by a landlord to change the basic parameters of the commercial deal reflected in the terms of the existing tenancy, according to which the landlord was responsible for repairs, maintenance and decoration of the exterior and common parts of the building and for providing and maintaining lifts and other plant (such as boilers). Instead, in return for a reduction in rent, the landlords proposed that the tenants should bear, by way of service charges, a proportion, attributable to their holding, of the costs of those items: see [1983] 2 AC at p. 748A-D. The House of Lords unanimously rejected the landlord's proposal. I set out substantial passages from the speech of Lord Hailsham and from the speech of Lord Wilberforce, since they provide authoritative guidance as to the approach which the court should adopt when applying section 35 of the 1954 Act. After citing sections 34 and 35 of the 1954 Act, Lord Hailsham said this at [1983] 2 AC 740D-741D: "From these sections I deduce three general propositions. (1) It is clear from section 34 that, in contrast to the enactments relating to residential property, Parliament did not intend, apart from certain limitations to protect the tenant from the operation of market forces in the determination of rent. (2) In contrast to the determination of rent, it is the court and not the market forces which, with one vital qualification, has an almost complete discretion as to the other terms of the tenancy (which, of course in turn must exercise a decisive influence on the market rent to be ascertained under section 34). And (3) in deciding the terms of the new tenancy, as to which its discretion is otherwise not expressly fettered, the court must start by "having regard to" the terms of the current tenancy, which ex hypothesi must either have been originally the subject of agreement between the parties, or themselves the result of a previous determination by the court in earlier proceedings for renewal. A certain amount of discussion took place in argument as to the meaning of "having regard to" in section 35. Despite the fact that the phrase has only just been used by the draftsman of section 34 in an almost mandatory sense, I do not in any way suggest that the court is intended, or should in any way attempt to bind the parties to the terms of the current tenancy in any permanent form. But I do believe that the court must begin by considering the terms of the current tenancy, that the burden of persuading the court to impose a change in those terms against the will of either party must rest on the party proposing the change, and that the change proposed must, in the circumstances of the case, be fair and reasonable, and should take into account, amongst other things, the comparatively weak negotiating position of a sitting tenant requiring renewal, particularly in conditions of scarcity, and the general purpose of the Act which is to protect the business interests of the tenant so far as they are affected by the approaching termination of the current lease, in particular as regards his security of tenure. I derive this view from the structure, purpose, and words of the Act itself. But, if I required confirmation of it, I would find it in the passages cited to us in argument from the judgment of Denning L.J. in Gold v. Brighton Corporation [1956] 1 W.L.R. 1291 , 1294 and of Widgery L.J. in Cardshops Ltd. v. Davies [1971] 1 W.L.R. 591, 596 (also cited with approval by Shaw L.J. in the instant case). The point is also emphasised by the decision in Charles Clements (London) Ltd. v. Rank City Wall Ltd. (1978) 246 E.G. 739, where the court rejected an attempt by the landlord as a means of raising the rent to force on a tenant a relaxation of a covenant limiting user which would have been of no value to the particular tenant, and Aldwych Club Ltd. v. Copthall Property Co. Ltd. (1962) 185 E.G. 219 where the court rejected an attempt by the tenant to narrow the permitted user with a view to reducing the rent. A further point which was canvassed in argument, and with which I agree, is that the discretion of the court to accept or reject terms not in the current lease is not limited to the security of tenure of the tenant even in the extended sense referred to by Denning L.J. in Gold v. Brighton Corporation [1956] 1 W.L.R. 1291 . There must, in my view, be a good reason based in the absence of agreement on essential fairness for the court to impose a new term not in the current lease by either party on the other against his will. Any other conclusion would in my view be inconsistent with the terms of the section. But, subject to this, the discretion of the court is of the widest possible kind, having regard to the almost infinitely varying circumstances of individual leases, properties, businesses and parties involved in business tenancies all over the country." Lord Wilberforce added the following at pp. 747D-H and 748E-749H: "The Act, in the portion (Part II) of it which deals with business tenancies, is in the main a discretionary Act, giving wide powers to the judge to grant and settle the terms on which the business tenant is to have a new lease. This applies particularly to sections 33 and 34, which relate to the duration of the tenancy and the rent. The crucial section, for present purposes, is section 35 which relates to the terms of the tenancy, other than terms as to duration and rent. This section contains a mandatory guideline or direction to "have regard to" the terms of the current tenancy and to all relevant circumstances. The words "have regard to" are elastic: they compel something between an obligation to reproduce existing terms and an unfettered right to substitute others. They impose an onus upon a party seeking to introduce new, or substituted, or modified terms, to justify the change, with reasons appearing sufficient to the court (see Gold v. Brighton Corporation [1956] 1 W.L.R. 1291, 1294 - on "strong and cogent evidence" per Denning L.J., Cardshops Ltd. v. Davies [1971] 1 W.L.R. 591, 596 per Widgery L.J.). If such reasons are shown, then the court, applying the words "all relevant circumstances," may consider giving effect to them: there is certainly no intention shown to freeze, or in the metaphor used by learned counsel, to "petrify" the terms of the lease. In some cases, especially where the lease is an old one, many of its terms may be out of date, or unsuitable in relation to the new term to be granted. If so or for other good reasons shown, the court has power to order a modification by changing an existing term or introducing a new one (e.g. a break clause, cf. Adams v. Green (1978) 247 E.G. 49). Before doing so it will consider any objections by the tenant, and where there is an insoluble conflict, will decide according to fairness and justice. … The landlord's case for a shift of the burdens as I have indicated rests upon two broad foundations. The first is that such a shift is, for quite genuine and respectable reasons, in the interest of the landlord. I accept this; I think that it is shown by evidence that in the present and foreseeable state of the property market, a freehold interest in commercial property, at least in London, commands a higher price if let on "clear leases" - i.e. leases in which the tenants bear all the costs and risks of repairing, maintaining and running the building of which their demised premises form part, so that the rent payable reaches the landlord clear of all expenses and overheads. Thus the landlord demonstrates a genuine interest in departing from the existing terms of the lease. Secondly, the landlord asserts that new leases of property, such as that with which we are concerned, are now granted and accepted by tenants as "clear leases." This too is supported by the evidence. But, in my opinion, though a relevant circumstance it is not decisive. There is no obligation, under section 35 of the Act, to make the new terms conform with market practice, if to do so would be unfair to the tenant. and there is no inherent necessity why the terms on which existing leases are to be renewed should be dictated by those of fresh bargains which tenants may feel themselves obliged to accept. The court has to compare the advantage desired by the landlord with the detriment to be suffered by the tenants and to consider whether any monetary compensation offered against that detriment ought fairly to be imposed upon the tenants in exchange for the acceptance of that detriment. That money is not necessarily fair compensation for a change in existing rights is obvious in itself and is well recognised by the law in relation, for example, to compulsory acquisition and to the granting of damages instead of an injunction. There can be no doubt in my opinion that this detriment is real and serious. Considering only the obligation to bear a proportion of the cost of maintaining and repairing the exterior and common parts of the building, to impose this upon the tenants is something which they may most reasonably resist. They risk incurring a liability which is unpredictable and which may, in the event of a structural defect, be very great. They have no power of precautionary inspection or survey, since they only have access to part of the building. They have no means of verifying that work for which they are charged was necessary at the time, or was truly repair and not improvement, the cost of which ought not to be put on the tenants, nor of controlling what work has been done or how it has been done. As tenants, carrying on a solicitor's business, they have no staff capable of performing these tasks, whereas the landlord, as a large property company with an interest in over 200 buildings in the City of London, has. If work can be ordered and effected by persons, other than those who have to bear the cost, risks of extravagance and misdirection of effort may be created. The same separation of responsibility necessitates a system of charging by certificate and of preventing challenges, except in rare cases, which is of its nature onerous and prejudicial. The character of the two parties' interests in the land - the landlord's an indefinite one by freehold, the tenants' a limited one over a comparatively short period, even though capable of renewal if the tenant so wishes, is such as to call for the assumption of long term risks by the former: his benefit too is long term and will not, according to the evidence, emerge till the 1990's. Transference of these rights to the leaseholders, accompanied, as is inevitable, by separation of control, creates a risk disproportionate to their interest. If it is reasonable for the landlord to wish to get rid of these risks in exchange for a fixed payment (reduction in rent) it must be equally, or indeed more, reasonable for the tenants to wish, against receipt of that reduction, to avoid assuming it. The tenants are being asked to bear all the risks of property management, a business which they have not chosen, being management by others in the interest of those others. The present distribution of burdens is that freely and contractually agreed upon so recently as in 1972. To recast it involves a serious departure from the terms of the current lease. In my opinion, a court which has to have regard to the terms of the current lease ought not to sanction such a departure, and such other circumstances as should fairly be taken into account - the landlord's wishes and the increasing acceptance by others, in different situations, of clear leases - are insufficient to give grounds for so doing." As O'May makes clear, the Court should not generally exercise its discretion under section 35 to change the basic parameters of the commercial arrangement between the landlord and the tenant: see pp. 744A-E and 745G-746D (Lord Hailsham) and 750A-B (Lord Wilberforce). At p. 746C Lord Hailsham said: "If I am correct that the inference from the authorities is that the language of section 35 requires that the party (whether landlord or tenant) requiring a change must justify as reasonable a departure from the current lease in case of dispute about its terms, the answer [to the question where, in the new lease, the risk of fluctuation in the costs of maintenance etc should lie] must be that prima facie it must lie where the current lease provides". In the present case, for the East and West Market leases, the tenants point to the existing terms of the 2001 leases, which provide for a simple all-inclusive rent, and seek to rely on O'May for the conclusion that that should be the payment structure to be incorporated in the new tenancies to be ordered by the Court. The City makes proposals to depart from this position. Accordingly, in line with the guidance in O'May, the onus is on the City to show that it is appropriate to order the grant of tenancies which depart from that payment structure. In my judgment, there are significant differences between this case and the position in O'May. Applying the guidance in O'May as a whole, I consider that the City has shown that there are good and sufficient reasons to justify a change in the payment structure under the new tenancies back to the original structure of a rent and variable service charge which formed part of the early 1980s leases between the parties. The first important point of distinction from O'May is that it is common ground in this case that the basic principle applicable between the parties is that the City should be entitled to recover all its costs of maintaining and operating the Market on an ongoing basis from the tenants. So, for example, the tenants accept that the simple rent they propose should be based upon estimates to be made now about the future running costs of the Market. The City, in its proposals for a rent plus a variable service charge, is not seeking to change that basic principle, but says that its proposals will in fact better and more fairly reflect that principle. The choice between the different payment structures contended for by the two sides does not involve the same substantial shift in the basic parameters of the commercial arrangement between the parties as was in issue in O'May. Secondly, in my view the weight to be attached to the payment structure in the 2001 leases is considerably diminished because of the background to the agreement of the parties on those terms and the terms of the leases themselves. As set out above, the original position under the early 1980s leases was that the tenants should pay a rent and a variable service charge. The parties moved to a simple all-inclusive rent in 1987 in contemplation of the disruption associated with the refurbishment of the East and West Markets. The intention was that this should be a temporary solution until the refurbishment was completed. The refurbishment lasted longer than had been expected. In 1994 the City and the tenants addressed the question once more, and the 1994 agreements were entered into. Those agreements provided for a continuation of the simple rent regime until 2000, at which time the parties agreed that they would revert to a rent and variable service charge regime. It is a significant feature of the history of the relationship between the parties that the tenants were willing to enter into binding agreements which would have that effect. In late 1994 the tenants had second thoughts and prevailed upon the City not to enforce the 1994 agreements, and hence to allow the simple rent arrangements then operating to continue. But this was simply to allow time and space for further debate between the parties about the choice between a simple rent or a rent and service charge payment structure. That debate resulted in the 2001 leases, which have the striking features I have set out in paras. [42]-[45] above. In my view, in those leases the parties essentially agreed to a further temporary resolution of the underlying dispute between them, recognising that it had not been resolved and would have to be addressed afresh between them in the future. This is reflected in the curious drafting of those leases, which included (i) provisions in the schedule to them for both a rent and a service charge, but a stipulation in the body of each lease that during its life the rent would include the sums due in respect of the service charge and (ii) clause 13, which gave a clear indication that both parties reserved their position as regards the resolution of the continuing underlying dispute between them for further debate at such time as the grant of new tenancies under the 1954 Act would be in issue. It is clear that this is an unusual case for the purposes of application of section 35. In light of this background, I do not consider that the same weight can be attached to the existing terms of the leases as would be appropriate in a more typical case. Since the 1980s there has been a continuing dispute between the parties about the structure of the payment terms to govern their relationship which both sides recognise has never been resolved and has only been "parked" by them in various ways as time has gone by. Further, the parties have indicated by the terms of the 2001 leases, in particular by clause 13, their agreement that each should have a fair opportunity to present argument about the appropriate payment structure for new tenancies going forward without being prejudiced in that debate by the drafting or form of the payment structure in the 2001 leases. That interpretation of events is reinforced by the insertion of clause 14 in some of the 2001 leases, which was intended to emphasise from the tenants' point of view that they should not be prejudiced in that debate by the fact that they had previously entered into the 1994 agreements. I therefore think that for the purposes of application of section 35 relatively little weight attaches to the simple rent provision in the 2001 leases, as compared with other factors relevant to the assessment of what terms should apply. It is common ground that the principle governing the new tenancies is that the City should be able to recover in full from the tenants the ongoing operational and maintenance costs of running the Market, and I agree with the submission of the City that that principle will most fairly and accurately be reflected by the City's proposals that the payment terms should include a variable service charge. The tenants' proposal for a simple rent, to be adjusted annually by a crude general inflation measure such as the Retail Prices Index, would create an unwarranted and avoidable risk that the underlying principle to be applied is departed from year on year (whether for the benefit of the City or for the benefit of the tenants would be a matter of arbitrary chance). In my view, this means that there is "a good reason based … on essential fairness" (O'May at p. 741D per Lord Hailsham) for the payment terms to be structured as the City proposes, and such terms would best accord with "fairness and justice" between the parties (O'May at p. 747H per Lord Wilberforce). This reasoning is supported by Hyams v Titan Properties Ltd (1972) 24 P & CR 359. In that case the Court of Appeal had to deal with a similar choice between a simple fixed payment arrangement and a rent plus variable service charge arrangement. The Court allowed an appeal from the order of the county court judge providing for a tenancy with a simple fixed payment arrangement and substituted provision for a variable service charge. Buckley LJ referred to evidence of expert witnesses about modern practice and added his own observations as follows: "The witnesses called in the county court included two technical witnesses called on behalf of Mr. Hyams and one called on behalf of Titan Properties Ltd., and in cross-examination each of the witnesses called on behalf of Mr. Hyams agreed that the modern practice in relation to service charges was to make the tenant liable for a proportion of the total costs incurred by the landlord in respect of the provision of services proportional to that part of the building occupied by the tenant; it was established in evidence that the proportion of the building which Mr. Hyams occupied was in fact one-ninth of the building. It was also established that the cost of providing the services for the year 1969–70 was £1,443, one-ninth of which would be approximately £150 a year. It is, I think, evident that the reason for this new practice which was recognised by the witnesses is that in an age of rapidly fluctuating and increasing prices it is a fairer arrangement between landlord and tenant that the tenant should pay a proportion of the cost year by year than that an arbitrary figure should be fixed at the inception of the lease to continue in force throughout, the term as the amount payable in respect of services." Sachs LJ agreed with the judgment of Buckley LJ and added this: "It is quite clear that in the conditions which have been over recent years prevailing as regards increases required on expenditure on services the charges for those services should, when questions arise under the Landlord and Tenant Act 1954, normally be separated from the rent itself. It is equally clear that it is necessary that when a new lease is granted, at any rate where the service charge is not merely minimal, there should be inserted in the lease a formula of the type referred to by Buckley L.J.; the simple reason for this is that in no other way can one obtain an appropriate measure of fairness as between landlord and tenant. To try and fix for these somewhat unpredictable increases—and I mean, of course, "unpredictable" as regards percentage—over a period of some five years a fixed mean sum is an exercise which is bound to result in unfairness to one side or the other." Current market practice supports the inference that adoption of a variable service charge to cover the provision of services by a landlord to a tenant in multi-occupied commercial premises is generally regarded as fair by both landlords and tenants. I accept the evidence of Mr Hull for the City that such an arrangement is standard market practice. A Code of Practice issued by the Royal Institution of Chartered Surveyors entitled, Service Charges in Commercial Property (2nd ed., 2011), drawn up to reflect a fair balance between the interests of commercial landlords and commercial tenants, provides detailed guidance for those drafting and operating commercial leases as to how a variable service charge payment structure should operate. The City's proposals are in line with this guidance. By far the larger element of the running costs incurred by the City in operating the Market is directly referable to the businesses carried on by the tenants. If their businesses were not located in the Market, the tenants would have to arrange for and directly bear the costs of provision of refrigeration, electricity, cleaning, security and the like. Provision of these services via the City allows for economies of scale and overall efficiency, but does not change the nature of such costs as in essence running costs of the tenants' businesses. Accordingly, it is in my view just and fair as between the City and the tenants that the tenants should directly bear the risks of fluctuations in such costs, and that the City should not have to bear the risk of subsidising such costs for the tenants if they fluctuate to an unexpected degree upwards. Furthermore, I accept the evidence for the City that the tenants are better placed than the City to manage and control such costs, by being able to adapt their behaviour (and that of their employees) to some degree so as to minimise such costs in a way that the City cannot readily do. The extent to which there may be scope for the tenants to do this will vary depending on the particular service in issue, but I consider that it is likely that the tenants will generally be more sensitive to the costs of provision of these services (such as cleaning) if they can see clearly year by year how such costs are affected by their actions. I also agree with the assessment of Mr Hull and Mr Smith for the City that adoption of a variable service charge is more likely to promote productive discussion between the City and the tenants about the level and standards of service which the tenants wish to pay for. Experience at other markets operated by the City tends to support that. Conversely, on the alternative proposed by the tenants of a simple fixed annual rent to cover all these matters, there is a greater risk that if faced with unpredicted rises in operating costs the City would attempt to trim back on the services provided, so potentially leading to acrimonious contractual disputes about whether the City was properly meeting its obligations. The adoption of a rent and variable service charge payment structure would also be likely to be fairer as between the various tenants who use the Market. The City's proposals in this regard are more finely attuned to the actual use which different tenants make of the Market and the different degrees to which they make use of the services provided by the City. So, for example, tenants in the Poultry Market do not make use of the meat rail which operates in the East Market and West Market. Likewise, so-called "box traders", who trade in meat delivered in boxes rather than in carcasses, do not use the meat rail. The City's proposals would more readily allow for such differences between tenants to be reflected in what they actually pay. I consider that there is a stronger argument for the tenants that the City should bear the risks of unforeseen upward fluctuation in the costs of maintaining the fabric of the Market buildings. However, there are certain features of the case which tend also to diminish the force of this argument. As noted above, the tenants are long-term occupants of the premises and will remain so under the new tenancies. There is therefore less reason than in some landlord and tenant contexts (where there may be a greater turnover in tenants) to distinguish strongly the respective interests of the landlord and the tenants in maintaining the fabric of the building. The East Market and West Market were refurbished to a good standard relatively recently in the 1990s, and there is no strong reason to expect that serious structural problems will arise in the near to medium future. The City's proposals provide for there to be inspection of the premises by a neutral expert, and the City undertakes that any structural problems identified in that inspection will be put right by it without cost to the tenants. The cost of maintaining the buildings has proved to be reasonably constant over a long period. Accordingly, the risk of significant unexpected structural costs appears to be within reasonable bounds. The City also makes other reasonable proposals for managing such risk, by creation of a sinking fund. And even in relation to maintenance costs, a service charge would be likely to have a beneficial effect in encouraging tenants to take greater care to minimise wear and tear caused to the fabric of the Market buildings as a result of the operation of the tenants' businesses, which make intensive use of the common parts. Since I think there is a difference in the force of the arguments applicable, I have given careful consideration to whether a distinction should be drawn in setting the payment terms under the new tenancies between the operating costs of the Market and the ongoing maintenance costs in relation to the fabric of the Market buildings, such that building maintenance costs might be accommodated within the rent element to be set while the operating costs should be the subject of a variable service charge. However, I have come to the conclusion that it would not be appropriate to split the treatment of the operating and maintenance costs in this way. Neither side argued with any force or enthusiasm for there to be such different treatment. Under the terms of the current tenancies (i.e. the 2001 leases), to which section 35 requires me to have regard, the services to be provided by the City and which (according to the schedule to the leases) are covered by the service charge group together both operating and maintenance costs without suggesting that any distinction should be drawn between them. Moreover, in relation to the underlying debate between the parties, the choice has always been framed in terms of either there being a simple rent to cover all costs or a rent plus a service charge covering all operating and maintenance costs as a whole. Under the early 1980s leases there was a variable service charge covering both operating and maintenance costs; under the 1994 agreements provision was made for reversion to a similar variable service charge covering all costs; and the essential question between the parties now, reflected in the way in which Issue 2 has been formulated, is whether there should be a reversion to such a service charge. Against this background of the way in which the parties have structured their agreements in the past and have framed the debate between themselves now, I do not think that the Court should intervene so as to impose a different solution of its own devising. Moreover, proceeding to choose between one or other of the two proposals put forward will promote simplicity and clarity of treatment of costs, and will reduce the scope for potentially acrimonious and costly boundary disputes over how particular items of costs borne by the City should be distributed between rent and service charge. Experience shows that landlords and tenants can operate a payment regime structured in this way in a satisfactory way without undue difficulty or argument, as the City and the tenants did under the early 1980s leases, have done and still do under leases in relation to the Poultry Market and as the City and other business tenants do at other markets such as Billingsgate. The parties did not point me to evidence of any practical experience of parties operating a sub-division in relation to services provided, as between partial coverage in the rent and partial coverage in a variable service charge, to show that such a structure could be operated equally successfully. Addressing the question in Issue 2, then, as a straightforward choice between a simple rent to cover all operating and maintenance costs (the tenants' proposal) or a rent plus a variable service charge to cover all operating and maintenance costs (the City's proposal), I conclude that the balance of justice and fairness is clearly in favour of adoption of the City's proposal for a variable service charge. By a substantial margin the greater part of the overall costs are operating costs directly referable to the carrying on of the businesses of the tenants, in relation to which I consider that the arguments of essential fairness in favour of a variable service charge are very strong. On the other hand, the maintenance costs are a significantly smaller proportion of the overall costs and the arguments in relation to them for including them within a simple rent are of lesser force (see para. [94] above). The main group of Poultry Market tenancies For these tenancies, the position under the terms of the current tenancies for the purposes of section 35 and application of the guidance in O'May is that they provide for payment of a rent with a variable service charge. There has been some background of variation of that position to provide for coverage of the services provided in a simple rent, but that variation was clearly time-limited and by agreement the parties have reverted to the original position: see paras. [46]-[49] above. These leases do not include any equivalent of clauses 13 and 14 in the 2001 leases in relation to the East Market and the West Market. According to O'May, in relation to these tenancies the onus is on the tenants to show why there should be a change from the existing position. In the circumstances of these tenancies, I consider that the grounds for reducing the weight to be given to the existing position are not as strong as in relation to the leases in respect of the East Market and the West Market. In line with the guidance in O'May, and by contrast with the position set out above in relation to the East Market and the West Market leases, I think that significant weight should be accorded to the existing terms of these Poultry Market tenancies. In addition, albeit the Poultry Market was not refurbished in the 1990s, similar general reasons as set out above in relation to those leases for considering that justice and fairness point to adoption of a rent and variable service charge payment structure (see paras. [82]ff) also apply in relation to these Poultry Market tenancies. Therefore, in my judgment, in applying section 35 the grounds for adopting that payment structure in relation to the main group of Poultry Market tenancies are still stronger than in relation to the East Market and West Market leases. Units 207 and 221 in the Poultry Market The only history of the relationship between the tenants of these units and the City which is in evidence is of a tenancy with a simple all-inclusive rent (subject to the minor and peripheral provision of separate payment for electricity usage). There is not the same elaborate factual history as applies in relation to the other tenancies considered in this judgment. Therefore, following the guidance in O'May in relation to these two units, the presumption in favour of adopting a simple rent payment structure as in the existing leases for these units is comparatively strong. However, the other general factors discussed above in relation to the tenancies of the East and West Markets (see paras. [82]ff) also apply in the context of these units and point in favour of adoption of a rent and variable service charge payment structure on grounds of justice and essential fairness between the parties. Moreover, I consider that the "relevant circumstances" referred to in section 35, to which I must have regard, include the desirability of having a uniform approach to the calculation and bearing of costs in the Market, applicable so far as possible across all relevant tenancies in the Market generally. Having a uniform payment structure across tenancies would be likely to assist in making reasonable assessments of the fair division of costs between tenants and would be likely to reduce the operational costs for the City of having to produce detailed estimates for five or seven and a half years hence (in order to work out how a simple all-inclusive rent for these two units should be calculated) as well as year on year estimates for all the other tenancies in the Market referred to above (required for the operation of the variable service charge in relation to those tenancies). Taking all these matters into account, I have come to the conclusion that in relation to the tenancies of units 207 and 221 as well the City has established that there is "good reason … based on essential fairness" (in the words of Lord Hailsham) and that there are "good reasons shown" on "strong and cogent evidence", taking into account "all relevant circumstances" and "fairness and justice" between the parties (to use the language of Lord Wilberforce) for adopting a payment structure of rent and variable service charge in the new tenancies to be ordered by the court under the 1954 Act. Conclusion For the reasons set out above, the answers I give in relation to the two preliminary issues are: i) Issue 1: "No". The tenants are not entitled to have their rents under the new tenancies reduced on account of income received by the City from letting any of the commercial offices or from the car park; ii) Issue 2: The rents to be set under the new tenancies to be ordered by the court under the 1954 Act in relation to all the properties reviewed in this judgment should be exclusive rents with the tenants' contribution to services covered by a separate service charge.

Judgment of the Court (First Chamber) of 21 March 1985. - Mariette Turner v Commission of the European Communities. - Staff Regulations - Staff report. - Case 263/83. European Court reports 1985 Page 00893 Parties Subject of the case Grounds Decision on costs Operative part Keywords OFFICIALS - ASSESSMENT - STAFF REPORTS - OBLIGATIONS OF THE FIRST ASSESSOR AND APPEAL ASSESSOR - BREACH OF OBLIGATION TO OBTAIN INFORMATION AND TO CONSULT - INFRINGEMENT OF ESSENTIAL PROCEDURAL REQUIREMENT ( STAFF REGULATIONS , ART . 43 ) Parties IN CASE 263/83 MARIETTE TURNER , AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES , RESIDING IN BRUSSELS , REPRESENTED BY G . VANDERSANDEN , OF THE BRUSSELS BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF J . BIVER , 2 RUE GOETHE , APPLICANT , V COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , D . GOULOUSSIS , ACTING AS AGENT , ASSISTED BY P . MIHAIL , OF THE BRUSSELS BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MANFRED BESCHEL , A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG , DEFENDANT , Subject of the case APPLICATION FOR THE ANNULMENT OF THE DECISION OF C . TUGENDHAT , A MEMBER OF THE COMMISSION , ESTABLISHING THE FINAL STAFF REPORT ON THE APPLICANT , Grounds 1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 24 NOVEMBER 1983 , MARIETTE TURNER , AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES , BROUGHT AN ACTION FOR THE ANNULMENT OF THE DECISION OF 29 OCTOBER 1982 WHEREBY C . TUGENDHAT , A MEMBER OF THE COMMISSION , ESTABLISHED THE FINAL STAFF REPORT ON HER FOR THE PERIOD FROM 1 JULY 1977 TO 4 MAY 1979 . 2 DR TURNER IS A MEDICAL PRACTITIONER WHO HAS WORKED SINCE 1968 IN THE COMMISSION ' S MEDICAL SERVICE ( DIRECTORATE-GENERAL IX , PERSONNEL AND ADMINISTRATION ), WHERE SHE WAS INITIALLY ASSIGNED TO THE DEPARTMENT OF PREVENTIVE MEDICINE . DURING THE PERIOD COVERED BY THE CONTESTED STAFF REPORT , SHE FIRST WORKED UNDER THE DIRECTION OF DR SEMILLER UNTIL 31 JULY 1978 . SINCE THEN HER SUPERIOR HAS BEEN DR SIDDONS . 3 ON THE OCCASION OF A REORGANIZATION OF ITS MEDICAL SERVICE THE COMMISSION PROPOSED TO ASSIGN DR TURNER TO A NEW MEDICO-SOCIAL UNIT THAT WAS TO BE SET UP . WHEN SHE REFUSED TO ACCEPT THE CHANGE OF DUTIES THE COMMISSION DECIDED ON 4 MAY 1979 TO RE-ASSIGN HER COMPULSORILY . SUBSEQUENTLY , ON 20 MAY 1980 , THE COMMISSION TRANSFERRED DR TURNER TO ANOTHER DIRECTORATE-GENERAL . THOSE TWO DECISIONS WERE HOWEVER ANNULLED BY THE COURT IN ITS JUDGMENT OF 9 JULY 1981 ( JOINED CASES 59 AND 129/80 ( 1981 ) ECR 1883 ). 4 THE PRESENT CASE CONCERNS THE STAFF REPORT ON THE APPLICANT FOR THE PERIOD FROM 1 JULY 1977 TO 30 JUNE 1979 . FROM THE PLEADINGS AND ORAL PROCEDURE , THE CIRCUMSTANCES IN WHICH THE CONTESTED REPORT WAS DRAWN UP MAY BE SUMMARIZED AS FOLLOWS . 5 ON 15 JANUARY 1981 , THE COMMISSION ' S DIRECTOR-GENERAL FOR PERSONNEL AND ADMINISTRATION , IN HIS CAPACITY AS FIRST ASSESSOR , SENT DR SEMILLER A DRAFT REPORT WHICH HE ASKED HIM TO SIGN . THAT DRAFT HAD ALREADY BEEN SIGNED BY DR TURNER ' S NEW SUPERIOR , DR SIDDONS , BUT NOT BY THE FIRST ASSESSOR . 6 THE DRAFT CONTAINED SIX ASSESSMENTS OF ' FAIR ' AND ONE ASSESSMENT OF ' UNSATISFACTORY ' . THE GENERAL ASSESSMENT STATED : ' DR TURNER HAS A GOOD TRAINING AND MEDICAL EXPERIENCE . UNFORTUNATELY SHE DOES NOT ADJUST TO TEAMWORK , WHICH REQUIRES A SPIRIT OF COLLABORATION WITH HER MEDICAL COLLEAGUES IN THE DEPARTMENT . FOLLOWING THE REORGANIZATION OF THE MEDICAL SERVICE SHE HAS BEEN UNABLE TO ADJUST TO THE NEW AND IMPORTANT TASKS WITH WHICH SHE WAS ENTRUSTED . ' 7 ON 17 JANUARY 1981 , DR SEMILLER INFORMED THE FIRST ASSESSOR THAT HE COULD NOT AGREE TO THE REPORT PROPOSED , BECAUSE ' THERE ARE CONTRADICTIONS BETWEEN THE ANALYTICAL REPORT AND THE GENERAL ASSESSMENT AND BETWEEN THE PRESENT REPORT AND THE PREVIOUS ONE ' . AFTERWARDS , USING THE STANDARD FORM FOR REPORTS , DR SEMILLER EVEN SENT THE ASSESSOR HIS OWN ASSESSMENT ON DR TURNER FOR THE PERIOD DURING WHICH HE WAS HER SUPERIOR . HIS ASSESSMENT WAS UNDOUBTEDLY MORE FAVOURABLE THAN THAT CONTAINED IN THE DRAFT REPORT . 8 THE FIRST ASSESSOR HOWEVER CONSIDERED IT UNNECESSARY TO PLACE DR SEMILLER ' S OPINION ON DR TURNER ' S PERSONAL FILE . THE STAFF REPORT WHICH THE ASSESSOR ULTIMATELY DREW UP CONTAINED EXACTLY THE SAME ASSESSMENTS AS THOSE IN THE DRAFT WHICH HAD BEEN SUBMITTED TO DR SEMILLER AND WHICH THE LATTER HAD DISAGREED WITH . DR SEMILLER COULD SIMPLY NOTE ON THE REPORT THAT HE ' COULD NOT AGREE EITHER WITH THE ANALYTICAL ASSESSMENTS OR WITH THE GENERAL ASSESSMENT FOR THE PERIOD FROM 1 JULY 1977 TO 31 JULY 1978 . ' 9 DR TURNER DECIDED TO SUBMIT HER OBSERVATIONS ON THE STAFF REPORT . SHE THEREFORE REQUESTED AN INTERVIEW WITH THE FIRST ASSESSOR AND , IN THE ALTERNATIVE , ASKED FOR THE MATTER TO BE REFERRED TO THE APPEAL ASSESSOR . FACED WITH SILENCE FROM THE FIRST ASSESSOR , DR TURNER APPROACHED MR TUGENDHAT , THE APPEAL ASSESSOR , DIRECTLY AND ASKED HIM TO INTERVENE . ON 15 FEBRUARY 1982 , MR TUGENDHAT MADE CERTAIN AMENDMENTS TO THE REPORT . THE ANALYTICAL ASSESSMENT IN THE AMENDED VERSION CONTAINED ONLY FIVE ASSESSMENTS OF ' FAIR ' AND NO ' UNSATISFACTORY ' . IN ADDITION , THE LAST SENTENCE OF THE GENERAL ASSESSMENT WAS REPLACED BY ANOTHER WHICH STATED THAT DR TURNER HAD BEEN SELECTED FOR PROMOTION TO GRADE A 4 IN 1978 . THOSE AMENDMENTS DID NOT SATISFY DR TURNER , WHO ASKED FOR THE MATTER TO BE REFERRED TO THE JOINT COMMITTEE ON STAFF REPORTS . 10 THE COMMITTEE DELIVERED AN OPINION IN WHICH IT EXPRESSED ITS REGRET THAT ' THE TIME-LIMITS FOR THE VARIOUS STAGES OF THE PROCEDURE WERE NOT OBSERVED AND THAT DR SEMILLER DID NOT EXPLAIN HIS REASONS FOR DISAGREEING ' . MR TUGENDHAT NEVERTHELESS SAW NO REASON TO ALTER THE REPORT PROPOSED ON 15 FEBRUARY 1982 , WHICH THEREUPON BECAME FINAL . 11 IN JANUARY 1983 , DR TURNER DECIDED TO LODGE A COMPLAINT AGAINST THAT DECISION . AT THE SAME TIME , HOWEVER , THE COMMISSION PROPOSED TO ANNUL THE PART OF THE STAFF REPORT COVERING THE PERIOD FROM MAY TO JUNE 1979 . THAT WAS THE PERIOD FOLLOWING THE DECISION TO ASSIGN DR TURNER TO ANOTHER DEPARTMENT . SINCE THAT DECISION HAD BEEN ANNULLED BY THE COURT THE COMMISSION THOUGHT IT PREFERABLE NOT TO TAKE THAT PERIOD INTO ACCOUNT . DR TURNER ACCEPTED THE PROPOSAL BUT REFUSED TO WITHDRAW HER COMPLAINT . 12 WHEN HER COMPLAINT WAS DISMISSED DR TURNER BROUGHT THE PRESENT ACTION , THE ADMISSIBILITY OF WHICH IS NOT CONTESTED . SHE SEEKS THE ANNULMENT OF THE STAFF REPORT , WHICH HAD BECOME FINAL BY THE DECISION OF THE APPEAL ASSESSOR . 13 IN SUPPORT OF HER ACTION THE APPLICANT PLEADS THREE SUBMISSIONS : ( I ) INFRINGEMENT OF ESSENTIAL PROCEDURAL REQUIREMENTS , ( II ) ERRORS OF ASSESSMENT IN THE STAFF REPORT AND ( III ) MISUSE OF POWERS . INFRINGEMENT OF ESSENTIAL PROCEDURAL REQUIREMENTS 14 IN THE COURSE OF THE PROCEEDINGS BEFORE THE COURT , THE APPLICANT HAS DRAWN ATTENTION TO THE PROCEDURAL REQUIREMENTS WHICH IN HER VIEW WERE NOT OBSERVED IN THE PREPARATION OF THE STAFF REPORT . IN THE FIRST PLACE , THE FINAL REPORT WAS NOT MADE UNTIL SOME 22 MONTHS AFTER THE EXPIRY OF THE PERIOD LAID DOWN IN ARTICLE 7 OF THE GUIDE TO STAFF REPORTS . SECONDLY , WHILST DR TURNER ADMITS THAT SHE WAS GRANTED A MEETING WITH THE FIRST ASSESSOR , SHE CONSIDERS THAT IT DID NOT CONSTITUTE A TRUE EXCHANGE OF VIEWS AS INTENDED BY THE GUIDE TO STAFF REPORTS BECAUSE IT TOOK PLACE WHEN THE DRAFT REPORT WAS STILL UNFINISHED . THIRDLY , DR TURNER OBJECTS THAT THE FIRST ASSESSOR AND THE APPEAL ASSESSOR DID NOT TAKE ACCOUNT OF THE OPINION OF DR SEMILLER , HER FIRST SUPERIOR . FINALLY , NO SUFFICIENT REASONS WERE GIVEN IN THE CONTESTED REPORT FOR THE FACT THAT SHE WAS GIVEN A LESS FAVOURABLE ASSESSMENT THAN IN PREVIOUS REPORTS . 15 THE COMMISSION PUTS FORWARD TWO ARGUMENTS IN ITS DEFENCE . IN THE FIRST PLACE , IT CONSIDERS THAT , EVEN IF THERE WAS SOME DELAY IN PREPARING THE REPORT AND NO EXCHANGE OF VIEWS BETWEEN THE FIRST ASSESSOR AND DR TURNER , THE BREACH OF THOSE PROCEDURAL REQUIREMENTS DID NOT ADVERSELY AFFECT HER : SHE CANNOT VALIDLY MAINTAIN THAT THE CONTESTED REPORT WAS LESS FAVOURABLE ON THAT ACCOUNT . AS REGARDS THE ALLEGED BREACH OF THE THIRD REQUIREMENT , THE COMMISSION CONSIDERS THAT NEITHER THE FIRST ASSESSOR NOR THE APPEAL ASSESSOR WAS OBLIGED TO TAKE ACCOUNT OF DR SEMILLER ' S OPINION . 16 THE APPLICANT ' S ARGUMENT MUST BE REJECTED IN RELATION TO THE FIRST TWO REQUIREMENTS WHICH SHE CONSIDERS WERE DISREGARDED . IT IS TRUE THAT THE FINAL REPORT WAS MADE LATER THAN IT OUGHT NORMALLY TO HAVE BEEN . NEVERTHELESS , IT MUST BE REMEMBERED THAT AT THE TIME THERE WAS A DISPUTE BETWEEN DR TURNER AND THE COMMISSION WHICH WAS RESOLVED BY THE AFORESAID JUDGMENT OF 9 JULY 1981 . IN THOSE CIRCUMSTANCES , FAR FROM ADVERSELY AFFECTING DR TURNER , THE DELAY ENABLED THE APPEAL ASSESSOR TO GIVE HIS OPINION MORE CALMLY AT A TIME WHEN THE AFORESAID SITUATION OF CONFLICT HAD ABATED . SIMILARLY , THE ALLEGED LACK OF CONSULTATION BETWEEN THE FIRST ASSESSOR AND DR TURNER CANNOT LEAD TO THE NULLITY OF THE CONTESTED REPORT . THE PRESENT ACTION RELATES TO THE FINAL REPORT AS DRAWN UP BY THE APPEAL ASSESSOR . IT IS NOT DENIED THAT THE APPEAL ASSESSOR HAD A GENUINE EXCHANGE OF VIEWS WITH DR TURNER , THUS REPAIRING ANY NEGLECT AT A PREVIOUS STAGE OF THE PROCEEDINGS . ON THE OTHER HAND , THE THIRD DEFECT ALLEGED BY DR TURNER MERITS CLOSER SCRUTINY . 17 ARTICLE 3 OF THE GUIDE TO STAFF REPORTS PROVIDES THAT THE FIRST ASSESSOR MUST CONSULT THE OFFICIAL ' S SUPERIOR IN ANY OTHER DEPARTMENT TO WHICH HE BELONGED . IN THE PRESENT CASE THE FIRST ASSESSOR CONFINED HIMSELF TO SENDING DR SEMILLER A DRAFT REPORT FOR SIGNATURE WITHOUT OFFERING HIM AN OPPORTUNITY TO GIVE HIS OPINION . IN THOSE CIRCUMSTANCES THERE WAS NO CONSULTATION OF THE PREVIOUS SUPERIOR FOR THE PURPOSES OF ARTICLE 3 OF THE GUIDE TO STAFF REPORTS . 18 THE APPEAL ASSESSOR IS ALSO UNDER AN OBLIGATION TO OBTAIN INFORMATION AND TO CONSULT . THAT OBLIGATION FLOWS FROM THE FOLLOWING PROVISIONS . ARTICLE 7 OF THE GUIDE TO STAFF REPORTS PROVIDES THAT THE APPEAL ASSESSOR MUST UNDERTAKE ALL NECESSARY CONSULTATIONS . POINT B.9.3.1 . OF THE GUIDE STATES , IN THAT RESPECT , THAT THE APPEAL ASSESSOR MUST OBTAIN THE FULLEST INFORMATION POSSIBLE AND TO FULFIL THAT OBLIGATION HE MAY IN PARTICULAR SEEK INFORMATION FROM ANY OTHER SUPERIOR OF THE OFFICIAL ASSESSED . THE INTRODUCTION TO THE GUIDE TO STAFF REPORTS , WHICH , IT MUST BE NOTED WAS SIGNED BY THE PERSON WHO WAS THE APPEAL ASSESSOR IN THE PRESENT CASE , STATES THAT HENCEFORTH THE ASSESSOR MUST CONSULT ' NOT ONLY THE OFFICIAL ' S IMMEDIATE SUPERIOR BUT ALSO OTHER SENIOR OFFICIALS WITH INFORMATION TO IMPART ' . 19 IN THE PRESENT CASE , THE APPEAL ASSESSOR KNEW THAT DR SEMILLER DID NOT APPROVE OF THE PROPOSED REPORT SINCE HE HAD EMPHATICALLY NOTED HIS DISAGREEMENT ON THE FIRST REPORT . THAT FACT SHOULD HAVE LED HIM TO QUESTION DR SEMILLER . THE LATTER HAD BEEN DR TURNER ' S SUPERIOR FOR A FAR LONGER PART OF THE PERIOD IN QUESTION THAN DR SIDDONS . HIS MORE FAVOURABLE OPINION WAS ALL THE MORE IMPORTANT SINCE THE REPORT WAS MADE DURING A TIME WHEN THERE WAS A CONFLICT BETWEEN DR TURNER AND THE COMMISSION . THE JOINT COMMITTEE ON STAFF REPORTS WAS AWARE OF THAT FACT SINCE IT EXPRESSED THE WISH THAT THE APPEAL ASSESSOR SHOULD CONSULT DR SEMILLER . 20 IN SPITE OF THE CIRCUMSTANCES THAT HAVE JUST BEEN RELATED THE APPEAL ASSESSOR DID NOT PERSONALLY QUESTION DR SEMILLER , ALTHOUGH HE HAD NO DETAILED KNOWLEDGE OF HIS OPINION SINCE , CONTRARY TO ARTICLE 26 OF THE STAFF REGULATIONS , IT HAD NOT BEEN PLACED ON THE APPLICANT ' S PERSONAL FILE . IN THOSE CIRCUMSTANCES , THE APPEAL ASSESSOR FAILED TO FULFIL HIS OBLIGATION TO OBTAIN INFORMATION AS REQUIRED BY THE AFORESAID PROVISIONS OF THE GUIDE TO STAFF REPORTS . 21 IT MUST THEREFORE BE CONCLUDED THAT , SINCE NEITHER OF THE ASSESSORS CONSULTED DR SEMILLER AS REQUIRED BY THE GUIDE TO STAFF REPORTS , THE PROCEDURE WHICH LED TO THE CONTESTED STAFF REPORT WAS VITIATED BY THE INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT . SINCE IT IS APPARENT THAT DR SEMILLER WAS MORE FAVOURABLE TO DR TURNER , SHE HAS EVERY REASON TO CONSIDER THAT THE REPORT WAS NOT MADE ON THE BASIS OF THE FULLEST INFORMATION AND THAT SHE WAS THUS ADVERSELY AFFECTED . ON THAT GROUND THE CONTESTED STAFF REPORT MUST BE ANNULLED . ERRORS OF APPRAISAL IN THE STAFF REPORT AND MISUSE OF POWERS 22 IN HER SECOND SUBMISSION , DR TURNER CHALLENGES THE VALIDITY OF THE ANALYTICAL ASSESSMENTS AND THE GENERAL ASSESSMENT MADE IN THE CONTESTED REPORT . IN HER THIRD SUBMISSION , SHE ALLEGES A MISUSE OF POWERS EVIDENCED BY VARIOUS CIRCUMSTANCES AND EXPLAINED BY THE FACT THAT THE REPORT WAS MADE AT A TIME WHEN THE CONFLICT BETWEEN HER AND THE COMMISSION WAS ACUTE . 23 THE COMMISSION STATES FIRST OF ALL THAT , ACCORDING TO ESTABLISHED CASE-LAW , THE COURT CANNOT SUBSTITUTE ITS OWN ASSESSMENT OF THE FACTS FOR THAT OF THE ASSESSORS . AS REGARDS THE ALLEGATION OF MISUSE OF POWERS , THE COMMISSION CONSIDERS THAT DR TURNER HAS NOT SHOWN THAT THE ASSESSMENTS CONTAINED IN THE CONTESTED REPORT WERE INTENDED TO HARM HER . 24 SINCE THE COURT HAS ALREADY HELD THAT THE CONTESTED REPORT MUST BE ANNULLED AS A RESULT OF THE INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT , IT IS NOT NECESSARY TO EXAMINE THE SECOND AND THIRD SUBMISSIONS PLEADED BY THE APPLICANT . 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 DEFENDANT HAS FAILED IN ITS SUBMISSIONS IT MUST BE ORDERED TO PAY THE COSTS . Operative part ON THOSE GROUNDS , THE COURT ( FIRST CHAMBER ) HEREBY : ( 1 ) ANNULS THE DECISION OF MR C . TUGENDHAT ESTABLISHING THE FINAL STAFF REPORT ON DR TURNER FOR THE PERIOD FROM 1 JULY 1977 TO 4 MAY 1979 ; ( 2)ORDERS THE COMMISSION TO PAY THE COSTS .

MR JUSTICE JACKSON: This judgment is in six parts, namely Part 1 introduction, Part 2 the facts, Part 3 the present proceedings, Part 4 the law, Part 5 the challenge to the manager's decision, Part 6 conclusion. Part 1 Introduction In these proceedings for judicial review the Official Solicitor, acting as litigation friend of the claimant, a 15 year old girl, challenges the legality of a decision to discharge the claimant from hospital pursuant to Section 23 of the Mental Health Act 1983. The claimant herself does not wish to remain in hospital. However the Official Solicitor, as the claimant's next friend, takes the view that it is in her best interests that the claimant should continue to be treated in hospital. In this judgment I shall refer to the Mental Health Act 1983 as "the Mental Health Act". I shall use the abbreviation "RMO" for responsible medical officer. The defendant in these proceedings is Huntercombe Maidenhead Hospital, to which I shall refer as "Huntercombe". The claimant has been treated at Huntercombe for the last four months. Huntercombe agrees with the Official Solicitor that the claimant should not be discharged from hospital. However the hospital managers take the opposite view, and it is their decision which is challenged. Accordingly the managers are separately represented in these proceedings. That is I hope a sufficient introduction. It is now necessary to outline the facts. Part 2 The Facts The claimant was born on 30 August 1990. When she was aged 13 she developed mental health problems. On 6 April 2004 the claimant was admitted to the Coburn Adolescent Unit at St Clement's Hospital, East London. She was diagnosed as suffering from a bi-polar disorder with psychotic symptoms. She displayed chaotic behaviour, mood swings and physical aggression. The claimant was treated in the Coburn Unit for ten months. She was finally discharged home to the care of her parents on 4 February 2005. On the afternoon of 5 March 2005 the claimant left home unknown to her parents. Later that day she was found wandering in a confused state near Leyton Underground Station. The claimant was removed by police to emergency foster care. On 6 March she was admitted to Homerton Hospital. On 23 March the claimant was transferred back to the Coburn Adolescent Unit. The claimant remained in the unit for some eight weeks. Her condition deteriorated. On 9 May 2005 a decision was made by the doctors and social worker responsible for the claimant's care that the claimant should be detained in hospital pursuant to Section 3 of the Mental Health Act. The statutory procedures were followed and the claimant was duly detained. On 16 May 2005 the claimant was transferred from the Coburn Unit to Huntercombe. Huntercombe Hospital is in Berkshire. Once the claimant was at Huntercombe, Dr Clapham became her RMO. Dr Clapham reviewed her medication and planned her future treatment. On 4 July 2005 Huntercombe received a letter dated 24 June from the claimant's father appealing against the Section 3 detention. This letter was treated by the hospital as a notice under Section 25 of the Mental Health Act requiring the claimant's discharge. Dr Clapham took the view that the claimant ought not to be discharged. On 4 July 2005, pursuant to Section 25 of the Mental Health Act, Dr Clapham signed and furnished to the managers of the hospital a report in the following terms: "I am of the opinion that the patient, if discharged, would be likely to act in a manner dangerous to other persons or to herself." In these circumstances the question whether the claimant should be discharged fell to be determined by the managers of the hospital pursuant to Section 23 of the Mental Health Act. On 14 July a panel of managers met to consider that question. The record of that hearing reads as follows: "S attended hearing and promptly kicks her solicitor. Introductions were made when S promptly kicked and punched her solicitor again. Miss Hardy, representing Mr R, requested a short adjournment and then asked for adjournment for two weeks and a psychology report. Adjournment agreed, section to continue." On 10 August 2005 a fresh panel was convened in order to determine whether the claimant should be discharged. The panel comprised three experienced hospital managers; one member was a retired social worker who had specialised in mental health; one was a retired police officer; one member was an experienced social work researcher and independent evaluator who specialised in complex and sensitive issues of social and health care in working with children and adolescents and people with communication difficulties, mental health problems and disability. The written evidence before the panel included a psychiatric report by Dr Clapham, a nursing report by Miss Rule, two social circumstances reports by Ms Robinson (a social worker) and a psychological report by Miss Halworth (an assistant psychologist who was supervised by a clinical psychologist). During the course of the hearing the panel heard oral evidence from Dr Clapham, from the social worker and from the claimant's father. The panel's decision was recorded on a standard form. I shall read out the relevant parts of that form: "Conditions necessary to continue detention (on appeal or renewal) (a) The patient is suffering from mental illness, mental disorder which makes it appropriate for him/her to receive medical treatment in a hospital. Answer: Yes. Such treatment is likely to alleviate or prevent a deterioration of his or her condition. Answer: Yes. It is necessary for the health or safety of the patient or for the protection of other persons that he/she should receive such treatment and it cannot be provided unless he/she continues to be detained. Answer: Yes." The managers have added the following note: "Dangerousness not proved. Code of practice to 23.12. Conditions necessary to continue detention (on report barring discharge by nearest relative) The patient, if discharged would be likely to act in a manner dangerous to other persons or to himself/herself. Answer: No. Decision of review panel The patient shall be discharged from section - deferred until 31.8.05. Reasons for decision On hearing the evidence and reviewing the written reports the managers were of the opinion that she meets the criteria for detention. However we were NOT satisfied that she met the stringent test of dangerousness (code of practice 23.12). This is an essential requirement for the RMO to bar the discharge by the nearest relative. The managers did note that S can be aggressive and violent sometimes impulsive and occasionally planned. No evidence was presented to show that S had been violent outside the hospital environment. S is clearly vulnerable and therefore she and her family will need a great deal of support. To enable this to happen and allow time for a comprehensive and robust package of care to be prepared her discharge will be deferred until 31 August 2005 or sooner should a satisfactory and agreed plan be in place before this date." The decision made by the hospital managers was a source of concern for Dr Clapham. It was also a source of concern for the London Borough of Hackney and for the East London and City Mental Health NHS Trust. These are the two authorities whose function it was, under Section 117 of the Mental Health Act, to provide after-care for the claimant following her discharge from hospital. In late August there was a flurry of activity and numerous procedural steps were taken by persons and bodies who were concerned for the claimant's welfare. It is not necessary for me to trace all those procedural ramifications. Suffice it to say that on 30 August an injunction was obtained to prevent the claimant's release from hospital. Two days later the Official Solicitor, who was seeking to challenge the hospital managers' decision, commenced the present proceedings. Part 3 the Present Proceedings By a claim form issued on 1 September 2005, the Official Solicitor, acting as the claimant's litigation friend, applied to this court for a declaration that the hospital managers' decision taken on 10 August 2005 to discharge the claimant was unlawful. The grounds of this challenge, as modified by amendment and as refined during oral argument, may be summarised as follows: (1) the managers fettered their discretion under Section 23 of the Mental Health Act, (2) the managers placed too much weight upon the code of practice guidance, (3) the managers took into account irrelevant matters, (4) not pursued, (5) the managers failed properly to particularise the details of the after-care package upon which the claimant's discharge was conditional, (6) the managers acted irrationally and reached a decision which no reasonable tribunal could have made on the question of dangerousness, (7) the managers failed to give proper reasons for their decision. A variety of related proceedings were commenced at about the same time. The future progress of those other proceedings will depend upon the outcome of the Official Solicitor's challenge to the managers' decision. One consequence of those other proceedings is that, one way or another, all interested parties are before the court. The principal proceedings came on for hearing yesterday and the argument lasted all day. Let me summarise how the battle lines were drawn. Miss Laura Davidson, for the Official Solicitor, presented her case as the claimant's next friend. Mr Huw Lloyd for Huntercombe, Miss Jenni Richards for East London and City NHS Trust and Miss Joanna Dobson QC for the London Borough of Hackney all made submissions in support of the Official Solicitor's contentions. Mr Gerard Clark for the hospital managers made submissions in opposition to the Official Solicitor and in support of the managers' decision. Miss Katie Scott, for the claimant's father, made submissions in support of the hospital managers' case. I thank all counsel for their detailed skeleton arguments and for their helpful oral submissions. I also congratulate counsel on compressing their oral submissions so that argument was completed by the end of yesterday afternoon. I shall now give my decision on the issues in this case after a brief review of the relevant law. Part 4 the Law Section 3 of the Mental Health Act - so far as material - provides: "(1) A patient may be admitted to a hospital and detained there for the period allowed by the following provisions of this Act in pursuance of an application (in this Act referred to as 'an application for admission for treatment') made in accordance with this section. (2) An application for admission for treatment may be made in respect of a patient on the grounds that - (a) he is suffering from mental illness, severe mental impairment, psychopathic disorder or mental impairment and his mental disorder is of a nature or degree which makes it appropriate for him to receive medical treatment in a hospital; and (b) in the case of psychopathic disorder or mental impairment, such treatment is likely to alleviate or prevent a deterioration of his condition; and (c) it is necessary for the health or safety of the patient or for the protection of other persons that he should receive such treatment and it cannot be provided unless he is detained under this section. (3) An application for admission for treatment shall be founded on the written recommendations in the prescribed form of two registered medical practitioners, including in each case a statement that in the opinion of the practitioner the conditions set out in sub-section (2) above are complied with; ..... " Section 23 of the Mental Health Act provides: "(1) Subject to the provisions of this section and section 25 below, a patient who is for the time being liable to be detained or subject to guardianship under this Part of this Act shall cease to be so liable or subject if an order in writing discharging him from detention or guardianship (in this Act referred to as 'an order for discharge') is made in accordance with this section. (2) An order for discharge may be made in respect of a patient - (a) where the patient is liable to be detained in a hospital in pursuance of an application for admission for assessment or for treatment by the responsible medical officer, by the managers or by the nearest relative of the patient; ..... (4) The powers conferred by this section on any authority [trust] [(other than an NHS foundation trust)] or body of persons may be exercised [subject to sub-section (3) below] by any three or more members of that authority [trust] or body authorised by them in that behalf or by three or more members of a committee or sub-committee of that authority [trust] or body which has been authorised by them in that behalf." Section 25 provides: "(1) An order for the discharge of a patient who is liable to be detained in a hospital shall not be made by his nearest relative except after giving not less than 72 hours' notice in writing to the managers of the hospital; and if, within 72 hours after such notice has been given, a responsible medical officer furnishes to the managers a report certifying that in the opinion of that officer the patient, if discharged, would be likely to act in a manner dangerous to other persons or to himself, - (a) any order for the discharge of the patient made by that relative in pursuance of the notice shall be of no effect; ..... " Section 118 of the Mental Health Act provides that the Secretary of State shall prepare and, from time to time, revise a code of practice for the guidance of those involved in mental health care. In April 1998 Mr Justice Latham had occasion to consider the inter-relationship between Sections 3, 23 and 25 of the Mental Heath Act in R v Riverside Mental Health Trust ex p Huzzey [1998] 43 BLMR 167. This case concerned a challenge to a hospital managers' decision brought by the mother of a patient. At page 173 of the report Mr Justice Latham said: "In my view, this argument fails to address the fact that section 23 provides, inter alia, a general discretion in the managers to discharge a patient. No criteria are set out as to what should or should not be taken into account by managers when considering a decision as to whether or not to discharge. The question of what are the relevant considerations is to be answered by looking at the general scheme of the Act. Clearly the criteria set out in section 3 of the Act are of fundamental importance. If the criteria for admission no longer exist, I cannot see how any decision by managers not to discharge could be other than perverse hence my conclusion on Mr Gledhill's first point. But that does not mean the managers are restricted to considering those criteria. Section 23 implicitly recognises that managers have a discretion to discharge even if those criteria have been met. Where, as in the present case, a nearest relative has sought to obtain a discharge order but has been confronted by a barring report, those facts must equally be relevant and material considerations. In my view, the managers are not only entitled to, but must, consider whether or not they are persuaded by the barring report that the patient, if discharged, would be likely to act in a manner dangerous to other persons or to himself. For if they are not so persuaded, they will have reached the position that the nearest relative would have been entitled to an order for discharge if the responsible medical officer had not come to what they have decided was an erroneous conclusion as to the danger presented by the patient. That cannot be anything other than a relevant and material consideration, and would be likely, in almost all circumstances, to mean that discharge should be ordered ..... " In March 1999 the Secretary of State promulgated a revised code of practice pursuant to Section 118 of the Act. This code duly came into force on 1 April 1999. The code includes the following provisions: "23.1 Section 23 gives the Hospital Managers (see para 22.1) the power to discharge an unrestricted patient from detention. Discharge of a restricted patient requires the consent of the Home Secretary. The power may be exercised on behalf of the Hospital Managers by three or more members of a committee or sub-committee formed for that purpose. In the case of a Trust or Hospital Authority the committee or sub-committee must not include any employee or officer of the Trust or Hospital Authority concerned. 23.2 The legislation does not define either the criteria or the procedure for reviewing a patient's detention. However the exercise of this power is subject to the general law and to public law duties which arise from it. The Hospital Managers' conduct of reviews must satisfy the fundamental legal requirements of fairness, reasonableness and lawfulness: a. they must adopt and apply a procedure which is fair and reasonable; b. they must not make irrational decisions, that is, decisions which no body of Hospital Managers, properly directing themselves as to the law and on the available information, could have made; and c. they must not act unlawfully, that is, contrary to the provisions of the Act, any other legislation and any applicable regulations. ..... 23.11 The Act does not define specific criteria to be applied by the Hospital Managers when considering the discharge of a patient who is detained or liable to be detained. The essential yardstick in considering a review application is whether the grounds for admission or continued detention under the Act are satisfied. To ensure that this is done in a systematic and consistent way the Review Panel should consider the following questions, in the order stated: • Is the patient still suffering from mental disorder? • If so, is the disorder of a nature or degree which makes treatment in hospital appropriate? • Is the detention in hospital still necessary in the interests of the patient's health or safety, or for the protection of other people? If the panel is satisfied from the evidence presented to them that the answer to any of these questions is "no", the patient should be discharged. 23.12 In cases where the rmo has made a report under Section 25 (1), the managers should not only consider the three questions above but also the following question: • Would the patient, if discharged, be likely to act in a manner dangerous to other persons or to him or herself? [R v Riverside Mental Health NHS Trust ex p Huzzey [1998]]. This question focuses on the probability of dangerous acts, such as causing serious physical injury, not merely the patient's general need for safety and others' general need for protection: it provides a more stringent test for continuing detention. If, on consideration of the report under Section 25 (1) and other evidence, the managers disagree with the rmo and decide the answer to this question is 'no', they should usually discharge the patient. ..... 23.18 In applying the criteria in para 23.11 and 23.12, and in deciding in the light of them whether or not to discharge the patient, the panel needs to consider very carefully the implications for the patient's subsequent care. The presence or absence of adequate community care arrangements may be critical in deciding whether continued detention is necessary in the interests of the patient's health or safety or for the protection of others. If the panel conclude that the patient ought to be discharged but arrangements for after-care need to be made, they may adjourn the panel, for a brief period, to enable a full CPA/care planning meeting to take place." It seems to me that paragraphs 23.11 and 23.12 of the code are quite close to the reasoning of Mr Justice Latham in Huzzey. Indeed these paragraphs have been influenced by that decision. In R (Tagoe-Thompson) v Central and North-West London Mental Health NHS Trust [2003] EWCACiv 330; [2003] 1 WLR 1272, the panel of managers was split 2-1 on the question whether to order discharge. The Court of Appeal held that this was not good enough. In order to override the view of the RMO and order discharge, an affirmative view of at least three managers was required. Lord Justice Pill gave the leading judgment. At paragraph 24 Lord Justice Pill said: "In my judgment, the context supports that view: (i) while the liberty of the subject is always an important consideration, this statutory procedure is also concerned with the welfare of the subject in whose case section 3 powers have been exercised and his welfare may require detention in hospital. The possibility of the patient damaging his own health or endangering life is a relevant consideration ..... ..... (ii) The RMO has a central place in the operation of procedures under the 1983 Act. The RMO can himself order discharge (section 23 (2)) and the exercise of the section 23 (4) power will only arise when discharge is not supported by the RMO. He has important functions under the Act including, for example, under section 50. It is not in the least surprising that, in circumstances in which the members are laymen, may not be directors of the trust and whose expertise may be limited, a finding that the affirmative view of at least three of them is required to override the opinion of the RMO and authorise release." Finally I should refer to the Court of Appeal decision in R (H) v The Ashworth Special Hospital Authority [2002] EWCA Civ 923; [2003] 1 WLR 127. In that case a Mental Health Tribunal ordered H's discharge from detention even though no after-care arrangements were in place. Both this court and the Court of Appeal held that the tribunal's decision should be quashed. In the Court of Appeal Lord Justice Dyson gave the leading judgment. At paragraphs 66 to 68 of his judgment Lord Justice Dyson indicated that the best course would have been for the tribunal to adjourn until it was clear that suitable after-care was available. With all of this guidance in mind, I must now turn to the challenge in the present case. Part 5 The Challenge to the Managers' Decision I shall deal with the seven grounds of challenge in the order set out in Part 3 above. Ground 1 It is clear from the statute that managers exercising their powers under Section 23 of the Mental Health Act have a wide discretion. It is also clear from the Act, from the code and from Mr Justice Latham's decision in Huzzey that if the managers override the RMO's report certifying dangerousness, this is a strong pointer in favour of discharge. It is not however an inflexible rule that in every case the managers must discharge if they overturn the finding of dangerousness. Mr Justice Latham in Huzzey acknowledged that there may be exceptions. Furthermore, paragraph 23.12 of the code also acknowledges that there may be exceptions. Finally, it is implicit in the unfettered discretion conferred by the Act that there may be exceptions. Looking at the managers' decision of 10 August, it seems to me that the managers overlooked this residual discretion. They proceeded on the basis that if they overturned the RMO's finding of dangerousness, then, as a matter of course, they must order discharge. That was an error of law. The managers failed to consider or to exercise their residual discretion in this regard. I therefore uphold the first ground of challenge. Ground 2 I reject this ground of challenge. It does not seem to me that the managers placed excessive weight on the code of practice. On the contrary, the complaint might be that in relation to paragraph 23.12 of the code the managers paid insufficient attention to the last part of that paragraph. Ground 3 This ground of challenge is directed to the following sentence in the managers' decision - "No evidence was presented to show that S had been violent outside the hospital environment." It is contended by the Official Solicitor and her supporting parties that this consideration is irrelevant. As formulated, I do not agree with this ground. If, and insofar as, the managers' observation was correct it would be a relevant consideration although, in the circumstances, a subordinate one. However the observation was not correct. There was conflicting evidence on the question whether the claimant had been violent outside the hospital environment. Furthermore, the question whether the claimant had been violent outside the hospital environment needs to be considered in context. The claimant had spent almost all of her time over the last one-and-a-half years within in hospital environment. Therefore her opportunities for violence outside were limited. I have come to the conclusion that these matters do not constitute an independent ground for attacking the validity of the managers' decision. They are however relevant to the sixth ground of challenge. Ground 4 As indicated earlier, this is not pursued as an independent ground of challenge. Ground 5 As formulated, this ground is untenable. The claimant's discharge was not made conditional upon the preparation of an after-care package. Indeed the managers would have had no power to make such a conditional order. Furthermore, the managers cannot be criticised for failing to particularise the after-care package which was required. It was not the function of the managers to provide such particularity. On the contrary, it was the duty of the London Borough of Hackney and (by a delegation of functions within the NHS) the East London and City Mental Health NHS Trust to devise and implement a package of after-care. I therefore reject the fifth ground of challenge as formulated. There is however a related matter to consider. Whenever the claimant is discharged from hospital she will require a substantial amount of after-care. This will need to be planned in some detail. The order made by the managers on 10 August allowed very little opportunity for the preparation of an after-care package. A better way to achieve what the managers intended would have been to adjourn the hearing for a defined period in order to see what after-care package was available. See the reasoning of the Court of Appeal in R (H) v Ashworth Special Hospital Authority. See also paragraph 23.18 of the code. I do not consider that this criticism of the managers' approach is a freestanding ground for attacking the validity of the managers' decision. It is however relevant to the sixth ground of challenge. Ground 6 This ground is what may loosely be described as an old- style Wednesbury challenge to the managers' decision. Miss Davidson, for the Official Solicitor, submits that on the issue of dangerousness Dr Clapham was plainly correct. The managers acted perversely in overriding the opinion of the RMO on this crucial issue. There was a mass of evidence to indicate that the claimant was violent and aggressive. Indeed, so strong was that evidence that the managers were bound to endorse Dr Clapham's opinion that "the patient, if discharged, would be likely to act in a manner dangerous to other persons or to herself." Mr Huw Lloyd, who appears for the hospital (as opposed to the managers), strongly supports these submissions. He submits that the managers' finding on the issue of dangerousness was perverse. Miss Jenni Richards, for the NHS Trust, also placed emphasis on this ground. She submits that the managers, who are not clinicians (despite their wide experience), should have accorded great weight to the opinion of Dr Clapham, who was the psychiatrist treating the claimant. On the other side of the fence, Mr Clark for the hospital managers, points out that their decision was in favour of the liberty of the subject; this court should therefore be slow to overturn the managers' decision. Moreover the evidence before the managers contained indications in both directions. The managers evaluated that evidence and came to a conclusion. This court should not entertain what is, in truth, a merits challenge to the managers' decision. These are formidable arguments on both sides. I have read and re-read the evidence which was before the managers. Having done so, my conclusion is that the managers' decision was irrational and pererse. No reasonable body of managers, faced with the evidence available on 10 August 2005, could have disagreed with Dr Clapham's report on the issue of dangerousness. I reach this conclusion for seven reasons: (1) there was strong and recent evidence of the claimant's violent and aggressive behaviour in the reports of Dr Clapham, Miss Rule, Ms Robinson and Ms Halworth. (2) The oral evidence also established the claimant's violent and aggressive behaviour (see the notes of the hearing taken by Susan Hardy, the solicitor representing the claimant's father). (3) A graphic illustration of the claimant's violence is afforded by the managers' report of the hearing on 14 July (see Part 2 above). (4) The claimant's aggression and violence could be accommodated within the environment of a hospital. However, anyone who behaved in that way in the outside world would be a danger to herself and to others. She would be liable to become entangled in numerous violent altercations. (5) Whilst there was only a small amount of evidence that the claimant had been violent outside hospital, this was unsurprising since she had spent little time out of hospital over the last one-and-a-half years. (6) The managers were proposing to discharge the claimant into the outside world without any information about the available after-care arrangements. This was a further reason for fearing that the claimant would be a danger to herself and to others. (7) It is true, as Mr Clark says, that the managers' decision was in favour of the liberty of the subject. On the other hand, the claimant's detention was for a therapeutic purpose and for the benefit of herself and the community (see R (Tagoe-Thompson) v the Central and North-West London Mental NHS Trust at paragraph 24). In this case the evidence was simply not available to justify the managers in overriding Dr Clapham's clinical assessment. In those circumstances, despite all the policy arguments in favour of individual liberty, the decision of the managers cannot stand. For all of these reasons I uphold the sixth ground of challenge advanced by the Official Solicitor. Ground 7 In the light of my earlier findings, the challenge based on inadequate reasons has become irrelevant. The managers did not give - indeed they could not have given - any satisfactory reasons to explain their decision. I regard this as a consequence of ground 6 rather than a freestanding challenge to the managers' decision. Let me now draw the threads together. I uphold the challenge to the managers' decision of 10 August on two grounds, namely ground 1 and ground 6. Part 6 Conclusion For the reasons set out in Part 5 above, the managers' decision of 10 August cannot stand. No party is asking me to make a quashing order. Accordingly I shall grant the relief which the Official Solicitor seeks in the claim form; that is, (1) a declaration that the decision of the hospital managers at Huntercombe Maidenhead Hospital on 10 August 2005 to discharge the claimant from detention under Section 3 of the Mental Health Act 1983 with an after-care package to be put in place by 31 August 2005 was unlawful, and (2) an order that a freshly constituted managers' hearing be convened to consider the application of the nearest relative for the discharge of the claimant. Before parting with this case, I wish to make two comments. First, these proceedings have progressed from issue to judgment within the space of three weeks. I congratulate the parties, solicitors and counsel, on the expedition and efficiency with which they have progressed this case. Secondly, the matter which lies at the heart of this litigation is the welfare of a teenage girl with serious mental health problems, who has spent almost all of the last 18 months in hospital. A huge amount of public resources has been devoted to the present litigation. I express the hope that similar resources will be devoted to her treatment in hospital and to her after-care when she is fit to be released. I hope that that time will be soon. Hopefully also all the other legal proceedings which are currently on foot will now be the subject of a sensible and early compromise. This will enable such public funds as are available to be devoted to medical treatment rather than litigation. MISS DAVIDSON: My Lord, we would ask for our costs in this matter. We have been successful and we would ask you to grant them - - - - - MR JUSTICE JACKSON: Against whom? MISS DAVIDSON: Against the defendant. MR JUSTICE JACKSON: The defendant supported you. MISS DAVIDSON: We are in this difficult position that the hospital managers are not strictly a party. MR JUSTICE JACKSON: You chose not to join them. MISS DAVIDSON: I did make the submission yesterday that we could not have served on them - except in the hospital - as individuals. MR JUSTICE JACKSON: Should they not have been defendants? MISS DAVIDSON: Perhaps they indicated to the defendant that they disagreed and they wanted to challenge the decision, and the defendant made it clear that the defendant wished to support us and against its own hospital managers, they could have applied to the court to become a party. MR JUSTICE JACKSON: The managers were the body who made the decision which you were challenging. Should they not have been the defendants? MISS DAVIDSON: This was discussed. Because Huntercombe Maidenhead Hospital is a private hospital and they were involved in the injunction proceedings it was decided, after discussion with all the parties, that the hospital was the correct defendant. Normally the hospital would be the correct defendant in most circumstances. This is a very unusual case where the hospital disagreed with its own hospital managers. MR JUSTICE JACKSON: I will hear what Mr Lloyd for the hospital has to say. MR LLOYD: I do oppose any application for costs against the hospital. The hospital, after all, did support the challenge to the hospital managers' decision. The history of this matter is a very strange one indeed. You will know that on 14 July there was a meeting before the managers which was adjourned. That was the meeting at which SR behaved in the aggressive way to her solicitor. That matter was adjourned until 10 August. Around about this time it was considered by the local authority whether the nearest relative should be removed. In my submission, had the nearest relative been removed and had the local authority acted with expedition at the time of the 14 July application we would not be here. For this reason: all parties in this case - the mental health trust, the social services and the private hospital - take the view that SR should be detained in hospital. The reason why we are here today is because there was a challenge by MR, the father. Had MR been removed as the nearest relative - as the court may conclude he should have been and certainly as the social services were planning to do - then the meeting on 10 August would not have gone ahead because MR would have been replaced by someone from social services who would have taken the view that SR should have been detained in hospital. Therefore these proceedings would not have been on board at all. MR JUSTICE JACKSON: Are you the proper defendant, Mr Lloyd, or are the managers the proper defendant? MR JUSTICE JACKSON: In my submission, the managers should be. MR JUSTICE JACKSON: My understanding is that where an independent body such as hospital managers make their own decision, they can be made the defendant in judicial review proceedings to challenge the decision. MR LLOYD: My recollection is that there are titles to cases where hospital managers are named as defendants. My first submission would be that we are not the appropriate defendant, if you like. My second submission is that in any event we should not pay the costs. Those costs should be visited on the London Borough of Hackney. My third submission would be that if any costs are to be awarded to the Official Solicitor they should be on the usual basis of 50 per cent and not full costs. MISS DAVIDSON: I do have further submissions to make in reply to Mr Lloyd's submissions. The reason why we are here today is because the hospital, which considered the hospital managers' decision to be perverse, the London Borough of Hackney and East London and City Mental Health NHS Trust - none of those parties judicially reviewed the decision. There was an impasse. The only reason why the Official Solicitor was forced to bring these judicial review proceedings was because none of those bodies bothered to do that. They just ignored what appeared to be a local decision without trying to challenge it. If the court is not prepared to award our costs against the defendant in this case, I would ask for costs against, in particular, Hackney Borough Council. The reason I say that is because they have not behaved properly throughout these proceedings. They got an emergency injunction in place overnight rather than judicially reviewing the decision they felt was wrong. That injunction - at an inter partes hearing in front of Mr Justice Charles - was then lifted because there was insufficient merit in it. They did not attend the hearing themselves. Miss Gannon appeared as counsel on that occasion and did not have proper instructions. The injunction was granted on an undertaking to issue proceedings to displace the nearest relative and to issue judicial review proceedings or at least to apply for permission for judicial review. Hackney did not do so. There were no instructions from Hackney to Miss Gannon to apply for permission for judicial review at the inter partes hearing. Mr Justice Charles expressed very clear criticism towards them for that. But their inappropriate behaviour did not stop there. They failed to acknowledge service. The court gave them permission yesterday, despite that failure to acknowledge service, to be represented and to make submissions. In my submission the Official Solicitor, who appears on behalf of the claimant (a detained patient) and who has succeeded in judicial review, should not be made to pay its own costs. But if the defendant should not pay those costs then the Hackney Borough Council should. MR JUSTICE JACKSON: I have forgotten who is counsel for Hackney. MISS GANNON: It is myself today instead of Miss Dobson QC. This is the second time I have had to address this court in relation to costs. MR JUSTICE JACKSON: The second time? MISS GANNON: Yes. Not this court; I believe I stood before Mr Justice Charles in relation to costs. I have apologised in relation to the conduct of proceedings on behalf of Hackney. Looking at the facts, on 10 August we were not present at that meeting either through our social worker or through legal. Furthermore there is evidence that that decision was not even communicated to the father's solicitors until 16 August, the same week. It was only on 18 August that Hackney had notice of the managers' decision and attended a legal planning meeting. There were discussions both in law and fact whether it was appropriate for care proceedings to be issued or whether we should go down the route of displacing the nearest relative. I am aware of the merits of that position. But it was, we would say, in the light of the nature of the dilemma presented to us - that is welfare - where should the justice lie? Should it lie in care proceedings or should it lie with the continuation of the managers' decision? The order you have seen was handwritten by Mr Justice Charles. It was faxed to the legal department at 9 o'clock on 29 August. It was an omission on behalf of Hackney that the word "and" was there; they saw it as an "or". I apologise to the court. We have complied with the filing of evidence, but unfortunately, as you are aware, Miss Dobson represented the fact that we were not served with the trial bundle on behalf of the Official Solicitor until noon before the hearing date. So we were prejudiced ourselves in preparing for this hearing. The skeleton argument which you have before you was prepared in a vacuum. The London Borough of Hackney has accepted its responsibility in relation to the conduct of the case and, equally, the lack of instructions to me on the hearing date. As you can appreciate, there were no papers before Hackney other than what was provided by the father's solicitors because we were not present at that hearing. We would say, and do submit, that the proper authority and the proper consideration should be for the East London Mental Health Trust for they had their representatives there in the personalities of Dr Matra, also the social worker who was referred to (Miss Rule) is employed by them, as is Dr Matra. Quite frankly, we were - although we were to be the authors of any care plan which would have been forthcoming - to be guided by the clinicians. The London Borough of Hackney cannot operate in a vacuum. We attended on the 30th against my advice but in relation to finding out exactly what the position was in relation to this child and why she was being accommodated and the circumstances. But as a local authority we were not yet on board. As you can appreciate, the Section 117 plan had not been drafted. In my submission, if I can assist you any further? MR JUSTICE JACKSON: No. MISS DAVIDSON: There are a few points that need to be made on behalf of the Official Solictior. I am informed that Huntercombe Hospital notified Hackney on 11 August of the decision, obviously the day after the decision. Hackney were well aware of that decision and they were not happy with it. They still failed to put into place any legal challenge. Furthermore in relation to the non-service of the trial bundle, as I have emphasised, there was no acknowledgement of service. My instructing solicitor did personally provide each barrister - apart from Miss Dobson - with a trial bundle, but we had not been told that she was even instructed. There was no acknowledgment of service. We did not know if Hackney were even going to turn up. There was no correspondence at all from Hackney until 16 September. RULING MR JUSTICE JACKSON: This is an application for costs made by the Official Solicitor, acting as next friend to the claimant. In the first instance, the Official Solicitor seeks an order for costs against Huntercombe Hospital and, if unsuccessful in that regard, the Official Solicitor seeks an order for costs against the London Borough of Hackney. Let me deal, first, with the application against the hospital. The hospital does not agree with the decision which was taken by its managers. The hospital and the clinicians which it employs has always opposed that decision. The hospital has lent sterling support to the Official Solicitor in the present proceedings. Mr Lloyd concentrated his submissions, in particular, on ground 6 which was one of the two grounds upon which the claim has succeeded. I, for my part, do not see what more the hospital could have done to assist the Official Solicitor. It seems to me that the proper defendant to these proceedings ought to have been not the hospital but the managers. The managers are a body appointed under the provisions of the Mental Health Act to take the decision which is impugned in the present proceedings. Procedural issues such as this would not, of course, have stood in the way of this court deciding the substantive issues which arose for decision. But when I come to consider the question of costs it is a material consideration that the hospital ought not to have been joined as a defendant at all. The proper defendant was the hospital managers. MISS DAVIDSON: I hesitate to rise, but my solicitor has pointed out that in the acknowledgement of service from the defendant they have indicated an intention to contest all of the claim. MR JUSTICE JACKSON: As I was saying, the proper defendant was the hospital managers. For all of those reasons, I refuse the application for costs which the Official Solicitor makes against the hospital. I turn to the application for costs against the London Borough of Hackney. That local authority has been criticised for a number of grounds. For example, it is said that they failed to start proceedings promptly to remove the father as nearest relative. They failed to bring their own judicial review proceedings to challenge the managers' decision. Thus they left a vacuum into which the Official Solicitors stepped. It is a happy circumstance that the Official Solicitor does step in when problems such as this arise and there is a vacuum. The Official Solicitor may, in appropriate cases, recover an order against the defendant against whom she has succeeded although such an order is not appropriate in this case. I do not think that the fact the London Borough of Hackney failed to begin the various proceedings and thus created the vacuum is a ground for ordering that authority to pay the costs of the Official Solicitor. I have come to the conclusion, bearing in mind that all the parties to this case are different publicly funded bodies, that the proper order to make is no order for costs. MISS DAVIDSON: I have drafted orders but I have not had an opportunity to discuss matters with all the parties although they have seen my draft. MR JUSTICE JACKSON: I suggest draft the order, circulate it to other counsel. I suggest before you leave the building you agree in manuscript the terms of the order, get it typed up and send it to me to initial. Can you all stay just to agree the terms of the order.

Lord Justice Briggs : This appeal from the Competition Appeal Tribunal raises questions of interpretation and application to particular facts of Section 86(1) of the Enterprise Act 2002 ("the Act"). Section 86(1) seeks to identify the circumstances in which an enforcement order made under Chapter 4 of the Act may extend to conduct outside the United Kingdom. It provides as follows: "(1) An enforcement order may extend to a person's conduct outside the United Kingdom if (and only if) he is – (a) a United Kingdom national; (b) a body incorporated under the law of the United Kingdom or of any part of the United Kingdom; or (c) a person carrying on business in the United Kingdom." The enforcement order in issue in these proceedings was one which the Competition Commission proposed to make (in the absence of receiving satisfactory undertakings) to prohibit completion of the indirect acquisition by Akzo Nobel N.V. ("Akzo Nobel") of 51% of the shares of Metlac Holding S.R.L. ("Metlac Holding"), following an investigation of the proposed transaction by the Commission, on a reference by the Office of Fair Trading, and a report by the Commission dated 21st December 2012 ("the Report"). In bare outline the Commission concluded that the proposed transaction would, if carried into effect, result in the creation of a relevant merger situation which might be expected to result in a substantial lessening of competition ("SLC") within the United Kingdom market for the supply of metal packaging coatings for beer and beverages ("B&B"): see Section 36(1) of the Act. Having decided that this would give rise to an anti-competitive outcome within the meaning of Section 36(2), the Commission concluded in its Report that the only remedy likely to be effective was prohibition of the transaction. Akzo Nobel is incorporated in the Netherlands. Metlac Holding is incorporated in Italy. The proposed share acquisition arose from the exercise of an option to purchase the 51% shareholding held by Akzo Nobel's wholly-owned subsidiary Akzo Nobel Coatings International BV ("ANCI"), also incorporated in the Netherlands, which had been granted by members of the Italian Bocchio family. ANCI already owned the remaining 49% of the shares of Metlac Holding. Completion of the transaction triggered by the exercise of the option would not involve any conduct within the United Kingdom by any of the parties to that transaction. The Akzo Nobel Group of companies, of which Akzo Nobel is the ultimate parent company, enjoys a substantial share in the UK market for metal packaging coatings for B&B. Metlac S.P.A, another Italian company, owned as to 55.56% by Metlac Holding and 44.44% by another subsidiary of Akzo Nobel had a smaller but significant share of the same UK market. The Commission's conclusion that there was an SLC arose from its perception that the merger between those two participants in that UK market would give rise to a loss of both actual and potential competition. Akzo Nobel applied for a review of the decision of the Commission on a number of separate grounds. They were all rejected by the Competition Appeal Tribunal (Norris J, Mr William Allan and Professor Gavin Reid) by its judgment of 21st June 2013. Akzo Nobel's appeal to this court has been limited to what is in substance a single ground (although pursued under two limbs), namely that the Commission had no jurisdiction to make an enforcement order against it, because the conduct to be prohibited was conduct outside the United Kingdom and because it was not a person carrying on business in the United Kingdom within the meaning of Section 86(1)(c). The two limbs of Akzo Nobel's appeal are: i) That the Tribunal's conclusion that Akzo Nobel was a person carrying on business in the United Kingdom involved an error of law; and ii) That the Tribunal based its conclusion upon a factual analysis which was not to be found in the Commission's Report. Most of the written and oral argument presented to this court focused upon limb (i). We were told that this was the first occasion upon which the Commission had ever sought to make an enforcement order against a foreign company in relation to its conduct outside the United Kingdom, so that the issue of interpretation of Section 86(1)(c) was both novel and of general importance. The Facts It is unnecessary to recite, or even summarise, the findings of fact which led the Commission to conclude that the proposed transaction would create a relevant merger situation resulting in an SLC. Although aspects of that conclusion were challenged in Akzo Nobel's appeal to the Tribunal, those issues have not been pursued on this appeal. Nor is it necessary to set out the reasons why the Commission considered that prohibition of the transaction was the only remedy likely to be effective. The only factual findings relevant to this appeal are those which relate to the question whether Akzo Nobel is (and was at the time of the Report) a person carrying on business in the United Kingdom within Section 86(1)(c). It is to be noted in that context that it is not a requirement of Section 86(1)(c) that the UK business of the target of an enforcement order must be, or even be related to, the business which gives rise to the actual or threatened SLC. Section 86(1) identifies three criteria, any one of which is sufficient to render the target amenable to the Commission's regulatory jurisdiction. I mention this because the Commission's focus upon the Akzo Nobel Group's activities in the UK was understandably directed to its activity in the metal packaging coatings market, rather than its activities in the UK generally. I have taken the following summary of the relevant facts from sections 3 and 11 of the Report. Parts of the passages from which I have drawn my summary have, throughout the proceedings, been treated as commercially confidential. I have endeavoured as far as possible to avoid trespassing upon that confidence, and the outcome of this appeal does not depend upon a detailed description or analysis of those matters. It means however that my summary of the relevant facts is, in certain respects, less than complete, and less detailed than I would have preferred, had I been unconstrained in that respect. The Akzo Nobel Group had a global business in the manufacture and sale of metal packaging coatings. Its five operational sites in Europe included two in the UK, at Birmingham and Hull. The Group had entered the manufacture and supply of metal packaging coatings in January 2008 by reason of its acquisition of ICI, a large and well-known UK-based chemical group. By 2011, the Akzo-Nobel Group divided its business into three operational divisions called Business Areas, namely Performance Coatings, Decorative Paints and Speciality Chemicals, which each accounted for approximately one-third of the Group's 2011 turnover. Each of those Business Areas was further divided into Business Units ("BUs"), which were further divided into sub-Units ("SBUs"). Depending on the specific activities and customers served, the organisation of those BUs and SBUs was either by market or by geography. The Performance Coatings Business Area included the following BUs: Industrial Coatings; Automotive & Aerospace Coatings; Marine & Protective Coatings, Powder Coatings, Industrial Coatings and Wood Finishes & Adhesives. The Industrial Coatings BU includes an SBU called Akzo Nobel Packaging Coatings ("ANPC"). Like most modern corporate groups, the Akzo Nobel Group consisted of a parent holding company and a large number of subsidiary companies, including a number of subsidiaries incorporated and carrying on business in the UK. The results of all its operating subsidiaries are consolidated in the accounts of Akzo Nobel itself, and that company's annual report sets out the overall strategy of the Group's business, describing its activities and strategic ambitions by reference to each of its three Business Areas. In accordance with Dutch law, Akzo Nobel operated a two-tier corporate management structure, consisting of a Board of Management which reported to an independent Supervisory Board. The Board of Management was responsible for management of the company. The company had appointed senior managers together with the Board of Management, collectively known as the Executive Committee ("ExCo"), as the organisational body responsible for the day-to-day management of the whole Group and for its strategic direction. ExCo included members who had responsibilities for specific Business Areas, and responsibilities for specific countries or regions. Under the heading "Carrying On Business" the Commission made specific findings about the management structure of the Akzo Nobel Group from which it is convenient to quote the following extracts: "11.90 We understand that within the Akzo Nobel Group there are a number of wholly owned subsidiaries which are incorporated in different countries. We saw sales contracts entered into by some of these companies relating to the supply of metal packaging coatings products in the UK (and correspondence between these companies and their customers) but, in our view, neither the identity of the contracting entity nor the corporate structure reflected how in substance strategic and operational decisions were made within the Akzo Nobel Group. We noted that Akzo Nobel's business activities, such as its activities in the metal packaging coatings industry are organised by Business Areas (BAs), Business Units (BUs) and Sub-Business Units (SBUs). For example, Akzo Nobel's metal packaging coatings business activities were organised by the SBU ANPG, which Akzo Nobel told us did not have separate corporate identity as a legal entity (Akzo Nobel also told us that the relevant BU did not have separate legal identity). The subsidiaries within the Group sit within these Business Units… 11.91 Akzo Nobel told us that depending on the specific activities and customers served, the organisation of the SBUs and BUs is either by market or by geography.... We therefore recognised that there was a distinction between the corporate structure of Akzo Nobel and the operational structure of the Group. In our view these arrangements, which are common among large corporate groups, reflected a structure in which the decision-making is centralised within the Group. 11.93 These contractual arrangements (set out in a confidential paragraph) reflected the situation which we considered was not unusual for a Group structure of a multi-national company. While certain aspects of the contractual arrangements are at subsidiary level, we noted that the purchasing arrangements had significant aspects which were centralised. 11.95 We considered the organisation of the Group and the involvement of Akzo Nobel NV to assess the decision-making arrangements within the Group. Akzo Nobel told us that Akzo Nobel NV has only a peripheral involvement in directing strategy for the UK… The four members of Akzo Nobel NV's Board of Management and the four leaders with functional expertise have responsibility for day-to-day management of the company, the Executive Committee (ExCo). ExCo manages the company's day-to-day operations. 11.97 In our view these arrangements (a reference to a confidential section) show that the participation of Akzo Nobel NV through ExCo was extensive and includes the approval of operational decisions. We therefore did not accept that Akzo Nobel NV had only a peripheral involvement in directing strategy for the UK. 11.98 The arrangements described by Akzo Nobel in its submission to us and in the Authority Schedule (another confidential document) are complex. The Group carries out operations in the UK and business operations are part of a SBU, BU and BA. We have observed that Akzo Nobel NV has structures in place such that the operations of the Group's various business activities are ultimately controlled by it. While appreciating that there are several steps of upward referral before the functional member of ExCo or Akzo Nobel NV takes a decision, the structure in place, in our view, is one in which the operations within the Group are centrally monitored and directed which limits autonomy within the BUs and SBUs in practice. In our view, the organisational structure and arrangements we have described above, including the relevant business units, is the means through which Akzo Nobel NV carries on business, including in the UK." Save perhaps for the last sentence, the quoted passages from the Commission's Report consist entirely of findings of fact. They are not, and indeed could not be, the subject matter of challenge in this court, otherwise than on Edwards v Bairstow rationality grounds. There has been no such challenge. The Commission's Report made no specific findings about the legal ownership of the businesses within the Akzo Nobel Group or, in particular, of the Group's businesses within the UK. I shall assume in favour of the Appellant that those businesses were, for the most part, owned by the Group's wholly-owned UK subsidiaries, rather than owned by, or held on trust for, their ultimate parent Akzo Nobel. Whereas the Articles of Association of a typical UK incorporated company provide that its business is to be managed by its board of directors, it is clear from the Commission's findings that responsibility for the management of the businesses of all the Group's UK subsidiaries, both in strategic and operational (i.e. day-to-day) terms, rested with ExCo, an organ of the Akzo Nobel parent company. For present purposes it matters not whether this wholesale transfer of responsibility for management from subsidiaries to ultimate parent was achieved by delegation by individual subsidiary boards of directors, alteration to their Articles of Association, or simply by the decision-making of 100% of the subsidiary's shareholders, as permitted by English law in relation to solvent companies: see Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Limited [1983] Ch 258. However achieved, the result that Akzo Nobel itself (through its organ ExCo) managed the businesses of all its UK subsidiaries is a cardinal fact which, incidentally, distinguishes the operations of the Akzo Nobel Group from the traditional basis upon which shareholders may influence the management of the businesses of their companies, namely by voting at general meetings and securing the appointment of directors of their choice, who are themselves charged with the management of the company's business. Although a departure from tradition, there is nothing at all unusual about the centralised group management structure which I have described. As the Commission noted, it is how most modern international corporate groups are managed. In his excellent and concise submissions on this appeal, Mr. Tim Ward QC sought to characterise the management structure found to have existed by the Commission as limited to "monitoring and directing" activities and decisions carried out by other entities in the Akzo Nobel Group, leaving the substance of management to other entities in the Group, including the UK subsidiaries. While it is true that the Commission used the phrase "centrally monitored and directed" (in paragraph 11.98 of its Report), a reading of the Report as a whole and in particular the passages which I have quoted from it, make it clear that responsibility for management of the group's business together with actual strategic and operational management were all vested in and carried out by ExCo, and that the residual responsibility of individual subsidiaries consisted of such relatively low-level matters as ExCo permitted, by way of delegation, together with each subsidiary's audit and accounts. This is particularly apparent from the confidential Authority Schedule issued by ExCo, available both to the Commission, the Tribunal and to this court during the hearing of the appeal, but from which it would be inappropriate for me to quote. It is also apparent from the Commission's specific rejection of Akzo Nobel's submission that its involvement in directing strategy for the UK businesses was only peripheral: see paragraphs 11.95 and 11.97 quoted above. Section 86 in its Context The innocent-sounding phrase "carrying on business in the United Kingdom" has been much used in UK legislation and, indeed, by the English courts as an analytical tool. The industry of Mr. Ward and his team suggested that it appeared no less than 135 times in UK legislation going back as far as 1854. It has been in use within competition legislation since the 1940s, having originally appeared in the Monopolies and Restrictive Practices Act 1948. Like any phrase in a statute or other legal document, it must be read in context, having regard both to the general purposes of the legislation in question, and to the specific purpose for its inclusion, so far as that can be ascertained. A phrase may have a natural or ordinary meaning which admits of no ambiguity. Sometimes, as in the present case, ambiguity only appears when an apparently simple phrase has to be applied to particular facts. The phrase "carrying on business in the UK" is not specifically defined in the Act, but some assistance is obtainable from the definitions in section 129. In section 129(1): ""Business" includes a professional practice and includes any other undertaking which is carried on for gain or reward or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge;" Section 129(3): "References in this Part to a person carrying on business include references to a person carrying on business in partnership with one or more other persons." More generally, there was a sharp debate between counsel as to the consequences of the requirement to construe legislation purposively. Mr. Daniel Beard QC for the Commission, supported by Mr. Romano Subiotto QC for Metlac (intervening to oppose Akzo Nobel's appeal) submitted that the phrase "carrying on business" in the United Kingdom should be liberally construed, so as to bring within its boundary all those targets of appropriate enforcement action necessary to ensure that the Commission could fashion and impose effective remedies for SLCs falling within its investigatory purview. It would, they submitted, be a negation of Chapter 4 of the Act headed "Enforcement" for Section 86 to be narrowly construed, in particular because of the Commission's duty, enshrined in Section 36(3), to have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the SLC and any adverse effects resulting from it. For his part Mr. Ward submitted that Section 86 was designed to implement, in the regulatory context, the common law requirement that English jurisdiction is confined to persons and activities within the UK, rather than extended in breach of comity to persons and conduct in other jurisdictions. Section 86(1) was, he submitted, a deliberate limiting provision plainly designed to confine the reach of the regulatory jurisdiction of the Commission within bounds which respected international comity, and should therefore be construed with that purpose in mind. In particular, he submitted that it should not be construed so as to bring within the class of targets of an enforcement order persons (whether individual or corporate) with no presence or place of business in the UK, whose participation in UK business was confined entirely to conduct outside the UK. It is in my judgment appropriate to have regard both to the wider general purposes of the Act in providing an effective regulatory regime to deal with anticipated or actual anti-competitive outcomes (see Section 36(2)), and to the specific purpose of Section 86(1), which is plainly to set boundaries to the class of persons who may, in relation to their behaviour outside the UK, be targets for enforcement orders. But neither of those purposes leads to a conclusion that Section 86(1) should either be broadly or narrowly construed. It must be interpreted with the fulfilment of both those purposes in mind so that, in particular, an interpretation which was destructive of either of them should be rejected, and an interpretation which gives best effect to both of them adopted if possible. In that context I accept Mr. Ward's submission that international comity forms part of the reason why Parliament may be supposed to have thought it necessary to limit the class of targets of an enforcement order, in relation to conduct outside the United Kingdom. But it cannot be supposed that Parliament intended to apply a purely common law notion of comity, such as that set out in the note to Section 128 in Bennion on Statutory Interpretation (5th Edition): "The principle of comity An Act is taken to be for the governance of the territory to which it extends, that is the territory throughout which it is law. Other territories are governed by their own law. The principle of comity between nations requires that each sovereign state should be exclusively allowed to govern its own territory. So an Act does not usually apply to acts or omissions taking place outside its territory, whether they involve foreigners or Britons." It is obvious that this cannot have been the intention behind Section 86(1) since it is in terms intended to permit three classes of persons to be subjected to regulatory control in respect of their conduct outside the UK. Rather, it seems to me that Section 86(1) performs in relation to this regulatory jurisdiction a function often to be found in statutory provisions which give the English courts jurisdiction over the affairs of foreign individuals or companies, namely to set out connecting factors between targets of regulatory action and the UK which make it appropriate, rather than exorbitant, for the particular jurisdiction in question to be exercised over them in relation to conduct outside the UK. The connecting factors in the present case are UK nationality, incorporation under UK law and carrying on business in the UK. If any one or more of those connecting factors is shown to exist in relation to a person, then Parliament must be taken to have decided, notwithstanding the dictates of international comity, that it is appropriate to confer upon the Commission jurisdiction to make enforcement orders regulating that person's conduct outside the UK. Mr. Ward laboured long and hard to persuade us that the phrase "carrying on business in the UK" had been habitually treated as synonymous with, or as a proxy for, the common law requirement that jurisdiction over a corporate body depended upon it having some 'presence' within the territory of the court exercising jurisdiction. He relied mainly on the well-known asbestosis case of Adams v Cape Industries PLC [1990] Ch 433, and in particular its analysis of what was described as "the Okura line of cases" of which the leading example was the Court of Appeal's decision in Okura & Co Limited v Forsbacka Jernverks Aktiebolag [1914] 1KB 715. The Adams case was itself about the question whether Cape Industries PLC and an associate company Capasco had established a sufficient presence in the USA to enable default judgments against them obtained in the USA to be enforced in England. The Okura line of cases relied upon by way of analogy were concerned with the question whether a foreign corporation had established a sufficient presence in England to render it susceptible to the English court's jurisdiction. Giving the judgment of the Court of Appeal, Slade LJ identified as the "most helpful guidance" in determining whether a foreign corporation is "here" so as to be amenable to the jurisdiction of our courts the following passage from the judgment of Buckley LJ in the Okura case itself, at pages 718-9: "The point to be considered is, do the facts show that this corporation is carrying on its business in this country? In determining that question, three matters have to be considered. First, the acts relied on as showing that the corporation is carrying on business in this country must have continued for sufficiently substantial period of time. That is the case here. Next, it is essential that these acts should have been done at some fixed place of business. If the acts relied on in this case amount to a carrying on of a business, there is no doubt that those acts were done at a fixed place of business. The third essential, and one which it is always more difficult to satisfy, is that the corporation must be 'here' by a person who carries on business for the corporation in this country. It is not enough to show that the corporation has an agent here; he must be an agent who does the corporation's business for the corporation in this country. This involves the still more difficult question, what is meant exactly by the expression 'doing business?'" Slade LJ continued: "It is clear that (special statutory provision apart) a minimum requirement which must be satisfied if a foreign trading corporation is to be amenable at common law to service within the jurisdiction is that it must carry on business at a place within the jurisdiction: see The Theodohos [1977] 2 Lloyd's Rep. 428, 430, per Brandon J." Mr. Ward submitted that, by parity of reasoning, the use of a 'carry on business in the UK' test for the Commission's jurisdiction should at least require it to be shown that the target company was itself present within the UK and carrying out some business activity here. That could not, he said, be achieved simply by attributing to a foreign parent the business activities of its UK subsidiaries. That much was also established in Adams v Cape Industries, accepted by the Tribunal and is common ground in this court. Nor could it be established if the only participation of the parent company in the English business consisted of acts of supervision and management carried out abroad. Mr. Ward sought to bolster his submission by reference first to The San Paulo (Brazilian) Railway Company Limited v Carter (Surveyor of Taxes) [1896] AC 31, a case about the statutory test for corporate liability to income tax, and secondly to SSL International PLC v TTK LIG Limited [2012] 1WLR 1842, a case about whether a company had established a sufficient presence within England to enable service to be effected on one of its directors while temporarily within the jurisdiction. It fell squarely within the Okura line of cases. He submitted that, in both of them, the concept of carrying on business within the jurisdiction was treated as synonymous with presence here. In my judgment, none of those cases lead to or even support the conclusion for which Mr. Ward contends. I agree with the Tribunal that the starting point is that Parliament could have, but did not, specify a 'presence' test in Section 86(1)(c) of the Act. It could have used one or more of the principles relating to 'presence' set out by Slade LJ at page 530-1 in the Adams case, which are firmly focussed upon the requirement that the foreign company has established and maintained a fixed place of business of its own within the jurisdiction, and carried on its own business from such premises. Instead, Section 86(1)(c) imposes a simple carrying on business requirement which, neither expressly nor by necessary implication, requires it to be shown that the target company's participation in the carrying on of that business is itself carried out within the UK. Secondly, the attempt to show by reference to the Okura line of cases that presence here is a necessary characteristic of carrying on business here strikes me as an illegitimate form of reverse engineering. While it may be that carrying on business here is a characteristic of corporate presence here, the opposite does not follow. Presence requires the additional element of a permanent place of business here from which the business is carried on. Thirdly, Lord Davey's analysis of the facts in the San Paulo Railway case illustrates that a corporation may carry on a business in one country even though its management of it takes place entirely from another. The railway company was registered in England and its central management and control was exercised entirely from England, but its trading activities consisted of the running of a railway in Brazil. He said: "It is clear to my mind that the direction and supreme control of the appellant company's business is vested in the board of directors in London, who appoint the agents and officials abroad, and either by general orders or by particular directions control or may control their duties, remuneration, and conduct, and to whom any question of policy or any contract or other matter may, and if deemed of sufficient importance I suppose would, be referred for their decision. The business is therefore in very truth carried on, in, and from the United Kingdom, although the actual operations of the company are in Brazil, and in that sense the business is also carried on in that country." (my underlining) Applying that analogy to Akzo Nobel, its central management activity is carried on in the Netherlands, but a substantial part of the managed business is transacted in the UK. It may fairly be described as carrying on business both in the Netherlands and in the UK. For present purposes, the critical question is whether the exercise of the strategic and operational management and control of a manufacturing and sales business, a substantial part of which is unmistakably carried on within the UK, amounts to carrying on business in the UK, where that management and control itself takes place elsewhere. I have in that context found Section 129(1) and (3) of the Act to be of significant assistance. Section 129(1) defines business as including a money making undertaking, rather than merely an activity other than pleasure. The effect of section 129(3) is that every partner is to be treated as carrying on a partnership business. Suppose that the business of an unincorporated partnership is or includes manufacturing and trading in the UK, and that responsibility for strategic and operational management of the business lies with a partner who (or which) carries out those activities entirely abroad. In my judgment that managing partner would be carrying on business within the UK even if he, she or it never entered the UK or established a presence here. Taken together, those definitions show that it is legitimate to approach Section 86(1)(c) by asking (i) is there a business being carried on in (or partly in) the UK? (ii) is the target person sufficiently involved in that business that it can be said to be carrying it on, whether alone or with others? If the answers to those two questions are affirmative, then the target falls within Section 86(1)(c). I agree again with the Tribunal that it would cast the net too wide to say that any involvement in such a business, such as the supply of goods to it from abroad, amounts to carrying it on. What does or does not amount to carrying it on in any particular case will be a fact-intensive question. That approach seems to me to give proper effect to the purposes both of the Act as a whole and of Section 86(1) in particular. In enables the Commission to regulate the behaviour abroad of a person engaged in the carrying on a business here. I consider that conducting strategic and operational management of a business carried on here clearly amounts to carrying it on, because it supplies an appropriate connecting factor between the manager and the UK to justify the exercise of jurisdiction over it, even if that manager performs its role offshore. Were that not so, modern methods of communication would permit effortless evasion of the Commission's regulatory jurisdiction, which Parliament is unlikely to have intended. In the present case, the substantial UK manufacturing and trading business of the Akzo Nobel group may well be carried on in premises owned or leased by one or more UK-incorporated subsidiaries, and the manufacturing and trading processes may be undertaken by employees of one or more of those subsidiaries. The profits of the UK business may be accounted for as profits of one or more of those subsidiaries. In all those respects the UK subsidiaries are themselves engaged in the carrying on of that business. But the business is nonetheless managed both strategically and operationally by Akzo Nobel, so that, like the offshore managing partner, it is also carrying on business in the UK. This is not to attribute the activities of Akzo Nobel's UK incorporated subsidiaries as its activities. That would be, as the Tribunal held, and as is common ground, an inappropriate departure from principles of separate corporate identity, flowing from Salomon v Salomon [1897] AC 22, and applied in this context in Adams v Cape Industries. It is simply the consequence of the Commission's careful focus on the nature and extent of the Akzo Nobel parent company's involvement in the conduct of the UK business, through its organ ExCo, as set out in the passages from the Report which I have summarised and from which I have quoted. By contrast, if all that the parent company of a subsidiary carrying on business in the UK did was to exercise its rights as shareholder in the traditional fashion, leaving the entire management of the business to the subsidiary's directors, the parent would not solely on that account be carrying on the business at all. It follows that neither the Commission nor the Tribunal made any error of law in its analysis of the question whether Akzo Nobel NV carried on business in the UK, so that the first limb of Akzo Nobel's grounds of appeal must be rejected. Did the Tribunal depart from the Commission's findings of fact? I can take this second limb of the grounds of appeal shortly, and it did not occupy much time during argument. Mr. Ward's submission that the Tribunal had departed from the Commission's findings of fact was focussed on paragraphs 113 and 114 of the Tribunal's judgment, from which I have extracted the passages criticised: "113. …The Commission's central conclusion was that the organisational and decision-making structure of the AN Group is based upon its functional units rather than its operating subsidiaries. Strategic decisions are made within the functional units, as evidenced by the absence of a strategic plan for subsidiaries. Contracting decisions are likewise made within the functional units:… Similarly, other operational decisions are made within the functional units. Taken together, we are satisfied that the Commission was entitled, as a matter of law, to conclude that these activities constitute the carrying on of business within the functional units and that that activity extends to the UK. 114. An important aspect of the Commission's unchallenged decision is that, based on the Authority Schedule, decision-making within the AN Group is centralised through ExCo, which is an organ of Akzo Nobel itself. It might be said that that decision is at variance with the distribution of decision-making authority between ExCo and the functional units. That issue is not, however, open to Akzo Nobel in a challenge based solely on an error of law. In that context, it is important to appreciate that the language of section 86(1)(c) cannot be applied to a group of companies; it necessitates that the business activities are attributed to a legal person, or persons, within the group. The activities of Akzo Nobel's functional units must be attributed to a legal person. Neither the ANPG SBU, nor the Industrial Coatings BU have separate legal personality so that the activities of those units cannot be attributed, for the purpose of section 86(1)(c), to them. They must, be attributed either to Akzo Nobel itself or to the subsidiaries that are located within the units. In determining which of those attributions is correct, the Commission is in our judgment entitled, as a matter of law (consistently with section 86(1)(c) and without violating the Salomon principles), to consider, on the basis of the evidence available to it, whether the decisions made within the functional units are properly to be regarded as decisions made by the organs of the subsidiaries or decisions made by the functional units that are implemented through the subsidiaries. If the latter, then it may be the case – and this will be a matter for factual assessment – that the decisions of the functional units are in reality those of the ultimate holding company." Mr. Ward submitted that it was wrong for the Tribunal to treat the Commission as having decided, as a matter of fact, that the strategic and operational decision-making in relation to the activities of the Group's functional units was to be attributed, via ExCo, to Akzo Nobel. In my judgment that is precisely what the Commission decided, as can readily be seen by comparing those extracted parts of the Tribunal's judgment with the parts of the Report which I have summarised, and from which I have quoted at the beginning of this judgment. My only slight criticism, which is immaterial for present purposes, is about what appears to have been an implicit assumption by the Tribunal that those decision-making activities had to be attributed, by a binary decision, either to the parent Akzo Nobel or to its subsidiaries. Even if they had been shared between them, Akzo Nobel's share of that activity would still have justified the conclusion that it was carrying on business in the UK. But the Commission did indeed find that the decision-making rested with ExCo, an organ of Akzo Nobel, even if no such simple all-or-nothing choice had to be made. That finding is, as I have said, not challenged on the grounds of irrationality. For those reasons I would dismiss this appeal. Lord Justice Beatson : I agree. Lord Justice Richards : I also agree.

JUDGMENT OF THE COURT (Second Chamber) 26 March 2009 (*) (Appeal – Community trade mark – Regulation (EC) No 40/94 – Article 8(1)(b) – Word and figurative mark ‘SUNPLUS’ – Opposition by the proprietor of the national word marks ‘SUN’ – Refusal of registration) In Case C‑21/08 P, APPEAL under Article 56 of the Statute of the Court of Justice, brought on 21 January 2008, Sunplus Technology Co. Ltd, established in Hsinchu (Taïwan), represented by K. Lochner and H. Gauß, Rechtsanwälte, applicant, the other parties to the proceedings being: Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), represented by A. Folliard-Monguiral, acting as Agent, defendant at first instance, Sun Microsystems, Inc., established in Palo Alto (United States), represented by M. Graf, Rechtsanwalt, intervener at first instance, THE COURT (Second Chamber), composed of C.W.A. Timmermans, President of the Chamber, K. Schiemann, J. Makarczyk, P. Kūris (Rapporteur) and C. Toader, Judges, Advocate General: D. Ruiz-Jarabo Colomer, Registrar: L. Hewlett, Administrator, having regard to the written procedure and further to the hearing on 5 February 2009, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment 1 By its appeal, Sunplus Technology Co. Ltd (‘Sunplus Technology’) seeks to have set aside the judgment of 15 November 2007 of the Court of First Instance of the European Communities in Case T‑38/04 Sunplus Technology v OHIM– Sun Microsystems (SUNPLUS) (‘the judgment under appeal’), by which it dismissed Sunplus Technology’s action for annulment of the decision of 7 October 2003 of the Fourth Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (‘OHIM’) in Case R 642/2000-4 (‘the contested decision’). Legal context 2 Article 8(1)(b) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1) reads as follows: ‘Upon opposition by the proprietor of an earlier trade mark, the trade mark applied for shall not be registered: … (b) if because of its identity with or similarity to the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected; the likelihood of confusion includes the likelihood of association with the earlier trade mark.’ 3 Article 8(2) of that regulation is worded as follows: ‘For the purposes of paragraph 1, “Earlier trade marks” means: (a) trade marks of the following kinds with a date of application for registration which is earlier than the date of application for registration of the Community trade mark, taking account, where appropriate, of the priorities claimed in respect of those trade marks: … (ii) trade marks registered in a Member State, or, in the case of Belgium, the Netherlands or Luxembourg, at the Benelux Trade Mark Office; …’. 4 Article 8(5) of the same regulation provides: ‘… [U]pon opposition by the proprietor of an earlier trade mark within the meaning of paragraph 2, the trade mark applied for shall not be registered where it is identical with or similar to the earlier trade mark and is to be registered for goods or services which are not similar to those for which the earlier trade mark is registered, where in the case of an earlier Community trade mark the trade mark has a reputation in the Community and, in the case of an earlier national trade mark, the trade mark has a reputation in the Member State concerned and where the use without due cause of the trade mark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.’ Background to the dispute 5 On 1 April 1996, Sunplus Technology filed a Community trade mark application with OHIM for registration of the following figurative mark: for the following goods in Class 9 of the Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks of 15 June 1957: ‘Chips; semi-conductors; integrated circuits; electronic circuits; semiconductor chips; semi-conductor elements; micro-processing chips; floating-point computing chips; super-large-scale integrated circuits; program cards; disks having computer program; magnetic disks.’ 6 On 18 August 1998, Sun Microsystems Inc. (‘Sun Microsystems’) filed a notice of opposition to the application for registration of the Community trade mark. The opposition was based on four earlier trade marks, including the word mark ‘SUN’ registered on 21 September 1993 at the Benelux Trade Mark Office for, among others, the goods in Class 9 of the Nice Agreement corresponding to the following description: ‘Information processing installations and apparatus, computers, personal computers, computer terminals, computer input and output devices, computer accessories, computer parts and computer memories, text processing apparatus; computer software; magnetic and electronic data carriers, apparatus and instruments for recording and reproducing data.’ 7 The opposition, based on Article 8(1)(b) of Regulation No 40/94, was directed against all of the goods covered by the mark, registration of which is sought. 8 By decision No 625/2000 of 31 March 2000, OHIM’s Opposition Division upheld the opposition in its entirety. 9 An appeal was brought before OHIM’s Fourth Board of Appeal. By the contested decision, the Board dismissed the appeal. It confirmed that there was a likelihood of confusion in the Benelux countries in relation to all the goods covered by the Community trade mark application. The judgment under appeal 10 By application lodged at the Registry of the Court of First Instance on 4 February 2004, Sun Technology brought an action for annulment of the contested decision, based on a single plea in law alleging infringement of Article 8(1)(b) of Regulation No 40/94. 11 The Court of First Instance first of all noted, in paragraphs 29 and 30 of the judgment under appeal, the case-law in respect of likelihood of confusion with an earlier trade mark. 12 Next, the Court of First Instance undertook a global assessment of the factors taking account, in particular, of the distinctive and dominant components of the opposing marks, following which it decided that the high degree of similarity between those marks on the phonetic and conceptual levels was not cancelled out by the visual differences existing between them. 13 The Court of First Instance expressed itself in the following terms: ‘39 In the present case, it is necessary to note, first, that the earlier mark is entirely reproduced in the word component of the trade mark applied for, which shows that there is a certain degree of similarity between them at the visual level. Secondly, it should be noted, as the Board of Appeal did, that “sun” undeniably constitutes the dominant component within the overall impression produced by the complex mark at issue, due to the absence of any distinctive characteristic of the word “plus” which, in relation to the word “sun”, is only a laudatory addition. However, despite that degree of similarity at the visual level, it must be stated that the presence of the additional word component “plus”, and of the figurative component based on the letter “s” and the drawing of a star, in the trade mark applied for introduce significant visual differences between the two marks. It should therefore be held that the Board of Appeal was fully entitled to hold that the two marks at issue were visually different. 40 As regards, secondly, the phonetic comparison, it must be pointed out that there is partial similarity between the trade mark applied for and the earlier trade mark, in so far as the “sun” component, common to both marks, is pronounced in the same way. Moreover, it is the dominant component placed at the start of the word. In that regard, it should be pointed out that, in general, the attention of the consumer is focused on the beginning of the word (see, to that effect, Joined Cases T‑183/02 and T‑184/02 El Corte Inglés v OHIM – González Cabello and Iberia Líneas Aéreas de España (MUNDICOR) [2004] ECR II‑965, paragraph 83). It must be held, in those circumstances, that the phonetic difference between the two marks at issue, resulting from the additional component “plus”, is not sufficient to outweigh the phonetic similarity arising from the fact that the dominant component of the trade mark applied for is, as has been established, identical to the dominant component of the earlier trade mark. In addition, the differences noted at the visual level are not to be found at the phonetic level, inasmuch as the figurative component cannot, in the present case, be taken into account. 41 As regards, thirdly, the conceptual comparison, the Board of Appeal was fully entitled to hold that the marks at issue both refer to the idea of “sun”. 42 The English word “sun”, which is both the only word component of the earlier trade mark and the dominant component of the trade mark applied for, will be easily understood by the public targeted, all the more so as the concept of “sun” is unexpected when used for computer products and it will therefore have a greater impact on the consumer, as the Board of Appeal correctly held. The visual differences noted cannot, in that regard, cancel out the immediate conceptual association between the two marks: on the contrary, they are likely by their very nature, to reinforce it. The enhancing term “plus” is not distinctive in any way and could be viewed as a way of emphasising the word “sun”, which it characterises in this context. The same is true of the figurative component of the mark applied for, which could be perceived as a stylised sun. Furthermore, the fact that the term “sunplus” does not appear in the dictionary and forms no part of everyday language does not in any way alter that finding (see, to that effect, Case T‑19/99 DKV v OHIM (COMPANYLINE) [2000] ECR II‑1, paragraph 26; Case T‑360/99 Community Concepts v OHIM (Investorworld) [2000] ECR II‑3545, paragraph 23; and Case T‑316/03 Münchener Rückversicherungs-Gesellschaft v OHIM (MunichFinancialServices) [2005] ECR II‑1951, paragraph 36). 43 In light of the foregoing, the Board of Appeal was fully entitled to hold that there is a high degree of similarity between the marks at issue at the phonetic and conceptual levels, and that that similarity is not cancelled out by the existing visual differences. 44 In view of the fact that there is a very high degree of similarity between the goods covered by the earlier trade mark and by the trade mark applied for (sometimes to the extent that they are identical), and given the phonetic and conceptual similarities between the two marks, the Board of Appeal was fully entitled to find that, in the present case, there is a genuine risk that the relevant public, notwithstanding the fact that it may be particularly attentive, might believe that the goods covered by those marks have the same commercial origin.’ 14 Consequently, the Court of First Instance dismissed Sunplus Technology’s action. The appeal 15 Sunplus Technology claims that the Court of Justice should set aside the judgment under appeal, annul the contested decision and order OHIM to pay the costs. 16 In support of its appeal, it puts forward three grounds alleging, respectively, infringement of Article 8(1)(b) of Regulation No 40/94, a distortion of facts and evidence and contradictory reasoning by the Court of First Instance. Arguments of the parties 17 As regards the first ground of appeal, Sunplus Technology submits that the Court of First Instance made several errors of law in concluding that there was a high degree of similarity, within the meaning of Article 8(1)(b) of Regulation No 40/94, between the opposing marks on the phonetic and conceptual levels which was not cancelled out by the existing visual differences. 18 By the first part of the first ground of appeal, as regards the phonetic level, Sunplus Technology submits, first, that the comparison of the overall phonetic impression of the opposing marks which the Court of First Instance made in paragraph 40 of the judgment under appeal is inadequate because it is contrary to the Court’s judgment in Case C‑251/95 SABEL [1997] ECR I‑6191. The Court of First Instance simply analysed a single part of the opposing marks, the component ‘SUN’, without assessing them globally and without considering the components ‘S’ and ‘PLUS’. Further, the Court of First Instance gave no reason for not considering them even though the letter ‘S’ can, by itself, be significant. 19 Secondly, it submits that the Court of First Instance also failed to take account of consumers’ lower level of attention in phonetic perception since they have little time to analyse a word and subsequently split off from it a syllable such as the term ‘Sun’. 20 By the first ground of appeal’s second part, as regards the conceptual level, Sunplus Technology claims that the Court of First Instance made an error of law by restricting, in paragraphs 41 and 42 of the judgment under appeal, the overall comparison solely to the component ‘SUN’, which is not in a dominant position, without taking into account the stylised ‘S’ combined with a picture of a star and the term ‘SUNPLUS’. 21 By the first ground of appeal’s third part, as regards the assessment of the likelihood of confusion, Sunplus Technology submits that the Court of First Instance made an error in law, in paragraph 44 of the judgment under appeal, in not taking account of the relative importance to be given to each of the factors in the perception of the opposing marks by reference to the category of goods they cover and to the circumstances in which they are marketed. In this case, the Court of First Instance should have placed more importance on visual perception. 22 As regards the second ground of appeal, Sunplus Technology claims that the Court of First Instance misinterpreted the facts and evidence before it, first, by finding, in paragraph 40 of the judgment under appeal, that ‘the differences noted at the visual level are not be found at the phonetic level, inasmuch as the figurative component cannot, in the present case, be taken into account’ and, second, by accepting, in paragraphs 41 and 42 of that judgment, that the figurative component of the trade mark, registration of which is sought, is a stylised sun and not a star. 23 As regards the third ground of appeal, Sunplus Technology submits that the Court of First Instance contradicted itself in comparing, in paragraph 39 of the judgment under appeal, the opposing marks in the overall impression which they create, taking into account the word ‘plus’ and the device in the mark, the registration of which is sought, whereas, in paragraph 40 of that judgment, it finds that those components have no impact on the phonetic comparison or have only a marginal impact on it and, in paragraph 42 of that judgment, it compares only the syllable ‘SUN’ with the earlier trade mark. 24 OHIM contends that the three grounds of appeal raised by Sunplus Technology are closely connected and can be dealt with together, and pleads that the first ground of appeal, so far as concerns its first two parts, which are effectively challenging the findings of fact made by the Court of First Instance, is inadmissible, and that the other grounds of appeal are unfounded. It contends also that Sunplus Technology should be ordered to pay the costs. 25 Sun Microsystems contends that the appeal should be dismissed and Sunplus Technology ordered to pay the costs, including those of Sun Microsystems. Findings of the Court 26 Since the three grounds of appeal raised by Sunplus Technology are closely connected, it is appropriate to consider them together. 27 As a preliminary point, it must be noted, as did the Court of First Instance in paragraphs 29 to 35 of the judgment under appeal, that the likelihood of confusion on the part of the public must be assessed globally, taking into account all the relevant factors of the case in hand. In addition, as regards the visual, aural or conceptual similarity of the trade marks in question, the global assessment of the likelihood of confusion must be based on the overall impression given by those trade marks, taking into account, in particular, their distinctive and dominant elements (see Case C‑206/04 P Mülhens v OHIM [2006] ECR I‑2717, paragraphs 18 and 19, and the order of 29 June 2006 in Case C‑314/05 P Creative Technology v OHIM, paragraph 32 and the case-law cited). 28 First, by ruling, in paragraph 43 of the judgment under appeal, that OHIM’s Fourth Board of Appeal correctly held that there was a high degree of similarity between the opposing marks on the phonetic and conceptual levels which was not cancelled out by the existing visual differences, the Court of First Instance undertook an assessment of a factual nature (see Creative Technology v OHIM, paragraph 33 and the case-law cited). 29 In that respect, the arguments developed by Sunplus Technology in connection with the two first parts of its first ground of appeal seek to put in issue the Court of First Instance’s findings of fact, since the arguments relate to the difference between the marks in question on the visual, phonetic and conceptual levels, and the assessment made by the Court of First Instance in that regard. 30 Contrary to Sunplus Technology’s submission, the Court of First Instance examined, as part of both its phonetic and conceptual analysis, the differences which it had noted in paragraph 39 of the judgment under appeal as regards the visual analysis, when it stated that the figurative component of the trade mark, registration of which is sought, is composed of the letter ‘S’ and the drawing of a star. Thus, by deciding, in essence, in paragraphs 40 to 43 of that judgment, that the visual differences between the opposing marks were not to be found on the phonetic and conceptual levels, the Court of First Instance undertook an assessment of a factual nature. 31 However, under Article 225(1) EC and the first subparagraph of Article 58 of the Statute of the Court of Justice, an appeal lies on a point of law only. The Court of First Instance has exclusive jurisdiction to find and appraise the relevant facts and to assess the evidence. The appraisal of those facts and the assessment of that evidence thus does not, save where they distort the evidence, constitute a point of law which is subject, as such, to review by the Court of Justice on appeal (see, among others, Case C‑104/00 P DKV v OHIM [2002] ECR I‑7561, paragraph 22; Case C‑173/04 P Deutsche SiSi-Werke v OHIM [2006] ECR I‑551, paragraph 35; and the order of 13 February 2008 in Case C‑212/07 P Indorata-Serviços e Gestão v OHIM, paragraph 38). 32 As regards the alleged distortion of the facts and of the evidence submitted to the Court of First Instance, Sunplus Technology has not adduced, in support of its allegation, any material which could lead to the conclusion that the Court of First Instance distorted the facts by ruling, in paragraph 40 of the judgment under appeal, that the differences noted on the visual level are not to be found on the phonetic level since the figurative component cannot, in the present case, be taken into account. 33 As regards failure to state reasons for the judgment under appeal, it is clear from Articles 42(2) and 118 of the Rules of Procedure that no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. Since it was not until the hearing that Sunplus Technology relied on failure to state reasons and that plea is not based on matters which have come to light since the bringing of the appeal, the plea must be rejected as being too late. 34 As regards paragraphs 41 and 42 of the judgment under appeal, Sunplus Technology submits that, by finding that the figurative component of the mark, registration of which is sought, is a stylised sun and not a star and by not taking the ‘S’ into consideration, the Court of First Instance distorted the facts. 35 Such an assertion, which arises from misinterpretation of the judgment under appeal, must be rejected. In fact, after accepting the position of OHIM’s Fourth Board of Appeal, which considered that both the opposing marks referred to the idea of ‘sun’, the Court of First Instance ruled on the informed consumer’s perception of the figurative component of the trade mark, registration of which is sought, so that it cannot, therefore, be accused of having distorted the facts. 36 The first ground of appeal’s first two parts must, therefore, be dismissed as inadmissible and the second ground of appeal must be dismissed as unfounded. 37 Next, as regards the third part of the first ground of appeal, it must be held that, by deciding, in paragraph 44 of the judgment under appeal, that, in view of the very high degree of similarity, or even identity, of the goods covered by the earlier trade mark and by the trade mark, registration of which is sought, as well as the phonetic and conceptual similarities between the two marks, OHIM’s Fourth Board of Appeal was fully entitled to find that there was, in the present case, a genuine risk that the relevant public, notwithstanding the fact that it may be particularly attentive, might believe that the goods covered by those two marks have the same commercial origin, the Court of First Instance made no error of law in the application of Article 8(1)(b) of Regulation No 40/94. 38 In fact, as is noted in paragraph 27 of the present judgment, the likelihood of confusion on the part of the public must be assessed globally, taking into account all the relevant factors of the case in hand and that assessment entails a certain interdependence between the factors taken into account. 39 In the present case, it must be noted that, in order to reach the conclusion in paragraph 44 of the judgment under appeal, the Court of First Instance carried out an analysis fully within the process intended to determine the overall impression produced by the opposing marks and to apply a global assessment to the likelihood of confusion between them, by taking into consideration all the relevant factors of the case. In that regard, contrary to Sunplus Technology’s submission, the Court of First Instance, after analysing successively the visual, phonetic and conceptual comparisons of the opposing marks, took into account both the type of goods concerned and of the public likely to buy them. 40 Accordingly, the third part of the first ground of appeal is unfounded and must be rejected. 41 Finally, as regards the third ground of appeal, alleging contradictory reasoning between the findings in paragraph 39 of the judgment under appeal and those in paragraphs 40 and 42 of that judgment, it is sufficient to point out that paragraph 39 concerns the assessment of the various visual components of the opposing marks which enabled the Court of First Instance to conclude that the two marks at issue were visually different, whereas, in paragraphs 40 and 42, the Court of First Instance examined those marks from the phonetic and conceptual point of view. While the likelihood of confusion must be assessed globally, each visual, phonetic and conceptual component is to be analysed individually. 42 It follows that the third ground of appeal must be rejected as unfounded. 43 It follows from all the foregoing considerations that the appeal must be dismissed in its entirety. Costs 44 Under Article 69(2) of the Rules of Procedure, which applies to appeals 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. Since OHIM and Sun Microsystems have applied for costs and Sunplus Technology has been unsuccessful, it must be ordered to pay the costs relating to the appeal. On those grounds, the Court (Second Chamber) hereby: 1. Dismisses the appeal; 2. Orders Sunplus Technology Co. Ltd to pay the costs. [Signatures] * Language of the case: English.

COURT OF APPEAL FOR ONTARIO CITATION: The Law Society of Upper Canada v. Abbott, 2017 ONCA 525 DATE: 20170623 DOCKET: C62169 Sharpe, Lauwers and Miller JJ.A. BETWEEN The Law Society of Upper Canada Applicant (Appellant) and John Paul Abbott Respondent (Respondent) Sean Dewart and Tim Gleason, for the appellant James Morton and Michelle Iezzi, for the respondent Heard: December 22, 2016 On appeal from the decision of the Divisional Court (Justices Harriet E. Sachs, Julie A. Thorburn and Brian W. Abrams), dated February 10, 2016, with reasons reported at 2016 ONSC 641, affirming the order of the Law Society Tribunal Appeal Division, dated September 14, 2015, with reasons reported at 2015 ONLSTA 25. Lauwers J.A.: [1] The Appeal Division of the Law Society Tribunal found John Paul Abbott to have knowingly participated in multiple instances of mortgage fraud, but reversed the decision of the Hearing Division to revoke his licence to practise law. In my view this unprecedented result was not justified on the facts or on the law. I would allow the appeal from the decision of the Divisional Court dismissing the appeal from the Appeal Division, set aside the decision of the Appeal Division of the Law Society Tribunal on penalty and reinstate the penalty of licence revocation ordered by the Hearing Division. A. OVERVIEW [2] Mr. Abbott was called to the bar in 1989. When the suspect transactions took place in 2006-2007, he was a sole practitioner in real estate and acted on about 500 transactions annually. [3] In February 2007, a lender client advised Mr. Abbott that it suspected mortgage fraud in one of its transactions. The client complained to the Law Society on February 26, 2007, an investigation was authorized in March, and in April, the Law Society investigator required production of Mr. Abbott’s client’s files and client trust ledgers. Over the ensuing years other investigators asked for more information. Mr. Abbott was at all times helpful and responsive. [4] The investigation report was issued on November 6, 2012, more than five and a half years after the investigation was authorized. The disciplinary Notice of Application was issued on April 9, 2013, and the hearing took place before the Hearing Division over four days in August 2014. [5] The Hearing Division of the Law Society Tribunal found Mr. Abbott had engaged in professional misconduct by knowingly participating in or assisting in mortgage fraud in seven transactions over a four-month period in late 2006 and early 2007; by failing to disclose material facts to his lender clients; and by failing to perform legal services to the standard of a competent lawyer. The financial losses were estimated to be about $625,000. The Hearing Division ordered that Mr. Abbott’s licence to practise law be revoked, but gave him the opportunity to seek a stay pending appeal. The merits reasons are reported at 2014 ONLSTH 194, and the penalty reasons are reported at 2015 ONLSTH 12. [6] The Hearing Division exhaustively reviewed the suspect transactions and the evidence, and summarized the elements of Mr. Abbott’s misconduct at paras. 194-97 of the merits decision, which set out the factual context: In these transactions, and assuming that Mr. Abbott actually made the inquiries that he said he did, these inquiries were manifestly insufficient to address the risk of fraud. We conclude that having a concern about the risk of fraud and making an inquiry that does not genuinely address the concern is no different than having the concern and electing to make no inquiry at all. We conclude that Mr. Abbott knowingly assisted in these fraudulent transactions whether by failing to make inquiry or by making an inquiry that did not actually address the risk of fraud. This conclusion is reinforced by Mr. Abbott's reaction to transactions in which third parties received payments. There were four of these transactions. Third party payments are said to be red flags in the Law Society Gazette and Law Society Magazine. The expert opinion states at pages 16 and 17 that inquiries should be made about such payments. While Mr. Abbott did so, his inquiry was limited to determining whether the vendor authorized the third party payment. As Mr. Abbott's counsel properly conceded in argument, such an inquiry does nothing to address the risk of fraud. An inquiry that does not address the risk that it is intended to address is practically no inquiry at all. We do not conclude that Mr. Abbott had actual knowledge of fraud. We do find that he was reckless and wilfully blind. We conclude, on a balance of probabilities, that Mr. Abbott knew of the risk that his conduct could bring about fraud by completing fraudulent transactions yet persisted in completing the transactions despite that risk. We conclude that Mr. Abbott became aware that an inquiry was required that would address the risk of fraud yet he made no useful inquiry. He made a different inquiry preferring to remain ignorant of what actually mattered. Standing back and reviewing the pattern of the transactions as a whole, we conclude on the balance of probabilities that, by at least transaction #3 (which is one of the most problematic transactions), Mr. Abbott actually suspected deposit fraud yet chose not to make meaningful inquiries. With respect to the two cases of repair credits, we find that Mr. Abbott must have been suspicious had he reviewed the file as he said he did yet he made no inquiries. We find knowing assistance on the basis of recklessness and wilful blindness. [7] Mr. Abbott appealed under s. 49.32 of the Law Society Act , R.S.O. 1990, c. L.8. The Appeal Division unanimously agreed that Mr. Abbott had engaged in professional misconduct. Despite accepting the Hearing Division’s factual findings, on a three-to-two split, the majority of the Appeal Division modified the penalty by substituting a two-year suspension for the licence revocation ordered by the Hearing Division, largely in response to what it found to be the Law Society’s “inordinate and unacceptable” delay in investigating and prosecuting Mr. Abbott. There was undoubtedly a lengthy delay, as the chronology of events set out in Appendix ‘A’ shows. The Divisional Court dismissed the Law Society’s appeal of the Appeal Division’s decision. B. The Issues [8] This appeal raises two general issues for determination: 1. Did the Divisional Court err in dismissing the Law Society’s appeal of the Appeal Division’s order? 2. Did the Appeal Division err in allowing Mr. Abbott’s appeal from the penalty of licence revocation imposed by the Hearing Division? [9] I will address these issues in reverse order. C. Did the Appeal Division err in allowing Mr. Abbott’s appeal from the penalty of licence revocation imposed by the Hearing Division? [10] I begin by describing the governing principles, then turn to the Appeal Division’s decision, and conclude by discussing the application of the principles to the facts. (1) The Governing Principles [11] There are two sets of governing principles engaged in this issue. The first relates to the standard of review and the second to penalty. (a) The Standard of Review [12] The Appeal Division is required to defer to the penalty decisions of the Hearing Division, just as the court does with respect to the decisions of specialized professional disciplinary bodies: Igbinosun v. Law Society of Upper Canada (2008), 239 O.A.C. 178 (Div. Ct.), aff’d 2009 ONCA 484, 96 O.R. (3d) 138, at para. 9; Groia v. The Law Society of Upper Canada , 2016 ONCA 471, 131 O.R. (3d) 1, leave to appeal allowed, [2016] S.C.C.A. No. 310 (February 2, 2017), at paras. 54-56. [13] There are three reasons for judicial deference. The first is that the Hearing Division is an expert tribunal. The second is that, unlike the Appeal Division, the Hearing Division hears live evidence over a period of time, in this case over four days, and has a decidedly more comprehensive understanding of the evidence. The third reason for deference is that the determination of the appropriate penalty for a lawyer’s misconduct is a question of mixed fact and law, which does not lend itself to the extrication of a pure question of law, as the Supreme Court noted in Law Society of New Brunswick v. Ryan , 2003 SCC 20, [2003] 1 S.C.R. 247, at para. 41. [14] To paraphrase the jurisprudence, the reasonableness standard requires the Appeal Division to pay respectful attention to the Hearing Division’s reasons and to consider them as a whole, not as a series of discrete and unrelated elements each of which must pass the test of reasonableness. The Appeal Division must consider whether the Hearing Division’s outcome falls within the range of possible, acceptable and defensible outcomes that are open on the evidence. It is not the Appeal Division’s role to seek out what it considers to be the single best answer to the issue resolved by the Hearing Division. Nor should it seize on an error that does not affect the decision as a whole as the pretext for reaching a different result. See Groia ; Ryan ; Dunsmuir v. New Brunswick , 2008 SCC 9, [2008] 1 S.C.R. 190; and Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board) , 2011 SCC 62, [2011] 3 S.C.R. 708. [15] In sum, the Appeal Division must find the penalty decision of the Hearing Division to be unreasonable before interfering with it. (b) Penalty [16] This appeal raises three issues regarding the appropriate penalty to be imposed on Mr. Abbott: the presumptive penalty of licence revocation, the existence of exceptional mitigating circumstances, and especially the effect of investigative and procedural delay on the penalty. (i) The presumptive penalty of licence revocation [17] The governing principles relating to the penalty to be imposed on a lawyer found to have knowingly participated in mortgage fraud were set out in Law Society of Upper Canada v. Mucha , 2008 ONLSAP 5, a decision of what was then called the Appeal Panel. Mucha is the converse of this case. After finding Mr. Mucha had knowingly participated in mortgage fraud in connection with sixteen real estate transactions, the Hearing Panel imposed a one-year suspension followed by a one-year practice restriction. The Appeal Panel allowed the Law Society’s appeal and imposed the penalty of licence revocation. [18] The Mucha Appeal Panel noted, at para. 21: “[W]e know of no case in which a penalty other than termination of practice has been granted once the Society has proven knowing participation in a mortgage fraud.” The Panel recognized licence revocation as the presumptive penalty for this form of misconduct. [19] In Mucha , the Appeal Panel instructed itself that the applicable standard of review was reasonableness and found, at para. 19, that the Hearing Panel’s “disposition was unreasonable,” on the basis, echoing Ryan , that: “There is no line of reasoning that can reasonably support this result”, and “the disposition is outside of the range of reasonable dispositions available in the circumstances.” [20] The Mucha Appeal Panel quoted Sir Thomas Bingham M.R. in Bolton v. Law Society , [1993] EWCA Civ 32, [1994] 2 All E.R. 486, who said, at para. 14: Any solicitor who is shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed upon him by the Solicitors Disciplinary Tribunal. Lapses from the required high standard may, of course, take different forms and be of varying degrees. The most serious involves proven dishonesty, whether or not leading to criminal proceedings and criminal penalties . In such cases the tribunal has almost invariably, no matter how strong the mitigation advanced for the solicitor, ordered that he be struck off the Roll of Solicitors . [Emphasis in Mucha .] [21] Licence revocation as the presumptive penalty for knowing participation in a mortgage fraud was considered and effectively adopted by the Divisional Court in Bishop v. Law Society of Upper Canada , 2014 ONSC 5057, 325 O.A.C. 160 (Div. Ct.). In that case the member had participated in fourteen instances of mortgage fraud. The majority of the Hearing Panel imposed a penalty of revocation, which the Appeal Panel upheld, and the member’s appeal to the Divisional Court was dismissed. Justice Nordheimer stated, at para. 30: “there is nothing per se objectionable to a profession setting out presumptive penalties for breaches of different types of professional obligations.” [22] There is, as yet, no precedent for a lower penalty than licence revocation for a lawyer who has knowingly participated in mortgage fraud. (ii) Exceptional mitigating circumstances [23] The Mucha Appeal Panel stated, at para. 22: “only exceptional circumstances of mitigation may justify a departure from the ordinary disposition of revocation of licence.” The Panel took the position, at para. 23, that presumptive revocation was “compelled by” the penalty factors, “particularly the overriding public interest,” so that “only extraordinary or exceptional circumstances warrant a departure from that disposition.” [24] The Mucha Appeal Panel expressly limited what it would consider to constitute such extraordinary or exceptional circumstances, at para. 28: As noted earlier, we do not suggest that there can never be exceptional circumstances justifying departure from the ordinary disposition of revocation where the licensee has knowingly participated in mortgage fraud. By way of illustration only, there may be compelling psychiatric or psychological evidence that, among other things, credibly indicates not only that the misconduct was out of character and unlikely to recur, but explains why it occurred . [Emphasis in Mucha .] [25] Arguably, in Bishop the Divisional Court allowed for mitigating factors beyond those personal factors that would explain the lawyer’s misconduct, at para. 31: The other observation is that the mitigating factors that will amount to exceptional circumstances in any given case are not restricted to only certain types or forms. Medical reasons or financial desperation or situations of duress serve as examples of the type of mitigating factors that may amount to exceptional circumstances but those situations are not exhaustive of such factors. That said, it remains the case that any such factors will normally have to be ones that would rise to the level where it would be obvious to other members of the profession, and to the public, that the underlying circumstances of the individual clearly obviated the need to provide reassurance to them of the integrity of the profession . I would add, on that point, that factors that provide an explanation for the conduct of the lawyer will generally be ones that would most likely reach that requisite level of mitigation but they are not the only ones that may achieve that result . [Emphasis added.] [26] The majority of the Appeal Division in this case stated fairly, in para. 41 of the decision, that Bishop “widened the concept” of exceptional circumstances beyond Mucha . (iii) The effect of investigative delay on penalty [27] The effect of investigative or procedural delay in administrative proceedings was addressed by the Supreme Court in Blencoe v. British Columbia (Human Rights Commission) , 2000 SCC 44, [2000] 2 S.C.R. 307. Mr. Blencoe resigned his position as a minister in the Government of British Columbia after accusations of sexual harassment. In the summer of 1995, two complaints of discriminatory conduct by sexual harassment against him were filed with the British Columbia Council of Human Rights, later known as the British Columbia Human Rights Commission. The incidents were alleged to have occurred between March 1993 and March 1995. The hearings were scheduled before the British Columbia Human Rights Tribunal in March 1998, over 30 months after the complaints were filed. [28] Mr. Blencoe suffered severe depression. He began judicial review proceedings in November 1997 to have the complaints stayed, arguing the Tribunal had lost jurisdiction because of the unreasonable delay in processing the complaints that caused serious prejudice to him and his family. [29] Speaking for the five-person majority in Blencoe , Bastarache J. set out some basic principles. While he agreed “state-caused delay” could give rise to an administrative law remedy, at para. 101, he cautioned that “delay, without more, will not warrant a stay of proceedings as an abuse of process at common law,” because it would not be appropriate to impose a “judicially created limitation period.” He added: “In the administrative law context, there must be proof of significant prejudice which results from an unacceptable delay.” [30] Blencoe identified two grounds on which the prejudice arising from delay might affect administrative proceedings. The first, under the rubric of hearing fairness, relates to the impairment of: “a party's ability to answer the complaint against him or her, because, for example, memories have faded, essential witnesses have died or are unavailable, or evidence has been lost, then administrative delay may be invoked to impugn the validity of the administrative proceedings and provide a remedy” (at para. 102). [31] The second ground is that an unacceptable delay could amount to an abuse of process “even where the fairness of the hearing has not been compromised” (at para. 115). Justice Bastarache expressed considerable caution about this ground, at para. 115: Where inordinate delay has directly caused significant psychological harm to a person, or attached a stigma to a person's reputation, such that the human rights system would be brought into disrepute, such prejudice may be sufficient to constitute an abuse of process.… It must however be emphasized that few lengthy delays will meet this threshold . I caution that in cases where there is no prejudice to hearing fairness, the delay must be clearly unacceptable and have directly caused a significant prejudice to amount to an abuse of process. It must be a delay that would, in the circumstances of the case, bring the human rights system into disrepute . [Emphasis added.] [32] The meaning of abuse of process was discussed in para. 118 of Blencoe . The Supreme Court adverted with approval to the principles of the criminal doctrine, which permit a stay where: “compelling an accused to stand trial would violate those fundamental principles of justice which underlie the community's sense of fair play and decency", or where the proceedings are "oppressive or vexatious". Justice Bastarache added, at para. 120: "[A]buse of process" has been characterized in the jurisprudence as a process tainted to such a degree that it amounts to one of the clearest of cases . In my opinion, this would apply equally to abuse of process in administrative proceedings. For there to be abuse of process, the proceedings must… be "unfair to the point that they are contrary to the interests of justice" . "Cases of this nature will be extremely rare " In the administrative context, there may be abuse of process where conduct is equally oppressive. [Emphasis added.] [33] Further, for there to be an abuse of process, there must be a “causal connection” between the delay and the prejudice: “the delay must have caused actual prejudice of such magnitude that the public's sense of decency and fairness is affected” (at para. 133). [34] The court is required to balance the competing interests in assessing whether a delay amounts to an abuse of process, as noted at para. 120: In order to find an abuse of process, the court must be satisfied that, "the damage to the public interest in the fairness of the administrative process should the proceeding go ahead would exceed the harm to the public interest in the enforcement of the legislation if the proceedings were halted. [35] Bastarache J. recognized, at para. 117: “There is, however, no support for the notion that a stay is the only remedy available in administrative law proceedings.” However, he found that the personal prejudice to Mr. Blencoe coupled with the delay of 24 months did not amount to an abuse of process and that accordingly no remedy was warranted. [36] Justice LeBel, speaking for the minority of four judges, agreed with the majority that a stay was not warranted but would have found an abuse of process and granted a modest remedy for the delay, namely an order expediting proceedings and awarding costs to Mr. Blencoe. (c) A Summary of the Governing Principles [37] To summarize, the relevant governing principles are the following: · the Appeal Division must find the penalty imposed by the Hearing Division on a lawyer to be unreasonable before it may substitute its own penalty; · in determining the penalty for knowing participation in mortgage fraud, priority is to be given to the public interest in maintaining the integrity of the profession; · the presumptive penalty is licence revocation; · that penalty can be withheld only in extraordinary or exceptional circumstances; · such circumstances will usually be personal to the member, and explain why the misconduct occurred and why there is no fear of repetition; and · where delay is claimed to constitute such an extraordinary circumstance, the effect of delay must be examined via the two branches of Blencoe : · first, hearing fairness - whether the delay impairs the defence’s ability to make full answer and defence given the quality of the evidence; and · second, whether the delay gives rise to an abuse of process. (2) Appeal Division: The Majority Decision [38] The Appeal Division was divided in its reasoning and in the result. The Chair, Raj Anand, wrote the majority’s reasons, and was joined by Roger Yachetti and Constance Backhouse. They set aside the penalty of licence revocation imposed by the Hearing Division on Mr. Abbot and substituted a two-year suspension. The dissent was written by Christopher Bredt, who was joined by lay bencher Marion Boyd. They would have dismissed Mr. Abbott’s appeal and upheld the revocation of his licence to practise law. (a) The Standard of Review [39] The majority found that on questions of fact, credibility, and mixed fact and law, the standard of review is reasonableness, but with respect to questions of law, the standard of review is correctness (at para. 7). (b) Penalty [40] The majority upheld the Hearing Division’s findings on Mr. Abbott’s professional misconduct without reservation (at para. 11). The majority made several pertinent observations. First, and significantly, it pointed out that Mr. Abbott “did not argue that the fairness of the hearing below was compromised by the passage of time”, thus setting aside the first branch of Blencoe . Second, the majority specifically upheld as reasonable the Hearing Panel’s finding that, on the second branch of Blencoe : “Mr. Abbott had not demonstrated significant psychological harm or stigma to his reputation, caused by the length of the investigation.” They continued, at para. 15: The panel's ruling about the impact on the Lawyer and his reputation was largely factual. Based on the Lawyer's affidavit, and the report filed by his social worker, together with the examinations of both witnesses, the Hearing Division at paras. 32 to 63 carefully analyzed the Appellant's claim that he had suffered psychological and economic prejudice due to the delay. The panel acknowledged at para. 60 that "the length of the investigation was stressful and difficult for Mr. Abbott." Its factual finding that no significant prejudice was proven is reasonable. In this context, its finding of mixed fact and law, characterizing the damage to the public interest should the hearing proceed as falling short of the harm to the public interest in professional regulation if the proceeding were halted, was also reasonable and should not be disturbed on appeal. [41] Third, the majority upheld the Hearing Division’s refusal to dismiss Mr. Abbot’s application for a stay on account of delay, concluding that its refusal was reasonable (at para. 16). (i) The presumptive penalty of licence revocation [42] The majority accepted that the presumptive penalty in the case is the revocation of Mr. Abbott’s licence to practise law (at para. 31). It rejected Mr. Abbott’s request to revisit whether licence revocation should be the presumptive penalty. (ii) Exceptional mitigating circumstances [43] The majority accepted, at paras. 41-42, that the Divisional Court’s decision in Bishop “widened the concept of ‘exceptional circumstances’, but only in situations where the underlying circumstances of the individual case provided assurance to the public that the integrity of the profession will be maintained.” [44] Mr. Abbott advanced twelve mitigating circumstances. The Hearing Division rejected them as individually and cumulatively insufficient to mitigate the presumptive penalty of licence revocation even though it did not question the truth of many of them. The majority noted, at para.46: While this panel may not have reached precisely the same conclusions with respect to each of the listed mitigation items, that is not the test on appeal. Most of the Hearing Division's conclusions addressed questions of fact or mixed fact and law, and were reasonable. [45] The majority of the Appeal Division went on to decide that the investigative and procedural delay was capable of constituting an exceptional circumstance that could mitigate the presumptive penalty of licence revocation. (iii) The effect of investigative delay on penalty [46] Despite its earlier conclusion that the Hearing Division’s rejection of “most of” the mitigating circumstances was reasonable, the majority said at para. 54: “we are unfortunately unable to say whether the full range of mitigating circumstances was given proper effect.” The majority focussed on what it considered to be the Law Society’s inordinate investigative and procedural delay, expressed at para. 47: Our focus, however, is on the panel's consideration of the overriding issue of delay, and the impact of its reasoning on the ultimate conclusion that Mr. Abbott's mitigating circumstances fell short of exceptional circumstances that would relieve against revocation. [47] The majority found, at para. 17, that “the delay in this case was indeed inordinate”, and added, at para. 29, that the delay “up to and somewhat beyond the issuance of the Notice of Application was inordinate and unacceptable, and exceeded what the community would regard as fair in the context of this case.” (iv) The Appeal Division’s Penalty [48] The majority took the position that the Hearing Division had made several errors of law in assessing the effect of the Law Society’s investigative and procedural delay on Mr. Abbott’s penalty. I discuss these alleged errors of law in more detail below. In view of these errors, the majority decided, at para. 56: “the Appeal Division is entitled to reach its own conclusion after directing itself to the proper factors and weighing them.” [49] The majority substituted a two-year suspension for the licence revocation imposed by the Hearing Division on Mr. Abbott, stating , at para. 90, that the mitigating circumstances, coupled with the delay, “ constituted exceptional circumstances that merited the mitigation of the presumptive penalty of revocation of the Lawyer's licence.” It picked out in particular, at para. 84, several mitigating circumstances that “spoke in his favour”, which it took from para. 22 of the Hearing Division’s penalty decision. I will review these below. Accordingly, the majority found, at para. 103, that, contrary to the Hearing Division’s conclusion: “this is a sufficiently extreme and rare case that it justifies the substitution of a suspension in place of the presumptive penalty.” This followed the majority’s conclusion, at para. 101, again contrary to the findings of the Hearing Division, that: “Overall, the circumstances do not point to a likelihood of a reoccurrence of professional misconduct.” The core of the majority’s penalty reasoning is found in para. 104: Considering all of the mitigating factors together, and after anxious and careful review, we have determined that the Lawyer has demonstrated "exceptional circumstances" that, in the formulation adopted in Mucha , are "more exceptional" than those that would justify an order to surrender his licence. A suspension will, for the reasons we have put forward, satisfy the onerous standard set by the Divisional Court in Bishop : the underlying facts concerning Mr. Abbott, in tandem with the institutional, stakeholder and personal interests concerning excessive delay, require the imposition of a remedy that will provide reassurance to the public of the integrity of the profession and its processes. [50] The majority added, at para. 105: At the same time, the imperatives of specific deterrence, general deterrence, and the maintenance of public confidence in the integrity and the regulation of the profession obviously point to the need for a lengthy suspension, in recognition of the nature and seriousness of the misconduct that occurred in this case, and the objectives that a long line of this Tribunal's case law has attempted to vindicate in cases of fraud and misappropriation. (3) The Principles Applied [51] In this section of the reasons I begin with the standard of review and then address the errors the majority made in its decision. (a) The Standard of Review [52] As I have noted, the Hearing Division imposed the penalty of revocation of Mr. Abbott’s licence to practise law in view of his knowing participation in mortgage fraud. There are no decisions supporting a lesser penalty. On the face of things, the Hearing Division’s imposition of the presumptive penalty fell within the range of possible, acceptable and defensible outcomes that were open on the evidence. In order to justify its rejection of that outcome, the Appeal Division was required to identify an overriding error of principle made by the Hearing Division that renders its penalty decision unreasonable, in the sense given metaphorically by Stratas J.A. in South Yukon Forest Corporation v. Canada , 2012 FCA 165, 431 N.R. 286, leave to appeal ref’d, [2012] S.C.C.A. No. 349, at para. 46: "Overriding" means an error that goes to the very core of the outcome of the case.… [I]t is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall. [53] The majority did not identify any such error of principle. [54] In my view, the majority failed to: defer to the Hearing Division’s penalty decision, as it was obliged to do; pay respectful attention to the Hearing Division’s penalty reasons and consider them as a whole; and consider whether the Hearing Division’s penalty fell within the range of possible, acceptable and defensible outcomes that were open on the evidence. (b) The Majority’s Errors [55] The majority’s reasons identify several issues on which it disagreed with the Hearing Division, to which I now turn. (i) Does the Law Society Tribunal have a role in policing prosecutions? [56] This is the core of the difference between the majority and the Hearing Division. The majority of the Appeal Division considered it to be part of the Law Society Tribunal’s function to “curb inordinate delay” (at para. 78). Accordingly, the majority noted, at para. 84: [H]arm to the administration of self-regulation, concern about repetition of delays, values of fairness, and efficient and effective service to the public and indeed to complainants are all prejudicial to the public interest more widely conceived. Delay in investigation and prosecution may be as harmful to public confidence in the legal profession’s ability to regulate itself as Mr. Abbott’s continued right to practise law. [57] The dissent rejected the majority’s approach, noting at para. 139: The majority's rationale for reducing the penalty from revocation to a suspension in this case, is that it is necessary in the public interest to send a message to the Law Society that this type of delay is unacceptable. In our view, this rationale is not consistent with the need to assure the public of the integrity of the profession. [58] Under the Law Society Act , questions of policy and resource allocation belong to Convocation, not to the Law Society Tribunal of which the Hearing and the Appeal Divisions form parts. Both Divisions are adjudicative bodies in the disciplinary scheme, with only limited policing functions. [59] The majority criticized the Hearing Division for failing to “make findings of the significance of the delay for the intersecting public and private interests that were relevant to its penalty determination” (at para. 88). The majority added that if the Hearing Division had “accorded significant weight to the extraordinary delay that took place here … we do not believe the panel's conclusion on delay as a mitigating factor and the overall circumstances as ‘exceptional’ would have been the same” (at para. 89). [60] With respect, the majority did not read the Hearing Division’s reasons fairly. The Hearing Division was fully alive to the actual delay and knew the reasons for it, as it explained in the merits decision at paras. 17-20: The Investigation Report in this matter is dated November 6, 2012. The Notice of Application was issued on April 9, 2013. There was a period of slightly over six years between the commencement of the investigation and the commencement of this Application. This hearing proceeded over seven years after the commencement of the investigation. As Mr. Dewart said in apparent understatement, this is not ideal. The explanation for this delay has little if anything to do with this particular case. Rather, mortgage fraud investigations are among the most complex and time-consuming investigations and are extremely demanding upon resources. The Law Society has faced a growing inventory of mortgage fraud complaints with the volume of investigations becoming much greater by 2005. Because of this volume, the Law Society triaged investigations based on perceived urgency/risk in order to best apply available resources. A situation such as this raises difficult issues of resource allocation. Some may think that the Law Society should have diverted sufficient resources from other regulatory activities to address the volume of mortgage fraud investigations. Others may think that Law Society fees should have been raised to generate further resources. Irrespective of the right answer, if there is one, to this resource problem, there was a lengthy delay in this case. [61] It is serious business for an adjudicative body to disturb, on grounds of investigative and prosecutorial delay, what would otherwise be the ordinary operation of the disciplinary scheme. This is because two public interests are in tension, as the Supreme Court noted in Blencoe at para. 120: “the public interest in the fairness of the administrative process should the proceeding go ahead”, on the one hand, and, on the other hand, “the harm to the public interest in the enforcement of the legislation if the proceedings were halted”. In my view, the role of the Law Society Tribunal in policing the prosecutorial function with respect to delay is defined by and limited to the authority of Blencoe . [62] The Hearing Division adverted precisely to the balance between two aspects of the public interest in para. 63 of the merits decision in determining that the prosecution would not be stayed: However, assuming inordinate delay which we need not decide, we find that the damage to the public interest in the fairness of this administrative process should this hearing proceed does not exceed the harm to the public interest in the professional regulation pursuant to the Law Society Act if this proceeding were halted. To the contrary, the public interest demands in the context before us that there be a determination of whether Mr. Abbott has engaged in professional misconduct in the serious circumstances alleged despite the fact of lengthy delay and the prejudice resulting from that delay. [63] The Hearing Division carefully assessed the tension between the public interest in fairness and in enforcement, and its assessment was entirely reasonable. The Appeal Division erred in setting that assessment aside. [64] The majority also faulted the Hearing Division for giving priority to general deterrence over specific deterrence in setting the penalty, noting at para. 83: “the Hearing Division gave precedence to general deterrence and maintenance of public confidence in the legal profession as the penalty objectives in this case, and minimized the importance of specific deterrence.” The majority found this to be wrong, and required both objectives to be accommodated. The majority added, at para. 84: “we do not agree that ‘reducing a penalty because of prejudice is most relevant where specific deterrence is the principal penalty goal.’” [65] The Hearing Division recognized the need to take into account both specific and general deterrence and addressed the issue directly at paras. 30 and 32 of its reasons on penalty: We accept the submission that delay causing prejudice can be a mitigating factor in many cases. However, we do not accept that prejudice arising from delay in this case is a proper basis to turn revocation into a lengthy suspension. The second reason is that the principal basis for the presumptive revocation penalty is general deterrence and maintenance of public confidence in the legal profession. On the other hand, reducing a penalty because of prejudice arising from delay is most relevant where specific deterrence is the principal penalty goal. Where a panel is concerned about the prospect of a lawyer engaging again in professional misconduct, a panel can reasonably conclude that the lawyer will reflect on all of the impacts of the prior misconduct and want to avoid all such impact. To the extent that a penalty in a discipline proceeding can properly be seen as punishment, it is fair to reflect prejudice suffered from investigative delay in the penalty ultimately ordered. While there might be cases where prejudice was sufficiently significant that general deterrence and maintenance of public confidence would be sufficiently served by a lengthy suspension rather than revocation, this is far from being such a case. [66] The Hearing Division’s emphasis was entirely consistent with precedent. As Nordheimer J. observed, at para. 28 of Bishop : I agree with the Appeal Panel that the penalty imposed by the Hearing Panel was a reasonable one. It fulfills the two purposes set out in Bolton [preventing the lawyer from repeating the misconduct and maintaining the reputation of the profession] . I acknowledge that there does not appear to be any real concern in this case that the appellant would repeat the conduct but that fact does not detract from the pressing need to send a consistent message that engaging in fraudulent conduct by a lawyer is a matter that will not be tolerated because of its impact on the profession as a whole. As was observed by Sir Thomas Bingham M.R. in Bolton , at p. 519: The reputation of the profession is more important than the fortunes of any individual member. Membership of a profession brings many benefits, but that is a part of the price. Although the majority of the Appeal Division quoted this passage from Bolton at para. 58, it does not appear to have given it any further thought. [67] In my view, Hearing Division’s consideration of general and specific deterrence in a case where the presumptive penalty is licence revocation was entirely reasonable. (ii) Did the Hearing Division assess the delay evidence properly? [68] The majority asserted the Hearing Division “misdirected itself” as to the effect of delay on penalty in light of the “widened formulation” of mitigating circumstances from Bishop (at paras. 48, 53, and 55). [69] This is not a fair reading of the Hearing Division’s penalty decision. The Hearing Division instructed itself correctly, at para. 21, that it would be wrong to adopt a restrictive reading of Mucha , in light of Bishop . After noting the holding in Bishop , it listed the mitigating circumstances advanced by Mr. Abbott at para. 22. The first raised the delay issue and its effect on the penalty squarely: There was substantial delay in the investigation as was discussed in our prior reasons. While we did not order a stay of proceedings as asked, it is now submitted that the delay in this case and the attendant prejudice suffered by Mr. Abbott justifies a lesser penalty than revocation; [70] In the succeeding paragraphs the Hearing Division analyzed each of the grounds. It addressed delay at paras. 30-31: Finally, we address the issue of delay. We accept the submission that delay causing prejudice can be a mitigating factor in many cases. However, we do not accept that prejudice arising from delay in this case is a proper basis to turn revocation into a lengthy suspension. The first reason is that we are not persuaded that much of the prejudice described by Mr. Abbott in his earlier evidence and during the penalty phase arises from investigative delay as opposed to from the issuance of the Notice of Application in the spring of 2013. The evidence of prejudice arising from investigative delay is quite limited as discussed in our decision on finding at paras. 32 to 60. While there was no doubt some prejudice, we do not find there to have been substantial prejudice arising from investigative delay. The evidence of prejudice was vague and general. Mr. Abbott sought no professional assistance during the investigation. There is no evidence from anyone about Mr. Abbott and his circumstances during the investigation. No medical or other expert evidence was adduced during the penalty phase of the hearing despite our earlier findings. To be clear, we continue to be concerned about the lengthy investigative delay in this case. However, our assessment here relates to the issue of prejudice arising from that delay. (The second reason given by the Hearing Division emphasized general deterrence and was excerpted earlier in para. 65.) [71] The Appeal Division drew several mitigating circumstances from para. 22 of the Hearing Division’s penalty decision, which included the following: · Prior to the real estate transactions of 2006 and 2007 that are in issue in this case, Mr. Abbott's conduct was unimpeached. · There were a limited number of problematic transactions over a few months. · Since these real estate transactions, Mr. Abbott's conduct is also unimpeached and his dealings with the Law Society in this matter have been entirely appropriate. · Mr. Abbott testified willingly and honestly. · Mr. Abbott has a reputation for honesty and integrity in support of which a number of letters were filed from colleagues and clients. [72] With respect, these mitigating circumstances are quite generic, and in the context of an active prosecution, one would expect the member to be on his best behaviour or risk making things worse. As for the supportive reference letters, it is well to keep in mind the observations of Sir Thomas Bingham M.R. in Bolton , at para. 16: It often happens that a solicitor appearing before the Tribunal can adduce a wealth of glowing tributes from his professional brethren. He can often show that for him and his family the consequences of striking off or suspension would be little short of tragic. Often he will say, convincingly, that he has learned his lesson and will not offend again. On applying for restoration after striking off, all these points may be made, and the former solicitor may also be able to point to real efforts made to re-establish himself and redeem his reputation. All these matters are relevant and should be considered. But none of them touches the essential issue, which is the need to maintain among members of the public a well-founded confidence that any solicitor whom they instruct will be a person of unquestionable integrity, probity and trustworthiness . [Emphasis added.] [73] The Appeal Division asserted that the Hearing Division resiled from Bishop in stating that the evidence did not provide a “credible explanation” for Mr. Abbott’s misconduct. The majority stated, at para. 55, that the locus of the Hearing Division’s error was in paras. 23 and 35 of the penalty decision, which I excerpt for convenience: In our view, this all [referring to the claimed mitigating circumstances] falls far short of circumstances justifying anything other than revocation. Clearly, there is no "compelling psychiatric or psychological evidence that, among other things, credibly indicates not only that the misconduct was out of character and unlikely to recur, but explains why it occurred." There is no evidence that explains why the misconduct occurred or that it is unlikely to recur. Ultimately, we conclude that revocation is the appropriate penalty given the gravity of the misconduct that we have found. We find no exceptional circumstances that would credibly explain the misconduct let alone credibly indicate that it is out of character and unlikely to recur. [74] At bottom, this review shows the majority simply disagreed with the Hearing Division’s reasoning about the effect of delay as an exceptional circumstance warranting the mitigation of Mr. Abbot’s penalty. In my view, the Hearing Division considered the right questions and gave cogent answers. The majority disagreed with the weight the Hearing Division gave to the prejudice to Mr. Abbott and the sufficiency of the evidence that he would not repeat the misconduct. However, in the absence of a palpable and overriding error of fact, a misapprehension, or an error of law, the issue of the weight of the evidence is not within the purview of an appellate body and does not constitute an error of law entitling it to intervene. The Hearing Division made no such errors here. (iii) What prejudice must be shown to warrant a reduction in the penalty? [75] The Hearing Division and the majority disagreed about the prejudice the affected member must show in order to warrant a reduction in penalty under the principles of Blencoe . The Hearing Division followed Blencoe ’s requirement that exceptional circumstances must be shown, while the majority backed away from such a high standard, going so far as to confine Blencoe to cases where a stay of proceedings is at issue (at para. 81). [76] The majority asserted the Hearing Division misapprehended Blencoe and erred in applying the more rigorous Blencoe test for a stay to its consideration of whether the delay could reduce Mr. Abbott’s penalty (at para. 82). The majority’s view was that while investigative and procedural delay coupled with the mitigating circumstances might not be sufficient to justify a stay of proceedings under Blencoe , the same delay coupled with the same mitigating circumstances could nonetheless warrant a reduction in Mr. Abbott’s penalty (at para. 80). It asserted that beyond the context of a stay application, the applicable prejudice test was “much less onerous” (at para. 81). [77] The sense conveyed by the majority’s reasons is that once a tribunal is out from under the onerous burden relating to a stay of proceedings, then it is free to indulge para. 117 of Blencoe , where Bastarache J. noted that other remedies might be available. The majority relies especially on the minority reasons in Blencoe , which it explains at para. 66. The linchpin to the majority’s approach is found in para. 73: “There is no basis, in our respectful view, to carve out revocation cases from the application of the impact of institutional delay.” [78] I do not agree. In my view it is appropriate to carve out revocation cases. The key point made in all of the mortgage fraud lawyer discipline cases is that dishonest misconduct presumptively results in revocation. It is in a different register, or of a different quality, than other lawyerly misconduct. The cases question whether, in the public interest, the profession can accept the continued licensing of a person who has shown himself to be willing to participate, for personal gain, in stealing someone else’s money; does the member have the moral character to continue to be in a position of trust? To repeat the words of Sir Thomas Bingham M.R. in Bolton , at para. 16, the “character question” gets at “the need to maintain among members of the public a well-founded confidence that any solicitor whom they instruct will be a person of unquestionable integrity, probity and trustworthiness.” [79] The same sense of gravity reflected in the presumptive revocation penalty for dishonesty must be brought to bear on the assessment of the prejudice suffered by the lawyer as a result of the delay. The prejudice must be very serious. [80] In my view, the majority did not pay sufficient attention to the statement of Bastarache J. at para. 122 of Blencoe : “the determination of whether a delay is inordinate is not based on the length of the delay alone, but on contextual factors, including the nature of the various rights at stake in the proceedings, in the attempt to determine whether the community's sense of fairness would be offended by the delay.” In the case of mortgage fraud, the significant contextual factor is the presumptive penalty and the need to reassure the public of the integrity of the legal profession. [81] The majority referred to several cases which, in my view, are unpersuasive authority for the proposition that a penalty short of revocation was called for. [82] In Wachtler v. College of Physicians and Surgeons of the Province of Alberta , 2009 ABCA 130, 448 A.R. 317,the Council of the College found Dr. Wachtler guilty of unbecoming conduct concerning his drug-prescribing practices. The Council increased his suspension by two months from the penalty recommended by the Investigating Committee and required him to pay costs. In light of the 35-month delay, the Court of Appeal of Alberta set aside the two-month increase in the suspension and the costs award. The penalty imposed by the Council was not the termination of his licence to practise medicine, but what the College suggested was a “rehabilitative rather than a deterrent” penalty (at para. 43). [83] The majority also cited Law Society of Upper Canada v. Marler , 2014 ONLSTH 203. The Hearing Division found the lawyer had committed professional misconduct, at para. 15, by “letting the [office] manager operate on his own with little or no direct supervision,” which enabled the manager to steal over $600,000 in trust funds. The member did not personally engage in intentional misconduct. The delay in Marler was found to be seven years. The case slipped through the cracks because the Law Society was swamped by mortgage fraud claims (at para. 29). Both the Law Society and the member agreed that the delay along with several other strong mitigating factors should mitigate the penalty. The normal penalty was a suspension not revocation, and it was accordingly set “at the low end of the range”, at 90 days (at para. 37). [84] The majority also cited Law Society of Upper Canada v. Totera , 2014 ONLSTA 45, rev’d 2016 ONSC 1578, 347 O.A.C. 59 (Div. Ct.), a decision of the Appeal Division. The Divisional Court’s reasons setting aside that decision were released March 8, 2016, after Appeal Division rendered its decision in this case. The allegation was that the member had knowingly participated in twelve fraudulent real estate transactions. The Hearing Panel found that the lawyer had not knowingly participated in mortgage fraud or failed to be honest or candid. It then dismissed the application on the basis of a five year delay. The Divisional Court set out the parties’ positions, at para. 22: The parties agree that there was inordinate delay, and the Law Society does not dispute that the public interest would not be compromised if the Disciplinary Proceeding against the Appellant were dismissed as the Hearing Panel concluded that the Appellant did not knowingly participate in mortgage fraud or fail to be honest or candid. [85] The issue was whether the member had proven he suffered serious personal prejudice resulting from the delay under Blencoe . The Appeal Division seized on an error in the Hearing Panel’s decision in which it stated that the member had not been cross-examined, and ordered a new hearing. However, the Divisional Court found that the Hearing Panel’s failure to consider the member’s cross-examination did not undermine its conclusion that the member “suffered serious psychological harm as a result of the delay in the investigation” (at para. 59). Accordingly, the Divisional Court set aside the Appeal Division’s order and re-instated the Hearing Panel’s dismissal of the prosecution based on Blencoe . [86] The majority also cited the Law Society of Upper Canada v. Durno , 2015 ONLSTH 122, in support of the proposition that delay could result in a lesser penalty. The member admitted to knowingly assisting in mortgage fraud in eight real estate transactions. There were mitigating circumstances in addition to a delay of nearly a decade between the time the investigation started and its culmination, (there was an earlier application and an appeal that led back to the Hearing Division). Instead of revoking his licence, the Hearing Division permitted him to resign. In Durno , the Hearing Division emphasized, at para. 104, an important contextual point to which the majority in this case did not refer: The appeal panel in Mucha acknowledged, at para. 30, that " the circumstances justifying permission to resign (which also results in a termination of licence) may be less exceptional than those that could ever justify a disposition that does not involve termination ." [Emphasis in Durno .] [87] The cases cited by the majority are all distinguishable and provide no guidance in a case where the presumptive penalty is licence revocation. Things are substantially different where the usual penalty is less than outright licence revocation. Totera was a straight application of Blencoe leading to dismissal for delay. In Durno the member would no longer be practising law. [88] It is arguable that, under Blencoe , delay could mitigate the presumptive penalty of licence revocation if the delay amounts to an abuse of process. However, where there is a presumptive penalty of licence revocation, a member should be obliged to establish that the delay was so egregious and caused him such personal prejudice that revoking his licence to practise law would bring the regulatory system for lawyers into disrepute. The Hearing Division did not err by following Blencoe and insisting the penalty should be reduced only where the member could show that the delay was the cause of “substantial prejudice”. [89] In contrast to Blencoe , the majority of the Appeal Division considered that any prejudice to Mr. Abbott from the delay could give rise to a remedy and would have inferred prejudice from the delay (at para. 79), noting that Mr. Abbott “did not have to prove substantial prejudice to himself” (at para. 80). This was an error. [90] In setting a penalty, the adjudicator should take into account in possible mitigation such factors as the Law Society’s investigative and procedural delay, the prejudice to the interest of the public in a timely investigative and prosecutorial process, and to the interests of licensees more generally, to which the Appeal Division alluded. However, to convert a presumptive licence revocation into a lesser penalty that allows a member to continue to practise law requires egregious personal prejudice of the kind demanded by the Supreme Court in Blencoe as necessary to establish an abuse of process. As the Hearing Division found, this case does not meet that standard. (iv) Concluding Observations on the Majority’s Errors [91] In my view, the Hearing Division did not make any palpable and overriding errors in apprehending the evidence, nor did it make any errors of law. Its reasons were reasonable in the sense expressed by the Supreme Court in Dunsmuir , at para. 47, in that they demonstrate “the existence of justification, transparency and intelligibility within the decision-making process." The Hearing Division’s imposition of the presumptive penalty fell within the range of possible, acceptable and defensible outcomes that were open to it on the evidence. [92] The findings of the Appeal Division that the Hearing Division made errors of law reflect its strong resolve to impose a lesser penalty than revocation on Mr. Abbott in order to send a message to the Law Society that delay is unacceptable, as the dissent pointed out. In doing so the Appeal Division exceeded its responsibility as an adjudicative body and misapprehended Blencoe . It did not defer to the Hearing Division but actively sought to subvert its reasoning, contrary to the Supreme Court’s reasoning in Newfoundland Nurses . These were clear errors in principle. D. Did the Divisional Court err in dismissing the Law Society’s appeal of the Appeal Division’s order? [93] This court’s approach in an appeal from the Divisional Court on an administrative law matter is to step into the shoes of the lower court and focus on the administrative decision: Groia , at para. 49; Ottawa Police Services v. Diafwila , 2016 ONCA 627, 352 O.A.C. 310, at para. 51. [94] The question to ask is whether the Divisional Court identified the correct standard of review and applied it properly: see Agraira v. Canada (Public Safety and Emergency Preparedness) , 2013 SCC 36, [2013] 2 S.C.R. 559, at paras. 45-47. The court does not take the same approach as is does to an appeal from a lower court: Groia , at para. 54, citing Mouvement laïque québécois v. Saguenay (City) , 2015 SCC 16, [2015] 2 S.C.R. 3, at paras. 29, 37-38 and 43. [95] Acting as the appeal court, the Divisional Court is to apply a presumption of reasonableness to decisions of specialized professional disciplinary bodies like the Appeal Committee, as this court noted in Groia, at paras. 55-62, following Supreme Court jurisprudence post- Dunsmuir . But reasonableness review is not a rubber stamp. [96] This court owes no deference to a decision of the Divisional Court on judicial review: Diafwila , at para. 51. [97] In my view the Divisional Court erred in failing to apply the recognized principles of reasonableness review referred to earlier, to ensure that the Appeal Division deferred appropriately to the penalty decision of the Hearing Division, just as the court does with respect to the decisions of specialized professional disciplinary bodies. The errors in the Appeal Division’s approach were laid out earlier and need not be repeated. The Divisional Court erred in failing to grapple with them. The Appeal Division’s decision was unreasonable and the Law Society’s appeal ought to have been allowed. E. Disposition [98] I would allow the appeal from decision of the Divisional Court, set aside the decision of the Appeal Division of the Law Society Tribunal on penalty and reinstate the penalty of licence revocation ordered by the Hearing Division, with costs payable to the Law Society fixed as agreed at $15,000 inclusive of disbursements and taxes. Released: “RJS” “JUN 23 2017” “P. Lauwers J.A.” “I agree. Robert J. Sharpe J.A.” “I agree. B.W. Miller J.A.” F. Appendix ‘A’ Chronology DATE DESCRIPTION Late 2006/Early 2007 Eight transactions involving alleged mortgage fraud February 22, 2007 Bridgewater Bank, Mr. Abbott’s client, advises him of its concerns of possible mortgage fraud involving two of the transactions February 26, 2007 Bridgewater complains to the Law Society March 2007 Law Society investigation authorized April 19, 2007 Law Society investigator requires production of Mr. Abbott’s client files and trust ledgers November 6, 2012 Investigation report issued April 9, 2013 A notice of application for a determination by the Law Society Hearing Panel of whether the respondent had contravened s. 33 of the Law Society Act by engaging in professional misconduct May 23, 2013 Mr. Abbott moves for an order staying or dismissing the application for delay August 18, 19, 20 and 21, 2014 Hearing before the Hearing Division October 10, 2014 Decision of the Hearing Division October 10, 2014 Order of the Hearing Division dismissing Mr. Abbott’s motion for an order staying or dismissing the application for delay December 4, 2014 Hearing Division’s penalty submissions January 22, 2015 Hearing Division’s penalty decision and order March 24, 2015 Appeal Decision Hearing September 14, 2015 Appeal Division decision and order allowing the appeal in part January 5, 2016 Divisional Court Hearing of the Law Society’s appeal February 10, 2016 Divisional Court decision released May 25, 2016 Law Society’s notice of appeal to the Court of Appeal

1995 3 SCR 905 The Judgment of the Court was delivered by S. VERMA, J. Leave granted in special leave petitions. The companymon question of law for decision is whether the proviso to subsection 2 of section 167 of the Code of Criminal Procedure, 1973 can be invoked by an accused arrested for companymission of an offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 hereinafter referred to as the N.D.P.S. Act. to claim release on bail on the expiry of the total period specified therein if the companyplaint is number filed within that period? The Madras High Court has answered this question in the affirmative and directed the release on bail of the respondents who were arrested for the companymission of offences under the N.D.P.S. Act in default of filing the companyplaint within that period. Hence these appeals by special leave. The material facts are only a few. Admittedly, the Narcotics Control Bureau got a tip-off that a companysignment of flasks exported from Madras to Israel companytained Hashish companycealed therein and pursuant to this tip-of the companysignment was seized at Israel on 8.6.1994. On the bask of information, the premises of the accused Armukham, Nagraj and Arif U. Patel were searched at Madras and their statements recorded by the companycerned authorities. These accused were arrested on 27.6.1994 and produced before the Magistrate who granted remand from time to time. We need number mention the facts relating to the orders of preventive detention of the accused under the Prevention of Illicit Traffic in Narcotic Drugs Psychotropic Substances Act, 1988 since that is the subject matter of a different proceeding wherein the order of preventive detention was challenged. Admittedly, the companyplaint against the accused was number filed within the maximum period of 90 days of the arrest specified in the proviso to subsection 2 of Section 167 Cr. P.C. as the total period for which the accused can be remanded to custody during investigation. Accordingly, the accused claimed to be released on bail as of right on expiry of the specified period of 90 days and they have been directed to be released on bail on that ground alone. The High Court has rejected the prayer for cancellation of the bail by the impugned order. Hence, these appeals which involved for decision the aforesaid companymon question of law. It may be mentioned that in the meantime, after the aforesaid prescribed period, the companyplaint has been filed but this subsequent fact is number material for decision of the above question of law. It is companymon ground that the legality of the impugned order granting bail is to be decided with reference to its date prior to the filing of the companyplaint. The power to detain the accused on the basis of the material number available on merits or the liability of the accused for preventive detention is a separate question which does number arise for companysideration herein, and would remain unaffected by the view taken in these appeals on the sole question for decision. The submission of the learned Additional Solicitor General is that by virtue of the special provisions in the N.D.P.S. Act and particularly Sections 36 and 37 thereof, the application of the proviso to sub-section 2 of Section 167 Cr. P.C. is excluded in the case of a person accused of any offence punishable under the N.D.P.S. Act. On the other hand, Shri Ram Jethmalani, learned companynsel for the respondents companytends that the scheme of the N.D.P.S. Act supports the applicability of the proviso to sub-section 2 of Section 167 Cr. P.C. instead of indicating its exclusion in such cases. The relevant provisions in the Code of Criminal Procedure, 1973 are as under Trial of offence under the Indian Penal Code and other laws. - 1 AH offences under the Indian Penal Code 45 of 1860 shall be investigated, inquired into, tried, and otherwise deal with ac-cording to the provisions hereinafter companytained. All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner trying or otherwise dealing with such offences. Procedure when investigation cannot be companypleted in twenty-four hours. - 1 Whenever any person is arrested and detained in custody, and it appears that the investigation cannot be companypleted within the period of twenty-four hours fixed by Section 57, and there are grounds for believing that the accusation or information is well-founded, the officer in charge of the police station or the police officer making the investigation, if he is number below the rank of subinspector, shall forthwith transmit to the nearest Judicial Magistrate a companyy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate. The Magistrate to whom an accused person is forwarded under this section may, whether he has or has number jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term number exceeding fifteen days in the whole and if he has numberjurisdiction to try the case or companymit it for trial, and companysiders further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction. Provided that - a the Magistrate may authorities the detention of the accused person, otherwise than in the custody of the police, beyond the period of fifteen days if he is satisfied that adequate grounds exist for doing so, but numberMagistrate shall authorise the detention of the accused person in custody under this paragraph for a total period exceedninety days, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of number less than ten years sixty days, were the investigation relates to any other offence, and, on the expiry of the said period of ninety days, or sixty days, as the case may be, the accused person shall be released on bail of he is prepared to and .does furnish bail, and every person released on bail under this sub-section shall be deemed to be so released under the provisions of chapter XXXIII for the purpose of that chapter b c Explanation I. - For the avoidance of doubts, it is hereby declared that, numberwithstanding the expiry of the period specified in paragraph a , the accused shall be detained in custody so long as he does number furnish bail. xxx xxx xxx The relevant provisions in the Narcotic Drugs and Psychotropic Substances Act, 1985 are as under 36-A. Offences triable by Special Courts. - 1 Notwithstanding anything companytained in the Code of Criminal Procedure, 1973 2 of 1974 , - a all offences under this Act shall be triable only by the Special Court companystituted for the area in which the offence has been companymitted or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the Government. b where a person accused of or suspected of the companymission of an offence under this Act is forwarded to a Magistrate under sub-section 2 or sub-section 2-A of Section 167 of the Code of Criminal Procedure, 1973 2 of 1974 , such Magistrate may authorise the detention of such person in such custody as he thinks fit for a period number exceeding fifteen days in the whole where such Magistrate .is a Judicial Magistrate and seven days in the whole where such Magistrate is an Executive Magistrate Provided that where such Magistrate companysiders - when such person is forwarded to him as aforesaid or upon or at any time before the expiry of the period of detention authorised by him, that the detention of such person is unnecessary, he shall order such person to be forwarded to the Special Court having jurisdiction c the Special Court may exercise, in relation to the person forwarded to it under clause b , the same power which a Magistrate having jurisdiction to try a case may exercise under Section 167 of the Code of Criminal Procedure, 1973 2 of 1974 , in relation to an accused person in such case who has been forwarded to him under the section xxx xxx xxx Nothing companytained in this section shall be deemed to affect that special powers of the High Court regarding bail under Section 439 of the Code of Criminal Procedure 1973 2 of 1974 , and the High Court may exercise such powers including the power under clause b of sub-section 1 of that section as if the reference to Magistrate in that section included also a reference to a Special Court companystituted under Section 36. 36-C. Application of Code to proceedings before a Special Court. - Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 2 of 1974 , including the provisions as to bail and bonds shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person companyducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. Offence to be companynizable and number-bailable - 1 Not-withstanding anything companytained in the Code of Criminal Procedure, 1973 2 of 1974 . a every offence punishable under this Act shall be companynizable b numberperson accused of an offence punishable for a term of imprisonment of five years or more under this Act shall be released on bail or on his own bond unless - the Public Prosecutor has been given an opportunity to oppose the application for such release, and where the Public Prosecutor oppose the application, the companyrt is satisfied that there are reasonable grounds for believing that he is number guilty of such offence and that he is number likely to companymit any offence while on bail. xxx xxx xxx Provisions of the Code of Criminal Procedure, 1973 to apply to warrants, arrests, searches and seizures. - The provisions of the Code of Criminal Procedure 1973 2 of 1974 shall apply, in so far as they are number inconsistent with the provisions of this Act, to all warrants issued and arrests, searches and seizures made under this Act. Section 36-A makes it clear that a person accused of or suspected of the companymission of an offence under the N.D.P.S. Act is to be forwarded to a Magistrate under sub-section 2 or sub-section 2-A of Section 167 Cr. C. and the Special Court companystituted under Section 36 of the Act exercises, in relation to the person so forward to it, the same power which a Magistrate having jurisdiction may exercise under Section 167 Cr. P.C. in relation to an accused person forwarded to him under that Section. The clear reference to the power of the Magistrate under Section 167 Cr. P.C., particularly sub-section 2 thereof, is an indication that numberpart of subsection 2 of Section 167 of the Code is inapplicable in such a case unless there be any specific provision to the companytrary in the N.D.P.S. Act. This companyclusion is reinforced by some other provisions of the N.D.P.S. Act, Section 36-C says that save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 2 of 1974 , including the provisions as to bail and bonds shall apply to the proceedings before a Special Court. This also indicates that the provisions in the Code of Criminal Procedure relating to bail and bonds are applicable to the proceedings before a Special Court under the N.D.P.S. Act save as otherwise provided in this Act. Section 51 also says that the provisions of the Code of Criminal Procedure, 1973 shall apply, in so far as they are number inconsistent with the provisions of this Act, to all warrants issued and arrests, searches and seizures made under this Act. Except for Section 37 of the N.D.P.S. Act, numberother provision of the N.D.P.S. Act is relied on to companytend that there is any inconsistent provisions in the N.D.P.S. Act to exclude the applicability merely of the proviso to sub-section 2 of Section 167 Cr.P.C. when sub-section 2 of Section 167 of the Code is made expressly applicable by Section 36-A of the N.D.P.S. Act. The question, therefore, is Whether Section 37 of the N.D.P.S. Act is an inconsistent provision of this kind to exclude the applicability merely of the proviso to sub-section 2 of Section 167 Cr.P.C. when sub-section 2 of Section 167 is expressly made applicable by the N.D.P.S. Act? The numberobstante clause at the beginning of sub-section 1 of Section 37 indicates that the provisions in clauses a and b thereof are inconsistent with the companyresponding provisions of the Code. Clause a makes every offence punishable under this Act to be companynizable. Clause b imposes limitations on granting of bail specified therein which are in addition to the limitations under the Code of Criminal Procedure on granting of bail as stated in sub-section 2 of Section 37. Clause b of sub-section 1 specifies the two limitations on granting of bail, namely, 1 an opportunity to the Public Prosecutor to oppose the bail application, and 2 satisfaction of the companyrt that there are reasonable grounds for believing that the accused is number guilty of such offence and that he is number likely to companymit any offence while on bail. The learned Additional Solicitor General companytends that these limitations on granting of bail specified in clause b of sub-section 1 of Section 37 indicate that the applicability of the proviso to subsection 2 of Section 167 Cr.P.C. is excluded in such cases. We are unable to accept this companytention. The limitations on granting of bail specified in clause b of sub-section 1 of Section 37 companye in only when the question of granting bail arises on merits. By its very nature the provision is number attracted when the grant of bail is automatic on account of the default in filing the companyplaint within the maximum period of custody permitted during investigation by virtue of sub-section 2 of Section 167 CR. P.C. The only fact material to attract the proviso to sub-section 2 of Section 167 is the default in filing the companyplaint within the maximum period specified therein to permit custody during investigation and number the merits of the case which till the filing of the companyplaint are number before the companyrt to determine the existence of reasonable grounds for forming the belief about the guilt of the accused. The learned Additional Solicitor General submitted that this belief can be formed during investigation by reference to the companytents of the case diary even before the charge-sheet has been filed. This is fallacious. Till the companyplaint is filed the accused is supplied numbermaterial from which he can discharge the burden placed on him by Section 37 l b of the N.D.P.S. Act. In our opinion, such a companystruction of clause b of sub-section 1 of Section 37 is number permissible. Sub-section 3 of Section 36-A provides that the special powers of the High Court regarding bail under Section 439 of the Code of Criminal Procedure shall number be affected by anything companytained in Section 36-A of the N.D.P.S. Act. Sub-section 2 of Section 167 Cr. P.C. has been expressly applied by Section 36-A of the Act and the scheme of the Act is that the provisions of the Code would apply except where there is any inconsistent provision in this Act in relation to arrests made under this Act. It is this companytext in which Section 37 l b has to be companystrued wherein are specified the limitations on granting of bail. We must, therefore, look to the companyresponding provision in the Code of Criminal Procedure with which Section 37 1 b of the Act can be treated to be inconsistent. In the Code of Criminal Procedure, it is Section 437 and number Section 167 which is the companyresponding provision for this purpose. The companyresponding limitation on grant of bail in case of number-bailable offence under Section 437 is as follows such person shall number be so re-leased if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life In other words, under Section 437 of the Code the person is number to be released on bail if there appear reasonable grounds for .believing that he has been guilty of an offence while according to Section 37 of the D.P.S. Act, the accused shall number be released on bail unless the companyrt is satisfied that there are reasonable grounds for believing that he is number guilty of such offence The requirement of reasonable grounds for belief in the guilt of the accused to refuse bail is more stringent and, therefore, more beneficial to the accused than the requirement of reasonable grounds for the belief that he is number guilty of the offence under Section 37 of the N.D.P.S. Act. Under Section 437 Cr. P.C., the burden is on the prosecution to show the existence of reasonable grounds for believing that the accused is guilty while under section 37 of the Act the burden is on the accused to show the existence of reasonable grounds for the belief that he is number guilty of the offence. In the first case, the presumption of innocence in favour of the accused is displaced only on the prosecution showing the existence of reasonable grounds to believe that the accused is guilty while under the N.D.P.S. Act it is the accused who has to show that there are reasonable grounds for believing that he is number guilty. The limitation on the power to release on bail in Section 437 Cr. P.C. is in the nature of a restriction on that power, if reasonable grounds exist for the belief that the accused is guilty. On the other hand, the limitation on this power in Section 37 of the N.D.P.S. Act is in the nature of a companydition precedent for the exercise of that power, so that, the accused shall number be released on bail unless the Court is satisfied that there are reasonable grounds to believe that he is number guilty. Under Section 437 Cr. P.C., it is for the prosecution to show the existence of reasonable grounds to support the belief in the guilt of the accused to attract the restriction on the power to grant bail but under Section 37 D.P.S. Act, it is the accused who must show the existence of grounds for the belief that he is number guilty, to satisfy the companydition precedent and lift the embargo on the power to grant bail. This appears to be the distinction between the two provisions which makes Section 37 of the D.P.S. Act more stringent. Accordingly, provision in Section 37 to the extent it is inconsistent with Section 437 of the Code of Criminal Procedure supersedes the companyresponding provisions in the Code and imposes limitations on granting of bail in addition to the limitations under the Code of Criminal Procedure as expressly provided in sub-section 2 of Section 37. These limitations on granting of bail specified in sub-section 1 of Section 37 are in addition to the limitations under Section 437 of the Code of Criminal Procedure and were enacted only for this purpose and they do number have the effect of excluding the applicability of the proviso to sub-section 2 of Section 167 Cr.P.C. which operates in a different field relating to the total period of custody of the accused permissible during investigation. In our opinion, in order to exclude the application of the proviso to subsection 2 of Section 167 Cr. P.C. in such cases an express provision indicating the companytrary intention was required or at least some provision from which such a companyclusion emerged by necessary implication. As shown by us, there is numbersuch provision in the N.D.P.S. Act and the scheme of the Act indicates that the total period of custody of the accused permissible during investigation is to be found in Section 167 Cr. P.C. which is expressly applied. The absence of any provision inconsistent therewith in this Act is significant. A companyparison with the relevant provisions of the Terrorist and Disruptive Activities Prevention Act, 1987 for short the TADA Act is useful. Section 20 therein provides for modified application of certain provisions of the Code of Criminal Procedure. Sub-section 4 of Section 20 specifies the modification with which Section 167 Cr. P.C. is applied, to a person accused of an offence under the TADA Act. One of the modifications expressly made .therein is by the provision for a longer total period of permissible custody during investigation. A companyresponding provision is absent in the N.D.P.S. Act. Thereafter sub-sections 8 and 9 of Section 20 are provisions companyresponding to sub-sections 1 and 2 of Section 37 of the N.D.P.S. Act. This similarity between the two Acts is striking and in this companytext the absence in the N.D.P.S. Act of a provision like subsection 4 of Section 20 of TADA Act assumes further significance and supports the companystruction we have made of Section 37 of the N.D.P.S. Act. The TADA Act is a stringent statute to meet an extraordinary situation as in the N.D.P.S. Act. It is also significant that numberwithstanding the substitution of Section 37 in the N.D.P.S. Act in its present form by Act 2 of 1989 subsequent to the enactment of the TADA Act, there is numberhing in Section 37 of the N.D.P.S. Act similar to sub-section 4 of Section 20 of the TADA Act even though there is striking similarity of the provision with sub-sections 8 and 9 of Section 20 of the TADA Act. In our opinion, the legislative intent of number excluding the applicability of the proviso to sub-section 2 of Section 167 Cr.P.C. in cases of arrest made for companymission of offences under the N.D.P.S. Act, is quite evident. It is settled that the companyrt will have numberpower of remand of an accused to any custody unless the power is companyferred by law. See Natabar Panda Bisnu Charon Panda Batakwshna Panda Babaji Panda v. State of Orissa, 1975 Supp. SCR 137 . The power must, therefore, be traced to some provision of the statute. There is clear mention of Section 167 Cr. P.C. in the N.D.P.S. Act for the exercise of this power. Ordinarily, there must also be an outer limit prescribed by specification of the total period of permissible remand during investigation. This too is provided in Section 167. To exclude merely this part of Section 167, an express provision in the statute was necessary, assuming there companyld be companyferment of power of remand unlimited in point of time which, in substance, is the argument of the learned Additional Solicitor General. The effect of the proviso to sub-section 2 of Section 167 Cr.P.C. was stated in Natabar Parida supra , thus- The law as engrafted in proviso a to sections 167 2 and section 309 2 of the New Code companyfers the powers of remand to jail custody during the pendency of the investigation only under the former and number under the latter. Section 309 2 is attracted only after companynizance of an offence has been taken or companymencement of trial has proceeded But then the companymand of the Legislature in proviso a is that the accused person has got to be released on bail if he is prepared to and does furnish bail and cannot be kept in detention beyond the period of 60 days even if the investigation may still be proceeding. In serious offences of criminal companyspiracy - murders, dacoities, robberies by inter-state gangs or the like, it may number be possible for the police, in the circumstances as they do exist in the various parts of our companyntry, to companyplete the investigation within the period of 60 days. Yet the intention of the Legislature seems to be to grant numberdiscretion to the companyrt and to make it obligatory for it to release the accused on bail. Of companyrse, it has been provided in proviso a that the accused released on bail under section 167 will be deemed to be so released under the provisions of Chapter XXXIII and for the purposes of that Chapter. That may empower the companyrt releasing him on bail, if it companysiders necessary so to do, to direct that such person be arrested and companymitted to custody as provided in sub-section 5 of section 437 occurring in Chapter XXXIII. It is also clear that after the taking of the companynizance the power of remand is to be exercised under section 309 of the New Code. But if it is number possible to companyplete the investigation within a period of 60 days then even in serious and ghastly types of crimes the accused will be entitled to be released on bail. Such a law may be a paradise for the criminals, but surely it would number be so, as sometimes it is supposed to be, because of the companyrts. It would be so under the companymand of the Legislature. at pages 142-143 emphasis supplied The learned Additional Solicitor General placed strong reliance on the decision of this Court in Narcotics Control Bureau v. Kishan Lal and Others, 1991 1 S.C.C. 705. The only thing decided in that case is that the power of the High Court to grant bail under Section 439 of the Code of Criminal Procedure is subject to the limitations companytained in the amended Section 37 of the N.D.P.S. Act since those additional limitations are applicable to the High Court also in the matter of granting bail. That is a different question. That decision does number, therefore, answer the question which arises for companysideration in the present case. No other decision of this Court has been relied on by either side at the hearing before us to support a different view. For the aforesaid reasons, these appeals are dismissed resulting in the interim orders made herein being vacated.

This is a very disturbing matter. It is an habeas companypus petition to securethe release of Sadhu Singh, Gurdeep Singh, Amanjit Singh, Hardev Singh,Davinder Singh, Sukhdev Singh and Sharanjit Singh. It is filed by Inder Singh, who is the son of Sadhu Singh, the brother of Gurdeep Singh, the father of Hardev Singh and the uncle of Amanjit Singh, Davinder Singh, Sukhdev Singh and Sharanjit Singh. Sadhu Singh is said to be about 85 years old and Sukhdev Singh and Sharanjit Singh to be about 17 and 14 years old respectively. It is the case of the petitioner that at or about 5.00 a.m. on 29-10-1991 a police party under the companymand of Baldev Singh, DSP, who is the third respondent to the petition, came to his residence and directed that all those present be lined up in the companyrtyard. The third respondent then ordered that the 7 persons in respect of whom the petition is filed be taken into custody. The police party accompanying the third respondent, accordingly, took the said 7 persons into custody and placed them in a police van No. PB-063100 . The petitioner and his family were told that they would be given the dead bodies of the said 7 persons if the third respondents brother was number produced. The petition sets out the various police stations in which the said 7 persons were from time to time lodged until 28-12-1991. The petition states that efforts to obtain the release of the said 7 persons having failed, the habeas companypus petition had been filed on 27-7-1994. The third respondent, who appeared before us through companynsel on 30-8-1994 and today, has filed an affidavit in reply to the petition on 23-8-1994. Therein he denies the allegations made against him in the petition. He states therein that an FIR has been lodged in regard to the abduction of the said 7 persons on 23-3-1994, in P.S. Kathunangal, District Majitha, which is under investigation by Gurcharan Singh, Superintendent of Police, In-Charge, Crime Investigation Cell, Punjab. He states that on 21-10- 1991 he was posted as DSP, Dera Baba Nanak Sub-Division in District Batala, and the residence of the petitioner fell outside his jurisdiction. He also states that he is companyperating in the investigation of the said FIR. The FIR is annexed to the affidavit of the third respondent and it says that the fourth respondent, who is alleged to have been part of the police party, is the brother of the third respondent. Mr K.T.S. Tulsi, learned Additional Solicitor General, appearing on behalf of the State of Punjab and K.P.S. Gill, Director General of Police, Punjab, the first and second respondents to the petition, made a submission before us on 30-8-1994, which is recorded thus We record the statement of Shri K.T.S. Tulsi, Additional Solicitor General appearing for Respondents 1 and 2, that the investigations have revealed that Respondent 3, the Deputy Superintendent of Police, was guilty of causing the abduction of the seven persons in 1991 in companyplicity with other policemen and that the investigations have number yet revealed whether the abducted persons are alive or have been killed by Respondent 3 and his police accomplices. It is also submitted that the police are placing a charge-sheet against the third respondent and other police officers companycerned. It is also stated that the third respondent is absconding. Mr Tulsi then submitted that this was a rare case in which the Punjab Police admitted that one of its officers had been guilty of abducting citizens and that the Punjab Police should, therefore, be trusted to carry out the investigations into the matter thoroughly. He sought to file an affidavit in this behalf. It is amply clear from the submissions of Mr Tulsi referred to above and the affidavits to which we shall number advert that the said 7 persons were number wanted by the Punjab Police in companynection with any criminal offence or inquiry. An affidavit has number been filed on behalf of the State of Punjab, the first respondent to the petition. It states that the statement of the petitioner was recorded on 22-5- 1994. The said FIR had been registered and that, during investigations, offences under Sections 143, 147, 149, 365 and 452 of the Indian Penal Code had been added. Eyewitnesses had named, apart from Baldev Singh, the third respondent, the following persons Balwinder Singh, Head Constable, the 4th respondent, Sikhwinder Singh, Head Constable, Nirmal Singh, Constable, Amrik Singh, Constable, Gurmukh Singh, Constable and Randhir Singh as Driver. The third respondent had been arrested on 2-9-1994 and the other accused between 27-8-1994 and 4-9-1994. Sufficient evidence had been companylected against the accused. All the accused were in judicial custody. The specific allegations in the petition that the said 7 persons had been lodged in the various police stations mentioned until 28-12-1991 is number denied. The affidavit of K.P.S. Gill, Director General of Police, Punjab, the 2nd respondent to the petition, needs to be set out in some detail, He states that he was number the Director General of Police, Punjab, on 29-10-1991, when the incident of abduction of the said 7 persons took place. Upon enquiry, Mr Tulsi stated that the 2nd respondent had taken charge as Director General of Police, Punjab, in November 1991. The 2nd respondent was, therefore, the Director General of Police, Punjab, on 25-1-1992, when, according to his own affidavit, the companyplaint in regard to the abduction of the said 7 persons, which was addressed to him, was received in his office on 25-1-1992. On the same day, according to the 2nd respondents affidavit, the companyplaint was marked by his PA to the Inspector General Crime . Since the IG Crime was on leave, a report was called for by the DIG Crime from the Senior Superintendent of Police, Majitha. The SSP, Majitha, sent the report on 23-4-1992 according to which the allegations in the companyplaint were found to be false. The report of the SSP, Majitha, was number found to be satisfactory by the DIG Crime and an independent inquiry was ordered through the Superintendent of Police, Special Staff, attached to the office of IG Crime . The report of the, Superintendent of Police, Special Staff, made companysequent upon the inquiry, showed that the 3rd respondent was responsible for the abduction of said 7 persons. The Special Branch, accordingly, recommended registration of a case against the 3rd respondent under Section 364, Indian Penal Code. The DIG Crime then suggested that the facts of the case may be got verified through a senior officer, upon which the Additional Director General of Police Intelligence directed the DIG, Jallandhar Range, to inquire into the matter and send his report. This direction was given on 27-8-1992. Eventually, quoting the 2nd respondents affidavit, the report was received from the SSP, Majitha, stating that the allegations against Respondent 3 were number proved. We asked Mr Tulsi what was the date upon which the report had eventually been received from the SSP, Majitha we were told that it was received on 17-2-1994. The 2nd respondents affidavit states that, numberwithstanding the difference of opinion between the Special Branch and the Crime Branch, the proposal of the IG Crime for registration of the case was approved by the Director General of Police Intelligence on 11-3-1994 and the case was registered on 23-3-1994. The affidavit of the 2nd respondent states I further state that the aforesaid file was number put up to me at any stage and the matter was dealt with at the level of Director General of Police Intelligence and the IG Crime . It is further submitted that the case came to my numberice on the filing of the present writ petition The result of the investigation showed that the 3rd respondent had abducted the said 7 persons on the suspicion that they had got his brother abducted through terrorists and it was highly regrettable that a member of the police force should have resorted to retaliatory action and taken the law in his own hands. Paragraphs 7, 8 and 9 of the 2nd respondents affidavit read thus That the police has made all possible inquiries about the whereabouts of the abducted persons. All possible clues with regard to whereabouts have been scrutinized by the Investigating Officer under the guidance of senior officer supervising the investigation in spite of the best efforts made to trace their whereabouts, the police has number been able to locate them out and there is numberdefinite clue as to whether they are alive or number. Efforts to trace them will companytinue to be made and result of further investigation will be placed before the companyrt. That the Punjab Police is proud of the dedication, companyrage and sense of sacrifice of its officers and men and incidents of the kind mentioned in the petition are deviant behaviour and an aberration on the part of individual member of the force. It is, thus, being dealt with severely and the Majesty of Law will prevail eventually by bringing the guilty to the companyrt of law for receiving suitable punishment. In view of the fact that the chargesheet has already been filed in the companyrt of companypetent jurisdiction, this writ petition has become infructuous and Your Lordships may be graciously pleased to dispose of the same in view of the fact that the trial into the incident is likely to companymence soon in the criminal companyrt. Seven persons ranging in age from 85 to 14 are alleged to have been abducted by a senior police officer and sundry policemen using official machinery for the purpose. The first companyplaint in this behalf was made to the 2nd respondent and received in his office as far back as 25-1- 1992. The 2nd respondent says in his affidavit that he knew numberhing about the matter until the writ petition was filed in July 1994. In January 1992, the companyplaint had been marked by his PA to the IG Crime . If so, the companyplaint was number deemed to be of such importance that it merited the attention of the officer in overall companymand of the Punjab Police and to whom it was expressly addressed. We find this surprising. The IG Crime being on leave, a report was called for by the DIG Crime from the SSP, Majitha. The SSP, Majitha, reported on 23-4-1992 that theallegations were false. However, the DIG Crime found the report of the SSP, Majitha, unsatisfactory and ordered an independent inquirythrough the Superintendent of Police, Special Staff, attached to the office of IG Crime . The report of the SP, Special Staff, showed the 3rd respondent to be responsible for the abduction of said 7 persons and, accordingly, it recommended the registration of a case against him under Section 364, Indian Penal Code. No case was registered. No disciplinary action was taken against the 3rd respondent. He was number suspended. Even at this stage the case was number brought to the numberice of the 2nd respondent. We asked Mr Tulsi whether reports as serious as that of the SP, Special Staff, against so senior an officer of the Punjab Police as a DSP, were number, under the dispensation of the 2nd respondent, companysidered unusual enough to merit his numberice. Mr Tulsi replied that those were dire times in the State of Punjab and many such accusations were made. No companyment appears necessary.

COURT OF APPEAL FOR ONTARIO CITATION: Lee v. McGhee, 2017 ONCA 997 DATE: 20171219 DOCKET: M48532 (C64335) Hourigan, Brown JJ.A. and Himel J. (ad hoc) BETWEEN Byeongheon Lee Respondent (Responding Party) and Doc McGhee, McGhee Entertainment, Capital Security and Investigations, Canadian Tire Centre, Gene Simmons and Kiss Moving Party (Respondents) Robin Brown, for the moving party Byeongheon Lee, appearing in person Heard and released orally: December 13, 2017 ENDORSEMENT [1] The appellant attended a Kiss concert at the Canadian Tire Centre in Ottawa on July 25, 2013. He was removed from the arena by security staff. He commenced an action claiming damages as a result of discrimination, harassment, intentional infliction of nervous shock, mental distress, loss of income, loss of reputation and loss of business. [2] The claims against the defendants McGhee Entertainment and Kiss were dismissed by Hackland J. on November 22, 2016 for failing to disclose a cause of action. [3] The respondent Simmons brought a motion to dismiss under rule 21.01(1)(b) as disclosing no cause of action which was granted by Labrosse J. He held that the sole claim against Simmons was alleging discrimination and that the effect of s. 46.1(2) of the Ontario Human Rights Code was to prohibit an action solely on an infringement of a right under Part 1 of the Code . The appellant appeals that order but does not assert any alleged error of law. [4] Simmons brings a motion to quash the appeal under s. 134(3) of the Courts of Justice Act alleging that the appeal is devoid of merit. A court will seldom exercise its power to quash an appeal because it is manifestly devoid of merit, as this will usually require full argument on all grounds the appeal raised: see, Schmidt v. Toronto Dominion Bank, (1995) 24 O.R. (3d) 1 (C.A.). [5] We see no reason to depart from that principle. [6] Motion to quash the appeal is dismissed. The appeal of this matter shall be heard on February 8, 2018 for one hour. Respondent shall serve and file a factum by January 19, 2018. Costs of this motion are reserved to the panel hearing the appeal. “C.W. Hourigan J.A.” “David Brown J.A.” “Himel J.”

Jayachandra Reddy, J. Leave granted. The Punjab Public Service Commission issued an advertisement dated 22.7.1989 for companyducting examination for Punjab Civil Services Executive Branch Allied Services to fill in eight posts to the P.C.S. Executive Branch , four posts of Excise Taxation Officers and five posts of Assistant Registrars, Co-operative Societies. One of the posts of Excise Taxation Officers was reserved for the wards of freedom fighters. The appellant, who claimed to be the son of a freedom fighter applied. However, he gave his first choice of service as the P.C.S. Executive Branch and second that of Excise Taxation Officer. It is an admitted case that there was numberreservation in favour of the wards of the freedom fighters either in the P.C.S. Executive Branch or against the posts of Assistant Registrars, Co-operative Societies. The appellant passed the companypetitive examination and also appeared in the viva-voce and as envisaged by the rules, a joint merit list was prepared and appointments were ordered to be made on the basis of that list in the order namely i to the posts in the P.C.S. Executive Branch , then to those of Excise and Taxation Officers and finally to those of Assistant Registrars, Co-operative Societies. The grievance of the appellant is that respondent No. 2, the Punjab Public Service Commission did number companysider his candidature for the P.C.S. Executive Branch on the premise that as he had applied as a ward of a freedom fighter against the reserved post in the category of Excise Taxation Officers, therefore his case was to be companysidered only for that category. Challenging the action of the Commission, the appellant filed a writ petition but the same was dismissed by the High Court. Hence the present appeal. There is numberdispute that the appellant in his application has given his order of preference and the first preference was to the post of P.C.S. Executive Branch . Since he happened to be a ward of a freedom fighter, he also gave his second preference to one of the posts of Excise Taxation Officers reserved for such wards. Before the High Court the respondents in the first instance admitted in their companynter affidavit that the appellants case was companysidered only for the post of Excise Taxation Officer and was selected as such. But in an additional affidavit, they however averred that even if the case of the appellant had been companysidered for a post in P.C.S. Executive Branch he was number liable to be selected on the basis of merit as per the rules. Refuting the stand taken by the Public Service Commission the appellant also companytended before the High Court that he secured more marks than respondent No. 4 yet he was declared successful for being selected in the P.C.S. Executive Branch the High Court, however, dismissed the writ petition holding that the selection of respondent No. 4 companyld number be faulted. Learned Counsel appearing for the appellant companytended that there cannot be any dispute at all that the appellants candidature was number companysidered at all for the P.C.S. Executive Branch though that was his first preference on the sole ground that the appellant came in the reserved category and thereby eligible for the one reserved post for the wards of the freedom fighters. Having perused the records including the application, we agree with the learned Counsel that the first preference of the appellant was P.C.S. Executive Branch and it is also clear that his candidature was, number companysidered for the P.C.S. Executive Branch on the sole ground that his candidature companyld be limited only to the reserved post. This, in our view, is clearly wrong. Learned Counsel has also placed some materials to show that two posts were filled up by other candidates number on the basis of merit but on the basis of companypassionate grounds. Be that as it may, the definite stand taken by the appellant is that even according to the merits he stood higher in rank than respondent No. 4 on the basis of the marks obtained. As we are satisfied that the candidature of the appellant was number companysidered for the P.C.S. Executive Branch on a wrong premise as mentioned above, we direct respondents number.

Thursday 11 March 2010 THE LORD CHIEF JUSTICE: This is an application by Her Majesty's Attorney General under section 36 of the Criminal Justice Act 1988 for leave to refer to this court a sentence which she considers to be unduly lenient. We grant leave. The offender is John McFarlane. He is aged 40, having been born in 1969. On 13 November 2009, at the Central Criminal Court, he was sentenced by Bean J to life imprisonment with a minimum term of 20 years imprisonment. The indictment contained a single count of murder. Initially he entered a not guilty plea. However, on 6 November 2009, in the Crown Court at Ipswich, before His Honour Judge Devaux, he pleaded guilty. The victim of the murder was Mary Griffiths. She was aged 38, a mother of three children aged 13, 10 and 8. She and the offender became friends. The offender wanted to have more than a platonic relationship with her. She did not, and he felt rejected. In the early hours of 6 May 2009 he went to her home. He was armed with an axe and a bolt gun of the type used in slaughter houses. He used the axe to force his way into her home. He partially disabled the electricity supply. He then attacked the deceased. She was shot in the shoulder with the bolt gun. Her children intervened to try to help. Eventually, she was dragged outside and, as she lay helpless on the ground, she was shot twice more, in front of her children. The facts in more detail are these. The offender had worked as a slaughterman and stockman in Suffolk for a substantial period of time. He was a married man. The nature of his work meant that he knew precisely what a bolt gun could do if misused. The deceased had been living at an address in Bury St Edmunds with her three daughters, having been divorced from her first husband in 2007. The offender and the deceased met. A platonic friendship developed between them, but the offender gradually became infatuated with her. One of the girls described how the relationship between the offender and her mother had been good at the beginning. They liked each other. She described the offender at that time as her "mum's best friend". However, she noticed a change in the relationship and the offender began to act "very weird", constantly telephoning, and ignoring her mother's requests that he should stop. He did for a while, and then the pattern would resume. The deceased described her relationship with the offender as being that of brother and sister, and certainly not the kind of relationship that he hoped would develop between them. In February/March 2009 the deceased told the offender that he must "back off". The offender was very upset. When they later met he ignored her. On one occasion she went out to her car to find that a tyre had been slashed. The inference that he had slashed it was inevitable. Gradually things settled down. The offender was introduced to the new boyfriend of the deceased, and clearly that was a source of much resentment. In April 2009 the offender left his wife. He telephoned a friend to say that he was feeling suicidal and was thinking of taking a knife and sleeping tablets, and hanging himself in the barn. He was taken to his general practitioner who referred him to the Mental Health Crisis Team. That afternoon he was assessed but was not considered to be a sufficient risk either to himself or others to be detained. He was therefore discharged. He was provided with alternative accommodation by a friend. That was described as the start of the deterioration in his behaviour. On the offender's birthday a party was arranged. A number of friends were invited to it, including the deceased. They spoke. It is clear from the terms and tones of text messages which she sent in the days that followed that so far as she was concerned it remained a relationship between friends and nothing more. The offender's response was to express a clear wish that the relationship between them should develop along the lines that he wished and she did not. The offender began to behave in a suicidal way. There was an occasion when a friend telephoned him. He told the friend that he had a rope around his neck. The friend immediately went to find him. She entered the barn where he was. The offender was seen on the top of a teleporter which had its forks and the cage raised to its highest level. A rope had been tied to one of its rafters and it was hanging down beside him. The offender came down and told the friend and her husband that he had taken some sleeping tablets. They took him home. He was then taken to hospital, where he remained for a short time until he left of his own accord. Following a formal assessment he was deemed "not sectionable". Although it is unnecessary to go through the details of the exchanges of text messages, the last received from the deceased is not without importance. It is timed at just after midnight on 6 May. It expresses her gratitude to friends for helping her in a situation in which she believed that the offender had behaved in a horrible way. She said: "I have amazing friends and family and know my true friends will know the truth. And as for [the offender] he just needs to grow up and act his age. .... Speak soon." At 2.42am the offender reported a burglary at a workshop where to his knowledge rifles were stored. This was obviously a device to create a distraction for the police. The nature of the alleged incident required the response of officers as well as other police officers. The call was made from the offender's mobile phone within in a cell site in the immediate vicinity of the police station at Bury St Edmunds. Such a call would have enabled the offender to see the police response before he left the scene in order to visit the home of the deceased, which was about a mile away. He sent a text message to his wife saying that he still loved her, that his head was "fucked up" and he blamed the deceased. He had to "sort it out once and for all". Armed with an axe and the bolt gun, the offender went to the home of the deceased. Because the family was concerned at the possibility of a visit from the offender and her mother was very upset, one of the children had gone to bed with her mother that night in the main bedroom on the second floor of the house. That was unusual. The child would normally have been asleep in her own bedroom on the ground floor. They both went to asleep. They were both awoken by the noise of the offender smashing his way into the house with the axe, which was later recovered from the kitchen. When he entered the house the offender turned off the main electricity lighting circuits. The deceased was able to activate some lighting in the bedroom when she heard the noise. The offender ran upstairs into her bedroom. He grabbed hold of the deceased and, according to the girl who was sleeping with her mother, he tried to strangle her. One of the other girls heard the noise. Between them they did their best to help their mother. At some stage in this process (and the precise details are not entirely clear) the offender fired a shot from the bolt gun used in a slaughterhouse. The shot caught the deceased in the shoulder and caused a serious wound. The offender continued to try to strangle her. Eventually the deceased managed to push the offender away and to escape through the bedroom door. The offender recovered sufficiently to push one of the children away and he pushed the deceased down the stairs into the hallway. One of the other girls opened the front door and the deceased escaped through it, but she was pursued by the offender who then struck her repeatedly. The deceased was crying out for help. The girls did their best to help their mother, but their efforts were to no avail. As the deceased was helpless on ground, the offender re-loaded the gun. He shot her once in the chest. He then again re-loaded the gun and shot her again in the chest. One of the neighbours had been woken by the noise. He looked out of the bedroom window. He saw what he described as a child's head being "bashed on the pavement". He described the moment when the shots were fired as looking like an execution, "quite clinical .... deliberate". In the immediate aftermath of the attack other people who lived in the vicinity and who had heard it came out. One was an off-duty police officer who was staying in the house next door to the home of the deceased. He walked up to within about 10 yards of the offender and asked him what had been happening. The offender said he had a gun, that he should not come any closer or he would be shot. "It wasn't really aggressive. It was almost quite calm, cool, calculated almost. I almost didn't believe him". The off-duty officer put his hands in the air to demonstrate that he posed no threat and he backed away. The offender held his right hand close to his body as though he had something in it. Help was brought for the deceased. Unfortunately, despite every effort from nearby neighbours, including one who was a nurse by profession, there was nothing that could be done for her. She died from her injuries. Help was required for at least two of the children who were deeply distressed. At about 3.15am the offender was found lying face down in the rear garden at an address in Bury St Edmunds. He had cut his arms with a knife. Armed police officers attended. He was arrested. He told the police that a knife found by his side in the garden was not the one he had used to cut his wrists. He had used a second, much sharper knife that had been in his car. Apart from that, he had nothing more to say. The offender was taken to hospital where his physical injuries were dealt with. He was then taken to a clinic. Eventually he was interviewed. He spoke of his early suicide attempt. As to the incident itself, he said that he could recall being in the street outside the home of the deceased in the dark and that the deceased was there crying, plainly in distress at the consequences of the injuries he had inflicted on her. He recalled cutting his arm and using the knife for the purpose. After that he claimed to have no recollection of events. The court was provided with a number of reports. The offender was seen the day after the murder. An assessment was made that he was suffering from a severe depressive illness with a "cognitive triad of hopelessness, helplessness and bleakness about the future". The psychiatrist noted an accelerating pattern of depressive cognitions, increased suicidal thoughts and organic symptoms of depression. That material was before the judge when he considered sentence. In his sentencing remarks the judge decided that the case fell within the category of offences characterised as offences of murder of particularly high seriousness within the context of Schedule 21 to the Criminal Justice Act 2003. Having reached that conclusion, he selected the starting point as a 30 year minimum term. The first question in this Reference is whether that assessment was too low. The judge took account of such mitigating features as he could find. He identified the depressive illness as a feature which reduced the offender's culpability. Making allowance for that condition, he reduced the minimum term from the starting point to 24 years, and then made allowance for the guilty plea tendered by the appellant at the full level of discount. The judge is not to be criticised for making due allowance for both those features in this case. Nevertheless, the submission is that the overall sentence in relation to the minimum term is unduly lenient. It should be emphasised that the dangerousness element of the case and the risk to the public posed by the offender is dealt with and included in the life sentence which was imposed. There is no issue about the imposition of the sentence of life imprisonment, which is mandatory. We agree with the submission made by the Attorney General that the assessment of the starting point at 30 years was too low. The judge referred to the aggravating features of the case. That was how he reached the 30 year starting point. Our concern is that that starting point did not sufficiently reflect the additional features of aggravation beyond the fact that the deceased had been shot and her fatal injuries inflicted by a gun. The offender deliberately armed himself with an axe in order to force his way into his intended victim's home in the middle of the night. He knew that her children would be there with her. He intended that she should be killed. He arranged to divert the attention of the police away from the address to which he was about to go. He took a lethal bolt gun with him. No one knew better than he what the consequences of the misuse of such a gun could be. He either took it with him already loaded, or, having entered the house, he loaded it while he was there. Having entered the house, he interfered with the electric lights. He then set about his attack. It was a sustained attack. The deceased was shot. She was injured. He tried to strangle her. The efforts of her children to help her were brushed aside. The deceased managed to escape from the house. At some stage the offender re-loaded his gun. Outside in the street she was brought to the ground. He shot her in the chest. He then re-loaded the gun and again shot her. The description of this as a deliberate execution is entirely justified. The motive, so far as it can be discovered from the text messages, was somehow to teach her a lesson. It is a distinctive feature of this dreadful case that the children witnessed their mother's execution and the infliction of these fatal injuries upon her. They tried in every way they could to help her, but their efforts were brushed aside. Their ordeal and the memories of it will scar their lives. They will not have the comfort and reassurance their mother would have been able to give them if she had lived. In our judgment the aggravating features of this case, and in particular the impact of and circumstances in which these young children became involved in this incident, take this case well beyond a starting point of 30 years. We consider that an appropriate starting point should have been substantially higher. We do not propose to make any alteration to the discount the judge made for the offender's depressive illness and for the guilty plea, both of which had to be taken into account. However, making every allowance for that and treating them compendiously as a ten year discount, we consider that the proper starting point for this case would have been a sentence of 40 years. In those circumstances the minimum term will be re-assessed and we shall order that it will be a period of 30 years rather than the 20 years ordered by the judge. ______________________________________

Sir Paul Kennedy: This is a renewed application for permission to appeal against the decision of the Asylum and Immigration Tribunal promulgated on 2 May 2007, when after reconsideration it dismissed the appellant's appeal from a decision of the Secretary of State not to certify under Section 10 of the Nationality, Immigration and Asylum Act 2002 that the applicant has the right of abode in the United Kingdom. That decision was communicated to the applicant in a letter dated 2 August 2006. The background facts are clear and not in dispute. The applicant was born on 8 March 1960 in what was then Southern Rhodesia and is now Zimbabwe. Her father had British nationality and had been born in Luton; her mother was Rhodesian. They had undergone a ceremony of marriage on 7 July 1959 in Bulawayo under Sunni Muslim law, possibly choosing that form of ceremony because at that time the civil authorities in Southern Rhodesia did not countenance marriages between persons of different races. In March 2001, at the age of 41, the applicant came to the United Kingdom initially to study and here she has remained. I turn now to the statutory provision which she sought to invoke. Section 10 merely provides that the Secretary of State may by regulations make provision for the issue to a person of a certificate that he or she has the right of abode in the United Kingdom; it does not indicate the test to be applied by the Secretary of State when deciding whether or not to issue a certificate. As envisaged by Section 10, regulations were made in relation to procedural matters such as to how to make an application and what documents should accompany it. There is no suggestion that the applicant failed to comply with the procedural requirements in this case, but the regulations, the Immigration (Certificate of Entitlement to Right of Abode in the United Kingdom) Regulations 2006, do, in paragraph 6, set out when a certificate of entitlement will be issued. It will only be issued where the appropriate authority is satisfied that the applicant a) has a right of abode in the United Kingdom under Section 2(1) of the Immigration Act 1971. For present purposes I can ignore the rest of paragraph 6, which deals with disqualifications which do not apply to this applicant. Furthermore the 2006 Regulations were not brought into force until 21 December 2006 so they were not in force when the Secretary of State made his decision in this case. Section 2(1) of the Immigration Act 1971 as substituted by the British Nationality Act 1981 was, however, in force and, so far as relevant, it provides that: "A person is under this Act to have the right of abode in the United Kingdom if- … (b) he or she is a commonwealth citizen who- (i) immediately before the commencement of the British Nationality Act 1981 [for all relevant purposes it commenced on 1 August 1983] was a Commonwealth citizen having the right of abode in the United Kingdom by virtue of Section 2 (1)(d) or Section 2(2) of this Act as then in force; and (ii) has not ceased to be a commonwealth citizen in the meanwhile." A commonwealth citizen is defined for the purposes of Acts passed before 1983 by Section 51(1) of the British Nationality Act 1981. I need not pause to cite that definition because it has always been accepted that the applicant fell within it. But did she, before 1 January 1983, have the right of abode in the United Kingdom by virtue of Section 2(1)(d) or Section 2(2) of the British Nationality Act 1981 as then enforced? That requires me to look at those sub sections. Section 2(1)(d) provided so far as relevant: "(1) A person is under this Act to have the right of abode in the United Kingdom if- (d) he is a Commonwealth citizen born to a parent who at the time of the birth had citizenship of the United Kingdom and Colonies by virtue of his birth in the United Kingdom." Section 2(2) does not assist. It deals with the position of female commonwealth citizens married to citizens of the United Kingdom and colonies; so the applicant, if she is to prove that she had such right of abode in the United Kingdom as would entitle her to a certificate, had on the face of it to show that she was born to a parent who at the time of the birth had citizenship of the United Kingdom and colonies. At first sight one might think that presented no problems because she could rely on her father, but Section 50(9) of the British Nationality Act 1981 provided that for the purposes of that Act subject to a qualification relating to subsequent legitimation which has no application in this case: "The relationship of father and child shall be taken to exist only between a man and any legitimate child born to him." So what the applicant had to establish if she was to obtain a certificate was that at the time of her birth she was legitimate, which she could only be if the marriage of her father to her mother was recognised by the authorities of the state in which she was born. Having looked at the legal framework I return now to this applicant's application. It caused the Secretary of State to make enquiries in Zimbabwe where the office of the Registrar of Births, Deaths and Marriages advised that the ceremony of 7 July 1959 and the certificate relating to that ceremony did not reflect a marriage solemnized according to the laws of Zimbabwe or rather Southern Rhodesia at the material time, the applicable law at the relevant time being the Marriage Act published as Chapter 150 of the 1939 Statute of Laws of Southern Rhodesia. The applicant appealed against that decision and that appeal was heard by the Asylum and Immigration Tribunal on 3 October  2006; it was unsuccessful. Reconsideration was then ordered on the basis that the immigration judge failed to apply his mind to paragraph 14 of the Immigration Rules. That paragraph reads: "A commonwealth citizen who has been given limited leave to enter the United Kingdom may later claim to have the right of abode. The time limit on his stay may be removed if he is able to establish a claim to the right of abode, for example by showing that i) immediately before the commencement of the British   Nationality   Act   1981 he was a Commonwealth citizen born to or legally adopted by a parent who at the time of his birth had citizenship of the United Kingdom and Colonies by his birth in the United Kingdom or any of the islands; and ii) he has not ceased to be a Commonwealth citizen in the meantime." I am unable to see what that adds to the statutory provisions to which I have already referred but at the reconsideration hearing the parties agreed that what the Asylum and Immigration Tribunal had to decide was whether the applicant was the legitimate child of her parents. For the reasons I have explained, that was the right question; and at paragraphs 7 and 8 the Asylum and Immigration Tribunal said: "7. In fact the respondent has produced some evidence on this point. There is a letter from solicitors in Harare to the Consul at the British Embassy in Harare stating that the marriage in question would not be valid under the relevant Rhodesian legislation. What the strength of that evidence would be if there were evidence to the contrary we do not need to decide; it is in fact the only evidence that we have on the point and it suggests that the marriage is not legally binding." "8. We do not, however, have to rely on this evidence, for it is for the appellant to prove that the marriage is valid and she has not done so." Miss Gore, on her behalf, now complains that the Asylum and Immigration Tribunal did not properly have regard to the presumption of marriage. That presumption is conveniently set out in paragraph  992 and 993 of the 4th Edition of Halsbury's Laws of England in this form: "992. Presumption from cohabitation without ceremony. Where a man and a woman have cohabited for such a length of time and in such circumstances as to have acquired the reputation of being man and wife, a lawful marriage between them will be presumed, even if there is no positive evidence of any marriage ceremony having taken place, and the presumption can be rebutted only by strong and weighty evidence to the contrary." "993. Presumption from cohabitation after ceremony. Where there is evidence of a ceremony of marriage having been gone through, followed by the cohabitation of the parties, everything necessary for the validity of the marriage will be presumed in the absence of decisive evidence to the contrary, even though it may be necessary to presume the grant of a Special Licence or the death of a former spouse. In most cases a certificate of marriage will be available, and this will usually suffice to prove the marriage." I am told that there was evidence before the tribunal that the parents of the applicant lived together for over four years after the ceremony of marriage had been completed. Miss Gore invited my attention to the decision of the tribunal in the case of FI  and  Others  (Bangladesh-presumptions-marriage-legitimacy) Banglasdesh [2005] UKIAT 00016. That was a case in which the presumption of marriage was applied in relation to the situation which existed, but on the facts it is clear that that situation was entirely different from the one which arises in the present case. There was simply no evidence either way, and accordingly it was thought right for the presumption to have effect. That is not this case. As I have already indicated, there was evidence before the tribunal and it went against the applicant. My attention has also been invited to the decision of Syed Shanur Ali v ECO (Dhaka) [1998] App no 18900, a decision of the Immigration Appeal Tribunal. That relates to the application of Muslim law in Bangladesh, and for example at page 3 of the transcript it says: "The general rule in Muslim law, as applied in Bangladesh, is that a child born to a valid marriage within 280 days after its dissolution, the mother remaining unmarried, is a legitimate child." Again that cannot be applied to the circumstances of the present case. There has now been produced before me a letter from a firm of legal practitioners in Harare which has been obtained only this week which suggests that there is a third type of marriage recognised there, namely marriage by customary law, which might be regarded as applying to the circumstances of this applicant's situation. For my part I think a slightly more profitable line of enquiry is     that     indicated     by the decision of this court in the Chief Adjudication Officer v Kirpal Kaur Bath [1999] EWCA Civ 3008. In that case the history was entirely different from that with which we are concerned in the present case, but in that case the court did feel able to give effect to the presumption of legitimacy. It seems to me possible that if this matter were to be reconsidered by the full court they would come to the conclusion that the tribunal had not given as much weight as it should have done to the possibility of that presumption applying in the circumstances of this case; and accordingly I am with some diffidence prepared to grant leave to appeal. I should also say by way of a footnote this. The section which causes the difficulty for this applicant is undoubtedly the section to which I have referred already, that is to say Section 50(9) of the British Nationality Act 1981. In Section 9(1) of the Nationality Immigration and Asylum Act 2002 there is a new section 50(9) which, so far as I am aware, has not been brought into effect in a way which would benefit this particular applicant. Were it to be brought into effect, then, as it seems to me, a more profitable course rather than expending further time and money on pursuing an appeal to the Court of Appeal would be to make a fresh application. Beyond that I say no more so that she may have permission to appeal. Order: Application granted

FOURTH SECTION CASE OF ATKIN v. TURKEY (Application no. 39977/98) JUDGMENT STRASBOURG 21 February 2006 FINAL 21/05/2006 This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Atkın v. Turkey, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: MrJ. Casadevall, President,MrR. Türmen,MrM. Pellonpää,MrR. Maruste,MrK. Traja,MsL. Mijović,MrJ. Šikuta, judges,and Mr M. O’Boyle, Section Registrar, Having deliberated in private on 31 January 2006, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 39977/98) against the Republic of Turkey lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish national, Mehmet Atkın (“the applicant”), on 11 June 1997. 2. The applicant was represented by Mr M. A. Erol, a lawyer practising in İstanbul. The Turkish Government (“the Government”) did not designate an Agent for the purposes of the proceedings before the Court. 3. On 21 October 1998 the European Commission of Human Rights declared the application partly inadmissible and decided to communicate the applicant’s complaint under Article 6 § 1 of the Convention relating to the length of the criminal proceedings. 4. The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11). 5. The application was allocated to the Fourth Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1. 6. In a letter of 1 April 2003, the Court informed the parties that in accordance with Article 29 §§ 1 and 3 of the Convention it would decide on both the admissibility and merits of the application. 7. The applicant and the Government each filed observations on the merits (Rule 59 § 1). 8. On 1 November 2004 the Court changed the composition of its Sections (Rule 25 § 1). This case was assigned to the newly composed Fourth Section (Rule 52 § 1). 9. On 7 June 2005 the Court decided to invite the parties to submit further written observations on the admissibility and merits of the applicant’s complaint that the written opinion of the principal public prosecutor at the Court of Cassation had never been served on him, thus depriving him of the opportunity to put forward his counter-arguments. THE FACTS THE CIRCUMSTANCES OF THE CASE 10. The applicant was born in 1951 and lives in İstanbul. 11. At the time of the events giving rise to the application, the applicant worked as a customs broker in a private company. 12. On 28 December 1988 the applicant was questioned by a customs inspector in respect of his involvement in the smuggling of electronic goods. 13. On 7 March 1989 the customs inspector submitted his report and on 18 May 1989 the Edirne public prosecutor filed a petition with the Edirne Assize Court accusing the applicant and three other suspects of smuggling electronic goods. He requested that the applicant be convicted and sentenced under Articles 27 §§ 2, 3, 4 and 5 and 33 § 2 of Law no. 1918. 14. On 22 May 1989 the criminal proceedings initiated against the applicant and three other co-accused commenced before the Edirne Assize Court. 15. On 27 July 1989 the applicant was remanded in custody. He was released pending trial on 19 June 1990. 16. On an undetermined date, the Edirne public prosecutor submitted an additional indictment against six other suspects and the cases were joined. 17. On 10 September 1991 the Edirne Assize Court declared that it lacked competence ratione materiae to examine the case. The case-file was transferred to the İstanbul State Security Court. 18. On 18 November 1992, Article 9 of Law no. 2845 on the Establishment and the Rules of Procedure of the State Security Courts was amended to exclude organized smuggling offences within the competence of the State Security Courts. Accordingly, on 25 December 1992 the İstanbul State Security Court declared that it lacked competence ratione materiae to examine the case. 19. On 25 January 1993 the criminal proceedings before the Edirne Assize Court commenced. The applicant was tried together with nine other co-accused. 20. Between 25 January 1993 and 26 December 1995 the first-instance court held twenty-two hearings on regular intervals. During this period the court undertook various procedural decisions with a view to determining the addresses of the co-accused and obtaining their additional defence submissions by way of rogatory letters. 21. In a hearing held on 18 November 1993 the court noted that no reply had been received from the various authorities to its requests for information for the case-file. On 15 September 1994 the court observed that the documents from the German authorities in respect of the co‑accused Mr K.Ç. had been translated and submitted to the case-file. It further noted that the Küçükçekmece Civil Court had not responded to its instruction to hear the co-accused Mr H.K. The court was informed that the public prosecutor’s office was unable to determine the address of another co‑accused Mr E.Ç. The court issued instructions to both the Küçükçekmece Civil Court and the public prosecutor’s office with a view to completing the case-file. 22. On 23 February 1995 the additional defence submission of Mr H.K. was submitted to the court. The court noted that the public prosecutor’s office had not responded to its request to determine the address of Mr E.Ç. 23. On 11 April 1995 the address of Mr E.Ç. was submitted to the court by the public prosecutor’s office. It appeared that Mr E.Ç. was a civil servant working in the Sarp Customs. On 25 May 1995 the additional defence submission of Mr E.Ç., taken by Hopa Criminal Court of First Instance, was submitted to the case-file. 24. On 27 June 1995 the public prosecutor submitted his observations on the merits. The applicant requested time to submit his final defence submissions. 25. On 10 August 1995 the applicant read out his final defence submissions before the court. 26. On 26 December 1995 the Edirne Assize Court convicted the applicant on account of his involvement in organised smuggling and sentenced him to nine years’ imprisonment and to a fine of 6,158,746,372 Turkish Liras (TRL). 27. On 25 December 1996 the Court of Cassation held a hearing and upheld the judgment of the first‑instance court. The decision of the Court of Cassation was sent to the registry of the first-instance court on 31 January 1997. 28. On 7 February 1997 the applicant was released from prison. 29. On 21 May 1997 the principal public prosecutor at the Court of Cassation dismissed the applicant’s request for the rectification of the Court of Cassation’s decision. THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION 30. The applicant complained that the length of the criminal proceedings brought against him was excessive. He further complained in his application form, dated 7 January 1998, that the written observations of the principal public prosecutor at the Court of Cassation on the merits of his appeal were not served on him, thus depriving him of the opportunity to put forward his counter-arguments. The applicant relied on Article 6 of the Convention, which in so far as relevant reads as follows: “In the determination of ... any criminal charge against him, everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...” A. Fairness of the criminal proceedings 31. The Government argued under Article 35 of the Convention that the applicant’s complaint concerning the non-communication of the written observations of the principal public prosecutor at the Court of Cassation must be rejected for failure to comply with the six-month rule. They maintained that the applicant should have lodged this complaint to the Court within six-months following the dismissal of his request for a rectification of the Court of Cassation’s decision whereas his complaint was introduced to the Court on 7 January 1998. 32. The applicant did not comment on this issue. 33. The Court notes that the “final decision” within the meaning of Article 35 § 1 of the Convention was the judgment of the Court of Cassation on 25 December 1996, dismissing the applicant’s appeal against the decision of the Edirne Assize Court. It observes that an application for rectification of a judgment does not constitute an effective remedy for the purposes of the Convention, unless it is successful and results in a re‑opening (see, Çıraklar v. Turkey judgment of 28 October 1998, Reports of Judgments and Decisions 1998-VII, pp. 3070-71, §§ 29-32). 34. The Court re-affirms its practice, in cases where the domestic law does not provide for the service of a written copy of a final domestic decision, that the six month period laid down in Article 35 § 1 begins to run from the date when the decision was finalised, i.e. when the parties were definitely able to be informed of its contents (see, among many others, Seher Karataş v. Turkey, no. 33179/96, § 27, 9 July 2002, and Karatepe v. Turkey (dec.), no. 43924/98, 3 April 2003). In the instant case, the judgment of the Court of Cassation was at the disposal of the applicant and his lawyers as of 31 January 1997 when the judgment was sent to the registry of the first-instance court. 35. Although the applicant’s first letter to the Court was dated 11 June 1997, his present complaint was only raised for the first time in his application form dated 7 January 1998. The Court reiterates that, when a new complaint is raised for the first time during the proceedings before the Court, the six month period is not interrupted until this complaint is actually lodged (see, Sarl Aborcas and Borowik v. France (dec.), no. 59423/00, 10 May 2005, and Loyen v. France (dec.), no. 46022/99, 27 April 2000). 36. In these circumstances, the Court accepts the Government’s objection that the applicant has failed to comply with the six-month rule. It follows that this complaint must be rejected under Article 35 §§ 1 and 4 of the Convention as having been introduced out of time. B. Length of the criminal proceedings 1. Admissibility 37. The Court notes that this part of the application is not manifestly ill‑founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. 2. Merits 38. There was no dispute over the period to be taken into consideration. It was common ground between the parties that the period to be taken into consideration began on 18 May 1989, when the Edirne public prosecutor filed a bill of indictment against the applicant and ended on 25 December 1996, when the Court of Cassation upheld the judgment of the first-instance court. The Court sees no reason to decide otherwise. The period under consideration thus lasted seven years and seven months before three instances. 39. The Government submitted that the case was complicated as it concerned the smuggling of electronic goods through customs. In this connection, they pointed out the organised nature of the crime and in particular the difficulty in determining the level of involvement of the different suspects. They stated that while some of the suspects were public officers, others worked in private companies and that one of them was a German national. They pointed out that the testimonies of the suspects had to be obtained through rogatory courts. The Government recalled that while Article 6 required that judicial proceedings be conducted promptly, it also laid emphasis on the more general principle of the proper administration of justice. The Government stated that the length of the proceedings could be considered to have been prolonged due to the determination of the competent court to try the applicant. However, they pointed out that during the proceedings before the İstanbul State Security Court, Article 9 of the Law no. 2845 on the Establishment and the Rules of Procedure of the State Security Courts was amended and that State Security Courts were no longer competent to try offences under Law no. 1918. 40. The applicant disputed the Government’s arguments. He stated that there were delays in between the hearings and that the proceedings could have been concluded in half the time since two separate investigation reports had been submitted to the court and that, therefore, the court did not spend time collecting evidence. 41. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities (see, among many others, Pélissier and Sassi v. France [GC], no. 25444/94, § 67, ECHR 1999-II). 42. The Court considers that, even though the case was of some complexity, it cannot be said that this in itself justified the entire length of the proceedings. 43. As regards the conduct of the applicant, the Court observes that it does not appear that he contributed to the prolongation of the proceedings. The Government have not argued to the contrary. 44. As to the conduct of the domestic authorities, the Court accepts the exceptional situation in which the national authorities found themselves following the amendment to Law no. 2845 which adversely affected the length of the proceedings for one year and three months. It also does not find that there were any excessive delays before the Court of Cassation. However, the Court cannot overlook the fact that a lengthy period - two years and three months - elapsed before the Edirne Assize Court declared that it lacked competence ratione materiae and transferred the case‑file to the State Security Court on 10 September 1991 (see, paragraphs 13 and 17). The Government did not offer any explanation for this state of affairs. The Court further observes that an additional period of two years and eleven months elapsed before the Edirne Assize Court delivered a judgment on the merits since it was unable to secure the additional defence submissions of the co-accused and in particular that of a civil servant working at the customs (see, paragraphs 19 and 26). The Court finds that, in the instant case, the delay in securing testimonies of the accused must be considered to be attributable to the domestic court’s handling of the proceedings. 45. Finally, the Court considers that what was at stake for the applicant in the domestic litigation was of considerable importance to him. 46. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. 47. There has accordingly been a breach of Article 6 § 1. 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. Damage 49. The applicant claimed 39,000 euros (EUR) in respect of pecuniary damage and EUR 100,000 in respect of non-pecuniary damage. 50. The Government contested these claims as being excessive. 51. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. However, it accepts that the applicant must have suffered non-pecuniary damage, such as distress and frustration, on account of the duration of the proceedings, which cannot be sufficiently compensated by the finding of a violation alone. Taking into account the circumstances of the case and having regard to its case law, the Court awards the applicant EUR 3,600 under this head. B. Costs and expenses 52. The applicant also claimed 25,000 German marks (DEM) (approximately EUR 12,782) for costs and expenses incurred before the domestic courts and EUR 5,000 for those incurred before the Court. He further claimed EUR 700 for translation and stationery and requested the reimbursement of expenses, i.e. transportation, incurred while he was attending the proceedings before the Edirne Assize Court. The applicant did not submit any receipt or invoice in respect of his above-mentioned costs and expenses. 53. The Government contested the amounts requested by the applicant. 54. According to the Court’s case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court rejects the claim for costs and expenses in the domestic proceedings and considers it reasonable to award the sum of EUR 1,000 for the proceedings before the Court. C. Default interest 55. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the complaint concerning the length of the criminal proceedings admissible and the remainder of the application inadmissible; 2. Holds that there has been a violation of Article 6 § 1 of the Convention on account of the length of the criminal proceedings; 3. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, the following amounts to be converted into new Turkish liras at the rate applicable at the date of settlement: (i) EUR 3,600 (three thousand and six hundred euros) in respect of non-pecuniary damage; (ii) EUR 1,000 (one thousand euros) in respect of costs and expenses; (iii) any tax that may be chargeable on the above amounts; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 4. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 21 February 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Michael O’BoyleJosep CasadevallRegistrarPresident

Opinion of Mr Advocate General Saggio delivered on 8 July 1999. - Coöperatieve Vereniging De Verenigde Bloemenveilingen Aalsmeer BA (VBA) v Florimex BV, Vereniging van Groothandelaren in Bloemkwekerijproducten (VGB). - Appeal - Competition - Decision rejecting a complaint - Compatibility with Article 2 of Regulation No 26 of a fee charged to external suppliers on floricultural products supplied to wholesalers established on the premises of a cooperative society of auctioneers - Statement of reasons. - Case C-265/97 P. European Court reports 2000 Page I-02061 Opinion of the Advocate-General I - Introduction 1 This appeal seeks to have set aside the judgment delivered on 14 May 1997 by the Court of First Instance in Joined Cases T-70/92 and T-71/92 Florimex BV and Vereniging van Groothandelaren in Bloemkwekerijprodukten v Commission of the European Communities (1) (hereinafter, `Florimex', `the VGB' and `the Commission' respectively). In that judgment the Court annulled the Commission decision of 2 July 1992 rejecting the complaints lodged by Florimex and the VGB pursuant to Article 3(2) of Regulation No 17 of the Council of 6 February 1962: First Regulation implementing Articles 85 and 86 of the Treaty (hereinafter `Regulation No 17'). (2) The complaints concerned the rules of the Coöperatieve Vereniging De Verenigde Bloemenveilingen (hereinafter `the VBA'), a cooperative society constituted under Netherlands law whose members are growers of flowers and ornamental plants. In particular, it was alleged that the payment of fees charged to non-member suppliers of the VBA to gain access to the premises of the cooperative and to supply their products directly to the dealers established on those premises constituted an infringement of Article 85(1) of the EC Treaty (now, after amendment, Article 81(1) EC). 2 I would observe that, under Article 36 EC (formerly Article 42), an agreement on agricultural products falls within the scope of the competition rules contained in the EC Treaty `only to the extent determined by the Council'. The Council established, in Regulation No 26 of the Council of 4 April 1962 applying certain rules of competition to production of and trade in agricultural products (3) (hereinafter `Regulation No 26'), that `Article 85(1) of the [EC] Treaty shall not apply to such of the agreements, decisions and practices ... as form an integral part of a national market organisation or are necessary for attainment of the objectives set out in Article 39 of the [EC] Treaty [now, after amendment, Article 33 EC]. In particular, it shall not apply to agreements, decisions and practices of farmers, farmers' associations, or associations of such associations belonging to a single Member State which concern the production or sale of agricultural products or the use of joint facilities for the storage, treatment or processing of agricultural products, and under which there is no obligation to charge identical prices, unless the Commission finds that competition is thereby excluded or that the objectives of Article 39 of the Treaty are jeopardised' (Article 2(1)). II - Facts before the Court of First Instance 3 The facts of the present case are summarised in the Court of First Instance judgment in paragraphs 1 to 51. I will repeat below only those passages of the judgment which are relevant for the purposes of examining this appeal. The parties (4) 4 The VBA represents more than 3 000 undertakings, the great majority of which are from the Netherlands with a small minority being Belgian. On its premises at Aalsmeer, the VBA organises auction sales of floricultural products, in particular fresh-cut flowers, indoor plants and garden plants. The VBA's premises are used primarily for the actual auction sales, but an area is reserved for the renting-out of processing rooms for the purposes of wholesale trade in floricultural products. The tenants of these rooms are mainly cut-flower wholesalers and, to a lesser extent, dealers in indoor plants. 5 Florimex is an undertaking engaged in the flower trade, established in Aalsmeer. It imports floricultural products from Member States of the European Community and from non-member countries, mainly for resale to wholesalers established in the Netherlands. 6 The VGB is an association comprising numerous wholesalers of floricultural products, including Florimex. The VGB's objects include promoting the interests of the wholesale trade in floricultural products in the Netherlands and liaising with the public authorities and auctioneers. The VBA's rules (5) 7 Article 17 of the VBA's statutes requires its members to sell their products in auctions organised on the premises of the cooperative. A fee or commission is invoiced to the members for the services provided by the VBA. In 1991 that fee amounted to 5.7% of the proceeds of sale. With regard to direct supplies to dealers established on the VBA's premises, it is apparent from the Court's judgment that, until 1 May 1988, the VBA auction rules included provisions designed to prevent the use of its premises for supplies, purchases and sales of floricultural products not passing through its own auctions. In practice, the VBA granted authorisation for commercial transactions involving these products but only under certain standard contracts known as `handelsovereenkomsten' (trade agreements) through which the VBA allowed certain dealers, under the conditions established by the VBA, to sell or supply to purchasers approved by it certain floricultural products bought in other auctions in the Netherlands, or to sell cut flowers of foreign origin against payment of a levy of 5% of the sale price. In addition, the association authorised the purchase by a dealer established on its premises of products not purchased through it, against payment of a levy of 10% of the value of the goods. The Commission decision of 1988 (6) 8 In 1982 Florimex lodged a complaint under Article 3(1) of Regulation No 17 that the VBA had infringed Articles 85 and 86 of the EC Treaty (now Article 82 EC) due to its auction rules on direct supplies to dealers established on its premises. 9 On 5 November 1984 the VBA applied to the Commission for negative clearance under Article 2 of Regulation No 17 or a favourable decision under Article 2 of Regulation No 26, or, failing this, an exemption decision under Article 85(3) of the Treaty, regarding, in particular, its statutes, its auction rules, its trade agreements, its general conditions for the rental of processing rooms and its scale of charges. 10 On 26 July 1988 the Commission adopted Decision 88/491/EEC relating to a proceeding pursuant to Article 85 of the EEC Treaty (IV/31.379 - Bloemenveilingen Aalsmeer, hereinafter `the 1988 decision'). (7) In the operative part of that decision, the Commission found that: `1. The agreements notified to the Commission which were concluded by the VBA whereby the dealers established on the VBA's premises and their suppliers were at least until 1 May 1988 required: (a) to deal in and/or have delivered on the VBA's premises floricultural products not bought through the VBA only with the consent of the VBA and under the conditions laid down by it; (b) to store temporarily on the VBA's premises floricultural products not bought through the VBA only against payment of a fee determined by the VBA, constitute infringements of Article 85(1) of the EEC Treaty. The charges for the prevention of irregular use of the VBA facilities imposed by the VBA on the dealers established on its premises (10% rule, NLG 0.25 levy) as well as the trade agreements concluded between the VBA and these dealers, also constitute, as notified, infringements of that provision. 2. An exemption pursuant to Article 85(3) of the EEC Treaty for the agreements referred to in Article 1 is hereby refused'. Amendments to the auction rules introduced after the 1988 decision (8) 11 As from 1 May 1988 the VBA formally removed the purchase obligations and restrictions on the free disposal of goods imposed by the auction rules and also the levies, but at the same time introduced a `user fee' (`facilitaire heffing'). The rules on this, amended several times in line with the Commission's indications, apply to direct supplies to dealers established on the VBA's premises and to commercial transactions not carried out through the VBA. The rules on this `user fee' involve the following: (a) the fee is payable by the supplier, that is to say the person by whom or the undertaking on whose instructions the products are brought on to the auction premises. Delivery is monitored at the entry to the premises. The supplier is required to indicate the name and nature of the products concerned, but not their destination; (b) the fee is levied on the basis of the number of stalks (cut flowers) or plants supplied; (c) as from 1 May 1991 the fee, which is subject to annual review, is fixed at specific levels, in particular according to the type of plant and the number of cut flowers; (d) the fees are determined by the VBA on the basis of the annual average prices achieved in the previous year for the categories concerned; (e) according to the VBA, a factor of around 4.3% of the annual average price for the products is applied but this must comply with the auction rules on the sale of products; suppliers may pay a fee of 5% as an alternative to the system described above; (f) a tenant of a processing room who brings goods onto the VBA's premises is exempt from the user fee if he has purchased the products in question at another flower auction in the Community or has imported them on his own behalf into the Netherlands, provided that he does not resell them to dealers on the auction premises. 12 Furthermore, on 29 April 1988, the VBA removed, with effect from 1 May 1988, the restrictions previously contained in the trade agreements, particularly those concerning sources of supply. Since then three types of trade agreement have existed covering slightly different situations (depending on whether or not the supplier rents a processing room from the VBA or whether or not he was a holder of a previous trade agreement). All the agreements apply a charge of 3% of the gross value of the goods supplied to customers on the VBA's premises. The agreements concern for the most part products not grown in the Netherlands and therefore products other than those which are normally entered for auction by members of the VBA. The reopening of the administrative procedure (9) 13 By letters of 18 May, 11 October and 29 November 1988 Florimex lodged a complaint with the Commission, registered under No IV/32.751, claiming in particular that the user fee had the same object or effect as the 10% levy prohibited by the Commission in the 1988 decision and that, for certain products, the user fee was levied at an even higher rate. The VGB lodged a similar complaint by letter of 15 October 1988. 14 On 19 July 1988 the VBA notified the Commission of the amendments to its rules adopted with effect from 1 May 1988, in particular the new user fee, but made no mention of the new trade agreements. On 15 August 1988 additional amendments to the VBA rules were notified to the Commission. 15 By letters of 21 December 1988 the Commission informed Florimex and the VGB that it had initiated proceedings against the VBA and expressed the opinion that the user fee was not discriminatory by comparison with the fees payable by members and other suppliers selling at VBA auctions. 16 On 4 April 1989 the Commission published Notice 89/C 83/03, pursuant to Article 19(3) of Regulation No 17 and Article 2 of Regulation No 26, indicating that it proposed to take a favourable decision on the VBA rules on supplies for auction sales by VBA members and other suppliers, the conditions of sale by auction and the user fee payable by suppliers and applicable to the direct supplying of dealers established on the VBA's premises. 17 By letters of 3 May 1989 Florimex and the VGB submitted their observations in response to the notice of 4 April 1989. On 7 February 1990 the VBA notified the Commission of its additional rules concerning the `detailed provisions governing the user fee', under which it would be possible for a supplier to pay the user fee at a flat rate of 5% of the value of the products. On the same date, the VBA notified the new trade agreements to the Commission. 18 By letter of 24 October 1990 the Commission informed the appellants of its intention to adopt a decision favourable to the VBA. The appellants repeated their arguments in letters of 26 November and 17 December 1990 and at a meeting with Commission staff dealing with the matter on 27 November 1990. The Commission decision contested before the Court of First Instance (10) 19 By letter of 4 March 1991 the Commission informed the complainants, in accordance with Article 6 of Commission Regulation No 99/63/EEC of 25 July 1963 on the hearings provided for in Article 19(1) and (2) of Council Regulation No 17 (11) (hereinafter `Regulation No 99/63'), that the information obtained did not enable the Commission to uphold their complaints regarding the user fee levied by the VBA. The Commission annexed to this letter a document which set out in detail the reasons which prompted the Commission to reach that conclusion. In the part of that document entitled `legal assessment', the Commission found firstly that the provisions concerning supplies for auction sales and the rules on direct supplies to dealers established on the VBA's premises formed part of a body of decisions and agreements concerning the supply of floricultural products on the VBA's premises which were covered by Article 85(1) of the EC Treaty. Secondly, it found that those decisions and agreements were necessary for attainment of the objectives set out in Article 39 of the EC Treaty, within the meaning of the first sentence of Article 2(1) of Regulation No 26. 20 As regards the application of the first sentence of Article 2(1) of Regulation No 26 to supplies for auction sales, the Commission found in particular, in point II.2(a) of the document annexed to the letter of 4 March 1991, that: `The most important principle of the rules on supplies for the auction sales is the obligation to sell by auction imposed on VBA members, which is based on Article 17 of the statutes of the VBA. That obligation to sell by auction constitutes an essential element of the cooperative basis on which the VBA is organised, which is necessary for attainment of the objectives of the common agricultural policy set out in Article 39. The importance of groups of producers and associations thereof in the context of the common agricultural policy is apparent from Council Regulation (EEC) No 1360/78 of 19 June 1978. The objectives set out in Article 39(1) cannot be attained unless the structural difficulties affecting the production of agricultural products and particularly the first stage of distribution of those products are eliminated. This situation can be remedied by grouping independent farmers on a cooperative basis so that the economic process can be influenced by common measures designed among other things to centralise supply (fifth and sixth recitals in the preamble to Regulation (EEC) No 1360/78). This general principle must also apply specifically in this case. It is clear from an analysis of the composition of the VBA's membership that, although a small group by itself is relatively important in economic terms, the vast majority of VBA producers are nevertheless farmers who can participate in the economic process on a wider-than-regional scale only through centralisation of supply. Cooperative associations can in principle fulfil their task of improving the organisation of marketing only if all their members' supplies are brought together. Accordingly, the measures taken by the Community with a view to promoting the establishment of cooperative organisations provide that the statutes of the groups to be supported must either contain uniform rules for contributions and placing goods on the market or must provide that the whole of the production intended for marketing is to be placed on the market by the group (Article 6(1)(c) of Regulation (EEC) No 1360/78; (12) Article 13 of Regulation (EEC) No 1035/72 (13)).' As regards the application of the first sentence of Article 2(1) of Regulation No 26 to direct supplies for dealers established on the VBA's premises, the Commission considered, in point II.2(b) of its document, that: `The user fees constitute an essential feature of the VBA distribution system, without which its competitive capacity and therefore its survival would be compromised. Consequently, they are also necessary for attainment of the objectives set out in Article 39. If the VBA, which specialises in exports, wishes to be in a position to achieve its object as an undertaking, in other words if it seeks to be able to develop and maintain its position as an important source of supply for international trade in flowers, it is necessary, because of the perishable and fragile nature of the products dealt in ("floricultural products"), that the export dealers should be geographically close to it. Geographical concentration of demand on its premises, which the VBA seeks in its own interest, is the consequence not only of the fact that a full range of products is offered there but also, and most importantly, of the fact that those dealers have services and facilities available there which help them carry on their trade. The geographical concentration of supply and demand on the VBA's premises constitutes an economic advantage which is the result of significant efforts, in both tangible and intangible terms, made by the VBA. If dealers were able to enjoy that benefit without paying for it, the VBA's survival would be compromised because the resultant discriminatory treatment of suppliers linked with the VBA would prevent it from amortising unavoidable costs and covering current operating costs.' Then, as to whether, through the user fee, the VBA obtained an unjustified advantage resulting in a restriction of competition, the Commission took the view that it was not necessary to calculate the fees with mathematical precision by apportioning the various costs on the basis of the internal organisation of the undertaking, but that it was sufficient to compare the levels of fees invoiced to the individual suppliers (point II.2(b), fifth and sixth subparagraphs, of the document annexed to the letter of 4 March 1991). The Commission concluded: `It is clear from a comparison of the auction fees and the user fees that broad equality of treatment is guaranteed as between suppliers. Admittedly, a proportion of the auction fees, which cannot be precisely determined, represents payment for the service provided by the auction, but in so far as the rate of the auction fees can be compared with that of the user fees in this case, that service is a quid pro quo for the assumption of supply obligations. Dealers who have concluded trade agreements with the VBA also assume such supply obligations. Consequently, the rules on user fees do not have effects which are not compatible with the common market (ibid., point II.2(b), seventh subparagraph).' Finally, the Commission took the view that the effect of the user fee was similar to that of the minimum auction sale price. According to the Commission, `the lower the price actually achieved, the greater the fee. As a result, supply is discouraged at times of excess supply, which is certainly desirable (ibid., point II.2(b), sixth subparagraph).' 21 On 17 April 1991 the complainants replied to the Commission and maintained their complaints. They claimed in particular that the Commission had not commented on all the circumstances and that, therefore, the letter of 4 March 1991 could not be regarded as a notice under Article 6 of Regulation No 99/63. 22 On 2 July 1992 the Commission sent the appellants' lawyer a registered letter with acknowledgment of receipt giving notice of the definitive rejection of their complaints concerning the user fee. In that letter (hereinafter `the decision'), the Commission stated that the reasons given in it supplemented and clarified those given in its letter of 4 March 1991 under Article 6, to which it referred. III - The contested judgment 23 On 21 September 1992 Florimex and the VGB brought two separate actions against the contested decision. By an order of 14 June 1993, the cases were joined. In support of their application for annulment, the appellants put forward a number of pleas which, after examining the arguments invoked, the Court grouped under the following four headings: the pleas alleging procedural error in that the user fee was, wrongly, dealt with separately; the plea alleging infringement of Article 19 of Regulation No 17 and the absence of a formal decision under Article 2 of Regulation No 26; the pleas alleging that the first sentence of Article 2(1) of Regulation No 26 was inapplicable and that adequate reasons were not given in that regard, and the plea alleging unequal treatment as between outside suppliers and the holders of trade agreements regarding the respective rates at which they were charged the user fee and the fee provided for in the trade agreements. (14) 24 The Court found that the arguments invoked under the first two headings were unfounded. It accepted the actions under the third and fourth headings, consequently annulling the Commission decision of 2 July 1992. IV - Substance 25 The VBA has put forward eight grounds of appeal against the judgment of the Court of First Instance. The first alleges infringement and incorrect application of Article 190 of the EC Treaty (now Article 253 EC) and the rules on the limits of the Court's review of administrative acts; the second alleges infringement and incorrect application of the second sentence of Article 2(1) of Regulation No 26; the third alleges infringement and incorrect application of Article 85(1) of the EC Treaty, and the fourth, fifth, sixth, seventh and eighth pleas allege infringement and incorrect application of the first sentence of Article 2(1) of Regulation No 26. The first ground of appeal alleging infringement of Article 190 of the EC Treaty and the rules on the limits of the Court of First Instance's review of administrative acts 26 In its first ground of appeal the VBA alleges infringement and incorrect application of Article 190 of the EC Treaty and the rules on the limits of the Court of First Instance's review of administrative acts. According to the appellant, the Court wrongly interpreted Article 190 of the EC Treaty with regard to the requirement to state reasons for a decision rejecting the complaint of infringement of the competition rules. In addition, in deciding whether the reasons stated were inadequate, the Court re-examined all the matters of fact and law in the administrative procedure. In doing so, first, the Court carried out a review which is not within its competence but which comes exclusively under the competence of the administration and, secondly, it annulled the contested act for breach of a procedural requirement, after having accepted that the competition rules had been incorrectly applied, and not for inadequacy of the reasons given. This ground has three different parts. The first concerns the requirement for the administration to state reasons for a decision rejecting a complaint on competition. The second concerns the legality of the review by the Court, when an act is being contested, of the matters of fact and law accepted by the Commission in the administrative procedure. Finally, the third concerns whether a court of law may assess the inadequacy of reasons by carrying out a review which also covers the substance of the decision and therefore any incorrect interpretation and application of the laws on which the contested act is based. - The statement of reasons for the decision rejecting a complaint concerning infringement of the competition rules 27 The appellant maintains that, when applying the competition rules, in particular Article 85(1) of the EC Treaty, to acts on agricultural products, the Commission has wide discretion which reduces the scope of the Court to review the substance of the act. The appellant observes that, if the administration were required to state reasons in more detail for every decision on the application of the competition rules, the Community court called to review the legality of such an act would be able to review the assessments which come under the exclusive competence of the administration. However, it adds that, in any event, the decision rejecting a complaint on competition is not subject to the same requirements to state reasons as a decision on the substance of the complaint. The Commission is not therefore required to take into consideration all the arguments invoked by the parties but is only required to indicate the matters of fact and law which led it to reach a particular conclusion. The defendants observe in this respect that, even accepting the appellant's above contention, even taking account of the characteristics of the contested act, the opposite conclusion to that drawn by the appellant must be reached. They state that, when applying the competition rules to acts concerning agricultural products, the Commission does not have wide discretion and that the review by the Community judicature must not be merely `marginal', that is concentrating on identifying only manifest errors. In support of this contention, the defendants observe that this case does not involve a decision granting an `exemption' under Article 85(3) of the EC Treaty but a decision excluding the application to an agreement of the prohibition referred to in Article 85(1). The Commission is therefore required only to ascertain that the conditions excluding, in agricultural matters, the application of the competition rules have been met. However, the decision at issue is not a decision on agricultural policy, as the appellant appears to maintain, but concerns the non-application of the competition rules to an agreement on the trade of agricultural products. In this respect the Commission basically makes two observations. Firstly it claims that the truth is that the Court examined the infringement of Article 190 even though this was not invoked in a specific plea in law in the action which was limited to contesting the application to this case of the first sentence of Article 2(1) of Regulation No 26. Secondly it claims that the Court incorrectly interpreted the requirement to state reasons for a decision rejecting a complaint and thus also `reversed the burden of proof' of the legality of the contested act. According to the contested judgment, the complainants are not responsible for proving that the act is unlawful, rather the Commission is responsible for proving that the reasons for this act are founded and that the act is therefore lawful. 28 Before assessing whether the arguments used to support this plea of illegality of the act are well founded, I will briefly recall the passages of the statement of reasons in the Court's judgment which apply in this respect. In the action for annulment of the decision, the appellants maintained, inter alia, that adequate reasons were not given and that the facts were wrongly characterised. The Court ruled jointly on these pleas by carrying out an examination in particular of the statement that `the first sentence of Article 2(1) of Regulation No 26 is inapplicable and that adequate reasons were not given in that regard'. With regard to the requirement to state reasons for a decision such as that at issue here, the Court observes, in paragraph 146 et seq., that the Commission has never found, in acts concluding similar infringement procedures adopted before the decision at issue, `that an agreement between the members of a cooperative which affects free access by non-members to agricultural producers' channels of distribution is necessary for attainment of the objectives set out in Article 39 of the Treaty.' As stated by the Commission itself, the `Court maintains that this type of agreement is for the most part not included among `the means indicated by the regulation providing for a common organisation in order to attain the objectives set out in Article 39' and cannot be included within the provisions of the regulation on the common organisation of the market. The regulation to be considered in this case, on the common organisation of the market in live plants and floricultural products, does not in fact `provide for agricultural cooperatives to impose such a fee on third parties'. The Court therefore concludes in this respect that `it was incumbent on the Commission to set out its reasoning in a particularly explicit manner, since the scope of its decision goes appreciably further than that of earlier decisions'. It adds that this conclusion is particularly true in a case such as this because, `constituting as it does a derogation from the general rule in Article 85(1) of the Treaty, Article 2 of Regulation No 26 must be interpreted strictly'. A decision adopted under the first sentence of Article 2(1) must show how `the agreement at issue satisfies each of the objectives of Article 39'. In the event of a conflict between those objectives, `the Commission's statement of reasons must, at the very least, show how it was able to reconcile them so as to enable the first sentence of Article 2(1) of Regulation No 26 to be applied'. The Court therefore proceeded to examine certain passages of the statement of reasons of the decision. In particular, according to the Court, the decision rejecting the complaint at issue does not fully set out the facts and points of law which led the Commission to conclude on the application of the derogation in Article 2. In the Court's opinion, the Commission essentially limited itself to acknowledging that the user fee is necessary in order to guarantee the survival of the VBA, without examining the compatibility, with the objectives of the common agricultural policy, of the effects of this fee on non-members of the cooperative. 29 As I have just observed, the VBA argues that this reasoning is defective in that the Court, in accepting that adequate reasons were not given, did not take account of the nature of the contested decision and specifically of the fact that this is a decision rejecting a complaint which, as such, does not deal with the substance of the conduct complained of. 30 In my opinion, this complaint is unfounded. It must be borne in mind that, when adopting a decision rejecting a complaint, although not being required to comment on all the facts which the persons concerned put forward in support of their application, it is incumbent on the Commission, however, to set out the facts and points of law which play an essential role in the adoption of the act. Furthermore, according to the case-law referred to by the parties, Article 190 of the EC Treaty is to be interpreted as meaning that the statement of reasons `must be appropriate to the act at issue 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 competent Community court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest [of] the addressees of the measure ...'. (15) I do not therefore share the appellant's opinion that in each case the requirement to state reasons differs according to whether the decision concludes the procedure by taking a position on the substance of the infringements or orders the rejecting of the complaint. I do not believe that in the second case the statement of reasons can ever be less complete than in the first case. It is appropriate to note that Article 190 does not provide for a different requirement to state reasons for these two types of act. The situation in which the decision rejecting a complaint occurs before a formal investigation does not exempt the institution from the requirement to state adequate reasons for the act with regard to the findings of fact. The truth is that it does not make much sense to maintain that the statement of reasons should, for certain categories of acts, be clearer and more complete than in others. The adequacy of the statement of reasons is actually measured essentially according to the specific characteristics of each individual act which allows the parties to defend themselves and the Community court to review the content of the act. This is why its content must be appropriate for this function. It cannot therefore be accepted, as the appellant does, that in stating the reasons for a decision such as that in this case the administration is not obliged to comply with the requirement to state reasons as defined in the case-law, in other words that it does not have to state the reasons clearly and completely for a decision such as that at issue where such a decision involves a rejection of the complaint and where, similarly, it does not rule on the substance of the alleged infringement of the competition rules. On the contrary, I would state that, according to settled case-law on the scope of the requirement to state reasons for decisions rejecting a complaint, `when a complaint has been submitted to it, the Commission must, however, examine carefully the facts brought to its notice in order to decide whether they disclose conduct liable to distort competition in the common market and affect trade between Member States and inform the complainant of the reasons for its decision to close the file', (16) which also applies when the file is closed due to the absence of a Community interest likely to justify the opening of an investigation. (17) The Court's assessment of the inadequacy of the statement of reasons for the contested act is confirmed by the fact that the contested decision, although not occurring after the formal opening of the investigation, is not limited to a rejection of the complaint on the ground that the complaints are manifestly unfounded but considers the substance of the circumstances and establishes that, even though the user fee produces restrictive effects on competition in the Netherlands market for floricultural products, it is not, however, prohibited under Article 85(1) of the EC Treaty as the agreement at issue comes within the scope of Article 2 of Regulation No 26. The Commission therefore, as rightly observed by Florimex, rejected the complaint on the basis of an analysis which, by applying a specific exemption, considers an agreement to be lawful even if, taken on its own, it is likely to produce restrictive effects on competition. It is therefore significant that, as is apparent from the Court's judgment, the complaints of Florimex and the VGB regarding the VBA's agreement were lodged during 1988, whereas the decision rejecting the complaint dates from 1992 and that therefore, before rejecting the complaints, the Commission had conducted a careful investigation which involved both the complainants and the VBA cooperative. Given therefore that the Commission had conducted an investigation and in view of the content of the contested decision which involves complex issues and the application of an exemption, I consider that the Court's assessment of the requirement on the Commission to state reasons for a decision of this kind is not open to complaint. It therefore follows that the first part of the first ground of appeal is unfounded. - The review of the legality of the act by the Court of First Instance 31 The second and third parts of the first ground of appeal concern the conditions under which the Court can review the legality of the act. I will therefore summarise together the positions of the parties in this respect. 32 In putting forward the second and third parts of the first ground of appeal, the VBA claims that, when reviewing the facts in the light of the legal framework of Article 2 of Regulation No 26, the Court did not limit itself to verifying whether there was a manifest error in the characterisation of these facts but conducted a complex and in-depth analysis of the facts at issue. According to the VBA, this is contrary to the case-law of the Court of Justice according to which only manifest errors in the characterisation of the facts can justify annulment. During the procedure before the Court of First Instance, the latter instead asked the Commission to prove its assessment of the facts to be well founded and, thus, the burden of proving the legality of the act fell on the Commission, thereby indicating that the burden of proving its objections on this point is not the responsibility of the appellant. The Court also conducted a full and in-depth examination of the facts found in the acts and, by so doing, replaced the Commission in conducting an administrative review. According to the appellant, this was not compatible with the administrative nature of the acts and therefore compromised legal certainty itself. The VBA finally observes that, whereas Florimex cited in its appeal both the inadequacy of the statement of reasons and the error in the characterisation of the facts, the Court in its judgment examined the foundation of these two pleas only in respect of the allegation that adequate reasons were not given, although conducting a careful examination of the assessment of the facts appearing in the Commission decision. However, the defendant undertakings maintain that the VBA's complaints are based on an incorrect reading of the judgment. The Court did not actually annul the decision as vitiated by an incorrect assessment of the facts but in so far as it was vitiated by an inadequate statement of reasons. In other words, the Court regarded as inadequate the reasons given by the administration to justify the characterisation of the user fee as a fee charged to non-members of the cooperative which was `necessary for attainment of the objectives laid down in Article 39 of the Treaty'. 33 The second part of the first plea which concerns the extent of the review by the Court of the contested act is also unfounded. It is settled case-law that, `although as a general rule the Community judicature undertakes a comprehensive review of the question whether or not the conditions for the application of Article 85(1) are met, its review of complex economic appraisals made by the Commission is necessarily limited to verifying whether the relevant rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or a misuse of powers'. (18) Any error in the application of the competition rules which may result from incorrect reconstruction and characterisation of the facts must therefore be for the Court to ascertain, even when the appraisals of their appropriateness from a technical-economic viewpoint are based on criteria not open to review by the Court. I would observe that, in this case, the examination carried out by the Court - so far as relevant to the present procedure - concentrated on the facts provided by the Commission on five points which were: the alleged necessity of the user fee for the survival of the cooperative, the effects of the user fee, access to the Netherlands market for non-members of the VBA, the allocation to the user fee of the same function as that of the `minimum price' in the context of the common organisation of the market and, finally, the absence of unequal treatment between non-members. The Court found that the findings made by the Commission in the decision in relation to these five points were not corroborated by the facts to which the decision refers. With regard to those facts, the Court limited itself to examining the well-foundedness of their legal characterisation. The Court therefore took the view that they did not correspond in any of the aforementioned aspects to the legal framework which the Commission had applied. It therefore annulled the decision on the ground of inadequacy of the statement of reasons and the incorrect application of the relevant competition rules and, more specifically, of the combined provisions of Article 85(1) of the EC Treaty and the first sentence of Article 2(1) of Regulation No 26. I consider that, by acting in that way, the Court remained within the limits of its competence. Contrary to the contention of the cooperative, the Court's examination concerned the legal characterisation of the findings of fact (as described above). This examination did not review the appraisal of the facts (with particular regard to economic considerations) but only the appraisal of the adequacy of these facts, as stated by the Commission, with regard to the legal conclusions which, based on such appraisal, that institution considered itself able to make. 34 In the third part of the first ground of appeal, the VBA claims that the Court committed an error of law in that it decided that the reasons given were not adequate by taking into account, not the adequacy of the facts on which the act was based, but the substance of that act and in particular the allegedly incorrect application of the competition rules to the agreement concluded between members of the VBA. I would point out that, contrary to the Commission's conclusions, in the appeal brought before the Court, Florimex invoked both the infringement of the competition rules and the inadequacy of the statement of reasons and that the arguments made in support of these pleas essentially concerned the alleged incorrect characterisation of the information provided to the Commission by the interested undertakings, particularly with regard to the effects produced by the agreement on the market. The Court took the two pleas together and ruled jointly - in paragraph 108 et seq. - on the `pleas alleging that the first sentence of Article 2(1) of Regulation No 26 is inapplicable and that adequate reasons were not given in that regard'. From the examination of the parties' arguments the Court concluded that the Commission had not provided, in the decision, all the elements needed to include the case at issue within the scope of the derogation referred to in the first sentence of Article 2(1) of Regulation No 26. The Court confirmed in essence that, in view of the findings of facts by the Commission, it was not justified to find that the circumstances at issue came under the agreements mentioned in Article 2 and could therefore benefit from the derogation which this provision specifies. This being so, to maintain, as the appellant does, that the Court annulled the decision solely on the basis of the inadequacy of the statement of reasons for the act is contrary to the letter and general scheme of the contested judgment. The Court actually annulled the decision because it considered that the Commission had not conducted a sufficiently in-depth examination of the case at issue before finding the VBA rules, and in particular the user fee, to be compatible with the objectives of the common agricultural policy. It follows that the Court decided that the arguments invoked in support of both pleas for annulment were founded and it therefore annulled the decision because, on the basis of the results of the administrative investigation, the circumstances at issue could not be compared to the type of agreement provided for by this provision since it excludes the application of the competition rules to agreements in the agricultural sector. In other words, in this case, by carrying out a joint analysis of the arguments - based on the error of law and the inadequacy of the statement of reasons - put forward in support of the two pleas invoked in the application for annulment, the Court considered not only that the reasons stated for the act were inadequate but also that an error of law had been made in the application of the competition rules. This part of the first plea for annulment must therefore also be rejected. 35 The case of Commission v Sytraval and Brink's France in which the Court of Justice ruled on an appeal brought by the Commission against the judgment of the Court of First Instance of 28 September 1995 does not allow a different conclusion to be reached. In that judgment, the Court of Justice found that the Court of First Instance had committed an error of law by failing `to draw the necessary distinction between the requirement [for the administration] to state reasons and the substantive legality of' the contested decision. The judgment of the Court of First Instance concerned the decision rejecting the complaint objecting to State aid granted by the French Republic. The Court of First Instance annulled the decision rejecting the complaint on the ground that inadequate reasons were given. In its appeal, the Commission maintained that the Court of First Instance had been wrong in `treating the purely procedural requirement to state reasons as a matter concerning the substantive legality of the decision'. The Court of Justice accepted this, finding that the Court of First Instance had examined the pleas based on the inadequacy of the statement of reasons together with the manifest error of assessment (in that there was an incorrect characterisation of the facts) and had accordingly annulled the contested decision based `solely on infringement of Article 190 of the Treaty'. By proceeding in this way, the Court of First Instance had, `on the basis of an alleged insufficiency of reasoning, ... criticised the Commission for a manifest error of assessment attributable to the inadequacy of the investigation carried out by that institution'. According to the Court of Justice, the Court of First Instance therefore committed an error of law (paragraphs 68 to 72). Such a precedent, which actually involves a conclusion which is irrelevant to this decision as the Court of Justice did not annul the contested judgment - and therefore constitutes only an obiter dictum - concerns different circumstances from those in this case and is not therefore relevant to the present case. In Florimex, the Court of First Instance expressly affirmed its desire to deal jointly with the two pleas, as is apparent from paragraph 153. In this way, it not only examined in detail whether the plea alleging infringement of the competition rules was well founded (although this examination was carried out together with that on the parallel plea alleging infringement of the requirement to state reasons: see paragraphs 139 to 186), but also acknowledged, in the concluding part of the judgment (paragraph 187) that, as things stood, the derogation referred to in Article 2 could not be applied to the agreement. It is therefore reasonable and justified to interpret the contested judgment as meaning that, setting aside any actual inaccuracies in the wording used, the Court of First Instance considered that the decision was vitiated not only by an insufficiency of reasons but also by an error of law, and thus it annulled that decision for both those reasons. This analysis fits perfectly with the overall context of the dispute. A judgment which solely bases the nullity of the act on alleged inadequate reasons reflects only partially the problem raised and does not respond adequately to the complaints made by the appellants. Furthermore, the Court of Justice has the power and the duty, in its appellate jurisdiction, not only to determine the real desire of the parties, as is apparent from the pleas put forward in the appeals, but also to determine the logical and legal route which has led the Court of First Instance to reach the contested judgment, by teasing out the decisive elements without being distracted by pernicious formalism. 36 It follows that this part of the ground of appeal is also unfounded. The second ground of appeal alleging infringement and incorrect application of the second sentence of Article 2(1) of Regulation No 26 37 In its second ground of appeal, the appellant invokes the infringement and incorrect application of the second sentence of Article 2(1) of Regulation No 26 which provides that Article 85(1) of the EC Treaty does not apply to certain agreements of farmers `unless the Commission finds that competition is thereby excluded or that the objectives of Article 39 of the Treaty are jeopardised'. The appellant criticises the Court of First Instance for having wrongly considered, in paragraph 138 of the judgment, that it was not required to adjudicate on the application of the second sentence of Article 2(1), taking the view that the Commission decision was based solely on the derogations mentioned in the first sentence of Article 2 and that therefore only the general derogation indicated in this provision applied. The VBA observes that, contrary to the Court's conclusion, the Commission examined the possibility of applying the second sentence of Article 2(1) because, in the preliminary draft decision to which the Court's judgment refers, in paragraph 41, the Commission accepted that the user fee constituted an essential feature of the VBA distribution system and was therefore relevant for the purposes of applying the derogation referred to in the second sentence of Article 2(1) of Regulation No 26. In addition, the VBA recalls that in the decision the Commission reasserts on several occasions the cooperative nature of the VBA, clearly referring to the provisions of the second sentence of Article 2(1). As a matter of law, the appellant underlines that, according to the settled case-law of the Court of Justice, the cases appearing in the second sentence of Article 2(1) are particularisations of the general rule expressed in the first part of paragraph 1. From this premiss, the appellant seems to draw the inference that, although referring expressly to the first part of this provision, the decision was in fact based on paragraph 1 as a whole. Moreover, the second part of this paragraph, which refers to farmers' associations, seems to include the activities of cooperatives and therefore seems to apply in this case. The second part of Article 2 allows the derogation to be applied in a simplified manner, that is by simply ascertaining whether the agreement hinders the attainment of the objectives referred to in Article 39 of the EC Treaty. In recent judgments Oude Luttikhuis and Others (19) and Dijkstra and Others, (20) the Court of Justice confirmed that Article 2 must be understood as containing three categories of derogation (the first applies to agreements in the context of a national market organisation, the second applies to agreements necessary for attainment of the objectives set out in Article 39 of the EC Treaty and the third applies to the cases referred to in the second sentence of Article 2(1)) and that therefore the agreements referred to in the second sentence have the same general scope as those referred to in the first sentence. On the other hand, the VBA claims that this case-law dates from after the contested decision and that it cannot therefore be taken into account for the purpose of assessing the legality of this decision. On the second ground of appeal, the defendants maintain that the Court of First Instance was not required to review the decision on the basis of a provision which the contested decision did not take into account. In any case, the defendants add that, had it conducted such an examination, the Court of First Instance would have concluded that the conditions required for the application of the derogation referred to in the second sentence of Article 2(1) were not met in this case, essentially for three reasons: (a) the members of the cooperative are not established in a single Member State because this cooperative also includes undertakings which are established outside the Netherlands; (b) the agreement does not cover strictly national activities and, therefore, the organisation of the market in the Netherlands, but specifically covers products originating from other Member States and even from third countries, and (c) finally, the user fee does not cover relations between members of the agricultural cooperative but only non-members and therefore this fee constitutes a sort of customs duty payable in order to access the Netherlands market. 38 This plea for annulment is also unfounded. I would observe, firstly, that, in the letter sent to Florimex and the VGB under Article 6 of Regulation No 99/63, the Commission confirmed that, in accordance with the first sentence of Article 2(1) of Regulation No 26, Article 85(1) of the EC Treaty was inapplicable to agreements concluded between the members of a cooperative because these agreements are instruments necessary for attainment of the objectives set out in Article 39 of the EC Treaty. The Commission reached this conclusion by reviewing the legality of the agreement on the basis solely of the first sentence of Article 2(1), thus referring to the objectives of the agricultural policy in general and not to the possibility of the agreement at issue coming under one of the categories of agreements mentioned in the second sentence of paragraph 1. In respect of this complaint, the Court of First Instance states that Florimex invoked, as the third ground of nullity, the infringement of Article 2(1) only with regard to its first sentence. The VBA, intervening in the procedure at first instance in support of the defendant, invoked in its oral arguments the application to this case of the second sentence of Article 2(1) of Regulation No 26. In ruling on this ground of nullity, the Court of First Instance set out - in paragraph 138 - the limits of the dispute observing that, with regard to the content of the contested decision, it was not `called upon to adjudicate on the arguments put forward by the intervener at the hearing ... but only on the legality of the conclusion reached by the Commission in the contested decision that the user fee falls within the first sentence of Article 2(1) of Regulation No 26'. Given the wording of the decision and the complaints put forward in the action for annulment by Florimex, it was completely justified for the Court of First Instance to conduct its review of the legality of the decision by reference only to the first sentence of Article 2(1). If the assessment of the legality of the act had been conducted on the basis of a provision other than that invoked by the appellant and used by the Commission as the basis for its decision, the Court of First Instance would have overstepped the limits of the dispute which are apparent from the arguments invoked by the appellants who specifically based the alleged illegality of the act solely on the first sentence of Article 2(1). In any event, even accepting (which I do not), as the appellant maintains, that the second part of Article 2(1) constitutes a particularisation of the first and is therefore devoid of any independent legal scope, it must, however, be accepted that, where the application to an agreement of the first part of Article 2 is excluded, the second part must therefore also be regarded as inapplicable. The third ground of appeal alleging infringement and incorrect application of Article 85(1) of the EC Treaty 39 In its third ground of appeal, the VBA criticises the judgment of the Court of First Instance for not having considered, contrary to settled case-law, (21) that the user fee constitutes a restriction on competition intended to ensure that `the cooperative functions properly and maintains its contractual power in relation to producers' and that this therefore constitutes an infringement of Article 85(1) of the EC Treaty. According to the defendants, in making this contention the VBA has incorrectly interpreted the case-law of the Court of Justice on the application of the competition rules to agreements establishing cooperatives. In their opinion, the Court of Justice's judgment actually concerned only those provisions which, unlike those at issue, affect solely the subjective interests of non-members of the cooperative. They maintain, in any case, that in the contested decision the Commission considered the application of the prohibition referred to in Article 85 to have been established. Therefore this ground of appeal does not involve the review of the legality of the contested act either. 40 I fully agree with the observations made by Florimex. In essence, the cooperative basis its arguments on the premiss that Article 85(1) does not apply in the present case because the agreement did not produce restrictive effects on competition. However, this premiss is incorrect. Contrary to what the VBA maintains in its appeal, in its decision the Commission did not rule out the application to the VBA rules of Article 85(1) of the EC Treaty on the ground that the restrictions on competition contained in these rules were necessary to ensure the survival of the cooperative and that the cooperative form of the VBA did not actually have any effect on free competition in the sector. On the contrary, the Commission took the view that, just as the 1988 decision had considered that the `buyers established on the VBA's premises constituted a large enough group to make the restrictions on competition agreed with them come under the prohibition on agreements referred to in Article 85(1) of the EC Treaty', the agreements referred to by the contested decision assumed, in the same way, the same economic importance and therefore came under the prohibition on agreements producing restrictive effects on competition (point 1 of the letter under Article 6). The Commission then considered whether the derogation referred to in Article 2 applied in this case. The VBA's rules were assessed specifically with regard to the object of the activity of the undertakings involved in this cooperative and those rules were taken to involve an agreement producing anti-competitive effects (point 2 of the letter under Article 6). Since the contested decision starts explicitly from the premiss that the agreement was contrary to the competition rules and as Florimex has not disputed this aspect of the decision (in that it has not disputed that the agreement comes under the prohibition referred to in Article 85(1) of the EC Treaty) but claims on the contrary the non-application of the derogation, the Court of First Instance did not commit an error of law but merely noted the position (favourable to the appellants) adopted on this point by the Commission. 41 It follows that this ground of appeal must also be rejected. The fourth, fifth, sixth, seventh and eighth grounds of appeal alleging infringement and incorrect application of the first sentence of Article 2(1) of Regulation No 26 42 In the fourth to eighth grounds of appeal, the VBA pleads infringement and incorrect application of the first sentence of Article 2(1) of Regulation No 26 - which specifies that Article 85(1) of the EC Treaty does not apply to agreements in agricultural matters `as form an integral part of a national market organisation or are necessary for attainment of the objectives set out in Article 39 of the Treaty' - having regard to the assessments made of the various arguments alleging illegality of the user fee set out in paragraphs 146 to 196 of the judgment. I will firstly consider the fourth ground of appeal, which raises different points of law from those raised by the last four pleas. I will then examine the fifth, sixth, seventh and eighth grounds of appeal together. - The fourth ground of appeal 43 In the fourth ground of appeal, the VBA alleges the infringement and incorrect application of the first sentence of Article 2(1) maintaining that, in paragraphs 146 to 153 of the judgment, the Court of First Instance erred in considering that, as the Commission based its decision on an extensive interpretation of Article 2 which was different from that on which earlier decisions on the issue were based, `it was incumbent on the Commission to set out its reasoning in a particularly explicit manner'. According to the VBA, the error of interpretation made by the Court of First Instance was due to the fact that it examined the legality of the user fee without taking account of all the VBA's rules. In the VBA's opinion, the user fees should instead be examined in the overall context of the obligations connected with the VBA's main activity which involves organising auctions of floricultural products. In that connection, the VBA questions the relevance, in the judgment on the application of Article 2, that neither the legislation on the common organisation of the market in floricultural products nor the rules on other common organisations of markets refer to contracts for the trade in these products, but concern only the quality of the products and the rules on ensuring compliance with the provisions on the import and export of products originating from third countries. In relation to this ground of appeal, the Commission points out that the Court of First Instance based its judgment on two incorrect conclusions. Firstly, it incorrectly analysed the user fee imposed by the VBA with no regard for the other rules of the cooperative whereas the Commission took account of all the relationships governed by the various agreements and rules of the cooperative. Secondly, the Court of First Instance incorrectly considered that a decision such as that at issue, which involves the non-application of the competition rules, must show that the agreement at issue contributes to the attainment of all the objectives set out in Article 39 of the EC Treaty. 44 In this respect it seems appropriate to recall the words of the Court of First Instance in paragraphs 146 to 153 of the judgment. The Court of First Instance firstly observes that to date `the Commission has never found that an agreement between the members of a cooperative which affects free access by non-members to agricultural producers' channels of distribution is necessary for attainment of the objectives set out in Article 39 of the Treaty'. The Court then states that the Commission's practice in earlier decisions has been to conclude that these agreements are generally not included among `the means indicated by the regulation providing for a common organisation in order to attain the objectives set out in Article 39' and that they cannot be included within the provisions of the regulation on the common organisation of the market. Like the basic regulations of other common organisations of markets, the regulation on the common organisation of the market in live plants and floricultural products does not provide for `agricultural cooperatives to impose such a fee on third parties'. According to the Court, under these circumstances `it was incumbent on the Commission to set out its reasoning in a particularly explicit manner, since the scope of its decision goes appreciably further than that of earlier decisions'. Referring to the cases of Frubo v Commission (22) and Oude Luttikhuis and Others, (23) the Court adds that this is particularly true in a case such as this because `constituting as it does a derogation from the general rule in Article 85(1) of the Treaty, Article 2 of Regulation No 26 must be interpreted strictly'. It follows that it must be apparent from a decision like this, adopted pursuant to the first sentence of Article 2(1), how `the agreement at issue satisfies each of the objectives of Article 39. In the event of a conflict between those sometimes divergent objectives, the Commission's statement of reasons must, at the very least, show how it was able to reconcile them so as to enable the first sentence of Article 2(1) of Regulation No 26 to be applied.' 45 In essence, the VBA criticises the Court, on one hand, for having considered the user fee without having regard to the other obligations and rights arising from the cooperative's rules and, on the other hand, for having considered that the absence of an explicit reference, in the basic regulations of common organisations of markets, to the possibility of establishing a user fee generally excludes the possibility of applying the derogation referred to in the first sentence of Article 2(1) of Regulation No 26. 46 Both these complaints are unfounded. With regard to the first complaint, the Court rightly considered that the user fee does not have an effect solely on the internal relationships between the cooperative members but that it affects non-members more. The Court also considered that the user fee produces restrictive effects on competition in the Netherlands market in floricultural products. The Court inferred from this that it was incumbent on the Commission to examine the compatibility of the cooperative's rules with the objectives of the agricultural policy in a more detailed manner than it did in the contested decision and that it could not merely note, in general terms, that, notwithstanding its restrictive effects, the agreement was lawful in so far as it was necessary to the survival of the cooperative. That complaint is therefore unfounded. The Court's reasoning that, taking into account the effects on competition of the user fee, it was necessary to examine in particular detail the compatibility of the provisions of the VBA's rules with the objectives of the common agricultural policy for the sector cannot be regarded as unlawful. Such an examination could not, as the Commission believes, be limited to taking into account the advantages arising for the cooperative's members from the payment of the user fee but rather, given the circumstances of the case, had to cover also consequences for non-members. The second complaint is also unfounded. As I have said, in this complaint the VBA claims that the Court committed an error of law by maintaining that, in the absence in the regulations on the common organisations of markets of a provision providing for a user fee such as that at issue, the Commission was required to take into consideration, in the statement of reasons for its decision, all the effects produced by the imposition of this fee, in light of the objectives of the common agricultural policy set out in Article 39 of the Treaty. This view seems completely correct. If the legislature has not expressly provided for the possibility of imposing the payment of a user fee on undertakings which use the facilities of a cooperative, the Commission can consider that this fee is compatible with the objectives of the common agricultural policy only if its restrictive effects on competition are in all cases consistent with attainment of the aims of the agricultural policy in the sector. In the present case, this circumstance has not been demonstrated and has not been taken into consideration in any respect. There is also no foundation for the complaint made by the Commission that the incorrect interpretation by the Court of the first sentence of Article 2(1) of Regulation No 26 was due to the fact that, in adopting a decision under this provision, the Commission should have shown `how the agreement at issue satisfies each of the objectives of Article 39'. On the contrary, it must be observed that this confirmation by the Court (which is actually based on the case-law of the Court of Justice referred to in the same paragraph 153 of the contested judgment) does not have unrestricted scope but is interpreted by taking into account the fact that the Court of First Instance also confirmed that `in the event of a conflict between those sometimes divergent objectives, the Commission's statement of reasons must, at the very least, show how it was able to reconcile them so as to enable the first sentence of Article 2(1) of Regulation No 26 to be applied'. According to the Court of First Instance, the logic of Article 2 requires the acceptance that several of these objectives can, solely in terms of the common organisation of the market or the agreement at issue, be in contradiction with each other and that this contradiction must be overcome, if necessary, by giving priority to some of these objectives over others. 47 It follows that this ground of appeal is also unfounded. - The fifth, sixth, seventh and eighth grounds of appeal 48 In its last four grounds of appeal, the VBA disputes the legality of the findings and characterisation of the facts as contained in paragraphs 155 to 198 of the judgment in which the Court of First Instance examines the main arguments which the Commission used to justify the application of the first sentence of Article 2(1) of Regulation No 26 to the user fee. Those grounds of appeal essentially concern `the need to ensure the survival of the VBA; the existence of a quid pro quo for the user fee, and the fact that the user fee has an effect analogous to that of a minimum auction sale price' (paragraph 154). These paragraphs also examine the complaint made by Florimex in its appeal before the Court of First Instance on the unequal treatment between the various suppliers who have access to the VBA facilities. In examining the legality of the user fee, the Court of First Instance starts from the principle that, `even on the assumption that the VBA's system ... can be maintained only on the basis of the user fee, it does not automatically follow that the user fee or a system of auction sales necessitating such a fee fulfils all the conditions of Article 39 of the Treaty, in accordance with the case-law of the Court of Justice'. It adds that a fee levied by an agricultural cooperative on supplies by non-member producers to independent buyers normally has the effect of increasing the price of such transactions, that it `constitutes at the very least a significant impediment to the freedom of other agricultural producers to sell through the distribution channels in question' and that `that obstacle is particularly significant in this case because the wholesalers established on the VBA's premises include ... the largest Netherlands exporters, who occupy a leading position in Community trade in floricultural products (points 131 and 132 of the 1988 decision)'. The Court of First Instance draws the conclusion from this that `even though the VBA's system meets certain of the objectives set out in Article 39 of the Treaty, the user fee is capable of operating ... in a manner inimical to those objectives, in particular by preventing producers who are not members of the VBA from increasing their individual earnings (Article 39(1)(b)), by impeding the availability of supplies from those other producers (Article 39(1)(d)) and by precluding price developments which are favourable from the consumer's point of view (Article 39(1)(e))' (points 155 to 169). In its decision, the Commission maintains that the user fee constitutes the quid pro quo of the services offered by the VBA to external suppliers. The Court observes in this respect that, if `the user fee were not justified by real value of that kind, or if its amount exceeded the value thus given, it would have the effect of placing certain agricultural producers at a disadvantage, thereby benefiting existing members of the VBA, and would constitute a disguised restriction of competition, with no sufficient objective justification'. On the basis of the accepted facts, the Court concludes that, in this case, `the outside suppliers from whom the user fee is collected do not use the numerous services offered by the VBA, such as auction sales, checking of products, packing, unpacking, sorting, collection of payments and recovery of debts' and that `similarly, the actual use of the VBA's facilities by third parties is limited to the use of roadways on the premises to make deliveries to the commercial premises of the wholesalers concerned'. In the Court's opinion, it therefore follows that `the concentration of supply and demand on the VBA's premises [as is apparent from the contested decision] is therefore the only [effective] advantage mentioned as a quid pro quo for the user fee levied'. The Court also observes that this economic advantage `is described in the contested decision only in very general terms, without specifying how the value of that advantage, and the amount of the resultant user fee, can be calculated and expressed in actual figures, taking into account, as appropriate, specific financial data concerning for example the income, margins and costs of the VBA, the investments made by it and the value of any economies of scale enjoyed as a result by third parties, and of the extent to which the rent paid by the buyers established on the premises already reflects the economic advantage invoked'. It follows that `the only justification put forward in the contested decision regarding the amount of the user fee relates to the fact that suppliers selling by auction and outside suppliers who do not use the auctions pay approximately the same rate of fee' (points 170 to 183). Another line of reasoning deployed by the Commission to support the contested decision is that the user fee has an effect analogous to that produced by the imposition of a minimum price on agricultural products. According to the Court, such reasoning presupposes `that protection of the minimum prices of an agricultural cooperative organised on the basis of auction sales takes precedence over the interest of other agricultural producers who are not members of the cooperative in selling their products freely to independent dealers'. Given that in principle it is the provisions on the common organisations of agricultural markets which determine the price of products, `where, as here, the rules on the common organisation contain no specific provision, it must be presumed that the price formation mechanism desired in that area is that of free competition, without such mechanism being affected by private agreements under which cooperative groups impose a fee on transactions between other agricultural producers and independent dealers'. It follows, according to the Court, that this aspect of the decision is also insufficiently reasoned (points 184 to 187). As for the alleged unequal treatment between suppliers, the Court observes that the Commission considers that the difference of rate between the fee of 3% of the price of the products, charged to suppliers who conclude `trade agreements', and that of the user fee, which is in general set higher, is justified and therefore lawful. On this point, the defendant maintains that `dealers who have concluded trade agreements with the VBA also assume such supply obligations'. However, the Court observes that `the trade agreements of which copies have been produced ... do not provide for specific supply obligations. The various trade agreements grant dealers the right to sell and deliver supplies on the VBA's premises, but do not impose specific obligations in that regard. According to the explanations given by the intervener's representative at the hearing, the `obligation' consists in the fact that, if the holder of a trade agreement does not sell the contractual products to the VBA's satisfaction, the agreement, which is for a term of one year, is simply not renewed.' Under those circumstances, the Court considers that `the existence of certain specific and precise obligations capable of justifying the difference of rate between the 3% fee which certain outside suppliers are allowed to pay and the user fee paid by other outside suppliers has not been adequately established' (points 191 to 196). 49 In its fifth ground of appeal the VBA maintains that the Court erred in considering that the user fee constituted an obstacle to access to the Netherlands market in floricultural products. Instead, it maintains that this fee only affected a specific type of supply by undertakings established on the VBA's premises and specifically those originating from outside suppliers delivering their products directly to such undertakings. Secondly, the VBA maintains that the Court was mistaken in considering that the user fee influenced the level of prices of products sold to the consumer as the dealers/suppliers alone paid the fee. Thirdly, it claims that the fact that the VBA membership includes the largest Netherlands undertakings in the sector did not justify the user fee being regarded as sealing off the market in question and favouring the reinforcement of the position of these undertakings in this market. In the sixth ground of appeal, the VBA disputes the Court's assessment that the user fee constitutes a quid pro quo which is not proportionate to the benefits and services offered by the VBA. In the VBA's opinion, the user fee constitutes the quid pro quo for a large number of different services provided by the VBA which, contrary to what is claimed in the judgment, are not limited solely to use of the premises and roadways within the cooperative's premises. In addition, the amount of the user fee was fixed by the VBA in agreement with the Commission and following an investigation carried out by experts in the sector. The amount was calculated on the basis of general criteria rightly taking into account the difficulty of establishing the precise quid pro quo for all the services provided. In its seventh ground of appeal, the appellant disputes, in essence, that the user fee can be regarded as a minimum price analogous to that fixed for the common organisation of the market. In this context, the VBA recalls that the user fee applies only to sales of products to dealers established on the VBA's premises and that the price of the individual products is in principle established totally freely during auctions organised by the cooperative itself. Finally, in the last ground of appeal, the VBA maintains that the Court wrongly determined the existence of unequal treatment between suppliers making direct supplies and those concluding `trade agreements' with the cooperative in that, contrary to what the Court maintains, the fees are the quid pro quo for the various benefits and services. 50 In my opinion, with the exception of the seventh ground of appeal, but only with regard to the substantive issues which it raises, these grounds of appeal can be merged into one complaint based on an allegedly incorrect finding of facts by the Court regarding: (a) the effects of the user fee on the outside undertakings and on the price of products sold to the consumer (fifth ground of appeal); (b) the disproportion between the services actually provided by the cooperative and the amount of the user fee incumbent on outside suppliers (sixth ground of appeal) and (c) the difference in treatment between the various suppliers of the VBA (eighth ground of appeal). 51 In its seventh ground of appeal, the appellant claims that the Court erred in having characterised the user fee as a minimum market price. This complaint raises a point of law the substance of which should be examined as it particularly concerns the Court's assessment of the illegality of a minimum price for agricultural products established on a contractual basis. I would merely point out, in this respect, that the Court of First Instance rightly considered that, in the absence of price fixing for agricultural products in the context of the common organisation of the markets, it is not possible to describe as lawful agreements between undertakings on the prices of products. This is confirmed by the express exclusion of agreements under the `agricultural derogation' referred to in the second sentence of Article 2(1) of Regulation No 26. It follows that, in this respect, the complaint in question is unfounded. Otherwise, like the fifth, sixth and eighth grounds of appeal, this ground of appeal amounts to a dispute about the findings of the fact by the Court since, in essence, it involves the actual effect of the fee on the final price of the product. 52 It must be borne in mind that an appeal brought against a judgment of the Court of First Instance must be limited to grounds of law and, according to the settled case-law of the Court of Justice, it cannot involve the re-examination of the assessment of the facts made at first instance. The Court of First Instance has `exclusive jurisdiction ... to establish the facts except where the substantive inaccuracy of its findings is apparent from the documents submitted to it'. This means that `when the Court of First Instance has established or assessed the facts, the Court of Justice has jurisdiction under Article 168a of the [EC] Treaty [now, after amendment, Article 225 EC] to review the legal characterisation of those facts by the Court of First Instance and the legal conclusions it has drawn from them'. (24) It follows that the fifth, sixth and eighth grounds of appeal and the seventh in part, which all concern the facts, must be regarded as inadmissible. 53 In view of all the foregoing observations, I therefore consider that the last four grounds of appeal for annulment are unfounded. Costs 54 Under Article 69(2) of the Rules of Procedure which, pursuant to Article 118, applies to the appeal procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. In this case, given the express request made in this respect by Florimex and the VGB, I propose that the Court of Justice order the appellant to pay the costs which those parties have incurred. I also propose that the Court of Justice order the Commission to bear its own costs, in accordance with Article 69(4) of the Rules of Procedure. Conclusion 55 In the light of the foregoing, I propose that the Court: (1) dismiss the appeal; (2) order the appellant to pay the costs incurred by Florimex BV and Vereniging van Groothandelaren in Bleomkwekerijprodukten at this stage of the proceedings. (1) - [1997] ECR II-693. (2) - OJ, English Special Edition 1959-1962 (I), p. 87. (3) - OJ, English Special Edition 1959-1962 (I), p. 129. (4) - Paragraphs 1 to 6 of the judgment. (5) - Paragraphs 7 to 14 of the judgment. (6) - Paragraphs 15 to 18 of the judgment. (7) - OJ 1988 L 262, p. 27. (8) - Paragraphs 19 to 23 of the judgment. (9) - Paragraphs 25 to 36 of the judgment. (10) - Paragraphs 37 to 47 of the judgment. (11) - OJ, English Special Edition 1963-1964, p. 47. (12) - OJ 1978 L 166, p. 1. (13) - OJ, English Special Edition 1972 (II), p. 437. (14) - Paragraph 78 of the judgment. (15) - See in particular Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, paragraph 63. (16) - See Case C-59/96 P Koelman v Commission [1997] ECR I-4809, paragraph 42 in particular, which confirms the judgment in Case T-575/93 Koelman v Commission [1996] ECR II-1, paragraphs 39 to 40. See also in this respect Case T-7/92 Asia Motor France and Others v Commission [1993] ECR II-669, paragraph 30; Case T-387/94 Asia Motor France and Others v Commission [1996] ECR II-961, paragraph 46; Joined Cases T-133/95 and T-204/95 IECC v Commission [1998] ECR II-3645, paragraph 125 et seq. and finally Case T-111/96 ITT Promedia v Commission [1998] ECR II-2937, paragraph 79. (17) - This case-law dates from the Automec II case (Case T-24/90 Automec v Commission [1992] ECR II-2223, paragraphs 77 to 85 in particular) in which the Court maintained that the complaint of an infringement can be rejected where this does not present a `Community interest', therefore establishing in this case that the Commission `must set out the legal and factual considerations which led it to conclude that there was insufficient Community interest to justify investigation of the case' and that this statement of reasons is subject to judicial review. See also in this same respect Case T-37/92 BEUC and NCC v Commission [1994] ECR II-285, paragraph 47. (18) - See Case C-7/95 P Deere v Commission [1998] ECR I-3111, paragraph 34. See also the Court of Justice judgments to which the above case refers, in particular Joined Cases 142/84 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487. The judgments on decisions rejecting complaints on competition include the aforementioned cases of T-24/90 Automec v Commission (paragraph 80) and T-387/94 Asia Motor France and Others v Commission (paragraph 33). (19) - Case C-399/93 Oude Luttikhuis and Others v Verenigde Coöperatieve Melkindustrie Coberco [1995] ECR I-4515. (20) - Joined Cases C-319/93, C-40/94 and C-224/94 Dijkstra v Friesland [1995] ECR I-4471. (21) - See in particular Case C-250/92 Gøttrup-Klim and Others v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641, paragraphs 34 and 35. (22) - Case 71/74 Frubo v Commission [1975] ECR 563. (23) - Case C-399/93, referred to in footnote 20. (24) - See in particular the case of Deere v Commission referred to in footnote 19 (paragraph 18 et seq.).

LORD JUSTICE THOMAS: On 17th July 1987 in the Crown Court at Birmingham before Mars Jones J, the appellant was convicted of conspiracy to wound and a conspiracy to murder. On 29th October in the same year, at the Central Criminal Court, the appellant was convicted of a count of attempted murder, a count of murder and a count of conspiracy to murder. He was sentenced on 30th October 1987 to life imprisonment. The facts can be briefly summarised. On 10th October 1985 the appellant and another man entered a shop at a service station in Derby where the victim, Sucha Singh Atwal, was the co-proprietor. The appellant was carrying a .45 loaded Webley revolver which he fired at the victim at a range of about five to six feet narrowly missing him. The next victim was Sangtar Singh Sandhu who was a Sikh and a well-known supporter of the late Rajiv Ghandhi. At about 5.00 pm on 16th January 1986 he arrived home with a friend. He reversed his car into the driveway of his home as he switched off the ignition he was shot with a shotgun, from very close range, to the offside window of the car by the appellant. He sustained serious head injuries and lost the sight of his right eye. The third victim was Tarsem Singh Toor, who was a shopkeeper. He was prominent in politics and associated with Sandhu. At about 9.55 on 24th January 1986 he and his assistant were alone in the shop when the appellant entered the premises. He spoke to the assistant who turned away and then produced a gun. He fired at Toor who sustained terrible injuries to his head and died within an hour of his admission to hospital. The appellant had been hired by Sikh extremist terrorists to commit these offences and was paid £6,000 for the offences. The final count to which we have referred related to a conspiracy to murder a person unknown. The Lord Chief Justice and the trial judge considered the minimum term and recommended a minimum term of 30 years. In 1994 the then Home Secretary wrote to the appellant to tell him that the Home Secretary had set the tariff at 30 years, but said he was willing to accept written representations as to the period to be served in accordance with the statement that had been made to the House of Commons in July 1993. Representations were made which included the provision of a psychiatric report. On 6th July 2001 a revised tariff was set at 25 years. No reduction was made on the grounds of exceptional progress. As was the custom at the time, no reasons were given for the decision of the then Home Secretary. With the passing of the Criminal Justice Act 2003, those who had been sentenced by the executive to a minimum term, in those circumstances, became entitled to a review by the judiciary of that term. The appellant sought a review in accordance with section 276 and paragraph 3 of Schedule 22 of the Criminal Justice Act 2003. The matter was referred to Wilkie J. Submissions were made that the tariff term should be reduced to 20 years. In a judgment given on 21st July 2007, Wilkie J concluded: "Applying the provisions of schedule 21 of the 2003 Act there is no doubt that the appropriate minimum term for this offender would have been significantly above 30 years. The multiplicity of the attacks, the highly organised nature of its commission and the political motivation each served to push the minimum term beyond the starting point of 30 years for someone who killed for gain. The Secretary of State was undoubtedly right in reducing his tariff from 30 years to 25 years to reflect the discrepancy in the seriousness of the involvement in these offences between, respectively, the offender and Basra but, in my judgment, the Secretary of State was correct in declining to consider that the progress made whilst in prison to be sufficiently exceptional to reduce further the tariff. There is nothing in the current representations which causes me to differ from that view. The offender's progress during sentence can be taken into account when the decision is taken whether, and if so when, to release him on licence at the end of the minimum term. I am obliged to have regard to the time spent in custody on remand awaiting trial which in this case was 12 months and 12 days. As I have indicated, the term notified by the Secretary of State is significantly less than the minimum term which now would be fixed under Schedule 21 of the 2003 Act even taking that period fully into account. I can see no reason to reduce that term still further to reflect that fact. Therefore the minimum term which I set is 25 years." It is against the decision that time on remand should not count, as set out in the last paragraph of the judgment, that the appellant appeals with the leave of the Single Judge. The provisions of Schedule 22 to the Criminal Justice Act provide by paragraph 3(1), that on the application of an existing prisoner [which the appellant was] "the High Court must in relation to the mandatory life sentence order the early release provisions [under s.28(5)-(8) of the Crime (Sentences) Act 1997] apply to him as soon as he has served that part of the sentence which is specified in the order, which in a case falling in paragraph 2(a) must not be greater than the notified minimum term". The judge is also obliged to have regard to the matters set out in paragraph 4, the seriousness of the offence and other matters. The short point made by Mr Gledhill, on behalf of the appellant in this case, is that it was wrong of the judge to have increased the minimum term that had been notified to the appellant by in effect ordering that the time spent on remand should not count; this was contrary to the provisions of paragraph 3(1) which we have set out. To examine the correctness of that submission it has been necessary to investigate and receive evidence in relation to the practice of the then Home Office, now the Ministry of Justice, in relation to the fixing of tariffs at the relevant time, that is to say back in 1987. From what we have been told has been a diligent search made by the Ministry of Justice officials who now have charge of this matter, the officials are satisfied that, generally, at the time tariffs were fixed in 1987, time on remand was taken into account and the tariff ran from the date on which the offender was remanded into custody. If that is right, then to provide now that a prisoner should serve the tariff without taking into account the time on remand would be to increase the minimum term, which is not permitted by the provisions of paragraph 3. There is, however, one difficulty that has emerged. It appears that the appellant was remanded into custody on 16th October 1986. Whilst on remand he was convicted of another offence on 17th July 1987. He was then a serving prisoner until he was sentenced on 30th October 1987. If one looks at the whole of the period on which he was on remand, that amounts to a period of 377 days. But if one deducts the period whilst on remand, though when he was a serving prisoner, the period is 273 days. It is unfortunate that the practice of the then Home Office is somewhat obscure in relation to this. Through the diligence of Mr Gledhill, to whom we are greatly indebted for the help he has given us, he had discovered (without the assistance of the Ministry of Justice) a provision in the relevant departmental Lifer Manual which stated as follows: "Tariff for convicted serving prisoner A prisoner charged with a further offence will continue to serve the original sentence whilst awaiting trial for the new offence and is therefore not on remand. In such cases the tariff life sentence imposed must be calculated as follows: • it will run from the date of conviction for which the life sentence is awarded; • in cases where a determinate sentence prisoner reaches his or her release date before being sentenced for the new offence, and remains on remand for that offence, the tariff will be calculated from the first day of remand, ie the release date for the determinate sentence. These arrangements apply to the calculation of tariff in both mandatory and discretionary cases." It is not as clear a provision as one would like, but it does appear to be the practice that, at the relevant time, the period that a prisoner would have spent in prison when convicted for another offence and not on remand for the offence for which the tariff was set, did not have the period counted during which he was serving time as a convicted prisoner. Thus, in the present case, were it not for a matter to which we will shortly refer, the position would be that the time that was to run as if 273 days had been served and not the full 377. Nonetheless, it is clear that on 14 February 2007 a letter was sent by NOMS, on behalf of the Home Office to the appellant, telling him that his release date was 16 October 2011; as he was remanded into custody on 16 October 1986, this signified the 25 year period had been calculated from 16th October 1986, with no deductions for the period during which he was a serving prisoner. Bearing in mind the obscurity of the term of the paragraph we have set out from the Lifer Manual, but more particularly giving effect to the notification (even though informal) of the position to the appellant, sent to him on 14 February 2007, it seems to us that, in the particular circumstances, the judge could not have increased the length of the sentence by directing the whole of the time on remand was not to count. If diligent work had been done by those at the Ministry of Justice, then the letter of 14 February 2007 would not have been written in terms in which it was, but it was. It seems to us, bearing in mind the provisions of the statute and also being fair to this appellant, Wilkie J was not entitled to decide as he did in paragraph 15 of his judgment that the time spent on remand was not to count. We would merely observe that in the future it is imperative that those at the Ministry of Justice take the time and trouble to ensure that there is a proper note on the file in these old cases explaining the practice to the judge and also producing to him any relevant and material correspondence. It is obviously important in the public interest that where these reviews are carried out, the information before the learned judge is as full as is possible. We are particularly grateful to Mr Gledhill for the work he has done on this case and to the assistance we have had today from Mr Counsell in relation to these historic matters. We hope the decision we have reached will clarify the matter for the future and also be fair to this appellant.

OPINION OF MR ADVOCATE GENERAL MAYRAS DELIVERED ON 23 MAY 1978 ( ) Mr President, Members of the Court, I — The present case has been referred to this Court by the National Insurance Commissioner, who has jurisdiction in the United Kingdom to give a decision on appeal on certain social security disputes. The Court will once more be led to deal with the situation relating to cash sickness insurance benefits of workers ‘absent from Great Britain’ within the meaning of Regulation No 1408/71. In contrast to the Brack case on which this Court gave a decision bv judgment of 29 September 1976 ([1976] ECR 1430), the present case concerns a stay or residence of rather a special nature since the person concerned was imprisoned in another Member State. I shall therefore have to make a foray into the field of social security of prisoners which, if I am not mistaken, has never given rise to a decision by this Court. The Welchner case (judgment of 5 December 1967 [1967] ECR 331) in fact concerned a period of captivity as a prisoner of war. The main action is between a national of the Republic of Ireland, who is at present resident in England, and the Insurance Officer who represents the British Minister of Health and Social Security. On 9 January 1973, the Central Criminal Court in Dublin found Mr Kenny guilty of assault on his wife and sentenced him on that account to 12 months' imprisonment with a suspended sentence on condition that he complied with a prohibition preventing him from staying in the Republic of Ireland in the vicinity of his wife's place of residence for two years. He infringed this prohibition on 16 June 1973, was arrested and was committed on 28 June to serve a term of 12 months' imprisonment at Mountjoy Prison. During the term of his imprisonment Mr Kenny was found to be incapable of work on account of a duodenal ulcer and haematemesis certified even before he was imprisoned and, since his state of health required treatment which could not be administered in the prison or in the prison infirmary, he was transferred on 23 October 1973 to the Mater Hospital which was situated close to the prison but did not form part of it. He stayed there unul 2 November 1973 when he returned to the prison. He was released on 28 March 1974, having obtained remission for good behaviour. After his release Mr Kenny claimed cash sickness benefits from the English Department of Health and Social Security for the whole period of incapacity on account of his illness, both while he was in prison and while he was in hospital. It is not known exactly in what profession he was employed but it is established that, after serving in the British Army, the last post which he occupied on 19 June 1973, shortly before the period in respect of which he lodged his application, was in England; nor is it in dispute that during that period he was, within the meaning of Regulation (EEC) No 1408/71 of the Council, subject to the legislation of Great Britain, i.e. of part of the United Kingdom. The English authorities however refused to grant him cash sickness benefits for that period. The Insurance Officer's argument is as follows: Article 1 (a) (i) of Regulation No 1408/71 provides that for the purpose of that regulation ‘worker’ means, subject to the restrictions set out in Annex V, any person who is insured, compulsorily or on an optional continued basis, for one or more of the contingencies covered by the branches of a social security scheme for employed persons. According to Article 1 (c) ‘“competent institution” means: (i) the institution with which the person concerned is insured at the time of the application for benefit …’ Since the applicant was employed as a worker in the United Kingdom until 19 June 1973 the right to sickness benefits which he claimed had to be examined by an institution in the United Kingdom. Under Article 19 (1) (b), ‘a worker residing in the territory of a Member State other than the competent State, who satisfies the conditions of the legislation of the competent State for entidement to benefits, taking account where appropriate of the provisions of Article 18, shall receive in the State in which he is resident: … (b) cash benefits provided by the competent institution in accordance with the legislation which it administers …’ Under Article 18 (1), ‘the competent institution of a Member State whose legislation makes the acquisition, retention or recovery of the right to benefits conditional upon the completion of insurance periods shall, to the extent necessary, take account of insurance periods completed under the legislation of any other Member State as if they were periods completed under its own legislation’. Similarly, Article 22 (1) provides that: ‘A worker who satisfies the conditions of the legislation of the competent State for entitlement to benefits, taking account where appropriate of the provisions of Article 18, and: (a) whose condition necessitates immediate benefits during a stay in the territory of another Member State, … shall be entitled: (ii) to cash benefits provided by the competent institution in accordance with the legislation which it administers…’ Thus a worker who moves within the Community is entitled to cash sickness benefits if he ‘satisfies the conditions of the legislation of the competent State for entitlement to benefits’ and those benefits correspond to those provided by the competent institution ‘in accordance with the legislation which it administers’. However, section 49 of the National Insurance Act 1965, which was in force at that time and has since been re-enacted in practically identical terms in section 85 (5) of the Social Security Act 1975 provides that: ‘1. Except where regulations otherwise provide, a person shall be disqualified for receiving any benefit, and an increase of benefit shall not be payable in respect of any person as the beneficiary's wife or husband, for any period during which that person (a) is absent from Great Britain; or (b) is undergoing imprisonment or detention in legal custody.’ Such regulations were introduced by Regulation 11 of the General Benefit Regulations 1970, according to which the disqualification does not operate unless a penalty is imposed at the conclusion of criminal proceedings brought against the detainee. Similarly, it does not operate for any period during his sentence in which he is detained at the conclusion of criminal proceedings if during that period he was iiable to be detained in a hospital or similar institution in Great Britain as a person suffering from mental disorder unless, pursuant to any sentence or order for detention made by a court in such proceedings, he has undergone detention by way of a penalty in prison and was removed to hospital or to a similar institution while liable to be detained due to that sentence or order. Only imprisonment in connexion with an unlawful act or criminal offence leads to the suspension of the right to benefits: there is no suspension in the case of imprisonment for debt, in other words of an order for detention in default of payment. It will therefore be clear that the nature of the imprisonment or detention, according to the legislation of the United Kingdom, has an effect on the maintenance of the rights to sickness benefits of the insured person. In another connexion, the fact that the person concerned was detained in the prison infirmary or in a hospital separate from the hospital is relevant. Absence from Great Britain, which was the first reason for refusing him benefits and which is still quoted first and foremost in the Social Security Act 1975, obviously cannot be relied upon with regard to workers of the Member States moving within the Community, by virtue of the very provisions of Articles 18 and 19 of the regulation. However the competent institution maintains that the expression ‘imprisonment or detention in legal custody’ refers not only to imprisonment but to any detention which is sufficiently connected with criminal proceedings. In particular it concerns detention in hospital or in a similar institution as a result of criminal proceedings. Moreover, although it is true that the applicant was hospitalized, that occurred during the prison sentence which he was serving and not because he was liable to be detained in a hospital. Finally, the exclusion from receiving benefits applies to any detention wherever it takes place, not only in Great Britain. As a result the plaintiff in the main action was refused cash sickness benefits for the period in question on the ground that during the relevant contribution year he was undergoing detention in legal custody. If I have correctly understood the English system, the mere fact of imprisonment or detention in legal custody involves de piano disqualification from the right to cash benefits in addition to the penalty incurred as a result of Mr Kenny's failure to comply with the local banishment order placed on him. It is therefore a genuine additional penalty. Of course it will still be for the national court to decide whether the suspended sentence given by the Central Criminal Court, Dublin, constitutes a ‘penalty’ within the meaning of section 49 (1) (b) of the National Insurance Act 1965 and of Regulation 11 of the General Benefit Regulations 1970. Similarly the national court will have to decide whether detention near to a prison may under English law be treated as equivalent to detention in a prison. However, that court is immediately concerned to know whether the Community rules on the application of social security schemes to employed persons and their families moving within the Community or the fundamental principles upon which those rules are based limit the scope of the English rules to periods of imprisonment or detention in Great Britain, thus making disqualification from benefits arising from imprisonment or detention undergone in another Member State inapplicable to persons who are members of social security schemes or whether, on the contrary, those rules or those Community principles require the court to refer to the provisions of the English regulations. It was therefore prompted to refer to this Court the following three questions: ‘1. Whether within the scope of application of Regulation (EEC) No 1408/71 Article 7 of the Treaty of Rome is directly applicable in Member States. 2. Whether the competent institution of a Member State which is required by either Article 19 (1) (b) or Article 22 (1) (a) (ii) of Regulation (EEC) No 1408/71 to pay cash benefits to a worker who is not a national of that Member State in accordance with the legislation which it administers is entitled (1) to treat facts occurring in the territory of another Member State as equivalent to corresponding facts occurring in its own State being facts which had they occurred in its own State would have disqualified the worker concerned in part or in whole for receiving the benefits and (2) to withhold benefit accordingly. 3. Whether the answer to the preceding question would be different if the worker concerned were a national of the Member State of the competent institution.’ II — The abstract reply which this Court will have to give to those questions might well go beyond the present case; the problem is in fact whether detention, imprisonment or any other fact occurring in a Member State — and not only in the Republic of Ireland, whose system of criminal law is still very close to the English system, although since partition it has displayed certain original features — constitutes a valid ground for disqualification from the right to cash sickness benefits in the other Member States, not only in the United Kingdom, both with regard to a worker and to that worker's wife or husband. Contrary to the Commission's suggestion, I shall examine the questions in the order in which they have been asked but regrouping the first and third. 1. It is an established fact that Mr Kenny's incapacity for work preceded his imprisonment, which is hardly astonishing in view of the nature of his illness, and that if he had not gone to Ireland it would have been possible to begin paying him benefits at the end of the ‘qualifying period’. In addition it is an established fact that the applicant was, for at least a proportion of his detention, suffering from the same incapacity as that which he had been acknowledged or which he should have been acknowledged to be suffering from before his imprisonment. Finally, it is not alleged that the fact of his detention made it impossible for the English National Insurance authorities to instruct a doctor of their choice to certify the physical incapacity of Mr Kenny to continue or resume work. Moreover the National Commissioner recognizes that that incapacity persisted until his release on 28 March 1974. 2. The only reason why the Commissioner did not grant the applicant's request is that the grant of benefits in his case is discriminatory as against nationals of the United Kingdom who are not migrant workers and who are in the same situation and subject to English legislation. The Commission for its part illustrates this disparity in treatment by also quoting the example of a migrant worker who, instead of returning to his original State (the Republic of Ireland), decides to remain in the country in which he serves the prison sentence (the United Kingdom). This explains the question as to the ‘direct applicability’ of Article 7 of the Treaty of Rome, the first paragraph of which provides, as you are aware, that: ‘Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited’. The rule on ‘equal treatment with nationals’ constitutes, it is true, one of the fundamental legal provisions of the Community; as a reference to a set of legislative provisions effectively applied by the country of establishment to its own nationals, this rule is, by its essence, capable of being directly invoked by nationals of all the other Member States (for example see the judgment of 21 June 1974 in the Reyners case ([1974] ECR 651). It is therefore for any court in a Member State to draw the consequences of any infringement of the rule on non-discrimination, as this Court held in the judgment of 12 December 1974 in the Walrave case ([1974] ECR 1420). 3. Article 7 therefore prohibits a Member State from giving less favourable treatment to nationals of other Member States than to its own nationals. This provision, according to Mr Cohen Jonathan (Revue du Marché Commun 1978, p. 74, La Cour des Communautes et les Droits de l'Homme (The Court of the Communities and Human Rights) ‘is merely the expression of an economic need — to ensure freedom of movement — without a genuine social and humanitarian objective’. Is it possible to deduce from that rule that it requires a Member State not to treat the nationals of other Member States more favourably than its own nationals, because of legislative or other disparities? In other words, does Article 7 contain a directly applicable principle which the national courts must protect even if it turns out to the disadvantage of individuals? This is the problem which seems to concern the National Commissioner most and which he seeks to encapsulate with his third question. It seems to me to be clear that Article 7 is not concerned with any disparities in treatment or the distortions which may result, for the persons and undertakings subject to the jurisdiction of the Community, from divergences existing between the laws of the various Member States, so long as the latter affect all persons subject to them in accordance with objective criteria and without regard to their nationality (judgment of 13 February 1969 in the Wilhelm case ([1969] ECR 16). This finding applies equally to social security matters and to the law on cartels. Nor does the prohibition against discrimination on the ground of nationality prohibit the application of a different system of taxation according to the residence of the taxpayer, as the Finanzgericht Dusseldorf decided on 8 May 1974 (Sperl 1974, No 545). It does not follow from the Treaty that in tax matters the tax authorities must treat the territory of the Member States as national territory. If that were not so, it would be necessary to accept that another rule is just as mandatory, in other words, that a national must not be treated differently from his compatriots according to whether he lives in the Member State of which he is a national or in another Member State. I do not therefore think that, worded thus, this rule has ‘direct effects’ within the meaning given by this Court to that expression, in so far as it is capable of turning out to the disadvantage of individuals for that reason, moreover, those individuals will not be induced to invoke it. III — On the other hand, the fundamental principle of non-discrimination on the basis of nationality is the subject of specific rules laid down in the chapters of Title III of Part Two of the Treaty on the freedom of movement for workers, the right of establishment and the provision of services. Article 3 (1) of Regulation No 1408/71 incorporates this principle in the field of the application of social security schemes to employed persons moving within the Community: ‘Subject to the special provisions of this regulation, persons resident in the territory of one of the Member States to whom this regulation applies shall be subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of that State’. If it were considered necessary to understand ‘obligations’ as meaning also any fact entailing disqualification from a right to benefits, it would have to be accepted that an event which occurred in a Member State (the Republic of Ireland) must have the same effects as a corresponding event occurring in another Member State (the United Kingdom). If that were not so, ‘inverted’ discrimination might well be produced to the detriment of workers who are nationals of the United Kingdom and are in an identical situation or to the detriment of migrant workers who, rinstead of returning to their country of origin, decide to remain in the country in which they are imprisoned (in the present case, the United Kingdom). For my part, I consider that the term ‘obligations’ used in Article 3 of Regulation No 1408/71 refers to the strict field of social security: they are conditions imposed by national legislation with regard to the acquisition, maintenance or recovery of the right to social security (for example, the conditions for being subject to a social security scheme, the minimum number of working hours, whether the worker is an employed person or a worker treated as such and the minimum registration period), and not detailed rules which are extraneous to social security and depend for example upon the ‘civic’ status of the perons insured. Article 3 of Regulation No 1408/71, just like Article 7 of the Treaty, concerns the treatment of nationals of each of the Member States in the same way as nationals of the host State, but not the treatment of facts which have occurred on the territory of each of the Member States as equivalent to ‘corresponding’ facts which have occurred on the territory of the host State or the competent State. IV — But does such a rule prohibiting ‘inverted’ discrimination exist specifically in the field of social security as a result of a general unwritten principle of Community law? In the d'Amico case, on which this Court gave judgment on 9 July 1975 ([1975] ECR 891), Mr Advocate General Trabucchi was led to state as follows in his opinion of 12 June 1975: ‘It would indeed be too much to assert in general terms that the principle of territoriality is superseded in every respect in connexion with the application of national social legislation to Community workers, but it is likewise inadmissible to proceed from the opposite concept that, as a general rule, for the purpose of the application of national social legislation it is impossible to take cognizance of facts occurring outside the territory of the State, unless there is express provision to the contrary. The case-law of the Court shows us how facts occurring outside the territory of a specific Member State must be treated, even in the absence of specific provisions to this effect, as equivalent to corresponding facts which the national legislation considers as relevant only if they occur on the national territory’ ([1975] ECR 902-903). The Advocate General thus referred in particular to the judgment given in the Ugliola case (15 October 1969 [1969] ECR 363) which concerned the problem whether national legislation providing that a contract of employment was maintained during a period of military service applied to such a period completed in another Member State. That case did not concern social security but freedom of movement for workers. In that instance this Court held that, on the basis of the principle of equality of treatment implemented, under Article 48 of the Treaty, by the Community rules on the right to employment, periods of military service completed in another Member State had to be taken into account. However, in the field of social security this Court has clearly departed from that view, specifically in its judgment in the d'Amico case, by holding that for the acquisition of the right to benefits in another Member State there was no need to take into account periods completed in another Member State which in essence are equivalent periods but which are not, under the national law of that State, reckonable towards the qualifying insurance period for the acquisition of the right to benefit or in calculating the benefit and the completion of which before a claim is made is simply an additional condition of the right to benefits. Although it is true that no Community provision precludes disqualification arising from imprisonment in a Member State or in a third State, nor does any provision provide for such disqualification. Of course although the form drawn up by the Administrative Commission on Social Security for Migrant Workers does not contain imprisonment or detention in the list of circumstances justifying suspension of the payment of unemployment benefits, that does not by itself prevent a Member State from considering that fact as a ground for disqualification provided that there is a general principle of law common to the social security schemes of the Member States requiring it to be taken into consideration. Given the prospects for a ‘European judicial area’ I consider in fact that it would be necessary to take into account in each of the Member States corresponding facts which have occurred in another Member State; however, it would then be necessary for the facts to be accepted without discrimination where they are capable of turning out to the advantage of those concerned as well as where they may turn out to their disadvantage. In the above-mentioned judgment this Court stated that there was no need to take into account a faa which, though closely linked to social security, might turn out to the advantage of a worker moving within the Community; I cannot understand how in the present state of affairs this Court could rule that it is necessary to take into account a faa capable of turning out to the disadvantage of such a worker by virtue of an unwritten provision of Community social security law. In a decision which is already of long standing the Landessozialgericht Baden-Württemberg ruled on 30 August 1968 (Sperl 1968, No 3337) ‘that Article 8 of Regulation No 3 (which corresponds in essence to Article 3 (1) of Regulation No 1408/71) primarily aims at prohibiting any discrimination towards or disadvantage to migrant workers as against nationals living in the Member State but not the converse and at preventing more favourable treatment which might result from the Community provisions applicable to migrant workers’. V — It remains to inquire whether there is a general principle common to the laws of the Member States enabling the competent national institution to treat facts which have occurred on the territory of another Member State as equivalent to corresponding facts which, had they occurred in its own State, would have disqualified the worker concerned in part or in whole for receiving cash sickness insurance benefits. Faced with this question, which is one of law and not of faa, it would be unsatisfactory to reply that it is for the national court to decide whether a person imprisoned in a Member State of which he is or is not a national is in the same situation as nationals or persons coming from another Member State deuined in that State. The faa that Regulation No 1408/71 aims exclusively at co-ordinating the application of the social security schemes of the Member States and not at harmonizing them cannot result in permitting without more ado alignment on the system applicable to prisoners in the Member State of the court making the reference. Such a reference to national law would amount, in the absence of harmonization at a Community level, to aligning Community law on the law of the national court making the reference to this Court and on the concepts existing in that law. Before taking such a step it would be appropriate to undertake a thorough study of comparative law in order to find out what effect imprisonment or detention has on the right to cash sickness insurance benefits in all the Member States so as to be able to state that ‘in substance’ the situation is the same whether workers are imprisoned in the State of which they are nationals or in the State in which they work. I consider that such a study is as important, for example, as drawing up a table of the veterinary and public health inspection measures carried out at the frontiers of the Member States with regard to imports of animals and meat from third countries. For my part, I have only been able to make a foray into the system of my Member State of origin. It is necessary first to make a clear distinction between the problem which is of interest to us and the system with regard to prisoners carrying out prison work as far as compensation for industrial accidents is concerned. The European Interim Agreements on Social Security entered into within the context of the Council of Europe did not envisage that problem at all. However the parties to those agreements formulated a certain number of reservations listed in Annex III to each of those agreements. Those reservations related in particular, in the case of France, to the legislation on compensation for industrial accidents suffered by prisoners. The benefits laid down in that legislation could not be granted within the context of the interim agreements and were only granted if a specific agreement had been entered into with the country in question. In France this reservation was removed as from 1 October 1962. A decree of 19 November 1962 abolished the restriction contained in Article L 416 (5) of the code de la Securite Sociale (Social Security Code) relating to the guarantee against the risks of industrial accident of prisoners of foreign nationality carrying out prison work. As from 23 November 1962, prisoners of foreign nationality were therefore covered, on the same conditions as French prisoners, for any accident occurring on account of or during prison work. Next it is necessary to separate the problem of sickness insurance benefits in kind from the case of interest to this Court since the treatment given to prisoners is given free at the infirmary or hospital. As far as cash sickness insurance benefits (daily allowances) are concerned, the system with regard to prisoners is as follows: There is no need to make a distinction according to the nature of the internment, whether administrative internment, detention under remand or imprisonment under the criminal law, or according to whether the prisoner is ultimately discharged, released or acquitted. A person who is a member of a social security scheme and who at the date of his imprisonment would have been entitled to daily allowances as a result of ceasing work because of illness is entitled to those allowances during the period of his incapacity. The condition is that he must have ceased work before the imprisonment; it is therefore sufficient if the right to daily allowances has been acknowledged before the detention. The right to benefits is in any case maintained where the insured person was actually receiving them at the date of imprisonment; on the other hand, it is irrelevant that payment of the benefits is not resumed after release. The French Cour de Cassation has consistently held in its decisions, in particular concerning workers from North Africa, that the sickness insurance funds are under a legal duty to pay daily allowances which are not in the nature of remuneration or compensation for remuneration and which arise from the collection of contributions from the insured person as long as the illness involves for the person concerned incapacity to work, ‘without the need to be concerned with any other facts which would make it impossible for that insured person to take up employment as a wage-earner’. At the most, since prisoners cannot be given less favourable treatment than insured persons in hospital it is necessary to apply identical reductions in the daily allowances paid to those two categories of persons. Consequently, in French law imprisonment or detention does not exclude incapacity for work resulting from circumstances preceding imprisonment. I do not know exactly what the system is in the other Member States, apart from the United Kingdom and the Republic of Ireland, having regard to the state of the information given without prejudice by the Commission at the hearing, but there is no reason for Community law to align itself on the law of one of those Member States or for this Court to acknowledge that there is a general principle common to the laws of the Member States according to which all rules of a Member State relating to the imprisonment of workers are applicable to imprisonment in the other Member States. This is a real lacuna in Community law and, in this field as in many others, there is a wide field of action open to the ‘European legislature’. Finally, although ‘inverted’ discrimination may well occur against nationals who have not left the United Kingdom, caused by the failure to harmonize the social security schemes for prisoners, to adopt the equivalent treatment defended by the Insurance Officer would itself produce other disparities. It is sufficient to imagine the following cases: an English worker who was employed in another Member State (France for example) and resided in that State where, let us suppose, there was no such disqualification would be entitled to cash sickness insurance benefits even if he was imprisoned in England; a Frenchman who, after working in England, returned to France and was imprisoned on the same conditions as the plaintiff in the main action would therefore be given treatment different from that given to a Frenchman who, without having left France, would receive daily sickness allowances although he was in prison; finally, if the plaintiff had been imprisoned in France instead of in Ireland and if the disqualification provided for by the legislation of the United Kingdom had been applied to him he would suffer discrimination as against Frenchmen living in France. Such disparities, augmenting a penalty, are capable of indirectly restricting the freedom of movement of workers. To quote the expression used by a member of this Court (Mr Pierre Pescatore, Statement to the Parliamentary Conference on Human Rights, Vienna, 1971): ‘In the task of comparison and approximation which the Court of Justice will have to perform, it will be induced by the force of circumstances to have regard each time to the highest standard of protection since it is difficult to imagine how Community law could preserve its authority if it had to stoop below a level of protection considered as essential in one or other Member State’. As Mr Cohen Jonathan says once more (in the above-mentioned article, p. 97): ‘The task of the Luxembourg Court is to seek the highest standard of protection: it is unimportant whether it finds it in a provision of national or international law which is not unanimously accepted by all the Member States’. VI — Finally, whatever the reply given by this Court to the questions referred to it, I consider, as I have already said, that it is necessary for the Court not to go beyond the problem of the payment of cash sickness benefits to insured prisoners and to rule in short, as the Insurance Officer suggests in his written observations, that any fan occurring in a Member State and capable of turning out to the disadvantage of an insured person must be treated as equivalent to a corresponding fact which occurred in the competent State, extending this rule to the case of members of the families of insured prisoners. In this respect, it seems to me that it is not permissible to penalize seriously a husband or wife or children who are in no way responsible for the mistakes of the head of the family and who are not only deprived of the person who normally provides for their needs but in addition deprived of the means to deal with misfortune when an event occurs which would normally justify the intervention of the social security authorities. I conclude that the Court should rule that neither Article 7 of the EEC Treaty nor Articles 19 and 22 of Regulation No 1408/71 nor any principle of Community law or general principle common to the laws of the Member States whatever require the national courts to uphold the rights of nationals of the competent State who, because of the consequences attached by that State to detention in legal custody on its territory in relation to cash sickness insurance benefits, would be subject to less favourable treatment than workers or members of their families from other Member States residing in the competent State who would be imprisoned in similar conditions in their State of origin or in another Member State. ( ) Translated from the French.

LORD JUSTICE JUDGE: Andrew Chapman is now aged 20. He is a young man without previous convictions who, on 2nd October 2001 at the Bradford Magistrates Court, pleaded guilty to an offence of violent disorder. The Justices committed him to the Crown Court for sentence. On 5th November in the Crown Court at Bradford the appellant was sentenced to three years' detention in a young offender institution by His Honour Judge Scott. To understand the sentence imposed in this case we must put the offence into context. On 7th and 8th July 2001 massive violence erupted in Bradford City Centre. A full-scale riot lasted something like 12 hours. Two days later more violence, generated at least in part by the earlier violence, broke out in the Ravenscliffe Estate, some two miles or so from the City Centre. This outbreak was less intense in its violent manifestations and less sustained than the first riot and lasted about four hours. The television screens were filled with alarming images of the first riot but most of us were distant observers. For those innocently present at either scene going about their lawful business, for those who became accidentally involved in the incident, for those targeted directly or indirectly by the violence, or whose homes were in its vicinity, and for the police performing their duty to maintain public order, these were horrifying incidents. Under the leadership of the resident judge at Bradford, His Honour Judge Gullick, the judiciary in the Crown Court resolved that so far as it lay within their powers and subject always to individual and specific mitigation available to any defendant, the sentences arising from or connected with this violence should send out a clear and unambiguous message, the object of which was to discourage and prevent any repetition of those violent scenes: the consequences of involvement in this kind of criminal behaviour would be severe. In the first case arriving in the Crown Court arising from the first disturbance, on 23rd November 2001, Judge Gullick made the following observations in public on behalf of himself and his judicial colleagues: "Any participation whatsoever of whatever duration in an unlawful and riotous assembly of that type, irrespective of its precise form, derives its gravity from becoming one of those who by sheer weight of numbers pursued a common and unlawful purpose. On the one hand, I must have regard to the total picture as it has been presented to me and on the other I must pay heed, as I have done, to the specific acts of an individual such as yourself. However, it must be made crystal clear to everyone that...each individual who takes an active part by deed or by encouragement is guilty of an extremely grave offence simply by being in a public place and being engaged in a crime against the peace. While it is plain that there were many, many people on the street, a goodly number of whom for a whole variety of reasons may never be prosecuted, may never be called answer for the acts which they perpetrated and thus would escape punishment, nevertheless in my judgment it is neither wrong in principle nor a matter which should affect sentence of those who have been prosecuted that the appropriate sentence should be given to those that are before the court. Those who choose to take part in activities of this type must understand that they do so at their peril. It must be made equally clear, both to those who are apprehended and to those who might be tempted to behave in this way in the future, that the court will have no hesitation in marking the seriousness of what has occurred and it will act in such a way in the present case as will, I hope, send out a clear and unambiguous message as to the consequences to the individual. It is a message which I trust will deter others from engaging in this type of behaviour in the future." He went on: "The people of this city are all entitled to look to the law for protection and to the courts to punish those who behaved so violently and viciously. It would be wholly unreal therefore for me to have regard to the specific acts which you committed as if they had been committed in isolation. In my judgment it would be a wholly wrong approach to take the acts of any individual participant in isolation. Those acts were not committed in isolation and, as I have already indicated, it is that very fact which constitutes the gravity of this offence. What the court has to pay regard to is the level and nature of the violence used, the scale of the riot, the extent to which it is premeditated, the number of persons engaged in its execution and finally, in the context of the overall picture, the specific acts of the individual defendant." In that case the judge was dealing with a defendant who had been involved in the first and most serious offence of riot. Nevertheless, the observations made by the judge apply equally to the second offence. We wholeheartedly and unhesitatingly endorse them, and adopt them as our own. They reflect the appropriate judicial response to sustained and violent public disturbances. In truth they reflect the fact that the maintenance of the peace of the community, and the protection of the public and the police doing their duty, is an imperative. The sentence now under consideration must be seen in this context. This is not the case of a young man who participated in the first and worst outbreak of public disorder, but one who took part in the second copycat outbreak which in the end had less broad impact than the first. That distinction has been reflected in the charges which the Crown Prosecution Service has brought. In relation to the first incidents there have been many charges of riot for which the maximum sentence is 10 years' imprisonment. For the second incident the charges have largely, if not wholly, been limited to violent disorder for which the maximum sentence is five years' imprisonment. Nevertheless, however it is put, although the second incident was less serious than the first riot, it was never less than serious. The police had to attend in numbers, wearing full riot gear to contain and control the situation. Quite how long they might have been at risk was not known to them when they started carrying out their duties. A very large number of youths estimated variously at between 75 and 100, many wearing masks or hats to hide their faces, armed with bats and staves and stones, attacked the police by throwing stones at them. Property was damaged, although much less than in the first riot. A car was set on fire: again, an incident which on its own was much less significant than the incidents of damage on the first occasion. Additionally, at one stage a resident of the area of Asian origin was targeted just because of his racial origin. The appellant pleaded guilty and the judge's attention was drawn to a sentencing decision in another case passed by His Honour Judge Gullick (R v Jones). The basis of the plea was that the appellant had been involved for about 15 minutes. His case was that he had spent much of the evening with friends and had not been present at the outset. His account was that he had been walking home when he passed the disturbance and recognised some people that he knew who were participating in it, and so he became actively involved. Video footage taken by the police showed the appellant throwing stones. He did not however just pick up a stone which happened to be in front of him and hurl it at the police. A few minutes later he was seen to go to a wheelie bin in which stones had already been collected by other youths, and he re-armed himself in order to get more stones to throw in the direction of the police. When the judge's attention was drawn to Judge Gullick's decision in Jones, he indicated to counsel that he would pass sentence on the defendant as he thought appropriate, but he would discuss the case with Judge Gullick, and having discussed it, if he felt that the sentence imposed on this defendant was inappropriate then he would bring the case back to court and reduce the sentence. He promised that he would not increase it. He heard the mitigation. The mitigation has been repeated before us in a careful argument by Mr Hendron on the appellant's behalf. What it comes to is that this is a young man of good character, who has pleaded guilty and whose involvement, according to the mitigation, was not prolonged. The argument on appeal then proceeds to ask us to consider Judge Gullick' decision in Jones, just as Judge Scott was asked to consider it. What seems clear that the judge would undoubtedly have done what he promised to do, which was to discuss the sentencing decision in Jones with Judge Gullick, and from that it seems to us that the fact that he chose not to ask this appellant to return to court for re-sentencing purposes means that Jones must have had some significant personal mitigation which is not available to the appellant. In the end, however, the question is whether the sentence for this young man's participation in this scene of violent disorder was manifestly excessive, having regard to the general judicial response that deterrent sentences should be passed to make it absolutely clear that behaviour of this kind and involvement in it was intolerable. The judge said to the appellant: "You take responsibility for your own actions but you must understand that by doing that you encourage others either to join in or to carry on doing what you are doing and that is why violent disorder is a serious offence." He reflected on the maximum sentence in the case; he took account of the credit due to the appellant for his plea and for the fact that he had no previous convictions, and made allowance for the further fact that in relation to his own personal participation he was not identified as a ringleader. In our judgment the sentencing decision in this case fell within the appropriate range of judicial sentencing decisions. Accordingly, the appeal must be dismissed.

His Honour Judge Richard Seymour Q.C. : Introduction In this action the claimant, Dr. Yehu Azaz, makes a number of claims against the first defendant, Mrs. Rena Denton, and the second defendant, Self Healing Meditation Healing Centre ("the Centre"). The Centre is a company limited by guarantee and a registered charity. It was incorporated on 8 September 1988 under the name Denton Realization Healing Centre Charitable Trust. The name of the Centre was changed on 10 November 1992 to The Self Realization Healing Centre Charitable Trust. It adopted its present name on 22 December 1998. For the purposes of this judgment it is not necessary to distinguish between the various names of the Centre over time, and I shall simply refer to it as "the Centre" no matter what its name in fact was at the time of which I am writing. The activities of the Centre focus on the study and practice of the art and science of meditation and healing. Mrs. Denton, as I understand it, established the Centre, possibly in conjunction with her husband, Mr. Peter Denton. She was born on 4 November 1930, and so is now 78 years of age. Her husband, I am told, is rather older, being now 81 years old. Mrs. Denton seems to be, or to be regarded by some as, the spiritual head of the Centre. She also seems to claim, or to have attributed to her by some, the status of "Guru". While the activities of the Centre appear to include teaching meditation and healing on both residential and non-residential courses, its base ("the Base") at Laurel Lane, Queen Camel, Yeovil, Somerset is operated as a residence for some members of the organisation. Those who reside at the Base seem to participate in communal living, with each of the residents contributing to the work necessary to maintain the Base and to offer the courses of instruction made available. Dr. Azaz was born on 24 January 1959. After attending Henley Grammar School he proceeded to University of Nottingham to read medicine. He graduated from the prestigious Medical School with a 2.1 degree in medical science in July 1979. He then remained in the Medical School for a further two years to complete his medical training, obtaining the degree of BM.BS in July 1981. Subsequently Dr. Azaz obtained further qualifications, DCH in September 1985 and MRCP in October 1985. After his training Dr. Azaz held a number of medical posts. The detail of those posts is not presently material. The last was as a Registrar in paediatrics at Taunton and Somerset Hospital in Taunton, a position which Dr. Azaz held between February 1990 and January 1991. On 23 September 1989 Dr. Azaz married the former Lizanne Davies. At some point Dr. Azaz developed an interest in alternative healing. It seems that he decided that when his then current medical contract, at Taunton and Somerset Hospital, came to an end in January 1991 he would not seek a further medical post immediately, but he and his wife would investigate undertaking a course in healing. Whilst he was in practice as a doctor Dr. Azaz employed the services of Elliott Bailey, life assurance and pension consultants, in relation, in particular, to arranging pension schemes, and other investments, for him. A director of that organisation was Mr. Peter James. In an attendance note made by Mr. James of a meeting with Dr. and Mrs. Azaz on 23 July 1990 Mr. James recorded:- "Yehu's contract as a doctor at the Taunton Hospital ends in January 1991 and he has decided to cease practising as an orthodox doctor in paediatrics, and intends to devote more time to unorthodox medicine. He hopes to attend a healing course in France during 1991." In a letter dated 16 April 1991 to Mr. James Dr. Azaz indicated that he was no longer working and that he and his wife intended to spend the months of June and July in South Africa. In his reply, dated 25 April 1991, Mr. James noted, "that Yehu is no longer receiving a salary". As I understand it, Dr. Azaz and his wife commenced a healing course in France. However, it appears that they did not complete that course. In a letter to a friend, Stephanie, dated 22 September 1992 they gave an account of what they had been doing for the last year and how they intended to proceed in the immediate future:- "We have been on the move for the last year and are writing to let you know our latest news. Over the last twelve months we have been living in rented accommodation in the Wye valley and in Somerset. During this time we have been looking for the right property in which to live and set up a healing practice. Last month we were invited to join an existing healing centre and this has led to a major change in our plans. We have decided to "seize the day" and have chosen a new way of life which will involve us living and working with a small group of people as one family. The Centre is a charity providing training, residential courses, retreats, individual healing and counselling and animal healing. We will be sharing in this work and in the day-to-day running of the centre. This is a huge change for us and we will be gradually settling in over the next few months. Before we get into the swing of full-time healing work we have decided to go travelling for four months and intend to leave at the beginning of next year." It seems that some time in 1990 Dr. Azaz first encountered Mrs. Denton. Mrs. Denton, according to Dr. Azaz, had various views about spirituality and healing which she communicated to Dr. and Mrs. Azaz, and they became persuaded of the wisdom of those views. In September 1992 Dr. and Mrs. Azaz decided, or were persuaded, to become resident at the Base. The name of the Centre and the address of the Base were set out in the letter to Stephanie from which I have quoted. It seems that on 7 January 1993 Dr. and Mrs. Azaz had an interview with Mr. David West, a partner in the solicitors' firm, Taylor Joynson Garrett. Mr. West made an attendance note of the interview, of which a copy was put in evidence, and he followed that up with a letter to Dr. and Mrs. Azaz dated 12 January 1993. The attendance note included:- "Dr. and Mrs. Azaz have moved to a new healing centre which is a registered charity and want to transfer all their assets to it before they set off on their trip. DEW [Mr. West] warning them very strongly about the dangers of what they propose doing. DEW pointing out the charity could change its nature or they could fall out with the other people. Dr. and Mrs. Azaz saying they understood his misgivings but had thought about it very deeply and having lived with the people for three months were absolutely satisfied they were making the right decision. They have reached an "arrangement" with the six people who run the charity and are happy with it. DEW saying the charity would have no liability to them at all if they should leave in the future. DEW suggesting they make a large contribution but retain some capital just in case. As it is they will not even have a house of their own. Dr. and Mrs. Azaz were adamant that everything must be transferred to the charity. DEW suggesting they consider waiting perhaps a year or at least until after their trip and then give three-quarters of what they own. Dr. and Mrs. Azaz again refused to consider this option. They have discussed it with Ian McFarlane and Peter James but have not told their families of the financial side of their new life with the charity. They may do so in a few years time. DEW explaining that he must advise them of the pitfalls of what they are doing but finally having to concede that we would do the transfers for them." The letter dated 12 January 1993 included the following:- "I was very glad to see you both on Friday when I made clear my concern about your plans and I thought I should set these out in writing because the situation is critical. I appreciate that you have both thought matters through and have taken great care in doing so but you will know that, even so, people can still make mistakes. Apart from that, events can happen which are totally unforeseeable and out of one's control. Both of you are free to do whatever you like with your assets as responsible adults. The substance of what you have decided to do is to give away Lizanne's substantial fortune which derived from her father's estate and various family trusts to a charity which at law is a separate legal entity. The money which you put into the Charity will no longer be your money and cannot be used to benefit you unless it is to pay your reasonable expenses and salary and these payments must be agreed by the Directors. The Charity will in no sense just be an extension of you. The Charity Commissioners will expect Accounts to be submitted each year. I realise that you respect the other Directors of the Charity and wish to be totally committed to them and to show your commitment. However as you both know and it has already been Lizanne's experience, the situation can change and, in your case, should it change the end result will be drastic. It is likely Yehu will be able to earn his living and his keep but if, for instance, you should have separated or divorced, Lizanne will be financially exposed and may not be able to keep herself. This may be the lot of many people but it must be considerably more difficult where somebody has already enjoyed substantial assets during her life. You are both giving away your assets to something you believe in but I have to say that it is Lizanne who is giving considerably more and is likely to be more exposed in the future. The money can never be repaid to you from the Charity. This means that if for any reason you break up with the Charity or are sacked or retire, there will be no way in which you can retrieve any of the money you have contributed. Do you know what arrangements will be made if you fall sick (and are not healed) or retire? Peter James telephoned me today. We are both worried about what you are doing. What is particularly worrying to both of us is that you have not seen fit to mention all this to David and of course we will not do so. The experience of both of us having viewed human behaviour for a number of years is that what can start off with starry-eyed enthusiasm can end, five, ten or twenty years down the line, in sadness and disillusionment. My heartfelt advice is that you should on no account give your whole fortune to the Charity. We did discuss putting off your decision until you returned from your World trip. In any event you could consider transferring say, a fraction of your assets now and then another fraction in a year's time and more if you still wanted to over the years. In this event you would be contributing to the Charity but also retaining a certain amount of independence. There is no reason why having seen the Charity in action for a number of years you should not in the future transfer your fortunes or a substantial part, to it. You will have committed your time and talents and a chunk of your assets to the Charity but have retained the ability to decide whether or not to continue to do so in the future. You will also have retained the freedom of choice which must be essential to you, to decide what interests you both wish to pursue in the future. Having divested yourself of all your assets you take away completely that choice. By retaining at least part of your assets, you have the ability not only to meet your future financial needs, but also to cope with your changing attitudes and interests which are bound to develope [sic] over the next ten or twenty years." The claims of Dr. Azaz in this action were all said to be consequent upon what was alleged to have happened at the time Dr. Azaz and his wife went to live at the Base, and subsequently. The first element of claim advanced on behalf of Dr. Azaz was based upon the contention that he was encouraged, on starting to live at the Base, and persuaded by the exercise of undue influence on the part of Mrs. Denton, acting on her own behalf and on behalf of the Centre, to hand over to the Centre virtually everything he owned. His assets included money, or items readily convertible into money, as well as works of art, furniture, books and miscellaneous items. In this action the assets which Dr. Azaz was said to have handed over to the Centre which were not money or converted into money were described at the trial as "the Possessions", and it is convenient to use that expression in that sense in this judgment. By contrast it is convenient to refer to the assets which were said to have been handed over which were money, or readily convertible into money, as "the Cash". Hereafter in this judgment I shall refer to the claim in respect of the Possessions as "the Possessions Claim" and the claim in respect of the Cash "the Cash Claim". I shall refer to the Possessions Claim and the Cash Claim together as "the First Element of Claim". In addition to the First Element of Claim, it was contended on behalf of Dr. Azaz that, acting under the undue influence of Mrs. Denton, he had abandoned his medical career, and instead had worked for the Centre between September 1992 and December 2003 for pitiful wages. Those circumstances were alleged to give rise to a second element of claim ("the Second Element of Claim"). It is convenient to distinguish between that part of the Second Element of Claim which consisted in the complaint that Dr. Azaz had been induced to abandon his medical career ("the Career Claim") and that part which comprised his work for low wages ("the Work Claim"). The way in which the First Element of Claim and the Second Element of Claim were pleaded in the Particulars of Claim was:- "36. From about October 1991, the Claimant had accepted the teachings and beliefs of the First Defendant and was under her actual undue influence as the leader of this spiritual or quasi-religious group. 37. Further, or in the alternative, the relationship between the Claimant and the First Defendant (as set out above) was a special relationship from which undue influence is to be presumed to have been exerted over the Claimant by the First Defendant as the First Defendant was his spiritual or quasi-religious adviser. 38. As the First Defendant was at all times acting as spiritual leader of the Second Defendant, the Claimant was also under the influence of the Second Defendant. 39. Whilst under that undue influence and as a direct consequence thereof, the Claimant: 39.1 Handed over to the First and/or Second Defendant the sums of money identified in the First Schedule to these Particulars of Claim [that is, the Cash] – totalling over £100,000; 39.2 Handed over to the First and/or Second Defendant or allowed the general use of all his other possessions [that is, the Possessions]; 39.3 Completely abandoned his career as a qualified Doctor in favour of his work for the First and Second Defendant; and 39.4 Worked for the First and/or Second Defendant from the summer of 1992 until December 2003 without receiving any proper remuneration for the tasks carried out or any compensation for the loss of his income or career as Doctor. 40. By the letters dated 2nd May 2007, as he was entitled to do, the Claimant avoided the gifts of money identified in the First Schedule to these Particulars of Claim as against both the First and Second Defendants; demanded the return of his possessions and sought damages. The Defendants have failed to return or repay that money or any part thereof, or to return any of the possessions or to pay any damages. 41. In these circumstances, the Claimant is entitled to: 41.1 Repayment of each of the sums identified in the First Schedule to these Particulars of Claim; 41.2 Return of all possessions identified in the Second Schedule to these Particulars of Claim and/or equitable compensation or damages representing their value; 41.3 Damages and/or equitable compensation for the period October 1991 until December 2003 based on (a) a reasonable remuneration for the work carried out in that period for the First and/or Second Defendant or (b) compensation for the remuneration that he would have received had he continued his career as a Doctor. 41.4 Damages and/or equitable compensation for a reasonable period after December 2003 to take account of the losses sustained by the Claimant whilst returning to a senior position in his career in medicine. … 43. Alternatively, at the time each sum identified in the First Schedule was paid to the First and/or Second Defendant and when the possessions were made available for general use, there existed a relationship of trust and confidence between the Claimant and the First Defendant (both as acting or [sic – presumable "on" was meant] her own behalf and as agent for the Second Defendant). 44. The gifts of money and allowing the possessions to be used generally were transactions that were so disadvantageous to the Claimant and/or so substantial as to be transactions that call for an explanation from the First and/or Second Defendants to rebut the presumption of undue influence that exists where such transactions take place where a relationship of trust and confidence exists between the parties. 45. The Claimant received some independent advice about some of those transactions but, following the First Defendant's teachings (as set out in paragraph 9.4 above), ignored any advice received and, accordingly, the First and/or Second Defendants are unable to rebut the presumption that the transactions were tainted by the undue influence that is presumed to exist. 46. As a result of the matters set out in paragraph 43 – 45 above, the Claimant was entitled to avoid each of the transactions and, by the letter dated 2nd May 2007 did avoid those transactions and became entitled to: 46.1 Repayment of each of the sums identified in the First Schedule to these Particulars of Claim; 46.2 Return of all possessions identified in the Second Schedule to these Particulars of Claim and/or equitable compensation or damages representing their value. … 48. Alternatively, at all material times, the possessions set out in the Second Schedule to these Particulars of Claim belonged to the Claimant who allowed them to remain at the Centre for general use. 49. By the letter dated 2nd May 2007, the Claimant demanded return of all of those possessions, but the First and/or Second Defendant have wrongfully failed to return any of the items set out in the Second Schedule and have thereby wrongfully interfered with them. 50. As a result of the matters set out in paragraph 48 and 49 above, the Claimant is entitled to: 50.1 delivery up of all of those goods together with damages from the wrongful retention of those goods between 15th December 2003 and the date of delivery up; or 50.2 the market value of the goods, together with damages for wrongful retention of those goods for that period. … 52. Further (or in the alternative) in relation to the possessions identified in the Second Schedule to these Particulars of Claim – the First and Second Defendants were bailees of those possessions and owed the Claimant a duty to take reasonable care of those possessions and to return them to the Claimant upon demand. 53. The Claimant was and remains the owner of those possessions and was and is entitled to immediate return of them upon demand. 54. By the letters dated 2nd May 2007, the Claimant demanded the return of those possessions, but the First and Second Defendants have failed to return them to the Claimant. 55. By reason of the matters set out in paragraphs 52 to 54 above, the Claimant has suffered loss and damage being the market value of those possessions." In the passage from the Particulars of Claim which I have quoted, although the Second Element of Claim was referred to at paragraphs 41.3 and 41.4, no real foundation for any claim or loss or damage was pleaded. Those matters were addressed at paragraphs 57 to 63 of the Particulars of Claim, which also included allegations which appeared to be directed at the third element of the claim of Dr. Azaz, namely for damages for personal injuries ("the Injury Claim"):- "57. At all material times after summer 1992 when the Claimant began living and working at the Centre, the following duties were owed to the Claimant by the First Defendant: 57.1 A duty of care in the First Defendant's capacity as spiritual or quasi-religious adviser to the Claimant to provide reasonable and competent advice to the Claimant, (including honest, accurate and true advice as to the efficacy of her alleged personal power to heal and the Claimant's spiritual skills or qualities). 57.2 A duty of care in the First Defendant's capacity as spiritual or quasi-religious advisor and counsellor to the Claimant to take reasonable care of and reasonable steps for his physical and mental well being and health. 57.3 A personal duty of care as Founder and Head of the Second Defendant, to take reasonable care of and reasonable steps for the Claimant's physical and mental well being whilst living at the Centre and whilst working at the Centre. 57.4 A duty of care in the First Defendant's capacity as spiritual or quasi-religious advisor and counsellor to the Claimant to take reasonable steps for his financial well being (which included a duty not to enrich herself or the Second Defendant at the expense of the Claimant). 57.5 A duty not to misuse confidential information she received in her capacity as spiritual or quasi-religious advisor to the Claimant (including information as to his financial and other assets) for her own benefit or for the benefit of the Second Defendant. 58. At all material times after summer 1992, the following duties were owed to the Claimant by the Second Defendant: 58.1 A duty to take reasonable care of and reasonable steps for the Claimant's health and safety (including his physical and mental well being) whilst he was living at the Centre and/or whilst he was employed by the Second Defendant. 58.2 A duty to supervise the activities of the First Defendant so as to ensure that the personal belief she claimed to have as to the benefits of meditation and her personal belief in her own special ability to heal others did not result in the rejection of conventional medicine for staff and residents at the Centre, or other health and safety assessments and precautions. 58.3 A duty of good faith and care to the Claimant as an employee of the Second Defendant which included a duty not to take financial advantage of the Claimant. 58.4 A duty not to misuse confidential information received by the First Defendant in her capacity as spiritual or quasi-religious advisor to the Claimant for the benefit of the Second Defendant. 59. Further, at all material times, the Second Defendant was vicariously liable for the actions of the First Defendant in her capacity as Founder of the Centre and the person in day to day control of the Centre and its employees. 60. The First and Second Defendants were in breach of the duties relating to the Claimant's financial position (as set out in paragraphs 57.4, 57.5, 58.3 and 58.4 above in that: 60.1 The First Defendant failed to take reasonable steps for the Claimant's financial well being and/or enriched herself and the Second Defendant at the expense of the Claimant by: 60.1.1 Persuading the Claimant to make each of the gifts of money set out in the First Schedule to these Particulars of Claim. 60.1.2 Persuading the Claimant to allow the possessions set out in the Second Schedule to be made available for general use. 60.1.3 Persuading the Claimant to give up his career in medicine and to work for a nominal sum for herself and the Second Defendant at the Centre. 60.2 The First Defendant misused confidential information received in her capacity as spiritual or quasi-religious adviser to the Claimant to identify the assets that he could be persuaded to hand over to her or to the Second Defendant. 60.3 The Second Defendant is vicariously liable for the breaches of duty set out in paragraphs 60.1.1, 60.1.2, 60.1.3 and 60.2 above. 60.4 The Second Defendant was in direct breach of the duty of good faith to the Claimant (as set out in paragraph 58.3 above) in that the Second Defendant received some or all of the money identified in the First Schedule to these Particulars of Claim from the Claimant and benefitted [sic] from the use of the general use [sic] of the possessions at [sic] set out in the Second Schedule in that they remained at the Centre, and obtained the services of the Claimant as an employee without paying him a reasonable remuneration for the work carried out. 60.5 The Second Defendant misused confidential information received through the First Defendant about the Claimant's financial position and the possession [sic] he had without which those transfers of funds and the use of his possessions could not have been arranged. 61. As a result of the matters set out in paragraph 60 above, the Claimant has suffered loss and damage. Particulars 61.1 In relation to the money set out in the First Schedule, the measure of the Claimant's loss is the value today of the property and assets that he would own, if he had not been persuaded to hand all that money over to the First and Second Defendant. 61.2 In relation to the possessions handed over for general use and not returned to him, the measure of loss is the market value of those goods at the date hereof. 61.3 In relation to giving up his career as a Doctor, the measure of loss is the difference between (a) the salary that the Claimant would have received if he had remained in his career (together with the value of all other benefits including pension and national insurance contribution based benefits) until retirement and (b) the sums actually received. Alternatively, the measure of damages is the difference between the salary received for working at the Centre and a reasonable salary for the work undertaken. 62. Further, in breach of the duties owed to the Claimant in relation to his health and safety and the duty of good faith (paragraphs 57.1, 57.2, 57.3, 58.1, 58.2 & 58.3 above): 62.1 The First and Second Defendants failed to undertake any risk assessments or to have any health and safety policy dealing with the health or safety of employees at the Centre, or to take any steps to consider the effect on their health of the regime for those living and working at the Centre or the effect upon them of the teachings and beliefs of the First Defendant (as set out in paragraphs 7 to 9 above). 62.2 The First and Second Defendant rejected the use of conventional medicine in favour of "healings" from the First Defendant and from other members of "The Family" either without any genuine belief in the effectiveness of those "healings" or with complete disregard for the situations in which those "healings" were shown to be ineffective. 62.3 The First Defendant advised and counselled the Claimant to undergo these "healings" in lieu of conventional medical treatment and the Second Defendant is vicariously liable for that conduct. 62.4 The First and Second Defendant exposed the Claimant to a foreseeable risk of injury from the activities at the Centre. 63. As a result of the matters complained of in paragraph 62 above, the Claimant has suffered pain suffering and loss of amenity and loss and damage in that: 63.1 He became ill as a result of the stress caused by the work and the spiritual or quasi-religious environment within the Centre and the pressure to conform without question to the beliefs of the First Defendant; and, 63.2 Having become ill, he was then provided with ineffective "healings" by the First Defendant rather than conventional medical treatment which exacerbated his condition and delayed any prospect of recovery. Particulars of Pain and Suffering The Claimant began to suffer from a dissociative state in late 1996 which was treated intermittently by conventional medicine under a psychiatrist when the Claimant was living with his parents, but not when he returned to the Centre. By the time the Claimant began to contemplate leaving the Centre he had depressive symptoms and high anxiety levels. After leaving the Centre, the Claimant required psychiatric assessment and care, treatment with antidepressant medication and expert counselling to assist him through the period after he left the Centre. The Claimant had to be assisted back into a world where he was able to think for himself and make decisions, rather than merely conform to the demands and teachings of the First Defendant. … Particulars of Loss and Damage The Claimant was unable to resume his career in medicine upon leaving the Centre on 15th December 2003, but had to recover from the physical and mental illness. As a result the resumption of his career resumption [sic] was delayed by a period of approximately 2 years. A Schedule of Loss and Damage is attached as the Third Schedule to these Particulars of Claim." Served with the Particulars of Claim, and said in the Particulars of Pain and Suffering to be relied upon in support of the Injury Claim, was a report ("the Tylden Report") dated 22 June 2004 of Dr. Elizabeth Tylden, a consultant psychiatrist. In the Tylden Report Dr. Tylden said that Dr. Azaz had first been referred to her in 1997, and that she had seen him on 10 March 2004 and regularly thereafter until the date of the Tylden Report. The Tylden Report concluded:- "He tells me that before he left the centre, he had told his partner Miriananda that he felt suicidal. I found him to be depressed and slightly abstracted, he complains of hallucinations and disturbed dreams, but appears to be slowly recovering. From what I have been told by Dr. Azaz and his parents Dr. Azaz had a personality change under strong suggestion following his sessions with Mr. and Mrs. Denton. Their suggestions had left him under their direction until they finally rejected him early this year since when he has returned to his previous personality and his interest in his profession which he had been persuaded to abandon while in the Self Realisation Healing Centre. I am of the opinion that the undertaking signed by Dr. Azaz on 23 January 1996 was signed when under the influence of the self healers just before he became mentally ill. I am interested in the fact that he signed as Yehu Azaz and wrote S Y Azaz underneath. The second document dated 11 January 2004 was signed when he was leaving the centre this year shortly before I myself and Dr. Orr his local Consultant Psychiatrist were called in by his G.P. Dr. Smith because of his psychiatric disturbance. It is signed clearly Simon Azaz although shortly after that date Dr. Azaz reverted to his previous name of Yehu Azaz. In my opinion the Healing Centre had a duty of care towards Dr. Azaz which they breached during his illness in 1996 and his present illness in 2004 by not encouraging him to seek proper medical care in the face of life threatening illness. I am also of the opinion that Dr. Azaz's actions between 1992 and 2004 were dictated under the influence of Mr. and Mrs. Denton and other members of the Healing Trust and that his experiences while there caused his two episodes of severe dissociative mental illness. … " Both of the two documents mentioned in the Tylden Report were put in evidence. The earlier ("the Joining Agreement"), dated 23 January 1996 and signed by Dr. Azaz in his normal signature, but with the initials S.Y. preceding his surname printed in manuscript below the signature, said this:- "AGREEMENT FOR JOINING THE SELF-REALIZATION HEALING CENTRE I joined the Self-Realization Healing Centre in September 1992. I had been given the opportunity to join the Self-Realization Healing Centre, and wanted to take up this offer. I understood that during the period of my training I would be taught and guided by the teachers and healers at the Self-Realization Healing Centre. I was certain of my choice, and made it without any pressure or influence being exerted by those I knew or anyone at the Self-Realization Centre. I understood that in doing so I would become part of the family of healers and counsellors who lived and worked at the Self-Realization Centre, and would be working for the Self-Realization Healing Centre Charitable Trust. I understood what was involved in joining the Self-Realization Healing Centre, and willingly and lovingly brought with me to share, and gave to the Charity all that was mine; including all monies, assets, furniture and other possessions. I understood that in doing so I was making the Self-Realization Healing Centre my home. I understood that if I decided to leave the Self-Realization Healing Centre in the future, I would be free to do so. I agreed to abide by the Truth, and the teaching of Life, to trust in God and Guru, and to serve in any way I was asked." The later document ("the Leaving Agreement") was dated 11 January 2004 and signed by Dr. Azaz in the name Simon Azaz, a name which he used for some purposes whilst living at the Base. Dr. Azaz said that the name "Simon" was given to him by Mrs. Denton to use in place of the name which he had been given by his parents, Yehu. The Leaving Agreement read:- "AGREEMENT FOR LEAVING THE SELF REALIZATION MEDITATION HEALING CENTRES I decided to leave the Self Realization Meditation Healing Centres. I am certain of my choice, and made it without any pressure or influence being exerted by those I know or anyone at the Self Realization Meditation Healing Centres. I understand that in doing so I will no longer be part of the family of healers and counsellors who live and work at the Self Realization Meditation Healing Centres, and will cease working for the Self Realization Healing Centre Charitable Trust. I know I have no claim or right to any of the items I brought with me on joining the Self Realization Meditation Healing Centres, as I willingly and lovingly brought with me to share, and give to the Charity all that was mine; including all monies, assets, furniture and other possessions. At the time of joining I understood that if I decided to leave the Self Realization Meditation Healing Centres, I would be free to do so, but without any obligation for the Self Realization Healing Centre Charitable Trust to return any donations or chattels to me. I therefore undertake to only take with me that which Trustees and the family have willing [sic] consented to and clarify and assert that I have no claim and will make no claim on anything within the Self Realization Meditation Healing Centres after Wednesday 10th December, when I left. I understand that in leaving the Self Realization Meditation Healing Centres they are no longer my home. I undertake to maintain confidentiality of all aspects of Self Realization Meditation Healing Centres work, including details of patients and students and to maintain professional ethics at all times. I still agree to abide by the Truth, and the Teaching of Life, to trust in God and Guru, and to serve in any way I can." The letters dated 2 May 2007 pleaded in the Particulars of Claim were each letters written by Messrs. Kirby & Co. ("Kirby"), solicitors acting on behalf of Dr. Azaz in this action. One was addressed to Mrs. Denton. The other was addressed to Mr. Daniel Casley of the Centre. The letters were lengthy and in the nature of letters before action, so hereafter in this judgment I shall refer to them collectively as "the Letters before Action". In each letter demand was made for return of the Possessions. The Work Claim seems rather to have disappeared from the Particulars of Claim at the point of the pleading of loss and damage. The Third Schedule to the Particulars of Claim simply set out what were alleged to be the gross sums Dr. Azaz would have earned in the medical profession, had he not abandoned that profession in (the assumption adopted for the purposes of the calculations in the Third Schedule) June 1992. As is apparent from my citation of the relevant parts of the Particulars of Claim in this action, the alleged legal foundations for the Cash Claim, the Possessions Claim, the Career Claim and the Injury Claim were pleaded in a number of different ways. In his written opening skeleton argument prepared for the purposes of this trial, Mr. Evan Ashfield summarised the claims of Dr. Azaz in this way:- "3. The individual claims brought require separate consideration within the preliminary issues and so the starting point is to identify those claims. 3.1 The first claim is the claim in actual or presumed undue influence (Paragraphs 36 to 47 of the Particulars of Claim). 3.2 The second claim relates to delivery up or damages for wrongful interference with the Claimant's possessions (Paragraphs 48 to 56 of the Particulars of Claim). 3.3 The final claim is for damages for breach of contract and duty which is in 2 parts. First it covers many of the same matters as the first two claims. Secondly, it contains a personal injury claim. This entire section of the claim is at Paragraphs 57 to 64 of the Particulars of Claim." Mr. Ashfield did not mention in his summary the Work Claim. Notwithstanding the reference in paragraph 3 of Mr. Ashfield's written opening skeleton argument to claims for breach of contract, no contract was expressly pleaded in the Particulars of Claim. What one seems to have in the Particulars of Claim is, first, assertions in paragraph 41 of entitlements not plainly linked to any cause of action other than undue influence. It appears that it is contended that a cause of action arises if a party abandons a career, or works for modest remuneration, as a result of undue influence. Those strike me as very novel propositions. At paragraphs 48 to 50 inclusive, and 52 to 55 inclusive, of the Particulars of Claim, are pleaded alternative factual bases for wrongful interference claims in relation to the Possessions. The plea in the later paragraphs is of a straightforward right to possession of the Possessions. In this judgment I shall refer to that way of putting the Possessions Claim "the Possessions Claim Mark I". The earlier plea is, in effect, of a loan of the Possessions to the defendants for an indefinite period, terminated by a demand made in the letter dated 2 May 2007. In this judgment I shall refer to that way of putting the Possessions Claim "the Possessions Claim Mark II". The Possessions Claim Mark I and the Possessions Claim Mark II, although based on mutually inconsistent versions of the alleged facts, are at least relatively conventional in theory. That part of the Particulars of Claim commencing with paragraph 57 appeared beneath the rubric "The breach of contract and duty claim". Notwithstanding that rubric, no alleged contract was pleaded. What were pleaded were a series of rather exotic alleged "dut[ies] of care", a formula normally suggestive of tortious duties in the law of negligence. I have the gravest doubts whether any of the alleged duties is capable of existing in law. Dr. Azaz gave evidence before me. He did not suggest that the picture presented by Mr. James's attendance note of the meeting with him and his wife on 23 July 1990, the terms of his own letter to Mr. James dated 16 April 1991, and his and his wife's letter to Stephanie, that he had decided in 1990 not to seek a further medical post when the then current post came to an end in January 1991, and that he did not then seek a further post, was inaccurate. What he did suggest was that at that stage he had only decided on a career break of indefinite length, but perhaps two years, not to leave medicine permanently. However, on that evidence the pleaded case that he gave up his medical career as a result of the undue influence of Mrs. Denton is unsustainable. He had given up that career, at least for the time being, prior to any alleged undue influence. In those circumstances it seems to me that the allegations in relation to giving up Dr. Azaz's medical career should be struck out of the Particulars of Claim in any event. In response to a Request for Further Information pursuant to Part 18 of Civil Procedure Rules it was said that it was the case of Dr. Azaz that the various sums included in the Cash Claim were paid over to the defendants between, at the earliest, September 1992, and, at the latest, 1997. The answer to a similar request in relation to the Possessions Claim Mark I was less clear, but seemed to envisage giving over a similar period. The claim form in this action was issued on 22 April 2008. The Particulars of Claim were dated 17 April 2008 and were served with the claim form. Also served at that time was a "Notice of funding of case or claim" dated 18 April 2008 which revealed that the case of Dr. Azaz was being funded by a conditional fee agreement between Kirby and Dr. Azaz dated 12 May 2004 ("the CFA"). A full and lengthy Defence was served on behalf of Mrs. Denton and the Centre. It concluded with these pleas:- "Limitation 111. The Claimant's claim for equitable relief is barred by the doctrine of laches as pleaded above. 112. The Claimant's claim includes a claim for personal injury and is statute-barred by virtue of s. 11 of the Limitation Act 1980 ("the 1980 Act"). The Claimant's "date of knowledge" for the purpose of s. 14 of the 1980 Act was more than three years prior to the commencement of these proceedings. 113. Further or in the alternative, by virtue of ss. 2 and 5 of the 1980 Act, any claim by the Claimant for breach of contract and/or duty prior to April 22, 2002 is statute-barred. If, which is denied, the Defendants were in breach of contract and/or duty in the period from April 22, 2002 to December 15, 2003 when the Claimant left the Centre, such breaches did not cause the Claimant any loss." In the light of the pleas of laches and limitation, on 16 February 2008 Master Leslie ordered that there be tried as preliminary issues in this action the following ("the Preliminary Issues"):- "a. Whether the Claimant was at any stage prior to the issue of this claim under a disability within then [sic] meaning of s.28 of the Limitation Act 1980 ("the 1980 Act"). b. Whether all or any part of the Claimant's claim is an action for personal injuries within s.11 of the 1980 Act; if so, whether the primary limitation period had expired when this claim was issued and, if so, whether the Court should exercise its discretion to disapply the primary limitation period under s.33 of the 1980 Act. c. Whether all or any part of the Claimant's claim is otherwise statute-barred under the 1980 Act. d. Whether the Claimant is entitled to rely upon s.32 of the 1980 Act. d. Whether all or any part of the Claimant's claim for equitable relief is barred by the equitable defence of laches." For reasons which I shall explain, the first of the Preliminary Issues it was accepted did not require an answer from me because the answer was in the negative, so far as relevant. Again, the first two limbs of the second of the Preliminary Issues did not require answers from me, it being accepted that the Injury Claim was a personal injuries claim and that the primary limitation period in respect of that claim had expired prior to the commencement of this action. There was, however, some debate about the effect of the provisions of s.11 of Limitation Act 1980 ("the 1980 Act") on other elements of the claims of Dr. Azaz, and to that debate I shall come. The relevant terms of the 1980 Act It is convenient, before turning in detail to the Preliminary Issues, insofar as they require answer, to set out the material terms of the 1980 Act. For present purposes the relevant terms of the 1980 Act are:- "2. An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued. … 5. An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued. … 11(1) This section applies to any action for damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision) where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to the plaintiff or any other person. (2) None of the time limits given in the preceding provisions of this Act shall apply to an action to which this section applies. (3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) or (5) below. (4) Except where subsection (5) below applies [not this case], the period applicable is three years from – (a) the date on which the cause of action accrued; or (b) the date of knowledge (if later) of the person injured. … 14(1) Subject to subsection (1A) below [not material], in sections 11 and 12 of this Act references to a person's date of knowledge are references to the date on which he first had knowledge of the following facts – (a) that the injury in question was significant; and (b) that the injury was attributable in whole or in part to the act or omission which is alleged to constitute negligence, nuisance or breach of duty; and (c) the identity of the defendant; and (d) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant; and knowledge that any acts or omissions did or did not, as a matter of law, involve negligence, nuisance or breach of duty is irrelevant. … (2) For the purposes of this section an injury is significant if the person whose date of knowledge is in question would reasonably have considered 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. … 28(1) Subject to the following provisions of this section, if on the date when any right of action accrued for which a period of limitation is prescribed by this Act, the person to whom it accrued was under a disability, the action may be brought at any time before the expiration of six years from the date when he ceased to be under a disability or died (whichever first occurred) notwithstanding that the period of limitation has expired. … (6) If the action is one to which section 11 or 12(2) of this Act applies, subsection (1) above shall have effect as if for the words 'six years' there were substituted the words 'three years'. … 32 (1) Subject to subsection (3) below, where in the case of any action for which a period of limitation is prescribed by this Act, either – (a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or (c) the action is for relief from the consequences of a mistake; the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. (2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty. … 33(1) If it appears to the court that it would be equitable to allow an action to proceed having regard to the degree to which – (a) the provisions of section 11 or 12 of this Act prejudice the plaintiff or any person whom he represents; and (b) any decision of the court under this subsection would prejudice the defendant or any person whom he represents; the court may direct that those provisions shall not apply to the action, or shall not apply to any specified cause of action to which the action relates. … (3) In acting under this section the court shall have regard to all the circumstances of the case and in particular to - (a) the length of, and the reasons for, the delay on the part of the plaintiff; (b) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought within the time allowed by section 11 or (as the case may be) by section 12; (c) the conduct of the defendant after the cause of action arose, including the extent (if any) to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff's cause of action against the defendant; (d) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action; (e) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages; (f) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received. … 38 … (2) For the purposes of this Act a person shall be treated as under a disability while he is an infant, or of unsound mind. (3) For the purposes of subsection (2) above a person is of unsound mind if he is a person who, by reason of mental disorder within the meaning of the Mental Health Act 1983, is incapable of managing and administering his property and affairs." The expression "mental disorder" is defined in Mental Health Act 1983 s.1(2) as:- "… mental illness, arrested or incomplete development of mind, psychopathic disorder and any other disorder or disability of mind…" Of these various descriptions, only "psychopathic disorder" is further defined, and that in terms not presently material. It was not suggested that Dr. Azaz suffered from psychopathic disorder at any time. The Preliminary Issues which do not require answer The first of the Preliminary Issues which does not necessitate an answer is "Whether the Claimant was at any stage prior to the issue of this claim under a disability within then [sic] meaning of s.28 of the Limitation Act 1980". Whilst the formulation of that issue was, perhaps, suggestive of it being relevant whether Dr. Azaz had been under a disability at any point between the accrual of a relevant cause of action and the issue of the claim form in this action, it was obvious, from a consideration of s.28(1) of the 1980 Act, that in fact the only possibly relevant question could be whether Dr. Azaz was under a disability "on the date when any right of action accrued for which a period of limitation is prescribed by this Act". It was agreed between Counsel at the trial before me that the answer to the correct question depended upon the expert psychiatric evidence put before me. The expert psychiatrist instructed on behalf of Dr. Azaz was Dr. Olga Tsatalou. That instructed on behalf of the defendants was Dr. N.L. Holden. In the usual way those experts had discussed the issues in this action relevant to their expertise and had prepared a joint statement setting out the matters about which they agreed and those about they did not agree. For the purposes of the trial before me Mr. Nicholas Yell, who appeared on behalf of the defendants, accepted the views of Dr. Tsatalou where they disagreed with those of Dr. Holden. There was in fact only one significant disagreement. The material views were set out in the joint statement. I set out that about which the experts agreed and the views of Dr. Tsatalou where she disagreed with those of Dr. Holden:- "3) Dr. Holden and Dr. Tsatalou agree that initially he [Dr. Azaz] became psychiatrically ill in autumn 1996 and there was evidence of improvement in his mental state by April 1997. At the time he was seen by Dr. Orr (Consultant Psychiatrist) who expressed uncertainty about the nature of his illness and concluded that Dr. Azaz was experiencing a severe dissociative state during which he became almost catatonic. Dr. Orr did not think that Dr. Azaz was well enough to make substantive decisions about the future. 4) Dr. Tsatalou and Dr. Holden agree that Dr. Azaz developed a second episode of mental health problems in late 2003 in the context of Dr. Azaz becoming disillusioned with the group. He was again seen by Dr. Orr who diagnosed a moderately severe depressive illness without psychosis. He improved with the aid of Venlafaxine, an antidepressant, in the early months of 2004. He was noted to be well when seen by Dr. Tyldon [sic] and Dr. Orr in June/July 2004. 5) Dr. Holden and Dr. Tsatalou agree that Dr. Azaz's third episode of mental health problems arose in 2004. Dr. Azaz appears to have left the family home after an argument and made his home in Liverpool. He was identified as suffering from psychological problems in November 2004 when he was noted to be in debt and injuring himself in the context of what appeared to be a depressive illness. He was treated with Mirtazapine, an antidepressant and was referred to the local Crisis Team. In December 2004 he returned to his parents [sic] home in Oxfordshire and in January 2005 he was referred urgently to psychiatric services. 6) He was subsequently assessed and treated by Dr. Tsatalou who diagnosed a recurrent depressive disorder and considered that at the time he was experiencing a moderately severe depressive episode with psychomotor retardation. Olanzapine (an atypical antipsychotic) was added because of anxiety and his troubled thoughts. He gradually improved over a period of a few months and was eventually discharged by the West Oxfordshire East CMHT in August 2005. 7) Dr. Tsatalou considers that Dr. Azaz's symptoms of depression and anxiety continued to improve but his functional recovery was slow and he required constant guidance and reassurance and found it difficult to make day to day decisions. Dr. Tsatalou considers that Dr. Azaz was suffering from a mental illness (severe depressive episode in the context of recurrent depressive disorder) and as a result of his illness he lacked capacity to deal with his financial affairs and to instruct his solicitors in the early part of 2005, and Dr. Tsatalou believes that this projected back into 2004. " Counsel agreed that the period of disability should be taken as between November 2004 and June 2005. The expert psychiatric evidence as agreed was to the effect that Dr. Azaz was only "by reason of mental disorder within the meaning of the Mental Health Act 1983 … incapable of managing and administering his property and affairs" in a period after he had ceased to reside at the Base and after any cause of action against Mrs. Denton or the Centre had accrued. In those circumstances the provisions of s.28 of the 1980 Act were simply irrelevant. It is material to notice that the agreed expert psychiatric evidence did not indicate that Dr. Azaz was suffering from any mental illness at the date he signed the Joining Agreement, although he was suffering from mental illness, while not incapable of managing his affairs, when he signed the Leaving Agreement. It was accepted by Mr. Ashfield that the Tylden Report gave Dr. Azaz such knowledge about the Injury Claim as he needed to have in order for time in relation to that claim to start running under s.11(4) of the 1980 Act, if he did not have that knowledge before receiving that report. As Dr. Tsatalou and Dr. Holden noted in their joint statement, Dr. Tylden and Dr. Orr considered that Dr. Azaz was well by June/July 2004, that is to say, about the date of the Tylden Report. Consequently it was accepted, as it had to be, that this action was not commenced within 3 years of Dr. Azaz acquiring the knowledge necessary to set time running. The issues of law (a) The proper construction of s. 11(1) of the 1980 Act From the nature of the argument before me it was obvious that there were aspects of the Preliminary Issues which were not revealed, or not revealed clearly, by the Preliminary Issues as formulated. One of the most important of these was the question of the proper construction of s.11(1) of the 1980 Act. Mr. Yell submitted at paragraph 6 of his written opening skeleton argument that:- "The three year period applies where the damages claimed by the Claimant include any claim for personal injuries. Thus the inclusion of a personal injuries element, however slight, means that the three year period applies to the whole claim …" Mr. Ashfield sought to answer that submission in his written opening skeleton argument in this way:- "28. The remaining claim is that for breach of contract and duty which includes a claim for damages for personal injury. The claim is in two distinct parts. 28.1 The first part is the breach of duty claim in paragraph 61 Particulars of Claim which has no personal injury element and so a 6 year limitation period applies. 28.2 The second part is the breach of duty claim in paragraphs 62 & 63 which do involve personal injury and so a 3 year limitation period applies. 29. Within the strike out application [the antecedent to this trial], it became clear that there is a fundamental disagreement between the parties over the correct approach to limitation in the situation identified in the preceding paragraph. 29.1 The Claimant's position is that if the personal injury claim were to be barred by limitation – then the balance of the claim must proceed. In short, the personal injury element can then be struck out leaving a valid claim. 29.2 The Defendant's position is that if the personal injury claim were to be barred by limitation then the entire claim fails. 30. The most common situation in which there is this dual limitation period happens [sic] is, of course, in road traffic accidents. The cause of action is negligence which has a 6 year limitation period unless the claim includes personal injury when it reduces to 3 years. 30.1 If all that is claimed is damage to a motor vehicle, a claimant has 6 years to bring the claim. 30.2 If all that is claimed is personal injury, a claimant has 3 years to bring the claim. 30.3 What if the claimant has both claims? If the personal injury claim is barred by limitation, can the other claim survive using the 6 year limitation period? It is submitted that the answer is plainly "Yes". They are separate causes of action. Any other approach would be absurd. Indeed, what is barred is not the cause of action but the remedy. There is, it is submitted authority for this approach." The authority referred to was an unreported decision of the Court of Appeal, Shade v. Compton Partnership, in which judgment was handed down on 22 July 1999. A copy of the transcript of the judgments was put before me. The case was an unusual one. The claimant was a litigant in person. He brought proceedings against a firm of solicitors, principally for damages for professional negligence. However, he included in his claims a claim for damages for personal injury. The action was commenced more than 3 years after the events said to have given rise to the claims, but less than 6 years. Application was made to Master Eyre to strike out all of the claims of the claimant on the ground that the effect of s.11(1) of the 1980 Act was that the limitation period applicable to all causes of action was 3 years. Master Eyre struck out the allegations relating to personal injury, but not the remainder of the claims. The claimant appealed to Sullivan J and the defendants cross-appealed. The judge struck out all of the claims. The claimant then appealed to the Court of Appeal, which restored the decision of the Master. Mr. Ashfield submitted that the effect of that decision was, as it were, that a claimant who included in an action a cause of action for personal injury, and other causes of action, was only on risk of having the personal injury action struck out if the action was commenced more than 3 years after the requirements of s.11(4) of the 1980 Act were satisfied, and not on risk of having the entire action struck out. However, I do not think that that is correct. The clear terms of s.11(1) of the 1980 Act apply "to any action for damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision) where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty … include damages in respect of personal injuries to the plaintiff". The subsection is not limited to causes of action, but applies to actions. It is manifest that the subsection is seeking to cover actions in which a claim for damages for personal injuries is one of a number of claims. Notwithstanding that the example taken by Mr. Ashfield in paragraph 30 of his written opening skeleton argument was in fact, as it seems to me, a case in which different damage, some in respect of personal injuries and some in respect of physical damage to property, was being claimed consequent upon a single act of negligence, rather than a case of two causes of action, s.11(1), in my judgment, in fact applies in all cases in which an element in the claims is damages for personal injuries, if the other elements of claim are for damages as a result of negligence, nuisance, or any breach of duty, however arising. In particular, it would include a claim for damages for breach of contract quite separate from the circumstances which are alleged to give rise to a claim for damages for personal injuries. It would apply, for example, if an employee sought to recover, more than 3 years from the date of an accident in which he was injured, but less than 6 years, both damages for personal injuries and damages for breach of some provision of the contract of employment. It thus applies in the present case, as it seems to me, at least to the Injury Claim, the Career Claim, the Work Claim, and the Cash Claim and the Possessions Claim, insofar as the Cash Claim and the Possessions Claim were based on alleged breaches of contract or alleged breaches of duties of care. In a case in which the effect of s.11(1) of the 1980 Act is to render claims which are not for damages for personal injuries vulnerable to limitation defences to which they would not be vulnerable but for being packaged with the claim for damages for personal injuries, the obvious way of saving the non-personal injuries claims is to abandon the personal injuries claim, by having it struck out, leaving the remaining claims in the action outside the ambit of s.11(1). In the case of Shade v. Compton Partnership Master Eyre and the Court of Appeal, as it seems to me, took pity on the litigant in person and took for him the course which a properly advised litigant would have taken. That does not mean, as it seems to me, that all litigants who seek to combine a claim for damages for personal injuries vulnerable to attack under s.11(1) with other claims get a free go, once a limitation defence is raised, in the sense of only thereafter being vulnerable to losing the claim for damages for personal injuries. A court might smile upon a party, faced with the s.11(1) dilemma, who seeks to save what he can by abandoning by amendment the personal injuries claim, but where a party has been invited to consider abandoning by amendment the personal injuries claim, as I invited Mr. Ashfield to, and has made a considered decision not to do so, that party must expect s.11(1) to be applied to him in its full rigour. In the result, subject to the issue, to which I shall come, of the effect of s.33 of the 1980 Act, it seems to me that at least the Injury Claim, the Careers Claim (if I had not already struck it out), the Work Claim (if it survives) and the Cash Claim and the Possessions Claim, insofar as based on some alleged breach of duty, whether in contract, tort or otherwise, should be dismissed as statute-barred. (b) Fraudulent concealment The other major issue of law, as opposed to questions dependent upon the application of the relevant law to findings of fact, which arose concerned what is popularly called "fraudulent concealment", that is, the applicability of s.32(1) of the 1980 Act. The issue was, essentially, how, on any version of the pleaded facts of this case, the provisions of s.32(1) could possibly be relevant. The parties exchanged statements of case on this issue. The position of the defendants was, quite simply, that the provisions of s.32(1) had no application. The case for Dr. Azaz was that he was entitled to rely on s.32(1)(b). He did not seek to rely on s.32(1)(a) or (c), no doubt because there was no allegation of fraud or mistake in the Particulars of Claim. The pleaded case of Dr. Azaz on fraudulent concealment was divided into three sections. The first section was entitled "Background" and need not be set out in this judgment. The second section, which also need not be set out in this judgment, was entitled "The relationship between the parties". In summary that set out again the contentions pleaded in the Particulars of Claim about Mrs. Denton being the head of a spiritual or quasi-religious group to the beliefs of which Dr. Azaz subscribed from October 1991. The core of the submissions in the pleaded case – for they were adopted as such in the written opening skeleton argument of Mr. Ashfield – was what was set out under the rubric "The specific matters relied upon as "concealment":- "15. Until 15th December 2003, the Claimant remained one of those attending (and, save as set out in the Particulars of Claim) living at the Centre. 16. The period of time during which the Claimant remained under the undue influence of the Defendants lasted beyond 15th December 2003 and extended until he was able to realise that he had been under the undue influence of the Defendants and free himself from that influence and begin to make independent decisions. 17. During the period whilst the Claimant was under the undue influence of the Defendants – all the facts relevant to the causes of action now being brought (i.e. the facts pleaded in relation to each claim) were concealed from the Claimant by the Defendants through the deliberate exercise of that undue influence. In particular the Claimant relies on the matters set out in paragraphs 60 to 63 of the Particulars of Claim as breaches of duty towards him that were concealed from him. 18. In further breach of the duties owed to the Claimant, the Defendants failed to inform the Claimant that he was entitled to the return of the money and/or property he had provided to them at any time but required him to sign documents dated 23rd January 1996 and 11th January 2004 which purported to confirm the Defendants' entitlement to that money and those possessions. 19. The undue influence claims brought by the Claimant are not subject to any limitation period. It follows that the Claimant relies upon s.32(1)(b) of the Limitation Act 1980 as follows: a. In respect of the possessions claim set out in paragraphs 48-56 of his Particulars of Claim, the Claimant's primary contention is that the period of limitation is 6 years and it begins with his request for return or delivery up of those possessions in May 2007. These proceedings were issued within the 6 year limitation period starting on that date. The Claimant only relies upon s.32(1)(b) if (and to the extent that) the 6 year limitation period begins to run from a date more than 6 years prior to issue of proceedings in April 2008 (which would be a date prior to his leaving the Centre in December 2003). b. In respect of the common law breach of contract and duty claims set out in paragraphs 57-64 of his Particulars of Claim, the Claimant's primary contention is that the period of limitation is 3 years from his date of knowledge in relation to the personal injury claim and 6 years in relation to the other claims. The Claimant relies upon s.32(1)(b) as an alternative to his reliance upon the matters set out in paragraphs 29 to 32 of his Reply. 20. As a result, upon the proper interpretation of s. 32(1)(b) of the Limitation Act 1980 – the Claimant's causes of action against the Defendants did not begin to run until the Claimant had freed himself of the effect of that undue influence and actually discovered (or could with reasonable diligence have discovered) all the facts concealed from him. The Claimant contends that this was well after he left the centre on 15th December 2003 and was not until about January 2006. Accordingly, this claim is brought within both the 3 year and 6 year Limitation periods applicable." The submissions of Mr. Ashfield are difficult to follow. In the passage cited he did not identify what fact or facts it was contended had been concealed from Dr. Azaz, by whom or in what manner. It seemed that his assertion was that by exercising undue influence upon Dr. Azaz Mrs. Denton, or the Centre, had concealed from him fraudulently facts relevant to causes of action not said to depend upon the exercise of undue influence, for Mr. Ashfield's submission in relation to causes of action said to be based on the alleged exercise of undue influence was that no period of limitation was prescribed by the 1980 Act. However, as it seems to me, the alleged exercise of undue influence is irrelevant to the question whether the conditions set out in s.32(1) of the 1980 Act are satisfied. Possibly the exercise of undue influence might prevent someone who was subject to it taking some step, like suing the person exercising the influence, which he might otherwise be inclined to take. However, that has nothing to do with whether the person the subject of the undue influence was aware of the facts which would justify taking proceedings. Indeed, it is rather implicit in the analysis that the person the subject of the undue influence was aware of the relevant facts, but was dissuaded by the influence from doing anything in consequence of that knowledge. Whether that is so or not, there is just no connection in logic between the exercise of undue influence and knowledge, or ignorance, of facts relevant to a cause of action. In his closing submissions Mr. Ashfield did not abandon the reliance of Dr. Azaz upon the provisions of s.32(1) of the 1980 Act, but he did focus his attention on other aspects of the Preliminary Issues. In the result the answer to Preliminary Issue d is in the negative. The application of s.33 of the 1980 Act in the circumstances of this case Before turning to consider the facts relevant to the issue whether, in the exercise of the discretion of the court conferred by s.33 of the 1980 Act, it is appropriate to direct that the provisions of s.11 of the 1980 Act should not apply "to the action, or … any specified cause of action to which the action relates", it is convenient to consider the guidance to be found in reported authorities as to the approach to be adopted. In Robinson v. St. Helens Metropolitan Borough Council [2003] PIQR P128, at pages 139 – 140 Sir Murray Stuart-Smith said:- "32. The Limitation Acts are designed to protect defendants from the injustice of having to fight stale claims especially when any witnesses the defendants might have been able to rely on are not available or have no recollection and there are no documents to assist the court in deciding what was done or not done and why. These cases [a reference, I think, to the type of case before the court, in which allegations of negligence in relation to education were made] are very time consuming to prepare and try and they inevitably divert resources from the education authority to defending the claim rather than teach. Under section 33 the onus is on the claimant to establish that it would be equitable to allow the claim to proceed having regard to the balance of prejudice. 33. The question of proportionality is now important in the exercise of any discretion, none more so than under section 33. Courts should be slow to exercise their discretion in favour of a claimant in the absence of cogent medical evidence showing a serious effect on the claimant's health or enjoyment of life and employability. The likely amount of an award is an important factor to consider, especially if, as is usual in these cases, they are likely to take a considerable time to try. A claim that the claimant's dyslexia was not diagnosed or treated many years before at school, brought long after the expiry of the limitation period, extended as it is until after the claimant's majority, will inevitably place the defendants in great difficulty in contesting it, especially in the absence of relevant witnesses and documents. The contesting of such a claim would be both expensive and likely to divert precious resources. Courts should be slow in such cases to find that the balance of prejudice is in favour of the claimant." Some of the observations in that passage were specific to the type of case before the court, but others, such as the onus being on the claimant to establish that it would be equitable to allow the claim to proceed, the relevance of proportionality, the significance of the presence or absence of relevant witnesses or documents on the defendant's side, the presence or absence of cogent medical evidence showing a serious effect on the claimant's health or enjoyment of life and employability, and the likely amount of damages if the claim succeeds (plainly linked to the preceding consideration), seem to me to be of general application. The passage cited was considered by Lord Hoffmann and the other members of the House of Lords in Adams v. Bracknell Forest Borough Council [2005] 1 AC 76, another dyslexia case, at page 91, where, having set out the passage at paragraph 54, Lord Hoffmann said, at paragraph 55:- "Peter Gibson and Brooke LJJ agreed. Their Lordships think that these observations from judges with considerable experience of exercising and overseeing the section 33 jurisdiction carry great weight." In Horton v. Sadler [2006] UKHL 27 the House of Lords was concerned with a claim for damages for personal injuries suffered in a road accident. The leading speech was that of Lord Bingham of Cornhill. At paragraph 33 of his speech he said:- "In resolving an application under section 33 the court must make a decision of which the inevitable effect is either to deprive the defendant of an accrued statute-bar defence or to stifle the claimant's action against the tortfeasor who caused his personal injuries. In choosing between these outcomes the court must be guided by what appears to it to be equitable, which I take to mean no more (but also no less) than fair, and it must have regard to all the circumstances of the case and in particular the six matters listed in subsection (3). These are, as Lord Diplock observed in Thompson at p. 751, "a curious hotchpotch", for reasons which he examined. But there is, as it seems to me, a problem underlying the whole of section 33: that it appears to treat the plaintiff and the defendant as individuals liable to suffer prejudice, and with no recognition that it is frequently the competing interests of insurers which will be liable to suffer prejudice. …Faced with this problem, but recognising the reality of insurance, the courts have routinely and rightly taken account of the parties' insurance rights. Thus a plaintiff's rights against his insured solicitor are very relevant (Thompson, p.752) but this does not mean that refusal of an order under section 33 will not prejudice him to some degree (Thompson, pp. 750 – 751)." Mr. Yell submitted that a consideration for the court to take into account in considering the exercise of its discretion under s.33 of the 1980 Act is the prospects of success of the causes of action affected by s.11. I think that that must be right. Plainly the prospects of success are one of the circumstances of the case, all of which must be considered. Wright J, in Hodgson v. Imperial Tobacco Ltd., unreported, 4 February 1999, considered that the prospects of success of a claimant fell to be considered in the context of the degree of prejudice to the claimant if a direction under s.33(1) were not made, but I think that in reality it is not important whether one considers the point in the context of prejudice, or as one of the circumstances of the case relevant to the question whether the discretion of the court should be exercised – I think it really comes to the same thing. What Wright J said was:- "One of the primary factors that has to be taken into consideration when considering an application under s.33 is the extent to which a Plaintiff will be prejudiced by the operation of the time-bar if a direction under s.33(1) is not made. On the face of it the nature of the prejudice is obvious – each Plaintiff will lose his cause of action. But in order to assess the degree of prejudice that he will suffer as a result, it is necessary for the Court to take an overall view, admittedly only on a very broad basis, of the Plaintiff's prospects of success; see Dale v. British Coal Corporation [1992] PIQR 373 at p.380-381 and Forbes v. Wandsworth HA [1997] QB 402 at p.417E per Stuart-Smith LJ. The prospects of success include not only the Plaintiff's chance of being able to establish his primary case on liability, but also the quantum of any likely recovery having regard both to the extent of his injuries and the extent to which any damages otherwise recoverable may fall to be reduced as a result of any allegations of contributory negligence which appear on the fact [sic] of it to be open to the Defendants." As I have pointed out, each of the alleged claims of Dr. Azaz is affected by the operation of s.11 of the 1980 Act to some extent. The Injury Claim cannot be pursued unless the discretion of the court is exercised in favour of Dr. Azaz under s.33. The Career Claim and the Work Claim also cannot be pursued at all unless the discretion of the court is exercised in favour of Dr. Azaz. I think that it is obvious from my conclusion that the Career Claim should be struck out and from the fact that no loss seems to be attributed to the Work Claim, that these two elements of claim fail at this point in the context of s.33, if it were necessary to consider them in that context. The Career Claim has no prospect of success on the evidence put before the court. The Work Claim has no prospect of success because no loss is attributed to it. The Cash Claim and the Possessions Claim are only dependent upon the exercise of the discretion of the court under s.33 insofar as the legal foundations for the claims are said to be breach of contract or other breach of duty, such as negligence. It must be relevant, as it seems to me, to the exercise of the discretion under s.33 that those claims are also alleged to be founded on causes of action which do not fall within the scope of s.11 in any event. If and insofar as the causes of action which are not vulnerable to a limitation defence under s.11 seem in themselves, and subject to the issue whether the facts alleged to support the causes of action can be proved, to be good causes of action, the invocation of the discretion under s.33 is unnecessary. On the other hand, if the other causes of action seem to have less prospect of success than the causes of action to which s.11 applies, leaving aside the effect of s.11, that would seem to point to the exercise of the discretion in favour of the claimant. If there are difficulties in the case whichever cause of action is relied upon, clearly other relevant factors are likely to point to the appropriate conclusion. An aspect of the prospects of success to which Mr. Yell drew particular attention was the problem of credibility of Dr. Azaz. Mr. Yell submitted that it was appropriate, in considering "all the circumstances of the case", to take into account in favour of the defendants that there are clearly in this case obstacles in the face of Dr. Azaz in establishing any cause of action, by reason of the fact that accounts which he had given in the past are inconsistent with his current evidence as to his relationship with Mrs. Denton and the Centre and the circumstances in which he and his wife came to give the Cash and the Possessions to the Centre. One problem was the terms of the Joining Agreement. On its face it is inconsistent with the Cash Claim and the Possessions Claim, and not supportive of the Injury Claim. Dr. Azaz was asked about that in cross-examination. It was suggested to him that it was he who had drafted the Joining Agreement and that it had been done following the settlement of an action ("the Davies Action") which had been brought against the Centre by Mrs. Azaz following her departure from the Base. In the Davies Action Mrs. Azaz sought the return of cash and possessions which she had given to the Centre on going to live there with her husband, on the grounds that the gifts in question had been induced by undue influence. I think that Dr. Azaz accepted that he had in fact drafted the Joining Agreement, in a form appropriate to be completed by everyone living at the Base, but he contended that he had done so whilst under undue influence. He did not elaborate as to the undue influence, or when it had been exercised, or what form it took. The formula "undue influence" was rather a mantra which he employed to seek to explain away any contemporaneous document or reference which was inconvenient to the case which he wished to advance in this action. Everything Dr. Azaz did, whilst at the Base, as I understood it, had been done following the instructions of Mrs. Denton, including the preparation and signature of the Joining Agreement. I do not have to reach any conclusion as to the adequacy of his explanation, and, indeed, I ought not to do so because, as I explain later in this judgment, this action may go to trial on one aspect of the case. However, the lack of an obviously convincing answer to the evidential value of the Joining Agreement is, I think, certainly a matter which I should take into account in my consideration of the factors relevant to a decision under s.33 of the 1980 Act. As I have noted, on the agreed psychiatric evidence put before me, Dr. Azaz was not suffering from mental illness when he drafted and signed the Joining Agreement. In contrast, at the date of the signature of the Leaving Agreement, upon which Mr. Yell also relied as casting doubt on the credibility of Dr. Azaz, Dr. Azaz was, as was common ground, suffering from mental illness, albeit not to such an extent as not to be capable of managing his affairs. Mr. Yell relied, in addition to the Joining Agreement and the Leaving Agreement, on two statements made by Dr. Azaz in the context of the Davies Action as being inconsistent with his present account of events, and thus casting doubt on his credibility. The Davies Action started with an application ("the Injunction Application") for a worldwide freezing injunction made on 14 December 1994. It was commenced formally by a claim form issued on 17 January 1995. It was settled in February 1996. In the context of the Injunction Application Dr. Azaz made a statement described as "STATEMENT BY DR YEHU EUGENE ZEEV AZAZ CONCERNING THE INJUNCTION DATED 14 DECEMBER 1994 FOR HIGH COURT ACTION BY LIZANNE AZAZ AGAINST THE SELF-REALIZATION HEALING CENTRE" ("the Injunction Statement"). The Injunction Statement was dated 7 January 1995 and was signed by Dr. Azaz using his usual signature, rather than the first name Simon, which he used for some purposes at the Base. The Injunction Statement included these passages:- "Lizanne, and I, met with Mata [Mrs. Denton] and Peter Denton, in late summer, 1992, to talk about what was involved in joining the SRHC [the Centre]. Lizanne, and I, already knew from our experience of the Centre, and, living there for a week, that the small group of healers, living and working at the Centre, were called the Alpha-Omega family; that they lived together, as any family of people does, sharing their home, and their belongings, with each other; and, in this case, with the people staying at the Centre. Lizanne, and I, learnt that everybody there, had brought with them, their furniture and possessions; and, had donated any money they had, to the Centre, and the Charity, fully making it their home. Lizanne, and I, were told that this was important, and helped everybody to fully feel, that they were an equal part of the family; and, that it did not matter, how much or how little, each person had to bring; it was the person, who was important to them, and, to the Centre; not their possessions. We were told, that as part of the family, everybody owned everything between them, (not, "owned nothing", as stated); and, the Centre fed and looked after their basic needs, (bed, heating etc.); each person, being there voluntarily, as a charity worker, received a small wage of £25 (now £30) a week, (not "earn nothing", as stated). Mata and Peter, did not know about our money, and investments, before we informed them, at one of these meetings; the complete amount involved, was not apparent until after we had joined the Centre. When we told her, Mata said, that she would have preferred it, if Lizanne, and I, had had less money, as looking after large quantities, would cause the Centre extra work, in addition to the healing. … There was no pressure (of any sort) on Lizanne, or persuasion to join, either from Mata, or Peter. It was Lizanne, and my, choice, as to whether we wanted to join, on these terms. I said very little about my opinions, at these discussions about the transfer of money, because the monies were largely Lizanne's, and Lizanne, had to decide for herself, whether she wanted to join the Centre enough, to bring her investments. We did ask many questions about joining, so that each of us understood, what was involved. I still believed that it was the best course, for the both of us, despite the large sums involved, and, was also willing not to join the Centre, if Lizanne decided against it; I did tell Lizanne this, before we joined." Subsequently a witness statement ("the Witness Statement") was prepared by, or for, Dr. Azaz in draft for use in the Davies Action. The Witness Statement was not signed by Dr. Azaz, but the copy adduced in evidence at the trial did bear upon it manuscript corrections and additions in his hand. The Witness Statement included:- "37. There was no pressure of any sort on Lizanne or myself to join or donate property to the Centre, either by Mr. or Mrs. Denton or anyone else. I said very little at these discussions about the transfer of moneys because it had largely been Lizanne's originally and Lizanne had to decide for herself whether she wanted to join the Centre enough to bring these investments. We did ask many questions about joining so that each of us understood what was involved. I was willing not to join the Centre if Lizanne decided against it and I told Lizanne this before we joined. 38. Mrs. Denton said nothing to us about protecting our wealth being anti-God or an act of fear. She did not say that it was impossible for Lizanne to retain her wealth and serve God fully. … 39. Mrs. Denton emphasized that if we wanted Self-Realization it would take 100% commitment in our willingness to look at ourselves and learn. She made no manipulative arguments such as failing to give up wealth meant that Lizanne had no faith in God or that surrendering her wealth was surrendering to God. Lizanne was far too bright and wary to do anything but react against any such arguments. She told me nothing about such comments. If she had, we would have never set foot in the Centre again. She told me of no occasion where she was tearful and begging on her knees for direction from Mrs. Denton. This is farcical and sounds grossly exaggerated for Lizanne then or at any time. These allegations have only been made in this legal action. Mrs. Denton was scrupulous to make it clear that joining the Centre was our decision. She understood that unless this was so, there would not be sufficient commitment and no point. 39. Mrs. Denton made no attempt to persuade Lizanne that Peter James should not attend these meetings to discuss joining the Centre and suggested to us (when Lizanne raised his name) that we should talk to him before making up our minds. She advised such a meeting and did not discourage it as some sign of weakness or for any other reason. Mrs. Denton said that Peter James might not understand a move to the Centre based on spiritual trust and beliefs, but she made no negative comments to devalue his advice such as he was part of the 'material world' or should be 'blocked out' or 'deflected'. … 41 Lizanne and I discussed in depth the pro's and con's of joining the Centre, including what would happen if we wanted to leave and did not get much of our money back. Lizanne and I agreed, at Lizanne's suggestion, that we could see this as giving our money to the best cause and working to help people that we knew of. Lizanne was in favour at times and hesitant or against joining at other times because of the uncertainty of the future. After all our discussions, when I asked Lizanne if she wanted to join she said "yes" that she wanted to put her trust in God and in Mrs. Denton as this was the way forwards for her. … 43. There was simply no influence exercised over Lizanne and I to join the Centre. Mr. and Mrs. Denton gave us the information we needed to make the decision. After hours of discussion we decided separately and together that we each wanted to join and wanted both to join. Lizanne initially said that she needed to give it between 3-5 years in order to get into the training and get the benefit of it. She later changed this to one year and then to 6 months. …." A further point made by Mr. Yell, which I think is relevant to my consideration of the exercise of my discretion under s.33 of the 1980 Act, is that Dr. Azaz clearly appreciated at the time of the Davies Action that it was possible in law for someone who had given money or possessions to someone under the undue influence of the donee to reclaim what had been given, for that was what Mrs. Azaz claimed in the Davies Action, and achieved by the terms of settlement of that action. The evidence was that Dr. Azaz had had the conduct of the Davies Action on behalf of the Centre. In his second witness statement made for the purposes of this action, dated 23 June 2009, he complained, at paragraph 6, that that role had been thrust upon him. On the agreed psychiatric evidence Dr. Azaz was not suffering from mental illness during the period of the Davies Action. In addition, Mr. Yell submitted that it was material, in the context of the prospects of success of the claims of Dr. Azaz, having regard to the legal and credibility issues to which I have referred, to take account of the situation which would prevail in the event that this action went to trial on causes of action which are weak, legally and/or factually, and those causes of action failed. The defendants obviously win, on this hypothesis, and would have a legitimate expectation of obtaining an award of costs in their favour. However, the evidence of Dr. Azaz in cross-examination was that he would not be able to pay the costs of the defendants, if they won, and he had not taken out After The Event ("ATE") insurance to cover any liability for costs which he might incur. In short, I think that the point made by Mr. Yell was really this: it is one thing for a claimant who is able to pay the costs of the defendant, if he loses, to pursue a weak claim, but it would be unjust to the defendant to permit a claimant with a weak case to pursue his claim if the effect would be that, even if he won, the defendant would be left bearing his own costs. There is, I think, much force in that submission. Mr. Ashfield submitted that a lot of that force is dissipated in a case in which the action is going to go to trial in any event on causes of action which are not vulnerable to s.11 of the 1980 Act. That may be so, but it depends upon the scope of the issues which will be investigated at the trial in any event, as compared with the scope of the issues which would fall for decision if the discretion of the court were exercised in favour of Dr. Azaz under s.33 of the 1980 Act. A point which Mr. Yell relied upon as covering the hypothesis that Dr. Azaz might succeed in the claims, or some of the claims, vulnerable to s.11 of the 1980 Act was the financial impact on the Centre and Mrs. Denton if Dr. Azaz did succeed. The evidence of Mr. Daniel Casley, a trustee of the Centre, at paragraph 45 of his witness statement dated 22 June 2009 was that:- "In addition to the evidential concerns which I have set out at paragraphs 26-36 above, the delay by the Claimant in bringing a claim will have caused the Centre considerable financial difficulties. In 2004 the Centre agreed an ambitious new building project which included the building of a new teaching room for Yoga classes and therapy, and a new bedroom, bathroom and toilet for disabled guests at the Centre. A 'poly tunnel' which used to cover the Centre's swimming pool has been replaced by a permanent structure so that guests (as well as the local community) can use the swimming pool all year round. These costs amounted to around £380,000. I can confirm that, had proceedings been contemplated at this time, we would not have agreed to this expenditure." In addition, it seemed that the Centre had insurance in relation to employers' and public liability, but no other insurance which might provide indemnity in respect of the claims of Dr. Azaz. The insurance was thus thought to cover the Injury Claim only. It did not appear that Mrs. Denton personally had any relevant insurance. Mr. Ashfield pointed out that no accounts of the Centre had been produced by way of disclosure, no minutes of meetings of the trustees of the Centre had been disclosed, and no documents relating to the building works described by Mr. Casley had been put in evidence. All of that is correct. It is also correct, as Mr. Ashfield contended, that the relevant policy or policies of insurance held by the Centre had not been produced. However, Mr. Ashfield did not contend that the building works described by Mr. Casley had not been carried out. Rather Mr. Ashfield's submission was that the Centre had been committed to the expenditure in question before Dr. Azaz had left the Base, because planning permission for the works in question had been obtained prior to his departure. As a fact, I think, Mr. Casley accepted the alleged timing of the grant of planning permission as correct. However, it certainly does not follow, in my judgment, from the obtaining of a grant of planning permission, that the person to whom the grant is made is thereby committed to taking advantage of the permission. Mr. Casley told me that the building works which he described were in fact undertaken in about February 2004. Mr. Ashfield did not contend that the Centre, or Mrs. Denton, in fact had the benefit of more extensive insurance cover than was revealed by the evidence. He did elicit from Mr. Casley in cross-examination that, at the time of the settlement of the Davies Action, the Centre had been able to raise a sum in excess of £1 million to meet the amount agreed to be paid to Mrs. Azaz, together with interest and costs, and the costs which it itself incurred in the Davies Action. Mr. Casley explained that the sum in question had been raised without disposing of any assets, but by borrowing, and that the borrowing had imposed straightened circumstances on the Centre for a number of years. In response to questions from Mr. Ashfield Mr. Casley explained that the existing assets of the Centre comprised the Base, another property on the south coast of England, and, perhaps, a property in Wales. It appears that there is a continuing dispute as to the ownership of the property in Wales. Subject to that dispute, Mr. Casley put the value of the assets of the Centre at in excess of £1 million, but less than £2 million. On the evidence I accept that in about February 2004 the Centre undertook expenditure at the Base of the order of £380,000 which it would not have undertaken if it had anticipated the making by Dr. Azaz of the claims made in this action. I reject the suggestion that the Centre was committed to undertaking those works before Dr. Azaz left the Base. I accept that the only possibly relevant insurance available to the Centre provides cover, at best, in respect of the Injury Claim only. It is plain, on the evidence, that neither the Centre nor Mrs. Denton would be in a position easily to pay to Dr. Azaz any significant sum, other than one provided by insurers in respect of the Injury Claim, in the event that any of Dr. Azaz's claims in this action succeeded. Turning to the specific factors listed in s.33(3) of the 1980 Act, for the purposes of s.33(3)(a) the length of delay is different in relation to each of the elements of Dr. Azaz's claim vulnerable to a defence under s.11. Any cause of action based on contract or on tort in relation to the Cash Claim or the Possessions Claim Mark I must have accrued when the relevant items were delivered, alleged to have been between September 1992 and 1997. The Career Claim, if of any substance, must have accrued when Dr. Azaz abandoned his medical career, on the evidence at the end of January 1991. The Work Claim I think I need not consider further, but if there had been any substance to it, it seems to me that a claim would have accrued each time a reasonable sum should have been paid, but was not paid. The Injury Claim, Mr. Ashfield contended in his written closing submissions, accrued on 22 June 2004. What Mr. Ashfield submitted was:- "17. This claim includes a personal injury claim so 3 year limitation period from date of knowledge. 18. Date of Knowledge is when? Dr. Tylden's Report 22nd June 2004 … sent to solicitors. Thus a 3 year limitation period expired on 22nd June 2007. Proceedings not issued until 22nd April 2008 so 10 months late." That submission in relation to the Injury Claim treats it as a single cause of action, implicitly with the three episodes of mental ill-health being but the consequences of the unlawful act or acts complained of. While, theoretically, one might regard the episode of ill-health between the autumn of 1996 and April 1997 as consequent upon one series of alleged unlawful acts, and the episode of ill-health commencing in late 2003 and continuing until about June or July 2004 as consequent upon a further series of alleged unlawful acts, the third episode of ill-health, between November 2004 and June 2005, could only be the subject of a claim at all if said to be attributable to matters arising prior to the departure of Dr. Azaz on about, it seems 10 December 2003. Consequently, it seems that Mr. Ashfield really had to analyse the Injury Claim in the way he did. The cause of action in relation to the first episode of ill-health accrued in the autumn of 1996, when Dr. Azaz first suffered psychiatric illness. One might have thought that, on recovery from that episode in about April 1997, Dr. Azaz would have known that he had been ill; he would have known, if it was the case, that the circumstances in which he had been living and working at the Base had been the cause of that illness; and he would have known who was responsible for those circumstances. On that analysis, time would have started to run in respect of the first episode of ill-health in April 1997 and would have expired in April 2000. However, it was not put to Dr. Azaz that he possessed all the knowledge necessary to commence the Injury Claim as early as April 1997. I think that it was rather accepted on both sides that, as Mr. Ashfield submitted, he did not possess the requisite knowledge until he received the Tylden Report. By that time, of course, he had also suffered the second episode of ill-health. If one had to consider the second episode of ill-health separately in relation to a cause of action, it is difficult to see how Dr. Azaz could have had knowledge of such cause of action any earlier than his recovery from that episode at about the time of the Tylden Report. Mr. Yell reminded me that in Donovan v. Gwentoys Ltd. [1990] 1 WLR 472 the House of Lords decided that, while, on proper construction of s.33(3)(a) and (b) of the 1980 Act, the "delay" mentioned in those paragraphs was delay after the expiration of the limitation period, that did not mean that the court, when considering the exercise of its discretion under s.33, had to leave out of account delay before the expiry of the limitation period. The leading speech was that of Lord Griffiths, but a succinct exposition of the point is to be found in the speech of Lord Oliver of Aylmerton at pages 479 – 480:- "The argument in favour of the proposition that dilatoriness on the part of the plaintiff in issuing his writ is irrelevant until the period of limitation has expired rests upon the proposition that, since a defendant has no legal grounds for complaint if the plaintiff issues his writ one day before the expiry of the period, it follows that he suffers no prejudice if the writ is not issued until two years later, save to the extent that, if the section is disapplied, he is deprived of his vested right to defeat the plaintiff's claim on that ground alone. In my opinion, this is a false point. A defendant is always likely to be prejudiced by the dilatoriness of a plaintiff in pursuing his claim. Witnesses' memories may fade, records may be lost or destroyed, opportunities for inspection and report may be lost. The fact that the law permits a plaintiff within prescribed limits to disadvantage a defendant in this way does not mean that the defendant is not prejudiced. It merely means that he is not in a position to complain of whatever prejudice he suffers. Once a plaintiff allows the permitted time to elapse, the defendant is no longer subject to that disability, and in a situation in which the court is directed to consider all the circumstances of the case and to balance the prejudice to the parties, the fact that the claim has, as a result of the plaintiff's failure to use the time allowed to him, become a thoroughly stale claim, cannot, in my judgment, be irrelevant. It is clear from the judge's judgment that, because sub-paragraphs (a) and (b) of section 33(3) of the Act of 1980 focus particular attention on the time elapsing after the expiry of the limitation period, he felt constrained to regard the time which had been allowed to pass prior to that date as something which had to be left wholly out of account. In my judgment, he was wrong to do so and that necessarily vitiated the exercise of his discretion." The effect of that decision, I think, is that the submission of Mr. Ashfield that the issue of the claim form in this action was only 10 months late is simply immaterial, if, by that submission, Mr. Ashfield intended that attention should be focused only on that period of 10 months. Moreover, it is material, in considering the issue of delay, also to have regard to the provisions of s.33(3)(e) of the 1980 Act, "the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages". Taking a broader view, in the context of s.33(3)(e), Dr. Azaz entered into the CFA with his present solicitors, Kirby, on 12 May 2004. Mr. Ashfield accepted that Dr. Azaz knew all that he needed to know in order to justify commencement of an action in respect of the Injury Claim when he received the Tylden Report. Essentially, therefore, Dr. Azaz was armed with legal advice and expert evidence in support of the Injury Claim by the end of June 2004. At that point he was not suffering from mental illness, although a further bout of illness rendered him unable to manage his own affairs between November 2004 and June 2005. Thus the Injury Claim could have been commenced and pursued between about June 2004 and November 2004, or at any time after June 2005. As from 25 January 2006, according to his witness statement dated 23 June 2009, Dr. Azaz was working at Abingdon Community Hospital as a doctor in paid employment. One might suppose that, if he was robust enough to undertake the care of the sick, he was able, if he chose, to commence proceedings in respect of the Injury Claim. However, that did not happen. On 2 May 2007 Kirby wrote to the defendants the Letters before Action. Dr. Azaz was asked in cross-examination why proceedings were not commenced when Kirby received from Messrs. Dyne Drewett, solicitors at that time acting on behalf of Mrs. Denton and the Centre, a response to the Letters before Action rejecting any claims. Dr. Azaz had no explanation. The only explanation offered for the delay in commencing this action until 22 April 2008 was that Dr. Azaz had been advised by Mr. Graham Baldwin, a counsellor, in terms set out in paragraph 23 of the witness statement of Mr. Baldwin dated 5 November 2008 as follows:- "During 2005, the question of Yehu's proposed legal action was raised by him on a number of occasions. The concern that I had was that any additional stress on top of his retraining and re-entering medicine as a lowly house officer with the long hours on duty that this entailed would be likely to cause a relapse and therefore legal action was inadvisable. It was clear that in order of priority his mental health and restarting his career was far more important than obtaining redress and recompense from his guru. I spoke to both Dr. Smith [Dr. Azaz's general medical practitioner] and Dr. Tsatalou as part of my conversation mentioned in para. 18 and following the discussion about this strongly advised Yehu that it was not the right time to pursue his action and that he should wait to see how things developed with his health and his return to medicine." Mr. Baldwin went on in his witness statement to express his own views about what happened, or did not happen, after 2005, without it being clear whether he communicated those views to Dr. Azaz. In cross-examination he said that he advised Dr. Azaz against commencing legal proceedings at the end of August or beginning of September 2005. In his witness statement Mr. Baldwin said about later times:- "25. The first two years of Yehu's GP course involved him working as a Senior House Officer for a number of departments within the hospital. Such work involved him returning to a regime of doing nights on call and initially he found this incredibly stressful and tiring. This was made worse by the fact that by now he was 47 years of age, considerably older than his peers and also had much studying to do to refresh his medical knowledge. Having been so long out of hospital medicine, he was not used to working such long hours and he became more and more tired. It is my firmly held opinion that if at this time he had had to concentrate on the pursuit of his legal action, which would have involved remembering all of the events that had so traumatised him during his years within the group, it would have proved much too much for him and he would have been likely to have had a further relapse or psychotic break. 26. It was only when it became obvious that his medical career was back on track and that he had got over the stress of 24 hour on call rotas that I was prepared to give my support when asked by Yehu and his parents in early 2007 to him pursuing the group for redress. …" Consequently it seems that Mr. Baldwin advised Dr. Azaz in early 2007 that he was fit to commence an action. However, that is not what happened. Mr. Yell submitted that, as Dr. Azaz had the benefit of the advice of Kirby from at least May 2004, it should be assumed that either that firm failed to draw the attention of Dr. Azaz to the need to commence this action before the expiration of the limitation period in relation to the Injury Claim, in which event it would seem that Dr. Azaz had a good cause of action against Kirby for failing to give that advice, or Kirby did give that advice, but Dr. Azaz did not accept it, in which event the consequences fall upon his own head. Certainly those alternatives seem to be the most plausible, although there may be others. Mr. Ashfield put before me nine witness statements, principally made by friends or relations of Dr. Azaz, in which, in each case, the maker expressed views as to how Dr. Azaz had seemed in 1997 or in 2003, 2004 or 2005, as compared with how he had seemed prior to going to live at the Base. None of these witness statements had been served under cover of a notice under Civil Evidence Act 1995. Mr. Ashfield submitted that each of the witness statements was admissible under Civil Evidence Act 1995 s.2(4) notwithstanding the failure to give notice. I think that that is technically correct, but in assessing the weight to be attributed to each of the witness statements, I consider that it is appropriate to have in mind that, had a notice been served, the defendants would have had the opportunity, of which they have been deprived, of requiring the maker of a statement to attend for cross-examination. In other words, the course taken on behalf of Dr. Azaz has involved, it seems deliberately, for permission could have been sought to serve notices late, depriving the defendants of the opportunity of cross-examining the relevant witnesses. In fact, as it seemed to me, the contents of the witness statements were of little value in any event, given that the period principally relevant to the delay in the commencement of the Injury Claim was between June 2004 and April 2008. In the end, therefore, there was really no explanation of any sort as to why this action was not commenced, as it might have been, at any time after early 2007, and the only explanation for delay between June 2005, when Dr. Azaz recovered from the third episode of mental illness, and early 2007 was the views of Mr. Baldwin, with there being no evidence of what advice was given by Kirby, instructed from May 2004 at the latest. On the material put before me, I am not satisfied that there was any satisfactory reason why the claim form in this action was not issued prior to the expiry of the limitation period relevant to the Injury Claim, and there was no explanation at all for the delay between the expiry of that limitation period and the issue of the claim form. The provisions of s.33(3)(b) of the 1980 Act require attention to be given to the impact of the passage of time since the expiry of the limitation period on the quality of the evidence available to each of the claimant and the defendants. Mr. Ashfield urged upon me the fact that the prejudice to the defendants as a result of the delay in commencing this action was mitigated by the fact that much of the ground needed to be covered in this action had been covered in 1995 and 1996 on behalf of the defendants in the course of preparing for the trial of the Davies Action. Certainly witness statements were prepared for Mrs. Denton, her husband, and Colonel Terry Palmer, one of the adherents of the Centre. In addition, various documents assembled for the purposes of the Davies Action were still available. However, all of the witness statements and the documents were relevant only to the claims of Mrs. Azaz for return of money and possessions. The Injury Claim was not material in the Davies Action. Dr. Azaz did not fall ill until after the conclusion of the Davies Action. Moreover, as Mr. Ashfield made plain in his closing submissions, in this action there would be a vigorous dispute as to the accuracy of the witness statements assembled on behalf of the defendants in the Davies Action, so in reality what one had to contemplate was cross-examination of witnesses on behalf of the defendants getting on for twenty years after the earliest of the events likely to be examined. I have already noted the age of Mrs. Denton. According to the evidence of Mr. Casley, Mrs. Denton suffers from a heart condition, high cholesterol and diabetes. Mr. Ashfield pointed out that there was no medical evidence in support of the condition of Mrs. Denton, but I accept the evidence of Mr. Casley on the point. Colonel Palmer, like Mr. Denton, is 81 years of age. I was invited by Mr. Yell to take judicial notice of the facts that memories fade with the passing of time and that, as people get older, their memories are not as reliable as those of younger people. I accept the first proposition. It is a statement of one's common experience. I am not sure about the second proposition, and without specific evidence would not be inclined to accept it. Nonetheless, I think that it is obvious that the position of the defendants is prejudiced by the fact that the various witnesses likely to be called on their behalf at any trial would be likely to be cross-examined as to events occurring perhaps as long ago as 1990, with the most recent events likely to be examined being events in 2003. In relation to the Injury Claim the relevant period would seem to be from some point in 1996 until the end of 2003. Mr. Yell submitted, and I accept, that a trial of this action on all issues raised in the Particulars of Claim would be unlikely to take place for a year. The witness to the signature of Dr. Azaz on the Joining Agreement, Carol Palmer, died on 30 November 2005. It would seem that Carol Palmer, had she lived, would have been able to give evidence about how Dr. Azaz seemed at the date on which he signed the Joining Agreement, and, perhaps, more generally during the period of his residence at the Base. It can rightly be said that most of the disadvantages suffered by the defendants to which I have referred in the two preceding paragraphs had in substance occurred prior to the expiry of the limitation period in relation to the Injury Claim. Consequently, to the extent that that is so, they do not fall to be considered specifically in the context of s.33(3)(b) of the 1980 Act. However, they are still relevant for the reasons explained by Lord Oliver of Aylmerton in the passage from his speech in Donovan v. Gwentoys Ltd. which I have set out. While not, perhaps, important as possible witnesses for the defendants, Dr. Tylden died on 3 February 2009; Dr. Azaz's father died on 27 October 2008; and Dr. Azaz's mother, who was born on 25 December 1931, so she is now 77 years of age, she suffered a heart attack on 3 March 2009. It is possible that relevant documents have been lost by the defendants as a result of two incidents of flooding at the Base, the first in November 2000 and the second in December 2008. The documents lost appear to include the papers of Dr. Azaz relating to his divorce from Mrs. Azaz. Mr. Yell submitted that the allegations in those divorce proceedings might have shed some light on both the circumstances in which Dr. Azaz and his wife came to reside at the Base and the circumstances in which they came to transfer money and goods to the defendants. Mr. Yell also submitted that those papers might shed light on the cause of Dr. Azaz's first episode of mental illness, which Mr. Yell suggested could have been referable in fact to the breakdown of his marriage. Mr. Yell contended that it was not known whether it would now be possible to trace the professional advisers, such as Mr. West and Mr. James, who advised Dr. and Mrs. Azaz in relation to the transfer of assets to the defendants. That consideration is immaterial to the Injury Claim. The conduct of the defendants after the cause of action in the Injury Claim, or the other causes of action vulnerable to the provisions of s.11 of the 1980 Act, accrued is specifically mentioned in s.33(3)(c), but on the facts of the present case does not really require particular consideration. Between signing the Leaving Agreement and the receipt of the Letters before Action Dr. Azaz did not indicate that he was thinking of pursuing any claim against the defendants. It was common ground that Dr. Azaz was under a disability, for the purposes of s.33(3)(d) of the 1980 Act, between November 2004 and June 2005. That period of disability plainly falls to be taken into account in determining how the discretion conferred by s.33 of the 1980 Act should be exercised. The last factor listed in s.33(3) of the 1980 Act as requiring particular consideration is (f). I have already mentioned the Tylden Report and the advice of Mr. Baldwin, and have noted that there was no evidence as to any legal advice given by Kirby to Dr. Azaz at any stage. In the circumstances I am not satisfied that it is appropriate for me to exercise my discretion under s.33(1) of the 1980 Act in favour of Dr. Azaz. It is, perhaps, appropriate for me to record my view that, even if I had been persuaded to exercise my discretion in favour of Dr. Azaz in relation to the Injury Claim, it would not have followed that I would have exercised my discretion in his favour in relation to the other causes of action vulnerable to the provisions of s.11 of the 1980 Act. S.33(1) confers a discretion on the court not only to direct that the provisions of s.11 should not apply "to the action" but also that it should not apply to "any specified cause of action to which the action relates". Thus, it is necessary to consider separately each cause of action to which the provisions of s.11 provide a defence. S.33 has the potential to operate so as to extend a limitation period of 6 years for breach of contract, or for negligence not causing personal injury, if causes of action for breach of contract or negligence are included in an action which also includes a claim for damages for personal injury alleged to have arisen considerably later in point of time than the breach of contract or negligence. It would, as it seems to me, be wrong in principle for the court to use the discretion conferred by s.33 of the 1980 Act to extend limitation periods which are fixed by the Act and not capable of being extended by discretion in the ordinary case, or those which have their own code for extension, for example s.14A of the 1980 Act. As I have explained, any cause of action for breach of contract or negligence in respect of the Cash Claim, the Possessions Claim Mark I or the Career Claim accrued a long time before the commencement of this action. The answer to Preliminary Issue b is thus, yes, yes and no. Preliminary Issue c The answer to Preliminary Issue c is that the Cash Claim and the Possessions Claim Mark I, insofar as founded on alleged breach of contract or negligence, and the Career Claim are all statute-barred. Laches It remains to consider Preliminary Issue e. Laches is said to be a defence to the Cash Claim and the Possessions Claim Mark I, insofar as those claims are based on invoking the equitable jurisdiction of the court to set aside transactions into which a party entered as a result of undue influence. I am not able at this stage to reach any conclusion as to whether any of the transactions sought to be set aside as part of the Cash Claim or the Possessions Claim Mark I was in fact a transaction into which Dr. Azaz entered as a result of undue influence. Whilst I have already noticed evidential difficulties in these cases as a result of previous accounts given by Dr. Azaz, for example in the Injunction Statement, I proceed, in considering the issue of laches, on the basis that Dr. Azaz was induced to enter into the relevant transactions by undue influence. It is convenient, first, to consider what is meant by the expression "laches". In Goldsworthy v. Brickell [1987] 1 Ch 378 at page 410 Nourse LJ, giving the leading judgment, said:- "The equitable defences which would usually be regarded as being available to defeat such a right are laches, acquiescence and confirmation: see for example the judgment of Lindley LJ in Allcard v. Skinner 36 ChD 145, 186-189. By any of these means the transaction could have been affirmed, in the first two cases impliedly and in the third case expressly. These expressions are not uniformly used. Sometimes laches is taken to mean undue delay on the part of the plaintiff in prosecuting his claim and no more. Sometimes acquiescence is used to mean laches in that sense. And sometimes laches is used to mean acquiescence in its proper sense, which involves a standing by so as to induce the other party to believe that the wrong is assented to…." Lord Selborne LC, giving the advice of the Privy Council in Lindsay Petroleum Co. v. Hurd (1874) LR5PC 221, explained at pages 239 – 240:- "Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy…." Next, in Allcard v. Skinner (1887) 36 ChD 145 Lindley LJ considered the issue, at pages 186 – 187:- "I proceed to consider the second point which arises in this case, namely, whether it is too late for the Plaintiff to invoke the assistance of the Court. More than six years had elapsed between the time when the Plaintiff left the sisterhood and the commencement of the present action. The action is not one of those to which the Statute of Limitations in terms applies; nor is that statute pleaded. But this action very closely resembles an action for money had and received where laches and acquiescence are relied upon as a defence: and the question is whether that defence ought to prevail. In my opinion it ought. Taking the statute as a guide, and proceeding on the principles laid down by Lord Camden in Smith v. Clay and by Lord Redesdale in Hovenden v. Lord Annesley the lapse of six years becomes a very material element for consideration. It is not, however, necessary to decide whether this delay alone would be a sufficient defence to the action. The case by no means rests on mere lapse of time. There is far more than inactivity and delay on the part of the Plaintiff. There is conduct amounting to confirmation of her gift. Gifts liable to be set aside by the Court on the ground of undue influence have always been treated as voidable and not void. If authority for this proposition be wanted, such authority will be found in Wright v. Vanderplank and Mitchell v. Homfray. Moreover, such gifts are voidable on equitable grounds only. A gift intended when made to be absolute and irrevocable, but liable to be set aside by a Court of Justice, not on the ground of a change of mind on the part of the donor, but on the grounds of public policy based upon the fact that the donor was not sufficiently free relatively to the donee, such a gift is very different from a loan which the borrower knows he is under an obligation to repay, and is also different from a gift expressly made revocable and never intended to be absolute and unconditional. A gift made in terms absolute and unconditional naturally leads the donee to regard it as his own; and the longer he is left under this impression the more difficult it is justly to deprive him of what he has naturally so regarded. So long as the relation between the donor and the donee which invalidates the gift lasts, so long is it necessary to hold that lapse of time affords no sufficient ground for refusing relief to the donor. But this necessity ceases when the relation itself comes to an end; and if the donor desires to have his gift declared invalid and set aside, he ought, in my opinion, to seek relief within a reasonable time after the removal of the influence under which the gift was made. If he does not the inference is strong, and if the lapse of time is long the inference becomes inevitable and conclusive, that the donor is content not to call the gift in question, or, in other words, that he elects not to avoid it, or, what is the same thing in effect, that he ratifies and confirms it. This view is not only conformable to the well-settled rules relating to other voidable transactions (see the judgment in Clough v. London and North Western Railway Company), but is also warranted by Wright v. Vanderplank and Mitchell v. Homfray." Finally, in Brooker v. Fisher [2008] EWCA Civ 287, at paragraph 55 Mummery LJ said:- "Laches looks to undue delay, to any change of position by the defendants resulting from the delay and to the unreasonableness and injustice of stopping the defendants from carrying on doing what they have been doing for very many years. The concept of unconscionability, which, as I shall explain, underpins the doctrine of proprietary estoppel, also appears in formulations of the defences of laches and acquiescence. The change of position aspect of acquiescence and laches is less stringent than the requirement of detrimental reliance in cases of proprietary estoppel. Undue delay by the claimant and the defendant's intervening activities over a long period may suffice to make it unjust to disturb the situation, especially if it is impossible to return the defendants to their original position without some injustice to them." Whilst it seems from the judgment of Lindley LJ in Allcard v. Skinner that in some circumstances it may be material, in a case of laches, to consider what the limitation period would have been, if the claim to which laches is raised as a defence had been formulated as a claim in respect of which the 1980 Act provided a period of limitation, the concept of limitation cannot really be applied in a case in which the relief sought is to avoid a transaction which, unless and until avoided, stands as effective. In a sense there is no cause of action in such a case until the court has granted the relief, because until then the transaction stands. The consideration, in the case of laches, is, therefore, it seems to me, a broad one. What has to be considered is whether, having regard to the acts of the parties in the period between the transaction sought to be avoided and the date upon which the claim for relief was made by commencement of proceedings, and the delay between those two events, it would be unjust to grant a remedy. The significance of the delay is whether it has been such as to induce the other party, in a case of alleged undue influence, to suppose that a challengeable transaction will not in fact be challenged. Mr. Yell submitted in his written opening skeleton argument:- "41. Proceedings to set aside a transaction on the grounds of undue influence would not normally be barred by lapse of time whilst the influence persists, however long after the transaction. But after the influence has ceased the donor must commence proceedings within a reasonable time … 42. … It is submitted that in determining whether it is conscionable for C's undue influence claims to proceed, the Court will take into account many of the matters referred to above (albeit under its equitable jurisdiction rather than under ss. 11 and 37 [sic] of the 1980 Act)." Mr. Ashfield in his written closing submissions put his argument in this way:- "4. The preliminary issue in relation to this claim is very simple: has the Defendant established laches (so that it would be unjust or inequitable for this claim to proceed)? The burden of proof is upon the Defendant. 5. This equitable defence is well known. In this case the Court has to decide when laches begins. It is plain that laches cannot begin until you are free of the undue influence. That is common ground [It was not, in fact, common ground]. 6. It is not clear precisely what period of delay the Defendants rely upon for the laches defence. It cannot start before December 2003 and, in reality, cannot start until much later when the Claimant recovers his health and becomes free from this undue influence. 6.1 On the peculiar facts of this case (and bearing in mind the period of "disability") any period of delay could not begin before June 2005. Letters before action were May 2007. Proceedings were issued on 22nd April 2008. 6.2 The real period that falls to be considered starts on about 28th November 2005 (when the Claimant starts honorary work) or March 2006 (when his counsellor, Mr. Baldwin, was able to reduce the frequency of consultations). 7. What is the correct approach to laches delay. An important question is what prejudice is suffered by the Defendants. 8. In this case there is no prejudice that makes it unjust or inequitable for the claim to proceed." Mr. Ashfield submitted that it was simply immaterial what happened in an undue influence case between the date of the transaction, or the dates of the transactions, sought to be set aside, and the date upon which it appeared that the undue influence ceased to be exercised. He seemed to suggest that the claimant in such a case had six years from the date at which the undue influence ceased to be exercised to commence proceedings, for he devoted some time to analysing the facts in Allcard v. Skinner in which, as I have noted, Lindley LJ did make some reference to the possible significance of a period of six years. I reject the submission of Mr. Ashfield that it was immaterial to consider in the present case what transpired between the dates of the transactions which Dr. Azaz sought to impeach and the date at which he ceased to be subject to undue influence, assuming that he ever was subject to such influence. On the authorities to which I have referred, in particular Lindsay Petroleum Co. v. Hurd, the acts of the parties after the date of the relevant transaction, or the dates of the relevant transactions, are in fact highly material. I incline to the view that one is concerned, in relation with the issue of laches, with the specific issue whether it is fair, having regard to the acts of the parties towards each other between the date of the transaction sought to be impeached and the commencement of the action, and the passage of time, insofar as such may have led the defendant in the circumstances to suppose that the claimant would not challenge the transaction, for the claimant to be permitted to claim relief. Thus the focus in relation to laches, in my judgment, may be somewhat narrower than the focus under s.33, although many of the factors relevant to the latter may also be relevant to the former. In the present case it is material to notice, in the context of laches, not only the passage of time since the dates of the various transactions sought to be impeached – as much as nearly sixteen years prior to the date of the issue of the claim form, and at the very least, it seems, eleven years prior to the date of the issue of the claim form (the sum of £15,000 given by Dr. Azaz from the proceeds of his divorce settlement with his wife) – but also that on two occasions during the period Dr. Azaz had disclaimed any intention to recover any asset given to the defendants. Those disclaimers were in the Joining Agreement and in the Leaving Agreement. Whilst Dr. Azaz asserted that he was acting under undue influence in executing the Joining Agreement, he executed the Leaving Agreement after ceasing to reside at the Base. He was in fact suffering from mental illness at the date of signature of the Leaving Agreement, although there was no evidence to suggest that the defendants were aware of that. However, Dr. Azaz was not, at the date of signature of the Leaving Agreement, unfit to manage his own affairs. His own evidence was that, at that time, he had the assistance of members of his family in dealing with correspondence with the defendants. Having executed the Joining Agreement and the Leaving Agreement Dr. Azaz had positively created the impression in the defendants that he would not seek to set aside the transactions which form the basis of the Cash Claim and the Possessions Claim Mark I. In those circumstances, as it seems to me, fairness to the defendants required that he repudiate those documents immediately he decided to seek to impeach the transactions which form the basis of the Cash Claim and the Possessions Claim Mark I. As long as those documents went unrepudiated they encouraged the defendants to suppose that there would be no claim. The longer that situation continued, the more unfair it became to permit Dr. Azaz to assert that he was not bound by what he had signed. Notwithstanding his evidence that he had assistance from his family in conducting correspondence with the defendants in the early part of 2004, if, within a matter of weeks of recovering his mental health in June or July 2004, Dr. Azaz had communicated to the defendants that he repudiated the Joining Agreement and the Leaving Agreement, or that he was intending to pursue the Cash Claim and the Possessions Claim Mark I, it would not have seemed to me that justice required that the laches defence succeed. However, not only did Dr. Azaz not do that, but no intimation of any claim of any kind was made until the despatch of the Letters before Action on 2 May 2007. That is over three years later. Even allowing for the third episode of mental illness, since June 2005 Dr. Azaz has been free of mental illness and able to conduct his own affairs. He has had solicitors since, at the latest, May 2004. He has been working in paid employment as a doctor since 25 January 2006. The only proper conclusion, as it seems to me, is that, in the circumstances, the period of delay is such as to make it unfair to the defendants to permit Dr. Azaz to pursue the Cash Claim and the Possessions Claim Mark I. The answer to Preliminary Issue e is that all of Dr. Azaz's claim to equitable relief is barred by laches. The Possessions Claim Mark II It was common ground that the Possessions Claim Mark II is not susceptible to a defence of limitation or laches. That claim must thus go forward. The case relied on in support of the Possession Claim Mark II is inconsistent with the passages from the Injunction Statement which I have quoted, with the Joining Agreement, with the Leaving Agreement, and with the witness statement made by Dr. Azaz for the purposes of this action dated 12 October 2008, where he said, at paragraph 5:- "I agree that my claim is in separate parts, as Mr. Jenkins states in paragraph 4. He then goes on to rely upon the fact that when these very substantial sums of money and all my possession [sic] were given to the Defendants they were gifts. My then wife also made similar gifts of all of her assets and property. In short, at about the time we both joined the Centre we gave the Defendants everything we had. The precise dates of each individual gift can be ascertained when the documents are examined. I have given the dates that I believe are correct within my Replies." In his oral evidence in this trial Dr. Azaz verified, without correction or alteration, his witness statement dated 12 October 2008. It seems that Dr. Azaz faces considerable difficulties in establishing the Possessions Claim Mark II in the light of the terms of the Injunction Statement, the terms of the Joining Agreement, the terms of the Leaving Agreement, and the terms of paragraph 5 of his witness statement dated 12 October 2008. Mr. Yell sought to persuade me during this trial to broaden the scope of the trial to include the merits of the Possessions Claim Mark II. Mr. Ashfield resisted that attempt on the grounds that there was, or might be, evidence relevant to the merits of the Possessions Claim Mark II which was not before the court, and could not conveniently be put before the court during this hearing. In the circumstances, I was not persuaded to broaden the scope of the trial. However, the value of the Possessions Claim Mark II, as pleaded, is £35,645. Mr. Yell submitted, with some plausibility, that that valuation may be excessive. Certainly the items claimed included a coffee table made by Dr. Azaz's father, to which a valuation of £10,000 was attributed, and a black and white photograph of Dr. Azaz's father, to which a valuation of £250 was attributed. However that may be, the aggregate values of the items claimed, even on Dr. Azaz's own valuations, fall well within the jurisdiction of the county court, and, subject to hearing the submissions of Counsel, I have it in mind to order the transfer of the balance of this action to the relevant county court. Conclusions In the circumstances, I think that it is more convenient not formally to answer each of the Preliminary Issues, but to make an order which gives effect to my conclusions as to those issues, namely that all causes of action, save that of Dr. Azaz for delivery up of the possessions listed in the Second Schedule to the Particulars of Claim on the ground that each of such items was provided to the defendants on long-term loan, and return was demanded on 2 May 2007, be dismissed.

Chinnappa Reddy, J. Habib Usman, sole appellant, was acquitted by the learned Sessions Judge, Ahmedabad Rural of an offence under Section 302, Indian Penal Code. On appeal by the State of Gujarat the order of acquittal was set aside by the High Court and he was companyvicted under Section 302, Indian Penal Code and sentenced to suffer imprisonment for life. He has filed this appeal. The case against the accused was as follows There was a trivial quarrel between the accused and Hajishah, P.W. 8 over a soap box near the Koteswar tube well, where both of them had gone for a bath. The deceased Amminuddin Miyasaheb intervened and this angered the accused. who went away uttering a threat at the deceased. On the day of occurrence, at about 8 A.M. the deceased had gone to Viramgam Railway Station to catch a train to go to Ahmedabad, as was his habit every day. Having put his bag in the companypartment, he was standing on the platform when the accused attacked him with a knife. The blow was delivered on the left side of the chest. The deceased sat down clutching his chest with both hands and crying save me, save me, P.W. 3, Yusufbhai who had gone to the Railway Station to see his sister-in-law off, witnessed the occurrence, went near the deceased, made him get up, took him up to the gate, put him in a carriage and went with him to the hospital. The occurrence was also witnessed by P.Ws. 4, 5 and 6 among others, P.W. 15, Dagadu, a companystable attached to the Railway Police Station happened to be companying along the platform along with another Constable Kamarsingh when they saw a man companying with his hands on his chest, crying save me, save me. The injured person said I am stabbed by one person on my chest on the platform and he has run away. The injured pointed towards the main gate indicating that the assailant had run that way. Dagadu ran towards the main gate in order to apprehend the assailant but he was unable to find him. So he returned. By that time the injured person had been taken to the hospital. Dagdu and Kamarsingh went to the Police Station to inform the Sub-Inspector about the stabbing. An entry was made in the station diary mentioning the information given by Dagadu. At the hospital, in the meanwhile, P.W. 2, the Medical Officer examined the injured and sent an intimation to the Police Station. The Sub-Inspector of Police proceeded forthwith to the hospital and recorded the dying declaration of the injured person in the presence of the Medical Officer. Within half an hour after the statement was recorded the injured expired at 9.15 a.m. As already numbericed the stabbing took place at about 8 a.m. After companypleting the investigation the Police filed a chargesheet against the accused for an offence under Section 302 Indian Penal Code, In support of its case the prosecution relied upon the direct evidence of P.Ws. 3, 4, 5 and 6 and the dying declaration recorded by the Sub-Inspector at the Hospital. The plea of the accused was one of denial. The learned Sessions Judge rejected the evidence of the eye witnesses primarily on the ground that they did number refer to the presence of Dagadu and Dagadu did number mention that any other persons were present near the deceased, when he heard him crying save me, save me. The learned Sessions Judge thought that if Yusufbhai was present at the time of the occurrence and had taken the deceased towards the main gate, he would have certainly met Dagadu and Kamarsingh when they came near the deceased on hearing his cries save me, save me. The failure of Dagadu to mention the presence of Yusufbhai and the statement of Dagadu that he saw a man running towards the main gate with his hands on the chest disproved, according to the learned Sessions Judge, the presence of Yusufbhai as well as his story that immediately on being stabbed the deceased sat down and Yusufbhai made him get up and took him towards the main gate. The learned Sessions Judge discarded the evidence of the other eye witnesses on the ground that they spoke to the presence of Yusufbhai and did number speak to the presence of Dagadu and Kamarsingh. The dying declaration was rejected by the learned Sessions Judge on the ground that the friends and relatives of the deceased were admittedly with the deceased just before he made the dying declaration and there was therefore, an opportunity for the deceased to be tutored to implicate the accused. The learned Sessions Judge also relied on the circumstance that according to Dagadu the deceased did number mention the name of the assailant but merely said that one person had stabbed him. He also relied on the circumstance that the driver of the carriage also stated that the deceased did number mention the name of the assailant. The learned Sessions Judge, therefore, acquitted the accused. On appeal by the State of Gujarat, the High Court held that there was numberacceptable reason for the rejection of the evidence of the eye witnesses or the dying declaration. The High Court went into the matter in great detail and after companysidering elaborately the reasons given by the learned Sessions Judge, it came to the companyclusion that the accused was guilty of the offence of murder. Accordingly the accused was companyvicted and sentenced to suffer imprisonment for life. In this appeal Shri R.K. Garg. Learned Counsel for the appellant argued that two views were possible on the evidence in the case and the learned Sessions Judge had taken one view which companyld number be described as unreasonable, and it was, therefore, number permissible for the High Court to interfere with the order of acquittal. He also argued that the reasons given by the learned Sessions Judge were number met by the High Court. Shri Garg relied primarily on the entry, made in the Station diary, of the information furnished by Dagadu and argued that the name of the assailant was number known initially and that the accused was implicated later. He argued that the entry in the Station diary and the evidence of Dagadu and the carriage driver companypletely destroyed the value to be attached to the dying declaration and the evidence of the eye witnesses. We have companysidered the arguments of Shri Garg in the light of the evidence and the views expressed by the Sessions Judge and the High Court. We are satisfied that the High Court was justified in interfering with the order of acquittal. As mentioned by us earlier the occurrence took place at about 8 a.m. The deceased died at about 9.15 a.m. The dying declaration was recorded half an hour before the death of the deceased, that is, at about 8.45 a.m. Great weight must naturally and necessarily be attached to the dying declaration, recorded so shortly after the occurrence. Merely because some friends and relatives happened to be with the deceased before his statement was recorded, the statement cannot be thrown out as tutored. In the first place it was indeed natural for the friends and relatives of the deceased to be with the deceased at that time. In the second place there is numberhing to indicate either in the evidence of the Doctor or of the Sub-Inspector or of the brother of the deceased that anyone tutored the deceased. It was number suggested to P.W. 9 the brother of the deceased that anyone was interested in falsely implicating the accused or that anyone had tutored the deceased to implicate the accused. The Trial Judge sought to draw the inference that the deceased must have been tutored to implicate the accused from the circumstance that the name of the assailant was number mentioned in the entry in the station diary made on the information furnished by Dagadu P.W. 15. We may here extract the entry in the Station diary. It is as follows Extract of entry No. 5 dated 15-9-69 from the Station Diary of Viramgam Railway Police Station 8.20 hrs. Today we are informed by Police Constable Dagadu Kashiram, B.No. 77 and Armed Police Constable Kamarsingh Lakkharaj B.No. 40 that they were companying for duty towards Sama Suriya Police Line and when they had companye to the Railway station one man was companying running to them raising cries save and thereupon Dagadu Kashiram chased the assailment of the deceased. The injured person did number give his name but he said I am stabbed by one person on my chest on the platform and he has run away. Meanwhile other persons took away the injured person to the hospital in a carriage. On hearing about this information I handed over the charge to Head Constable Allauddin and went to the Hospital for further inquiries. Sd - Sub Inspector. All that the entry in the Station diary shows is that Dagadu and Kamarsingh saw the injured running towards them raising cries save me, save me, and that Dagadu thereupon tried to chase the assailant. At that time the injured person did number give his name but merely said I am stabbed by one person on my chest on the platform. It is clear that all that Dagadu heard was the involuntary exclamation of the deceased to the effect that he had been stabbed by one person on the platform and that he should be saved. The entry in the Station diary does number show that Dagadu enquired from the deceased as to who his assailant was and that the deceased failed to disclose the name of the assailant. In our view it would be wholly unjustifiable to put the involuntary exclamation of the deceased on the same par as a dying declaration and to reject the dying declaration recorded by the Sub Inspector later in the presence of the Medical Officer on the ground that the deceased did number name his assailant while crying out save me, one person has stabbed me. We are of the view that the reasons given by the learned Sessions Judge for discarding the dying declaration were unsatisfactory and therefore, the High Court was justified in accepting the dying declaration and acting upon it. The learned Sessions Judge had also referred to the evidence of D.W. 1, the driver of the carriage in which the deceased was taken to the hospital. D.W. 1 said in his evidence that when he questioned the deceased as to who had stabbed him, he said that one man had given him a knife blow and that he should be taken to the hospital immediately. From this casual question of the driver of the carriage and the answer of a person who had been seriously injured and who was anxious to be taken to the hospital, it is too much to infer that the deceased did number know the name of the assailant and therefore, was unable to mention the name to D.W. 1. The High Court was, therefore, right in number attaching any importance to the evidence of D.W. 1. Coming to the evidence of the eye witnesses it has to be numbericed straightway that the name of Yusufbhai P.W. 3 was mentioned in the dying declaration itself as the person who had taken him to the hospital. The reason given by the learned Sessions Judge for rejecting the evidence of P.W. 3 was that P.W. 3s evidence companyld number be true if the evidence of Dagadu was true because Dagadu did number mention that the deceased was being taken towards the main gate by P.W. 3 but stated, on the other hand, that the deceased was running towards them when he and Kamarsingh first saw him. We do number think that the learned Sessions Judge was justified in rejecting the evidence of P.W. 3 on that account.Dagadu and Kamarsingh saw the deceased companying towards the gate holding his chest with his hands and crying out save me, one person has stabbed me Immediately Dagadu ran towards the main gate In the hope of catching the assailant. He must have had but a fleeting glimpse of the deceased before he ran to chase the assailant. It is possible that he did number numberice, in those fleeting moments, whether the deceased was walking by himself or whether some one was supporting him and taking him towards the main gale, Dagadu himself did number witness the actual stabbings. The evidence of P.W. 3 that he witnessed the occurrence companyld number be rejected merely because Dagadu did number numberice whether anyone was supporting the deceased after he was stabbed when he was proceeding towards the main gate. Similarly, it is possible that P.W. 3 on his part did number numberice Dagadu and Kamarsingh. We do number see how the evidence of P.W. 3 that he witnessed the stabbing is liable to be rejected merely because, after the stabbing, P.W. 3 and Dagadu did number numberice each other. What has been said about P.W. 3 applies equally to the evidence of P. Ws, 4, 5 and 6. Their evidence was number liable to be rejected merely because they vouched for the presence of P.W. 3 and because they did number numberice Dagadu and Dagadu did number numberice them. It is number as if Dagadu stopped the deceased and spoke to him. Dagadu merely heard the deceased cry out and saw him pointing towards the main gate. When he heard the deceased cry out and saw him pointing towards the main gate he ran towards the main gate in the hope of catching the assailant. Dagadu did number claim that he spoke to the deceased or that the deceased spoke to him. We are of the view that the learned Sessions Judge gave insubstantial reasons to reject the evidence of P.Ws. 3, 4, 5 and 6. The High Court companysidered the evidence of each witness separately and dealt with the reasons given by the learned Sessions Judge to reject their evidence. We have ourselves gone through the evidence of the eye witnesses. We were unable to discover any reason to discard their evidence. Not a single suggestion was made and numberhing was elicited to shake their credit in any way. We are satisfied that the learned Sessions Judge had taken an unreasonable view of the evidence and that the High Court was justified in upsetting the companyclusions of the learned Sessions Judge.

Opinion of Mr Advocate General Lenz delivered on 24 February 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 Opinion of the Advocate-General ++++ Mr President, Members of the Court, A - Facts 1 . These proceedings, brought before us on a reference by the cour d' appel, Versailles, concern the interpretation of Articles 30 and 36 of the EEC Treaty on the one hand and of Article 86 on the other, in relation to the fact that Sacem, the French copyright-management society, charges discotheques a "supplementary mechanical reproduction fee" on the use of records from other Member States . 2 . The following points are relevant in that regard . 3 . Under the French Law of 11 March 1957 on literary and artistic property the right of exploitation held by the author of a work comprises the right of performance on the one hand ( that is to say, the direct communication of the work to the public and, according to the case-law and to a statute of 3 July 1985, the public playing of recorded music ) and the right of reproduction on the other ( that is to say, the material fixation of the work by a method permitting indirect communication to the public ). The law expressly provides that the assignment of the right of performance does not imply the assignment of the right of reproduction, and vice versa . In Article 31 of the law it is also expressly provided that in the event of the transfer of the copyright the extent and purpose of the use to which the work may be put must be defined . Accordingly, when the right of reproduction is assigned ( generally to manufacturers of recordings, in return for a reproduction fee ) it is expressly provided that recordings may only be marketed for private use . If a recording of a work is played in public, therefore, not only a performance royalty but also the abovementioned supplementary reproduction fee become payable . 4 . Elsewhere in the Community that legal position prevails only in Belgium, by virtue of case-law; under the law of the other Member States the right of reproduction is exhausted when it is transferred to a manufacturer of recordings, and when recordings are played in public only a performance royalty is payable . 5 . In France, copyrights are administered by Sacem, a society composed of authors, composers, music publishers, sound-recording manufacturers and artists . It looks after works of its members and also those of foreign copyright societies with which it has reciprocal but non-exclusive representation agreements . Its subsidiary SDRM ( Société pour l' administration du droit de reproduction méchanique des auteurs, compositeurs et éditeurs ) is responsible for the exploitation of rights of reproduction; however, the supplementary mechanical reproduction fee payable on the public use of sound recordings is collected by Sacem, acting as agent . 6 . Sacem enters into contracts with users of musical works, inter alia discotheques, providing for the payment of fees calculated according to the importance of the music in the user' s activities . In the case of discotheques it requires 8.25% of their receipts, composed of a performance fee of 6.6% and a supplementary mechanical reproduction fee of 1.65% ( that breakdown, however, is not expressly made in the contracts ). 7 . Since 1974 the plaintiff in the main proceedings has operated a discotheque in Fréjus, in which he plays records the rights to which are held by Sacem . These two parties entered into legal proceedings, which were referred by the cour de cassation to the cour d' appel, Versailles . The latter court has referred to us the question whether Articles 30 and 36 or Article 86 of the EEC Treaty prevent Sacem from charging the abovementioned "supplementary mechanical reproduction fee ". 8 . For further details of the background to the main proceedings, the order of the national court, the wording of the preliminary questions and the written observations submitted to the Court reference may be made to the Report for the Hearing . In so far as is necessary I shall deal with the remarks made at the hearing in my Opinion . B - Opinion 9 . My views on the issues referred to us are the following : I - Question 1 1 . 10 . In the course of the proceedings, as the Court will recall, the view was expressed that Article 30 of the EEC Treaty was not relevant, since the French legislation in question, concerning the charging of a fee for the public playing of recorded music, relates only to the provision of services . Doubts as to the applicability of Article 30 in such circumstances were also raised with regard to the fact that that legislation does not concern trade and the importation of goods, it has nothing to do with the free movement of goods and above all the crossing of frontiers is entirely irrelevant . It was also argued that the fact that the fee in question applies without distinction to domestic products and imported recordings implies that Article 30 is not applicable . 11 . I have begun by summarizing those arguments because it is my impression that the problem raised in the main proceedings cannot really be dealt with in that manner; these arguments are clearly based on an excessively narrow view of Article 30 . 12 . As is well known, the Court has consistently held that Article 30 applies to any measure which is capable of hindering intra-Community trade, directly or indirectly, actually or potentially ( see for example the judgment of the Court in Case 229/83 ( 1 )). In its view it is the effects of a measure on trade which are of key significance for the application of Article 30 . Restrictive effects - indeed, effects of all kinds - can arise from legislation concerned with matters other than trade and imports, as the Court' s case-law clearly shows . Nor can such restrictions be excluded in the case of legislation regarding the provision of services, in particular where sound recordings, that is to say goods for the purpose of the Treaty, play a significant role ( as, for instance, in the playing of music in discotheques ). 13 . It is equally clear, moreover, that the mere fact that legislation affects imported and domestic products in the same manner is not sufficient to avoid the application of Article 30 . Reference may be made in that regard to the judgment in Case 130/80 ( 2 ) ( concerning a regulation of general application laying down limits for the quantity of dry matter in bread ); reference may also be made to the price regulations at issue in Joined Cases 16 to 20/79 ( 3 ) and Case 231/83, ( 4 in which it was necessary to determine whether prices were set in such a manner that the competitive advantage of imported goods was neutralized . With regard to the issues raised in the main proceedings, however, it cannot be denied that should the charging of the supplementary mechanical reproduction fee be ruled unlawful - on the basis of considerations relating to the actual subject-matter of copyright and its exhaustion in the event of lawful reproduction in a foreign country - the effect could be that because of their price advantage such sound recordings could become more attractive to users and imports could thus increase . Conversely, it would also mean that the charging of the fee might affect imports and that there might be grounds for applying Article 30 even though the fee is charged in respect of both imports and domestic goods without distinction . 2 . 14 . If, on the other hand, it is recalled that in its order the national court expressly stated that the amount of the combined fee ( 8.25% of income ) was not to be regarded as unreasonable, and that it was also stated that the plaintiff had acknowledged that the charging of a flat rate was legitimate ( in particular since Article 35 of the French Law expressly provides for flat-rate calculations ), there is some foundation for the view that Article 30 does not in fact apply in circumstances such as those of the main proceedings . 15 . ( a ) Thus the Commission expressed the view that should it be held that the supplementary mechanical reproduction fee was not permissible under Community law and must therefore be eliminated, at least with regard to imports, Sacem would in all probability continue to demand 8.25% of their income from discotheques ( as it could easily do in the light of the relative strength of the parties ) as performance royalty alone . No legal objection could be made to such a course of action, since that part of the copyright is certainly not exhausted by the manufacture and marketing of sound recordings in another Member State . The elimination of the supplementary mechanical reproduction fee would not, therefore, in the end work to the benefit of imported sound recordings; looked at in those terms, it cannot be assumed that they would become more attractive from the point of view of price and that patterns of trade would be influenced accordingly . 16 . In my view it cannot be denied that that approach has something to be said for it . Nor can it be objected, as Sacem suggested at the hearing, that such a change would not be entirely without difficulty since the different components of the fee reflect rights owned by different persons ( in its written observations the Commission explained the manner in which the fee is divided, under which the larger part goes to the publishers; its statement in that regard was not contradicted ). That is to say, I think it is relevant that the contracts entered into by Sacem concerning the use of records provide for a single composite fee . How that fee is divided among the copyright holders is a matter for the copyright-management society alone, and it will certainly have no difficulty in determining the portion to which each party is entitled, irrespective of whether its calculation is based on the composite fee or on its components . 17 . ( b ) It must also be recalled that the fees payable by discotheques and other users of sound recordings can only be calculated on a flat-rate basis, and that that is expressly provided for in the French Law of 11 March 1957 . Consequently, it would be difficult to conclude that any elimination of the supplementary mechanical reproduction fee ( for imported sound recordings, on the basis of considerations of copyright ) would have the effect of encouraging individual users to purchase such records and thus influence patterns of trade . If, that is to say, the fee were eliminated in respect of such recordings, with the result, because of the proportion of imported recordings in a discotheque' s stock, that the supplementary mechanical reproduction fee was collected only to a reduced extent ( that is to say, only for domestic sound recordings ), that could not be determined on an individual basis . It would instead be necessary either to work on the basis of general sales statistics and assume that the use of imported sound recordings in discotheques followed the same pattern or establish average figures on the use of imported sound recordings on the basis of a sample of individual discotheques, and no objection could be made to such a course of action . As the Commission correctly emphasized, the only result of such a change would thus be that transfers to foreign copyright societies would be diminished by a corresponding amount, and it is not clear that it would influence the purchasing decisions of individual discotheque proprietors and thus affect patterns of trade . 18 . ( c ) Finally, it must also be pointed out that the most important consideration for discotheque operators in making their arrangements is the music preferred by the public ( that is, as the plaintiff in the main proceedings has stated, music from English-speaking countries and from Italy ). Purchasing decisions are obviously made accordingly; it seems highly questionable whether a certain financial advantage arising out of the elimination of the supplementary mechanical reproduction fee in respect of the use of imported sound recordings would play any role . Even if it were assumed, therefore, that a change in the calculation method could have some influence on the purchasing decisions of discotheque owners, it can hardly be concluded that any such influence would be of sufficient importance in relation to decisions clearly based primarily on taste as to affect patterns of trade . 19 . ( d ) Let me add for the sake of completeness that if there is therefore a strong foundation for the view that the charging of the supplementary mechanical reproduction fee should not be regarded as a measure having equivalent effect to a quantitative restriction on imports within the meaning of Article 30, there is certainly nothing to be achieved by reference to the judgment in Joined Cases 55 and 57/80, ( 5 ) to which the plaintiff clearly attached considerable weight, in part because it was mentioned by the French commission de la concurrence ( Competition Committee ) in its opinion of 19 June 1986 . The circumstances are too different in nature . 20 . That case concerned direct interference with imports ( by the charging, by the German copyright-management society, of a supplementary licence fee on sound recordings from other Member States ) and thus a direct influence on sales of goods ( not merely, as in this case, a conceivable indirect effect by way of the purchasing decisions of domestic customers, which are normally made after goods have been imported ). The key point, moreover, was that the German copyright-management society relied on the right assigned to it ( the right of reproduction ), although the relevant case-law in related areas led to the conclusion that that right could be regarded as exhausted once the product had been put into circulation in another country with the authorization of the author or composer . 21 . This case, on the other hand, is concerned not with the exercise of a right which has already been exhausted in another Member State ( that is to say, the right of reproduction ), but - in spite of its misleading name, which was presumably chosen in view of its beneficiaries - a right similar to the right of performance which has not yet been used in the foreign country and which comes into play each time the recording is used . 22 . For the purposes of this case, therefore, no direct inference can be made from the judgment referred to . That ruling would have to be significantly extended and modified in order for the issues now before us to be dealt with in a corresponding manner . It must now be examined whether there are compelling grounds for such an extension . 3 . 23 . In my view - here I anticipate my conclusion - there are in fact no significant reasons for recommending such a step . Even if it were necessary to assume that Article 30 is in principle applicable in this case, I think there are important considerations which weigh against the conclusion that the charging of a supplementary mechanical reproduction fee on the use of imported records is contrary to the Treaty . 24 . ( a ) First of all, Sacem correctly relied in this regard on Article 36 ( which is expressly referred to in the first question ), under which the restriction of trade may be justified inter alia on grounds of the protection of industrial and commercial property . 25 . As was made clear in the judgment referred to, copyright falls under that description . The key issue in that respect has consistently - and quite correctly - been whether the exercise of the right, and its effects on trade, relate to the specific subject-matter of the industrial property right in question ( see judgment in Case 78/70 ( 6 )); with regard to the exercise of patent rights attention has been focused on the substance of the right ( see judgment in Case 187/80 ( 7 )) and whether it results in restrictions on trade . 26 . In the legal systems of the Member States copyright is typically a right of exploitation in the form of the right of reproduction on the one hand and the right of public performance on the other ( applying equally to situations where it takes place by way of a sound recording ). The peculiarity of French law lies in the fact that an assignment of the right of reproduction may be restricted to a specific use ( private use ); if public use is made of the reproduction, the supplementary mechanical reproduction fee becomes payable . That was apparently considered appropriate for reasons of a proper division of income from the use of the work and in the interests of proper taxation of the beneficiaries ( these reasons may be found convincing even if the choice of a name for the fee does not seem an entirely happy one ). 27 . It might therefore be said that that aspect of French law ( the assignment of the right of reproduction for the purposes of a specific use ) forms part of the specific subject-matter of copyright and that its exercise, involving the charging of a special fee for the public use of sound recordings, is covered by Article 36 . In any event, however, it is important that in circumstances such as those of the main proceedings it may be said with regard to sound recordings imported from other Member States that the right of reproduction has been exhausted but not the right of performance which, as in the case of films ( see the judgment in Case 62/79 ( 8 )), comes into play each time the work is performed . When, therefore, the composer or his agent demands a performance fee on the public use of sound recordings in a Member State other than that of manufacture, that clearly forms part of the exercise of the substance of copyright and must therefore be tolerated under Article 36 even if it has effects restrictive of trade . 28 . ( b ) Furthermore, reference was quite properly made to provisions of international treaties to which all Member States are signatories ( that is to say, the Berne Copyright Convention of 9 September 1886, in the revised version of 24 July 1971, and the Unesco Convention of 16 September 1952 ) and to Article 234 of the EEC Treaty under which the rights and obligations arising from agreements concluded before the entry into force of the Treaty between one or more Member States on the one hand and one or more third countries on the other are not affected by the provisions of the Treaty . Since those Conventions ( the Berne Convention, incidentally, expressly states that the right of reproduction and that of public performance are protected rights ) incorporate the principle that in each contracting State works by nationals of other contracting States are to be protected in accordance with the provisions of national law ( that is to say, foreign works must be protected in the same manner as works by nationals of the State in question ), in France the French system, in all its details ( including those which on a strict view of copyright might not seem entirely convincing ) must be applied to works from other Member States . Since under French law a supplementary mechanical reproduction fee is payable on the public playing of sound recordings in France, under the Conventions referred to above that fee cannot be reserved for French works; it must also be applied to sound recordings from other Member States where such a fee is not charged, and any interference with trade which may result cannot be regarded as unlawful under Community law . 4 . 29 . It does not appear necessary to deal specifically with the other factors referred to in the first question, such as the fact that Sacem enjoys a de facto monopoly for the protection of its repertoire and is connected by reciprocal representation contracts with foreign copyright-management societies; the answer to the first question must therefore be that Article 30 of the EEC Treaty ( in conjunction, if necessary, with Article 36 of the Treaty and with international conventions ) does not prevent the French copyright-management society from charging users a royalty referred to as a supplementary mechanical reproduction fee on the public performance of works from the repertoires of foreign companies by means of sound recordings in free circulation on the territory of other Member States even where such a fee is not provided for in the Member States in which those sound recordings originate . II - Question 2 30 . The second question is worded in the same way as the first . It seeks, however, an interpretation of Article 86 of the EEC Treaty . That is to say, it must be examined whether that provision prevents Sacem from charging the supplementary mechanical reproduction fee on the public playing of sound recordings from other Member States . 31 . In that regard we have been told that the Commission, pursuant to a complaint, is currently investigating the relations between Sacem and foreign copyright-management societies and, with regard to the amount of the fees charged by Sacem, Article 86 of the EEC Treaty . It must be pointed out, however, that these proceedings do not concern the amount of the fees charged by Sacem ( with regard to which counsel for Mr Basset made detailed submissions, including comparisons with the fees payable in other countries ). The national court has expressly held on this point that it may not be objected that the amount of the fee is unreasonable . The question for us, instead, is whether there is anything in Article 86 to suggest that the charging of the supplementary mechanical reproduction fee is unlawful in itself . 32 . With regard to the remarks made in the course of the proceedings I must admit that I find it difficult to follow the logic of the argument relating to Article 86 . Nor did the remarks made by counsel for Mr Basset shed much light on the matter . 33 . On the basis of what little argument was presented in that regard, the conclusion can only be that Article 86 of the EEC Treaty provides no foundation for the assertion that the charging of the supplementary mechanical reproduction fee is unlawful . 34 . As Sacem quite correctly submitted, the following types of abuse referred to in Article 86 do not come into consideration in this case : ( b ) the restriction of production, markets or technical development; ( c ) the application of dissimilar conditions to equivalent transactions with other trading parties ( the national court dealt with this point itself, in so far as comparison with the fees demanded of other users is concerned ); ( d ) the imposition on other parties of supplementary obligations which have no connection with the subject of the contract . 35 . The only possible alternative, therefore, is the type of abuse referred to in subparagraph ( a ) - the imposition of unfair prices or trading conditions . The argument was put forward in that regard that in charging the supplementary mechanical reproduction fee Sacem had gone beyond the power delegated to it by foreign copyright-management societies . 36 . It is immediately clear, however, that that is not in fact the situation in this case . As Sacem emphasized, those contracts expressly provide for the treatment of foreign nationals in the same manner as French nationals . Indeed, as we have already seen that is also required by the relevant international conventions . 37 . Nor are the criticisms made in the report of the commission de la concurrence, referred to above, regarding the charging methods of SDRM of any assistance since only the manner in which the fee is charged is criticized, not the fee itself . 38 . The only conclusion can therefore be that the charging in France of the supplementary mechanical reproduction fee, that is to say, the exercise of a right provided for by statute, cannot be regarded as an abuse for the purposes of Article 86, even where the fee is charged on the use of imported sound recordings . 39 . If it is borne in mind, moreover, that in the light of what has already been stated there is no real question of any effects on trade and that the exercise of the right in question has nothing to do with Sacem' s dominant position ( any author or composer is entitled by statute to exercise that right, but does not for that reason alone occupy a dominant position - see judgment in Case 78/70 ), it is clear that in circumstances such as those of the main proceedings Article 86 of the EEC Treaty is not relevant . C - Conclusion I can only propose, therefore, that the Court reply to the questions referred by the cour d' appel, Versailles, in the following manner : 40 . Neither Article 30 nor Article 86 of the EEC Treaty prevent 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, from charging users a royalty called a supplementary mechanical reproduction fee on the public performance of works from the repertoires of those foreign companies by means of sound recordings in free circulation on the territory of those Member States which is not provided for by the law of the Member States from which the sound recordings are imported . (*) Translated from the German . ( 1 ) Judgment of the Court of 10 January 1985 in Case 229/83 Leclerc v Au blé vert (( 1985 )) ECR 17 . ( 2 ) Judgment of 19 February 1981 in Case 130/80 Kelderman (( 1981 )) ECR 527 . ( 3 ) Judgment of 6 November 1979 in Joined Cases 16 to 20/79 Danis (( 1979 )) ECR 3327 . ( 4 ) Judgment of 29 January 1985 in Case 231/83 Cullet v Centre Leclerc (( 1985 )) ECR 305 . ( 5 ) Judgment of 20 January 1981 in Joined Cases 55 and 57/80 Musikvertrieb Membran v GEMA (( 1981 )) ECR 147 . ( 6 ) Judgment of 8 June 1971 in Case 78/70 Deutsche Grammophon v Metro-SB-Grossmaerkte (( 1971 )) ECR 487 . ( 7 ) Judgment of 14 July 1981 in Case 187/80 Merck v Stephar and Exler (( 1981 )) ECR 2063 . ( 8 ) Judgment of 18 March 1980 in Case 62/79 Coditel v Ciné Vog (( 1980 )) ECR 881 .

Judgment of the Court (Second Chamber) of 5 April 1973. - Luigi Giordano v Commission of the European Communities. - Case 11-72. European Court reports 1973 Page 00417 Greek special edition Page 00511 Portuguese special edition Page 00185 Summary Parties Grounds Decision on costs Operative part Keywords ++++ PROCEEDINGS - NON-CONTRACTUAL LIABILITY - ACTION FOR COMPENSATION - TIME IN WHICH ACTION BROUGHT - PERIOD OF LIMITATION ( EEC TREATY, ARTICLES 173 AND 175; STATUTE OF THE EEC COURT, ARTICLE 43 ) Summary IN NO CIRCUMSTANCES CAN THE APPLICATION OF ARTICLES 173 AND 175 OF THE EEC TREATY RESULT IN THE PERIOD OF LIMITATION OF FIVE YEARS LAID DOWN IN THE FIRST SENTENCE OF ARTICLE 43 OF THE STATUTE OF THE COURT OF JUSTICE OF THE EEC BEING REDUCED . Parties IN CASE 11/72 LUIGI GIORDANO, A FORMER AUXILIARY SERVANT OF THE COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY POMPEO CORSO; OF THE PALERMO BAR, AND HAVING CHOSEN HIS ADDRESS FOR SERVICE IN LUXEMBOURG AT THE RESIDENCE OF MME . MAGDA BELLERI, 12 RUE DE BRAGANCE, APPLICANT, VERSUS COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ITS LEGAL ADVISER, GIORGIO PINCHERLE, ACTING AS AGENT, HAVING CHOSEN ITS ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ITS LEGAL ADVISER, EMILE REUTER, 4 BOULEVARD ROYAL, DEFENDANT, CLAIM FOR DAMAGES Grounds 1 THE ACTION, BROUGHT ON THE BASIS OF THE SECOND PARAGRAPH OF ARTICLE 215 OF THE EEC TREATY, SEEKS TO ESTABLISH THE LIABILITY OF THE COMMUNITY BY REASON OF THE CIRCUMSTANCES UNDER WHICH THE APPLICANT AFTER THE NON-RENEWAL OF HIS CONTRACT AS AN AUXILIARY AGENT, WAS UNABLE TO OBTAIN A POST WHICH HE SOLICITED IN THE SERVICES OF THE COURT OF JUSTICE, IN CONSEQUENCE OF UNFAVOURABLE INFORMATION FORWARDED BY THE COMMISSION WITH REGARD TO HIM . BY VIRTUE OF THIS, THE APPLICANT CLAIMS THE TOTAL SALARY WHICH HE WAS UNABLE TO OBTAIN FROM DECEMBER 1968 - WHEN HIS CANDIDATURE WAS REJECTED BY THE COURT OF JUSTICE - UNTIL THE DATE WHEN JUDGMENT IS DELIVERED BY THE COURT, OR ANY OTHER SUM WHICH THE COURT THINKS PROPER . ADMISSIBILITY 2 ACCORDING TO THE COMMISSION THE ACTION IS INADMISSIBLE SINCE IT IS IN REALITY DIRECTED TOWARDS OBTAINING JUDICIAL CONTROL OF DECISIONS WHICH ARE NOW BEYOND ATTACK, NAMELY THE NON-RENEWAL OF THE APPLICANT' S CONTRACT AND THE REJECTION BY THE COMMISSION OF FINANCIAL CLAIMS WHICH HE HAD MADE ON THIS ACCOUNT . 3 THE APPLICANT FOR HIS PART ASSERTS THAT HIS CLAIM RELATES TO MAKING GOOD THE DAMAGE RESULTING FROM THE FACT THAT HE HAS NOT BEEN APPOINTED BY THE COURT OF JUSTICE BECAUSE OF DAMAGING INFORMATION SUPPLIED BY THE FORMER EMPLOYER WHO, " NOT SATISFIED WITH HAVING ILLEGALLY BROKEN THE CONTRACT OF EMPLOYMENT, " HAS BY HIS SUBSEQUENT BEHAVIOUR PREVENTED THE CREATION OF A CONTRACT OF EMPLOYMENT WITH ANOTHER COMMUNITY INSTITUTION . HE SPECIFIES THAT WHILST THE OBJECT OF THE CLAIM IS SOLELY TO MAKE GOOD THE DAMAGE ALLEGEDLY SUFFERED, THE INTENTIONALLY INJURIOUS CHARACTER OF THE ALLEGED ACT IS MADE APPARENT BY THE WHOLE OF THE PREVIOUS BEHAVIOUR OF THE DEFENDANT " INCLUDING THE ILLEGAL DISMISSAL . " 4 THE TERMS OF THE APPLICATION, AS SPECIFIED IN THE OBSERVATIONS MADE IN REPLY TO THE INTERLOCUTORY APPLICATION OF THE COMMISSION RELATING TO THE ADMISSIBILITY OF THE ACTION, DEFINE THE OBJECT OF THE CLAIM AS REFERRING TO THE AWARD OF DAMAGES BY REASON OF THE COMMISSION' S BEHAVIOUR SUBSEQUENT TO THE EXPIRY OF THE CONTRACT OF EMPLOYMENT . ON THE OTHER HAND, NOT HAVING CONTESTED IN COURT THE LEGALITY OF THE CESSATION OF HIS DUTIES, THE APPLICANT CANNOT BE ALLOWED TO DESCRIBE SUCH CESSATION AS ILLEGAL, NOR TO BASE AN ARGUMENT ON THE CIRCUMSTANCES IN WHICH IT ALLEGEDLY OCCURRED . SINCE THAT PART OF THE ARGUMENT CANNOT BE TAKEN INTO CONSIDERATION, THE PLEA OF INADMISSIBILITY RAISED BY THE COMMISSION IS DEVOID OF ANY OBJECT . 5 TO THE EXTENT TO WHICH THE ACTION IS CONCERNED EXCLUSIVELY WITH LIABILITY PROPERLY SO CALLED, THE COMMISSION ALSO BASES ITS ARGUMENT AGAINST THE ADMISSIBILITY OF THE ACTION ON THE EXPIRY OF THE TIME LIMITS LAID DOWN BY ARTICLE 43 OF THE STATUTE ( EEC ) OF THE COURT . THE APPLICANT HAVING ALREADY BROUGHT BEFORE THE COMMISSION, BY REQUESTS DATED RESPECTIVELY 7 OCTOBER 1970 AND 10 FEBRUARY 1971, CLAIMS IN SUBSTANCE IDENTICAL WITH THOSE WHICH ARE THE OBJECT OF THE ACTION, THE TIME LIMIT LAID DOWN BY ARTICLE 43 OF THE STATUTE OF THE COURT EXPIRED BEFORE THE FILING OF THE APPLICATION . 6 SUCH PLEA IN BAR RESTS ON AN ERRONEOUS INTERPRETATION OF ARTICLE 43 OF THE STATUTE . BY THE FIRST SENTENCE OF THIS ARTICLE, PROCEEDINGS AGAINST THE COMMUNITY IN MATTERS ARISING FROM NON-CONTRACTUAL LIABILITY SHALL BE BARRED AFTER A PERIOD OF FIVE YEARS FROM THE OCCURRENCE OF THE EVENT GIVING RISE THERETO . THE SECOND AND THIRD SENTENCES OF THE SAME ARTICLE HAVE REFERENCE EXCLUSIVELY TO THE INTERRUPTION OF THE PERIOD OF LIMITATION THUS LAID DOWN . IT IS PROVIDED ON THIS POINT THAT THE PERIOD OF LIMITATION SHALL BE INTERRUPTED EITHER BY THE APPLICATION BROUGHT BEFORE THE COURT, OR BY A PRELIMINARY REQUEST ADDRESSED TO THE RELEVANT INSTITUTION, IT BEING HOWEVER UNDERSTOOD THAT, IN SUCH LATTER CASE, INTERRUPTION ONLY OCCURS IF THE REQUEST IS FOLLOWED BY AN APPLICATION WITHIN THE TIME LIMITS DETERMINED BY REFERENCE TO ARTICLES 173 AND 175, DEPENDING ON THE CASE IN ISSUE . 7 HENCEFORTH IT APPEARS THAT IN NO CASE CAN THE APPLICATION OF THESE PROVISIONS HAVE THE EFFECT OF CUTTING DOWN THE FIVE-YEAR PERIOD OF LIMITATION LAID DOWN BY THE FIRST SENTENCE OF ARTICLE 43 OF THE STATUTE . THE APPLICANT HAVING COMMENCED HIS ACTION WITHIN SUCH PERIOD OF LIMITATION, THE ACTION IS ADMISSIBLE . MERITS 8 WITH A VIEW TO ESTABLISHING THE BASIS FOR THE LIABILITY OF THE COMMUNITY, THE APPLICANT MUST IN THE FIRST PLACE BE ABLE TO PROVE THE EXISTENCE OF A FACT CREATING THE DAMAGE, WHICH IS ATTRIBUTABLE TO THE ACTION OF ONE OF THE INSTITUTIONS . IN THIS RESPECT THE APPLICANT EXPLAINS THAT HE HAD A REAL CHANCE OF BEING APPOINTED AS AN ADMINISTRATOR IN THE " LIBRARY AND RESEARCH " DIVISION OF THE COURT OF JUSTICE, BUT THAT HE WAS FOILED BY UNFAVOURABLE INFORMATION FORWARDED BY THE COMMISSION ON THE SUBJECT OF HIS FORMER EMPLOYMENT . 9 HOWEVER HE HAS BEEN UNABLE TO ADDUCE ANY PROOF WHATEVER, EITHER AS TO THE REALITY OF HIS CHANCE OF RECRUITMENT, OR AS TO THE INFORMATION ALLEGEDLY FORWARDED BY THE COMMISSION . A PREPARATORY DOCUMENT DRAWN UP BY THE DEPARTMENTS OF THE COURT ON THE SUBJECT OF A POSSIBLE TRAINING COURSE FOR THE PARTY CONCERNED, AND PUT IN EVIDENCE BY THE LATTER, CANNOT BE CONSIDERED AS CONCLUSIVE BECAUSE OF ITS PURELY INTERNAL AND PREPARATORY CHARACTER . 10 IN ADDITION, THE PLAINTIFF HAS PRODUCED A TELEGRAPHIC COMMUNICATION WHICH EMANATED FROM AN OFFICIAL OF THE COURT' S ADMINISTRATION, LETTING HIM KNOW THAT HIS CHANCES OF OBTAINING A POST DETERIORATED AFTER " ENQUIRIES MADE IN BRUSSELS ". THIS COMMUNICATION, ALLUSIVE AND OF A PERSONAL NATURE, DOES NOT HOWEVER ESTABLISH MORE THAN THE EXISTENCE OF PRELIMINARY CONTACTS OR ENQUIRIES IN RELATION TO THE PARTY CONCERNED WITH A VIEW TO HIS POSSIBLE APPOINTMENT . 11 THE APPLICANT HAS NOT PRODUCED, NOR EVEN OFFERED TO PRODUCE, ANY ADDITIONAL PROOF IN SUPPORT OF HIS ALLEGATIONS . HENCE, THE PROSPECTS OF A POST WHICH HE CLAIMS TO HAVE HAD, IN THE SAME WAY AS THE EFFECT OF ALLEGEDLY UNFAVOURABLE INFORMATION ON THE PART OF THE COMMISSION ON HIS SUPPOSED CHANCES, MUST BE CONSIDERED AS BELONGING TO AN AREA OF PURE CONJECTURE . 12 THUS THE ACTION MUST BE REJECTED INVIEW OF THE APPLICANT' S FAILURE TO ESTABLISH EVEN THE SEMBLANCE OF A FACT CAPABLE OF GIVING RISE TO LIABILITY ON THE PART OF THE COMMUNITY . Decision on costs 13 BY ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE, THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS . THE APPLICANT HAS FAILED IN HIS PLEAS . HOWEVER, BY ARTICLE 70 OF THE RULES OF PROCEDURE, THE EXPENSES INCURRED BY THE INSTITUTIONS IN ACTIONS BY COMMUNITY SERVANTS SHALL BE BORNE BY THE INSTITUTIONS . Operative part THE COURT ( SECOND CHAMBER ) HEREBY : 1 . DISMISSES THE ACTION; 2 . ORDERS EACH OF THE PARTIES TO BEAR ITS OWN COSTS .

Lord Justice Patten : The Appellant, Mr Elton Joseph, is the tenant of the basement flat ("the Flat") at 7 Nettleton Road, London, SE14. This is one of eight houses in Nettleton Road owned by the Respondent. There are three other flats in No. 7 together with a communal area and the tenants also share a garden with the residents of one of the adjoining houses. The Respondent ("the Co-operative") is a fully mutual housing association within the meaning of s.1(2) of the Housing Associations Act 1985 ("HAA 1985"). It is also registered as a co-operative housing association under the provisions of the Industrial Provident Societies Act 1965. Fully mutual housing associations are non-profit making organisations set up for the benefit of their members. They operate in accordance with rules under which the business of the association is managed through general meetings of its members on a democratic basis. The Co-operative has adopted model rules under which each registered member is entitled to attend the meetings and has one vote. There is an annual general meeting but the management of the day-to-day running of the Co-operative is delegated to a committee made up of members who are elected at the AGM. Under the rules all tenants of the Co-operative must be members and all members must be tenants or prospective tenants: see Rule 7(b). Membership terminates on death, resignation, expulsion or the termination of the member's tenancy. The rules contain no provisions governing the circumstances in which a tenancy may be brought to an end but Rule 10 specifies a procedure governing expulsion under which a resolution has to be passed by two-thirds of the members present and voting at a general meeting of the Co-operative at which at least 50% of its members are present. The member must be given advance notice in writing of the complaint at least 28 days before the meeting and the details of the complaint and the member's response to it are then considered at the meeting. The Co-operative also operates a procedure for resolving disputes which is commonly referred to as the Grievance Procedure. This is designed to deal with issues arising between members or between members and the Co-operative and may, in some cases, lead to expulsion from membership. There is also a provision in Rule 40 which allows certain disputes between members and the Co-operative to be referred to arbitration. But in this case none of these procedures was invoked by either Mr Joseph or the Co-operative nor was any attempt made to expel him from membership under the provisions of Rule 10. Tenancies granted by fully mutual housing associations as defined in s.1(2) HAA 1985 are neither assured nor secure tenancies. They are excluded from being assured tenancies by s.1(2) and paragraph 12(h) of Schedule 1 Part 1 to the Housing Act 1988 ("HA 1988"). As a consequence, they do not enjoy the statutory protection conferred by HA 1988 which preserves the tenancy until determined by an order of the court and requires the landlord to bring the case within one of the grounds for possession set out in Schedule 2 to the Act. Even when grounds for possession exist, the court has an extended discretion under s.9 to make a suspended order for possession on conditions such as compliance with the terms of the tenancy agreement. A fully mutual housing association does not satisfy the landlord condition under s.80 of the Housing Act 1985 ("HA 1985") because it is not a registered social landlord within the meaning of s.5(4) of the Act. The tenancies it grants are not therefore secure tenancies and consequently do not enjoy the statutory protection imposed by s.82-85 HA 1985 which require the statutory grounds for possession to be established and for an order of the court to be made. As in the case of assured tenancies, s.85 gives to the court power to make suspended orders for possession on terms and thereby to control the claim for possession at all stages in the process: see (e.g.) Sheffield City Council v Jepson (1993) 25 HLR 299. Mr Joseph was a founding member of the Co-operative and has been a tenant of the Flat since 1983. A copy of his original tenancy agreement does not survive but it is common ground that in 1995 each member agreed to enter into a new tenancy agreement which replaced the original contract. The tenancy agreement grants to the member a monthly tenancy at a rent which may be varied on four weeks' notice. Changes to the rent are approved by the Co-operative from time to time in general meeting. Clause 6 of the agreement sets out the tenant's covenants. These include (in clause 6.17) a covenant that:- "6.17 The tenant shall not, without the Co-operative's written permission: … 6.17.6 Keep any pet in the premises. Such permission will only be granted by the Co-operative if it has the agreement of all other tenants affected." Clause 12 of the agreement is headed "Ending the Tenancy". So far as material it provides:- "12.1 The tenant may bring the tenancy to an end by giving the Co-operative 4 weeks written notice. 12.2. The Co-operative may bring the tenancy to an end by giving the tenant 4 weeks written notice to quit. This shall only be in the following circumstances: … 12.2.3 If the tenant has committed any breach of the agreement and the Management Committee has given the tenant written notice of the breach complained of and the tenant has failed to remedy it within the period of time stated in the notice. … 12.3 When a notice to quit has been served by the Co-operative and has expired the Co-operative may apply to the court for a possession order." From 1985 until 1996 Mr Joseph kept a Doberman dog in the flat with the permission of the then members of the Co-operative. In about August 2007 he acquired a Staffordshire bull terrier. The dog, he says, belonged to a friend who was in hospital suffering from cancer, although no mention was made of this at the time. He did not ask either the Co-operative or his neighbours at No. 7 for permission to bring the dog onto the premises. His attitude seems to have been that he did not need their permission because he had in the past kept a dog there. On 9th September 2007 there was a general meeting of the Co-operative at which the dog was discussed. Mr Joseph did not attend. One of the tenants in the house, Ms Kelly Martinez, complained that the other residents had not been asked for permission and that at least two of them objected to it. Mr Joseph's attitude was reported to be that it was his dog and he was going to keep it. The meeting agreed that the secretary should write to Mr Joseph informing him that he was in breach of covenant and giving him two weeks to re-home the dog. A letter to this effect was sent to Mr Joseph on 25th September. He was told that keeping the dog was a breach of clause 6 of the tenancy agreement and was asked to remove it within 14 days, failing which further action would be taken. The next meeting of the Co-operative took place on 15th October. Again Mr Joseph was not present. By then there had been no response to the letter and the dog had not been removed. The members agreed that they should call a meeting to discuss the next step which could involve invoking the grievance or expulsion procedures. At the monthly general meeting of the Co-operative on 11th November Mr Joseph was present. By then he had sought and obtained advice from the Evelyn 190 Centre in Deptford who had written a letter to the secretary of the Co-operative on his behalf. The letter complained that Mr Joseph had been unreasonably singled out and treated less favourably than the other members. Some of them, it said, had been allowed to keep pets, although Mr Joseph had been refused permission to do so. The letter did not suggest that Mr Joseph was simply looking after the dog for a friend nor did it propose a timescale in which he would be able to dispose of it. The letter was discussed at the 11th November meeting. The terms of clause 6 were read out and the point was made that the other members of the Co-operative were not agreeable to the dog remaining in the Flat. Mr Joseph denied that the dog had damaged and messed in the garden. But he made no proposals for its removal. The end result of the meeting was that consent for the dog was refused and a decision made to serve a notice to quit. The notice was served on 13th November. It required possession to be given up on 10th December 2007 or the day on which a complete period of the tenancy expired next after the end of four weeks from the service of the notice. It therefore complied with the minimum period of notice required both under the agreement and under the provisions of the Protection from Eviction Act 1977. On 26th November Mr Joseph responded to the notice by writing to the secretary of the Co-operative asking for permission to keep the dog. Again there was no mention of his keeping it for a friend or any offer to re-home it. Mr Joseph explained in the letter that he had not previously asked for permission because he had kept a dog there before and therefore thought that he did not need it. If consent was denied he said that he intended to raise the issue of why other members should be allowed to keep their pets. On 5th December Mr Joseph's solicitors, Messrs Cunningham Blake, wrote to the Co-operative disputing the validity of the notice to quit on the ground that it failed to give their client the requisite 28 days' notice to which he was entitled. This was clearly wrong but the letter went on to repeat the complaint that Mr Joseph was being unfairly treated and asked that a less drastic course of action be followed to resolve the dispute. On 18th December the Vice-Chair of the Co-operative replied to Mr Joseph's letter of 26th November explaining that consent was needed before any pet could be kept and that no consent would be given for the dog. She explained that the keeping of the other pets had been agreed to by the Co-operative but that the animals in question were not dogs. On one occasion objections had been made to the keeping of a cat and it had been removed. In a separate letter of the same date to Cunningham Blake she explained why the notice to quit was effective to give 28 days' notice and pointed out that Mr Joseph had failed to remedy the breach of clause 6 within the 14 days specified in the letter sent to him on 25th September. On 13th January 2008 Mr Joseph attended the monthly general meeting of the Co-operative and told those present that he would be returning the dog to its owner when he had recovered but did not know when that would be. Some of the members queried his account of the dog belonging to a friend but he was asked to make a proposal as to when it would be removed. He did not respond to this. The meeting therefore decided that the possession action should continue. In his judgment District Judge Lee described Mr Joseph's attitude to the breach of covenant in these terms:- "7. He was obviously aware of why any reasonable neighbour would be aggrieved at the dog being in the property, because he concurred that there was no 100% guarantee that the dog would not be a nuisance, and if he were to leave it alone in the property at any time, there would be no safeguard against it barking for prolonged periods. Taking all this into account, I was somewhat taken aback by his intransigence over the dog, and could sympathise with the claimant's view that whatever they tried to do to ameliorate the position, he would not have changed his stance anyway. For instance, in his witness statement he admits he was "a little intransigent" at the meeting on the 13th January 2008. Indeed, when asked if he had any proposals, he had none – and so it was decided that the proceedings would continue. It had been plainly put to him that he had adamantly insisted that the dog was his, and the sudden news that it was somebody else's was novel to the other members. Indeed it appeared that as late as the 11th February 2008 meeting, it was not entirely clear the dog had gone. I do not believe, on the balance of probabilities, that the dog was other than his own. All this highlighted an obduracy on the part of the defendant that demanded a robust response from the claimant. He had been given fair warning." Later in his judgment he considered whether Mr Joseph had been given sufficient time to allow him to remove the dog:- "33. In the face of the defendant's assertion that the time for removing the dog was insufficient, Mr Potts, witness for the claimant, stated that there were dogs' homes around which would be willing to take the dog in. Had the defendant been more proactive in conveying any difficulties he may have had, more time might have been considered. I can see no objection to 14 days being given as reasonable, where the landlord has been confronted with a situation that could potentially cause mutiny within the ranks of the other occupiers on account of nuisance by way of noise, smell and hygiene which were complained of in the Minutes of the meetings. Any reasonable landlord would look upon time being of the essence in such circumstances. What is more, Mr Joseph candidly admitted in cross-examination that when he went to seek advice from the Evelyn 190 Centre, he never told them that he thought the time was too short, so he himself must have had some inkling that it would not have been impossible to meet the time allowed. 34. However an important point is that, as it turned out, Mr Joseph had longer than the two weeks to remove the dog, so he had ample time to consider his position, despite his obduracy. He himself ultimately recognised that permission was required, so he could never have acted to his detriment. He was served with the letter of warning around 25th September 2007. The general meeting that noted he had not yet removed the dog was on the 15th October 2007, and the next crucial meeting when the issue was again discussed was on the 11th November 2007, when the defendant was present and when a decision was made to issue the notice. The defendant had already had seven weeks by then to remove the dog. But still at that meeting he would not recognise the need to comply, despite objections voiced by the other tenants over faeces in the garden and other problems. I do not see any justification in implying that the breach had to be "serious". The parties had agreed in clause 12.2 that the agreement could be terminated by "any" breach. Even so, given the very sore contentions over the dog on all sides, I could not conceivably classify such breach as not serious, nor the notice as being draconian." The possession proceedings were issued on 22nd January 2008. After various adjournments, the trial took place on 3rd and 4th March 2009 when the District Judge made an order for possession of the Flat on or before 19th June 2009. At the trial Mr Joseph accepted that he was a non-secure tenant of the Flat because of the operation of the statutory provisions to which I have referred. But he disputed that he was in breach of covenant and contested the validity of the notice to quit. In his defence he contended that an order for possession would breach his rights under Article 8 ECHR because it was not a proportionate remedy and that, in any event, the legislative scheme covering fully mutual housing co-operatives was itself incompatible with Article 8. It was also alleged that terms should be implied into the tenancy agreement on grounds of business efficacy or public policy to the effect that a tenant will be given reasonable time to remedy any breach of covenant and that a notice to quit will only be served in circumstances which are sufficiently serious to justify eviction. The Co-operative responded to Mr Joseph's reliance on those implied terms with an alternative submission that the imposition of any conditions on the service of a notice to quit in relation to a periodic tenancy (whether by the implied terms contended for or even by the express terms of clause 12 of the tenancy agreement) was ineffective as a matter of law. For this they relied on the decision of the House of Lords in Prudential Assurance Company Limited v London Residuary Body [1992] 2 AC 386. The issue in the Prudential Assurance case was whether the grant of a tenancy which was to continue until the land was required by the landlord council for road widening was a grant for a term certain. The House of Lords held that a lease on these terms was of uncertain duration and therefore void and that the land was held instead on a yearly tenancy created by the payment and acceptance of rent. The question therefore arose as to which of the terms in the original lease were incorporated by implication into the yearly tenancy. The House of Lords decided that the tenancy was determinable on the usual six months' notice notwithstanding the provision referred to above. At page 392 Lord Templeman said that:- "Now it is said that when in the present case the tenant entered pursuant to the agreement and paid a yearly rent he became a tenant from year to year on the terms of the agreement including clause 6 which prevents the landlord from giving notice to quit until the land is required for road widening. This submission would make a nonsense of the rule that a grant for an uncertain term does not create a lease and would make nonsense of the concept of a tenancy from year to year because it is of the essence of a tenancy from year to year that both the landlord and the tenant shall be entitled to give notice determining the tenancy." This statement of the law is based on a series of cases beginning with the decision of Lord Ellenborough CJ in Doe d. Warner v Browne (1807) 8 East 165 who held that a yearly tenancy was determinable on 6 months' notice notwithstanding a provision in the lease that the landlord would not evict the tenant so long as the rent was paid and there was no breach of covenant. The tenant paid the rent on time and observed the terms of the lease but his tenancy was held to be determinable by a notice to quit that was served by the landlord. After considering these cases Lord Templeman (at page 394) went on:- "A tenancy from year to year is saved from being uncertain because each party has power by notice to determine at the end of any year. The term continues until determined as if both parties made a new agreement at the end of each year for a new term for the ensuing year. A power for nobody to determine or for one party only to be able to determine is inconsistent with the concept of a term from year to year: see Doe d. Warner v. Browne, 8 East 165 and Cheshire Lines Committee v. Lewis & Co., 50 L.J.Q.B. 121 . In In re Midland Railway Co.'s Agreement [1971] Ch. 725 there was no 'clearly expressed bargain' that the term should continue until the crack of doom if the demised land was not required for the landlord's undertaking or if the undertaking ceased to exist. In the present case there was no 'clearly expressed bargain' that the tenant shall be entitled to enjoy his 'temporary structures' in perpetuity if Walworth Road is never widened. In any event principle and precedent dictate that it is beyond the power of the landlord and the tenant to create a term which is uncertain. A lease can be made for five years subject to the tenant's right to determine if the war ends before the expiry of five years. A lease can be made from year to year subject to a fetter on the right of the landlord to determine the lease before the expiry of five years unless the war ends. Both leases are valid because they create a determinable certain term of five years. A lease might purport to be made for the duration of the war subject to the tenant's right to determine before the end of the war. A lease might be made from year to year subject to a fetter on the right of the landlord to determine the lease before the war ends. Both leases would be invalid because each purported to create an uncertain term. A term must either be certain or uncertain. It cannot be partly certain because the tenant can determine it at any time and partly uncertain because the landlord cannot determine it for an uncertain period. If the landlord does not grant and the tenant does not take a certain term the grant does not create a lease." The District Judge held that the reasoning in Prudential did apply to Mr Joseph's tenancy so as to exclude the operation of the provisions of clause 12 of the lease and any of the implied terms contended for. If this is right the notice to quit served by the Co-operative was, on any view, effective to terminate Mr Joseph's tenancy. The principal ground of appeal is that the exclusion of any system of statutory protection by the provisions of HA 1988 coupled with the removal even of clause 12 under the common law rules affirmed in Prudential have combined to create a situation in which the tenants of fully mutual housing associations can be evicted from their houses on an arbitrary and capricious basis and in a way which is wholly incompatible with the provisions of either Article 8 or Article 14. It is now accepted (as the District Judge held) that the Co-operative is not a public body for the purposes of s.3 of the Human Rights Act 1998 and we are not therefore concerned with an argument that the decision to serve the notice to quit and to pursue the possession proceedings was itself disproportionate and therefore unlawful. The challenge on Article 8 grounds is directed to the statutory provisions themselves and a declaration of incompatibility is sought in the notice of appeal unless it is possible to construe the legislation as effective both to override or oust the common law rules of certainty of term so far as applied to periodic tenancies operated by fully mutual housing associations and to imply into such tenancies the terms relied on in the defence. Mr Drabble QC has helpfully re-formulated the argument and it can be summarised in this way. The exclusion of the tenancies granted by the Co-operative and other fully mutual housing associations from the protection given to secure and assured tenants is clearly attributable to their mutual status. The contractual relationship between members and the rights of each member to participate in the decision-making process was presumably considered to provide a sufficient safeguard against arbitrary evictions and to make the imposition of statutory controls unnecessary. For this assumption to be made good the service of a notice to quit which (because of the lack of statutory protection) gives to the association an unfettered right to possession if valid must be subject to a procedure which enables the tenant to address any breaches of covenant he may have committed and to remedy those breaches within a reasonable time before becoming liable to have his tenancy terminated by the service of a notice. The rule in Prudential makes this a contractual impossibility and therefore defeats the underlying intention of Parliament in enacting the relevant provisions of HA 1988. By nullifying the provisions of clause 12 of the tenancy agreement it allows Mr Joseph to be evicted without any safeguards and without the benefit of the grievance procedures inherent in the provisions of Rule 10 of the Co-operative's rule. The correct approach therefore is to regard HA 1988 as having, by implication, excluded the operation of the rule in Prudential from the tenancy granted by the Co-operative thereby leaving clause 12 of the agreement intact. Consistently with this, those provisions should be construed as requiring the period of time which the tenant is given to remedy the breach to be reasonable. Mr Drabble accepts that no process of statutory construction can succeed in replicating the security of tenure provisions applicable to assured and secure tenancies. That would require the court to be given the power to suspend orders for possession or to make them conditionally. But this is an additional reason, he submits, why the notice period should be generous to the tenant and give him every opportunity to avoid the loss of his home. In this case the period given should have allowed Mr Joseph time not only to have disposed of the dog but also to have overcome his own recalcitrance caused by his belief that he need not seek a further consent to keep the animal and that he was being unfairly discriminated against having regard to other residents who were allowed to keep pets. In the circumstances of this case, neither the 14 days specified in the letter of 25th September 2007 or the seven weeks from the date of that letter to the service of the notice to quit was adequate. Mr Bhose, on behalf of the Co-operative, submits that we should follow Prudential and reject any suggestion that the common law principle it applied to periodic tenancies was excluded by the provisions of HA 1988. He points to the fact that Prudential was decided three years after the passing of the Act. He also relies on the fact that fully mutual housing co-operatives grew out of the squatting movement and were used to take on short-life housing stock from local housing authorities. This required there to be flexibility in their letting arrangements and Parliament did not confer statutory security of tenure on their tenants either under the Rent Act 1977 or the Housing Act 1980. The 1988 Act simply continued this position. In terms of precedent he contends that we are bound by the decision in Prudential (as we clearly are) and that the correct approach when faced with an argument that the decision is inconsistent either with a subsequent decision of the Strasbourg Court or with the application of the ECHR under the Human Rights Act 1998 is to apply the decision and leave it to the Supreme Court to decide whether to depart from its earlier decision. It will only be in exceptional cases that the Court of Appeal will be entitled to depart from the decision on those grounds: see Kay v Lambeth LBC [2006] 2 AC 465. The complexity and importance of all these arguments seem to me to make it imperative that we should not decide this appeal on grounds which do not really arise. The Co-operative is a small association with limited funds. It would be quite wrong in my view to expose it to the risk of a further appeal and perhaps subsequent costly litigation by attempting to decide points which are not essential for the disposal of the appeal. I am prepared to accept (without deciding) that Prudential does have the effect for which the Co-operative contended before the District Judge. But the reality of this case is that the Co-operative operated the procedures set out in clause 12 of the tenancy agreement and only resorted to the Prudential point when faced with an argument in the proceedings that the time given to Mr Joseph to remedy the breach was inadequate. I have very serious doubts as to whether it is possible to construe the relevant provisions of HA 1988 in the way that Mr Drabble suggests. The provisions in question remove tenancies granted by various specified public and other bodies from the protection conferred on assured tenancies. They do not therefore attempt to regulate such tenancies and it is difficult to see how even the most purposive construction of the statute can attribute to Parliament an intention to do what, on the face of the legislation, is the very opposite of what it provides. But on his argument the requisite degree of compatibility with both Article 8 and Article 14 could be achieved by the implication of a term requiring the tenant to be given a reasonable opportunity to remedy the breach of covenant before the service of a notice to quit. Mr Bhose accepts that if clause 12 is effective as a term of the tenancy then clause 12.2.3 has to be construed as requiring the tenant to be given sufficient notice to allow him to comply. That seems to me to be right. The only implied terms contended for by Mr Joseph in addition to this are that the notice to quit will only be served where the breach is sufficiently serious and that the decision to evict will be taken in accordance with any existing policies or procedures of the Co-operative such as those affecting anti-social behaviour. Even if Mr Joseph were to succeed in all his arguments on the law, his appeal fails in my judgment on the facts. The breach of covenant was a serious breach. To bring a dog like a Staffordshire bull terrier into the house without the consent and against the wishes of the other residents seems to me to show a complete disregard for the interests of the other tenants and a breach of the fundamental principle of consent which underpins associations of this kind. The terms of clause 6 are clear and Mr Joseph's reliance on his previously having kept a dog there or on other members of the Co-operative having other pets was misguided. Those points were made clear to him at an early stage but, notwithstanding this, he persisted in his determination to keep the dog right up to and beyond the service of the notice to quit. On the judge's findings, Mr Joseph did not care about the terms of the tenancy agreement; he had an altercation with Ms Martinez and told her that he was not getting rid of the dog; and he refused every opportunity at the meetings and in correspondence to offer a date by which he would re-house the dog. The judge was therefore entitled to conclude as he did that this was a serious breach of covenant and that the decision to serve the notice to quit was not an excessive or disproportionate response. Mr Drabble's argument, concentrating as it does on the validity of the notice to quit, depends upon the period for compliance being inadequate. But again this argument is, I am afraid, hopeless. Whatever may have been the position about 14 days, the Co-operative invoked its usual procedures of attempting to deal with the problem through dialogue at the monthly meetings, some of which Mr Joseph attended and at which he was able to put his case. He knew well before the 11th November meeting and, as a result of what was said at that meeting, that no consent would be given to his keeping the dog. By then he had had seven weeks in which to re-home it. It is clear from the notes of that meeting that had he offered even then to dispose of the animal he could have avoided eviction. The decision to serve the notice to quit was taken in the face of his refusal to comply. The District Judge found that Mr Joseph had ample time between September and 11th November to remove the dog and to consider his own position. In the circumstances, it is not possible in my judgment to say that the period given to him in which to remedy the breach was either inadequate or unreasonable. For these reasons, I would dismiss this appeal. Lord Justice Ward: I agree.

Mr Justice Dingemans Introduction This case concerns a challenge by the Commissioner of the Police for the Metropolis ("the Commissioner") to the lawfulness of decisions by the Police Appeals Tribunal ("the Appeals Tribunal") announced at the conclusion of the hearing on 21 October 2011, and in a written decision dated 6 November 2011, to order the reinstatement of Inspector Naulls, to award costs, and to order the payment of back pay. On 25 January 2010 Inspector Naulls was stopped travelling in first class on a train out of London Victoria. He was not entitled to first class travel. He lied about what he was doing travelling in first class and where he was going to, and he continued lying until confronted with CCTV evidence on 13 April 2010. At the time Inspector Naulls was under severe personal stress, partly because his youngest 4 year old son had a rare genetic condition meaning that he could not walk, talk, sleep properly and whose future was uncertain. On 12 October 2010, at the conclusion of misconduct proceedings, Inspector Naulls was dismissed without notice by a Misconduct Hearing Panel. Inspector Naulls appealed against that dismissal and following a hearing on 21 October 2011, the Police Appeals Tribunal ("the Appeals Tribunal") decided that the appeal should be allowed as to the disciplinary action taken so that Inspector Naulls was reinstated and given a final written warning to last for 18 months. The Appeals Tribunal also decided that Inspector Naulls' costs should be paid by the Police Authority. Written reasons for that decision were given on 6 November 2011, and it was then also ordered that his pay should be backdated to run from the date of his dismissal. The Commissioner challenges the decisions of the Appeals Tribunal (1) to order the reinstatement on the grounds that the decision was irrational to order the reinstatement of Inspector Naulls in the light of his dishonesty and admitted gross misconduct; (2) to order that Inspector Naulls should have his pay from the date of reinstatement on the ground that the Appeals Tribunal's decision was made after it had ceased to have jurisdiction and on the ground that the Commissioner had not been asked to address the issue of back pay; and (3) to order that he should have his costs on the grounds that it was irrational because the Appeals Tribunal had not taken account of the fact that the starting position ought to be that the Police Authority, as a regulatory body for police officers, ought not to be ordered to pay costs. Inspector Naulls, who is the interested party, resists the challenge. He says (1) that the Appeals Tribunal was entitled, and right, to order his reinstatement because the original Misconduct hearing panel had failed to have proper regard to the stress suffered by Inspector Naulls arising from his very unfortunate domestic situation; (2) that the Appeals Tribunal did have jurisdiction to make the order relating to his back pay, and that although the matter was not expressly raised at the hearing, it was an order to be expected and therefore if the Commissioner had wanted to address it, he should have done so; (3) the order for costs was properly made for the reasons given by the Tribunal. The Appeals Tribunal resisted the Commissioner's application and put in detailed grounds for contesting the claim. At one stage, as appears below, it seemed as if this application might raise a point of importance about the legal approach to the Appeals Tribunal's jurisdiction on appeal, but this point has now been clarified in other subsequent cases and it became common ground before me. In those circumstances the Appeals Tribunal wrote a letter stating that they continued to resist the application made by the Commissioner but because Inspector Naulls would be making similar points, and to save costs, they would not attend. This was an obviously sensible approach to take. Inspector Naulls position leading up to 25 January 2010 As appears from the short summary set out above, it is necessary to set out some factual background relating to Inspector Naulls. He was born on 25 May 1962 and was nearly 48 when the present events occurred. He had joined the Metropolitan Police Service and had been promoted to Inspector. He was at the time working on policy work. He had not had a day off sick since 2006. He had, in December 2009, finally passed his exams to become a Chief Inspector at the ninth attempt. On the 25 January 2010 he had been interviewed for a specific appointment as Chief Inspector and the interview had gone well and he was hoping to get that appointment. He was working on a PhD in criminology. He produced a review in February 2010 on the Section 60 Stop and Search power ("the S60 review"), collating information that he had obtained on the use of the power. He had been married for 19 years and had, at the material time, 3 children aged under 10. He had not sought to access any welfare services provided by the Police Service. The Commissioner says that Inspector Naulls had a successful career, he had acquired significant responsibilities, and he was operating normally. However, other facts provide further insight. At work before 25 January 2010 Inspector Naulls had been seen crying, on occasion, by a more senior officer. Inspector Naulls domestic situation was very unfortunate. Inspector Naulls' youngest son had been born in May 2006, so that he was nearly 4 at the material time. The youngest son had been diagnosed with a rare genetic condition which meant he was unable to walk. The papers show that the son had some mobility, particularly when provided with a lycra suit, although he had outgrown those on occasions. The son had very limited vocal skills. He did not sleep well, and did not sleep for any length of time. He had coughed blood when suffering from a cold, see the letter dated 1 March 2010. If he had seizures (a known complication arising from the genetic condition) the medical evidence showed that these did not last and only occurred very rarely. He required constant supervision. Much assistance had been provided by Inspector Naulls' parents-in-law, but they too had suffered medical problems which had limited their ability to help. The strain that must have been imposed on both Inspector Naulls and his wife is obvious. On 14 April 2010 Inspector Naulls (following his interview on 13 April 2010, details of which are given below) presented to Oxted Health Centre with suicidal ideations. At the material time Inspector Naulls appeared, see the letter from Oxted Health Centre dated 29 June 2010, to be in denial about his son's need for long term care. Inspector Naulls had, before 14 April 2010, attempted to cope, and to keep these private matters private. Inspector Naulls was examined on 5 May 2010 by Dr Sukumaran, consultant psychiatrist, following a request by a social worker, as appears from a letter dated 14 May 2010. Dr Sukumaran made a diagnosis of acute stress reaction and recorded, as noted on behalf of the Commissioner in submissions, that this suggested that everything was going well until 25 January 2010 "which seems to be the precipitating factor for the current issues". Dr Sukumaran saw Inspector Naulls again on 14 May 2010. Inspector Naulls had been feeling better in the last few weeks, and was then in a recovery phase. An updated assessment dated 19 May 2010 relating to Inspector Naulls' son was produced by social workers. This was part of a child protection investigation triggered as a result of Inspector Naulls' disclosures about his suicidal thoughts. In the course of a second visit noted in the assessment Inspector Naulls said "he was feeling much more positive and stated that he felt like a weight had been lifted off of his shoulders because his problems had come out into the open". Coping strategies were suggested and it was recorded that Inspector Naulls "used to have to rush home to take Toby to appointments (if Mrs Naulls could not do so) and this meant that he did not take time off work to do this and so it impacted on his working life thus causing more stress and anxiety". The report specifically noted that "there appears to be a clear difference now and the past in that Mr Naulls acknowledges the problems he has (whereas in the past he did not) and this has provided a problem for him to analyse and reflect upon his mental health situation thus enabling him to carry on his daily life …". By 14 June it was noted that Inspector Naulls had been on holiday with his daughter, had been to Harvard University as part of his PhD, had completed counselling sessions, and was due to return to work. On 30 June 2010 Inspector Naulls saw Dr Oxlade, a consultant psychiatrist, as part of the Human Resources provision made by the Commissioner. Dr Oxlade recorded that "he has no problems with memory now, and problems that were noted in January regarding his inconsistent stories about what he was doing, should be regarded as related to his state of panic at the time, and the fact that his memory was not working properly when so frightened". The journey on 25 January 2010 and lies told by Inspector Naulls The Association of Train Operating Companies ("ATOC") provide free standard class travel, but not first class travel, to police officers. This helps to ensure that there are often police officers on trains ready to provide assistance when required. This is an important privilege available to police officers which should not be abused. On Monday 25 January 2010, as part of an operation into police officers wrongly travelling in first class accommodation in contravention of the ATOC agreement, a Revenue Protection Officer from Southern Railways, and officers from the Metropolitan Police Directorate of Professional Standards ("DPS"), boarded a train travelling from London Victoria to East Grinstead. Inspector Naulls, having completed his work in London, had boarded the train and sat in the first class accommodation. He had started to watch a DVD, and was intending to travel to his home station of Hurst Green. The DPS officers and the Revenue Protection officer approached Inspector Naulls and asked to see his ticket. Inspector Naulls produced his warrant card, entitling him to standard class, but not first class, travel. Inspector Naulls was told that he was not entitled to travel in the first class accommodation and he offered to move to standard class. He and the DPS officers got off the train at Clapham Junction. It is common ground that Inspector Naulls told the DPS officers that: he was sitting in first class accommodation because he was required to make and receive sensitive phone calls connected to the S60 review; he had been watching the DVD because of poor telephone reception; and he had been getting off at Clapham Junction. Inspector Naulls was given a penalty fare of £20. The correct penalty fare if it had been known he was travelling to Hurst Green would have been £26.40. The DPS officers told Inspector Naulls that his actions in travelling in first class amounted to misconduct. The evidence shows that the normal penalty for such misconduct was likely to have been a written warning. Such a written warning would obviously have compromised Inspector Naulls' promotion chances. At 1620 hours that day Inspector Naulls called his line manager and said he had been found standing in first class accommodation. This was untrue because he had been sitting down. The next day, on Tuesday morning, at 0842 hours, Inspector Naulls sent an email to his line manager, copied to the DPS officers. In the email, Inspector Naulls stated that he was intending to travel from Victoria to Clapham Junction, where he was going to meet his wife, and travel on to Brighton for a meal to celebrate the wedding anniversary. He had boarded the train in standard class and had begun to type up notes and make telephone calls. He had had to speak loudly because of a poor signal, and had moved to first class. He stood up making a call and then sat down to make notes on his laptop. The email was obviously written in an attempt to avoid any proceedings because it contained the suggestion, after explaining the false matters set out above, that "… common sense and discretion should have a part to play in the decision making process". It is common ground that the email contained statements which were not true. He also said that he had often been asked to sit in first class to deal with school children who invaded first class. CCTV investigations were carried out. Footage from the platform at London Victoria and the carriage showed that Inspector Naulls had not had a conversation, lost a signal or stood up. CCTV from Hurst Green showed Inspector Naulls travelling on 25 January 2010 to that station, and not to Brighton. On 8 February 2010 Inspector Naulls was served with a Regulation 15 notice. This made two essential complaints. The first complaint was that he had travelled in first class when he was not entitled to such travel. The second complaint, which had become more serious than the first, was that he had fabricated reasons for travelling in first class. Inspector Naulls replied to that notice accepting that he was sitting in first class, but maintaining that he was sitting there writing an urgent police report of a highly sensitive nature on his laptop. He was anticipating making and receiving sensitive mobile phone calls on the issue. On 13 April 2010 Inspector Naulls was interviewed. A disclosure and interview strategy was devised whereby the CCTV would be disclosed in stages, to see whether Inspector Naulls was giving a truthful account. Inspector Naulls maintained his false account until he was confronted with the CCTV evidence, and he made some limited admissions about his untrue account. However he maintained his account that he had not been watching a DVD. In the course of the interview Inspector Naulls said he had originally lied because of panic, thinking he might be able to bluff his way out of it, and embarrassment. He said that having started to lie he couldn't go back on it, and he admitted that he would have continued to lie without the CCTV evidence. At the end of the interview Inspector Naulls referred to the stress that he was under. He referred to the pressure of the S60 review and police federation work. He referred to his son's condition. He said he had never sought help and had just ploughed on. He said he had just passed the Chief Inspectors exam, and that when colleagues challenged him about the first class ticket all of that risk came to mind. Later that day Inspector Naulls emailed and said he had lied about not watching the DVD. As appears above, it was on 14 April 2010 that Inspector Naulls first sought psychiatric help. On 27 April 2010 Inspector Naulls submitted a statement that it is common ground provides a true account of what happened on 25 January. In the statement Inspector Naulls admitted to trying to lie his way out of the situation and panicking. He made a reference to "other events in my life" at the end of the statement, and said that "these events have had more of an effect on me than I may have realised and may go some way to explaining my irrational thoughts process, absence of memory and uncharacteristic behaviour". As appears from the investigating officer's account Inspector Naulls had: lied about sitting at the bottom of platform 19 to make notes about his S60 review; lied about using his laptop when sitting in first class; lied by saying he was not watching a DVD and owning a portable DVD player; lied about getting off at Clapham Junction and going to Brighton; and lied about standing up in first class to his line manager. The Police Act, Conduct regulations and guidance, and Police Appeal Tribunal Rules Section 50 of the Police Act 1996 provides a power to the Secretary of State to make regulations to provide for disciplinary proceedings. The Police (Conduct) Regulations 2008 provide, in certain circumstances, for a Misconduct Hearing Panel to determine misconduct proceedings. The Police Appeal Tribunal Rules 2008 provide for appeals to an Appeals Tribunal. One of the grounds of appeal is "that the … disciplinary action imposed was unreasonable", pursuant to rule 4(4)(a). At one stage in the proceedings the Commissioner had put in written submissions noting that the Appeals Tribunal could only allow an appeal where the disciplinary action was unreasonable, and suggesting that in order to satisfy this test, the police officer who was appealing would have to show that the Misconduct Hearing Panel had made a decision which was so unreasonable that no reasonable Misconduct Hearing Panel could have made it, namely the Wednesbury test. It is now common ground that this is not the correct test, see R(Chief Constable of Wiltshire Police) v Police Appeals Tribunal (Woolard) [2012] EWHC 3288 (Admin) at paragraphs 32-34. This is because the Appeals Tribunal has statutory jurisdiction, pursuant to the Police Appeals Tribunal Rules 2008, to allow an appeal where the disciplinary action is unreasonable. Although the Wednesbury test uses, among other expressions, the words "unreasonable" it does so in another context. The Court may intervene to quash an unlawful decision made by a public body. It is established law that a public body is not entitled to make a decision that is so unreasonable that no reasonable public body could have made that decision. This is a different and higher test than the Appeals Tribunal considering that the sanction or outcome imposed by the Misconduct hearing panel's decision was unreasonable. Sanctions Guidelines (which was non statutory internal guidance relating to the 2004 Regulations, which were themselves replaced by the 2008 Regulations) provide, under Code of Conduct 1 (now replaced by the Professional Standards of Behaviour) that "It is of paramount importance that the public has faith in the honesty and integrity of police officers. Officers should be open and truthful in their dealings …". The paragraphs following this statement record that an officer who has failed to adhere to this standard will frequently be found to be unfit for service, and that an adverse finding may render the officer unsuitable for operational deployment and therefore not useful to the service. A list of factors likely to be relevant ask whether the false declaration is deliberate or reckless, and record that the most serious breach will be dishonesty in the contemplation of criminal or civil proceedings, followed by false statements for financial benefit, and below that there would be false statements uttered in order to deflect enquiry about a one off and relatively minor breach of duty. Further guidance noted that officers making false statements in the context of personal and family relationships would not ordinarily be susceptible to disciplinary procedures. It was also recorded that a crucial issue was where off-duty behaviour is likely to have the capacity to infect the officer's honesty and integrity in the performance of his duties. The Police Appeal Tribunal Rules 2008 provide at rule 22 for a statement of the Tribunal's determination. Rule 22(3) provides that "The chair shall prepare a written statement of the tribunal's determination of the appeal and of the reasons for the decision". Rule 22(4) provides that "As soon as reasonably practicable after the determination of the appeal the chair shall cause the appellant, the respondent and the police authority to be given a copy of such a statement; but, in any event, the appellant shall be given written notice of the decision before the end of 3 working days beginning with the first working day after the day on which the appeal is determined." These provisions are relevant to the issue of jurisdiction to make the order relating to back pay. Previous decisions have noted that both misconduct hearing panels and Appeals Tribunals (provision for the latter being made by schedule 6 of the Police Act) are specialist Tribunals. This means that the Court will obviously give proper weight to the views and decisions of such Tribunals. It also means that the Appeals Tribunal will not be required to show the same deference to the Misconduct Hearing Panel that a non-specialist tribunal should properly accord to a specialist tribunal. However the Appeals Tribunal has a statutory jurisdiction to allow an appeal only if they find the decision "unreasonable" within the ordinary and proper meaning of that word. Misconduct hearing panel The Misconduct hearing panel gave a short judgment which was read out by the Presiding Officer at the end of the hearing on 12 October 2010. The panel set out the details of Inspector Naulls being stopped, appeared to accept that Inspector Naulls was expecting to receive telephone calls, and recorded that that was not a legitimate reason for breaching the ATOC agreement. The Misconduct Hearing Panel recorded that Inspector Naulls had chosen to lie and set out the details of the lies, recording that the lies had taken the matter far beyond a misconduct matter and into gross misconduct. The panel recorded that Inspector Naulls had invented the story to protect his livelihood and that it had spiralled out of control. The panel recorded that they had listened carefully to what had been said on behalf of Inspector Naulls, the panel accepted that the saving of £6.40 was not the motive for lying, but recorded that the panel did not condone his lying. The panel noted that the primary mitigating factor for his behaviour was severe stress as a result of his son's condition. The panel said that they understood the very difficult family circumstances, and recorded the evidence about Inspector Naulls crying. Having then referred to character evidence the panel noted that Inspector Naulls chose not to seek help, panicked when challenged and had been functioning at work. He had opportunities to tell the truth but had not done so. The panel rejected the option of imposing a written warning saying that they rejected the view that he had not functioned because of stress, this was because Inspector Naulls had lied from the outset, and continued to lie and only admitted the truth when confronted with evidence. The panel dismissed Inspector Naulls. The Appeals Tribunal Inspector Naulls appealed to the Appeals Tribunal. Following the hearing on 21 October 2011 the Appeals Tribunal announced that: the appeal should be allowed as to the disciplinary action taken but that Inspector Naulls should receive a final written warning to last for 18 months; and that Inspector Naulls' costs should be paid by the Police Authority. By written reason for determination dated 6 November 2011 the Appeals Tribunal gave reasons for those decisions. The Appeals Tribunal also decided to award Inspector Naulls back pay for the period when he had been dismissed, and gave reasons for that. The Appeals Tribunal set out the details of the allegations, antecedents, character evidence, mitigation and disciplinary action. The grounds of appeal and a response to them were set out. The Appeals Tribunal then dealt with the merits of the appeal. The Appeals Tribunal recorded that "Whilst gross misconduct is by definition conduct so serious that dismissal is justified, the Tribunal had to consider whether it was a reasonable outcome having regard to the conduct and surrounding circumstances". The Appeals Tribunal considered the Guidance on sanctions and related the start of the "sorry history". The Appeals Tribunal noted that the lies were not an attempt to deny misconduct but rather to put up reasons why misconduct proceedings should not be started. The Appeals Tribunal then addressed the reasons why Inspector Naulls lied, whether he admitted his lies, the evidence of character and past service, and what impact this had on the trust that could now be placed on him. In the course of considering the reasons why Inspector Naulls lied the Appeals Tribunal noted Dr Sukumaran's diagnosis, and the fact that the diagnosis was unexplained, and did not give any indication about when the condition started. The Appeals Tribunal recorded that by 14 April 2010 Inspector Naulls was in serious need of help and that "whatever the precise nature of his mental state and the date of its onset it is reasonable to assume that it played some part in the gross error of judgement which he made in trying to lie his way out of his situation. Although these aspects of the case were referred to by the Misconduct Panel, albeit relatively briefly … the Tribunal concluded that, judging by their decision, it was not reasonable to give them so little weight when set against the misconduct". The Tribunal recorded that the disciplinary action should be amended to a final written warning for 18 months. It was noted that disciplinary action runs from the date of the decision appealed against (the 12th October 2010) and that the Tribunal did not find any reason why reinstatement and pay should not run from that date. It is common ground that there was no argument on that issue at the hearing on 21 October 2011. The Tribunal then addressed the issue of costs giving reasons that legal representation was justified because of complexity, Inspector Naulls was mentally fragile, the Respondent to Inspector Naulls' appeal was legally represented, the legal representative had assisted, and Inspector Naulls had been successful. There was no reference to the fact that Inspector Naulls had committed gross misconduct or that a starting position in regulatory proceedings is that there ought to be no order for costs. Appeals Tribunal decision to order reinstatement was rational The Appeals Tribunal expressly addressed the correct legal test when deciding whether to allow Inspector Naulls' appeal against the sanction or outcome of dismissal, and found that the Misconduct Hearing Panel's decision to give such little weight to the reason for the lies told by Inspector Naulls was not reasonable. It was submitted for the Commissioner that because gross misconduct was part defined by the fact that it was conduct so serious that dismissal is justified, the Appeals Tribunal acted irrationally in setting aside a decision to remove Inspector Naulls who had admitted gross misconduct. However, many regulatory regimes adopt a definition of misconduct or gross misconduct as misconduct which is so serious as to justify dismissal, or its equivalent such as removal from a register of professionals. It is plain that not every incidence of such misconduct or gross misconduct will lead to dismissal. The fact that dismissal might be justified does not mean in every circumstance that it is justified. On behalf of the Commissioner it was also noted that maintenance of public confidence in the police force was vital. The fact that Inspector Naulls was more senior, and in a policy role (meaning that he was less likely to give evidence), should not mean that he is given inappropriate protection from removal. Inspector Naulls' dishonesty should be equated with operational dishonesty, which, as the authorities show, will almost always justify dismissal. The medical evidence did not justify the decision made by the Appeals Tribunal. The answers given in interview, and the medical evidence, showed that Inspector Naulls was simply trying to protect himself from the very sad consequences of misconduct proceedings and dismissal, which would apply to anyone, and there was no medical evidence to show that the mental state had been relevant as found by the Appeals Tribunal. I accept that the maintenance of public confidence in the police force is essential, and that this is a principal aim of disciplinary proceedings. It is clear that dishonesty will undermine public confidence and the fact that a person facing dismissal for gross misconduct will: be of otherwise good or exemplary character; lose their livelihood; have reformed; will carry little weight in regulatory proceedings for the reasons given in Bolton v The Law Society [1994] 1 WLR 512 at 529C-E. In my judgment, it would not be a correct reading of the Appeals Tribunal decision to suggest that Inspector Naulls had been protected because of his policy position. The fact that he was in a policy position was a relevant fact, and it was recorded. It does not appear to have been in any sense decisive in the reasoning of the Appeals Tribunal. The fact that Inspector Naulls was in a senior position obviously increased the obligation on him to set a proper example. It is also apparent that Inspector Naulls told lies, on a repeated basis, over a period of time in an attempt to deflect the misconduct proceedings which would be taken for travelling in a first class carriage. I also accept that the evidence shows that part of the reason for this was that Inspector Naulls wanted to protect his likely promotion. However the evidence did justify the decision made by the Appeals Tribunal about the part played by Inspector Naulls' mental state. In my view, from the material set out above, the Appeals Tribunal was entitled to consider that Inspector Naulls' mental state was part responsible for his gross error of judgement in giving dishonest explanations. It is true that there are passages of the evidence, particularly in interview, when Inspector Naulls does state that he was just in a state of panic, and that that was a reaction which is likely to affect everyone. However, there are other parts of the interview when Inspector Naulls talks about the stress that he was under, his failing memory, and his irrational behaviour. The fact that he was crying alone, at work, before 25 January 2010 is compelling evidence that his mental state was, even before he had been stopped wrongly travelling in first class, not normal. The fact that Inspector Naulls was able to complete assignments and obtain promotion is consistent both with increasing stress and with an internal and external denial of the realities of his situation. As noted above until 14 April 2010 Inspector Naulls seemed to be in a state of denial about his son's condition. The approach taken by the Appeals Tribunal to the evidence as a whole was, in my judgment, fair, reasonable and therefore rational. However that still left the fact that there was very serious dishonesty by Inspector Naulls, in an attempt to deflect misconduct proceedings, together with a part explanation for that dishonesty unique to Inspector Naulls. It might be said that the decision of the Appeals Tribunal to hold that the Misconduct Hearing Panel had been unreasonable, within the meaning of the Appeal Tribunal Rules, was merciful to Inspector Naulls. It might also be said that other reasonable Appeals Tribunals may have been inclined to take a different approach. However, in my judgment, the decision of the Appeals Tribunal was within the bounds of a reasonable decision maker and cannot therefore be said to have been irrational and unlawful. The Appeals Tribunal have not, in any sense, licensed or approved of Inspector Naulls telling lies. What they did was reflect very carefully on his very individual circumstances which part explained the reason that he told lies and concluded that this justified the reduction in sanction or outcome from one of dismissal to a final written warning. They were reasonably entitled to take this view on the material before them. For these reasons, I find that the decision of the Appeals Tribunal to order the reinstatement of Inspector Naulls and to substitute a final written warning was lawful. Jurisdiction to make order on back pay, but no natural justice The Appeals Tribunal did have jurisdiction to make the order about back pay. What appears to have happened is that the Appeals Tribunal announced their decision on reinstatement and costs orally at the end of the hearing on 21 October 2011, but said nothing about back pay. Nothing further happened until the written statement was produced on 6 November 2011. It is apparent that there was not compliance with rule 22(3) and (4) of the Police Appeals Tribunals Rules 2008 set out above. This is because no written notice of the decision of the Tribunal was provided within 3 working days of the hearing. It seems to me to be impossible to characterise the oral decision on 21 October 2011 as the "written notice". This is because it was not written, it was simply said. The written notice of the decision, and the reasons for that decision, were both provided on 6 November 2011. This was in breach of the time limits, but it was not suggested that a breach of the time limits removed jurisdiction, and I would expect clear words to that effect in the Rules if that had been intended to be the effect of non compliance with the time limits. However one reason that nothing was said about back pay was because the issue was simply not raised at the hearing. It could have been raised by either side, or by the Appeals Tribunal, but it was not. It does seem to me that if the Commissioner was going to be ordered to make a significant back payment then he should have been invited to address the point. Natural justice required this. The Commissioner could then have raised issues relating to earnings (if any) which Inspector Naulls had received over the period from 12 October 2010 to 6 November 2011. It seems to me that the Appeals Tribunal's decision on back pay should be quashed because it was made in breach of the rules of natural justice, and remitted to the Appeals Tribunal for reconsideration. Costs in the Appeals Tribunal The reasoning by the Appeals Tribunal for its costs order does not take account of the fact that, in regulatory proceedings, "a regulator brings proceedings in the public interest in the exercise of a public function which it is required to perform. In those circumstances the principles applicable to an award of costs differ from those in relation to private civil litigation. Absent dishonesty or a lack of good faith, a costs order should not be made against such a regulator unless there is good reason to do so … In considering an award of costs against a public regulator the court must consider on the one hand the financial prejudice to the particular complainant, weighed against the need to encourage public bodies to exercise their public function of making reasonable and sound decisions without fear of exposure to undue financial prejudice, if the decision is successfully challenged", see paragraph 44 of Baxendale-Walker v The Law Society [2006] EWHC 643 (Admin); [2006] 3 All ER 675, which was affirmed on appeal [2007] EWCA Civ 233; [2008] 1 WLR 426. These are relevant principles of law in relation to costs which apply to any internal appeal before the Police Appeals Tribunals. They were not considered by the Appeals Tribunal, and the failure to take these fundamental principles into account means that the decision of Appeals Tribunal was not lawful. It was submitted on behalf of Inspector Naulls that the decision of the Misconduct Hearing Panel had been found to be unreasonable meaning that it was right that Inspector Naulls should be entitled to costs. That is a submission that needs to be considered by the Police Appeals Tribunal but they will need to take into account Inspector Naulls' admission of gross misconduct, the fact that proceedings against Inspector Naulls were properly brought and pursued, and the principles set out in paragraph 49. Conclusion For these reasons, I dismiss the Commissioner's challenge to the decision to reinstate Inspector Naulls and provide him with a written warning to last for 18 months, but I quash the decisions to order back pay and costs, and remit those matters to be determined by the Police Appeals Tribunal, if they cannot be resolved by the parties themselves. I am very grateful to counsel for their helpful submissions.

Sir James Munby, President of the Family Division : This is an application for permission to appeal, with appeal to follow if permission is granted, listed in accordance with an order made by Ryder LJ on 14 May 2014, from a judgment and order of Her Honour Judge Probyn dated 28 April 2014. The judge was sitting in the Family Court at Brighton hearing care proceedings in relation to two children, a girl, V, born in March 1998 and her brother, M, born in October 2003. The proceedings have had a distressingly chequered history, exemplified by the facts that although commenced as long ago as 28 March 2013 they have still not concluded some 67 weeks later and, of even more concern, that the order which is challenged before us was an order adjourning the fourth final hearing. It might be thought that something has gone badly wrong. The question for us, however, is whether, as the local authority submits, Judge Probyn was wrong to adjourn the most recent final hearing. In fairness to all concerned, it needs to be acknowledged that these care proceedings began on 28 March 2013 before the implementation (in Brighton in August 2013) of the pilot revised PLO. Initially they followed an appropriate path. The adjourned CMC took place before a District Judge on 21 June 2013. A fact finding hearing, with a time estimate of 5 days, was fixed for the first available date after 9 September 2013. A social work assessment of the mother by the local authority was directed. No other expert evidence was sought or directed. The IRH took place before the DFJ on 9 September 2013. The first hearing commenced before Judge Probyn on 16 September 2013 and lasted for six days, concluding on 27 September 2013. The judge heard evidence from a number of witnesses and made findings against the mother of significant physical harm to V and emotional harm to both children. During the hearing the judge had indicated that a psychological assessment of the children and their attachment to the mother and wider family was necessary in order to evaluate the competing outcomes for the children. In the event, Judge Probyn directed that a consultant clinical psychologist, Gail Miller, report by 8 November 2013 on the potential impact on the children of the local authority's care plans, given the children's expressed wishes and in light of the court's findings, and on the risks posed to the children by a return home to the mother. Ms Miller's report was dated 8 November 2013. It needs, of course, to be read in full but for present purposes I can be selective. Ms Miller recorded the mother as being quite unable to accept the court's findings – she would "never" admit to having assaulted V because it simply was not true. She expressed the opinion that the mother has "very limited" capacity for change at all and "certainly" not within the timescales for V. Nor, she said, would the mother be able to make change within a timescale that would enable M to return home. Ms Miller said that she did not see any current benefit in family work for the mother, M and V, and added that she did not believe the mother to be "receptive to interventions regarding her parenting." Her conclusion was that the children should not return to their mother's care as she would not be able to care for them safely. The guardian's stance in her first report dated 6 May 2013 had been that V and M should remain in foster care pending a fact finding hearing. The recommendations in her report dated 2 September 2013 had been contingent on the outcome of that hearing. Having read Ms Miller's report, the guardian's recommendation in her report dated 6 December 2013 was supportive of the local authority's care plan – care orders and long-term fostering – though advising re-consideration of the timing of the proposed reduction in, and the inclusion of further details as to, indirect contact. The second hearing had been listed for three days starting on 10 December 2013. Three days earlier, on 7 December 2013, V absconded from her foster placement and refused to return. There was discussion at court on 10 December 2013 about a possible recovery order. Judge Probyn concluded that an adjournment was needed to allow for Ms Miller and the local authority to consider what impact, if any, V's actions had on their opinions and recommendations to the court. She accordingly re-listed the case on 20 December 2013, for review and to consider the local authority's application for a recovery order, and for final hearing for 20 January 2014 (time estimate five days). Directions were given for Ms Miller to file an addendum report by 3 January 2014. Ms Miller set out some preliminary views in a letter dated 17 December 2013, in which she expressed "serious concerns" about the local authority seeking a recovery order in relation to V though being in "complete agreement" that V "cannot remain at her mother's home." Her addendum report is dated 3 January 2014. She said that there was no change in the level of risk posed by the mother, while recognising the difficulties created by V's behaviour and looming 16th birthday. The guardian reported on 20 January 2014. By then the local authority had changed its care plan for V. Although M was to remain in foster care subject to a care order, the plan for V now was for her to remain with her mother, subject to a supervision order. The guardian agreed "on balance" with the local authority's plan for V. The risk to V was, in her view, "manageable", while the alternative had the potential to be "seriously damaging" if there were to be further absconding leading to recovery orders and possible secure accommodation. In relation to M, however, the guardian felt unable to recommend the care plan, inviting the local authority instead to apply for a supervision order. Asked to comment on the guardian's recommendations, and to indicate whether they made her change her view, Ms Miller responded in a letter dated 21 January 2014. She said that she would not oppose the view that V should remain at home and was "sympathetic" to the guardian's wish to return M home "in a controlled manner whilst further work is undertaken" though having "serious concerns" about the mother's capacity to work genuinely with such a plan. She suggested the need for a plan in place which "clearly stated the specific requirements" from the mother. Perhaps unsurprisingly she concluded with the comment in relation to M that "there are no simple answers" and that the court "faces a complex decision." The third final hearing commenced on 20 January 2014. Judge Probyn heard from various witnesses, including Ms Miller who gave evidence on 23 January 2014. The previous day, 22 January 2014, Judge Probyn had had a meeting with M. He said he wanted to go home. The transcript of Ms Miller's evidence is not as good as one would wish – there was apparently some problem with the recording equipment – but it is clear enough for present purposes. In relation to M, Ms Miller said that there was potential for emotional harm in both settings and "I genuinely do not have clarity about which route we should go down." Later she said "I feel on the cusp of both views." She agreed that returning M home was "high risk", for reasons which she then elaborated. On 24 January 2014 Judge Probyn adjourned the hearing until 5 February 2014 for two purposes: for enquiries to be made of the C Unit as to what, if any work, it could undertake with the mother, and for the local authority to set out the differences between the support provided under a supervision order and a care order. On 5 February 2014 Judge Probyn adjourned the case, for hearing over four days in the week commencing 28 April 2014: "on the basis of the proposal advocated on behalf of M by his Children's guardian to allow for two initial assessment sessions to assess the mother's capacity to engage in work, such assessment to be carried out by the C Unit, the Court being of the view that this evidence is necessary to conclude the case and to do justice to all the parties and their competing positions." In relation to V, the case was listed for final determination on 12 March 2014. On 12 March 2014 the proceedings in relation to V concluded with the making of a 12 month supervision order. The fourth final hearing began before Judge Probyn on 28 April 2014. The C Unit had reported on 14 March 2014. Its report suggested some signs of change in the mother: acceptance that she had slapped V and that the children had witnessed domestic violence, awareness of the impact of this on them, changes in her relationship with V, and a wish to extend this to her relationship with M, suggesting a "readiness and responsiveness" to intervention. The report recommended "interventions that are both therapeutic and instructive", specifically a programme of sixteen hours of individual 1½ hour weekly sessions "to look at the impact of her anger on the children, better strategies to manage her anger to ensure safety for her children, and the impact of domestic abuse on her and the link with being an abusive parent to her child." Importantly, the writer of the report said "I am unable to comment on the likelihood that risk can be reduced to the extent that M could safely return to his mother's care together with his sister." As against that, and in the teeth of Judge Probyn's earlier findings, the mother in her final statement dated 28 April 2014 specifically denied that she had ever slapped V. The local authority's final care plan for M dated 31 March 2014 was that he should remain in his current foster placement while his mother participates in further work, the local authority stating that, once this work had been completed, it would re-assess the mother in six months time to consider if the necessary improvements and changes had been made to ensure his safe return to her care. The guardian's report was dated 23 April 2014. In it she identified and analysed the various options for M as she saw them: first, return to his mother under a care order; second, as proposed by the local authority – she was concerned about the emotional impact on M of what she saw as the "deeply confusing" message from the local authority it would convey; third, a supervision order with M being accommodated for a period pursuant to section 20 of the Children Act 1989 to enable the work with his mother to progress; and, fourth, the option she recommended, "purposeful delay for a period of three months" to enable the mother to undertake the recommended work with the C Unit. The guardian reported a discussion she had had on 10 April 2014 with Ms Miller, who had expressed concerns that the mother's stance was untested and that this might be a case of "disguised compliance". The guardian's recommendation was that the mother have the opportunity to undertake a "considerable number" of the recommended sessions with the C Unit. She said that she considered it realistic to expect that within six weeks of that work being progressed there would be some indication of the mother's capacity to effect change. She said, "I consider that this postponement is necessary to enable the fullest information to be available to inform long term decisions for M's care." The guardian's position statement for the hearing on 28 April 2014 summarised matters thus: "M needs a decision. But it must be the right decision. [The mother] has embarked on a programme of work which was recommended by the Court's expert and is supported by the local authority. What was the point in starting that work if the rug is to be pulled from under her at this stage given the significant consequences for M? It is disproportionate. The Guardian says there is a gap in the evidence. The missing information can be provided with a relatively short time-frame. It is purposeful delay." Five days earlier, on 23 April 2014, M had absconded from his foster placement and turned up at home. On 24 April 2014 Judge Probyn made a recovery order. Pausing at this point to take stock, the history of events as I have described them, deliberately in some detail, demonstrates the difficulty and complexity of the task facing Judge Probyn on 28 April 2014. (1) More than once, the case had taken an unexpected turn. V's absconding led to a fundamental change in the care plan for her. At the same time the guardian, for understandable reasons, signalled her inability to support the planning for M. Subsequently, M also absconded. (2) It is of course absolutely no criticism of her, but Ms Miller had somewhat changed her stance (compare paragraphs 5 and 10 above) and, understandably, found it difficult to express any clear view (paragraph 11 above). (3) The initial report from the C Unit contained a vitally important caveat (paragraph 15 above). (4) The local authority's final care plan (paragraph 17 above) would no doubt have achieved legal finality for M but no finality for him 'on the ground', since it contemplated the possibility of him returning home following re-assessment of the mother in six month's time. (5) The guardian was expressing the clear view that there should be a further adjournment for reasons (paragraphs 18-19) which on any view merited very careful consideration. And (6) back of all this there was an important point to which Judge Probyn herself drew attention (see paragraph 33 below), M's feeling that it was unfair that V was able to be at home when he could not – particularly poignant, it might be thought, given that it was V, not M, who had been subjected to physical harm by the mother. Judge Probyn gave judgment on 28 April 2014, accepting the guardian's submission that the case be adjourned on the basis, as the order expressed it, that "in order justly to conclude this case it is necessary to obtain a further report from [the C Unit] following six sessions of work as to the mother's progress in the work she is undertaking." She listed the case for an IRH on 4 July 2014 and for final hearing, with a time estimate of 4 days, starting on 10 July 2014. The following day she refused the local authority's application for permission to appeal. The local authority filed its appellant's notice on 8 May 2014, seeking expedition as the next hearing had been fixed for 4 July 2014. On 14 May 2014 Ryder LJ adjourned the application for permission to the full court, with appeal to follow if permission granted. The matter came on for hearing before us on 16 June 2014. The local authority was represented by Ms Tina Cook QC and Ms Katie Phillips, the mother and the guardian, both of whom resisted the appeal, by Mr Jonathan C L Bennett and Ms Anna McKenna respectively. The local authority's case was that we should grant permission, allow the appeal and, then and there, make the care order which, in its contention, Judge Probyn could and should have made on 28 April 2014. At the end of the hearing we indicated that, even if we were otherwise with the local authority, we could not ourselves make a care order, that the matter would therefore in any event need to go back for a further hearing at first instance, that there was no reason why that further hearing should not be before Judge Probyn (and, indeed, I might add, every reason why it should), and that the case should therefore, irrespective of the outcome of the hearing before us, remain listed before Judge Probyn in accordance with her order of 28 April 2014. We subsequently made an order containing additional directions designed to ensure the efficacy of the further hearings before Judge Probyn. On 3 July 2014 we communicated to the parties, and to Judge Probyn, our decision, namely that although the draft judgment was not yet ready for circulation, we had unanimously decided to grant permission to appeal but to dismiss the appeal from Judge Probyn. We now give our reasons. Although this judgment was not formally handed down until 15 July 2014, it was sent to the parties on 9 July 2014 so as to be available to them when the final hearing commenced before Judge Probyn the following day. The arguments before Judge Probyn on 28 April 2014 had centred, as indeed the arguments before us centred, on the judgment I gave on 16 April 2014 in the Bournemouth and Poole County Court in In re S (A Child) [2014] EWCC B44 (Fam). That judgment built upon the judgments of this court in Re TG (Care Proceedings: Case Management: Expert Evidence) [2013] EWCA Civ 5, [2013] 1 FLR 1250, In re H-L (A Child) (Care Proceedings: Expert Evidence) [2013] EWCA Civ 655, [2014] 1 WLR 1160, [2013] 2 FLR 1434, and In re B-S (Children) (Adoption Order: Leave to Oppose) [2013] EWCA Civ 1146, [2014] 1 WLR 563. It explained the impact of the new statutory reforms under the Children and Families Act 2014 that came into effect on 22 April 2014, in particular, so far as is material in this case, the amendments to section 32 of the Children Act 1989, including the requirement in section 32(1)(a)(ii) that care cases be concluded within 26 weeks and the limited circumstances, spelt out in sections 32(5)-(7), in which that period can be extended. I need not repeat what I said on this topic in In re S. It suffices to note my observation (para 28) that the 26 weeks rule "is not, and must never be allowed to become, a straightjacket, least of all if rigorous adherence to an inflexible timetable risks putting justice in jeopardy", and my endorsement (para 29) of Pauffley J's warning in Re NL (A child) (Appeal: Interim Care Order: Facts and Reasons) [2014] EWHC 270 (Fam), [2014] 1 FLR 1384, that "Justice must never be sacrificed upon the altar of speed." I continued (para 30): "So despite the imperative demand of section 32(1)(a)(ii), there can be exceptions. But before going further it is vital to recall the equally imperative language of sections 32(5) and 32(7). An extension beyond 26 weeks is to be permitted only if it is "necessary to enable the court to resolve the proceedings justly". This is precisely the same language as appears in section 38(7A) of the 1989 Act and section 13(6) of the 2014 Act, so it must mean the same. Specifically, the learning in Re TG and in In re H-L must, in my judgment, apply as much to section 32(5) of the 1989 Act as it does to section 38(7A) of the 1989 Act and section 13(6) of the 2014 Act. Moreover, extensions are "not to be granted routinely" and require "specific justification."" I emphasised the point (para 34): "I repeat, because the point is so important, that in no case can an extension beyond 26 weeks be authorised unless it is "necessary" to enable the court to resolve the proceedings "justly". Only the imperative demands of justice – fair process – or of the child's welfare will suffice." I went on to consider in what circumstances the qualification in section 32(5) might apply. Recognising that in the final analysis the question can be determined only on a case by case basis, I offered what I was careful to describe (para 32) as "some preliminary and necessarily tentative observations". I continued (para 33, citations omitted): "There will, as it seems to me, be three different forensic contexts in which an extension of the 26 week time limit in accordance with section 32(5) may be "necessary": i) The first is where the case can be identified from the outset, or at least very early on, as one which it may not be possible to resolve justly within 26 weeks. Experience will no doubt identify the kind of cases that may fall within this category. Four examples which readily spring to mind (no doubt others will emerge) are (a) very heavy cases involving the most complex medical evidence where a separate fact finding hearing is directed … (b) FDAC type cases (see further below), (c) cases with an international element where investigations or assessments have to be carried out abroad and (d) cases where the parent's disabilities require recourse to special assessments or measures … ii) The second is where, despite appropriately robust and vigorous judicial case management, something unexpectedly emerges to change the nature of the proceedings too late in the day to enable the case to be concluded justly within 26 weeks. Examples which come to mind are (a) cases proceeding on allegations of neglect or emotional harm where allegations of sexual abuse subsequently surface, (b) cases which are unexpectedly 'derailed' because of the death, serious illness or imprisonment of the proposed carer, and (c) cases where a realistic alternative family carer emerges late in the day. iii) The third is where litigation failure on the part of one or more of the parties makes it impossible to complete the case justly within 26 weeks …" In relation to what I referred to as FDAC type cases, I said this (para 38): "Viewed from a judicial perspective a vital component of the FDAC approach has to be a robust and realistic appraisal at the outset of what is possible within the child's timescale and an equally robust and realistic ongoing appraisal throughout of whether what is needed is indeed being achieved (or not) within the child's timescale. These appraisals must be evidence based, with a solid foundation, not driven by sentiment or a hope that 'something may turn up'. Typically three questions will have to be addressed. First, is there some solid, evidence based, reason to believe that the parent is committed to making the necessary changes? If so, secondly, is there some solid, evidence based, reason to believe that the parent will be able to maintain that commitment? If so, thirdly, is there some solid, evidence based, reason to believe that the parent will be able to make the necessary changes within the child's timescale?" I return to Judge Probyn's judgment. Having summarised the background and set out the guardian's position, broadly supported by the mother, Judge Probyn summarised the local authority's stance: "The local authority opposes the application to adjourn. There are two features to their opposition. One, they say that, substantively, it is the wrong outcome for M but also, on a preliminary basis, they argue that I should not decide the application until I have heard the evidence … M will be told about the care plan and the local authority accept that he will need help to understand it. M absconded from his placement last week and went home to his mother. The local authority sought a recovery order last Thursday and mother did not oppose that order being made, and M returned to foster care. The local authority point to this as evidence of how disruptive the litigation is for him and the need to bring proceedings to an end. They argue it is unfair to determine the application without my hearing the evidence. They rely on the psychologist, Ms. Gail Miller's concern, that what is seen in relation to the mother is something called "disguised compliance", ie superficial compliance, rather than any meaningful engagement with the issues. They point to the fact that the mother's statement, filed today, seems to resile from the progress she is making, or she is described as making, by the [C Unit] programme workers." Explaining her decision, Judge Probyn said this: "Ultimately it is of course a matter for me to assess whether the adjournment proposed by the children's guardian is realistic, or whether it is simply postponing the final decision without any real justification. I rely on the recent authority of Re S, the judgment of the president, Sir James Munby: Re S (A Child) [2014] EWCC B44 (Fam). Whether, it is necessary to adjourn for the purpose identified by the guardian and the impact upon M's welfare. The President identified three questions". Having quoted from the latter part of what I had said in para 38, she continued: "In my judgment the significant factors are as follows: M is ten and a half years of age. He is an articulate child and has consistently expressed a very clear wish to return home. Further delay, in proceedings which have taken over a year to resolve, is inimical to his welfare and I accept he needs a decision as soon as possible, and as soon as it can be done, in a fair and proportionate fashion. M loves his mother and there is no issue that she loves her children. V is at home on the basis of an agreed care plan and M finds it unfair that his sister is able to be at home and he cannot. M will suffer emotional harm if he cannot return home and that must be balanced against the risk of continued emotional harm, and potential physical harm identified in my judgment in September of 2013. M is a black African Portuguese boy and the local authority's care plan is that he be placed on a long term basis with a white foster carer, who does not, as I understand it, speak Portuguese. M has absconded from the foster placement twice and there is a real risk that he may well do so again. The guardian is concerned about what sense M will be able to make of the care plan, particularly given his desire to return home. Mother has engaged positively with the [C Unit] programme to date and she is said to have co-operated fully and demonstrated being open to developing a therapeutic relationship. While the assessment of the mother is positive they are unable to indicate at this stage whether the risk can be managed so that M can safely return home. The guardian is clear in her analysis that it is realistic to expect that within six weeks of the work commencing with the … programme – and I remind myself that there have already been two sessions – there should be some indication of the mother's capacity to change. The … work is important and necessary evidence in terms of the mother's capacity to safely parent M. In my judgment the three questions identified by the President are answered in the affirmative. I accept the submission that cross-examination at this stage may be counter-productive and that, if it is right that the … work is a necessary piece of the jigsaw, there is no real purpose to hearing the evidence at this stage. I remind myself of Mrs Justice Pauffley's observation in Re NL, that: "Justice must never be sacrificed upon the altar of speed." I accept of course that that can hardly be said to be the case here, but in these circumstances I do find delay is purposeful. This is a finely balanced decision but I accept I cannot properly evaluate the competing factors and M's overall welfare without the evidence, or the further evidence from the … In the circumstances, albeit delay is inimical to M's welfare, this is, in my judgment, a potentially vital piece of the jigsaw. I see no purpose in challenging the mother at this stage, particularly given that I am going to re-list this matter within a short period of time. Of course, my decision is informed not only by M and his mother's Article 8 rights, but also by the principle of fairness and access to justice, and the ability of the mother to fairly argue her case in the absence of this evidence. Equally, for the matters to be properly and fairly explored in the absence of this evidence." Explaining the next day why she was refusing the local authority permission to appeal, Judge Probyn amplified what she had said the day before (I quote from an agreed advocates' note): "What I meant by that [the reference to Re NL] was that the proceedings have taken some time to resolve but there are exceptional circumstances of this case as I set out. Not least of all M's age, understanding and cultural identity and continued separation from his family who he desperately wants to be back with and in the face of a final care plan for long term separation in a placement which, with the best will in the world, cannot meet his cultural needs save to ensure support for his Portuguese inheritance through language lessons and wider cultural assistance and his social identity." She continued: "Having heard the application on submissions in the first instance, on the basis of the factors I identified, the case could not be resolved justly in the absence of further information of the mother's progress with the work with [the C Unit] and her capacity to care for M. In those circumstances I did not accept … the LA submissions that hearing evidence would be of assistance and [some words seem to be missing] would be likely to cause the mother stress and anxiety and would in effect potentially compound the unfairness pointed to by the Children's Guardian on the mother's behalf, as she would be giving evidence in what is no doubt a challenging process of doing this work and without the advantage of being able to rely on and indeed refer to any up-to-date information as to her progress … having decided the need for additional evidence, I consider that an extension of time is necessary to justly resolve the case. It is implicit in my judgment that this is the case but it is right to raise that and I do find that the additional evidence is necessary to resolve the application." I have set out Judge Probyn's reasoning at length because it demonstrates not merely the care she gave to this very difficult case but also, as it seems to me, why she was entirely justified in deciding as she did and for the reasons she gave. Her reasoning, in my judgment, displays no error of law or approach; it correctly identifies the relevant factors that had to be taken into account; and it explains her ultimate decision in a way which makes clear how very understandable that decision was in all the circumstances, not least in the light of those factors upon which the guardian placed particular emphasis. Despite all Ms Cook's endeavours, her attack on Judge Probyn's judgment fails. I should add that at one point in her submissions Ms Cook suggested that Judge Probyn had "lost her way". I unhesitatingly reject that criticism. The local authority has formulated six grounds of appeal, although in substance they fall into three groups: i) The first complaint (ground 1) is that Judge Probyn was wrong to direct an adjournment without first hearing the evidence in the case. It is said that she was wrong to accept (a) that the report from the C Unit was a vital piece of evidence, (b) that the mother was committed to change that could be achieved in M's timescale and (c) the guardian's submission that cross-examination of the mother might undermine her therapeutic work. ii) The second complaint is that Judge Probyn was wrong to adjourn the case, already in its 57th week and particularly when it had been adjourned three times already, (a) having regard (ground 2) to the harm that M would suffer by further delay and his need for a final decision, (b) having failed (ground 3) to answer correctly the three questions posed in Re S, (c) thus failing (ground 4) to comply with the mandatory 26 week time limit and wrongly finding that an extension was necessary which would inevitably take the case beyond the next eight weeks, thus breaching PD12A, and (d) in circumstances where (ground 5) the further delay was not purposeful and would in any event be inadequate to demonstrate the necessary changes in the mother. iii) The third complaint (ground 6) is that Judge Probyn was wrong to adjourn the case to achieve a purpose, namely further assessment of the mother, which was already provided for in the local authority's proposed care plan. To continue the proceedings in these circumstances was to exercise an inappropriate supervisory role over the proper functions of the local authority in the exercise of its responsibilities and duties under the implementation of its final care plan. I shall deal with these complaints in turn. First, however, I note that this is an appeal from a case management decision. The approach this court must adopt is accordingly that set out in Re TG: see In re B-S, para 77, though in my judgment the outcome would be the same whichever approach we adopted. In relation to the first complaint, Ms Cook submits that the court was not in a position to evaluate the importance of the work done and to be done by the C Unit, nor to evaluate the reality of the mother's seeming changes (the evidence in relation to which was contradictory), without hearing oral evidence from, as I understand it, Ms Miller, the mother and the social worker. Everything hinged on the mother's progress or otherwise, something that required to be probed by cross-examination. In granting an adjournment on the basis of submissions alone, Judge Probyn was failing to decide the case fairly and justly. In my judgment it was pre-eminently a matter for Judge Probyn, as the trial judge exercising her case management powers, to decide whether to hear oral evidence before determining the application for an adjournment. It is the kind of decision in respect of which this court should be slow to intervene. Judge Probyn's decision to proceed on submissions was, in my judgment, a decision that fell comfortably within the range of decisions with which this court will not, indeed must not, interfere. Sometimes it will be appropriate to hear at least some evidence, particularly if the evidence falls within a narrow compass and is likely to have significant impact. Often it will not, particularly if what is proposed is, as here, hearing oral evidence from a number of witnesses. Any application for an adjournment, especially if, as here, the case is already badly overrunning, requires the anxious scrutiny and rigorous approach which Judge Probyn rightly adopted. But we need to guard against applications for adjournments turning into mini trials. The fact is that Judge Probyn had been hearing the case over a period of some months and was well aware of, indeed steeped in, all its subtleties and complexities. She had heard Ms Miller, the social worker, the guardian and the mother give evidence on previous occasions (the mother twice). She was therefore better placed to evaluate what appeared on the papers, and without the need for oral evidence, than a judge who had not had those advantages. This complaint must, in my judgment, be dismissed. In relation to the second complaint, Ms Cook points to M's fragility, his need for stability and for final decisions about his future, and the adverse effects on him not merely of the continuing delay but also of seemingly final hearings proving anything but. For M, she says, the decision to adjourn has been 'the worst of all worlds'. The mother, she submits, is in denial and there is lacking the "solid" foundation of evidence that Re S shows was needed if an adjournment was properly to be granted. The court failed to comply with its obligations in relation to the mandatory 26 week period, permitting a yet further adjournment when this was not "necessary", when the adjournment will not achieve its purpose, given the limited time available for further work with the mother before the final hearing, when there is at present no expert or other professional view recommending M's safe return to his mother's care now, and when whatever work is done by the final hearing will not enable M to return home at that stage. I do not resile from a word of what I said in Re S, but as with any judgment it has to be read in context and is not to be treated as if its language is that of a statute, particularly if it is qualified in the way in which I was deliberately careful to qualify what I said in paras 32 and 38 (note my use of the word "typically"). The reality is that this was a case which had already been derailed (see Re S, para 33(ii)). Nor was it a typical FDAC type case. There is nothing to suggest that Judge Probyn was, as I put it in Re S, para 38, "driven by sentiment or a hope that 'something may turn up'." She had much more solid grounds than that for proceeding as she did. There was an indication of some change in the mother, but it was something that the judge found, accepting the guardian's submission, necessitated further probing and evaluation if she was to be able to come to a just and fair decision, having been furnished with all the information she needed but which, with all her knowledge of the case, she felt was in part still lacking. The adjournment was sought and granted with a very specific purpose in mind. It was carefully and appropriately time-limited. The impact on M was obviously a weighty factor, and one to which Judge Probyn properly gave careful attention, weighing the various factors in the balance and ultimately coming to a conclusion which was, in my judgment, plainly open to her on the materials before her. In considering Ms Cook's arguments based on M's need for finality, one has to bear in mind that, as I have already pointed out, even the local authority's plan was offering M no more than finality in the legal sense, not finality 'on the ground'. This, in my judgment goes a long way to blunting the force of this part of her submissions. In my judgment each of these grounds of appeal fails and must be dismissed. In relation to the third complaint, Ms Cook points to the principles definitively stated by Lord Nicholls of Birkenhead in In re S (Minors) (Care Order: Implementation of Care Plan), In re W (Minors) (Care Order: Adequacy of Care Plan) [2002] UKHL 10, [2002] 2 AC 291. She submits that since the local authority's care plan was for active consideration of M's rehabilitation to the mother, the court was wrong to adjourn the proceedings. I cannot, with all respect to Ms Cook, accept any of this. The situation with which Judge Probyn was faced had nothing to do with the profoundly important principles enunciated by Lord Nicholls, which pre-suppose that the court has already decided, at least in principle, to accept the local authority's care plan but wishes to monitor or police it before finally devolving responsibility to the local authority. But here the proceedings have not got to that stage. The court has not yet resolved the issue between the local authority and the guardian as to whether the appropriate form of order is, as the local authority contends, a care order or, as the guardian suggests, a supervision order. Even on the most restrictive reading of section 31(3A) of the Children Act 1989, that outstanding issue is plainly a matter within the court's exclusive competence. And until the court has ruled on it – and that point has not been reached – the court is doing nothing that can properly be described as exercising an inappropriate supervisory role over the local authority. In directing the adjournment Judge Probyn was, as Ms McKenna helpfully put it, indicating that she was unable at this stage to find that the order which best met M's needs was a care order backed by this care plan. If the adjournment was otherwise appropriate, as it was, objection on this ground is, in my judgment, misplaced. It follows that this ground of appeal also fails and must be dismissed. Ms Cook raised a question as to whether the court can adjourn and re-timetable a case beyond the next 8 week period referred to in PD12A. She complains that Judge Probyn approved a timetable that took the case beyond the relevant 8 week period. This offended, she says, against all the principles which the statute and the PLO were designed to enforce. There is no need for us to consider the application in this context of the transitional provisions in article 8 of The Children and Families Act 2014 (Transitional Provisions) Order 2014, SI 2014/1042. It suffices to focus on paragraphs 6.4 and 6.5 of PD12A, which have of course to be read in the context of the recently amended section 32 of the Children Act 1989. PD12A, paragraphs 6.4 and 6.5, provide as follows: "6.4 If the court agrees an extension is necessary, an initial extension to the time limit may be granted for up to eight weeks (or less if directed) in order to resolve the case justly (see section 32(8) of the 1989 Act). If more time is necessary, in order to resolve the proceedings justly, a further extension of up to eight weeks may be agreed by the court. There is no limit on the number of extensions that may be granted in a particular case. 6.5 If the court considers that the timetable for the proceedings will require an extension beyond the next eight week period in order to resolve the proceedings justly, the Case Management Order should – (1) state the reason(s) why it is necessary to have a further extension; (2) fix the date of the next effective hearing (which might be in a period shorter than a further eight weeks); and (3) indicate whether it is appropriate for the next application for an extension of the timetable to be considered on paper." There are two separate questions. The first is whether, compatibly with the imperative requirements of section 32, an extension beyond 26 weeks can be shown to be "necessary". That is a matter I considered in some detail in Re S and I see no reason to alter what I said or add to it in any way. The second question is whether, if an extension is indeed "necessary", the case can be re-timetabled for a period in excess of 8 weeks at a time. In my judgment the answer to this question is that quite plainly it can, if that is necessary. Take a very simple example. Suppose that, in a case of the kind I referred to in Re S, para 33(i), it is plain at the outset that the proper – the "necessary" – timetable will take the case to week 36. It would be absurd to suggest that the court cannot timetable it accordingly at the outset just because the timetable will stretch beyond 26 weeks and, indeed, beyond the first 8 week extension. To impose such a restraint on the court would be to defeat the very principles of proper case management which underlie the PLO. But in any event, PD12A does not have this consequence. PD12A para 6.5 is careful to distinguish between the "timetable" and the required "extension", contemplates that the timetable may require an extension "beyond the next eight week period", and provides for how that is to be managed. Nothing that Judge Probyn did offended against either the letter or the spirit of either section 32 or the PLO or PD12A. There is one final matter I should address. Judge Probyn referred to the delay in this case as being "purposeful", a phrase that was also used by counsel in the course of submissions before us. 'Planned and purposeful delay' has had a long and distinguished place in this part of the law (see, for example, C v Solihull Metropolitan Borough Council [1993] 1 FLR 290, 304) but as a phrase it has, I suspect, outlived its usefulness. Too often in recent years it has served merely as a convenient label, justifying delay when, on proper and more rigorous analysis, delay was not appropriate. Today, when, to repeat, the relevant test is that set out in section 32(5), this handy expression is apt to mislead. For an extension to be "necessary" it may be appropriate to demonstrate that what is proposed is, indeed, planned and purposeful, but even if that is, and I am not saying it is, a necessary condition it is certainly not a sufficient condition for granting an extension. All in all, I suggest that this is a label that has had its day and is now better left unused. I add that in saying this I am not to be taken as disagreeing in any way with what Macur LJ recently said in Re S (Children) [2014] EWCA Civ 135, para 21: "It is crucial to note that the family court will be faced on many occasions with asserted markedly changed circumstances, often poorly evidenced and very late in the day, necessarily exceeding the child's 'timetable' in terms of welfare considerations. In such cases there can be little prospect of delaying a decision, mostly inevitable in the light of the previous history of the case. However, there are cases where delay is 'purposeful'. Each case must be judged on its own facts." Lord Justice Kitchin : I agree. Lord Justice Underhill : I agree.

LORD JUSTICE RICHARDS: This is an appeal against the decision of District Judge Tubbs, sitting at the City of Westminster Magistrates' Court on 22nd December 2008, to order the appellant's extradition to Malta pursuant to section 21 of the Extradition Act 2003, this being a case under Part 1 of that Act. The appellant's extradition was sought originally under a European Arrest Warrant issued in February 2007, but the resulting order for extradition was quashed by the Divisional Court, presided over by me, in October 2007 (see [2007] EWHC 2651 (Admin)). A new warrant was issued on 25th June 2008 leading to the further order for extradition now under challenge. The grounds on which extradition is resisted in this appeal are abuse of process and passage of time. An attempt by Mr Butt to introduce this morning an additional ground of appeal, based upon a contention that the new warrant was defective for failure to refer to the original warrant, was refused by us. The point could have been, but was not, taken before the District Judge and is not a point that, in our judgment, the appellant ought to be allowed to take for the first time at the hearing of the appeal before this court without even any prior notice to the court. The appellant is a 40-year old British citizen. The facts lying behind the order for extradition are summarised as follows in the District Judge's decision: "Mr Haynes visited Malta over a number of years and in 1999 returned there to live and run a business. It is alleged that on the evening of 10th May 2003, Mr Haynes was the driver of a vehicle which collided with and overtook a car being driven by a man called Joseph Attard. Mr Attard was accompanied in his vehicle by his wife, Maryanne Attard, and a friend David Shephard. Mr Haynes stopped his vehicle in front of Mr Attard's vehicle. All four people got out of their respective vehicles. It is alleged that Mr Haynes physically attacked Joseph and Maryanne Attard and David Shephard by punching and kicking them. As a result David Shephard suffered a contusion of the brain and a fracture of the eighth rib close to the spleen which resulted in internal bleeding. Joseph Attard received facial injuries comprising bruising on the forehead and a 1 cm laceration over his left eyebrow which required stitching. Maryanne Attard sustained bruising to her forehead. Mr Haynes was arrested and trial proceedings were commenced in May 2003. Mr Haynes was present and legally represented throughout the trial proceedings. Initially he was remanded in custody for about three months. At one of the court hearings in July 2003 he was granted bail on conditions, one of which was the surrender of his passport. The prosecution case was substantially completed when, in April 2006 and prior to the defence case commencing, Mr Haynes chartered a yacht and absconded from Malta in breach of his bail and abandoning his passport. He made his way through Italy to France where he obtained an emergency passport from the British Embassy in Paris and came to the UK." The original warrant was quashed because it was not in a sufficiently clear and particularised form to meet the requirements laid down by section 2 of the Act. I described it in my judgment as "a terrible muddle". One of the problems was a confusion on the face of the warrant as to the number and nature of offences of bodily harm that were covered, in circumstances where an offence of grievous bodily harm was an extradition offence, whereas an offence of slight bodily harm was not. It was clear that the appellant's return was sought in respect of at least one offence of grievous bodily harm in relation to the attack on Mr Shephard, but it was not clear whether there were separate counts of grievous bodily harm or only slight bodily harm in relation to the attacks on Mr and Mrs Attard, or how many counts of bodily harm there were in total, or what the maximum sentence of 9 years in the warrant related to. A letter from the Maltese Attorney General's office (to which I will need to refer further in a moment) asserted that the offences for which return was requested were three counts of grievous bodily harm, but this did not tie in satisfactorily with the warrant itself or resolve the court's concerns about the validity of the warrant (see, in particular, paragraphs 22 to 25 of my previous judgment). The new warrant indicated that the appellant's extradition was sought in respect of three counts of grievous bodily harm, and this was the position first adopted by counsel for the respondent authority in seeking to uphold the warrant. But an expert report obtained on the appellant's behalf concluded that the alleged assault on Mrs Attard, at least, was incapable of amounting to an offence of grievous bodily harm under Maltese law. Service of that report resulted in an adjournment and further enquiry of the respondent authority. That produced a response to the effect that a mistake had been made and that there were only two counts of grievous bodily harm, in relation to the assaults on Mr Shephard and Mr Attard. The assault on Mrs Attard was in fact charged as an offence of slight bodily harm. Accordingly, extradition was sought thereafter only in respect of the two offences of grievous bodily harm. Abuse of Process To sustain an allegation of abuse of process in relation to proceedings under the Act, it is necessary, first, to identify with specificity what is alleged to constitute the abuse; secondly, to satisfy the court that the matter complained of is capable to amounting to an abuse; and thirdly, to satisfy the court that there are reasonable grounds for believing that such conduct has occurred. If the matter gets that far, then the court should require the judicial authority to provide an explanation. The court should not order extradition unless satisfied that no such abuse has taken place (see R (on the application of The Government of the United States of America) v Bow Street Magistrates' Court and Tollman [2007] 1 WLR 1157, in particular at paragraphs 84 to 89). The abuse of process argument in the present case is founded on the stance previously adopted by the respondent authority in relation to the offences for which extradition was sought and the explanation given for the change of stance. It is submitted, in short, that there are reasonable grounds for believing that the respondent has provided deliberately misleading information in relation to the charges on which the appellant has been tried in Malta and has done so with a view to securing extradition. It is common ground that if a judicial authority were to provide misleading information with such intention, this would amount to an abuse. But the submission for the respondent is, in summary, that the error that occurred in this case was nothing more than a mistake and cannot amount to an abuse. In order to examine the issue, it is necessary to look first in greater detail at the relevant facts. In the extradition proceedings pursuant to the original warrant, the District Judge formed a provisional view that the warrant alleged only one extradition offence. That led to further information being sought from the respondent in order to clarify what offences the appellant was accused of and what the maximum sentence was for each offence. In a response from the Maltese Attorney General's Office, Dr Donatella Dimech, Senior Counsel for the Republic, said that she had viewed the court file, she had that morning consulted the presiding Magistrate, Dr Padovani, and she was in a position to state that the offences for which the appellant's return was requested were three count of grievous bodily harm. She said that in relation to the Attards the appellant was also accused of causing different injuries of a slight nature. The letter was undated but was served in June 2007. Counsel for the authority placed reliance upon that letter at subsequent hearings before the District Judge and the Divisional Court, seeking to persuade the court to accept the reliability of the statements in it. The letter was relied on by the District Judge in finding the warrant to be valid and ordering extradition. It was also taken into account by the Divisional Court (and I have already made mention of it), but it was not considered sufficient to overcome the court's concerns about the warrant itself. Following the quashing of the original order for extradition, the second warrant was issued by Dr Padovani, repeating the assertion that the appellant was sought for three offences of grievous bodily harm. In the ensuing extradition proceedings, the District Judge was invited by counsel for the authority to accept that at face value. Then came the expert report for the appellant, to which I have already referred, and the subsequent change of position by the authority. A letter from Dr Padovani dated 11th November 2008 sets out the terms of the original charges against the appellant and the terms of the charges as amended in May 2003. As there set out, they show that there was at all times a charge of grievous bodily harm in relation to the attack on Mr Shephard. However, the attack on Mr and Mrs Attard was originally charged as an offence of slight bodily harm in each case, but this was amended in May 2003 to a charge of grievous bodily harm as regards Mr Attard and of slight bodily harm as regards Mrs Attard. A letter from Dr Dimech dated 12th November 2008 explains that the error in the warrant was a mistake due to the manner in which the charge was amended in May 2003. The letter continues: "As the charge sheet indicates and as attested by the records of the sitting of the 16th May 2003, the charges proffered against Haynes were amended. Under Maltese law, when an amendment is made on the face of the records, the amended text (be it a correction, a substitution or a deletion of words/phrases) must still remain visible. The charge sheet indicates an 'ø' which denotes that the charge was amended by the words that follow. It has always been understood and thus reproduced in the warrant that the words which were added were 'grievous bodily and of a slight nature' in substitution of the word 'slight'. Since the sentence makes no reference to another insertion (denoted by another similar symbol) it appeared that the sentence added was meant to refer to both. This understanding was further strengthened by the fact that at the end of the charge the articles of the penal code referring to grievous bodily harm (214, 216) were listed and I quote 'in breach of articles 214, 216 and 221' referring to the injuries committed on both Mr and Mrs Attard!! Nowhere in the charge sheet does it appear that the offence of grievous bodily harm committed could have been attributed solely in respect of Mr Attard and not in respect of both. Indeed, had the amendment been drafted differently this misunderstanding would never have arisen. Nor would I have so vehemently argued in defence of this fact. Should it have meant to indicate that the words 'and of slight nature' were meant to be introduced immediately before the words 'Maryanne Attard', an indication similar to what had just been done with respect to Joseph Attard ('Ø') was, in my humble opinion, undoubtedly in order. In fact from a grammatical point of view it appears inconceivable that, taking in consideration how it has now transpired that it was meant to read, with the reproduced amendment the wording is 'and . . . of slight nature on Maryanne Attard'; what now seems to be the word 'on' was hitherto perceived to be close inverts ("). The charge sheet which has been exhibited in no unclear manner bears witness that this was an honest mistake attributed by the manner in which the charge sheet was amended and had it not been for the request for clarification by your authorities from the Court of Magistrates, this fact would not have become known to me although admittedly it was known to the relevant court who has possession of the court records since 2003 and thus, from the evidence tendered (also in the UK authorities' possession!) could also verify from the testimonies and documentation including medical certificates exhibited in the course of the said proceedings, the reading which the amendments were purported to convey. I can attest that I only learnt of this mistake upon reading the Magistrate Padovani's communication of the 11th November 2008." That explanation is, in part, a little difficult to understand, but the difficulty is increased by the fact that the court does not have before it the charge sheet either in its original form or in its amended form. I recall seeing those documents on the occasion of the previous hearing before the Divisional Court, but neither side has thought fit to produce them for today's hearing and Mr Butt has made clear that he does not rely on those documents in his submissions. The submissions he makes, and makes very forcefully, are that there are reasonable grounds for believing that there has been deliberate misleading by the judicial authority and that the burden is then on that authority to satisfy the court that there is no abuse of process. He submits in particular that the explanation given by Dr Dimech is insufficient and unconvincing, and that the court cannot be satisfied by reference to it that this was simply a mistake. He makes three points in particular. First, Dr Dimech says that she only learned of the mistake when reading Dr Padovani's communication of 11th November 2008, yet in her original letter of June 2007 she said she had consulted with Dr Padovani, and that gave the original letter greater authority. This contradiction is not explained. Secondly, the second warrant was issued by Dr Padovani herself and the erroneous reference in it to three counts of grievous bodily harm cannot be explained by a mistake on the part of Dr Dimech or by her being unaware of the mistake until she read Dr Padovani's communication of 11th November 2008. Thirdly, there has been close communication throughout between the CPS and the authorities in Malta, and it is unreasonable in the circumstances to assume, having regard to the case advanced by the appellant at all times and to the terms of the previous judgment of the Divisional Court, that if a mistake had been made it would not have been discovered earlier, or to assume that Senior Counsel for the Republic could have been so incompetent as to make such a mistake and to fail to discover it if it had been made. The District Judge gave reasons for rejecting the submissions as to abuse of process that were made to her. She said: "It has always been conceded that Mr Haynes was properly charged with grievous harm of David Shephard and that that was an extradition offence. Secure in that knowledge there would be no logical reason for the Maltese Authorities to act in breach of their legal and international duties and obligations to deliberately lie and mislead the requested court in respect of the less serious alleged assaults on the Attards. Having read Dr Dimech's reasons as to how the misreading of the amended charge sheet arose and having seen the photocopy of that charge sheet I entirely accept that it was a genuine and unfortunate error and that there has been no deliberate attempt by any Maltese Authority to mislead this court in order to obtain Mr Haynes's extradition to face a charge which the authorities knew not to be an extradition offence." Mr Butt submits that that reasoning is mistaken. It was clear that the appellant could not be returned to Malta unless the court was satisfied that he faced three identical offences of grievous bodily harm. If any of the three assaults was not an extradition offence, the court could not be satisfied that the particulars of sentence given in the original warrant met the statutory requirement, since only one maximum sentence of nine years was specified in respect of all three assaults and the failure of the warrant to state with sufficient clarity the maximum sentence was one of the reasons why the Divisional Court quashed the order for extradition. In her written submissions on behalf of the respondent authority, Miss Lindfield contends that the reasoning of the District Judge is beyond fault. She says that the error about the nature of the charges is unfortunate, but it is clear that this was a mistake and that nothing more sinister has occurred. The expert report did not compel a change of position but was simply a catalyst for uncovering the mistake. Queries had always been passed to the Attorney General's Office which had answered in a way which was believed at the time to be accurate but is now accepted not to have been. The amended charge sheet is itself a confusing document, but the relevant amendment was made in May 2003 before the appellant absconded, and the true position must have been known to him. It is submitted that this court should start from the premise that the judicial authority is acting in good faith -- a well-established principle -- and should conclude in the circumstances, as did the District Judge, that there has been no intention on the part of the respondent to mislead the court. For my part, I have no difficulty in accepting Miss Lindfield's submissions. In my judgment, this whole saga smacks plainly of carelessness and mistake rather than any deliberate attempt to mislead the English court. There is a presumption of good faith in extradition proceedings. The court is entitled to assume that a judicial authority will act in good faith and the court should be slow to find that there has been bad faith. I am satisfied that there is nothing in the material before the court to provide reasonable grounds for believing that the judicial authority in this case acted, or may have acted, in bad faith and in such a way as deliberately to mislead the English court. The District Judge was right to focus on the fact that there has throughout been at least one offence (the alleged assault on Mr Shephard) on which extradition could properly be based. The warrants and other information provided were consistent and correct on that point. The judicial authority did not need to mislead in order to secure the appellant's extradition for that offence. There was an entirely sound basis for it. Indeed, there was also an entirely sound basis for extradition in respect of the alleged assault on Mr Attard. The suggestion that false information as to the existence of three counts of grievous bodily harm may have been provided by Dr Dimech in order to make good or disguise a defect in the original warrant with regard to the particulars of maximum sentence is to my mind far-fetched and unsustainable. It is true that Dr Dimech said in the first place that she had consulted Dr Padovani, and it was Dr Padovani who issued the second warrant. The error must therefore be attributed to Dr Padovani as well as to Dr Dimech. But it is understandable how such an error could have occurred through the taking of insufficient care to examine the amended charge sheet and to ensure the accuracy of the warrant. Of course, such a mistake should not have been made and the subsequent enquiries should have caused the true position to emerge sooner than it did, but in my judgment the explanation of the mistake is nonetheless entirely plausible. By contrast, I regard the suggestion of deliberate misinformation as wholly implausible. I am therefore of the opinion that the District Judge was correct to dismiss the appellant's contentions as to abuse of process. On the material available, I am satisfied that there are no reasonable grounds for believing that what happened was done in bad faith or constituted an abuse of process. No further explanation is therefore required. The first ground of appeal fails. I turn to the second ground of appeal, passage of time. Passage of Time By section 14 of the 2003 Act a person's extradition to a Category 1 territory is barred by reason of the passage of time if (and only if) it appears that it would be unjust or oppressive to extradite him by reason of the passage of time since he is alleged to have committed the offence or since he is alleged to have been unlawfully at large, as the case may be. The appellant relies upon Lord Diplock's oft cited dictum in Kakis v Government of Cyprus [1978] 1 WLR 779 at 782: "'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 changes 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." There are three strands to the argument advanced by Mr Butt. First, reliance is placed on what happened between the appellant's arrest in Malta on 10th May 2003 and the time when he absconded from Malta in July 2005. The first hearing of the case against him was on 12th May 2003, and it is said that the case was then heard over a number of days with adjournments, amounting in total to 20 different occasions. The final court hearing before he left the jurisdiction was listed for 17th July 2005. By that date, the prosecution case had still not closed. The applicant complained at the time to various bodies about the delay. It is now submitted that given the dilatory nature of the previous proceedings in Malta, it would be unjust and oppressive to return him there where he might be expected to have to endure similar treatment again before the courts. Secondly, reliance is placed on delay from the date of issue of the first warrant to the current date. It is submitted to be the fault of the judicial authority that two years after the first warrant was issued, these proceedings have still not been concluded. The first warrant was defective. The authority proceeded on a false basis until November 2008 as to the offences for which extradition was being sought. Thirdly, as an additional point in relation to the more recent period of delay, particularly oppression is said to have been caused by the delay in issuing the second warrant following the decision of the Divisional Court; a delay from October 2007 to June 2008. No reason has been given why the authority waited so long. It should have acted quickly. The appellant was lulled into a false sense of security by the delay in issuing the second warrant. He described, in his evidence before the District Judge, the stressful effect of the proceedings upon him and that after the successful appeal in October 2007 he soon thought the proceedings were behind him and he was able to put behind him the stress they had caused. For the proposition that culpable delay associated with a false sense of security can be relevant to the issue of oppression, reliance is placed on La Torre v Italy [2007] EWHC 1370, paragraphs 36 to 37. Mr Butt submits that the combined effect of those matters is such that to order the appellant's return would have an oppressive effect upon him. The District Judge did not accept the appellant's case on passage of time. She found that the appellant was not a witness of truth. She rejected his account of why he left Malta. She said that the trial began promptly and there was no evidence before her that there were inappropriate adjournments or any failure to prosecute the case at any stage. When the first order for extradition was quashed, there was nothing in the Divisional Court's judgment to suggest that the Maltese authorities would not pursue the matter further, and the appellant would have been advised that there was nothing to prevent him from correcting the faults in the original warrant and issuing another warrant. There was no reason for him to develop any false sense of security, nor would he be entitled to presume there would be no further proceedings in the period between then and the issue of the second warrant. She did not find the Maltese authorities to be culpable for the passage of time relied on, nor did she find any basis for concluding that it would be oppressive to return the appellant to continue to stand trial, beyond the disruption inevitable to any individual leaving family and employment to face trial. That inevitable disruption was not linked causally to the passage of time. She therefore found that the appellant's extradition was not barred by the passage of time. For the judicial authority, Miss Lindfield submits that the District Judge was correct so to find for the reasons she gave. She also refers to the case of Von Der Pahlen v Leoben High Court, Austria [2009] EWHC 383 (Admin), which was also a case concerning the issue of a second warrant after the Divisional Court had discharged the appellant in respect of the first warrant. There, too, arguments about a false sense of security were run, but without success. I think it unnecessary to carry out any detailed analysis of the case. I doubt whether it helps the respondent authority here because it lays down no relevant principle but is another case on its particular facts. I do not need to take the matter any further for present purposes. Miss Lindfield submits that the appellant was responsible for the delay that has ensued as a result of his leaving Malta. Had he not absconded, the matter would have been concluded many years ago. The District Judge was correct to find that the Maltese authorities were not culpable for the delay. She further submits that it would not be unjust, given the passage of time, for the appellant to be surrendered. The majority of the evidence in the Malta proceedings has been heard and he has a full written record of the oral evidence. In relation to oppression, it is submitted that, as the District Judge found, there is nothing in the appellant's personal circumstances to justify a finding of oppression. The disruption he will suffer is no greater than that to be expected in the ordinary course, and there is no causal link between it and the passage of time. In my judgment, the District Judge was right to find that the appellant's extradition was not barred by the passage of time, and I have very limited comment to make on the reasons that she gave for that conclusion. The proceedings in Malta, up to the time the appellant absconded, were perhaps more extended and fragmented than one might expect in this jurisdiction, but there was nothing about them to give rise to injustice or oppression or to make it unjust or oppressive for the appellant to be returned to Malta for the remainder of his trial. I accept that some delay was caused by the errors in the original warrant and, for reasons already discussed, the mistake concerning the nature of the counts the appellant was facing could have been avoided if greater care had been taken. I also consider that the judicial authority could and should have moved more quickly to issue the second warrant following the successful appeal to the Divisional Court in respect of the original warrant. In those respects, I consider that a degree of culpability for the delay does attach to the judicial authority. That is the one point on which I respectfully differ from the District Judge. I do not, however, regard it as a point of any real significance in the context of the case overall. I am satisfied that the appellant had no reasonable basis for developing a sense of security following the Divisional Court's judgment, even after a number of months had elapsed. He must have been advised of the possibility of a fresh warrant being issued and he had no reason to think, even by June 2008, that the risk had passed. In any event, looking at the passage of time as a whole, and taking into account all the circumstances of the case, the District Judge was, in my opinion, entirely justified in concluding that the appellant's return to face the rest of his trial would be neither unjust nor oppressive and that his extradition was not barred by the passage of time. Accordingly, I would find against the appellant on both the grounds advanced and would dismiss the appeal. MR JUSTICE TEARE: I agree. LORD JUSTICE RICHARDS: Is there anything further that needs to be said? MR BUTT: My Lord, I accept that I cannot argue the point on section 2(4)(b) in light of the authority of Louca. That was the case at the time of the judgment in the Magistrates' Court. However, leave has recently been granted in Louca and questions have been certified in very similar cases. I wonder whether your Lordships would consider certifying a question in similar terms in relation to this case. LORD JUSTICE RICHARDS: It is not a point that arises out of our judgment because, for the reasons we have given, we declined to allow the matter to be advanced. MR BUTT: Indeed, my Lord. Can I request Legal Aid taxation? LORD JUSTICE RICHARDS: Of course. MR BUTT: I am grateful. LORD JUSTICE RICHARDS: Thank you both very much.

Approved Judgment (No.3) AMENDMENTS THE HON MR JUSTICE COULSON JUDGMENT (No. 3) / AMENDMENTS   The Hon. Mr Justice Coulson: 1. INTRODUCTION The Claimant is the owner of Broadway Plaza ("the Development") in Birmingham. In these proceedings, it brings claims against the defendant, pursuant to a warranty agreement dated 14 April 2005, in respect of alleged defects in the Development. The defendant, who was the design and build contractor, makes additional claims against the third party (the mechanical and electrical sub-contractors); the fourth party (the suppliers of the escalators and lifts); and the fifth and sixth parties (the architects). By applications dated 20 April and 30 April 2015, the claimant seeks to amend its particulars of claim and the lengthy schedules attached to them. The amendments are voluminous. However, the parties were able to categorise them in this way: category 1 consisted of the amendments relating to the remedial scheme, and therefore the quantum of the claim; category 2 concerned the addition of further allegations of breach, which generally related back to the breaches already pleaded; and category 3 concerned two new claims, one in respect of the car park smoke ventilation system, and one in respect of alleged defects in the roofs. As explained in more detail below, the parties were able to reach agreement in respect of the amendments in categories 1 and 2, subject to a significant shunt in the timetable leading up to the trial. The two new claims in category 3 are disputed. For reasons of time, it was not possible to give a full extempore judgment at the conclusion of the hearing. I gave a short oral ruling in which I explained why I declined to give permission for the category 3 amendments. I said that a full Judgment would be provided in due course. I set out in Section 2 below the consequences of the amendments in categories 1 and 2. Then, moving on to consider the new claims in category 3, I summarise the relevant principles of law (Section 3 below), before dealing with the smoke ventilation amendments (Section 4 below), and the roof amendments (Section 5 below). 2. CATEGORIES 1 AND 2 As I have said, category 1 consisted of the amendments relating to the remedial scheme, and category 2 related to the further allegations/clarifications in respect of the case on breach. Because ultimately no objection was taken to those two categories of amendments, it is unnecessary for me to consider them in any great detail. However, what is important is the consequences of those amendments on the timetable for trial, because that is the background against which the contested amendments in category 3 have to be considered. This is a case with an unhappy procedural history. The pre-action protocol letter was written as long ago as 2011. The pre-action protocol process was extremely drawn out and, at an earlier hearing, Ramsey J noted that, within it, there had been a 17 month period where the claimant had done nothing to progress the claim. Eventually, these proceedings were started on 23 October 2013. Again, however, matters proceeded slowly and it was not until the case management conference before me on 3 October 2014 that a realistic timetable was set, leading up to a trial on 18 January 2016. One of the problems that was identified at the CMC on 3 October was the very high level of costs which the claimant had incurred and anticipated that it would incur in the future. That gave rise to a dispute as to whether costs management was appropriate in this case, the claimant contending that it was not. I ruled against the claimant in my first judgment ([2014] EWHC 3546 (TCC)). A whole day was then set aside to deal with the costs budgets themselves. This was principally because the claimant's total figure was so high, at over £9 million, that it attracted copious criticism from both the defendant and the additional parties. I upheld much of that criticism, and reduced the claimant's budget by a figure in excess of £4 million in my second judgment in this case at [2015] EWHC 481 (TCC). At the CMC, leading counsel then appearing for the claimant informed the court and the other parties that there were no plans to amend the claim. However it appears that, ever since that date, the claimant has indeed been working on these detailed amendments. Despite that, the amendments in categories 1 and 2 were not provided to the defendant and the additional parties until last month. As already noted, the formal applications were not made until 20 April and 30 April 2015. The amount of work necessary on the part of the defendant and the additional parties to understand, investigate and respond to the amendments in categories 1 and 2 is formidable. I do not set out in this Judgment the detailed evidence in respect of those matters but I have in mind in particular sections 5 and 6 of the witness statement of Mr Davis for the defendant, and paragraphs 40-58 of the statement of Mr Wicks, for the third party. Ultimately, the amount of work involved in dealing with the amendments in categories 1 and 2, at a time when the pleadings had otherwise closed and disclosure had taken place, is best seen in the revised timetable proffered by Mr Davis at paragraph 6.11 of his statement. There he sets out his proposed adjusted dates for the new pleadings, the witness statements, the experts' meetings and the experts' reports. That revised timetable was subsequently agreed by all parties, including the claimant. It is a timetable which contains absolutely no room for manoeuvre. For a trial at the start of the new term in January 2016, it postulates the reopening of the pleadings, with completion of all amendments by 11 September 2015; witness statements being exchanged on 2 October 2015; experts to meet and produce a joint statement by 6 November 2015; and experts' reports being exchanged on 27 November 2015. As I made plain at the hearing, I consider those to be 'last-gasp' dates. They cannot be extended without necessitating an adjournment of the trial date. Indeed, in Mr Davis' original proposal, there was provision for supplemental experts' reports to be exchanged on 4 December 2015 and the pre-trial review to take place on 11 December 2015. I made clear at the hearing that I could not countenance either of those proposed directions. A pre-trial review immediately before the Christmas vacation, with the trial starting immediately after it, is simply too late to be a meaningful hearing. Furthermore, the whole point of experts' meeting and producing their joint statements before they provide their reports is so that those reports can be confined to those matters which are in dispute. This obviates the need for a further round of supplemental reports. However, it was only those modifications (a PTR in early December and no supplemental reports) which ensured that the adjusted timetable could still lead to the trial date of 18 January 2016. I am in no doubt that it is in the parties' best interests, and in accordance with the overriding objective, that the trial takes place on 18 January 2016, and that no question of its adjournment should even be entertained. Of course there are the usual reasons for that, including the importance of certainty for the parties and the need, where at all possible, to maintain the court's lists, because of the impact of adjournments on other court users. But in the present case, there is a particular imperative in requiring the trial to go ahead on the fixed date. I have already referred to the cost management disputes in this case. The costs are already far higher than I would have wished. Any adjournment of the trial date would increase those costs significantly, and any semblance of proportionality would then be lost. Accordingly, I have approached the disputed amendments on the basis that, whatever else happens, it is critical that the trial date of 18 January 2016 be maintained. No party sought to dissuade me from that approach. 3. THE LAW I was provided with a lever arch file which contained 20 authorities relating to amendments. A large number of those cases were referred to during the oral hearing. It is, I think, unnecessary for me to set out large chunks of the judgments in those cases. Instead I will cut to the chase and summarise the principles which are now applied in The Rolls Building to disputed applications to amend. In my view, the traditional approach outlined by Peter Gibson LJ in Cobbold v Greenwich LBC (1999 unreported), to the effect that "[a]mendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs…" is no longer the right starting point. Indeed it is arguable that it never was: in the earlier Court of Appeal decision of Worldwide Corporation Ltd v GPT Ltd and another [1998] WL 1120764, Waller LJ stressed that a payment in costs was not adequate compensation for the other party being 'mucked around' at the last moment. Subsequently, in Savings and Investment Bank Ltd (in liquidation) v Fincken [2003] EWCA Civ 1630; [2004] 1 WLR 667, Rix LJ noted that Worldwide was authority for the proposition that "the older view that amendments should be allowed as of right if they could be compensated in costs without injustice had made way for a view which paid greater regard to all the circumstances which are now summed up in the overriding objective." The subsequent decision of the Court of Appeal in Swain-Mason and Others v Mills and Reeve LLP [2011] EWCA Civ 14; [2011] 1 WLR 2735 also stressed that, when dealing with very late amendments, the court should be less ready than in former times to grant a late application to amend. Moreover, Lloyd LJ said that, when considering the competing arguments of prejudice, the prejudice to the amending party in not being able to advance its amended case was a relevant factor, but was only one of the factors to be taken into account in reaching a conclusion. It was also stressed that a late amendment cannot be insufficient or deficient. And at paragraph 72 of his judgment, Lloyd LJ said: "…a heavy onus lies on a party seeking to make a very late amendment to justify it, as regards his own position, that of the other parties to the litigation, and that of other litigants in other cases before the court." In Andrew Brown and Others v Innovatorone PLC and Others [2011] EWHC 3221 (Comm), Hamblen J said that parties had a legitimate expectation that trial dates would be met and they would not be put back or delayed without good reason. At paragraph 14 of his judgment, the judge set out some of the likely factors that would be involved in striking a fair balance. They were: "(1) the history as regards the amendment and the explanation as to why it is being made late; (2) the prejudice which will be caused to the applicant if the amendment is refused; (3) the prejudice which will be caused to the resisting party if the amendment is allowed; (4) whether the text of the amendment is satisfactory in terms of clarity and particularity." As part of the Jackson reforms to the CPR, the overriding objective, which is the starting-point for any consideration by the court of late amendments, was amended. It now expressly provides that the court must deal with cases "justly and at proportionate cost". Proportionality is vital, not only to this application, but to the vast majority of applications to amend late. For those reasons, I pay particular attention to four more recent cases concerned with amendments, the majority of which post-date this change to the overriding objective. They are: (a) Archlane Ltd v Johnson Controls Ltd [2012] EWHC B12 (TCC), in which Edwards-Stuart J said that "to the extent that the First Defendant will suffer prejudice by the refusal of this amendment, which I accept is a clear possibility, it seems to me clear also that it is very substantially the author of that prejudice". (b) Hague Plant Ltd v Hague and Others [2014] EWCA Civ 1609, in which Briggs LJ said: "32. In that succinct passage the judge clearly distinguished between the "very late" amendment cases such as Swain-Mason where the risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be heavily loaded against the grant of permission, and "late" amendments in which the consequence of the large scale reformulation of the Particulars of Claim, after the completion of Defences and Part 18 exchanges, will risk undermining work already done on response to the original Particulars of Claim, and causing a duplication of cost and effort. It is evident, for example from paragraph 60 and 61, and elsewhere in the judgment, that it was this aspect of lateness, namely the consequence that, if permitted, the amendments would cause existing work to be wasted and substantial further work and expense incurred, that weighed in the judge's mind. 33. I consider that the judge was entitled to approach the relevance of lateness in this way. Lateness is not an absolute but a relative concept. As Mr. Randall put it, a tightly focussed, properly explained and fully particularised short amendment in August may not be too late, whereas a lengthy, ill-defined, unfocussed and unexplained amendment proffered in the previous March may be too late. It all depends upon a careful review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of its consequences in terms of work wasted and consequential work to be done." The court upheld the decision of the first instance judge, HHJ Behrens, to refuse the amendments. (c) Bourke and another v Favre and another [2015] EWHC 277 (Ch) in which Nugee J refused the amendments some months before trial because of the 'significant pressure' that having to deal with the new claim would put on the defendants, whilst there was no corresponding pressure on the claimants because they had already prepared their evidence with this new claim in mind. In that case, a second action was considered inevitable, and Nugee J indicated that such fresh proceedings would not be caught by the rule in Henderson v Henderson. (d) Wani LLP v Royal Bank of Scotland PLC and another [2015] EWHC 1181 (Ch) in which Henderson J refused amendments which neither side said necessitated the adjournment of the trial if they were allowed. He rejected the suggestion that it made a difference that the application was being made two months before the trial, citing the passage in Hague Plant referred to above. He also applied the approach in Brown, although he dealt with the four points in a slightly different sequence. As to lateness, he found that the amendments could have been made much earlier than they were, and they lacked proper clarity and particularity. In summary, therefore, I consider that the right approach to amendments is as follows: (a) The lateness by which an amendment is produced is a relative concept (Hague Plant). An amendment is late if it could have been advanced earlier, or involves the duplication of cost and effort, or if it requires the resisting party to revisit any of the significant steps in the litigation (such as disclosure or the provision of witness statements and expert's reports) which have been completed by the time of the amendment. (b) An amendment can be regarded as 'very late' if permission to amend threatens the trial date (Swain-Mason), even if the application is made some months before the trial is due to start. Parties have a legitimate expectation that trial dates will be met and not adjourned without good reason (Brown). (c) The history of the amendment, together with an explanation for its lateness, is a matter for the amending party and is an important factor in the necessary balancing exercise (Brown; Wani). In essence, there must be a good reason for the delay (Brown). (d) The particularity and/or clarity of the proposed amendment then has to be considered, because different considerations may well apply to amendments which are not tightly-drawn or focused (Swain Mason; Hague Plant; Wani). (e) The prejudice to the resisting parties if the amendments are allowed will incorporate, at one end of the spectrum, the simple fact of being 'mucked around' (Worldwide), to the disruption of and additional pressure on their lawyers in the run-up to trial (Bourke), and the duplication of cost and effort (Hague Plant) at the other. If allowing the amendments would necessitate the adjournment of the trial, that may be an overwhelming reason to refuse the amendments (Swain Mason). (f) Prejudice to the amending party if the amendments are not allowed will, obviously, include its inability to advance its amended case, but that is just one factor to be considered (Swain-Mason). Moreover, if that prejudice has come about by the amending party's own conduct, then it is a much less important element of the balancing exercise (Archlane). 4. THE SMOKE VENTILATION AMENDMENT 1 General Approach Mr White QC maintained that, because the trial date was 8 months away, these amendments could not be classified as 'late'. The defendant and the additional parties disagreed, and relied on Hague Plant, and the reference to lateness being a relative concept. In my view, although this application is being heard some months before the trial date, this is a late amendment because permission is sought for it at a time when the pleadings are closed and disclosure has been completed. On my analysis, it is a very late amendment because, as explained below, permission for it would threaten the trial date fixed last October. The principles noted above, and in particular the questions formulated by Hamblen J in Brown, therefore apply to my consideration of the application. For the reasons noted below, I consider that the 'heavy onus' on the claimant to justify the amendments has not been discharged. 2 History In the schedule attached to the pre-action protocol claim letter dated 26 August 2011, the claimant alleged that the smoke ventilation system in the car park was defective (i.e. when the system was in 'fire' condition). There was also an allegation that the ventilation system was inadequate to deal with the carbon monoxide emissions (i.e. when the system was in normal operating mode). However, when the defects schedule was served in the proceedings more than two years later, the allegations in respect of the car park ventilation were worded in a completely different way. Now, only the carbon monoxide case was pleaded, and even that was in a very different form to the way the claim had previously been put. There was no longer any mention of any defects when the system was in 'fire' mode. The 'Route Map' provided by the claimant, a lengthy document in itself and to be read alongside the schedule, said expressly that "certain items have been removed as no longer claimed". On its face, therefore, the smoke ventilation claim had been omitted because it was no longer pursued. It is the claimant's case now that the smoke ventilation claim was omitted accidentally. That is what Mr Bradley says in his statements. He also says that this omission only became apparent when the relevant experts met in November 2014. However, the claimant did not suggest that it wanted to add back this claim, by way of amendment, until February 2015 and, when this was challenged by the defendant, no proposed amendment was put forward until April 2015. Mr Bradley's assertion that the claim in respect of the smoke ventilation claim was omitted accidentally is just that: a bald assertion. No particulars of any kind are provided as to how or why or when this omission occurred or any of the circumstances surrounding the alleged error. I am bound to say that I am unable to accept this explanation. There are two reasons for that. First, the position in respect of the car park ventilation system was clearly reconsidered after the pre-action protocol stage, because it was put into a completely different form when the claim was pleaded in these proceedings. One claim was revamped; the other was removed. The only fair inference must be that, whilst the whole issue was being reconsidered, somebody decided that the smoke ventilation claim should not be pursued. This is not a situation where a sentence or a paragraph of the original claim was simply missed out; the whole item was deliberately changed for the purposes of the litigation. Therefore I find that the smoke ventilation item was one of those claims which the drafters of the Route Map said had been removed "because it was no longer claimed". I should add that it is unnecessary for me to consider, let alone resolve, the question of whether or not the smoke ventilation claim could be said to have been withdrawn (the defendant's and third party's case). First, I agree with Mr White QC that the proper term is 'discontinued' not withdrawn (see the judgment of Lewison LJ in Spicer v Tuli [2012] EWCA Civ 845; [2012] 1 WLR 1308). But second, that is irrelevant to the only issue for me on this point, which is whether this item of claim was not pursued into the court proceedings deliberately or accidentally. Secondly, by reason of the claimant's costs budget, the circumstances in which this claim could plausibly have been omitted by accident do not appear to have arisen. Miss Smith QC submitted that the Precedent H costs budget provided by the claimant shows that perhaps as much as £900,000 was spent on formulating the particulars of claim and the schedules. A large team of lawyers and experts are said by the claimant to have combed through the defects case in order to plead the claim properly. Again, if the omission was, say, a sentence or paragraph being omitted from the pre-action claim, then a case of accident might be understandable; but given the fact that this item was completely revamped, and then passed through this large team for checking purposes, it is implausible now to say that the smoke ventilation claim was accidentally (rather than deliberately) omitted. The further difficulty for the claimant is that, even if it was accidentally omitted, on its own case, the claimant realised that omission no later than October/November 2014, and possibly earlier. And yet it did not instruct a smoke expert (Mr Barnfield) until April 2015, and made no application to amend until later in April, an additional delay of at least six months. No explanation of any kind has been given for that delay; it has nothing to do with the alleged accidental omission in 2013. In circumstances where, as the authorities make plain, the onus is on the claimant as the amending party to explain how the late amendment came about, the lack of any explanation for this further 6 month delay is significant. In my view, the effect on the timetable is the single most important aspect of this application, and in the circumstances here, it is unacceptable for the claimant to take six months just to produce a first pleading of the new claim. There have been other delays. On behalf of the fifth and sixth parties, Ms Sinclair QC noted that her solicitors had written on three separate occasions seeking information relating to this claim, but none of those letters had ever been answered. In addition, I accept the submission of Mr Constable QC to the effect that, even if the court accepted Mr Bradley's explanation for the delay (the accidental omission) that still fails to get the claimant home. As Hamblen J made clear in Brown, the reason for the delay has to be a good reason. There is nothing in any authority, and I would suggest that it flies in the face of common sense, to suggest that an avoidable mistake by the amending party constitutes a good reason for the delay in advancing the claim. Accordingly, I find that, not only has the claimant not properly explained the lateness of the application to amend to add the smoke ventilation claim but that also, on the face of the documents, the claim was deliberately omitted when these proceedings were commenced. If the claimant had wanted to pursue this claim, it could and should have done so in 2013. Even if (which I do not accept) the claim was omitted by accident in 2013 that is not a good reason to explain the delay until April 2015. Moreover, the delay from November 2014 to April 2015 has been ignored altogether. The application is therefore late and not properly explained or justified. 3 Clarity and Particularity The relevant new item in the schedule is 70B. It is pleaded that the Building Regulations provide for a standard solution which requires that the system is capable of ten air changes per hour under "fire conditions". It is asserted that the system as provided did not do that. It goes on to suggest possible alternative solutions. In relation to remedial works, it postulates two potential remedial schemes, scheme A and scheme B, and the evidence makes clear that further investigations are required before a conclusion could be reached as to which remedial scheme was appropriate. This is not a tightly drawn pleading. It is not clear which parts of the Building Regulations or other contractual documents/standards are relied on for the assertion that the defendant was obliged to provide a system capable of ten air changes per hour under fire conditions, and that anything less would constitute a breach of contract. It is not clear how and why it is said that the system as provided did not achieve that; indeed, there is no plea as to how the alleged defects breach the terms or standards relied on. The pleading does not say which alternative solution should have been adopted or why. Although there are numerous references to ceiling heights, there is no link between those and an allegedly inappropriate design. Thus the allegations concerning the relevant terms, and the allegations that those terms have been breached, will require proper particularisation. In respect of remedial work and damages, the position is even less clear because, on the claimant's own case, it is yet to be decided which remedial scheme is appropriate: because of the lateness of this new claim, the claimant accepts that further investigations are going to be required. This is not a small point: whilst scheme A is said to cost just under £1.2 million, scheme B is said to cost just under £2.4 million. Mr Barnfield's statement makes clear the detailed further work required (through testing and the like) before the precise inadequacies can be identified and a remedial scheme recommended. Accordingly, I consider that the pleading of the relevant terms and the breaches is crying out for further particularisation, whilst the plea in respect of remedial work and damages is, on any view, equivocal and will remain so until after the further testing and investigations have been carried out. The pleading is not therefore of the tightly-drawn and focussed kind which would ordinarily be permitted as a late amendment. 4 Prejudice To The Defendant (And Additional Parties) If The Amendments Are Allowed In my view, the principal prejudice that will be suffered by the defendant and the additional parties if these amendments are allowed is that the trial would inevitably have to be adjourned, with all of the disruption and increased costs consequences noted above. I have already said that I consider that an adjournment of this trial, in view of the costs already incurred and to be incurred, is not a feasible option. I have concluded that the timetable leading up to that trial is, because of the category 1 and category 2 amendments, only just possible. I accept the evidence from the defendant and the additional parties that the inclusion of the smoke ventilation claim would make the trial date impossible. I regard this as the single most important reason why the amendment in respect of the smoke ventilation claim should be refused. It is unnecessary to set out the extensive evidence, again principally from Mr Davis and Mr Wicks, in which they set out the procedural consequences if the amendment in relation to smoke ventilation is allowed. I have in mind in particular section 9 of Mr Davis' statement and section L of Mr Wicks' statement. These set out in detail how and why the inclusion of the smoke ventilation claim would make the current trial date impossible. As I have said, I accept that evidence. During the course of his clear submissions on this point, Mr White QC politely suggested that, on this aspect of the case, the evidence of the defendant and the additional parties was over-stated. I do not agree. The statements to which I have referred are rational in their explanation of the further work that will be required if the smoke ventilation claim is permitted, and the impossibility of fitting that work into the already disrupted timetable. Furthermore, I am bound to note that the claimant has not put in any evidence which challenges the analysis of Mr Davis and Mr Wicks (notwithstanding a 25 page statement in reply from Mr Bradley). I conclude that the evidence from Mr Davis and Mr Wicks as to the effect of the proposed amendments is unanswerable. In addition to the procedural prejudice, Mr Constable QC, on behalf of the defendant, also raised concerns, that if this new claim was allowed in at this late stage, it would cause prejudice to the defendant because any claim it had over (either against the fifth/sixth parties or against the company which produced the Fire Strategy Report, or the third party, the M & E sub-contractors) would be statute-barred. There was a debate about whether the claim for an indemnity had already accrued or did not accrue until the defendant actually suffered loss. There was an even more abstruse argument as to the nature of the contribution claim made by the defendant against the fifth and sixth parties, because it was suggested on behalf of the claimant that, in respect of that claim too, there were no limitation difficulties. I do not consider it necessary to rule on these various arguments. I accept that it has not been possible for the defendant to show, even on the balance of probabilities, any form of irretrievable prejudice if the amendments were allowed: for example, the clear and unarguable loss of a claim over against another party, because of the claimant's delay. On the other hand, the defendant has demonstrated a risk that, if these amendments were allowed, because of the delays, it would be in a worse position as against Pointer and the fifth/sixth parties than it would have been in if the claim had been made at the start of proceedings. That is therefore an additional factor for me to bear in mind when considering the balancing exercise but, on my analysis, it is nowhere near as important as the adjournment issue to which I have already referred. 5 Prejudice To The Claimant If The Amendments Are Refused Subject to Mr White QC's overarching point about the possibility of fresh proceedings, which I deal with in Section 4.6 below, the claimant's principal argument as to prejudice was that, if the amendments are refused, it would be prejudiced because it would not be able to pursue the smoke ventilation claim in these proceedings. That is certainly a factor for the court to take into account in the balancing exercise. However, as the authorities make plain, the force of that point is significantly diluted if, on the facts, the lateness of the amendments was the claimant's responsibility in the first place. I am in no doubt, given what I have said about the history in Section 4.2 above, that this late amendment is indeed the claimant's sole responsibility. First, it appears to have made a deliberate decision not to pursue this claim at the start of these proceedings, which is why the car park smoke ventilation case is pleaded (in draft form now) in a completely different way to how it had appeared in the pre-action protocol letter. The fact that it now wishes to add the claim back in is plainly the claimant's responsibility. Furthermore, as I have said, I am startled by the lack of any proper explanation for the delay between October/November 2014, when this omission was apparently drawn to the claimant's attention, and late April 2015, when the application to amend was made. That length of delay, in the preparation for a major trial, is inexcusable. The claimant makes no attempt to justify such a lengthy period. Again therefore, the prejudice is the claimant's own fault. It follows from what I have said that, when considering the four likely issues as set out in Brown, the first three all militate against allowing the amendments and the fourth acknowledges that, whilst there might be prejudice to the claimant if the late claim cannot be pursued, the lateness is the claimant's own fault. Accordingly, the balancing exercise comes down firmly against allowing the amendments. Indeed I agree with paragraph 35 of the skeleton submissions prepared by Ms Smith QC and Mr Wheater, that this is a similar situation to that in Bourke where Nugee J said: "41. In circumstances where the amendment is made late; where no good explanation has been given for so late an amendment; where to permit the amendment might force the defendants to ask for an adjournment but where, even if it does not, it would require a significant amount of extra work and would put the defendants at the disadvantage that I have referred to, as compared to the claimants - a disadvantage entirely down, it seems to me, to the claimants' decision not to apply to amend before exchange of witness statements - it is, in my judgment, more consistent with the overriding objective to refuse the amendment. This may indeed cause prejudice to the claimants but, if so, they only really have themselves to blame." Finally, it is necessary to go on to consider Mr White QC's overarching point. 6 Fresh Proceedings In his submissions in reply, Mr White QC said that, in effect, the outcome of all of these issues was immaterial because the decisive factor in the claimant's favour was that it could commence fresh proceedings in respect of the smoke ventilation claim in any event. He argued that, since fresh proceedings were not in the interests of any of the parties to the case, the claimant ought to be allowed simply to make the amendments and raise the new claim in the existing proceedings. For the reasons noted below, I do not accept that submission. First, as in Bourke, the defendant and the third, fifth and sixth parties are aware of the risk of fresh proceedings, but continue to maintain their opposition to this amendment. That is because of what they would regard as the procedural catastrophe of an adjournment that would ensue if these amendments were allowed into these proceedings at this late stage. Accordingly, the claimant cannot simply put a gun to the head of the defendant and the additional parties (and indeed the court) and say that, regardless of all the relevant principles, the amendments should be allowed because otherwise there would be fresh proceedings. The defendant and the affected additional parties have chosen to object to the amendments in reliance on the authorities, and I have upheld those objections on that basis. To that extent, therefore, I consider that the risk of fresh proceedings is nothing to the point. However, just as in Bourke, there was some argument as to whether any fresh proceedings would be an abuse of process of the court, because of the rule in Henderson v Henderson [1843] 3 Hare 100. Mr Constable QC argued that, on the authorities, I should find that it was probable that the court would not permit the claimant to pursue separate proceedings in respect of the smoke ventilation amendments. By reference to Henderson v Henderson, he argued that the court would not permit "the same parties to open the same subject of litigation in respect of the matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence or even accident, omitted part of their case". This rule has been restated in the modern context in Johnson v Gore Wood and Co (a firm) [2002] 2 AC 1; Aldi Stores v WSP Group PLC [2007] EWCA Civ 1260 and Seele Austria GmbH Co v Tokyo Marine Europe Insurance Limited [2009] EWHC 255 (TCC). To the extent that it is relevant to my consideration of the application to amend, I conclude that there is a strong prima facie case that it would not be open to the claimant to commence fresh proceedings in respect of the smoke ventilation claim. That is because, not only was that a claim which could have been brought forward in these proceedings, but it was also a claim which, on my findings, the claimant deliberately choose not to bring forward from the pre-action protocol phase, notwithstanding the fact that other aspects of the car park ventilation system, in respect of carbon monoxide, were maintained. If the claimant had wanted to pursue the smoke ventilation claim, it could and should have done so. Again, in respect of the Henderson v Henderson point, it is unnecessary for me to decide whether or not the smoke ventilation claim had been discontinued in 2013. It is sufficient for present purposes to conclude that there is a strong prima facie case that, if that is what the claimant wanted, this claim could and should have been pursued at the outset of proceedings in 2013. Accordingly, for these reasons, I do not consider that the fact that the claimant may choose to issue fresh proceedings is any sort of answer to the opposition from the defendant and the additional parties to the proposed amendment. What is more, in relation to that claim, I consider that there is a strong prima facie case that the new proceedings may be caught by the rule in Henderson v Henderson and therefore not open to the claimant in any event. 7 Summary For reasons set out above, permission to make the proposed amendments in respect of the smoke ventilation claim, being one part of the category 3 claims, is refused. 5. THE ROOF DEFECTS AMENDMENTS General Approach In my view, in respect of the roof defects, the same analysis as that set out in paragraphs 20 and 21 above (in relation to the smoke ventilation claim) applies again. History The most important evidence in relation to the history of the amendments in respect of roof leaks comes from Mr Webb, the Centre Manager at the Plaza. His statement, dated 6 May 2015 says this: "5. During the past 24 months I have seen water leaks develop in various roof locations. During patch repairs roofing contractors have commented to me that the construction was poor. The number of leaks being notified got to a point where I considered it was necessary to do some further investigations. 6. The roof areas that have suffered leaks during the past 24 months are: [15 separate locations identified]. 7. The most recent roof repairs were to Purple Apartment 38 notified to me by email on the 19 September 2014 by the residential managing agents Remus Management and to Unit 17 Nuffield Health Gym above windows in the original façade. … 10. Following exposure of the roof above Unit 17 on 20 January 2015 the Central Group Roofing Building Contractor commented to myself and the C & W building surveyor that the existing flashing did not conform to industry standards in respect of overlaps or cutting into the brickwork. He also showed us that the hot melt roof covering had not adhered to the concrete and was lifting in numerous areas, he also commented that the hot melt layer thickness was inadequate. This work was completed in January 2015…" Although other evidence was shown to me which suggested that the problem with the roof leaks may have occurred more than 24 months ago, so before May 2013, I am content for present purposes to take what Mr Webb says at face value, namely that there have been ongoing roof leak problems at Broadway Plaza since at least May 2013. It seems to me that this evidence is squarely against the claimant for the purposes of this application. On one view of that evidence, the problems with the roofs were known months before these proceedings were commenced in October 2013, so there is no reason why the claim in respect of the roofs was not included in the original pleading. That obvious point simply has not been addressed in the claimant's evidence. But, on any view, Mr Webb's evidence makes clear that the problem with the roofs was extensive and was known to be a substantial problem by September 2014, when the most recent of the 15 separate leaks had been notified and dealt with. So that raises the question as to why this problem was not then acted upon and made the subject of an amendment, either in time for the CMC on 3 October 2014 (when leading counsel said that no amendments were planned) or shortly after that CMC? There is no explanation for how and why the claimant realised that there was a serious roof leak problem at the latest in September 2014, but did not bring forward amendments to raise the new claim until April 2015. It is incorrect to say, as the claimant sought to do, that it only discovered the scale of the problem when some further opening-up work was done in January 2015. It is right that, following that work, Mr Heighway, the claimant's building surveyor, was called in to carry out inspection works in March 2015. But he has been the claimant's expert building surveyor for some time, and there was no explanation as to why he was not called in by Mr Webb, or anyone else at the claimant, in 2014 or even 2013, in order to investigate the roof leaks. Again therefore, the history in respect of the roof defects is similar to that relating to the smoke ventilation claim. The claimant has, without explanation or justification, allowed itself the maximum possible time to make its new claim, thereby ensuring that the defendant and the relevant additional parties have insufficient time to respond to it within the existing timetable. Clarity and Particularity In my view the position is again similar to that relating to the smoke ventilation amendment. I regard the pleading of this new claim as a first draft; again it lacks proper particularity. In respect of each defect, a number of different faults are asserted. However, it is not made plain how and why these are said to be a breach of the contract provisions which are referred to generically in the next column of the schedule. The locations are not identified. More importantly perhaps, it is not clear which of the alleged defects identified under each individual roof leak is said to be the cause of the water ingress. Indeed, the pleading is not clear as to how and why the matters said to be defects have given rise to water ingress at all. In addition, I note from paragraphs 8 and 9 of Mr Heighway's statement that he is not happy with the pleading of this new case on liability as it presently stands, and is suggesting some amendments. Although he calls them "relatively minor corrections" they show the hurried way in which these new pleadings have been put together. Furthermore, it is accepted by the claimant that the roof leak part of the case needs to be the subject of further investigation and consideration. The damages claim figure, currently put at around £500,000, may well alter. Indeed, I would expect the pleading of this new claim to be put into much tighter and clearer form following the investigations. Thus, I find that the current pleading of the roof leak claim represents the start of a pleading process, rather than the end; it is not in the focussed and clear form that I would have expected for a late amendment. Prejudice To The Defendant (And Additional Parties) If The Amendment Is Allowed The position is the same as set out in Section 4.4 above in respect of the smoke ventilation amendments. If these new claims in respect of the roof are permitted, then the trial would have to be adjourned. The evidence of the defendant and the additional parties is unequivocal on that point, and is not contradicted. For reasons of proportionality, an adjournment of this 6-8 week trial is wholly inappropriate. Again, that is the single most important factor militating against allowing this amendment. Again, in respect of claims over against other parties, there is a risk that the defendant is in a worse position because of the lateness of these amendments than it would otherwise have been in. However, as far as I can tell, such a risk is a modest one and does not therefore make any significant difference to the balancing exercise which I have to undertake. Prejudice To The Claimant If The Amendments Are Not Allowed The position is the same as noted in Section 4.5 above. There would be prejudice to the claimant if this amendment were not allowed but, for the reasons set out in Section 5.2 above, the delay in making these allegations is wholly the responsibility of the claimant. This is not therefore a factor on which the claimant can properly rely. For those reasons therefore, on application of the usual principles, the roof amendments should be refused. Fresh Proceedings For the reasons set out in Section 4.5 above, I do not accept the suggestion that, because the claimant considers that it can issue fresh proceedings in respect of the roof defects, that renders futile any opposition to the proposed amendments. I accept that, in respect of the alleged roof defects, the Henderson v Henderson argument is different to that in respect to the smoke ventilation amendment, and may be less strong from the defendant's point of view. That is principally because the roof defects were not an item which had originally been in the pre-action claim, and then omitted from the court proceedings. That said, I consider that there is force in Mr Constable QC's submission that, in any subsequent proceedings, the court might consider that the claimant had its opportunity to bring the roof defects claim within its one juggernaut building defects case, and should not be allowed now to run fresh proceedings in respect of the roofs which could have been included in those comprehensive proceedings. So, although the argument is more nuanced than in respect of the smoke ventilation claim, I still think that there is a prima facie case that the roof defects claim would be caught by the rule in Henderson v Henderson, particularly because of the sheer length of time in which this roof leak problem has been apparent to the claimant (stretching back to a period before these proceedings were even commenced) but was not the subject of a formal claim. Summary For the reasons set out above, therefore, I do not allow the amendments in respect of the alleged roof defects.

Dr Dhananjaya Y Chandrachud, J. 1 Leave granted. 2 The present appeal arises from a judgment dated 31 January, 2018 of a learned Single Judge of the Indore Bench of the High Court of Madhya Pradesh 1 discharging the Respondent from charges framed by the Special Judge, Neemuch. The Special Judge, Neemuch had by an order dated 13.10.17 in Special Case No. 51 of 2017 framed charges against the respondent under Section 306 of the Indian Penal Code, 18602 and Section 3 2 V of the Scheduled Castes and the Signature Not Verified Scheduled Tribes Prevention of Atrocities Act, 1989. Digitally signed by NEELAM GULATI Date 2019.03.27 102703 IST Reason 1 In Criminal Revision No. 458 of 2018 2 Penal Code 3 In pursuance of the numberice issued by this Court on 19 November, 2018, the respondent has entered appearance through learned companynsel. We have heard the Deputy Advocate General for the State of Madhya Pradesh and learned companynsel for the respondent. 4 On 9 August 2017, Jyoti Sharma companymitted suicide by companysuming poison at her residence at Neemuch. Immediately after she companysumed poison, she was moved to the District hospital for treatment. The dying declaration of the victim was recorded on 9 August 2017 in the presence of the Naib Tehsildar, Neemuch. The relevant part of the dying declaration is extracted below Question What has happened to you? Answer I have companysumed poison. Question Why you have companysumed poison? Answer I am number able to get the job, wherever I go, Deepak Bhamawat R o Jeeran, get me sacked out from the job. Earlier he had molested me, on which, I had instituted a case against him, since then, he is harassing me. Question Whether you want to say anything else? Answer No. 5 Jyoti Sharma died on 10 August 2017 at a hospital in Udaipur where she was admitted for treatment. The First Information Report 3 was registered on 16 August 2017. During the companyrse of the investigation, the respondent was arrested on 6 September 2017. On the companypletion of the investigation, the investigating officer submitted a charge-sheet on 22 September 2017 under Section 306 of the Penal Code and Section 3 2 v and Section 3 2 v a of the Scheduled Castes and Scheduled Tribes Prevention of Atrocities Act before the Special Judge, Neemuch. Cognizance was taken on 13 October 2017. Charges were framed on 10 January 2018. Challenging the order framing charges, a Criminal Revision was filed before the High Court. 3 FIR 6 The Single Judge, by the order impugned in these proceedings, set aside the order of the trial judge and directed that the respondent be discharged. 7 The Deputy Advocate General has adverted to the charge-sheet which has been submitted after the investigation was companypleted. Learned companynsel submitted that there is a dying declaration of the victim which was recorded on 9 August 2017. It was urged that the investigation has disclosed that the respondent and the deceased were employees in the Central Bank. The respondent had obtained a loan in the name of the deceased, allegedly after forging her signature. The loan was number paid, as a result of which on 3 August, 2017, Central Bank issued a numberice to the deceased for the repayment of the loan. During the companyrse of the investigation, the investigating agency found that three companyplaints were submitted by the victim on 1 November 2016 to the Station House Officer, P.S. Jeeran in December 2016 at P.S. Jeeran and another on 6 January 2017 to the Collector, Neemuch making specific allegations that the respondent was harassing her. The respondent is alleged to have caused the deceased to be terminated from employment and also allegedly caused her landlord to oust her from possession. On this material, which has emerged in the companyrse of the investigation, it is urged that the case for discharge was number made out. 8 On the other hand, learned companynsel appearing on behalf of the respondent placed reliance on the fact that in the FIR all that has been adverted to is that the respondent had got the deceased terminated from her job in the Central Bank and thereby harassed her and tortured her as a woman belonging to a Scheduled Caste for depositing the installments of the loan. Learned companynsel submitted that on the companytents of the FIR, the High Court was justified in companying to the companyclusion that there was numberprovocation, inducement or incitement that would fall within the description of abetment to sustain a charge under Section 306 of the Penal Code. 9 The only circumstance which has weighed with the High Court in passing the impugned order is what has been stated in the following extract 11. . Merely the deceased was failing to get any job and she is under impression that the petitioner is creating burden and hence she did number get any new job. He never intended that deceased should companymit suicide. The High Court held thus 16 in the facts and circumstances of the present case, there is numberevidence with regard to provocation, incitement or encouragement for companymitment of suicide by the deceased 10 We shall number examine whether the High Court has companyrectly exercised its revisional jurisdiction under Section 397 read with 401 of the Code of Criminal Procedure, 19734 in discharging the respondent of the charges framed by the Special Judge, Neemuch. 11 In Amit Kapoor v Ramesh Chander5, a two-judge bench of this Court elucidated on the revisional power of the Court under Section 397. Justice Swatanter Kumar numbered thus Section 397 of the Code vests the companyrt with the power to call for and examine the records of an inferior companyrt for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it 4 Procedure Code 5 2012 9 SCC 460 may number be appropriate for the companyrt to scrutinise the orders, which upon the face of it bears a token of careful companysideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is numbercompliance with the provisions of law, the finding recorded is based on numberevidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are number exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits. Another well-accepted numberm is that the revisional jurisdiction of the higher companyrt is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should number be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should number lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much advanced stage in the proceedings under the CrPC. The Court also enunciated a set of principles which the High Courts must keep in mind while exercising their jurisdiction under the provision 27. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the principles to be companysidered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be 27.2. The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or number. If the allegations are so patently absurd and inherently improbable that numberprudent person can ever reach such a companyclusion and where the basic ingredients of a criminal offence are number satisfied then the Court may interfere. 27.3. The High Court should number unduly interfere. No meticulous examination of the evidence is needed for companysidering whether the case would end in companyviction or number at the stage of framing of charge or quashing of charge. 27.4. Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for companyrecting some grave error that might be companymitted by the subordinate companyrts even in such cases, the High Court should be loath to interfere, at the threshold, to throttle the prosecution in exercise of its inherent powers. 27.9. Another very significant caution that the companyrts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a companyviction the companyrt is companycerned primarily with the allegations taken as a whole whether they will companystitute an offence and, if so, is it an abuse of the process of companyrt leading to injustice. 27.13. Quashing of a charge is an exception to the rule of companytinuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit companytinuation of prosecution rather than its quashing at that initial stage. The Court is number expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie. Emphasis supplied 12 In State of Rajasthan v Fatehkaran Mehdu 6, a two-judge bench of this Court has elucidated on the scope of the interference permissible under Section 397 with regard to the framing of a charge. Justice Ashok Bhushan held thus The scope of interference and exercise of jurisdiction under Section 397 CrPC has been time and again explained by this Court. Further, the scope of interference under Section 397 CrPC at a stage, when charge had been framed, is also well settled. At the stage of framing of a charge, the companyrt is companycerned number with the proof of the allegation rather it has to focus on the material and form an opinion whether there is strong suspicion that the accused has companymitted an offence, which if put to trial, companyld prove his guilt. The framing of charge is number a stage, at which stage final test of guilt is to be applied. Thus, to hold that at the stage of framing the charge, the companyrt should form an opinion that the accused is certainly guilty of companymitting an offence, is to hold 6 2017 3 SCC 198 something which is neither permissible number is in companysonance with the scheme of the Code of Criminal Procedure. Emphasis supplied 13 In view of the above decisions of this Court, we shall number determine whether the High Court has companyrectly exercised its revisional jurisdiction. The High Court had held that the lower companyrt had erred in framing charges in the present case as there was numberevidence with regard to provocation, incitement or encouragement which would lead to the companymission of suicide by the deceased. 14 It is of relevance to refer to certain judgements of this Court. In Chitresh Kumar Chopra v. State NCT of Delhi 7, the appellant and two other individuals were charged under Section 306 read with Section 34 of the Penal Code. It had been alleged that the appellant and the other accused persons had forcibly companypelled the deceased to sign a settlement giving up a part of his share in the profits from the sale of certain land. This led to a dispute and as a result of the mental harassment suffered by the deceased, he companymitted suicide. The Court affirmed the framing of charges by the trial companyrt. The two-judge Bench of this Court laid down the ingredients of the offence of abetment of suicide. Justice D K Jain held thus As observed in Ramesh Kumar 2001 9 SCC 618 2002 SCC Cri 1088 , where the accused by his acts or by a companytinued companyrse of companyduct creates such circumstances that the deceased was left with numberother option except to companymit suicide, an instigation may be inferred. In other words, in order to prove that the accused abetted companymission of suicide by a person, it has to be established that the accused kept on irritating or annoying the deceased by words, deeds or willful omission or companyduct which may even be a willful silence until the deceased reacted or pushed or forced the deceased by his deeds, 7 2009 16 SCC 605 words or willful omission or companyduct to make the deceased move forward more quickly in a forward direction and that the accused had the intention to provoke, urge or encourage the deceased to companymit suicide while acting in the manner numbered above. Undoubtedly, presence of mens rea is the necessary companycomitant of instigation. Emphasis supplied After due companysideration of the facts and circumstances, the Court numbered that prima facie, the offence of abetment of suicide was made out In the present case, apart from the suicide numbere, extracted above, statements recorded by the police during the companyrse of investigation, tend to show that on account of business transactions with the accused, including the appellant herein, the deceased was put under tremendous pressure to do something which he was perhaps number willing to do. Prima facie, it appears that the companyduct of the appellant and his accomplices was such that the deceased was left with numberother option except to end his life and therefore, clause Firstly of Section 107 IPC was attracted. Emphasis supplied It was also numbered that at the stage of framing of charges, the Court has to companysider the material only with a view to find out if there is a ground for presuming that the accused had companymitted the offence It is trite that at the stage of framing of charge, the companyrt is required to evaluate the material and documents on record with a view to finding out if the facts emerging therefrom, taken at their face value, disclose the existence of all the ingredients companystituting the alleged offence or offences. For this limited purpose, the companyrt may sift the evidence as it cannot be expected even at the initial stage to accept as gospel truth all that the prosecution states. At this stage, the companyrt has to companysider the material only with a view to find out if there is ground for presuming that the accused has companymitted an offence and number for the purpose of arriving at the companyclusion that it is number likely to lead to a companyviction. 15 A two-judge Bench of this Court, in Rajbir Singh v State of U P 8 numbered that in 8 2006 4 SCC 51 accordance with Section 227, the High Court must ascertain whether there is sufficient ground for proceeding against the accused or there is ground for presuming that the offence has been companymitted. Justice G P Mathur held thus In Stree Atyachar Virodhi Parishad v. Dilip Nathumal Chordia, the Court while examining the scope of Section 227 held as under Section 227 itself companytains enough guidelines as to the scope of inquiry for the purpose of discharging an accused. It provides that the judge shall discharge when he companysiders that there is numbersufficient ground for proceeding against the accused. The ground in the companytext is number a ground for companyviction, but a ground for putting the accused on trial. It is in the trial, the guilt or the innocence of the accused will be determined and number at the time of framing of charge. The companyrt, therefore, need number undertake an elaborate inquiry in sifting and weighing the material. Nor is it necessary to delve deep into various aspects. All that the companyrt has to companysider is whether the evidentiary material on record, if generally accepted, would reasonably companynect the accused with the crime. The High Court did number at all apply the relevant test, namely, whether there is sufficient ground for proceeding against the accused or whether there is ground for presuming that the accused has companymitted an offence. If the answer is in the affirmative an order of discharge cannot be passed and the accused has to face the trial. The High Court after merely observing that as the firing was aimed at the other persons and accidentally the deceased Pooja Balmiki was passing through that way and she was hit and further observing that the applicant neither intended to kill the deceased number was she aimed at because of the reason that she was a Scheduled Caste set aside the order by which the charges had been framed against Respondent 2. There can be numbermanner of doubt that the provisions of Section 301 IPC have been companypletely ignored and the relevant criteria for judging the validity of the order passed by the learned Special Judge directing framing of charges have number been applied. The impugned order is, therefore, clearly erroneous in law and is liable to be set aside. Emphasis supplied 16 In the present case, there is sufficient material on record to uphold the order framing charges of the Trial Court. The discharge of the accused was number justified. The High Court has evidently ignored what has emerged during the companyrse of the investigation. The material indicates that several companyplaints were filed by the deceased. The last of them was filed a few days before the suicide. It is alleged that the respondent had taken a loan of Rs 5 lakhs through fraudulent means in the name of the deceased and an altercation took place between him and the deceased in that regard. Moreover, the respondent is alleged to have got the deceased evicted from a rented house as well as terminated from her employment at Central Bank.

Judgment of the Court (First Chamber) of 13 March 1997. - Tommaso Morellato v Unità sanitaria locale (USL) n. 11 di Pordenone. - Reference for a preliminary ruling: Pretura di Pordenone - Italy. - Articles 30 and 36 of the Treaty - Composition of bread - Maximum moisture content, minimum ash content and prohibition of certain ingredients. - Case C-358/95. European Court reports 1997 Page I-01431 Summary Parties Grounds Decision on costs Operative part Keywords 1 Free movement of goods - Quantitative restrictions - Measures having equivalent effect - Prohibition against marketing bread not meeting certain standards concerning maximum moisture content, minimum ash content and presence of bran - Not permissible - Justification - Protection of public health - None (EC Treaty, Arts 30 and 36) 2 Community law - Direct effect - Conflict between Community law and a national law - Obligations and powers of the national court seised - Disapplication of national law Summary 3 The application to products lawfully manufactured and marketed in other Member States of national legislation prohibiting the marketing of bread with a moisture content exceeding 34% or an ash content lower than 1.40% or containing bran constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty which cannot, in the absence of any evidence to that effect, be regarded as justified under Article 36 of the Treaty by the need to protect public health. 4 The national court is under a duty, when asked to apply a national law which is incompatible with Article 30 of the Treaty, to give full effect to that article by disapplying any such law on its own initiative. Parties In Case C-358/95, REFERENCE to the Court under Article 177 of the EC Treaty by the Pretura di Pordenone (Italy) for a preliminary ruling in the proceedings pending before that court between Tommaso Morellato and Unità Sanitaria Locale (USL) No 11, Pordenone on the interpretation of Articles 30 and 36 of the EC Treaty, THE COURT (First Chamber), composed of: L. Sevón, President of the Chamber, D.A.O. Edward (Rapporteur) and P. Jann, Judges, Advocate General: D. Ruiz-Jarabo Colomer, Registrar: R. Grass, after considering the written observations submitted on behalf of: - the German Government, by Ernst Röder, Ministerialrat in the Federal Ministry of Economic Affairs, and Sabine Maass, Regierungsrätin in the same ministry, acting as Agents, - the French Government, by Catherine de Salins, Assistant Director in the Directorate for Legal Affairs of the Ministry of Foreign Affairs, and Régine Loosli-Surrans, Chargé de Mission in the same directorate, acting as Agents, - the Commission of the European Communities, by Antonio Aresu and Paolo Stancanelli, of its Legal Service, and by Richard B. Wainwright, Legal Adviser, acting as Agents, having regard to the report of the Judge-Rapporteur, after hearing the Opinion of the Advocate General at the sitting on 12 December 1996, gives the following Judgment Grounds 1 By order of 18 October 1995, received at the Court Registry on 21 November 1995, the Pretore (Magistrate), Pordenone, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty four questions on the interpretation of Articles 30 and 36 of that Treaty. 2 Those questions were raised in three actions in which Mr Morellato, the person empowered to represent Soveda Srl in legal proceedings (hereinafter `Soveda'), challenged three orders issued by Unità Sanitaria Locale (USL) No 11, Pordenone, requiring him to pay certain sums by way of fines for infringement of Italian Law No 580/67 of 4 July 1967 laying down rules for the processing and marketing of cereals, flour, bread and pasta (GURI No 189 of 29 July 1967). 3 Soveda is the exclusive distributor in Italy of deep-frozen bread lawfully manufactured and marketed in France by BCS, an undertaking whose registered office is in Tarascon (France). The bread is covered by a certificate issued by the Marseilles Inter-regional Laboratory on 7 February 1992 to the effect that it is a `good-quality, healthy product, fit for human consumption'. 4 In 1993, Soveda supplied several consignments of deep-frozen bread manufactured by BCS to the Iperstanda supermarket in Porcia, Italy. 5 On 26 July 1993, the USL determined that Soveda had thereby infringed Law No 580/67 in three respects. First, the moisture content of the bread marketed by Soveda was 38.4% (37.5% in a second analysis), whereas the statutory limit under Article 16 of Law No 580/67 was 34%; second, the ash content of the bread in question, as a proportion of dry matter, was 1.05% (or 1.13% in a second analysis), whereas the statutory minimum content under Article 7 of Law No 580/67 was 1.40%; and, finally, the bread contained bran, whereas Article 18 of Law No 580/67 did not allow that ingredient to be used. 6 Consequently, on 13 and 18 January 1994, the USL issued three orders against Mr Morellato, requiring him to pay certain sums by way of administrative fines. 7 On 16 February, Mr Morellato challenged those three orders before the Pretore, Pordenone, who, considering that an interpretation of Articles 30 and 36 was necessary to enable him to give a decision, stayed proceedings pending a preliminary ruling from the Court of Justice on the following questions: `1. Are Articles 30 and 36 of the Treaty establishing the EEC to be interpreted as precluding the Italian legislation on the processing of cereals, flour, bread and pasta (Law No 580 of 4 July 1967), in so far as such legislation prohibits the sale of deep-frozen special wholemeal bread having: - a moisture content in excess of the percentages referred to in Article 16; - an ash content lower than that prescribed by Article 16 in conjunction with Article 7(3); - an admixture of bran, which is not a permitted ingredient; accordingly, are those legislative provisions to be regarded as a quantitative restriction or a measure having equivalent effect thereto within the meaning of Article 30? 2. In the event of an affirmative answer to that question, is the Italian State, in circumstances such as those of this case, entitled to rely on the derogation provided for in Article 36 of the EEC Treaty, for the purpose of protecting public health? 3. Is the Italian legislation to be disapplied by the Italian courts? 4. Is the free movement on Italian territory of bread produced in France and described as aforesaid to be permitted?' The first and second questions 8 The point of the national court's first and second questions is whether the application to products lawfully manufactured and marketed in other Member States of national legislation prohibiting the marketing of bread with a moisture content exceeding 34% or an ash content lower than 1.40% or containing bran constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty and whether such a measure is justified under Article 36 of the Treaty by the need to protect public health. 9 It should be noted at the outset that, as Community law stands at present, the manufacture and marketing of bread are not covered by common or harmonized rules. Each Member State must therefore, when enacting legislation, keep within the limits set by Article 30 of the Treaty. 10 However, it must also be borne in mind that the Court has already interpreted that provision in relation to national rules concerning the composition of bread. 11 In Case 130/80 Kelderman [1981] ECR 527, paragraph 7, it stated that the extension to imported products of the requirement that they contain a specific amount of dry matter may prevent bread originating in other Member States from being marketed in the State concerned. Such extension may make it necessary to vary the method of manufacture according to the place where the bread is to be sold and thus impede the movement of bread lawfully produced in the Member State of origin if identical manufacturing standards are not prescribed in that State. The Court thus held that the rules of a Member State imposing such conditions concerning composition were liable to hinder Community trade and fell within the prohibition laid down in Article 30 of the Treaty. 12 Similarly, in Case C-17/93 Van der Veldt [1994] ECR I-3537, paragraph 11, the Court stated that the extension to imported products of the requirement that they contain no more than a specific amount of salt, calculated by reference to the dry matter, may prevent bread and other bakery products originating in other Member States from being marketed in the State concerned. Such extension may make it necessary, if identical manufacturing standards are not prescribed in those States of origin, to vary the method of manufacture according to the place where the bread or bakery product in question is to be sold and thus impede the movement of products lawfully manufactured and marketed in those States. The Court therefore held that the application of legislation of a Member State prohibiting the marketing of bread and other bakery products whose salt content by reference to the dry matter exceeded the maximum permitted level of 2% to products which had been lawfully manufactured and marketed in another Member State constituted a measure having equivalent effect to a quantitative restriction within the meaning of Article 30 of the Treaty. 13 The same considerations apply to the extension to imported products of national rules prohibiting the marketing of bread with a moisture content exceeding, or an ash content falling short of, specified levels, or containing ingredients such as bran. Since such an extension will also make it necessary to vary the method of manufacture according to the place where the bread is to be sold and thus impede the movement of products lawfully manufactured and marketed in other Member States, it constitutes a measure having equivalent effect to a quantitative restriction within the meaning of Article 30 of the Treaty. 14 It is settled case-law that an exception to the principle of the free movement of goods may be justified under Article 36 only if the national authorities show that it is necessary in order to attain one or more objectives mentioned in that article - in this case the protection of public health - and that it is in conformity with the principle of proportionality. 15 In this case, no justification for such a restriction has been put to the Court. On the contrary, it is clear from Circular 131150/R of the Italian Ministry for Industry, Commerce and Crafts of 2 November 1992, forwarded by the Commission to the Court, that the Italian authorities themselves have authorized the import of bread and similar products conforming to standards other than those laid down by Italian law. That circular states: `The importation from other Member States of the EC and the marketing of bread and similar products conforming to standards other than those laid down by the Italian legislation in force is authorized provided that those products are manufactured and marketed lawfully in those Member States and conform, as regards labelling, with the requirements of Decree No 109 of the President of the Republic of 27 January 1992 implementing in Italy Directive 79/112/EEC, as amended'. 16 The answer to the first and second questions must therefore be that the application to products lawfully manufactured and marketed in other Member States of national legislation prohibiting the marketing of bread with a moisture content exceeding 34% or an ash content lower than 1.40% or containing bran constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty and is not justified under Article 36 of the Treaty by the need to protect public health. The third and fourth questions 17 The point of the third and fourth questions is whether the national court is under an obligation to give full effect to Article 30 of the Treaty by disapplying on its own initiative domestic legislation conflicting with that provision. 18 According to settled case-law, where provisions of national law are incompatible with Community law, the national court is under a duty to give full effect to Community law by disapplying on its own initiative conflicting provisions of national law (Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthal [1978] ECR 629). 19 It follows that, in the circumstances described above, the marketing of bread with a moisture content exceeding 34% or an ash content lower than 1.40% or containing bran lawfully manufactured and marketed in a Member State must also be allowed in another Member State. 20 The answer to the third and fourth questions must therefore be that the national court is under a duty to give full effect to Article 30 of the Treaty by disapplying on its own initiative provisions of national law conflicting with it. Decision on costs Costs 21 The costs incurred by the German and French Governments and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. 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. Operative part On those grounds, THE COURT (First Chamber) in answer to the questions referred to it by the Pretura di Pordenone by order of 18 October 1995, hereby rules: 1. The application to products lawfully manufactured and marketed in other Member States of national legislation prohibiting the marketing of bread with a moisture content exceeding 34% or an ash content lower than 1.40% or containing bran constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the EC Treaty and is not justified under Article 36 of the Treaty by the need to protect public health. 2. The national court is under a duty to give full effect to Article 30 of the Treaty by disapplying on its own initiative provisions of national law conflicting with it.

Friday, 8th October 2004 MR JUSTICE DAVIS: The Chemical and Biological Defence Establishment of the Ministry of Defence is better known to the public by the name of its principal location, Porton Down. Its practices and procedures over the years have been the subject of both confidential reports and open debate, and from time to time have been modified: for example, as one instance, following the death of a volunteer soldier in 1953 after tests involving nerve gas agents had been conducted. There have been those over the years, both in Parliament and outside Parliament, who have pressed for epidemiological research into the long-term effects, if any, in relation to chemical and biological warfare testing at Porton Down involving the use of volunteers from the armed services. Until relatively recently, however, those proposals have been rejected, the view stated by the various governments of the day being, in essence, that there was no evidence that volunteers had suffered long-term damage and therefore there was no justification for such research. The appellant, Thomas Roche, who was born on 14th September 1938, served in the Royal Engineers between February 1954 and 1968, when he was discharged on medical grounds, those grounds being agreed to be wholly unrelated to the present claim. In 1962 Sapper Roche volunteered to undergo tests of chemical weapons at Porton Down. He was paid extra wages for his time spent there. What happened is conveniently recorded in the decision of the Pensions Appeal Tribunal, the subject of this present appeal. It was noted that no documentary evidence existed in respect of the incidents relating to the 1962 visit. However, the evidence of Mr Roche, which was accepted, was that the 1962 testing was for mustard gas. He, together with five or six fellow soldiers, were seated in a small room for about six hours. Patches of cloth were attached to their arms and a liquid applied. At the end of the six hours the cloth patches were removed and the soldiers were allowed to return to their units. Mr Roche could not recall any side effects either immediately after the tests or in the weeks and months that followed. It was noted that in 1963 he was treated for an acute attack of bronchitis, but it was found that that was not linked to the tests. In July 1963 Mr Roche returned to Porton Down for a second series of tests. Those tests were partially documented. Mr Roche, in the first testing period, again underwent the mustard gas tests in exactly the same format as described already, the only side effect being a slight reddening of the skin beneath the patches, although he did recall one of his colleagues suffering a small amount of blistering. In addition, however, Mr Roche underwent a GF gas single breath inhalation test, GF being a kind of nerve gas. This was, it appears, in around the middle of July 1963. For the purpose of that testing Mr Roche was required to enter a sealed airtight compartment and was fitted with a face mask, through which a single dose of GF gas was administered, after which he removed the mask and exited the chamber. On that occasion Mr Roche, as he recalled, experienced an immediate reaction of a tightening of his chest and momentary shortness of breath. Apart from those immediate effects, there were no other immediate effects and no other effects noted in the weeks and months that followed. There were no accurate records as to the doses administered in any of the tests, although certain estimates had been prepared. Following his discharge Mr Roche's medical history continued to be, as it was found, "unremarkable". In 1981 his medical records indicate him as visiting his doctor, complaining of shortness of breath and wheeziness. There was no family history of asthma and Mr Roche had apparently stopped smoking cigarettes in 1969, although he may have continued occasionally to smoke a pipe. He was diagnosed at that stage as suffering mild hypertension and late onset bronchial asthma. In 1989, however, he was found to have high blood pressure and was diagnosed as suffering from Chronic Obstructive Airways Disease ("COAD"). A doctor suggested that a possible link with the Porton Down tests should be further investigated. The upshot was that in due course Mr Roche applied on 10th June 1991 for a war disability pension, citing hypertension and breathing problems. That claim was rejected in January 1992. There was then a significant period of delay until Mr Roche appealed against that rejection by an appeal lodged on 8th November 1998. COAD was cited as the condition in respect of which he was claiming. It appears that in the meantime Mr Roche had been investigating the possibility of a civil claim against the Ministry of Defence. A letter intimating such a claim was sent. In the result a certificate, pursuant to section 10 of the Crown Proceedings Act 1947, was issued on behalf of the Secretary of State on 3rd August 1995. That stated as follows: "Insofar as the personal injury of former Sapper Thomas Michael ROCHE 22999388 of the Royal Corps of Engineers is due to anything suffered by him as a result of his service in the Army between 16 February 1954 and 2 April 1968, I hereby certify that his suffering that thing has been treated as attributable to service for the purpose of entitlement to an award under the Naval, Military and Air Forces Etc (Disablement and Death) Service Pensions Order 1983, which relates to disablement or death of members of the Army." One consequence of that certificate was that Mr Roche was thereby, as a matter of English law, prevented from bringing civil proceedings against the Ministry of Defence. It has been suggested that, had he not been so prevented, he probably would have been granted legal aid. That I think, speaking for myself, is very debatable given that both then and now Mr Roche had not, and has not, sufficient evidence to show an arguable case that his ailments were, on the balance of probabilities, due to the tests conducted at Porton Down and so attributable to his military service; and one may query whether legal aid funds would have been advanced to enable inevitably extensive and complex medical and scientific research to be undertaken under the guise of public funding for litigation purposes. It is not, however, necessary for me to say more than that. I was in fact told that a challenge to the validity of the section 10 certificate is due to be heard in the European Court of Justice in the very near future. However, the provisions of the Naval, Military and Air Forces (Disablement and Death) (Services Pension) 1983 Order were potentially available in appropriate cases to provide compensation for those who might not otherwise be able to recover any compensation. The provisions of the 1983 Order impose a very decidedly lower standard of proof on an applicant than otherwise would ordinarily be the case for civil proceedings commenced in England and Wales. The relevant provisions of the 1983 Order read as follows. By article 3 it is provided: "Under this Order awards may be made where the disablement or death of a member of the armed forces is due to service." Article 4 then provides for entitlements where a claim was made in respect of a disablement or death occurring not later than seven years after the termination of service. Article 5 is the crucial article for present purposes. In the relevant respects it reads as follows: "(1) Where, after the expiration of the period of 7 years beginning with the termination of the service of a member of the armed forces, a claim is made in respect of a disablement of that member, or in respect of the death of that member (being a death occurring after the expiration of the said period), such disablement or death, as the case may be, shall be accepted as due to service for the purposes of this Order provided it is certified that - (a) the disablement is due to an injury which - (i) is attributable to service after 2nd September 1939; or (ii) existed before or arose during such service and has been and remains aggravated thereby; or (b) the death was due or substantially hastened by - (i) an injury which was attributable to service; or (ii) the aggravation by service of an injury which existed before or arose during service. (2) A disablement or death shall be certified in accordance with paragraph 1 if it is shown that the conditions set out in this article and applicable thereto are fulfilled ... (4) Where, upon reliable evidence, a reasonable doubt exists whether the conditions set out in paragraph (1) are fulfilled, the benefit of that reasonable doubt shall be given to the claimant. (5) Where there is no note in contemporary official records of a material fact on which the claim is based, other reliable corroborative evidence of that fact may be accepted." It was by reference to the 1983 Order that Mr Roche initiated and then pursued his claim for a war disability pension, on the footing that his disablement was due to an injury attributable to his service. Mr Roche's appeal eventually, after one or more previous hearings, came on for hearing before the Pensions Appeal Tribunal on 23rd October 2003. Adjournments had previously had to be granted. In addition, there was a regrettable muddle as to whether hypertension was also to be the subject of the appeal. The Pensions Appeal Tribunal ultimately, at the hearing of 23rd October 2003, gave permission to Mr Roche to pursue the appeal as to hypertension also out of time. But it adjourned consideration of that aspect to a later date, to enable the relevant evidential material to be considered and collated and responded to by the Ministry of Defence. The hearing and subsequent decision, therefore, was solely by reference to COAD. By its decision released on 16th January 2004, the Pensions Appeal Tribunal rejected Mr Roche's appeal. It ruled, amongst other things, that there was no reliable evidence to suggest a causal link between the tests on Mr Roche at Porton Down for mustard gas or GF gas and the claimed condition; and that the test of reasonable doubt under article 5 was not met. Section 6 of the Pensions Appeals Tribunals Act 1943 permits an appeal, with permission, on a point of law. The Pensions Appeal Tribunal subsequently refused permission to appeal; but permission was granted by Newman J after a consideration of the papers on 18th July 2004. It is in those circumstances that the appeal has come on for hearing before me. The appellant, Mr Roche, was represented by Mr Pilbrow of counsel and the respondent Secretary of State by Mr Clive Lewis of counsel. Some argument was addressed to me as to the meaning and effect of article 5 of the 1983 Order. As I see it, a number of points are clear enough. (1) First, article 5(2), by its terms, casts the burden on the applicant in such cases. That indeed was so held by Ormerod J in the case of Dickinson v Minister of Pensions [1953] QB 226. (2) Second, the use of the word "reliable" in article 5(4) cannot be taken, in my view, to be mere surplusage. I respectfully agree, all the same, with the observations of McCowan LJ in the case of R v Department of Social Security ex parte Edwards (unreported, 10th July 1992) that such word was not intended to convey the meaning "convincing"; rather, it was designed to emphasise that the evidence adduced was not fanciful or worthless. All courts and tribunals have experience of evidence, sometimes even in the form of a witness statement, which, on examination, or perhaps in the light of a quantity of wholly compelling other evidence, is shown to be completely worthless. Article 5(4), as it seems to me, is so worded as to allow for that. (3) Third, the reference to the phrase "reasonable doubt" perhaps suggests an analogy with the criminal courts' jurisdiction. Indeed, in the present case Mr Lewis was content to proceed on the footing that, in essence, the question to be asked by the Pensions Appeal Tribunal was whether, on the whole of the evidence, it could be sure in the case of Mr Roche that the respiratory problems Mr Roche claimed he was suffering were not due to his service. The burden all the same, such as it is, under article 5(2) remains on the applicant in cases of this kind; and the reference to "reasonable doubt" is, as I see it, essentially designed to exclude any reliance on a doubt which, in truth, can properly be said to be wholly fanciful or entirely theoretical. I was referred to the decision of Newman J in the case of Busmer [2004] EWHC 29 Admin, a decision given on 20th January 2004. In the course of his judgment in that case, Newman J, after referring to a number of authorities, said this: "Like McCowan LJ in ex parte Edwards, I have some doubt that the word 'reliable' sheds much light on the correct approach. The real question is whether on all the evidence which has been presented, on both sides, a reasonable doubt arises as to whether all the conditions have been fulfilled. Because the burden of proof is on the claimant, unless a reasonable doubt has been raised, the claim will fail. If a reasonable doubt has been raised, the claim will succeed." Newman J then went on to suggest that two questions might usefully be posed. First, is there any evidence before the Tribunal which indicates that the death or disablement was due to service? And, secondly, does the evidence raise a reasonable doubt as to whether all the conditions have been fulfilled? That, no doubt, is a convenient checklist that can be used. But ultimately the Tribunal must apply Article 5 without any gloss; and as Newman J went on to say (in my view entirely appositely) the Secretary of State and the Pensions Appeal Tribunal were well able to understand the expression "reasonable doubt". A useful illustration, by reference to its own facts, of the way in which article 5 works in my view can be found in the unreported decision of Drake J in the case of Westcott v Secretary of State for Social Services (11th December 1987). In that particular case the applicant claimed a pension on the ground that he suffered from osteoarthritis of the knees and lumbo-sacral spine said to be attributable to service. It was said that he had experienced a heavy fall while testing a parachute in Norway whilst serving in the 1st Airborne Division, the fall taking place in 1945. A surgeon put in a report which, amongst other things, said that it was absolutely impossible to give a firm indication as to whether Mr Westcott would not have suffered arthritis had he not had his accident during the war, and that in the view of the surgeon he should be given the benefit of the doubt in his case. Drake J indicated that the answer thus given was to the effect, "Yes, Mr Westcott's orthopaedic pathology involving the knees and spine could be related to heavy parachute landings". The Department for Health and Social Security for its part then obtained its own medical reports from its own medical division. Those reports were to the effect that the evidence pointed very strongly indeed to the conclusion that Mr Westcott's condition was entirely unrelated to any parachute landing and, on the contrary, was primary osteoarthritis particularly related to Mr Westcott's considerable obesity. Drake J agreed that the evidence could be said to point strongly against Mr Westcott's claim. But, as he pointed out, there was also some evidence which did support his claim. He noted that the tribunal there had not expressly rejected as unreliable the consultant orthopaedic surgeon's opinion procured by Mr Westcott, and in those circumstances the appeal had to be allowed. On behalf of the appellant in the present case, Mr Pilbrow advanced, in summary, the following grounds of appeal. First, he submitted that the Pensions Appeal Tribunal had failed to apply the correct test under article 5, in that it had inadmissibly raised the evidential burden faced by Mr Roche and had paid too much attention to the concept of "reliable evidence" and had acted contrary to the decision of Newman J in Busmer. Secondly, it was submitted that, rather than asking whether a reasonable doubt had been raised as to whether all the conditions of article 5 had been fulfilled, the Pensions Appeal Tribunal had, as a matter of wrong approach, weighed, or at least appeared to weigh, certain evidence against other evidence. Thirdly, it was submitted that the Pensions Appeal Tribunal had misinterpreted the evidence of Professor Alistair Hay, the court appointed expert, which, on a proper analysis and when viewed as a whole and in the context of all the other evidence, did raise a reasonable doubt. Finally, it was submitted that the Pensions Appeal Tribunal had failed to understand that the lack of any epidemiological follow-up study went to the issue of whether or not a reasonable doubt had been raised on all the evidence. On behalf of the respondent, Mr Lewis submitted that the Pensions Appeal Tribunal was required to consider the evidence before it in its totality; that it was entitled to attach the weight that it did attach to the unchallenged written evidence of Professor Hay, which evidence was addressed specifically to the case of Mr Roche; and was entitled to conclude on the evidence that no reasonable doubt was shown. There was a considerable quantity of evidence before the Pensions Appeal Tribunal. This included a medical opinion dated 28th January 1999 from an army medical doctor. This stated an opinion that, in the light of the lapse of time between the Porton Down test and the manifestation of Mr Roche's symptoms and for other reasons there set out, it was contended as follows: "In conclusion, we remain of the opinion that Mr Roche has not, by reliable evidence, raised a reasonable doubt that his condition Chronic Obstructive Airways Disease is attributable to service or that it existed before or arose during service and was aggravated thereby." For his part, Mr Roche had already enlisted the support of Professor Hay (who I might add is now the Professor of Environmental Toxicology at the University of Leeds). Professor Hay had in fact provided to Mr Roche over the years, it would appear, a number of advices and reports. Latterly a series of questions were drafted by Mr Roche's advisers addressed to Professor Hay; this in fact being at the suggestion of the Pensions Appeal Tribunal after a previous hearing before it on 3rd October 2002. The questions posed to Professor Hay in this way and his answers are of very considerable importance for the purposes of this appeal. The questions started by asking Professor Hay to consider the various documents in the light of the proposition that Mr Roche was attempting to establish symptoms of COAD, hypertension (with associated epilepsy) and depression. Thus it is to be noted that the questions were directed to wider conditions than simply COAD. Question 6 is phrased in this way: "If Mr Gosden is right about the level of percentage inhibition applied to Mr Roche, does that exclude the possibility (rather than probability) that the inhalation of GF gas could have caused (and it could be one of a number of causes) the medical conditions that Mr Roche complains of in paragraph A2 above? [Paragraph A2 being the three conditions above mentioned]?" Question 9 says this: "If he does agree with that analysis [and that was an analysis of a Mr Evans] does that rule out the possibility (not probability) of Mr Roche's exposure to GF as being a cause (and it could be one of a number of causes) of his medical condition set out in paragraph A2 above? [I add there that everyone agreed that conditions should have been phrased in the plural]?" Question 13 read as follows: "It is part of Mr Roche's case that he was in a room for 6-8 hours which was unventilated, with 6 or 7 other men on whom the same tests were being performed. This, he suggests, meant that he indirectly inhaled the cumulative dosage of mustard gas tested on each of the men. a. is there any merit in this argument? b. is it at all possible that this form of exposure could have caused the conditions outlined in paragraph A2 above?" Question 15: "Is there anything arising out of these documents that exclude the possibility (not probability) that Mr Roche may be suffering the conditions outlined in paragraph A2 above as a result of the chemical testing he underwent in 1962 and 1963?" In B4 this question is asked: "Is there anything in the reports that exclude the possibility (not probability) that the medical conditions outlined in paragraph B2 above could have been caused by Mr Roche's exposure to GF and/or mustard gas?" In C5 this question is asked: "Is there anything in those documents which excludes the possibility (not probability) that Mr Roche's conditions set out in paragraph C2 above could have been caused by his exposure to GF and/or mustard gas?" Then in D5: "Is there anything in those documents which excludes the possibility (not probability) that Mr Roche's conditions set out in paragraph D2 above could have been caused by his exposure to GF and/or mustard gas?" Questions using similar terminology were also posed in D6 and 9. The answers of Professor Hay were provided by a letter addressed to the Tribunal dated 19th February 2003. The answer to question A6 was in these terms: "Given the percentage inhibition figures which apply to Mr Roche they do not, in my view, exclude the possibility that inhalation of GF could have caused the medical conditions that Mr Roche complains of. In my view, only an epidemiological assessment of a large number of volunteers would be able to rule out categorically that the symptoms from which Mr Roche complains of were or were not caused by his exposure to GF. However, I would add that on the basis of the information I have seen in relation to Mr Roche and other cases, I can find no evidence to relate his exposure to GF with the conditions of which he complains." The answer to question 9 was in these terms: "I agree with the analysis carried out by Mr Evans but as I stated in my answer to Question 6 it does not rule out the possibility of Mr Roche's exposure to GF as being a cause of his medical condition. However, as I also noted earlier, there is no strong evidence to suggest that exposure to GF would be a cause of Mr Roche's symptoms. In particular, I note in the report of DS Grant and RJ Shephard, that the symptoms experienced by most subjects were mild..." Then a little later on he says this: "However, as documented, the evidence suggests that the effects were limited. In other words the effects did not persist beyond the evening of the day of exposure." In answer to question 13, Professor Hay said this: "Mr Roche may have inhaled a little mustard gas which would have been volatilised (formed a vapour) from the sample tested on each individual's skin. There is no merit in his argument that he would have indirectly inhaled a cumulative dosage of mustard gas tested on each of the men." Professor Hay then went on to amplify that answer; and at (b) he said this: "In my view it is unlikely that Mr Roche's exposure to mustard gas through the inhalation route would have caused the conditions outlined in paragraph A2. There is some evidence from Iranian subjects to associate exposure to mustard gas with asthma. In Mr Roche's case, however, any inhalation of mustard gas would, in my opinion, have been trivial, and not a cause of his obstructive airways disease. There is no evidence of which I am aware to associate exposure to organophosphorus compounds, including nerve agents, with asthma. Given both the amount of GF to which Mr Roche was exposed, and his subsequent recovery from side effects, this would rule out, in my view, exposure to GF as a cause of his chronic obstructive airways disease." Then, in answer to question 15, he said this: "a) Please refer to my answers to question 6 and 9. There is nothing in these documents which exclude the possibility that Mr Roche may be suffering the condition outlined in paragraph A2. However, given the nature of his exposure to mustard gas, and his exposure to the nerve agent, and the temporary effects of the exposure to the nerve agent, it is unlikely in my view that Mr Roche's condition was caused by his exposure in the chemical testing which he underwent in 1963." Professor Hay went on to give further answers (in an interim passage having stated his own personal regret that no detailed study had ever been undertaken by the relevant Secretary of State). In answer to the question at B4, his answer was this: "Please see answers to Section A questions 6, 9 and 15. There is nothing further in the additional documents which I have read which alter my view. In other words they do not exclude the possibility that Mr Roche's medical conditions could have been caused by his exposure to GF..." Then a little further on: "However, as I noted earlier, the nature of the response of individuals to the dose of sarin to which they were exposed would make it unlikely in my view that Mr Roche's current medical conditions were caused by his exposure to either GF or mustard gas." Then in answer to question C5 he stated that those documents added nothing further to the answer which he had given to question 4 in section B. In answer to question 5 in section D he said that there was nothing in the documents which excluded the possibility that Mr Roche's condition set out in D2 could have been caused by his exposure to GF, and that there was nothing in those documents which either added to or subtracted from his answers given to question C5 or question B4. In answer to question B6, he again referred to his answers to questions C5 and D5, and again in answer to question D9. He concluded: "In other words they do not exclude GF as a possible cause of the conditions Mr Roche complains of, for the simple reason that the individuals are quite inadequate to assess the longer-term health implications of exposure to nerve agents." The Secretary of State then commented on the various answers given by Professor Hay by his own statement, which is dated 14th October 2003. The Secretary of State accepted that the comments of Professor Hay had been impartial and evidence-based, and in terms stated that he was broadly in agreement with Professor Hay's arguments and conclusions within the limits of existing evidence. In paragraph 4 of that response, it may be noted, the view was indicated that in each of sections A, B and C of the questions and answers Professor Hay had gone on to discuss why, in the light of the case specific evidence, "... any such causal link is however unlikely in his expert view". In paragraph 6 this was stated on behalf of the Secretary of State: "Professor Hay's response to Q15 Section A is noted and the related Q6 and Q9: he consistently finds a lack of evidence to support the contended links. It is therefore concluded that Professor Hay's expert analysis of the case does not identify reliable evidence to raise a reasonable doubt in support of Mr Roche's contentions that his chronic obstructive airways disease is causally related to his service in the armed forces, specifically at Porton Down." It is perhaps to be noted that Professor Hay was not asked any further questions, nor was he asked to give any oral evidence at the hearing before the Pensions Appeal Tribunal in which he might have expanded or further clarified his answers; nor was Professor Hay, as it happened, present when Mr Roche gave his evidence orally before the Pensions Appeal Tribunal. Also included in the voluminous evidence submitted to the Pensions Appeal Tribunal were numerous research papers and studies relating to biological and chemical weapons. For example, a report on the "Medical Effects of Chemical Warfare Agents" published by the Working Party on Chemical and Biological Warfare and produced, as I was told, in around 1991, dealt with delayed and long-term effects relating to the use, amongst other things, of mustard gas and nerve gas. In the course of that report this, amongst other things, was said: "Mustard gas can produce a wide range of mutagenic, carcinogenic, hepatoxic and neurotoxic effects. Even in cases of exposure to very slight amounts which do not necessarily bring on acute symptoms, toxic reactions may follow." The reactions were stated as including injuries of respiratory tract, from asthma-like conditions to very severe emphysematous bronchitis, recurrent pneumonia and the like; and a variety of other conditions. In a report prepared by a panel operating in the United States of America on the "Possible Long-Term Health Effects of Short-Term Exposure to Chemical Agents", produced in 1984, detailed comments were also made. Amongst other things, it stated in the course of the report that with regard to mustard gas: "Information is insufficient to project risks associated with smaller exposures to mustard gas; however, serious long-term adverse effects in the small number of soldiers who received one or a few low-dose exposures at Edgewood seem unlikely (except for possible skin tumours and some cases of permanent scarring)." Another report to which my attention was briefly drawn was a report on "Delayed Toxic Effects of Chemical Warfare Agents", produced by the Stockholm International Peace Research Institute. As I understand it, that principally was concerned to stress the point that insufficient material and case studies were available to advance any firm views one way or the other. Another report, prepared by Veterans at Risk and headed "The Health effects of Mustard Gas and Lewisite", produced in 1993, stated, amongst other things, in the course of that report that the evidence found indicated a causal relationship between exposure and a number of health conditions, including chronic respiratory diseases. It was also stated in the course of that report that indirect evidence, based on a review of the relationships between acute and chronic effects caused by other substances, suggested that the likelihood of long-term respiratory effects may not necessarily be linked to the presence of an acute respiratory response. It seems, on the whole, fair to say, and as the Pensions Appeal Tribunal itself pointed out, that, speaking generally, the reports were generalised reports; and throughout there seems to have been a constant refrain as to the insufficiency of data and case studies, which restricted the findings or observations that could usefully be made. I turn then to the actual decision of the Pensions Appeal Tribunal itself. This set out the background facts, much of which I have already recorded. The Tribunal expressly found, I should add, that Mr Roche was an honest and truthful witness, albeit his recollections were understandably affected by the lapse of time. The Tribunal went on, at page 4 of its report, to refer to the testing which Mr Roche underwent and found that the research papers, some of which I have mentioned, contained generalised conclusions. The Tribunal then referred to the evidence of Professor Hay and stated: "The tribunal attach much probative weight to the conclusions reached by Dr Hay since they relate specifically to Mr Roche's case." The Tribunal went on to record that whilst Professor Hay correctly pointed out that only an epidemiological study with a large number of volunteers would be able categorically to provide the answers to the questions posed, it was his view, as the Tribunal summarised it, that neither Mr Roche's exposure to GF gas or to mustard gas would cause the respiratory symptoms of which he now complains. The Tribunal went on at page 4 to say this: "Although the studies referred to above show an accepted link between asthma and exposure to mustard gas, this is only the case where the dosage is significant (eg in a chemical warfare scenario) and the effects are almost immediate. In contrast, in Mr Roche's case, exposure was limited to off-gassing (by evaporation of the chemical from the clothing on which it was placed), where the quantities were so small as to produce almost no skin reaction, there were no short-term effects and asthma was not diagnosed until 1981 at the earliest." The Tribunal went on to summarise Mr Roche's case to the effect that the long-term effects of the exposure had caused or contributed to his current respiratory problems. The Tribunal went on to say this in the course of summarising the case: "Mr Roche relies on Dr Hay's comments that he 'cannot exclude the possibility' of a link. However, Dr Hay's opinion is that there is 'no merit' in the argument that Mr Roche inhaled a cumulative dose of mustard gas from all of the individuals in the room, since most would have been absorbed into the clothing on which it was being tested." The Tribunal then went on to summarise the Secretary of State's contentions that there was simply no evidence to support Mr Roche's claim. The Tribunal then proceeded to direct itself as to the law. It referred to article 5 and stated as follows: "The first hurdle to overcome therefore is to establish the existence of reliable evidence. If there is no such evidence or it is unreliable then it follows that a reasonable doubt cannot be raised." The Tribunal then went on to deal with a further submission made by counsel then appearing for Mr Roche about the lack of testing evidence, which I do not think it necessary to set out in full here. The Tribunal then came to its findings, which can be found at page 6 of its decision. It found expressly that Mr Roche suffered no long-term respiratory effects from skin contact with mustard gas following the tests in 1962 and 1963. It found expressly that Mr Roche was administered only small doses of mustard gas and GF gas, which would have resulted in minimal exposure to mustard gas by off-gassing and a limited and transitory reaction to the GF gas. It then found in paragraph 3 in these terms: "The compelling weight of the evidence is that Mr Roche did not receive, in any of the tests, dosages likely to have long term effects as described in the research papers. In particular, the expert, Dr Hay, although accepting that there is a possibility that given further research through a long term follow-up study, a link might be found, concludes that there is no evidence to link Mr Roche's exposure to either of the gases with his present condition. We accept Dr Hay's conclusion that, given the limited doses and Mr Roche's minimal immediate reactions, this would rule out a link between the tests and the claimed conditions. 4. We particularly rely on Dr Hay's expert report. He has analysed the specific data relevant to Mr Roche's case and considered the conditions for which he is claiming in relation to that specific data. The research papers relied on by the Appellant, although of some evidential value, are very general and speculative. We therefore prefer the evidence, and the conclusions reached by Dr Hay in his reports." Then in its ultimate conclusions, under the heading "Law", this was said by the Tribunal at paragraph 3 of those conclusions: "We find that there is some reliable evidence surrounding the Porton Down tests for which Mr Roche volunteered. However, this evidence tends, if anything, to support the view that there is in fact no link between those tests and Mr Roche's current conditions. The test of reasonable doubt is not therefore met. 4. There is no reliable evidence to suggest a causal link between the tests for either mustard gas or GF gas and the claimed condition. 5. Dr Hay's views that he 'cannot exclude the possibility' of a link between exposure to GF and/or mustard gas and the claimed condition does not meet the 'reasonable doubt' test. Furthermore, he 'rules out' exposure to GF as a cause and deems it 'unlikely' that mustard gas is a cause." The first ground of appeal raised by Mr Pilbrow on behalf of Mr Roche is that the Tribunal, in effect, wrongly overstated the emphasis to be placed on the words "reliable evidence" as set out in article 5(4) and thereby were led into error. I am bound to say I can see nothing whatsoever in that particular point. The Tribunal's statement that if there was no evidence or if it was unreliable evidence it followed that a reasonable doubt cannot be raised, in my view, is a perfectly acceptable paraphrase of what article 5(4) is aimed at. So I reject that ground of appeal. But the essence of Mr Pilbrow's complaints is to be found set out in his second and third points. Mr Pilbrow frankly accepted that the totality of the evidence no doubt showed a probability, even a strong probability, but a causal link was not shown. But that is not the test under Article 5. In essence, what Mr Pilbrow says is that on the approach that this particular Pensions Appeal Tribunal chose to adopt (that is to say by placing prime emphasis on Professor Hay's written evidence) it simply was not entitled to reach its finding of fact, as set out in paragraph 3, or to reach the conclusion, as summarised in paragraph 4 of its conclusions as to law. In that regard Mr Pilbrow accepted that if that finding and that conclusion was a finding and conclusion properly open to the Pensions Appeal Tribunal, then, as he put it, his appeal was "dead in the water". Mr Lewis, for his part, says that there were, in essence, three aspects which had to be considered. First, was it possible that the administration of the mustard gas caused, by off-gassing, Mr Roche's respiratory problems; that is, that they were due to his service? Second, was it possible that the single administration of GF gas caused Mr Roche's respiratory problems; that is, that they were due to his service? Third, was it possible that a combination of those administrations caused Mr Roche's respiratory problems; that is, that they were due to his service? So far as the GF gas is concerned, says Mr Lewis, Professor Hay is unequivocal. He says in his written answers that "this would rule out exposure to GF as a cause of his COAD"; and elsewhere he said "I can find no evidence to relate his exposure to GF with the conditions of which he now complains". As to mustard gas, Mr Lewis was disposed to agree, for the purposes of this case, that the various studies and papers arguably show that exposure to mustard gas in sufficient doses possibly may lead to respiratory diseases. But these papers were, as he pointed out, and as the Pensions Appeal Tribunal itself found, generalised: whereas in the case of Professor Hay his answers were, as again the Pensions Appeal Tribunal noted, specific to the case of Mr Roche. Professor Hay roundly said, stressed Mr Lewis, "there is no merit in the argument that he would have directly inhaled a cumulative dosage of mustard gas tested on each of the men"; and elsewhere: "any inhalation of mustard gas, would, in my opinion, have been trivial, and not a cause of his obstructive airways disease". In other words, says Mr Lewis, even though possibly there may be cases where exposure to mustard gas may cause respiratory diseases, here, as he submits, Professor Hay was in the case of Mr Roche flatly rejecting that as a possibility in that the inhalation and exposure was too insignificant to give rise to that as a possibility. Accordingly, goes on Mr Lewis' argument, reading the answers of Professor Hay as a whole, and taking the evidence as a whole (as he stressed, and rightly in my view, one must) and reading also the Pension Appeal Tribunal's decision as a whole, the Tribunal was justified in concluding that no reasonable doubt was shown. I do not agree. As it seems to me, it is precisely because one must read the evidence as a whole that the position, on the approach adopted by the Pensions Appeal Tribunal, focusing, as it did, in particular on the evidence of Professor Hay in the Tribunal's determination, that the position is not so clear as Mr Lewis would have it. It is to be observed that there are the repeated observations by Professor Hay in his written answers in answer to the questions -- and one must accept, rather leading questions -- that he could not exclude the possibility of the various points put forward. For example, and it is only by way of example, he says, in answer to question A6 with regard to the percentage inhibition figures, that they did not, in his view, exclude the possibility that inhalation of GF could have caused the medical conditions of which Mr Roche was complaining and only an epidemiological assessment could categorically rule that out one way or the other. Mr Pilbrow agreed that that answer, and answers to similar effect elsewhere, could not in themselves show a reasonable doubt. He acknowledged that in the light of the way in which the leading questions were put, and given understandable and ordinary scientific prudence, it might have been difficult for Professor Hay to have answered such a question otherwise; but Mr Pilbrow states that that is at least a reasonable starting point for a case that a reasonable doubt had been raised. What Mr Pilbrow stresses, however, and in my view with force, is that elsewhere Professor Hay in fact does give somewhat more equivocal answers than in other parts he gives. It is certainly true that Mr Lewis can point to passages in those answers where Professor Hay seems to be wholly unequivocal in rejecting the causal link between the Porton Down tests and Mr Roche's present respiratory illnesses. But elsewhere that is not so. For example, in the answer to question 9 Professor Hay talks about there being no strong evidence to suggest that exposure to GF would be a cause of Mr Roche's symptoms. That is a rather different thing from saying there is no evidence at all of such a kind. Further, on a number of occasions in his report Professor Hay seems to qualify the previous answers that he has given by stating words to the effect that it was unlikely that Mr Roche's condition was caused by his exposure to the chemical testing which he underwent in 1963 (I add that Professor Hay seems to have been focusing in particular on the testing in that year). That is repeated in a number of respects in his written answers. In consequence, as it seems to me, reading Professor Hay's evidence as a whole, there is a degree of doubt arguably raised by those answers. I do not think that one can conclude that Professor Hay was necessarily saying that he was sure that the causal link between Mr Roche's respiratory problems and service was excluded. It seems to me that although one can certainly cherry pick from Professor Hay's answers which are unequivocal in that regard, equally one can select answers which significantly modify such an unequivocal position. That being so, I do not think that the Pensions Appeal Tribunal here had the basis (on the approach which it had chosen to adopt) to make the findings that it purported to make at paragraph 3 of the findings of fact and paragraph 4 in its conclusions of law; and it erred in law in doing so. That is particularly so, as it seems to me, when a number of other considerations are also taken into account. First, the generalised evidence contained in the various studies and reports, which the Tribunal expressly did not reject as unreliable, lent some support, at least potentially, to Mr Roche's case, at least with regard to mustard gas; and at all events those reports were not inconsistent with Mr Roche's case. Secondly, there are various references in the decision of the Pensions Appeal Tribunal itself which perhaps indicate that on occasions the Tribunal may have been engaging in a balancing exercise. For example, it refers to the "significant probative weight" which it attached to Professor Hay's report. It said that it "preferred" that evidence to the other evidence. It said, by way of example, that the "compelling weight" of the evidence was that Mr Roche had not received dosages likely to have long-term effects. It had referred to the evidence of Professor Hay to the effect that he deemed it "unlikely" that mustard gas was a cause. These points perhaps would not in themselves suffice to invalidate the decision of the Tribunal. But they do seem to me to lend at least some further support for the view that, quite simply, the wrong answer may have been reached given the approach that needed to be applied under article 5(4). In that regard I would reiterate the point raised by reference to paragraph 5 of the conclusions: if the recording of the evidence was that mustard gas was "unlikely" to be a cause, then that would seem to give rise to an acceptance that there was a possibility that it was the cause. It may be, as Mr Lewis said, that that particular answer is to be read in the answer previously given in paragraph 3 of the findings of fact. But, again, as it seems to me, there is some doubt as to that; and at all events my fundamental reason for allowing this appeal is that, on the approach adopted by the Pensions Appeal Tribunal, with the particular emphasis on the answers of Professor Hay, it simply was not entitled to reach the finding of fact set out in paragraph 3 or the finding in paragraph 4 of its conclusions, as it did. In those circumstances, I need not deal any further with Mr Pilbrow's other ground of appeal, which I have to say did not impress me very much. In the result, therefore, it seems to me that I must allow this appeal. Mr Pilbrow invited me to allow it without more and not to refer the matter back to the Pensions Appeal Tribunal. However, I allow this appeal not on the footing that the Pensions Appeal Tribunal reached a conclusion which it simply was not open to it to reach; rather, I allow it on the ground that, given the approach that this particular Tribunal chose to adopt, it was not thereafter entitled to reach the conclusion that it did in fact purport to reach. I have not myself been taken through the entirety of the evidence that was before the Tribunal and it is for the Tribunal to assess the entirety of that evidence. Accordingly, I allow this appeal and refer the matter back to the Tribunal for a further hearing. MR JUSTICE DAVIS: Mr Pilbrow, is there anything you wish to add or say? MR PILBROW: My Lord, no. As noted yesterday, costs are provided for in rule 28 of the Pensions Appeal Tribunal Rules so they do not arise. My Lord, as far as I am concerned, there is nothing further to add. MR JUSTICE DAVIS: So the matter will then have to go back. MR PILBROW: Indeed, my Lord, and it may be, as a matter of practicality, it can be reacquainted with the hypertension appeal. MR JUSTICE DAVIS: There might be some advantage in that. Obviously it has to be done soon rather than later. Ms Stone, is there anything you wish to add? MS STONE: No, I have nothing to add. MR JUSTICE DAVIS: Thank you both.

Mr Justice Eady : The Claimant in these proceedings is Mr Jeffrey Wakefield, who apparently trades as "Wills Probate and Trusts of Weybridge". He is not a solicitor but writes and advises on the preparation of wills. He complains in respect of an allegation contained in a letter written as long ago as 12 January 2006, in which the First Defendant, Mr Roger Ford, alleged that he was negligent and, moreover, that negligence had been admitted on his behalf. Mr Ford is a solicitor and at the material time was a partner in a firm called Caporn Campbell, who are in fact the Second Defendants. That firm later merged with Russell-Cooke, and the firm is now known as Russell-Cooke LLP, of which Mr Ford is a partner and also the head of the private client department at the Kingston upon Thames office. The letter of 12 January 2006 was written to a firm of solicitors called Crellins, and it dealt with various matters including a query as to the Claimant's involvement in the preparation of documents. A request was made for information about his qualifications. The particular words extracted for complaint in the particulars of claim are as follows: "Indeed in relation to another unconnected matter we are acting for a client in respect of a claim against another local solicitor arising out of Mr Wakefield's admitted negligence and in that matter we have asked a similar question … " It is said that the words bore the meanings that the Claimant: a) had been negligent in another case, and b) that this negligence had been admitted by him or on his behalf. Much significance has been attached, both in correspondence and in submissions throughout this case, to the distinction between asserting of someone that he is negligent and, on the other hand, asserting that this negligence had been admitted. It seems that the Claimant takes particular exception to the suggestion that negligence had been admitted by him or on his behalf. As Gray J has pointed out, however, at an earlier hearing in December 2007, the essential sting of the words is contained in the allegation of negligence. If one has been negligent, or indeed has behaved wrongfully in any other respect, and the wrongdoing can be established, one would hardly expect to recover damages in such circumstances in respect of a marginal allegation to the effect that it had been admitted. Indeed, it will often be regarded as being to a person's credit that, if wrongdoing has indeed taken place, he has been prepared to come clean and admit it. There was a ruling by the Master in September 2007 to the effect that the occasion of publication was protected by qualified privilege. There was plainly a common and corresponding interest in the subject-matter between Mr Ford and Crellins. In order to overcome this defence, therefore, the Claimant would obviously have to establish that Mr Ford was malicious at the time he wrote the letter. That would ordinarily mean proving that he knew what he was saying to be false, or that he was reckless in the sense of being genuinely indifferent to its truth or falsity, or at the very least that his dominant motive in writing the words complained of was to injure the Claimant's reputation (rather than serving the legitimate purpose for which the law accords qualified privilege). There is also a plea of justification alleging that the Claimant was indeed negligent in certain respects and, for what it is worth, that an admission had been made on his behalf to this effect in October 2005. It will be necessary to return briefly, and in general terms, to the nature of the negligence alleged because it is one of the aspects of the Claimant's conduct that Mr Speker, on the Defendants' behalf, relies to buttress his application for costs to be awarded on the indemnity basis. Despite attempts at persuasion on the Defendants' behalf, in particular on the basis that the claim was doomed to failure because it would prove impossible to establish malice against Mr Ford, the Claimant continued to press ahead for another 15 months after the Master upheld the defence of qualified privilege. Eventually, on 9 December 2008, following supplemental disclosure on 3 December 2008, it was recognised by the Claimant that he did not wish to proceed to trial in January of this year. He did not simply discontinue, however, but rather made an application dated 22 December to the effect that he should be permitted to accept, as he purported to do by letter of 9 December, what was alleged to be an outstanding offer to settle the action made on the Defendants' behalf on 14 August 2008. Mr Speker characterised this as a last-minute attempt to avoid the consequences of his pursuing litigation which he was bound to lose. In a letter of 5 January of this year, the Claimant's solicitors stated that if the application of 22 December failed, the Claimant would indeed discontinue the action (with the usual costs consequences). As to the merits of the contractual dispute, it is necessary to consider the terms of a sequence of letters, commencing with one from the Defendants' solicitors dated 30 June of last year. This was headed "Without prejudice save as to costs" and sought to capitalise not only on the Claimant's weak position so far as malice was concerned but also on admissions contained in the amended reply concerning the plea of justification (i.e. as to the allegations of negligence). The relevant parts of the letter of 30 June were in these terms: "Your client will not succeed on defeating (sic) the plea of justification and his efforts to blame others, including the lay client who he charged for his advice, are very unattractive. Further, we have already made our views plain on your decision to persist with the malice allegations against Mr Ford and do not intend to repeat them here. Your client will not succeed on that issue and should not be persisting with it. It is time your client saw some sense and discontinued this litigation. Accordingly, we make this further offer to you now before considerable costs are incurred preparing witness statements and proceeding to trial: 1. Your client withdraws the allegation of malice he has made against Mr Ford and apologises to him personally in writing for having made it; 2. Your client pays our base costs (including all disbursements and VAT) to date. In return we are prepared to waive our success fees (counsel is now on conditional fee agreements as this firm has been from the outset of the litigation) and your client would not incur any further costs going forward. If you client does not accept this offer we will, as we have already said, proceed to trial. If successful, our firm and counsel will be entitled to success fees and will also seek a costs order on the indemnity basis because (a) your client has made and persisted with improper allegations of malice against a professional man; (b) your client has chosen to blame his conduct on a blameless third party; and (c) he has ignored sensible offers to settle made throughout the litigation. It is only your client's intransigence that is keeping this case running. We strongly suggest your client takes this reasonable offer very seriously. Please do not respond by making demands for your own costs or any other remedies. They are not on the table at this stage." After some chasing, there was a response dated 18 July in these terms: "We refer to your Without Prejudice letter dated 30th June 2008. We disagree strongly with your assertions that the drafting of the Deed of Variation was negligent but see no point in further debating the merits of our respective cases in correspondence. In any event, as I am sure your client will recall, the defamatory statement that he made in the letter to Crellins used the words 'admitted negligence'. The suggestion that our client, or someone apprised of the matter and acting with his authority or on his behalf, had made an admission of negligence is an aspect of the allegation which has caused our client very real distress and damage to his reputation. It is also an aspect of the allegation which, as you must realise, you have no hope of justifying. As your client appears to show a willingness to negotiate we suggest the following:- That your client apologises in writing for the allegation that our client, or someone acting with his authority or on his behalf, had admitted negligence; That our client withdraws the allegation of malice and apologises to Mr Ford for having made it; That your client gives an undertaking in words to be agreed that he will not defame our client any further; That each party bear their own costs subject to costs already reserved. We would be pleased if you could take instructions on this matter and confirm whether or not your client is content for the matter to be settled on this basis. We look forward to hearing from you." It will be noted, first, that emphasis was being placed on the words "admitted negligence" and that no request was made of the Defendants to withdraw or apologise for the allegations of negligence actually having taken place; secondly, there was a willingness to apologise for having made the allegation of malice (which suggests an acknowledgment that it was wrong to have done so). Nonetheless, the allegation of malice remains on the record to this day and has not, so far, been withdrawn. On 14 August 2008 the Defendants responded: " … We note that your client has finally retreated from the position set out in your letters dated 17 September 2007 and 15 February 2008. Whilst our clients welcome parts of this offer it does not go far enough. We address the points in your letter in turn: 1. Your client is now prepared to drop his demand for an apology in relation to the real sting of the libel (that he was negligent) but is still insisting upon one that says he never admitted to being negligent. At the hearing in December 2007 Gray J said in his judgment, 'Whether or not the second of those two meanings is a defamatory one is open to some doubt in my view however the real sting is the first of those two meanings' This is a clear warning from an experienced libel judge. Gray J's view makes complete sense. We note that you do not specify to whom this apology would be published. It would be misleading for Mr Ford to write a letter that your client could publish to the world at large in which Mr Ford accepted that your client never admitted negligence in respect of Mrs Damle's case without him also making clear in the same letter that he was entitled to conclude that your client was, in fact, negligent in his dealings with Mrs Damle and explain why. It would be surprising if that is what he really wants. 2. Whilst we welcome the offer to withdraw the plea of malice and for your client to offer to apologise to Mr Ford, the allegation of malice is very serious (more serious than an allegation of negligence or admitted negligence) and should never have been placed on the record. You have Mr Ford's witness statement explaining his honest belief. The issue should be withdrawn and judgment entered for our clients. Since you made this allegation in pleadings open to the public and instructed your counsel to allege that this was a serious case of malice in open court proceedings on a number of occasions, Mr Ford must be entitled to publish the apology as he sees fit. We attach some wording. 3. Our client is not prepared to give any undertaking and your client, even if he was successful at trial, would never obtain an injunction as wide as the undertaking sought; 4. We welcome your client's movement on costs but we do not understand your proposal that 'each party bear their own costs subject to costs already reserved'. We take it to be a walk away which is not acceptable to our clients at this stage. Your client is going to lose the action and costs will follow the event. As you know, our clients offered many months ago to accept only the payment of disbursements to date and since that time they have incurred considerable costs. Whilst our clients are prepared to consider any sensible offer on costs your client is prepared to make they see no reason to depart from their previous offer that your client pays our base costs to date and, in turn, we will waive our success fee. Please note that the costs to date (including disbursements and VAT) on this side are in the region of £58,000. That figure is likely to double going forward to trial when witness statements are prepared and trial brief fees incurred. At the conclusion of the case we will be entitled to a success fee on top of our base costs which will wipe out any costs orders you have in your favour at this stage. We therefore reject your offer and invite your client to reconsider his position." (I need not set out the terms of the apology to Mr Ford which was enclosed.) Nothing further was heard until a letter of 9 December, as I have said, which purported to accept the "offer" contained in the letter of 14 August. It is important, therefore, to note the emphasis placed by the Defendants' solicitors in that letter upon the fact that they were prepared to accept costs "to date" (i.e. to 14 August or thereabouts). They also emphasised that, if this offer were not accepted, the demands on the Claimant would be correspondingly greater as costs built up towards trial (and the proposed concessions on costs would not be any longer available). It is therefore, in my judgment, quite untenable to construe that letter as making an offer which was to continue indefinitely into the future, such that the Claimant could accept it at any time. Nevertheless, that seems to be his submission. The letter of 9 December contained the following passages: " … our client recognises the difficulties involved in pursuing a case on malice to trial and has no wish to subject your client to the public embarrassment involved in the same. Neither does our client wish to spend more time and money pursuing this litigation. In view of the above, our client is prepared to accept the offer contained in your letter dated 30 June 2008 and reiterated in your letter dated 14 August 2008. The precise wording of our client's apology can be the subject of further discussion but our client can indicate now that he substantially agrees to the terms of the draft you provided. A version with some amendments marked is attached for your consideration. On the question of costs, we understand your offer to be made subject to the costs Orders already in place. In other words: (a) our client would be entitled to set off those costs which were ordered in his favour in relation to the striking out of the original justification defence and of and occasioned by the re-amendment of the defence. (b) your clients would not be entitled to their costs of the same. (c) your clients would not be entitled to the costs of the appeal (where the Costs Order was the claimant's costs in the case). Our client accepts your offer on this basis." It is clear that even at this stage the plea of malice was being held out as a threat – notwithstanding the expressed willingness to apologise back in July. I have already indicated that I do not believe that there was any such offer outstanding on 9 December, capable of acceptance, and for that reason alone the Claimant's construction must fail. In any event, the parties were not ad idem, since the Defendants were plainly intending in the letter of 14 August to indicate that the Claimant could "buy out" of the litigation at that stage at a price. They were not suggesting that the Claimant would be entitled to set off costs orders in his favour, although that is how his solicitors chose to interpret it in the letter of 9 December. Moreover, the terms of the apology were (albeit in minor respects) to be re-negotiated. In these circumstances, having ruled against the Claimant's construction, I must move to the next submissions which relate to the basis upon which costs should be paid following the anticipated discontinuance. Mr Speker asks for costs on the indemnity basis because of a number of aspects of the Claimant's conduct. As I have already shown, this was foreshadowed in correspondence. Generally, he puts his argument on the footing that this is a case which should never have been brought, since the Claimant knew perfectly well that he had been negligent. Still less should it have been persisted in for so long in the teeth of the persuasive arguments adduced in correspondence. At least, for example, when the Master upheld qualified privilege in September 2007, it is said that he should have bowed to the inevitable. Mr Eardley argues for the Claimant that it was reasonable for him to hold on in the hope of obtaining an apology relating purely to the "admission" question. That is unrealistic, however, since it was always inconceivable that any such apology would be offered without it being made clear that the allegation of actual negligence was well founded. I turn to Mr Speker's more specific points. Ordinarily, following a discontinuance, the costs would be payable on the standard basis but the court has a power to award indemnity costs in what are regarded as exceptional circumstances: see CPR 38.6(1). The following test was suggested by Waller LJ in Excelsior Commercial and Industrial Holdings v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879: "The question will always be: is there something in the conduct of the action or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs?" The learned editors of Gatley on Libel & Slander (11th edn) observe: "Following the introduction of CPR the threshold for an assessment on an indemnity basis has been lowered. It does not require a finding of some lack of moral probity or conduct deserving of moral condemnation on the part of the paying party. It is sufficient if the litigation has been conducted in a way which is unreasonable, though the unreasonableness must be of a high degree, not merely wrong or misguided." Two aspects of the Claimant's behaviour, albeit linked, that are relied upon by Mr Speker are his pleading and persistence in the allegation of malice against Mr Ford and his stubborn refusal to accept reasonable proposals of settlement as the case has progressed. There is a connection in the sense that the Claimant has from time to time cited the strength of his case in malice as a reason for turning down a proposal of settlement. There is no need for me to recite all that the parties have said in witness statements, in pleadings and in correspondence on the subject of malice, but I would cite two matters in particular. A full explanation was given in a letter from the Defendants' solicitors of 26 September 2007 (shortly after the Master's ruling on qualified privilege) as to why the Claimant was likely to fail. Of course, in general terms one can often take arguments in solicitors' correspondence with a pinch of salt, but the arguments advanced in that letter are particularly compelling and should not have been ignored. As I have already noted, the explanation for rejecting the offer of settlement was that the Claimant was holding out for an apology over the "admission" issue. That was unreasonable. Also, I particularly deprecate the continued reliance upon malice (and indeed using it as a threat in the letter of 9 December) after it had been acknowledged on 18 July that an apology would be appropriate. Although the offer was made on a without prejudice basis, when addressing the question of costs at this stage I can naturally take it into account. Mr Speker reminded me of certain observations I had made in the case of McKenna v MGN Ltd on the risks attaching to casual or formulaic pleas of malice. The ruling was given on 16 July 2007 and, at [11], I commented: "There are numerous examples of libel actions in which the fact that malice has been pleaded causes delay and increased cost out of all proportion to its ultimate utility in furthering the overriding objective or arriving at a just result. There need to be available, therefore, in the modern era of civil litigation, suitable disciplinary mechanisms for discouraging unrealistic or tactical pleas of malice. People need to think carefully before alleging bad faith against journalists, newspapers groups or any other defendant just for the sake of it. If such allegations lead to additional cost, but ultimately do not stand up to scrutiny, it is quite right that this should be reflected in determining who should pay." Correspondingly, unreasonable reliance on a plea of malice would clearly be a relevant factor in determining whether or not costs should be payable on the indemnity basis. Mr Speker also points to the Claimant's conduct in relation to the example of negligence pleaded by way of justification. What is said is that the Claimant had, in relation to a client called Mrs Damle, plagiarised or copied a precedent deed of variation and an accompanying note from specialist Chancery counsel relating to a different person entirely. The essence of the negligence was that the Claimant merely copied the documents, more or less word for word, without applying his mind to the appropriateness of the drafting to the case in hand. Mr Speker has described the exercise as "mindless"; so much so that the Claimant had actually gone to the extent of sending the document off to Mrs Damle without deleting the paragraph whereby the Chancery counsel had invited her client to make contact, if necessary, at her chambers address (which obviously had no application to the Claimant). He also copied certain passages which were relevant to two properties in the case of the other client, whereas there was only one property to consider in relation to Mrs Damle. The consequence was that, so far as she was concerned, the deed contained inconsistent paragraphs. What is said is that the Claimant must have known that he had done this and that it was accordingly quite inappropriate for him to be suing over an allegation of negligence which could be justified. It is inherent in this submission, of course, that the costs should be on the indemnity basis throughout. In a letter to Mr Wills, a partner in the firm of solicitors for whom he had been working in relation to Mrs Damle, he asserted that the trust was drafted by counsel and that a note was supplied with the draft and sent to Mrs Damle (stating that the trust may not be effective with regard to inheritance tax if the clause allowing her to live in the house remained in the deed). This clearly gave the impression that the trust had been drafted by counsel with Mrs Damle in mind and acting on her behalf. In fact, of course, although the documents had been drafted by counsel, they related to a completely different client. These untrue statements, therefore, are also relied upon by Mr Speker as relevant to the issue of indemnity costs. It was admitted in the amended reply, on 22 May 2008, that paragraph 5 of the plagiarised note contradicted paragraph 4. The explanation was that paragraph 5 was "included in error" and that it would have been evident "to any competent solicitor (and indeed anyone who read the draft deed and note)" that paragraph 5 had been included in error. I do not find this very compelling. My attention was also drawn to the witness statement of Mrs Damle prepared for the purposes of this litigation, in which she made the comment: "I find it outrageous that, having relied upon Mr Wakefield to advise me properly and to ensure that the work done on my behalf was to my benefit, he now claims that I am responsible for the negligent preparation of the deed of variation." Mr Speker is relying not only upon the negligence itself but upon the fact that the Claimant sought to blame an innocent third party, namely Mrs Damle, by asserting that she had given him conflicting instructions. It is perhaps worth clarifying that Mr Speker is not arguing that the Claimant should, in some way, be punished for his conduct before this litigation began but rather, in view of his earlier behaviour, that it was completely unreasonable for the Claimant to launch and persist in this litigation and to claim vindication which was clearly unwarranted. I do find the conduct of the Claimant in the course of this litigation to have been unreasonable and I see no reason why the Defendants should be out of pocket for having had to defend it for so long. Accordingly, I accede to the submission that the costs should be awarded on the indemnity basis throughout. I am asked to order a payment on account of costs, which is nowadays becoming the standard practice. I think the right order, in all the circumstances, is that the Claimant should pay £45,000 by 13 March 2009.

COURT OF APPEAL FOR ONTARIO CITATION: R. v. Doolan, 2015 ONCA 340 DATE: 20150512 DOCKET: C58638 Simmons, Tulloch and Huscroft JJ.A. BETWEEN Her Majesty the Queen Respondent and Christopher James Doolan Appellant Bruce Simpson, for the appellant Karen Papadopoulos, for the respondent Heard and released orally: April 9, 2015 On appeal from the conviction entered on September 30, 2013 by Justice C.S. Dorval of the Ontario Court of Justice. ENDORSEMENT [1] The appellant has not met the onus of establishing either that his presumptively valid guilty plea was invalid or that he suffered prejudice amounting to a miscarriage of justice arising from the conduct of his trial counsel. [2] To be valid, a guilty plea must be voluntary, unequivocal and fully informed.  The evidence adduced on appeal demonstrates that the appellant made a conscious decision to plead guilty to aggravated assault some considerable time after the charges were laid and after consulting with three lawyers. [3] The appellant had the opportunity to review the disclosure prior to pleading guilty.  Moreover, he understood that a guilty plea to an aggravated assault charge could result in a jail term and that, as a result of his agreement to plead guilty, and despite the very serious injuries suffered by the victim, the Crown had agreed to drop other charges and seek a jail term of no more than six months.  Although at the time of his guilty plea, the appellant did not agree with all the facts read in before the sentencing judge (such as that he picked up the glass before striking the victim over the head with it), his plea was in no way equivocal. [4] As for the appellant’s claim of ineffective assistance of counsel, on our review of the record, the appellant has not demonstrated prejudice amounting to a miscarriage of justice because he has not established, based on his current version of the events, a reasonable probability [1] that he would not have been convicted of aggravated assault following a trial.  The appellant claims that he initially struck the victim over the head while holding glass as a reaction to being struck by the victim and that he did not subsequently either deliberately or recklessly strike the victim.  In our view, having regard to the injuries suffered by the victim and the statements given by the third party witness on whom the appellant seeks to rely, the latter claim is untenable. [5] The appeal is therefore dismissed. “Janet Simmons J.A.” “M. Tulloch J.A.” “Grant Huscroft J.A.” [1] In this context, a reasonable probability lies somewhere between a mere possibility and a likelihood: R. v. Joanisse , [1995] O.J. No.2883 (C.A.), at para. 80; leave to appeal to S.C.C. refused, [1996] S.C.C.A. No. 347.

Wednesday, 5th November 2003 LORD JUSTICE AULD: Jacob J will give the first judgment. MR JUSTICE JACOB: This is an appeal by permission of Mantell LJ from the judgment of His Honour Judge Zucker QC. It is the claimant's appeal in an action for personal injuries. The claimant suffered an accident in the office block where she was employed by Arthur Anderson. She had worked in the building concerned for some time, but not on the floor where the accident occurred: she had worked in other parts of the building. Her employers, Arthur Anderson, had recently taken over the fifth floor. She was employed as a Systems Analyst and she was going to the fifth floor, for the first time, in order to retrieve some software from the software library which had recently been moved to the fifth floor. Previously it had been in the basement. She was given instructions as to where the library was, but they were inadequate, in that she was merely told to turn left out of the lift. This she did. She walked along the corridor, she went past a door to her left, which on the floors which she did know had the lavatories in, and she went on to the only other door, used the key pad number which she had been given, opened the door, stepped forward -- it was darkish -- looking for the light. There was a step of just over six inches. She did not see it. She fell and suffered injuries, unfortunately rather more than one might get from simply falling down a step. In the room in which she had gone there was a lot of plant, because this was the plant room. On the outside of the doors to the plant room were a number of signs. They are best seen from the photographs. On the left-hand door there are three large signs. The top-most says, "Safety helmets must be worn beyond this point", and there is a picture of a man in a safety helmet. The second one says, "Use ear protection in this area". The third one says, "No smoking beyond this point." On the right-hand door is a much smaller sign, saying "Plant Room". The evidence which was accepted, was that the claimant did not see that, and would not have been able to see it, because she was not wearing her glasses. The question is whether the employers are liable in negligence. The case has not been run on the Occupiers Liability Act. I am not sure it would have made any difference if it had. The negligence as pleaded was that she was given misleading or inadequate directions as to where to go. The judge perhaps accepted that. What he says (in paragraph 19 of his judgment) is this: "I first have to consider whether negligence on the part of the defendants was a causative factor in this accident. If consideration is given to the particulars of negligence pleaded in the amended Particulars of Claim, the nub of the claimant's case is that she was misdirected to the plant room instead of the library. I readily conclude that on the information given to her and the fact that the code she was given opened the plant room door, Mrs Lovett was led to believe that the library was in the plant room. But that in itself, in my judgment, is not an allegation of negligence causative of the accident. It is not alleged that she was led into a trap or a dangerous situation, or that the step was inadequately marked. Nor did it of itself cause Mrs Lovett to fall." It may be that we are only dealing with allegations, rather than findings, of negligence. For my part I do not think it matters, because the operative part of the judge's judgment is really to be found in paragraphs 18 and 22. The nub of what he is saying -- and he had the advantage over us, although we have had very good photographs -- is that the claimant, if she had been looking where she was going, would have seen the step. He makes no express reference to the signs on the door when he comes to that finding; he simply says that she did not see a step which she could and should have seen, but that there were warning signs before then. I will put myself, as best I can, in the Appellant's position. She had to pull open the door. There would have been a natural transition in the nature of the flooring. What she saw was dark, but not so dark that she could not have seen, had she been looking, the plant and machinery. We have a photograph taken from the outside of the door showing how much plant and machinery could be seen. In effect, the judge came to the conclusion, having seen the site, that the cause of this accident was not any misdirection but simply that the claimant was paying inadequate attention. In short, the earlier inadequate direction of where to go was not the cause of this accident, nor was the fact that the plant room had this step, because in the judge's view -- and he has seen the place in question -- anyone opening the door ought to have seen the step. I would dismiss this appeal. LADY JUSTICE ARDEN: In this matter the judge set out the facts and then set out his conclusions, starting at paragraph 19. He begins by taking what I would call a pleading point. He held: "If consideration is given to the particulars of negligence pleaded in the amended Particulars of Claim, the nub of the claimant's case is that she was misdirected to the plant room instead of the library. I readily conclude that on the information given to her and the fact that the code she was given opened the plant room door, Mrs Lovett was led to believe that the library was in the plant room. But that in itself, in my judgment, is not an allegation of negligence causative of the accident. It is not alleged that she was led into a trap or a dangerous situation, or that the step was inadequately marked. Nor did it of itself cause Mrs Lovett to fall." Accordingly the judge puts the pleading point at the outset of his conclusions, and it clearly had a strong influence on him. It is correct that the critical particular of negligence was a simple alleged misdirection or inadequate direction to Mrs Lovett to the archive library, when the defendant should have foreseen that she might, mistakenly, enter the plant room and fall. But it was clear that the case was put on a wider basis than that. For example, there was in evidence the opinion of a Miss Catherine Daniels, Senior Environmental Health Officer at Hackney Commercial Standards, and her opinion was, as expressed in her letter of 18th January 1999, that the underlying reason for the accident was the breakdown in the system for handing over control of the newly converted archive room from the stock exchange to the defendants. She said in her letter: "Access to the room should have been denied until all the administrative procedures had been completed which would have included changing the access code on the door. Had this been changed before Miss Lovett mistakenly tried to gain access to the plant room, believing it to be the new archive store, the accident would not have occurred." Accordingly, the issues before the judge were wider than those pleaded before him. The judge, it seems to me, had to proceed on the basis that Mrs Lovett was given an inadequate direction as to where she would find the newly located archive and that it was an issue that the employer had failed to ensure that the key pad to the plant room was different from that of the other rooms forming part of the office accommodation. The judge then referred in his conclusions to authorities on the question of causation and he continued: "21. Whether I ask myself the question: was any act or omission of the defendants an effective cause of the accident or materially contributed to it, the answer I reach is: No they were not. Persons are often subject to misdirection. In my judgment the defendants' acts or omissions provide the circumstances in which the accident occurred, but no more. ... 22. The simple truth of this matter, in my judgment, is that Mrs Lovett fell because she did not see a step which she could and should have seen. Her mind was on other things and she was not paying attention. She failed to take sufficient care for her own safety and I find that that was the primary and sole cause of the accident she suffered." Mr Simon Browne for the defendants submits that the question of causation was a question of fact for the judge and that this court should be slow to interfere. He refers to paragraph 5.30 of Charlesworth on Negligence. The final passage was read by the judge and it contains the following: "When considering whether a claimant has established that injuries were caused or materially contributed to by negligence, the test to be applied is on the balance of probability and a cause can only be material if it is more than minimal, trivial or insignificant. Such an issue is eminently for the decision of the trial judge on the basis of medical or other evidence and the Court of Appeal should be slow to interfere." I bear that injunction in mind, and it is certainly correct, with respect, to primary issues of fact -- for instance, whether the type of injury caused could have been caused by the alleged negligence -- that the trial judge's findings will be such that the court will be very slow to set them aside. But where there are competing causes, it is open to this court to find that the judge's conclusion should be set aside if the judge fails to take into account causes which would have contributed to the loss but which are not apparent from the judge's final conclusion. In this particular case it is necessary to take into account that the directions given to Mrs Lovett were inadequate and, on that basis, it was foreseeable that she would direct herself to the plant room. It was reasonable for her to think that the plant room was the archive, given that its location on the fifth floor was identical to that of her office on the third floor. In the third floor office there was also no step down or sunken floor, such as there was at the front of the plant room. Moreover, there is no suggestion that she was not a diligent employee. She had been given directions to find an object which could have been in the room which she thought was the archive, and she fell as she was looking for the light switch, which was on the right-hand side. The room was not automatically lit as you pulled open the door. I have read the judge's conclusion in paragraph 22. He clearly considered that she could, and should, have seen the step. The judge had the benefit of a view of the premises and found in paragraph 18 of his judgment, before expressing his conclusion (as a result of his view) that, once the right-hand door to the plant room was open, the interior of the plant room nearest the door was illuminated, as was the shallow step leading into it. He held that the illumination came from the corridor lights and abundant natural light coming from a picture window to the right of the doors to the room. He made allowance for the fact that it was a different time of year when he did his view, that he expected the step to be there and that it was now marked by a broad yellow stripe. But, in expressing that conclusion, the judge also went on to say that her mind was on other things, that she was not paying attention and that she had failed to take sufficient care for her own safety. As I see it, the judge failed to give any weight to the fact that she was carrying out her employer's instructions and that, on that basis, it was foreseeable that she would not give primary attention to her own safety but would wish to carry out those instructions. Also as I see it, it cannot be said that that factor would have been a minimal or trivial cause of the injury that subsequently ensued. Accordingly, in my judgment, the judge has failed to take into account a factor which was relevant to causation. Accordingly this appeal should be allowed. LORD JUSTICE AULD: I agree with my Lord, Jacob J, that the appeal should be dismissed. I do so because, despite the form of the particulars of negligence and the way in which the judge constructed his judgment, on a proper analysis of his findings and reasoning, the matter falls to be determined on the issue of a breach of duty of care, not causation. The judge in paragraph 18 of his judgment, after considering the largely undisputed evidence and after a careful view of the site, found as a fact that the step would have been very obvious to Mrs Lovett as soon as she opened the door. This is how he put it at paragraph 18, part of which my Lady has cited. He said: "I have had the benefit of a view on the afternoon of 8 April 2003. What became clear as a result of the view is that once the right-hand door to the plant room is opened, the interior of the plant room nearest to the door is illuminated, as very obviously is the shallow step leading into it. The illumination comes from the corridor lights and the abundant natural light coming from the picture window to the right of the doors to the plant room. I allow for any difference in light between 8 April 2003 and 29 October 1998, the fact that I expected the step to be there, and that it is now marked by a broad yellow stripe." That was a finding that the step, in the condition and the position it was, was not a hazard to an employee of the respondent in the position of the appellant. It was not something that the respondent should reasonably have foreseen as likely to cause her harm in the event of her approaching the door with a view to entering it in the mistaken belief that it was the room she wanted. The judge later in his judgment, approaching the matter as one of causation, said this at paragraph 22: "The simple truth of this matter, in my judgment, is that Mrs Lovett fell because she did not see a step which she could and should have seen." That, in my view, put in the context of all the evidence in this case, was, in reality, a finding on the facts of no breach of duty by the respondent. No negligence. Given the evidence before the judge and the careful view that he undertook of the site, that was a powerful finding of mixed fact and law that I would not feel able to disturb. Accordingly, the appeal is dismissed. Order: Appeal dismissed with costs.

CRIMINAL APPEAL NO. OF 2008 Arising out of S.L.P. Crl. No.5453 of 2007 DR. ARIJIT PASAYAT, J. Leave granted. The challenge in this appeal is to the order passed by the learned Single Judge of the Mumbai High Court dismissing the Criminal Writ Petition filed by the appellant for quashing the proceedings pending before the Addl. Chief Metropolitan Magistrate, 37th Court, Eaplanade. The appellant was the accused No.10 in the said case. The allegation against the appellant was that while working with Maharashthon Housing and Area Development Authority in short MHADA the appellant allotted premises to various persons under his signature, issued rent receipts so that the said persons companyld claim that they were in possession of the tenements, though in fact, the tenements, in question, were vacant and were number in possession of MHADA. According to the prosecution, the appellant companymitted offences punishable under Sections 420, 465, 466, 467, 468 and 471 of the Indian Penal Code, 1986 in short IPC . Before the Trial Court, the appellant filed an application for discharge in terms of Section 228 of the Code of Criminal Procedure, 1973 in short the Cr.P.C. primarily on the ground that sanction was necessary for his prosecution. It was also submitted that proceedings companyld number have been initiated after his retirement in view of what has been stated under Rule 27 of the Maharashtra Civil Services Pension Rules, 1982 in short Pension Rules . The application was dismissed by the Trial Court. It was numbered that the appellant was in Government service till 31.8.1989. The companyplaint was filed on 17.7.1989 which was treated as an FIR and, therefore, Rule 27 of the Pension Rules have numberapplication. As regards the requirement of sanction in terms of Section 197 Cr.P.C. it was held that acts done by the accused did number fall within the ambit of official duty and, therefore, question of sanction did number arise. The High Court by the impugned order dismissed the petition affirming the view taken by the Trial Court. It was held that on 10.8.1992 when the companynizance was taken, the appellant had ceased to be a public servant. Learned companynsel for the appellant submitted that the acts done had clearly link with the official duty. The language of Section 197 Cr.P.C. is very clear that if the impugned acts were done when the accused was in service, sanction in terms of Section 197 Cr.P.C. is necessary. Learned companynsel for the State supported the orders impugned. The pivotal issue i.e. applicability of Section 197 Cr.P.C. needs careful companysideration. In Bakhshish Singh Brar v. Gurmej Kaur 1987 4 SCC 663 , this Court while emphasizing on the balance between protection to the officers and the protection to the citizens observed as follows It is necessary to protect the public servants in the discharge of their duties.In the facts and circumstances of each case protection of public officers and public servants functioning in discharge of official duties and protection of private citizens have to be balanced by finding cut as to what extent and how far is a public servant working in discharge of his duties or purported discharge of his duties, and whether the public servant has exceeded his limit. It is true that Section sic197 states that numbercognizance can be taken and even after companynizance having been taken if facts companye to light that the acts companyplained of were done in the discharge of the official duties then the trial may have to be stayed unless sanction is obtained. But at the same time it has to be emphasised that criminal trials should number be stayed in all cases at the preliminary stage because that will cause great damage to the evidence. The protection given under Section 197 Cr.P.C. is to protect responsible public servants against the institution of possibly vexatious criminal proceedings for offences alleged to have been companymitted by them while they are acting or adequate protection to public servants to ensure that they are number prosecuted for anything done by them, in the discharge of their official duties without reasonable cause, and if sanction is granted, to companyfer on the Government, if it chooses to exercise it, companyplete companytrol of the prosecution. This protection has certain limits and is available only when the alleged act done by the public servant is reasonably companynected with the discharge of his official duty and is number merely a cloak for doing the objectionable act. If in doing his official duty, he acted in excess of his duty, but there is a reasonable companynection between the act and the performance of the official duty, the excess will number be a sufficient ground to deprive the public servant from the protection. The question is number as to the nature of the offence such as whether the alleged offence companytained an element necessarily dependent upon the offender being a public servant, but whether it was companymitted by a public servant acting or purporting to act as such in the discharge of his official capacity. Before Section 197 Cr.P.C. can be invoked, it must be shown that the official companycerned was accused of an offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official capacity. It is number the duty which requires examination so much as the act, because the official act can be performed both in the discharge of the official duty as well as in dereliction of it. The act must fall within the scope and range of the official duties of the public servant companycerned. It is the quality of the act which is important and the protection of the section is available if the act falls within the scope and range of his official duty. There cannot be any universal rule to determine whether there is a reasonable companynection between the act done and the official duty, number is it possible to lay down any such rule. One safe and sure test in this regard would be to companysider if the omission or neglect on the part of the public servant to companymit the act companyplained of companyld have made him answerable for a charge of dereliction of his official duty if the answer to this question is in the affirmative, it may be said that such act was companymitted by the public servant while acting in the discharge of his official duty and there was every companynection with the act companyplained of and the official duty of the public servant. This aspect makes it clear that the companycept of Section 197 Cr.P.C. does number get immediately attracted on institution of the companyplaint case. At this juncture, we may refer to P. Arulswami v. State of Madras 1967 1 SCR 201, wherein this Court held as under It is number therefore every offence companymitted by a public servant that requires sanction for prosecution under Section 197 1 of the Criminal Procedure Code number even every act done by him while he is actually engaged in the performance of his official duties but if the act companyplained of is directly companycerned with his official duties so that, if questioned, it companyld be claimed to have been done by virtue of the office, then sanction would be necessary. It is the quality of the act that is important and if it falls within the scope and range of his official duties the protection companytemplated by Section 197 of the Criminal Procedure Code will be attracted. An offence may be entirely unconnected with the official duty as such or it may be companymitted within the scope of the official duty. Where it is unconnected with the official duty there can be numberprotection. It is only when it is either within the scope of the official duty or in excess of it that the protection is claimable. It would be appropriate to examine the nature of power exercised by the Court under Section 197 Cr.P.C. and the extent of protection it affords to public servants, who, apart from various hazards in discharge of their duties, in the absence of a provision like the one mentioned, may be exposed to vexatious prosecutions. Sections 197 1 and 2 of the Code and as under 197. 1 When any person who is or was a Judge or magistrate or a public servant number removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official duty, numbercourt shall take companynizance of such offence except with the previous sanction- a in the case of a person who is employed or, as the case may be, was at the time of companymission of the alleged offence employed, in companynection with the affairs of the Union, of the Central Government b in the case of a person who is employed or, as the case may be, was at the time of companymission of the alleged offence employed, in companynection with the affairs of a State, of the State Government xx xx No companyrt shall take companynizance of any offence alleged to have been companymitted by arty member of the Armed Forces of the Union while acting or purporting to act in the discharge of his official duty, except with the previous sanction of the Central Government. The section falls in the chapter dealing with companyditions requisite for initiation of proceedings. That is, if the companyditions mentioned are number made out or are absent, then numberprosecution can be set in motion. For instance, numberprosecution can be initiated in a Court of Session under Section 193, as it cannot take companynizance, as a companyrt of original jurisdiction, of any offence unless the case has been companymitted to it by a Magistrate or unless the Code expressly provides for it. And the jurisdiction of a Magistrate to take companynizance of any offence is provided by Section 190 of the companye, either on receipt of a companyplaint, or upon a police report or upon information received from any person other than a police officer, or upon his knowledge that such offence has been companymitted. So far public servants are companycerned, the companynizance of any offence, by any companyrt, is barred by Section 197 of the Code unless sanction is obtained from the appropriate authority, if the offence, alleged to have been companymitted, was in discharge of the official duty. The section number only specifies the persons to whom the protection is afforded but it also specifies the companyditions and circumstances in which it shall be available and the effect in law if the companyditions are satisfied. The mandatory character of the protection afforded to a public servant is brought out by the expression numbercourt shall take companynizance of such offence except with the previous sanction. Use of the words numberand shall make it abundantly clear that the bar on the exercise of power by the companyrt to take companynizance of any offence is absolute and companyplete. Very companynizance is barred. That is, the companyplaint cannot be taken numberice of. According to Blacks Law Dictionary the word companynizance means jurisdiction or the exercise of jurisdiction or power to try and determine causes. In companymon parlance it means taking numberice of. A companyrt, therefore, is precluded from entertaining a companyplaint or taking numberice of it or exercising jurisdiction if it is in respect of a public servant who is accused of an offence alleged to have been companymitted during the discharge of his official duty. Such being the nature of the provision the question is how should the expression any offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official duty be understood? What does it mean? Official act or official duty means an act or duty done by an officer in his official capacity. In B. Saha v. M.S Kocha 1979 4 SCC 177 it was held SCC pp.184-85, para 17 The words any offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official duty employed in Section 197 l of the Code, are capable of a narrow as well as a wide interpretation. If these words are companystrued too narrowly, the section will be rendered altogether sterile, for, it is numberpart of an official duty to companymit an offence, and never can be. In the wider sense, these words will take under their umbrella every act companystituting an offence, companymitted in the companyrse of the same transaction in which the official duty is performed or purports to be performed. The right approach to the import of these words lies between these two extremes. While on the one hand, it is number every offence companymitted by a public servant while engaged in the performance of his official duty, which is entitled to the protection of Section 197 1 , an act companystituting an offence, directly and reasonably companynected with his official duty will require sanction for prosecution under the said provision. Use of the expression official duty implies that the act or omission must have been done by the public servant in the companyrse of his service and that it should have been in the public service and discharge of his duty. The section does number extend its protective companyer to every act or omission done by a public servant in service but restricts its scope of operation to only those acts or omissions which are done by a public servant in discharge of official duty. It has been widened further by extending protection to even those acts or omissions which are done in purported exercise of official duty that is under the companyour of office. Official duty, therefore, implies that the act or omission must have been done by the public servant in the companyrse of his service and such act or omission must have been performed as part of duty which further must have been official in nature. The section has, thus, to be companystrued strictly, while determining its applicability to any act or omission in the companyrse of service. Its operation has to be limited to those duties which are discharged in the companyrse of duty. But once any act or omission has been found to have been companymitted by a public servant in the discharge of his duty then it must be given liberal and wide companystruction so far its official nature is companycerned. For instance a public servant is number entitled to indulge in criminal activities. To that extent the section has to be companystrued narrowly and in a restricted manner. But once it is established that an act or omission was done by the public servant while discharging his duty then the scope of its being official should be companystrued so as to advance the objective of the section in favour of the public servant. Otherwise the entire purpose of affording protection to a public servant without sanction shall stand frustrated. For instance a police officer in the discharge of duty may have to use force which may be an offence for the prosecution of which the sanction may be necessary. But if the same officer companymits an act in the companyrse of service but number in the discharge of his duty and without any justification therefor then the bar under Section 197 of the Code is number attracted. To what extent an act or omission performed by a public servant in the discharge of his duty can be deemed to be official was explained by this Court in Matajog Dobey v. H.C. Bhari 1955 2 SCR 925 . The offence alleged to have been companymitted by the accused must have something to do, or must be related in some manner, with the discharge of official duty. There must be a reasonable companynection between the act and the discharge of official duty the act must bear such relation to the duty that the accused companyld lay a reasonable claim , but number a pretended or fanciful claim, that he did it in the companyrse of the performance of his duty. If on facts, therefore, it is prima facie found that the act or omission for which the accused was charged had reasonable companynection with discharge of his duty then it must be held to be official, to which applicability of Section 197 of the Code cannot be disputed. In S.A. Venkataraman v. State 1958 SCR 1040 , this Court has held There is numberhing in the words used in Section 6 1 to even remotely suggest that previous sanction was necessary before a companyrt companyld take companynizance of the offences mentioned therein in the case of a person who had ceased to be a public servant at the time the companyrt was asked to take companynizance, although he had been such a person at the time the offence was companymitted. The above position was illuminatingly highlighted in State of Maharashtra v. Dr. Budhikota Subbarao 1993 3 SCC 339 . When the newly worded section appeared in the Code Section 197 with the words, when any person who is or was a Judge or Magistrate or a public servant as against the truncated expression in the companyresponding provision of the old Code of Criminal Procedure, 1898 a companytention was raised before this Court in Kalicharan Mahapatra v. State of Orissa 1998 6 SCC 411 that the legal position must be treated as changed even in regard to offences under the old Act and new Act also. The said companytention was, however, repelled by this Court wherein a two-Judge Bench has held thus A public servant who companymitted an offence mentioned in the Act, while he was a public servant, can be prosecuted with the sanction companytemplated in Section 197 of the Act if he companytinues to be a public servant when the companyrt takes companynizance of the offence. But if he ceases to be a public servant by that time, the companyrt can take companynizance of the offence without any such sanction. The companyrect legal position, therefore, is that an accused facing prosecution for offences under the old Act or new Act cannot claim any immunity on the ground of want of sanction, if he ceased to be a public servant on the date when the companyrt took companynizance of the said offences. But the position is different in cases where Section 197 of the Code has application. Section 197 l provides that when any person who is or was a public servant number removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official duty, numbercourt shall take companynizance of such offence except with the previous sanction a in the case of a person who is employed of, as the case may be, was at the time of companymission of the alleged offence employed, in companynection with the affairs of the Union, of the Central Government, and b in the case of a person who is employed or, as the case may be, was at the time of companymission of the alleged offence employed, in companynection with the affairs of a State, or the State Government. We may mention that the Law Commission in its 41st Report in para 15.123 while dealing with Section 197, as it then stood, observed It appears to us that protection under the section is needed as much after retirement of the public servant as before retirement. The protection afforded by the section would be rendered illusory if it were open to a private person harbouring a grievance to wait until the public servant ceased to hold his official position, and then to lodge a companyplaint. The ultimate justification for the protection companyferred by Section 197 is the public interest in seeing that official acts do number lead to needless or vexatious prosecution. It should be left to the Government to determine from that point of view the question of the expediency of prosecuting any public servant. It was in pursuance of this observation that the expression was came to be employed after the expression is to make the need for sanction applicable even in cases where a retired public servant is sought to be prosecuted. The above position was highlighted in R. Balakrishna Pillai v. State of Kerala 1996 1 SCC 478 , State of H.P. v. P. Gupta 2004 2 SCC 349 , State of Orissa v. Ganesh Chandra Jew 2004 8 SCC 40 , S.K. Zutshi v. Bimal Debnath 2004 8 SCC 31 and Rakesh Kumar Mishra v. State of Bihar and others 2006 1 SCC 557 . The High Court, therefore, was in error in observing that sanction was number necessary because the expression used is was. But the question is really of academic nature because the alleged offences cannot be related to any official duty. The State of Kerala v. V. Padmanabhnan Nair 1999 5 SCC 690 it was observed as follows In S.A. Venkataraman v. State AIR 1958 SC 107 and in C.R. Bansi v. State of Maharashtra 1970 3 SCC 537 this Court has held that There is numberhing in the words used in Section 6 1 to even remotely suggest that previous sanction was necessary before a Court companyld take a companynizance of the offences mentioned therein the case of a person who had ceased to be a public servant at the time the companyrt was asked to take companynizance, although he had at the time the offence was companymitted. That apart, the companytention of the respondent that for offences under Sections 406 and 409 read with Section 120-B of IPC sanction under Section 197 of the Code is a companydition precedent for launching the prosecution is equally fallacious. This Court has stated the companyrect legal position in. Srreekantiah Ranatta Munnipslli v. State of Bombay AIR 1955 SC 287 and also Amrik Singh v. State of Pepsu AIR 1955 SC 309 that it is number every offence companymitted by a public servant which requires sanction for prosecution under Section 197 of the Code, number even every act done by him while he is actually engaged in the performance of his official duties. Following the above legal position it was held in Harihar Prasad 1972 3 SCC 89 as follows The next point was with regard to companysent or sanction. There is numberdoubt that in respect of B.P. Sinha companysent was properly given by the Deputy Commissioner. So companysent was also given in respect of N.K. Banerjee and Harihar Prasad by the Chief Secretary. This is number a case of sanction or companysent under Section 196-A of the Code of Criminal Procedure. On the question of the applicability of Section 197 of the Code of Criminal Procedure, the principle laid down in two cases, namely, Shreekantiah Ramayya Munipalli v. State of Bombay and Amrik Singh State of Pepsu was as follows It is number every offence companymitted by a public servant that requires sanction for prosecution under Section 197 1 of the Criminal Procedure Code number even every act done by him while he is actually engaged in the performance of his official duties but if the act companyplained of is directly companycerned with his official duties so that, if questioned, it companyld be claimed to have been done by virtue of the office, then sanction would be necessary. The real question therefore is whether the acts companyplained of in the present case were directly companycerned with the official duties of the three public servants. As far as the offence of criminal companyspiracy punishable under Section 120-B, read with Section 409 of the Indian Penal Code is companycerned and also Section 5 2 of the Prevention of Corruption Act, are companycerned they cannot be said to be of the nature mentioned in Section 197 of the Code of Criminal Procedure. To put it shortly, it is numberpart of the duty of a public servant, while discharging his official duties, to enter into a criminal companyspiracy or to indulge in criminal misconduct. Want of sanction under Section 197 of the Code of Criminal Procedure is, therefore, numberbar. Learned Single Judge of the High Court declined to follow the aforesaid legal position in the present case on the sole premise that the offence under Section 406 of IPC has also been fastened against the accused besides Section 409 of IPC. We are unable to discern the rationale in the distinguishment. Section 406 and 409 of IPC are companynate offences in which the companymon companyponent is criminal breach of trust. When the offences in which offence under Section 406 is a public servant of holding any one of the position listed in the Section the offence would escalate to Section 409 of the Penal Code.

Order of the President of the Court of First Instance of 31 October 1998. - Anthony Goldstein v Commission of the European Communities. - Admissibility. - Case T-100/98 R. European Court reports 1998 Page 0000 Summary Keywords Non-contractual liability - Conditions - Publication by the Commission, for information purposes, of a fact-sheet concerning the recognition of diplomas and qualifications in medical practice - Fault on the part of the Commission - None (EC Treaty, Art, 215, second para.) Summary There is manifestly no foundation in law in the case of an application brought by a national of a Member State holding general and specialist qualifications in medicine, gained in that State, seeking compensation for damage allegedly suffered as a result of the Commission's publication of a fact-sheet concerning the recognition of diplomas and qualifications for general and specialist medical practitioners which, in the view of the applicant, inadequately reflects the rules applicable to specialist medical practitioners in the aforementioned Member State. No finding of fault can be made against the Commission where the fact-sheet contains, for persons who wish to obtain recognition of their diploma or qualifications, a general overview of the applicable Community law, a list of the Community and national legislative instruments in force and a list of useful addresses, accompanied by a disclaimer warning that such guidance as is given on Community law is for information purposes only. Furthermore, inasmuch as the fact-sheet cannot, by reason of its nature and content, have any effect as regards the rules applicable to specialist medical practitioners trained and established in a particular Member State, the applicant is in no position to invoke any personal damage arising out of the information published by the Commission.

Case C-118/08 Transportes Urbanos y Servicios Generales SAL v Administración del Estado (Reference for a preliminary ruling from the Tribunal Supremo) (Procedural autonomy of the Member States – Principle of equivalence – Action for damages against the State – Breach of European Union law – Breach of the Constitution) Summary of the Judgment 1. Preliminary rulings – Jurisdiction of the Court – Limits (Art. 234 EC) 2. European Union law – Rights conferred on individuals – Infringement by a Member State – Obligation to make good damage caused to individuals 1. Although it is not the task of the Court, in preliminary ruling proceedings, to rule upon the compatibility of provisions of national law with the legal rules of the European Union, it has jurisdiction to give the national court full guidance on the interpretation of European Union law in order to enable it to determine the issue of compatibility for the purposes of the case before it. To that end, the origin – whether legislative, regulatory or judicial – of the rules of national law whose compatibility with European Union law the national court must assess, in the light of the guidance on interpretation provided by the Court, has no effect whatsoever on the latter’s jurisdiction to rule on the reference for a preliminary ruling. (see paras 23-24) 2. European Union law precludes the application of a rule of a Member State under which an action for damages against the State, alleging a breach of that law by national legislation which has been established by a judgment of the Court of Justice of the European Communities given pursuant to Article 226 EC, can succeed only if the applicant has previously exhausted all domestic remedies for challenging the validity of a harmful administrative measure adopted on the basis of that legislation, when such a rule is not applicable to an action for damages against the State alleging breach of the Constitution by national legislation which has been established by the competent court. The principle of equivalence requires that all the rules applicable to actions apply without distinction to actions alleging infringement of European Union law and to similar actions alleging infringement of national law. In the light of their purpose and their essential characteristics, the two actions for damages concerned may be regarded as similar since, first, they have exactly the same purpose, namely compensation for the loss suffered by the person harmed as a result of an act or an omission of the State and, second, the only difference between the two actions concerned is the fact that the breaches of law on which they are based are established, in respect of one, by the Court in a judgment given pursuant to Article 226 EC and, in respect of the other, by a judgment of the competent national court. That fact, in the absence of other factors demonstrating that there are further differences between those actions, cannot suffice to establish a distinction between those two actions in the light of the principle of equivalence. Accordingly, the principle of equivalence precludes the application of such a rule. (see paras 33, 36, 43-46, 48 and operative part) JUDGMENT OF THE COURT (Grand Chamber) 26 January 2010 (*) (Procedural autonomy of the Member States – Principle of equivalence – Action for damages against the State – Breach of European Union law – Breach of the Constitution) In Case C‑118/08, REFERENCE for a preliminary ruling under Article 234 EC from the Tribunal Supremo (Spain), made by decision of 1 February 2008, received at the Court on 18 March 2008, in the proceedings Transportes Urbanos y Servicios Generales SAL v Administración del Estado, THE COURT (Grand Chamber), composed of V. Skouris, President, A. Tizzano (Rapporteur), J.N. Cunha Rodrigues, K. Lenaerts, J.-C. Bonichot, R. Silva de Lapuerta and C. Toader, Presidents of Chambers, C.W.A. Timmermans, A. Rosas, K. Schiemann, T. von Danwitz, A. Arabadjiev and J.-J. Kasel, Judges, Advocate General: M. Poiares Maduro, Registrar: M. Ferreira, Principal Administrator, having regard to the written procedure and further to the hearing on 22 April 2009, after considering the observations submitted on behalf of: – Transportes Urbanos y Servicios Generales SAL, by C. Esquerrá Andreu, abogado, – the Spanish Government, by J. López-Medel Báscones, acting as Agent, – the Commission of the European Communities, by R. Vidal Puig and M. Afonso, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 9 July 2009, gives the following Judgment 1 This reference for a preliminary ruling concerns the interpretation of the principles of effectiveness and equivalence in the light of the rules applicable in the Spanish legal system to actions for damages against the State in respect of a breach of European Union law. 2 The reference has been made in proceedings between Transportes Urbanos y Servicios Generales SAL (‘Transportes Urbanos’) and the Administración del Estado regarding the dismissal of the action for damages brought by that company against the Spanish State in respect of a breach of European Union law. Legal context The Sixth Directive 3 Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 95/7/EC of 10 April 1995 (OJ 1995 L 102, p. 18) (‘the Sixth Directive’), provides in Article 17(2) and (5), in the version resulting from Article 28f thereof: ‘2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay: (a) value added tax due or paid within the territory of the country in respect of goods or services supplied or to be supplied to him by another taxable person; (b) value added tax due or paid in respect of imported goods within the territory of the country; (c) value added tax due pursuant to Articles 5(7)(a), 6(3) and 28a(6); … 5. As regards goods and services to be used by a taxable person both for transactions covered by paragraphs 2 and 3, in respect of which value added tax is deductible, and for transactions in respect of which value added tax is not deductible, only such proportion of the value added tax shall be deductible as is attributable to the former transactions. This proportion shall be determined, in accordance with Article 19, for all the transactions carried out by the taxable person. …’ 4 Article 19 of the Sixth Directive sets out the criteria for the calculation of the deductible proportion provided for in the first subparagraph of Article 17(5) thereof. National law 5 Article 163 of the Spanish Constitution (‘the Constitution’) provides: ‘Where a court or tribunal considers, when hearing a case, that a provision having the status of law, which is applicable to the case and upon the validity of which the judgment depends, may be contrary to the Constitution, it shall refer the matter to the Tribunal Constitucional [Constitutional Court] in the circumstances, according to the procedure and with the effects laid down by law, such effects in no case being suspensive.’ 6 Law 37/1992 of 28 December 1992 on value added tax (BOE No 312 of 29 December 1992, p. 44247), as amended by Law 66/1997 of 30 December 1997 (BOE No 313 of 31 December 1997, p. 38517; ‘Law 37/1992’), provides for limitations on the right of a taxable person to deduct value added tax (‘VAT’) on the purchase of goods or services which are subsidised. Those limitations entered into force as of the 1998 tax year. 7 Law 37/1992 also provides that every taxable person is required to file periodic tax returns, in which he must calculate the amounts of VAT due by him (‘self-assessment’). 8 In accordance with General Tax Law 58/2003 of 17 December 2003 (BOE No 303 of 18 December 2003, p. 44987), the taxable person has the right to request that his self-assessments be rectified and, where appropriate, to require that overpayments be refunded. According to Articles 66 and 67 of that law, the limitation period for the exercise of that right is four years, which essentially starts to run from the day following that on which the overpayment was made or that of the expiry of the time-limit for submitting the self-assessment if the overpayment was made by that time-limit. The dispute in the main proceedings 9 By judgment of 6 October 2005 in Case C-204/03 Commission v Spain [2005] ECR I‑8389, the Court held in essence that the limitations on the right to deduct VAT laid down in Law 37/1992 were incompatible with Articles 17(2) and (5) and 19 of the Sixth Directive. 10 Transportes Urbanos, which had made self-assessments for the tax years 1999 and 2000 in accordance with Law 37/1992, did not avail itself of its right to request, pursuant to General Tax Law 58/2003, the rectification of those self-assessments. It is common ground that such a right was time-barred at the date on which the Court delivered its judgment in Commission v Spain. 11 Transportes Urbanos then brought an action for damages before the Council of Ministers against the Spanish State. In that action, it submits that it suffered loss in the amount of EUR 1 228 366.39 on account of breach by the Spanish legislature of the Sixth Directive, that breach having been established by the Court in Commission v Spain. That amount corresponds to the VAT payments unduly collected by the Spanish tax authorities during the tax years 1999 and 2000 and the repayments which Transportes Urbanos could have claimed for those years. 12 By decision of 12 January 2007, the Council of Ministers dismissed the application of Transportes Urbanos, holding that its failure to request rectification of those self-assessments within the period prescribed for that purpose had broken the direct causal link between the breach of European Union law alleged against the Spanish State and the loss allegedly sustained by that company. 13 That decision of the Council of Ministers is based in particular on two judgments of the Tribunal Supremo (Spanish Supreme Court) of 29 January 2004 and 24 May 2005 (‘the contested case-law’), according to which actions for damages against the State in respect of a breach of European Union law are subject to a rule requiring prior exhaustion of administrative and judicial remedies against a challenged administrative measure adopted pursuant to national legislation contrary to European Union law. 14 On 6 June 2007, Transportes Urbanos brought an action against the decision of the Council of Ministers before the Tribunal Supremo. The order for reference and the question referred 15 In its order for reference, the Tribunal Supremo recalls that, according to the contested case-law, the bringing of an action for damages against the State on the basis of the unconstitutionality of legislation is not subject, unlike the same action based on the incompatibility of that legislation with European Union law, to any condition requiring prior exhaustion of remedies against the challenged administrative measure based on that legislation. 16 The reason for the difference in treatment between those two actions arises from the differences between the actions which can be brought against an administrative measure, according to whether those actions are based on the incompatibility of that measure with European Union law or on the breach of the Constitution by the national legislation pursuant to which that measure was adopted. 17 According to the contested case-law, since national legislation is presumed to be consistent with the Constitution, administrative measures based on that legislation are also presumed to be ‘lawful’. It follows that neither the administrative authorities nor the judicial authorities may annul those measures unless the legislation has been declared void on the ground that it is contrary to the Constitution, by a judgment of the Tribunal Constitucional following an action seeking a declaration of unconstitutionality brought in accordance with Article 163 of the Constitution, an action which only the court hearing the matter may refer. 18 In those circumstances, if the prior exhaustion of administrative and judicial remedies against a harmful administrative measure were required as a condition before an action for damages alleging a breach of the Constitution could be brought, that would place on individuals the burden of challenging the administrative measure enacted pursuant to the allegedly unconstitutional legislation, by recourse, first, to the administrative remedy and, second, to the judicial remedy and by exhausting all appeal procedures until such time as one of the courts hearing the matter decides finally to raise the question of the unconstitutionality of that legislation before the Tribunal Constitucional. Such a situation would be disproportionate and have unacceptable consequences. 19 On the other hand, if the competent administrative or judicial authorities hold that an administrative measure has been enacted pursuant to legislation which is incompatible with European Union law, they are bound, in accordance with the settled case-law of the Court, to disapply that legislation and the administrative measures adopted on the basis of that legislation. Accordingly, it is possible to apply directly to those authorities for annulment of the harmful administrative measure and thus to obtain complete redress. 20 In addition, according to the contested case-law, the existence of a breach of European Union law which could lead to a finding of State liability must be established by a preliminary ruling of the Court. The effects of a judgment of the Court given under Article 267 TFEU are not comparable to those of a judgment of the Tribunal Constitucional declaring legislation to be unconstitutional, in that only the decision of the Tribunal results in that legislation’s being void with retroactive effect. 21 It is in those circumstances that the Tribunal Supremo decided to stay proceedings and to refer the following question to the Court for a preliminary ruling: ‘Is it contrary to the principles of equivalence and effectiveness that the Tribunal Supremo should apply differing legal principles in the [contested case-law] to actions to establish the financial liability of the State as legislature in respect of administrative measures enacted pursuant to legislation which has been declared unconstitutional and to such actions in respect of measures enacted pursuant to a rule which has been held to be contrary to [European Union] law?’ Jurisdiction of the Court 22 According to the Spanish Government, the Court lacks jurisdiction to rule upon the compatibility with European Union law of judicial decisions such as those of which the contested case-law consists, since the Tribunal Supremo itself is able to amend that case-law if it finds that it is not compatible with European Union law. 23 It must be recalled in this respect that, although it is not the task of the Court, in preliminary ruling proceedings, to rule upon the compatibility of provisions of national law with the legal rules of the European Union, it has repeatedly held that it has jurisdiction to give the national court full guidance on the interpretation of European Union law in order to enable it to determine the issue of compatibility for the purposes of the case before it (see, to that effect, inter alia, Case C‑292/92 Hünermund and Others [1993] ECR I‑6787, paragraph 8, and Case C‑380/05 Centro Europa 7 [2008] ECR I‑349, paragraph 50). 24 To that end, as the Advocate General observed at point 13 of his Opinion, the origin – whether legislative, regulatory or judicial – of the rules of national law whose compatibility with European Union law the national court must assess, in the light of the guidance on interpretation provided by the Court, has no effect whatsoever on the latter’s jurisdiction to rule on the reference for a preliminary ruling. 25 Moreover, according to settled case-law, in the context of the cooperation between the Court of Justice and the courts of the Member States provided for by Article 267 TFEU, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of each case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of European Union law, the Court is bound, in principle, to give a ruling (see, to that effect, inter alia, Case C‑379/98 PreussenElektra [2001] ECR I‑2099, paragraph 38; Case C‑18/01 Korhonen and Others [2003] ECR I‑5321, paragraph 19; and Joined Cases C‑261/07 and C‑299/07 VTB-VAB and Galatea [2009] ECR I‑0000, paragraph 32). 26 In the present case, the Court is not called upon to interpret national law or a judgment of a national court, but to provide the referring court with guidance on the interpretation of the principles of effectiveness and equivalence, so as to permit it to assess whether, under European Union law, it is required to disapply national rules relating to actions for damages against the State in respect of a breach of that law by national legislation (see, to that effect, Case C‑119/05 Lucchini [2007] ECR I‑6199, paragraph 46). 27 The Court therefore has jurisdiction to rule on the present reference for a preliminary ruling. The question referred for a preliminary ruling 28 By its question, the national court asks in essence whether European Union law precludes a rule of a Member State under which actions for damages against the State, alleging a breach of that law by national legislation, are subject to a condition requiring prior exhaustion of remedies against a harmful administrative measure, when those actions are not subject to such a condition where they allege a breach of the Constitution by national legislation. Preliminary observations 29 In order to answer that question, it is to be recalled at the outset that, in accordance with settled case-law, the principle of State liability for loss and damage caused to individuals as a result of breaches of European Union law for which the State can be held responsible is inherent in the system of the treaties on which the European Union is based (see, to that effect, Joined Cases C-6/90 and C-9/90 Francovich and Others [1991] ECR I-5357, paragraph 35; Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR I-1029, paragraph 31; and Case C‑445/06 Danske Slagterier [2009] ECR I‑0000, paragraph 19). 30 In this respect, the Court has held that individuals harmed have a right to reparation where three conditions are met: the rule of European Union law infringed must be intended to confer rights on them; the breach of that rule must be sufficiently serious; and there must be a direct causal link between the breach and the loss or damage sustained by the individuals (see, to that effect, Danske Slagterier, paragraph 20 and case-law cited). 31 The Court has also had occasion to make clear that, subject to the right to reparation which thus flows directly from European Union law where those conditions are satisfied, it is on the basis of the rules of national law on liability that the State must make reparation for the consequences of the loss and damage caused, provided that the conditions for reparation of loss and damage laid down by national law are not less favourable than those relating to similar domestic claims (principle of equivalence) and are not so framed as to make it, in practice, impossible or excessively difficult to obtain reparation (principle of effectiveness) (see, to that effect, Case C‑224/01 Köbler [2003] ECR I‑10239, paragraph 58, and Case C‑524/04 Test Claimants in the Thin Cap Group Litigation [2007] ECR I‑2107, paragraph 123). 32 As the national court has observed, it is therefore in the light of those principles that the question referred must be examined. Principle of equivalence 33 In relation to the principle of equivalence, it should be borne in mind that, according to settled case-law, this requires that all the rules applicable to actions apply without distinction to actions alleging infringement of European Union law and to similar actions alleging infringement of national law (see, to that effect, Case C‑231/96 Edis [1998] ECR I‑4951, paragraph 36; Case C‑326/96 Levez [1998] ECR I‑7835, paragraph 41; Case C‑78/98 Preston and Others [2000] ECR I‑3201, paragraph 55; and Joined Cases C‑392/04 and C‑422/04 i-21 Germany and Arcor [2006] ECR I‑8559, paragraph 62). 34 However, that principle is not to be interpreted as requiring Member States to extend their most favourable rules to all actions brought in a certain field of law (Levez, paragraph 42; Case C‑343/96 Dilexport [1999] ECR I‑579, paragraph 27; and Case C‑63/08 Pontin [2009] ECR I‑0000, paragraph 45). 35 In order to determine whether the principle of equivalence has been complied with in the case in the main proceedings, it is therefore necessary to examine whether, in the light of their purpose and their essential characteristics, the action for damages brought by Transportes Urbanos, alleging breach of European Union law, and the action which that company could have brought on the basis of a possible breach of the Constitution may be regarded as similar (see, to that effect, Preston and Others, paragraph 49). 36 As regards the purpose of the two actions for damages referred to in the previous paragraph, the Court notes that they have exactly the same purpose, namely compensation for the loss suffered by the person harmed as a result of an act or an omission of the State. 37 As regards their essential characteristics, it should be borne in mind that the rule requiring prior exhaustion of all remedies, at issue in the main proceedings, draws a distinction between those actions, in that it requires that the applicant has previously exhausted the remedies against the harmful administrative measure solely where the action for damages alleges breach of European Union law by the national legislation pursuant to which that measure was adopted. 38 It should be pointed out that, contrary to what certain aspects of the contested case-law recalled in paragraph 20 of this judgment seem to suggest, reparation of the damage caused by a breach of European Union law by a Member State is not conditional on the requirement that the existence of such a breach must be clear from a preliminary ruling delivered by the Court (see, to that effect, Brasserie du pêcheur and Factortame, paragraphs 94 to 96; Joined Cases C‑178/94, C‑179/94 and C‑188/94 to C‑190/94 Dillenkofer and Others [1996] ECR I‑4845, paragraph 28; and Danske Slagterier, paragraph 37). 39 However, in the case in the main proceedings, Transportes Urbanos has expressly based its action for damages on the judgment in Commission v Spain, given pursuant to Article 226 EC, in which the Court found that Law 37/1992 was in breach of the Sixth Directive. 40 It is also clear from the order for reference that Transportes Urbanos brought this action before the Council of Ministers on account of the fact that the time-limits for requesting rectification of the self-assessments made in respect of the tax years 1999 and 2000 had expired by the date on which the judgment in Commission v Spain was delivered. 41 None the less, as was stated at paragraphs 12 and 13 of this judgment, that action was dismissed by the Council of Ministers precisely on the ground that Transportes Urbanos had not, prior to bringing that action, requested the rectification of its self-assessments. 42 However, according to the order for reference, if Transportes Urbanos had been able to base its action for damages on a judgment of the Tribunal Constitucional declaring the legislation in question to be void on the ground of breach of the Constitution, that action might have succeeded, irrespective of the fact that that company had not requested the rectification of those self-assessments before the time-limits for doing so had expired. 43 It appears from the foregoing considerations that, in the specific context which gave rise to the case in the main proceedings as described in the order for reference, the only difference between the two actions referred to in paragraph 35 of this judgment is the fact that the breaches of law on which they are based are established, in respect of one, by the Court in a judgment given pursuant to Article 226 EC and, in respect of the other, by a judgment of the Tribunal Constitucional. 44 This fact alone, in the absence of any mention in the order for reference of other factors demonstrating that there are further differences between the action for damages against the State actually brought by Transportes Urbanos and the action which it might have brought on the basis of a breach of the Constitution established by the Tribunal Constitucional cannot suffice to establish a distinction between those two actions in the light of the principle of equivalence. 45 In that situation, the two abovementioned actions may be regarded as similar for the purposes of the case-law referred to in paragraph 35 of this judgment. 46 It follows that, in the light of the circumstances described in the order for reference, the principle of equivalence precludes the application of a rule such as that at issue in the main proceedings. 47 In view of this conclusion, it is not necessary to examine the rule requiring prior exhaustion of the remedies in question in the case in the main proceedings in the light of the principle of effectiveness. 48 It follows from the foregoing that the answer to the question referred is that European Union law precludes the application of a rule of a Member State under which an action for damages against the State, alleging a breach of that law by national legislation which has been established by a judgment of the Court given pursuant to Article 226 EC, can succeed only if the applicant has previously exhausted all domestic remedies for challenging the validity of a harmful administrative measure adopted on the basis of that legislation, when such a rule is not applicable to an action for damages against the State alleging breach of the Constitution by national legislation which has been established by the competent court. 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 (Grand Chamber) hereby rules: European Union law precludes the application of a rule of a Member State under which an action for damages against the State, alleging a breach of that law by national legislation which has been established by a judgment of the Court of Justice of the European Communities given pursuant to Article 226 EC, can succeed only if the applicant has previously exhausted all domestic remedies for challenging the validity of a harmful administrative measure adopted on the basis of that legislation, when such a rule is not applicable to an action for damages against the State alleging breach of the Constitution by national legislation which has been established by the competent court. [Signatures] * Language of the case: Spanish.

OPINION OF ADVOCATE GENERAL TRSTENJAK delivered on 15 May 2012 ( ) Case C‑40/11 Yoshikazu Iida v Stadt Ulm (Reference for a preliminary ruling from the Verwaltungsgerichtshof Baden‑Württemberg (Germany)) ‛Article 6 TEU — Articles 20 TFEU and 21 TFEU — Articles 7, 24 and 51 of the Charter of Fundamental Rights of the European Union — Articles 2, 3, 7(2), 10 and 12 of Directive 2004/38/EC — Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms — A national of a Member State who is a minor and who has moved with her mother to another Member State — Right of a third-country national having custody rights to reside in his child’s State of origin — Scope of the Charter of Fundamental Rights of the European Union — Implementation of European Union law’ I – Introduction 1. The present request for a preliminary ruling concerns the question whether and, if so, to what extent and under what conditions, third-country nationals enjoy a right of residence under European Union law by virtue of their family and personal relationship with Union citizens who are minors. The request is thus connected with the problem under consideration in the Dereci ( ) and Ruiz Zambrano ( ) judgments concerning the extent to which the rights of residence enjoyed by Union citizens extend to third-country nationals. In this respect, the present case displays a peculiarity in that the third-country national is not applying for a right of residence in the Member State in which his daughter, the Union citizen, is living. II – Legal framework A – European Union law 1. Charter of Fundamental Rights of the European Union 2. Article 7 of the Charter of Fundamental Rights of the European Union (‘the Charter’) – ‘Respect for private and family life’ – provides: ‘Everyone has the right to respect for his or her private and family life, home and communications.’ 3. Article 24 of the Charter – ‘The rights of the child’ – provides: ‘1. Children shall have the right to such protection and care as is necessary for their well-being. … ... 3. Every child shall have the right to maintain on a regular basis a personal relationship and direct contact with both his or her parents, unless that is contrary to his or her interests.’ 4. The first sentence of Article 51(1) of the Charter is worded as follows: ‘The provisions of this Charter are addressed to the institutions, bodies, offices and agencies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing Union law.’ 2. Directive 2004/38/EC 5. Recital 5 in the preamble to Directive 2004/38/EC 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 (‘Directive 2004/38’) ( ) provides: ‘The right of all Union citizens to move and reside freely within the territory of the Member States should, if it is to be exercised under objective conditions of freedom and dignity, be also granted to their family members, irrespective of nationality. ...’ 6. Article 1 of Directive 2004/38 defines the subject-matter of that directive in the following terms: ‘This Directive lays down: (a) the conditions governing the exercise of the right of free movement and residence within the territory of the Member States by Union citizens and their family members; …’ 7. According to the definitions of terms in Article 2 of Directive 2004/38, ‘family member’ means, inter alia, ‘the dependent direct relatives in the ascending line and those of the spouse or partner’ (Article 2(2)(d)). Under Article 2(3) of that directive, ‘Host Member State’ means ‘the Member State to which a Union citizen moves in order to exercise his/her right of free movement and residence’. 8. Article 3 of Directive 2004/38 – ‘Beneficiaries’ – provides: ‘1. This Directive shall apply to all Union citizens who move to or reside in a Member State other than that of which they are a national, and to their family members as defined in point 2 of Article 2 who accompany or join them. 2. Without prejudice to any right to free movement and residence the persons concerned may have in their own right, the host Member State shall, in accordance with its national legislation, facilitate entry and residence for the following persons: (a) any other family members, irrespective of their nationality, not falling under the definition in point 2 of Article 2 who, in the country from which they have come, are dependants or members of the household of the Union citizen having the primary right of residence, or where serious health grounds strictly require the personal care of the family member by the Union citizen.’ 9. Article 7(2) of Directive 2004/38 provides: ‘The right of residence … shall extend to family members who are not nationals of a Member State, accompanying or joining the Union citizen in the host Member State’. 10. Article 10 of Directive 2004/38 – ‘Issue of residence cards’ – provides: ‘1. The right of residence of family members of a Union citizen who are not nationals of a Member State shall be evidenced by the issuing of a document called “Residence card of a family member of a Union citizen” no later than six months from the date on which they submit the application. … 2. For the residence card to be issued, Member States shall require presentation of the following documents: … (c) the registration certificate or, in the absence of a registration system, any other proof of residence in the host Member State of the Union citizen whom they are accompanying or joining; …’ 11. Article 12 of Directive 2004/38 provides as follows with regard to ‘Retention of the right of residence by family members in the event of death or departure of the Union citizen’: ‘… 3. The Union citizen’s departure from the host Member State or his/her death shall not entail loss of the right of residence of his/her children or of the parent who has actual custody of the children, irrespective of nationality, if the children reside in the host Member State and are enrolled at an educational establishment, for the purpose of studying there, until the completion of their studies.’ B – European Convention for the Protection of Human Rights and Fundamental Freedoms 12. Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (‘the ECHR’) concerns the right to respect for private and family life and is worded as follows: ‘1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well‑being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.’ C – National law 1. Gesetz über den Aufenthalt, die Erwerbstätigkeit und die Integration von Ausländern im Bundesgebiet (Law on the residence, employment and integration of foreign nationals in the Federal territory) 13. Paragraph 7 of the German Gesetz über den Aufenthalt, die Erwerbstätigkeit und die Integration von Ausländern im Bundesgebiet (‘the Aufenthaltsgesetz’) ( ) concerns residence permits and provides as follows: ‘(1) The residence permit is a temporary residence certificate. It shall be issued for the purposes of residence mentioned in the following sections. In cases which are justified, a residence permit may also be issued for a purpose of residence which is not covered by this Law.’ 14. Paragraph 18(2) of the Aufenthaltsgesetz provides: ‘A foreign national may be issued with a residence certificate for the purpose of taking up employment ...’ 2. Gesetz über die allgemeine Freizügigkeit von Unionsbürgern (Law on general freedom of movement of Union citizens) 15. Under Paragraph 2 of the German Gesetz über die allgemeine Freizügigkeit von Unionsbürgern (‘the Freizügigkeitsgesetz/EU’), ( ) Union citizens who enjoy the right to free movement are to have the right to enter and reside in Federal territory, subject to the provisions of that Law, but the members of their family in principle enjoy that right only ‘where they accompany or join the Union citizen’ (Paragraph 3(1) of the Freizügigkeitsgesetz/EU) or where a right of permanent residence accrues after five years of lawful residence (Paragraph 4a of the Freizügigkeitsgesetz/EU). 16. Paragraph 5 of the Freizügigkeitsgesetz/EU provides as follows under the heading ‘Certificates of rights of residence under Community law, residence cards’: … (2) Family members who enjoy freedom of movement and who are not Union citizens shall be issued, automatically, within six months after they have provided the necessary information, with a residence card for a member of the family of a Union citizen, which is to be valid for five years. …’ III – Facts of the main proceedings 17. The applicant in the main proceedings is a Japanese national. He has been married to a German national since 1998. Their daughter was born in the USA in 2004 and holds German nationality in addition to Japanese and US nationality. 18. At the end of December 2005 the family moved from the United States to Ulm (Germany). On 9 January 2006 the applicant received a national residence permit as the foreign spouse of a German national. 19. Since February 2006 the applicant has been employed in Ulm on a full-time basis, with an unlimited employment contract and a gross monthly income of EUR 4 850. 20. After the applicant’s wife had accepted a post in Vienna in the summer of 2007, she moved her principal place of residence there in March 2008 and took their daughter with her. The applicant remained in Ulm. The parents have joint custody of the daughter, who attends school in Vienna. The applicant visits his daughter regularly once a month to spend the weekend together and pays maintenance for her of EUR 300 a month. The daughter also spends most holidays with the applicant. 21. In June 2008 the wife notified the German office responsible for foreign nationals that she had been living apart from the applicant since 1 January 2008. Accordingly, the residence permit originally issued to the applicant in his capacity as the spouse of a German national was not extended pursuant to the German Aufenthaltsgesetz. 22. At present the applicant is lawfully resident in Germany since he was issued with a national residence permit linked to employment pursuant to Paragraph 18 of the German Aufenthaltsgesetz. 23. However, the applicant takes the view that he also has a right of residence in Germany under European Union law by virtue of the right of custody which he exercises in respect of his daughter living in Austria. He claims that this right entitles him to be issued with a ‘residence card of a family member of a Union citizen’ within the terms of Article 10 of Directive 2004/38. 24. On 30 May 2008, however, the applicant applied unsuccessfully for the issue of such a residence card. That application is now the subject of appeal proceedings before the referring court. IV – Questions referred for a preliminary ruling 25. The foregoing is the background against which the Verwaltungsgerichtshof Baden-Württemberg (Higher Administrative Court, Baden-Württemberg) has referred the following questions to the Court: ‘A. Articles 2, 3 and 7 of Directive 2004/38/EC 1. Does “family member” include, in particular in the light of Articles 7 and 24 of the Charter of Fundamental Rights (“the Charter”) and Article 8 of the ECHR on a broad interpretation of Article 2(2)(d) of Directive 2004/38, a parent who is a third-country national and has custody of a non-dependent child who is a Union citizen enjoying freedom of movement? 2. If so, does Directive 2004/38 apply to that parent, in particular in the light of Articles 7 and 24 of the Charter and Article 8 of the ECHR on a broad interpretation of Article 3(1) of the directive, even if he does not “accompany” or “join” the child who is a Union citizen and who has moved away from the Member State of origin? 3. If so, does that parent, in particular in the light of Articles 7 and 24 of the Charter and Article 8 of the ECHR, have a right of residence for more than three months in the Member State of origin of the child who is a Union citizen, on a broad interpretation of Article 7(2) of Directive 2004/38, at least where a right of custody exists and is actually exercised? B. Article 6(1) EU in conjunction with the Charter 1.(a) Is the Charter applicable pursuant to the second alternative of the first sentence of Article 51(1) of the Charter if the subject-matter of the dispute depends on a national law (or part of a law) which partly – but not only – transposed directives? 1.(b) If not, is the Charter applicable pursuant to the second alternative of the first sentence of Article 51(1) of the Charter because the applicant could enjoy a right of residence under Union law and could accordingly claim, under the first sentence of Paragraph 5(2) of the Freizügigkeitsgesetz/EU (Law on the Freedom of Movement of Union Citizens), a residence card of a family member of a Union citizen which has its legal basis in the first sentence of Article 10(1) of Directive 2004/38? 1.(c) If not, is the Charter applicable pursuant to the second alternative of the first sentence of Article 51(1) of the Charter, in accordance with the ERT case‑law (Case C‑260/89, paragraphs 41-45), where a Member State restricts the right of residence of the father who is a third-country national and has custody of a Union citizen who is a minor and resides predominantly in another EU Member State with her mother on account of the latter’s occupation? 2.(a) If the Charter does apply, does Article 24(3) of the Charter directly accord a right of residence under European Union law to the father who is a third-country national, at least if he holds and actually exercises the right of custody of his child who is a Union citizen, even though the child resides predominantly in another EU Member State? 2.(b) If not, does it follow from the freedom of movement of the child who is a Union citizen that under Article 45(1) of the Charter, possibly in conjunction with Article 24(3) of the Charter, the father who is a third-country national has a right of residence under European Union law, at least if he holds and actually exercises the right of custody of his child who is a Union citizen, so that in particular the freedom of movement of the child who is a Union citizen is not deprived of its practical effect? C. Article 6(3) EU in conjunction with the general principles of Union law 1. Can the “unwritten’ EU fundamental rights developed in the Court’s case‑law from the Stuttgart Stauder case (Case 29/69, paragraph 7) to, for example, Mangold (Case C‑144/04, paragraph 75) be fully applied even if the Charter is not applicable in the specific case? In other words, do the fundamental rights which continue to apply as general principles of Union law under Article 6(3) EU stand autonomously and independently alongside the new fundamental rights laid down in the Charter in accordance with Article 6(1) EU? 2. If so, can a right of residence under European Union law be inferred, with a view to the effective exercise of the right of custody, from the general principles of Union law, in particular in the light of the right to respect for family life under Article 8 of the ECHR, for a father, who is a third-country national, of a Union citizen who is a minor and resides predominantly in another EU Member State with her mother on account of the latter’s occupation? D. Article 21(1) TFEU in conjunction with Article 8 of the ECHR If Article 6(1) or (3) EU does not accord the applicant a right of residence under European Union law, in accordance with the ruling in Zhu and Chen (Case C‑200/02, paragraphs 45-47) can a right of residence under European Union law be inferred, under Article 21(1) TFEU, possibly in the light of Article 8 of the ECHR, with a view to the effective exercise of the right of custody, from the freedom of movement enjoyed by a Union citizen who is a minor and resides predominantly in another EU Member State with her mother on account of the latter’s occupation, for the father, who is a third-country national, in the Member State of origin of the child? E. Article 10 of Directive 2004/38: If a right of residence under European Union law is taken to exist, is a parent who is a third-country national in the applicant’s situation entitled to the issue of a “residence card of a family member of a Union citizen”, if necessary in accordance with the first sentence of Article 10(1) of the directive?’ 26. However, the referring court concedes that ‘[o]f course, all the questions referred can also be summarised in a single question: Under European Union law does a parent who has a right of custody and is a third-country national, in order to maintain a personal relationship and direct parental contact on a regular basis, have a right to remain in the Member State of origin of his child, who is a Union citizen, to be documented by a “residence card of a family member of a Union citizen”, if the child moves from there to another Member State, exercising his right of free movement?’ ( ) V – Assessment of the questions referred A – Order in which the questions are to be examined 27. The summary question reproduced above in point 26, which is to be assessed in the light of the legal issues raised in point 25, in so far as they are relevant, must be taken as the basis for the following analysis. 28. Firstly, the referring court thus seeks to ascertain whether, in the circumstances of the case in the main proceedings, the applicant has a right of residence under Union law in the Member State of origin of his German child. Secondly, it asks whether the applicant is entitled, by virtue of that right, to the issue of a ‘residence card of a family member of a Union citizen’. B – Right of a third-country national who has custody rights to reside in the Member State of origin of a Union citizen who is a minor and who has moved to another Member State 29. It may be possible to derive a European-Union-law right of the applicant to reside in Germany from Directive 2004/38 or from primary law. 30. In what follows, it is first necessary to examine whether such a right of residence can be established on the basis of Directive 2004/38. 1. Directive 2004/38 31. In determining whether a right of residence can be established on the basis of Directive 2004/38, it is necessary first to consider the wording of that directive’s provisions, its scheme and its spirit and purpose. It will then be necessary to determine whether the outcome of this interpretation of Directive 2004/38 is compatible with fundamental rights by reference to its wording, scheme and objective. a) Textual interpretation of Directive 2004/38 32. The applicant may have a right to reside in Germany under Article 7(2) or Article 12(3) of Directive 2004/38. Account must also be taken of recital 5 in the preamble thereto. i) Article 7(2) of Directive 2004/38, in conjunction with Article 2(2)(d) thereof 33. Where a Union citizen moves to another Member State of which he is not a national, Article 7(2) of Directive 2004/38, in conjunction with Article 2(2)(d) thereof, confers on the parents of the Union citizen there a right of residence for more than three months where the Union citizen is dependent on them. However, this right of residence applies subject to the caveat that the family members concerned actually accompany or join the Union citizen. 34. The above requirements are not satisfied in the main proceedings here. Firstly, the father, who is a third-country national, is precisely not claiming a right of residence in respect of the host Member State to which his daughter has moved, namely Austria, but rather in respect of his daughter’s Member State of origin, that is to say, Germany. Secondly, Article 7(2) of Directive 2004/38 is not relevant in terms of its wording precisely because the Japanese father did not join his daughter in the host Member State or accompany her there. Finally, the requirement laid down in Article 2(2)(d) of Directive 2004/38 is likewise not satisfied because in the present case the father is not dependent on the Union citizen, but rather the Union citizen is dependent on the father. ( ) ii) Article 12(3) of Directive 2004/38 35. Although Article 12(3) of Directive 2004/38 confers on the ‘parent who has actual custody’, irrespective of his nationality, a right of residence until the child completes his studies, this provision is, in view of its unambiguous wording, applicable only in the case where the Union citizen moves away from his host Member State and not, as in the case at issue here, where he moves away from his Member State of origin. Therefore, this provision likewise cannot establish a right of residence in Germany for the Japanese father of the German national who has moved to Austria. iii) Recital 5 in the preamble to Directive 2004/38 36. At first glance, the wording of recital 5 in the preamble to Directive 2004/38 is broad and appears, if viewed in isolation, to grant third-country nationals a Union-wide right of residence ‘within the territory of the Member States’. 37. However, as it is a recital, this statement is to be assessed only as a principle to be taken into account in interpreting Directive 2004/38. It cannot undermine the exhaustive list and specific conditions governing the rights of residence afforded by the directive and replace them with an unconditional Union-wide right of residence for family members. ( ) Otherwise, no independent scope would remain, for example, for Articles 7(2) and 12(3) of Directive 2004/38. 38. Consequently, no right of residence for a third-country national in the Member State of origin of his child can be derived from recital 5 in the preamble either. iv) Interim conclusion 39. Consequently, no right of the applicant to reside in Germany can be derived from a textual interpretation of Directive 2004/38. The Court has consistently held that, in interpreting a provision of European Union law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part. ( ) 40. Since no right of residence for the third-country national who has custody rights in the Member State of origin of the Union citizen who is a minor can be derived from the wording of Directive 2004/38, it is therefore necessary to determine whether the directive in question lends itself to a ‘broad interpretation’ ( ) beyond its wording by reference to its scheme and purpose. b) Interpretation of Directive 2004/38 by reference to its scheme 41. As regards the question whether schematic considerations militate in favour of using Directive 2004/38, beyond its wording, to establish a right of residence for a third-country national who has custody rights in the Member State of origin of his child who has moved to another Member State, the Commission rightly states ( ) that the scheme of Directive 2004/38 leaves no scope for extending the right of residence to situations in which the members of the family of a Union citizen who are third-country nationals wish to remain in the Member State of origin of the Union citizen after the latter himself has moved to another Member State. 42. The right of residence which Directive 2004/38 confers on family members who are third-country nationals is linked, in Article 7(2) thereof, to the fact that the family member has accompanied the Union citizen to the host Member State or joined him there. 43. Admittedly, the Court has pointed out that the requirement relating to ‘family members [of Union citizens] who accompany … them’ must not, in the interest of the practical effectiveness of Directive 2004/38, be interpreted narrowly, and it is not relevant, for example, whether the individuals concerned entered the host Member State at the same time. ( ) 44. However, as Article 3(1) thereof makes clear, Directive 2004/38 relates, in line with the regulatory approach adopted therein, in principle only to situations concerning rights of residence of the Union citizen and the members of his family in Member States other than that of which the Union citizen is a national. ( ) 45. Therefore, the right of family members who are third-country nationals to reside in the Member State of origin of the Union citizen does not in principle form the subject-matter of Directive 2004/38, and particularly not in the case where it is the Union citizen, and not the member of his family, who moves away from his Member State of origin to a host Member State. 46. The European Union legislature did not overlook the issue of a Union citizen possibly moving away in Directive 2004/38 but, rather, laid down detailed rules thereon in Article 12 thereof. Article 12(3) of Directive 2004/38 confers a right of residence on the family member who is a third-country national, but only in the host Member State and not in the Union citizen’s Member State of origin. This provision is specifically relevant in the case where, for example, a Union citizen having custody rights, who initially moved with his spouse, who is the third-country national, and their children to the host Member State, moves again from that host Member State and the other parent, who is a third-country national, wishes to remain with the children in that State until they have completed their studies. By contrast, Article 12 of Directive 2004/38 contains no rules on the situation where there is a move away from the Member State of origin and on the continued existence of a right of residence there for the person who is a third-country national, and there is no apparent reason why the assessment of Article 12(3) of Directive 2004/38 should apply, beyond the subject-matter of the directive in question, mutatis mutandis to the Member State of origin. Moreover, even if Article 12(3) of Directive 2004/38 were to apply mutatis mutandis, no right of residence for the father could consequently be inferred in the present case because the father, who is a third-country national, and his child no longer reside in the same Member State, the situation which, however, Article 12(3) of Directive 2004/38 clearly takes as a basis. 47. What the general schemes of Articles 7(2) and 12(3) of Directive 2004/38 ultimately have in common is that the right of residence of the third-country national depends on the right of residence of the Union citizen in so far as he must have initially accompanied the Union citizen to a host Member State, and thus to a State other than the Union citizen’s Member State of origin. This did not happen in the main proceedings here, as the Union citizen moved to Austria with only her mother. 48. In view of the scheme of Directive 2004/38, this fact cannot therefore be used to establish a right of residence for a third-country national who has custody rights in the host Member State of the Union citizen who is a minor and who has moved to another Member State. 49. The question further arises as to whether Directive 2004/38 can, beyond its general scheme, be used, on the basis of teleological reasoning, to establish a right of residence, for a third-country national who has custody rights, in the Member State of origin of the Union citizen who is a minor and who has moved to another Member State. c) Teleological interpretation of Directive 2004/38 50. As stated above, the purpose of Directive 2004/38 is to regulate cases concerning rights of residence of the Union citizen and members of his family in Member States other than that of which the Union citizen is a national. According to its spirit and purpose, it cannot therefore be required to cover situations such as that at issue in the main proceedings in the present case, which concern solely the Member State of origin of the Union citizen who has moved away and a right of residence for a family member which might exist in that Member State of origin. 51. The referring court, however, has also raised the question whether a ‘broad interpretation’ of Directive 2004/38 might be possible in the light of Articles 7 and 24 of the Charter of Fundamental Rights, ( ) under which family life must be respected and children must have the right to protection and care and to regular personal contact with their parents. d) Interpretation of Directive 2004/38 in a manner consistent with fundamental rights 52. Further legal development of the provisions of Directive 2004/38 may be required by way of an interpretation consistent with fundamental rights. 53. Under Article 6 TEU, the Charter of Fundamental Rights forms part of primary law. Secondary Union law, such as Directive 2004/38, must, so far as possible, be interpreted in a manner consistent with primary law, and thus with fundamental rights. Where an act is open to more than one interpretation, it is necessary to take as a basis the interpretation which is not in conflict with the fundamental rights protected by the European Union’s legal order. ( ) 54. Under Article 51 thereof, the Charter of Fundamental Rights must be complied with in the implementation of Directive 2004/38. However, the question as to interpretation and application of a legal act in a manner consistent with fundamental rights cannot be raised outside the scope of that legal act. Since it has been established above that Directive 2004/38 does not at all cover the present case of the right of residence of the third-country national in the Member State of origin of the Union citizen, there is consequently also no need to examine the issue of assessment of the provisions of that directive in the light of the Charter of Fundamental Rights. ( ) 55. The same is true of the provisions of the ECHR, ( ) which, for purposes of interpretation, could, like the Charter of Fundamental Rights, be relevant solely in relation to the scope of Directive 2004/38. Since the directive at issue governs only rights of residence in Member States other than that of which the Union citizen is a national, there is also no need to examine this aspect in greater detail. 56. However, in the present context the question also arises as to whether fundamental rights can be applied directly on other grounds and confer on the applicant a right of residence in the Member State of origin of his daughter, thus bypassing Directive 2004/38. I will examine this later at point 75 et seq. of this Opinion. 57. However, a legal development of Directive 2004/38, on the basis of fundamental rights, to establish a right of residence for a third-country national, who has custody rights, in the Member State of origin of the Union citizen who is a minor and who has moved to another Member State is not necessary. e) Interim conclusion 58. By way of interim conclusion, it must be stated that no right of residence for a third-country national who has custody rights, in the Member State of origin of a Union citizen who is a minor and has moved to another Member State, can be derived from Directive 2004/38. 59. Since secondary law does not grant the applicant the right of residence under Union law which he seeks, it is necessary, in what follows, to examine primary law. 2. Primary law 60. In the light of the fundamental rights guaranteed under Article 6(1) and (3) TEU, the applicant may have a right of residence in the Member State of origin of his child who has moved to Austria, pursuant to Articles 20 TFEU and 21 TFEU. a) Right of residence of the third-country national who has custody rights in order effectively to guarantee the substance of the legal position, conferred by Union citizenship, of the Union citizen who is a minor 61. As a third-country national, the father who has custody rights cannot, in the present case, rely directly on the freedom of movement or right to remain enshrined in Articles 20 TFEU and 21 TFEU or on a right to remain based on Union citizenship. However, according to the case‑law of the Court, the Union-citizen status of the Union citizen can, in individual cases, result in a right of residence under Union law also being conferred on a family member who is a third-country national. i) Previous case‑law of the Court ( ) 62. According to the Court’s case‑law, in order for a parent who is a third-country national to have a right of residence under Union law which is derived from primary law, effective exercise of the Union citizen’s legal position would have to be harmed substantially ( ) if the parent who is a third-country national were denied a right of residence. Accordingly, a parent who is a third-country national was found to have a right of residence – in the same Member State, it should be noted, as that in which the minor was residing – for example where ‘a refusal would lead to a situation where … children … would have to leave the territory of the Union’, ( ) or where otherwise ‘the child’s right of residence [would be deprived] of any useful effect’. ( ) 63. With reference to the criterion relating to the ‘substance of the rights conferred by virtue of the status of citizen of the Union’ the Court recently stated again in its judgment in Dereci ( ) that a derived right of residence for a third-country national can in principle be found to exist only exceptionally and in that respect stated that ‘the mere fact that it might appear desirable to a national of a Member State, for economic reasons or in order to keep his family together in the territory of the Union, for the members of his family who do not have the nationality of a Member State to be able to reside with him in the territory of the Union, is not sufficient in itself to support the view that the Union citizen will be forced to leave Union territory if such a right is not granted.’ At the same time, however, the Court specifically acknowledged that that finding is ‘without prejudice to the question whether, on the basis of other criteria, inter alia, by virtue of the right to the protection of family life, a right of residence cannot be refused. However, that question must be tackled in the framework of the provisions on the protection of fundamental rights which are applicable in each case’. ii) Application of the principles developed in case‑law to the facts of the main proceedings 64. It can scarcely be argued from the outset that in the present case the core of the legal position conferred by Union citizenship of the Union citizen who is a minor would be affected if her father, who is a third-country national, were not granted a right of residence in Germany under Union law. 65. Arguing against this is the fact that the Union citizen has already in fact moved with her mother to Austria, although her father has still not been granted a right under Union law to reside in Germany, and has consequently exercised her freedom of movement in full. Therefore, since the essence of the practical effect of the Union citizen’s legal position under Union law is clearly not under threat in this specific case, it must for the moment be held, in accordance with the principles developed in the case‑law, that the Union citizen’s father does not have a derived right of residence under Union law on the basis of his daughter’s Union citizenship or the freedom of movement. 66. However, it should be borne in mind that the father, who is a third-country national and who has custody rights, may exercise the right to determine the place of residence jointly with the child’s mother and consequently decide (with her) where his child is to reside. It is conceivable that the mother and he might, if he were to be threatened with not having his residence permit in Germany extended or denied a right of residence under Union law, consider moving the child’s place of residence back to Germany. 67. However, in this – as yet hypothetical – situation it is difficult to identify any specific interference with the very essence of the daughter’s legal position under Union law. iii) Interim conclusion 68. In light of the foregoing, it is not possible, on the basis of the Court’s previous case‑law, to derive, in a case such as that in the main proceedings, a right of residence for the third-country national, who has custody rights, in the Member State of origin of the Union citizen who is a minor. 69. However, detailed consideration has yet to be given in case‑law as to whether, under the conditions obtaining in the main proceedings, a right of residence for a third-country national in the Member State of origin of a Union citizen can be established pursuant to primary law in order to guarantee fundamental rights in an effective manner. b) Right of residence of a third-country national in order to guarantee fundamental rights in an effective manner 70. In Dereci the Court considered this possibility and ruled that: ‘Thus, … if the referring court considers, in the light of the circumstances of the disputes in the main proceedings, that the situation of the applicants in the main proceedings is covered by European Union law, it must examine whether the refusal of their right of residence undermines the right to respect for private and family life provided for in Article 7 of the Charter. On the other hand, if it takes the view that that situation is not covered by European Union law, it must undertake that examination in the light of Article 8(1) of the ECHR.’ ( ) 71. Although the Dereci case concerned the issue of the joint residence of a Union citizen and a third-country national in the same Member State, the above considerations of the Court in its judgment in that case are so general that they appear also to be applicable to the situation in the present case, which involves two different Member States. 72. This issue must be considered below and in this respect it is first necessary to examine whether the Charter of Fundamental Rights is at all applicable in the present case. Under Article 51(1) of that Charter, in order for this to be so, there must be a connection with the implementation of Union law. 73. Consequently, it would not be sufficient for there to be a connection to purely national provisions with no element of Union law. ( ) However, it must be concluded that there is a sufficient connection with the implementation of Union law where, although refusal of a residence permit under Union law does not constitute interference with the substance of the rights conferred by virtue of the status of citizen of the Union, it does constitute a less serious restriction of the right to free movement of the Union citizen who is a minor. 74. The contention that the Charter of Fundamental Rights is applicable in the context of restrictions on the fundamental rights is questioned by some legal writers with reference to Article 51 thereof, which takes ‘implementing Union law’ as a basis. ( ) These concerns also apply to the right to freedom of movement enshrined in Article 21 TFEU. ( ) However, the reference in the explanations relating to the Charter ( ) to the case‑law of the Court in which the applicability of the fundamental rights to measures restricting fundamental freedoms is recognised ( ) militates in favour of applying the fundamental rights enshrined in the Charter also to restrictions on freedom of movement under Article 21 TFEU. i) Restriction of freedom of movement under Article 21 TFEU as a connecting factor for the applicability of the Charter of Fundamental Rights 75. Whether and, if so, to what extent a restriction of freedom of movement under Article 21 TFEU exists will depend ultimately on the circumstances of the individual case, the assessment of which is a matter for the referring court. 76. However, it is not possible to dismiss out of hand the possibility that the father’s insecure future residence in Germany may potentially deter his minor daughter from further exercising her right of free movement as a Union citizen, ( ) and consequently may constitute a restriction of that freedom, even though it does not amount to interference with the substance of the rights conferred by Union-citizen status within the meaning of the case‑law to date. ( ) 77. In this regard, the referring court might have to assemble more detailed facts since it is not clear from the content of the case-file how the applicant’s possibly insecure residence will affect the future life plans of the mother and child. 78. None the less, it would appear plausible that the Union citizen – on the assumption that the relationship between the father and the daughter is trouble-free, as the case-file suggests – could be deterred all the more from exercising her right to freedom of movement if, as a result of a possible denial of a right of residence in Germany under Union law, there were a danger that her father, as a third-country national, would have to take up residence far away from her. However, in that respect, an overall assessment must be made and account must also be taken of the fact that the third-country national may, as noted by the German Government, ( ) be entitled to have his national residence permit perpetuated under national law. 79. However, if it were concluded in this case that there is such a deterrent effect in denying a right of residence under Union law, and thus a restriction on the freedom of movement, fundamental rights would be applicable. 80. In this context it is necessary to give due regard to the fundamental freedoms and to ascertain, in particular, whether they do in fact ultimately confer on the third-country national a right of residence under Union law. ii) Possibility of a right of residence established by the fundamental freedoms? 81. It follows from my foregoing observations that the Charter of Fundamental Rights applies, under the first sentence of Article 51(1) thereof, in so far as denial of the right of residence prejudices the daughter’s right to freedom of movement under Article 21 TFEU and thus the implementation of Union law is concerned. 82. The right of the child to maintain on a regular basis a personal relationship and direct contact with both parents (Article 24(3) of the Charter) and respect for family life (Article 7 of the Charter) are particularly relevant in the present case in terms of fundamental rights. 83. However, whether or not denial of the right of residence constitutes interference with a fundamental right in this regard is unclear and depends on the specific circumstances of each case, which must be assessed by the referring court. ( ) 84. If the father were denied the right of residence in Germany, this need not necessary impact on his opportunities to maintain regular contact with this child living in Austria. Rather, Article 24(3) of the Charter appears precisely to ensure that the father can also maintain contact with his child in Austria after she has exercised freedom of movement. 85. However, if it were to transpire in a particular case that denying a right of residence would rule out the possibility of maintaining regular personal relations, this could constitute interference with a fundamental right, the justification for which would have to been assessed from the standpoint of proportionality. In that context, it would be necessary to consider, among other things, whether the child’s father who is a third-country national also actually exercises his right of custody and endeavours to fulfil his parental duties. 86. In this case a right of residence, based on fundamental rights, of the third-country national within the meaning of the Dereci judgment might be inferred from Article 24(3) of the Charter of Fundamental Rights, in conjunction with Article 7 thereof. ( ) 87. It should also be pointed out that Article 8 of the ECHR, which is applicable to parent/child relationships even where the parents and the child no longer live permanently together under the same roof, ( ) leads to a similar conclusion. Under Article 52(3) of the Charter of Fundamental Rights, the rights contained in the Charter which correspond to rights guaranteed by the ECHR have the same meaning and scope as the corresponding rights laid down by the ECHR. However, it is also expressly provided in Article 52(3) of the Charter of Fundamental Rights that that provision does not prevent EU law from providing more extensive protection. ( ) c) Interim conclusion 88. By way of interim conclusion, it must therefore be stated that, in the light of the fundamental rights guaranteed under Article 6(1) and (3) TEU, and in particular in the light of those enshrined in Articles 7 and 24 of the Charter of Fundamental Rights, a parent who has a right of custody and is a third-country national can, in order to maintain a personal relationship and direct parental contact on a regular basis, have a right of residence in the Member State of origin of his child who is a Union citizen under Articles 20 TFEU and 21 TFEU, if the child has moved from there to another Member State, exercising his right of free movement. For such a right of residence to exist, the denial thereof must have a restrictive effect on the child’s right to freedom of movement and must be regarded as amounting to a disproportionate interference with fundamental rights in the light of the abovementioned fundamental rights. This is a matter for assessment by the referring court. C – Right under European Union law to the issue of a ‘residence card of a family member of a Union citizen’ 89. Irrespective of whether the third-country national ultimately has a right of residence in Germany based on primary law in view of the fundamental rights to be observed, he cannot demand a ‘residence card of a family member of a Union citizen’ under Union law. 90. The requirements for the issue of this card are set out exhaustively in Article 10 of Directive 2004/38 and are specifically tailored to the right of residence conferred on third-country nationals by Directive 2004/38. For example, the presentation is required, in particular, of the registration certificate of the Union citizen whom the third-country national is accompanying or joining. The applicant in the main proceedings will be unable to demonstrate this to be the case precisely because he did not follow his daughter to Austria. 91. As in the case of the right to residence under substantive law, this provision too is incapable of application outside the scope of Directive 2004/38, and therefore there is no right to the issue of the above residence card under Union law. It is for the national court also to assess, if necessary, whether national law provides for the issue of such a card for any cases in which there is a right of residence under Union law, that is to say, also outside the scope of Directive 2004/38. VI – Conclusion 92. In the light of all of the foregoing considerations, I propose that the Court should answer as follows the questions which have been referred for a preliminary ruling: Directive 2004/38/EC 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 does not confer on a parent who has custody rights and is a third-country national a right, in order to maintain a personal relationship and direct parental contact on a regular basis, to remain in the Member State of origin of his child, who is a Union citizen, to be documented by a residence card of a member of the family of a Union citizen, if the child, exercising his or her right of free movement, moves from there to another Member State. In the light of the fundamental rights guaranteed under Article 6(1) and (3) TEU, and in particular those enshrined in Articles 7 and 24 of the Charter of Fundamental Rights of the European Union, a parent who has custody rights and is a third-country national may, in order to maintain a personal relationship and direct parental contact on a regular basis, have a right of residence in the Member State of origin of his child who is a Union citizen under Articles 20 TFEU and 21 TFEU, if the child, exercising his or her right of free movement, has moved from there to another Member State. In order for such a right of residence to exist, the denial thereof must have a restrictive effect on the child’s right of free movement and must be regarded as constituting a disproportionate interference with fundamental rights in the light of the abovementioned fundamental rights. This is a matter which must be assessed by the referring court. There is no right under European Union law to the issue of a residence card for members of the family of a Union citizen as documentary proof of this right of residence. ( ) Original language of the Opinion: German. Language of the case: German. ( ) Case C-256/11 Dereci and Others [2011] ECR I-11315. ( ) Case C-34/09 Ruiz Zambrano [2011] ECR I-1177. ( ) OJ 2004 L 158, p. 77 – corrigendum in OJ 2004 L 229, p. 35 – most recently amended by 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). ( ) In the version resulting from the Communication of 25 February 2008 (BGBl. I p. 162), which was amended by Article 2(25) of the Law of 22 December 2011 (BGBl. I, p. 3044). ( ) Freizügigkeitsgesetz/EU of 30 July 2004 (BGBl. I, p. 1950, 1986), which was amended by Article 14 of the Law of 20 December 2011 (BGBl. I, p. 2854). ( ) Page 14 of the English translation of the order for reference. ( ) See also, as regards the comparable rule contained in Article 1(2)(b) of Directive 90/364/EEC, Case C-200/02 Zhu and Chen [2004] ECR I-9925, paragraph 44. ( ) See, in this regard, Riesenhuber, K., ‘Die Auslegung’ in Riesenhuber, K., Europäische Methodenlehre, 2nd edition, Walter de Gruyter, Berlin/New York 2010, § 11 paragraph 37: ‘Rechte müssen stets aus dem normativen Teil eines Rechtsakts abgeleitet werden’ [Rights must always be derived from the normative terms of a legal act]. ( ) See, inter alia, Case C-301/98 KVS International [2000] ECR I-3583, paragraph 21; Case C-300/05 ZVK [2006] ECR I-11169, paragraph 15; and Case C-19/08 Petrosian and Others [2009] ECR I-495, paragraph 34. As regards the methodical peculiarities in interpreting Union law, see Wendehorst, C., ‘Methodenlehre und Privatrecht in Europa’ in Jabloner, C. et al., Vom praktischen Wert der Methode, Festschrift für Heinz Mayer zum 65. Geburtstag, Manzsche Verlags- und Universitätsbuchhandlung, Wien 2011, p. 827 et seq.; as regards the specific risks of multilingualism in European Union law, see Müller, F./Christensen, R., Juristische Methodik, Band II, Europarecht, 2nd edition., Duncker & Humblot, Berlin 2007, paragraphs 324 to 344. ( ) See page 14 of the English translation of the order for reference. ( ) See paragraph 45 of its written observations. Detailed considerations on the possible relevance of Directive 2004/38 following a subsequent return of the Union citizen to his Member State of origin are not necessary in the present case in the absence of actual indications to that effect. See, with regard to a similar issue, Case C-291/05 Eind [2007] ECR I-10719. ( ) Case C-127/08 Metock and Others [2008] ECR I-6241, paragraph 93, and order in Case C-551/07 Sahin [2008] ECR I-10453, paragraph 28. ( ) As regards the term ‘beneficiary’ within the meaning of Directive 2004/38, see points 25 to 45 of the Opinion of Advocate General Kokott in Case C-434/09 McCarthy [2011] ECR I-3375. ( ) While the referring court considers such a ‘broad interpretation’, it rules that it is somewhat ‘abstruse’ (see page 14 of the English translation of the order for reference). ( ) See, for example, Case C-305/05 Ordre des barreaux francophones und germanophones and Others [2007] ECR I-5305, paragraph 28 and the case-law cited therein, and Joined Cases C-402/07 and C-432/07 Sturgeon and Others [2009] ECR I-10923, paragraph 48; with regard to the precedence of fundamental rights and of an interpretation which is consistent with fundamental rights, see Jarass, H. D., EU-Grundrechte, C.H. Beck, Munich 2005, § 3, paragraph 7. ( ) At point 31 of her Opinion in Case C‑434/09 McCarthy, Advocate General Kokott points out that Directive 2004/38 is consistent per se with primary law, as is indicated, moreover, by recital 31 in the preamble to that directive, particularly with regard to fundamental rights. ( ) As regards its relationship to the Charter of Fundamental Rights, see my Opinion of 22 September 2011 in Joined Cases C-411/10 and C-493/10 N. S. and Others [2011] ECR I-13905, points 142 to 148. ( ) See for example, in addition to Dereci and Others (footnote 2), Ruiz Zambrano (footnote 3) and Zhu and Chen (footnote 8), Case C-60/00 Carpenter [2002] ECR I-6279, paragraph 46, on the freedom to provide services ‘in the light of the fundamental right to respect for family life’, and Case C-434/09 McCarthy [2011] ECR I-3375, paragraph 57. ( ) See, for example, Ruiz Zambrano (footnote 3), paragraph 42, according to which national measures ‘[may not deprive] citizens of the Union of the genuine enjoyment of the substance of the rights conferred by virtue of their status as citizens of the Union’. ( ) Ruiz Zambrano (footnote 3), paragraph 44. ( ) Zhu and Chen (footnote 8), paragraph 45. ( ) Dereci and Others (footnote 2), paragraphs 65 to 69. ( ) Dereci and Others (footnote 2), paragraph 72. ( ) The referring court appears to consider this in Section B.1 of its list of questions. ( ) See, as regards the status of the dispute, Borowsky, M. in Meyer, J., Charta der Grundrechte der Europäischen Union, 3rd edition, Nomos Verlagsgesellschaft, Baden-Baden 2011, Art. 51, paragraphs 29 to 31; Ehlers, D. in Ehlers, D. Europäische Grundrechte und Grundfreiheiten, 3rd edition, De Gruyter, Berlin 2009, § 14, paragraph 53; and Jarass (footnote 16), § 4, paragraph 15. ( ) As regards its legal nature, see Zhu and Chen (footnote 8), paragraphs 39 to 41, and Case C-148/02 Garcia Avello [2003] ECR I-11613, paragraph 24; see also Seyr, S./Rümke, H.-C., ‘Das grenzüberschreitende Element in der Rechtsprechung des EuGH zur Unionsbürgerschaft – zugleich eine Anmerkung zum Urteil in der Rechtssache Chen’, EuR 2005, 667, 672 et seq., Calliess, C., ‘Der Unionsbürger: Status, Dogmatik und Dynamik’, EuR 2007, p. 7, 23 et seq., and, with reference to recital 2 in the preamble to Directive 2004/38, Graf Vitzthum, N., ‘Die Entdeckung der Heimat der Unionsbürger’, EurR 2011, pp. 550, 555, in particular footnote 29. ( ) See, to that effect, the explanation relating to Article 51 of the Charter of Fundamental Rights, to be found in OJ 2007 C 303, p. 32. ( ) See, for example, Case C-71/02 Karner [2004] ECR I-3025, paragraph 48 et seq., and the case‑law cited therein; Carpenter (footnote 19), paragraph 40; and Case C-368/95 Familiapress [1997] ECR I-3689, paragraph 24. ( ) As regards the broad interpretation of the term ‘restriction’, see, for example, Case C-192/05 Tas-Hagen and Tas [2006] ECR I-10451, paragraph 30 et seq. and the case‑law cited therein, and Case C-406/04 De Cuyper [2006] ECR I-6947, paragraph 39. See also, to that effect, point 69 of the Opinion of Advocate General Bot of 27 March 2012 in Case C‑83/11 Rahman and Others. ( ) See, to that effect, the Commission’s written observations, p. 21 et seq. ( ) See, to that effect, the written observations of the Federal Republic of Germany, paragraph 95 et seq. ( ) See also, to this effect, point 78 of the Opinion of Advocate General Bot in Rahman and Others (footnote 30), in which, however, the residence of family members in the same Member State is at issue. ( ) As regards the relevance to the right of residence of primary law in conjunction with fundamental and human rights, see also points 74 and 79 of the Opinion of Advocate General Bot in Rahman and Others (footnote 30). ( ) See, to that effect, Karpenstein, U./Mayer, F.C., EMRK, C.H. Beck, Munich 2012, Art. 8, paragraphs 41 to 53 and the case‑law cited therein, and Grabenwarter, C., Europäische Menschenrechtskonvention, 4th edition, C.H. Beck, Munich 2009, § 22, paragraphs 16 to 19, and, generally on the scope of the right enshrined in Article 8 ECHR, European Court of Human Rights judgments in Ahmut v. the Netherlands, 28 November 1996, § 71, Reports of Judgments and Decisions 1996-VI, Gül v. Switzerland, 19 February 1996, § 38, Reports of Judgments and Decisions 1996-I, and Sen v. the Netherlands, no. 31465/96, § 31, 21 December 2001. ( ) See my Opinion in N.S. and Others (footnote 18), point 143 et seq.

FOURTH SECTION CASE OF DOMBEK v. POLAND (Application no. 75107/01) JUDGMENT STRASBOURG 12 December 2006 FINAL 12/03/2007 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 Dombek v. Poland, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: SirNicolas Bratza, President, MrJ. CasadevallMrG. Bonello,MrK. Traja,MrS. Pavlovschi,MrL. Garlicki,MrsL. Mijović, judges,and Mr T.L. Early, Section Registrar, Having deliberated in private on 21 November 2006, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 75107/01) against the Republic of Poland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Polish national, Mr Jacek Dombek (“the applicant”), on 10 October 1999. 2. The Polish Government were represented by their Agent, Mr J. Wołąsiewicz of the Ministry of Foreign Affairs. 3. On 25 October 2005 the Court declared the application partly inadmissible and decided to communicate the complaints concerning alleged unlawfulness and length of the applicant’s detention on remand to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 4. The applicant was born in 1965 and lives in Gdańsk. 1. First set of criminal proceedings (“the Bydgoszcz case”) 5. On 9 July 1996 the applicant was arrested and detained on remand. On 12 August 1996 the Kędzierzyn-Koźle District Court (Sąd Rejonowy) released the applicant. 6. On 20 October 1997 the applicant was again arrested by the police in connection with the same criminal investigation. On 21 October 1997 the Częstochowa District Court decided to detain him on remand in view of the reasonable suspicion that he had committed several offences acting in an organised group of criminals. 7. The applicant’s appeal against this decision was dismissed by the Częstochowa Regional Court (Sąd Wojewódzki) on 6 November 1997. The appeal lodged by his lawyer was dismissed on 20 November 1997. 8. On 8 December 1997 the Częstochowa Regional Court prolonged the applicant’s pre‑trial detention reiterating the grounds originally given for his detention and adding that the measure was necessary to secure the proper conduct of the investigation. 9. On 4 March 1998 the Katowice Court of Appeal (Sąd Apelacyjny) further prolonged his detention on remand. That decision was upheld by the Supreme Court (Sąd Najwyższy) on 24 April 1998. 10. Subsequently, the applicant’s detention was prolonged by the Katowice Court of Appeal on 8 July 1998. The court considered that the severity of the anticipated penalty and the risk of collusion justified keeping him in detention. 11. On 11 September 1998 the Supreme Court allowed an application made by the Prosecutor General under Article 263 of the 1997 Code of Criminal Procedure (“1997 Code”) and further prolonged the applicant’s detention on remand. The Supreme Court considered that the reasonable suspicion of his having committed the offences in question and the risk of collusion justified keeping the applicant in detention to secure the proper conduct of the proceedings. The court also considered that the investigation could not be terminated earlier due to circumstances for which the authorities could not be held responsible, such as the complexity of the case and the seriousness of the offences. 12. On 31 December 1998 the applicant and 14 co‑accused were indicted before the Bydgoszcz Regional Court (Sąd Okręgowy). 13. On 11 January 1999 the Częstochowa Regional Court prolonged the applicant’s detention until 30 June 1999 reiterating the grounds previously given for the applicant’s detention. 14. On 23 June 1999 the Bygodszcz Regional Court decided to prolong until 30 September 1999 the applicant’s detention on remand. It considered, for the same reasons as previously given, that keeping the applicant in detention was the only means to secure the proper conduct of the proceedings. The applicant appealed. 15. The applicant’s trial started on 24 August 1999 and continued for three days. It appears that the hearing was subsequently adjourned. 16. On 27 August 1999 the Bygdoszcz Regional Court examined the applicant’s appeal against its decision of 23 June 1999 and partly allowed it. The court considered that the pre-trial detention of the applicant should be prolonged only until 17 September 1999. It established that in assessing the length of the applicant’s detention with respect to the present case, and for the purpose of the time-limits provided for by Article 263 of the 1997 Code, the period between 9 July and 12 August 1996 should have been added. Accordingly, the Regional Court applied to the Supreme Court asking for the applicant’s detention to be prolonged beyond the term of two years provided for in Article 263 § 3 of the 1997 Code. 17. On 16 September 1999 the Bydgoszcz Detention Centre asked the Supreme Court whether any decision had been given in the applicant’s case. On the same date the President of Chamber III of the Supreme Court informed the Detention Centre by fax that a session on prolongation of the applicant’s detention had been scheduled for 1 October 1999. The President further noted that on the basis of the transitional provisions in the 1997 Code, the applicant’s detention should be ipso jure prolonged until the date of the Supreme Court’s session. 18. On 22 September 1999 the applicant’s lawyer submitted pleadings to the Supreme Court in which he argued that the applicant had been illegally detained as the detention order given on 27 August 1999 had expired on 17 September 1999 and therefore he should have been released. In particular, he maintained that the transitional provisions were not applicable in the applicant’s case and that the 1997 Code did not contain a provision which would allow detention on the basis of a fax sent by the Supreme Court. 19. On 1 October 1999 the Supreme Court held its session and prolonged the applicant’s detention until 27 February 2000 relying on the strong suspicion against the applicant, the complexity of the case and the need to continue the process of gathering the evidence. 20. On 10 February and 24 May 2000 the Supreme Court further prolonged the applicant’s detention reiterating the grounds previously given. In the first of those decisions the Supreme Court added: “...There is no evidence that could prove [the applicant’s] assertion that his wife and children ‘would soon have nothing to eat’. Moreover, it should be noted that there is a particular reason why the pre-trial detention of [the applicant] should not be lifted. From the information obtained by the Presiding Judge it appears that [the applicant] might obstruct the proceedings.” 21. Subsequently, the Bydgoszcz Regional Court made several applications to the Court of Appeal asking that the applicant’s detention be prolonged as, following an amendment to the 1997 Code, the Supreme Court was no longer competent to prolong the detention beyond the statutory time-limit of 2 years, as laid down in Article 263 § 3 of the Code. 22. On 27 September 2000 the Gdansk Court of Appeal granted the application and prolonged the applicant’s detention on remand until 30 December 2000. The court relied in particular on the complexity of the case and the conduct of the accused who had contributed to the prolongation of the proceedings. The court found as follows: “Of course, the applicant’s detention for over three years in this case requires particular attention to be given to the process of gathering evidence, above all, to examine without further delay the defence motions concerning evidence. However, in the light of the proceedings as a whole, the conduct of the Regional Courts should be assessed positively”. 23. On 21 December 2000 as well as on 25 April and 20 June 2001 the Gdańsk Court of Appeal prolonged the applicant’s detention. In addition to the strong probability that he had committed the offences, the court found that the proceedings had been conducted diligently and concluded that only the applicant’s detention would guarantee the proper conduct of the final stage of the proceedings. 24. Between 15 February and 15 October 2001 the applicant served a prison sentence ordered by the Inowrocław District Court in another set of criminal proceedings brought against him. 25. During his pre‑trial detention the applicant lodged several hundred applications for release. However, these applications and his appeals against the decisions to prolong his detention on remand were to no avail. 26. On 27 September 2001 the Bydgoszcz Regional Court gave judgment. The trial court convicted the applicant and sentenced him to eight years’ imprisonment. The applicant and the prosecutor appealed. 27. Subsequently, the applicant’s detention with respect to this set of criminal proceedings was not prolonged. However, the applicant had not been released as he remained in pre-trial detention ordered in the second set of criminal proceedings (see below). 28. On 17 June 2003 the Gdansk Court of Appeal allowed the appeals and quashed the impugned judgment. The case was remitted to the Bydgoszcz Regional Court which, on 14 January 2004, stayed the proceedings because the other set of criminal proceedings before the Zielona Góra Regional Court were pending and the applicant could not be transported to the Bygdoszcz Detention Centre. 29. On 25 May 2005 the Bydgoszcz Regional Court resumed the proceedings. The proceedings are pending before that court. 2. Second set of criminal proceedings (“the Zielona Góra case”) 30. On 11 September 1991 the applicant was arrested by the police in connection with criminal proceedings pending against him. On the same date the Zielona Góra Regional Prosecutor decided to detain him on remand. 31. On 12 July 1994 the Zielona Góra Regional Court acquitted the applicant. 32. On 14 December 1994 the applicant was released from detention. 33. On 24 January 1996 the Poznań Court of Appeal quashed the impugned judgment and remitted the case to the Regional Prosecutor. 34. Between December 1997 and November 1999 the prosecutor stayed the proceedings. 35. On 30 January 2001 the Poznań Court of Appeal decided to detain the applicant on remand in view of the reasonable suspicion that he had committed, with an accomplice, a robbery and three offences of homicide. 36. The applicant appealed, but on 13 January 2001 the Poznań Court of Appeal dismissed his appeal. 37. On 19 April, 24 July and 25 October 2001 and 24 April, 23 July and 24 October 2002 as well as on 22 January 2003 the Poznań Court of Appeal further prolonged his detention. The court held that the reasonable suspicion that the applicant had committed the offences with which he had been charged, the severity of the anticipated sentence and the need to secure the proper conduct of the investigation justified keeping the applicant in detention. 38. On 13 March 2003 the applicant was indicted before the Zielona Góra Regional Court. 39. On 26 March 2003 the Poznań Court of Appeal further prolonged the applicant’s detention. Subsequently, the applicant’s detention was prolonged on three occasions in 2003, and on 25 March, 24 June, 23 September and 21 December 2004. The court in all those decisions found that the grounds for keeping him in detention were still valid. 40. On 28 April 2005 the trial court gave judgment. The applicant was convicted as charged and sentenced to twenty-five years’ imprisonment. 41. The applicant requested that the written reasons for the judgment be prepared by the trial court so as to allow him to lodge an appeal. II. RELEVANT DOMESTIC LAW 42. The Code of Criminal Procedure of 1997, which entered into force on 1 September 1998, defines detention on remand as one of the so‑called “preventive measures” (środki zapobiegawcze). Article 249 § 5 provides that the lawyer of a detained person should be informed of the date and time of court sessions at which a decision is to be taken concerning prolongation of detention on remand. A more detailed rendition of the relevant domestic law provisions is set out in the Court’s judgment in Celejewski v. Poland, no. 17584/04, §§ 22 and 23, 4 May 2006. 43. Rules relating to means of controlling correspondence of persons involved in criminal proceedings are set out in the Code of Execution of Criminal Sentences (Kodeks karny wykonawczy) (“the 1997 Code”) which entered into force on 1 September 1998. The relevant part of Article 103 § 1 of the Code provides as follows: “Convicts (...) have a right to lodge complaints with institutions established by international treaties ratified by the Republic of Poland concerning the protection of human rights. Correspondence in those cases (...) shall be sent to the addressee without delay and shall not be censored.” For a more detailed rendition of the relevant domestic law provisions see the Court’s judgment in Michta v. Poland, no. 13425/02, § 33, 4 May 2006. 44. According to Article 10 (a) of the Law of 29 June 1995, as amended by the Law of 1 December 1995, different rules applied in respect of persons whose detention on remand started before 4 August 1996. This Article provided: “1. In cases where the total period of detention on remand which started before 1 August 1996 exceeds the time-limits referred to in Article 222 §§ ... and 3 of the Code of Criminal Procedure, the accused shall be kept in detention until the Supreme Court gives a decision on a request for prolongation of such detention under Article 222 § 4 of the Code of Criminal Procedure. 2. In cases referred to in § 1, if no [such] request has been lodged, detention shall be quashed not later than 1 January 1997.” Article 2 § 2 of the Law of 6 December 1996, which added certain new grounds for prolonging detention beyond the time‑limits, provided: “In cases where a request for prolongation of detention imposed before 4 August 1996 is lodged on the basis of Article 222 § 4, as amended by Article 1 of this law, the detention shall continue until that request has been examined by the Supreme Court.” THE LAW I. ALLEGED VIOLATION OF ARTICLE 5 § 1 OF THE CONVENTION 45. The applicant complained that his detention during the period between 17 September and 1 October 1999 lacked any legal basis. Article 5 of the Convention, in so far as relevant, reads: “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; ...” 46. The Government contested that argument. A. Admissibility 47. The Court notes that this complaint is not manifestly ill‑founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 48. The Government were of the view that the applicant’s detention during that period was lawful. They argued that it was based on Article 2 § 2 of the Law of 6 December 1996. The Government observed that the Supreme Court had contacted the remand centre before the expiry of the preceding detention order and informed it that the examination of the lawfulness of the applicant’s detention would be held on 1 October 1999. 49. The applicant did not agree. 50. The Court reiterates that a period of detention will in principle only be lawful if it is carried out pursuant to a court order (see Benham v. the United Kingdom, judgment of 10 June 1996, Reports 1996‑III, p. 753, § 42, and Ječius v. Lithuania, no. 34578/97, § 68, ECHR 2000‑IX). In addition, the habeas corpus guarantee contained in Article 5 § 4 of the Convention supports the view that detention which is prolonged beyond the initial period foreseen in paragraph 3 necessitates “judicial intervention” as a safeguard against arbitrariness (see Baranowski v. Poland, no. 28358/95, § 69, ECHR 2000‑III). 51. The Court observes that by the decision of 27 August 1999 the applicant’s detention was prolonged only until 17 September 1999. Thus, his detention after 17 September until 1 October 1999, when the Supreme Court further prolonged it, was not based on any judicial decision. It is clear that the fax from the registry of the Supreme Court, sent to the detention centre on 16 September 1999, in which the registry informed the prison authorities that the request for the prolongation of the applicant’s detention would be examined on 1 October 1999, cannot be regarded as a judicial order. Nor can the application for prolongation made by the Regional Court on 27 August 1999 be so qualified. 52. The Court has already examined this matter and found that the practice of keeping a person in detention under transitional provisions in the 1997 Code was inconsistent with the lawfulness requirement of Article 5 § 1 of the Convention (see A.S. v. Poland, no. 39510/98, § 76, 20 June 2006). The Court sees no reason to distinguish the present case from the previous application. It follows that the applicant’s detention on remand between 17 September and 1 October 1999 was in breach of Article 5 § 1. 53. There has accordingly been a violation of Article 5 § 1 of the Convention. II. ALLEGED VIOLATION OF ARTICLE 5 § 3 OF THE CONVENTION 54. The applicant complained that the length of his detention on remand had been unreasonable. He relied on Article 5 § 3 of the Convention, which reads as follows: “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.” 55. The Government contested that argument. A. Admissibility 56. The Court notes that this complaint is not manifestly ill‑founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. Arguments before the Court 57. The applicant submitted in general terms that his application lodged with the Court was justified. He argued that keeping him in pre‑trial detention for such a lengthy period of time had violated his human rights and the Convention. 58. The Government considered that the applicant’s pre‑trial detention satisfied the requirements of Article 5 § 3. They pointed to the fact that as from 2 June 2004 the applicant has been detained in connection with two sets of pending criminal proceedings against him. The Government submitted that his pre-trial detention was justified and that during the entire period the authorities had given relevant and sufficient reasons for prolonging it. 59. The Government further submitted that the domestic courts acted diligently and speedily, in particular taking into account the complexity of the case, which involved nine co‑accused and altogether 41 offences. 2. The Court’s assessment (a) Principles established under the Court’s case-law 60. Under the Court’s case-law, the issue of whether a period of detention is reasonable cannot be assessed in abstracto. Whether it is reasonable for an accused to remain in detention must be assessed in each case according to its special features. Continued detention can be justified in a given case only if there are specific indications of a genuine requirement of public interest which, notwithstanding the presumption of innocence, outweighs the rule of respect for individual liberty (see, among other authorities, W. v. Switzerland, judgment of 26 January 1993, Series A no. 254‑A, p. 15, § 30, and Kudła v. Poland [GC], no. 30210/96, § 110, ECHR 2000‑XI) 61. The presumption is in favour of release. As established in Neumeister v. Austria (judgment of 27 June 1968, Series A no. 8, p. 37, § 4), the second limb of Article 5 § 3 does not give judicial authorities a choice between either bringing an accused to trial within a reasonable time or granting him provisional release pending trial. Until conviction, he must be presumed innocent, and the purpose of the provision under consideration is essentially to require his provisional release once his continuing detention ceases to be reasonable (see McKay v. the United Kingdom [GC], no. 543/03 , § 41, ECHR 2006‑...). 62. It falls in the first place to the national judicial authorities to ensure that, in a given case, the pre-trial detention of an accused person does not exceed a reasonable time. To this end they must examine all the facts arguing for or against the existence of a genuine requirement of public interest justifying, with due regard to the principle of the presumption of innocence, a departure from the rule of respect for individual liberty and set them out in their decisions dismissing the applications for release. It is essentially on the basis of the reasons given in these decisions and of the established facts mentioned by the applicant in his appeals, that the Court is called upon to decide whether or not there has been a violation of Article 5 § 3 of the Convention (see McKay, cited above, § 43). 63. The persistence of reasonable suspicion that the person arrested has committed an offence is a condition sine qua non for the lawfulness of the continued detention, but after a certain lapse of time it no longer suffices. In such cases, the Court must establish whether the other grounds given by the judicial authorities continued to justify the deprivation of liberty. Where such grounds were “relevant” and “sufficient”, the Court must also ascertain whether the competent national authorities displayed “special diligence” in the conduct of the proceedings (see Labita v. Italy [GC], no. 26772/95, § 153, ECHR 2000‑IV, and Jabłoński v. Poland, no. 33492/96, § 80, 21 December 2000). (b) Application of the principles to the circumstances of the present case 64. The Court first notes that the applicant complains about his pre‑trial detention in two sets of criminal proceedings. In the first set the applicant had been detained between 20 October 1997, when he was arrested, and 15 February 2001, when he started serving the prison sentence ordered in another set of criminal proceedings. Subsequently, in particular after the first-instance judgment had been quashed by the appeal court, his pre‑trial detention had not been prolonged. The detention thus lasted 3 years, 3 months and 27 days. As regards the second set of criminal proceedings the applicant was detained on remand on 30 January 2001 and on 28 April 2005 he was convicted by the first-instance court. However, the period between 15 February and 15 October 2001 must be subtracted from the total period of the applicant’s detention, as during this time the applicant had been serving the prison sentence. It should be noted that the applicant did not start to serve the prison sentence ordered in the first set of proceedings by the Bydgoszcz Regional Court on 27 September 2001 as the conviction did not become final and enforceable. His detention thus lasted 3 years and 7 months. 65. The Court observes that in both sets of proceedings the authorities initially relied on the reasonable suspicion that the applicant had committed the offences with which he had been charged, and the risk that he might interfere with the conduct of the proceedings. In addition, the authorities relied heavily on the severity of the anticipated sentence, which made it probable that the applicant and other accused would obstruct the course of the criminal proceedings. They repeated those grounds in all their decisions. The domestic courts also considered that in view of the complexity of the case, which concerned an organised criminal group, the applicant’s detention was necessary to secure the proper conduct of the proceedings. In subsequent decisions given in both sets of criminal proceedings against the applicant, the authorities failed to advance any new grounds for prolonging the application of the most serious preventive measure to the applicant. 66. The Court accepts that the suspicion against the applicant of having committed the offences might initially have justified his detention, in particular in the light of the fact that the applicant was subsequently sentenced, by the first-instance court to twenty-five years’ imprisonment. 67. In addition, the judicial authorities appeared to presume the risk of obstruction of the proceedings with regard to the severity of the anticipated penalty, given the serious nature of the offences at issue. In this respect, the Court reiterates that the severity of the sentence faced is a relevant element in the assessment of the risk of absconding or re-offending (Górski v. Poland, no. 28904/02, § 57, 4 October 2005). The Court also acknowledges that in view of the seriousness of the accusations against the applicant the authorities could justifiably consider that such an initial risk was established. However, the Court has repeatedly held that the gravity of the charges cannot by itself serve to justify long periods of detention on remand (see Ilijkov v. Bulgaria, no. 33977/96, §§ 80‑81, 26 July 2001). 68. Furthermore, the judicial authorities relied on the fact that the applicant had been charged with being a member of an organised criminal group. In this regard, the Court considers that the existence of a general risk flowing from the organised nature of the alleged criminal activities of the applicant may be accepted as the basis for his detention at the initial stages of the proceedings (Górski v. Poland, no. 28904/02, § 58, 4 October 2005) and in some circumstances also for subsequent prolongations of the detention. It is also accepted that in such cases, involving numerous accused, the process of gathering and hearing evidence is often a difficult task. In these circumstances, the Court considers that the need to obtain voluminous evidence from many sources and to determine the facts and degree of the alleged responsibility of each of the co-defendants, constituted relevant and sufficient grounds for the applicant’s detention during the period necessary to terminate the investigation, to draw up the bill of indictment and to hear evidence from the accused. Moreover, the Court considers that in cases such as the present concerning organised criminal groups, the risk that a detainee, if released, might bring pressure to bear on witnesses or other co-accused, or might otherwise obstruct the proceedings, is in the nature of things often particularly high. 69. All the factors considered above could justify a relatively longer period of detention on remand. However, they do not give the authorities unlimited power to prolong this preventive measure. Firstly, with the passage of time, the initial grounds for pre-trial detention become less and less relevant and the domestic courts should rely on other “relevant” and “sufficient” grounds to justify the deprivation of liberty (see, among many other authorities, I.A. v. France, judgment of 23 September 1998, Reports of Judgments and Decisions 1998-VII, p. 2979, § 102; Labita v. Italy [GC], cited above, § 153). Secondly, even if due to the particular circumstances of the case, detention on remand is extended beyond the period generally accepted under the Court’s case-law, particularly strong reasons would be required to justify this. In the circumstances of the present case, the Court finds that with the passage of time, the severity of the anticipated penalty, alone or in conjunction with other grounds relied on by the authorities, cannot be accepted as sufficient justification for holding the applicant in detention for a very long period of over 3 years. 70. Finally, the Court would emphasise that under Article 5 § 3 the authorities, when deciding whether a person is to be released or detained, are obliged to consider alternative measures of ensuring his appearance at the trial. Indeed, that Article lays down not only the right to “trial within a reasonable time or release pending trial” but also provides that “release may be conditioned by guarantees to appear for trial” (see Jabłoński, cited above, § 83). In the present case the Court notes that there is no express indication that during the entire period of the applicant’s pre-trial detention the authorities envisaged any other ways of guaranteeing his appearance at trial. Nor did they give any consideration to the possibility of ensuring his presence at trial by imposing on him other “preventive measures” expressly foreseen by Polish law to secure the proper conduct of criminal proceedings. 71. The Court concludes, even taking into account the particular difficulty in dealing with a case concerning an organised criminal group, that the grounds given by the domestic authorities were not “relevant” and “sufficient” to justify the applicant’s being kept in detention for 3 years and 4 months as regards the first set of proceedings and 3 years and 7 months with respect to the second one. There has therefore been a violation of Article 5 § 3 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 72. 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 73. The applicant claimed 1,340,000 euros (EUR) in respect of non‑pecuniary damage. 74. The Government considered the claim excessive. 75. The Court awards the applicant EUR 2,000 in respect of non‑pecuniary damage. B. Costs and expenses 76. The applicant did not make any claim in respect of costs and expenses. C. Default interest 77. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the remainder of the application admissible; 2. Holds that there has been a violation of Article 5 § 1 of the Convention as regards the applicant’s detention between 17 September 1999 and 1 October 1999; 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 from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 2,000 (two thousand euros) in respect of non-pecuniary damage, plus any tax that may be chargeable, to be converted into Polish zlotys at the rate applicable at the settlement; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 5. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 12 December 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. T.L. EarlyNicolas BratzaRegistrarPresident

Lord Justice Pitchford : Introduction This is an appeal against conviction with the leave of the single judge. The appellants faced an indictment containing three counts. In count 1 they were charged jointly with causing grievous bodily harm to Martin Jones with intent to cause him grievous bodily harm, contrary to section of the 18 Offences Against the Person Act 1861. In count 2 they were charged in the alternative with inflicting grievous bodily harm on Martin Jones contrary to section 20 of the 1861 Act. In count 3 they were charged with attempting to cause grievous bodily harm to Ray Simmons with intent to cause him grievous bodily harm. On 24 November 2011 the appellant Press pleaded guilty to count 3. The trial commenced on 18 June 2012 at Plymouth Crown Court before Mr Recorder Geoffrey Still. On 26 June both men were convicted upon count 1 and the appellant Thompson was convicted upon count 3. No verdict was required upon count 2. Upon count 1 Press was sentenced to 6 years imprisonment and Thompson to 8 years imprisonment. Upon count 3 Press was sentenced to 4 years imprisonment and Thompson to 3 years imprisonment. The Recorder ordered that all sentences should be served concurrently. Press has leave to advance a single ground of appeal, namely that the Recorder wrongly gave to the jury a qualified good character direction the effect of which was to undermine the credibility of Thompson. Since there was no conflict between the cases of the two appellants the Recorder's misdirection had a consequential impact upon the safety of the verdict in Press' case. He seeks to renew a further ground of appeal in respect of which the single judge refused leave, namely that the Recorder, having correctly directed the jury upon the issue of joint enterprise, gave a confused direction in response to a note from the jury in retirement defining a route by which they might find Press guilty upon count 1 on which the prosecution had not relied in the course of the trial. Thompson has leave to advance grounds that the Recorder misdirected the jury upon the issue of his lies in interview, misdirected the jury upon the facts and wrongly provided the appellant with a qualified good character direction. Secondly, he renews his application for leave in respect of an allegation of judicial bias, a reference by prosecuting counsel to factual material which was not in evidence and the Recorder's further direction to the jury on the issue of joint enterprise in response to the note from the jury. Thirdly, he seeks to advance a further ground of appeal, namely that the Recorder did not direct the jury as to the effect of intoxication and/or post-traumatic stress disorder upon the issue of intent in counts 1 and 3. Fourthly, the Criminal Appeal Office raised for counsel's attention the question whether and to what extent expert evidence of the Thompson's post-traumatic stress disorder was relevant to their consideration of the defence of self-defence, and whether the jury was provided with appropriate directions. Evidence at Trial The appellants were soldiers in 9 Regiment REME, stationed at Bickley Barracks in Chippenham. On 1 December 2010 they travelled with other soldiers to HMS Raleigh in Plymouth for a one day training course. At the end of the day they were off duty in Plymouth. Transport was to return them to barracks some time after 3 am. The complainants, Martin Jones and Ray Simmons, were Royal Marines stationed in Plymouth who had also been out for the evening. All four men had been drinking. Shortly before 3.30 am Jones and Simmons went to a burger vendor stall (during the trial called the "burger van") situated in the street behind the Oceana club. Serving at the van was Robert Mackey. It was common ground that Mr Mackey was independent of all four men, serving in the normal course of his work, and sober. Mr Mackey gave evidence that two men, who must have been Jones and Simmons, approached the van and ordered food. At this time no-one else was in the vicinity. He handed a burger to Jones and was cooking chips for Simmons. About two minutes later the appellants arrived at the van. Mr Mackey heard no words exchanged between the four men until he heard a shout, "Do you want some?" Jones and Simmons were immediately attacked by the appellants. When Mr Mackey turned towards the sound of the raised voice the complainants were already on the floor being kicked. Mr Mackey made a radio call for security. Press ran away and Thompson was detained at the scene by security men, presumably from the Oceana club, wearing fluorescent jackets. Street CCTV film captured the attack from a moment after the complainants went to the ground. Jones and Simmons were on the ground attempting to adopt protective positions while punches and kicks delivered with full force were aimed at them by the appellants. The camera is directed towards the serving hatch of the stall. Thompson is to be seen attacking Jones while Press is to be seen attacking Simmons. At one moment Press leaves Simmons to deliver a punch at Thompson. First on the scene appears to have been two off duty members from the same regiment as the appellants who attempted to pull Thompson and Press away from their victims. Thompson is to be seen detained by two security men. Press left the scene. So severe were fractures to Jones' facial bones that he was permanently blinded in one eye. Jones gave evidence that he was unaware of the arrival of the appellants at the burger van. He saw a punch delivered to Simmons from his right. Simmons went straight to the ground. As Jones turned to his right he was also felled by a blow to the face and he dropped to his knees. He then suffered several more blows to the head, one of which was of extreme severity. Jones said during his evidence-in-chief that he and Simmons had done nothing to provoke the attack. Simmons had no memory of the attack. He told the jury that he and Jones were standing at the burger van and the next thing he could remember was waking up in an ambulance. Thompson gave evidence that while he was being detained at the scene by the security men he suffered a blow to the head that knocked him out. He also suffered an injury to his hand. He was arrested and later interviewed under caution in the presence of his solicitor. He claimed that he had gone alone to the burger van. He said that he had felt a bit threatened at the burger van but he did not think that he had taken any action against those who had threatened him. When he was shown the CCTV film it depicted the simultaneous attacks made by Thompson and Press. Press was a friend of his whom he had known for at least two years. Thompson told the police that he did not remember who had "started the fight". He did not know the man to be seen in the CCTV with him. He was "fazey" as to what happened. He next remembered being held by the bouncers. The interviewing officer saw a graze and reddening to Thompson's left forehead, and a fracture to the scaphoid bone in his wrist was subsequently found on x-ray. Thompson insisted that both these injuries were caused while he was being detained and not during the violence which preceded it. Having been shown the CCTV film Thompson responded that he did not know why he would have behaved in that manner. It was not like him. There must have been some reason. However he continued, "There isn't an excuse. I should have walked away". He repeatedly said that he did not know the identity of the man with him. Press gave evidence that when he and Thompson arrived at the burger van, he asked Thompson what he was going to order. Thompson replied, "A pint of chips". Jones responded insultingly, "If you think you are so funny, you can buy us all chips". Mr Mackey then handed a burger to Jones. Jones put ketchup on the burger and thrust it towards Thompson's face. The burger fell to the floor as Thompson parried it, and Jones squared up to them. Press said that, believing he had no alternative, he punched Jones who fell to the ground. Simmons made an aggressive approach and Press punched him to the head or face. Simmons too went to the ground. The rest, Press said, could be seen on the CCTV film. He acknowledged that at the end of the incident he had intended to cause really serious harm to Simmons while Simmons was defenceless on the ground and Press was kicking him. That is why he had pleaded guilty to count 3. Accordingly, his defence to count 1 was that he had punched Jones in defence of Thompson and had punched Simmons in defence of them both; there was no pre-arrangement between the appellants to make a joint attack on the complainants and Press claimed that he was unaware what was happening between Thompson and Jones while he, Press, was occupied with Simmons. Thompson gave evidence that he had undertaken a 6 month tour in Afghanistan, returning to the United Kingdom in April 2010. He claimed to have a good memory of the events at the burger van. In interview he had been shocked and scared. He denied that he had been lying. He agreed that he had been drinking but was tipsy and not drunk. Drink had no bearing on the way he behaved or upon his memory after the incident. Thompson confirmed that Jones had made a bad joke about the purchase of chips. Jones was handed a burger, placed the ketchup on it and thrust it towards his face. Thompson "swiped" towards the burger which went to the ground. Jones, he said, puffed out his chest and clenched his fist. Press struck Jones to the left side of his face. Simmons approached and Press punched him too. Thompson said that he went to Jones who was trying to get up and his subsequent actions were intended to keep him on the ground because he was scared what Jones would do if he regained his feet. He was acting in self-defence. He was unaware what was happening to Simmons. He had not intended to cause serious harm to Jones. We have viewed the CCTV film. It is quite apparent that these two appellants were delivering savage kicks and punches at Jones and Simmons respectively while they were immediately alongside one another. It is, we conclude, inconceivable that the jury would have accepted their assertions that they each did not know what the other was doing. On 16 June 2012 Thompson's solicitors instructed a consultant forensic psychiatrist, Dr Michael Alcock, to examine Thompson and to make a psychiatric assessment, in particular as to whether Thompson was suffering post-traumatic stress disorder in consequence of his service in Afghanistan. Dr Alcock recommended that Thompson be referred for the opinion of a clinical psychologist. Thompson was seen by Dr Arthur Anderson on 26 August 2011. His report is dated 6 September 2011. Dr Anderson, by agreement between the prosecution and the defence, gave evidence to the jury. We are informed by counsel that there was no discussion with the Recorder as to the relevance of this evidence to the issues which arose in the trial either before the evidence was adduced or before speeches. Thompson explained in evidence that his job in Afghanistan was to maintain vehicles. He would see some vehicles coming into the base with bits blown off them. Although it was not his job to clean the vehicles he did see some of the bloody results of road side explosions. He said that overall he felt good about his experience in Afghanistan. He had come back safe and had not been involved in fighting. Dr Anderson said in evidence that Thompson had described to him his intermittent fear while serving in Afghanistan. Thompson expressed to him increased levels of self-awareness and fear after mortar shelling and the effects of seeing the aftermath of explosions. He continued to experience anxiety, disturbance of appetite, disruption of sleep, occasional feelings of panic, a sense of doom and catastrophe, and periods of sadness. Dr Anderson observed no signs of exaggeration. He carried out psychological testing using several inventories and tests, in particular the FOA Post-traumatic Stress Diagnostic Scale. Thompson showed consistent scores for elevated anxiety and fear. Dr Anderson concluded that he was suffering a moderate level of post-traumatic stress disorder ("PTSD"). He explained to the jury his opinion as to the relevance of PTSD to the events at the burger van. He said that some people become hyper-vigilant and had a heightened awareness of potential threats. He did not conclude that the appellant had an explosive personality, but if he felt threatened he might over-react to protect himself, even if there was no objective reason for him to do so. Dr Anderson expressed the opinion that it was highly likely that this is the way Thompson reacted on 2 December 2010. In cross-examination he confirmed that his opinion was formed solely upon the information provided to him by Thompson himself. When it was pointed out that Thompson had given a different account in interview Dr Anderson expressed the opinion that the head injury may have caused Thompson short term memory loss. Dr Anderson could not speak about Thompson's intention and could not conclude that he did not have the intention to cause serious harm. Once he had responded Thompson would have been adrenaline-fuelled. Alcohol, he said, would play a significant part in any attack. Its effect might be to decrease Thompson's sensitivity to a threat. In re-examination he summarised his opinion: if there were threats, real or perceived, Thompson would have reacted in a way he would not have done but for his symptoms of PTSD. Grounds of Appeal - Thompson Misdirection as to lies in interview We have already referred to the assertion made by Thompson that he had suffered a head injury following the incident in front of the burger van and Dr Anderson's evidence that short term memory loss may have been the result. In the course of his summing up the Recorder (at page 17) reminded the jury that the officer in the case, Detective Constable Wood, had been recalled to deal with the contents of the custody record and the state of Thompson's health and demeanour at the time of interview. The prosecution did not accept that Thompson's ability to provide a truthful account of events had been affected by a blow to his head. The Recorder directed the jury that this evidence was relevant to the question whether the apparent discrepancies between Thompson's account to the police and his evidence during the trial, particularly about the commencement of the outbreak of violence, was to be explained by partial memory loss or was the result of concoction of the account given at trial. He continued: "Here I have to give you a careful direction about the significance you may or may not attach to any lies you find proved. The prosecution say that the defendant Thompson lied several times in his police interview and I will direct your attention to the possible passages: (a) that he went to the burger van alone at a time before he was shown the CCTV recording and (b) several times after he was shown the CCTV recording, when the CCTV record had shown that he was not alone, as to the identity of Press, who was at the time a good friend and colleague. And also (c) at page 6 before the CCTV, saying that after he felt 'a bit threatened' he didn't think that he had taken any action at all against the people or the person threatening him." The Recorder proceeded to give a standard Lucas direction as to which there is no complaint. However it is common ground that at trial counsel for the prosecution, Mr Gittins, identified specifically as a lie upon which he relied only the several occasions during interview when Thompson failed to identify Press as his companion. He did not identify Thompson's expression of belief that he had taken no action against the people who were threatening him, although the prosecution did not accept that Thompson's head injury could have explained that assertion. Mr Lewin, for Thompson, contends that the Recorder's addition of lie (c) (paragraph 16 above) was unfair to Thompson since he did not have the opportunity to deal with it in evidence or in his final address to the jury. It seems to us that Thompson's assertion that he did not think he had taken any action against the complainants was so obviously a subject for the jury's examination (having regard to what they could see on the CCTV film) that we do not accept that the appellant was placed at any disadvantage by the Recorder's inclusion of the subject in his Lucas direction. Indeed he could have been criticised for not doing so. It would, we agree, have been preferable for the matter to have been raised with the Recorder before speeches, but we do not consider that the absence of discussion could have had any effect upon the safety of the verdict. The real issue between the prosecution and the defence was whether the differences, of which there were several, between the account given by Thompson in interview and his account in evidence, could be accounted for by his head injury and a short term memory loss, some other innocent reason, a consciousness of guilt and/or concoction with Press. The judge provided the jury with appropriate directions as to the manner in which they should approach these differences. Factual errors in the summing up In the course of reminding the jury of the evidence of Jones the Recorder informed them that in response to questions from Mr Lewin he replied "I was not aggressive to them. I didn't puff up my chest". It is submitted that to be accurate the Recorder should have stated that the witness could not remember being aggressive or puffing up his chest. We have been provided with an agreed note of the evidence. In examination-in-chief, Mr Jones was asked: "Q: Had you done anything that night that might have caused that incident? A: No." In cross-examination the following passage occurred: "Q: Whilst at the burger van do you remember two other males coming to the van? A: No. Q: Thereafter a discussion took place between you and one of those males over him ordering a pint of chips? A: I do not remember that. Q: Do you remember being aggressive with him? A: No. Q: Puffing up your chest a bit? A: No." We do not consider that the Recorder's summary of the evidence was inaccurate. If it was, then it was of no consequence. The witness had already denied being in any way responsible for the violence which followed the arrival of the appellants. In response to a question whether there had been a discussion over a pint of chips the witness responded that he did not remember that. Commonly a witness will respond in this way as a denial. It was clearly of no consequence to Mr Lewin at the time since he did not elucidate in what sense the witness was giving his answer; neither did he raise it with the judge at a suitable break in his summing up. Thompson complains that in setting the scene for his summary of the interview between the police and Thompson the judge informed the jury that the usual procedure, since the appellant was accompanied by a solicitor, would have been for the solicitor to be provided with an outline of the case and an opportunity to be given for legal advice before the commencement of the interview. The Recorder was pointing out to the jury that if there had been any doubt at the time that Thompson was fit to be interviewed there was an opportunity available for a protest to be made. We are surprised that this should be raised as a ground of appeal in the absence of any evidence that the appellant's solicitor did not have the opportunity to which the Recorder was referring. In our view the Recorder was simply informing the jury about a procedure in police stations about which they would not have had knowledge but the lawyers did. We do not accept that any unfairness resulted. At page 22 of the summing up the Recorder, when referring to Thomspon's reply in interview, "I don't know why I would have reacted like that for no reason", reminded the jury of the defence case that Thompson may have been suffering from partial memory loss. He inaccurately added the words "being associated with PTSD". This was clearly a slip of the tongue since the Recorder had in the preceding five pages of transcript made repeated references to the defence case that partial memory loss may have been caused by a head injury suffered while the appellant was being detained by the security men. This again is a complaint about which it does not appear to have occurred to Mr Lewin to make mention at the time. The same observation applies to Mr Lewin's reference to an error in which the Recorder suggested that it was Simmons who had made a threatening remark about the pint of chips when, clearly, in context he meant Jones. We fail to understand why an attempt has been made to elevate this to a ground of appeal. Again the Recorder's slip of the tongue was not drawn to his attention at the time. Finally, Mr Lewin says that the Recorder summarised Thompson's evidence of "wiping" his face after the burger had been thrust towards him. In fact the evidence was that Thompson had made a "swipe" towards the burger. This too was an error of no consequence. Good character direction The Recorder provided both appellants with a good character direction. In the case of Thompson he reminded them that he was a man with no convictions, warnings or cautions on his record and that the jury had heard testimonials "speaking of his fine qualities". He continued: "However, in Mr Thompson's case you will have to decide what impact his lies, if you find them so to be, told to the police in interview have. He may, in your view of the evidence, have been protecting Press, who had escaped at that time, but why you may ask yourselves did he decline to answer when he could have?" The Recorder proceeded to instruct the jury that they should treat Press also as a man of good character although he had committed a minor offence of public disorder in the past. Furthermore, in his case, he had pleaded guilty to a serious offence of attempting to cause grievous bodily harm to Simmons with intent to do him grievous bodily harm. The judge continued: "That said, what should be your general approach to this evidence in relation to each defendant? It should be as follows. Good character cannot by itself provide a defence, but it can support a defendant's credibility and should therefore be taken into account. It also may mean that a defendant is less likely than otherwise to have committed the offence. It is for you to decide what weight you give to a defendant's good character, applying these guidelines and applying your commonsense to the evidence of alcohol in this case." Mr Lewin submits that the Recorder gave the appropriate good character direction but he added riders which rendered it qualified when it should have been unqualified. He acknowledges that had the Recorder completed the standard good character direction and only then invited the jury to consider the question of lies and the possible impact of alcohol when assessing the weight that they should give to good character, he could have had no complaint. We agree that it would have been preferable for the Recorder to have approached the good character direction as Mr Lewin submitted he should have. However, having read the passage in its entirety we are quite sure that no unfairness resulted. The jury will have understood that good character spoke in the appellants' favour in the ways the Recorder explained. However, when it came to the value of that good character, his credibility as a witness (first limb) might be affected by their decision as to whether he had lied in the course of his interview. Their decision as to the value of good character in an assessment of whether the appellant may have committed an offence (second limb) may have been tempered by the knowledge that he had consumed a substantial quantity of alcohol. We turn to examine those grounds of appeal in respect of which Thompson's application for leave was refused by the single judge. Bias At the conclusion of Dr Anderson's evidence in re-examination the Recorder indicated that he wished to ask some questions of his own. First, he reminded Dr Anderson that on three occasions in the course of his evidence he had used the word "fight" to describe the violence which had occurred. He asked Dr Anderson to confirm that he was aware that the prosecution case was that it was not a fight at all but an unprovoked attack by the defendants upon the complainants. Dr Anderson confirmed that he did. The Recorder asked the following question: "If there were not any provocative words or provocative actions by the victims prior to what happened, does that mean that your findings really do not have much relevance for the jury?" Dr Anderson replied that even if there were no words of provocation there may have been actions which were provocative. The judge asked Dr Anderson to assume that there had been neither words nor actions from the complainants which could have triggered any reaction from Thompson. Dr Anderson replied: "… he … could have initiated an attack out of the blue based on some internal mechanism, some internal rage that was going on inside of him and something sparked it off. That's the alternative view." When the Recorder asked whether this was guesswork or based on some scientific evidence Dr Anderson's response was: "I think it is at least as strong as stating, without video evidence, that there was no altercation, that there was no fight and that it was a straight beating, so let's say it is a diametrically opposed view, but it is based on as much forensic evidence as assuming there was a fight with no provocation." With the benefit of hindsight, it seems to us that although Dr Anderson had become argumentative he was not claiming that "some internal rage" was a symptom of PTSD. He was saying that in the absence of any provocative words or conduct the alternative explanation was an attack out of the blue generated by internal rage rather than fearful hypersensitivity to perceived threat. The Recorder, thinking that Dr Anderson was attempting to excuse unprovoked conduct, went on to remark that if Dr Anderson was correct any soldier returning from a battle zone was liable to respond as Mr Thompson had done even without provocation. At this point Mr Lewin intervened to object to the Recorder's questions. The jury left court. The judge indicated that he was well aware that he had for the moment taken over questioning of the expert but he informed counsel that he intended to ask a question which would undoubtedly spring to the mind of any juror in retirement. The jury returned to court and the Recorder repeated his question. Dr Anderson replied that of those who returned from battle zones not all had signs of PTSD. The judge proceeded to ask Dr Anderson whether, when he had spoken of short term memory loss as a possible effect of head injury, he was speaking of total or partial memory loss. Dr Anderson replied he was speaking of partial memory loss. The judge proceeded to deal with two questions to which the jury wanted an answer and no complaint is made in respect of them. Mr Lewin contends that in these questions the judge was betraying an animosity towards Dr Anderson's evidence which must have become evident to the jury. We do not agree. The Recorder was testing the limits of Dr Anderson's opinion as to the effect that PTSD may have had upon Thompson's appreciation of circumstances. It was clearly of the first importance to the jury's assessment of his evidence whether he was saying that Thompson's symptoms of PTSD may have caused not just a misinterpretation of actions or words from the complainants but a form of delusion in the absence of any relevant actions or words. In our judgment the Recorder was entitled to raise this issue which at the close of re-examination appears to have been an important lacuna in the evidence. It was open to any counsel to request permission to examine the doctor further. This is a matter which became relevant in his summing up to which we shall refer shortly. Joint enterprise direction The prosecution had from the start put its case on the basis of a joint enterprise by the appellants to cause grievous bodily harm to the complainants with intent. It was suggested that the motivation for the attack may have been inter-forces rivalry. The Recorder gave an explanation to the jury of the joint enterprise concept to which no exception is taken. The Recorder further explained that if one defendant joined in an attack on a complainant intending that the complainant should suffer really serious injury then he would be guilty of the section 18 offence if really serious injury was caused by the joint attack. The issue was whether the defendants were "in it together". On the facts of the present case those directions were accurate: see Grundy and others [1989] 89 Cr App R 333. However, in their retirement the jury sent to the Recorder a note in the following terms: "Does intent have to be from the beginning of the action? Can intent come into play after the action has started, that is the mind set and culpability has changed for whatever reason when the opportunity presented itself to deliberately inflict grievous bodily harm they took it and with intent." The Recorder directed the jury as follows: "This case has always been put on the basis of Jones and Mackey's evidence that it was a 2 on 2 joint attack with both jointly intending grievous bodily harm, and both responsible for what happened to each victim thereafter, that is requiring intent to do grievous bodily harm from to use your words, 'the beginning of the action'. If your question implies a later acquisition of an intention to cause grievous bodily harm (seizing the opportunity to cause grievous bodily harm which later presented itself) then that is not enough for a joint enterprise grievous bodily harm as alleged. But if one man is attacking another, and another man is attacking another man, and one man becomes possessed of an intent to do grievous bodily harm at some point later in the attack, and while so intending he causes grievous bodily harm, that would be sufficient to prove that offence against that person, if you are sure that that person was not acting with lawful excuse as I have defined it, that is self-defence either of oneself or another." Mr Lewin submits that the judge's further direction was impenetrable to a layman. We note, however, that immediately after the Recorder had given his further direction he remarked "you are nodding". He asked whether his direction sufficiently answered the jury's question. Plainly, an indication was given that it did because the judge responded "thank you very much indeed". We do not accept that the judge's further direction was couched in terms which the jury were misunderstanding. He was dealing with a situation in which the jury may not be sure that there was a joint enterprise from the outset to cause really serious harm. They were concerned as to where the judge's direction on joint enterprise would lead them if they were to rely only on the contents of the CCTV film. The judge instructed them that if one of the defendants, acting other than in self-defence, attacked one of the complainants so as to cause him grievous bodily harm with intent to cause him grievous bodily harm, that would suffice to prove the offence against that person. The Recorder specifically directed the jury that later acquired intent could not support a finding of joint enterprise to do really serious harm. The jury retired at 1.52 pm after receiving this further assistance. They returned with guilty verdicts at 3.05 pm. It is plain that, notwithstanding the direction given by the judge just over an hour before, the jury convicted on the basis that there was a joint enterprise, since they convicted Press upon count 1 in the indictment and Thompson upon count 3. We turn to consider the issues raised by the Criminal Appeal Office as worthy of further argument. Intoxication and intent The conventional direction in a case where the prosecution is required to prove a specific intent and the evidence is that the defendant has taken alcohol (or drugs) is that the jury should consider whether the act was accompanied by the required intent even in drink. The fact that the defendant was intoxicated does not constitute a defence. In the present case the Recorder repeatedly emphasised the need for the prosecution to prove the specific intent alleged against both appellants but he did not give the conventional direction in this context. At the conclusion of his summing up, however, when summarising the issues the jury had to decide, he said, "an intention obviously formed in drink remains an intention". Furthermore, Thompson had been explicit in his evidence that alcohol played no role in his decision making or behaviour on the night of 2 December 2010. The Recorder correctly informed the jury that even if his intention was formed in drink it was nevertheless an intention. In our view, the direction given was adequate. Post-traumatic stress disorder, self-defence and intent The issue raised by the case lawyer on which we have received argument is whether and to what extent Dr Anderson's evidence that Thompson was suffering the effects of PTSD was relevant to self defence. In Keane and McGrath [2010] EWCA Crim 2514, the court (Hughes LJ, Vice President, Owen and Roderick Evans JJ) considered the effect upon the common law concept of self-defence of the statutory intervention made by section 76 of the Criminal Justice and Immigration Act 2008. The court confirmed that it was not the purpose of the section to change the common law but to specify in statutory form some of the requirements upon a tribunal considering self-defence. The Vice President made it clear that although the court intended to make some general observations it would not provide a comprehensive survey of the whole of the law of self-defence so as to deal with the exigencies of any particular case. At paragraph 5 he described "the basic building blocks" of the large proportion of cases in which self-defence is raised. The first stage of the jury's consideration is to decide what happened to cause the defendant to use the violence he did. The facts must be established by application of the criminal burden and standard of proof. Second, if (and, we would add, only if) the defendant claims that something happened which caused him to act as he did, but the jury find it did not, the jury must resolve the question whether the defendant genuinely believed in the circumstances he asserted. If he did then the jury must judge his conduct against the circumstances as he honestly believed them to be, unless his erroneous belief was the result of voluntarily taken drink or drugs. The third stage of the analysis is of significance in the present case: "5 (3) Once it has thus been decided on what factual basis the defendant's actions are to be judged, either because they are the things that actually happened and he knew them or because he genuinely believed in them even if they did not occur, then the remaining and critical question for the jury is: was his response reasonable, or proportionate (which means the same thing)? Was it reasonable (or proportionate) in all the circumstances? Unlike the earlier stages which may involve the belief of the defendant being the governing factor, the reasonableness of his response on the assumed basis of fact is a test solely for the jury and not for him. In resolving it the jury must usually take into consideration what are often referred to as the 'agony of the moment' factors. That means that the jury must be reminded when it rises, as it very often does, that there is in a confrontation no opportunity for the kind of hindsight or debate which can take place months afterwards in court. The defendant must act on the instant, at any rate in a large number of cases. If he does so, and does no more than seems honestly and instinctively to be necessary, that is itself strong evidence that it was reasonable. It is strong evidence, not conclusive evidence. Whilst the jury's attention must be directed to these factors if they arise, the jury must also be made to understand that the decision of what is a reasonable response is not made by the defendant, it is made by the jury. We should perhaps add that 'in all the circumstances' means what it says. There can be no exhaustive catalogue of the events, human reactions and other circumstances which may affect the reasonableness or proportionality of what the defendant did. That is explicitly recognised by section 76 (8)." [Emphasis added] For present purposes it is sufficient to refer to a limited number of the sub-sections of section 76: "(3) The question whether the degree of force used by D was reasonable in the circumstances is to be decided by reference to the circumstances as D believed them to be, and sub-sections (4) to (8) also apply in connection with deciding that question. (4) If D claims to have held a particular belief as regards the existence of any circumstances- (a) the reasonableness or otherwise of that belief is relevant to the question whether D genuinely held it; but (b) if it is determined that D did genuinely hold it, D is entitled to rely on it for the purposes of subsection (3), whether or not- (i) it was mistaken, or (ii) (if it was mistaken) the mistake was a reasonable one to have made. (5) But subsection (4)(b) does not enable D to rely on any mistaken belief attributable to intoxication that was voluntarily induced. (6) The degree of force used by D is not to be regarded as having been reasonable in the circumstances as D believed them to be if it was disproportionate in those circumstances. (7) In deciding the question mentioned in sub-section (3) the following considerations are to be taken into account (so far as relevant in the circumstances of the case) – (a) that a person acting for a legitimate purpose may not be able to weigh to a nicety the exact measure of any necessary action; and (b) that evidence of a person's having only done what the person honestly and instinctively thought was necessary for a legitimate purpose constitutes strong evidence that only reasonable action was taken by that person for that purpose. (8) Subsection (7) is not to be read as preventing other matters from being taken into account where they are relevant in deciding the question mentioned in subsection (3). (9) This section is intended to clarify the operation of the existing defences mentioned in subsection (2). …" In the present case the complainants asserted that they said and did nothing which could have provoked violence from the appellants, even that which could have been misconstrued. The appellants on the other hand maintained that Jones and then Simmons had acted aggressively towards them in the manner we have described. Assuming that the jury concluded the complainants had done nothing to justify force from the appellants, the second stage for the jury's consideration (see paragraph 36 above), was whether Thompson nevertheless genuinely believed that their behaviour was sufficiently threatening to require force in response. It seems to us, as it did to the parties and to the judge, that Dr Anderson's evidence that Thompson would have been hypersensitive to threatening situations was plainly relevant to the question whether he held an honest belief that he was being threatened. The reasonableness of that belief was relevant to the question whether he held it but it was not conclusive. Thompson's PTSD was therefore relevant to the question whether Thompson held a genuine belief that he was under threat. The third issue for the jury was the reasonableness of the force used either in the circumstances as the jury found them to be or as the jury found Thompson genuinely believed them to be. Assuming that the jury resolved the second question in favour of the appellant (namely, he genuinely believed he was under such a threat that a physical response was required), section 76(7) required them to consider whether Thompson "honestly and instinctively" thought that the force he used was necessary in defence of himself and, ultimately, whether the force used was proportionate in those circumstances (section 76(6)). At this stage of the assessment, the issue was not, we consider, whether a reasonable person would have thought the degree of force he used was necessary but whether Thompson did. A person suffering from a post-traumatic stress disorder may, by reason of its effects, hold such a belief when a reasonable person would not. As the Vice President emphasised in Keane and McGrath a belief honestly held by the defendant that he did only what was necessary in self-defence is to be treated as "strong evidence" that the degree of force used was reasonable, but it is not conclusive evidence. The ultimate decision is entirely objective: was the force used proportionate (and therefore reasonable) in the circumstances as the defendant believed them to be? It seems to us that the facts of the present case provide a useful example of circumstances in which the objective test was likely to resolve the ultimate question. Even if Thompson genuinely believed himself to be under threat from Jones and Simmons, the jury could assess for themselves from the contents of the CCTV film whether Thompson, even upon his understanding, had gone grossly beyond what was reasonable in the circumstances. In B [2013] EWCA Crim 3 the court (Hughes LJ, Vice President, Macur and Maddison JJ) considered the question whether it was open to a defendant charged with rape contrary to section 1 of the Sexual Offences Act 2003 to rely upon a "deluded" belief in the consent of the complainant. At paragraph 36 the Vice President said: "36. Both the common law and statute law are well used to a rule which judges a defendant by his subjective state of mind. So, for example, in the case where self-defence is at issue the defendant is to be judged according to the facts as he genuinely believed them to be, whether his belief was reasonable or not, at least unless it was attributable to voluntary intoxication. Criminal damage, which arises also in the present case is not committed if the defendant honestly believes he had (or would have had) the consent of the owner of the property damage to do what he did, even if that belief was unreasonable. But the decisive indication as to the law of rape is, we think, that the Sexual Offences Act 2003 deliberately departs from this model. It deliberately does not make belief and consent enough. The belief must not only be genuinely held; it must also be reasonable in all the circumstances. This was a conscious departure from the former law. Under the former law a genuine belief in consent (reasonable or not) was a complete defence to rape; the reasonableness of the belief was material only as a factor to be considered en route to the decision whether it was genuinely held: see the Sexual Offences (Amendment) Act 1976." For these reasons the court concluded at paragraph 40: "40. We conclude that unless and until the state of mind amounts to insanity in law, then under the rule enacted in the Sexual Offences Act beliefs in consent arising from conditions such as delusional psychotic illness or personality disorders must be judged by objective standards of reasonableness and not by taking into account a mental disorder which induced a belief which could not reasonably arise without it. The defendant's mental condition, and its impact on his behaviour, is of course extremely relevant to sentence. If punishment is inappropriate, a non-custodial sentence may result when otherwise there would have been a substantial sentence of imprisonment, and whether a hospital order is needed by the time of trial or not. In other cases it may significantly mitigate the punishment required. In yet others, it may result in a substantial custodial sentence recognising the danger which the defendant presents." It seems to us that section 76 of the Criminal Justice and Immigration Act 2008 represents a further occasion upon which Parliament has specified precisely the extent to which a subjective understanding both of circumstances and necessity by the defendant contributes to the decision whether the prosecution has proved its case. In Martin [2001] EWCA Crim 2245, [2003] QB 1 the court (Lord Woolf CJ, Wright and Grigson JJ) ruled, at paragraph 67, that it would not be appropriate except in exceptional circumstances "which would make the evidence especially probative" to take into account, when deciding whether excessive force was used in self-defence, that the defendant was suffering from a psychiatric condition. Since the hearing of the present appeal, this court (Davis LJ, Keith and Lewis JJ) has handed down judgment in the appeal of Seun Oye [2013] EWCA Crim 1725. At paragraph 55 Davis LJ noted that the saving for exceptional circumstances in Martin had been considered in Canns [2005] EWCA Crim 2264 (Rose LJ, Vice President, Forbes and Calvert-Smith JJ). No member of that constitution could envisage circumstances in which a deluded understanding of circumstances arising from a psychiatric condition might be "especially probative" in resolution of the issue whether force used in self defence was reasonable. In Seun Oye, following Martin and Canns, the court concluded that in the assessment of reasonableness of force used in self defence, an honest and instinctive belief in the necessity for the force used, formed because the defendant was acting under an insane delusion as to the nature of the threat, was to be left out of account. To hold otherwise, the court concluded, would be to ignore the explicit terms of section 76(9) that section 76 was a clarification of existing law and not a change in it. We emphasise it is common ground that it was not Dr Anderson's evidence in the present case that Thompson did hold or may have held a "deluded" belief that he needed to use force. The essence of his evidence was that Thompson's condition may have caused him to react over-sensitively to perceived threat. The issue that arose in the present case was not whether the appellant was acting under a psychotic or other delusion as to the nature of the threat he faced. It was whether, having perhaps mistakenly judged the need to use force at all (through the effects of PTSD), he then exceeded what was reasonable in the circumstances as he understood them to be. The Recorder correctly directed the jury that Dr Anderson's evidence was relevant to the question whether the appellant Thompson held a genuine belief that he was under a threat such as required him to use force. Further, the Recorder correctly left to the jury the question whether there was any room for a finding that Thompson had a genuine belief in the need to defend himself if they were sure that nothing had been said or done that could have caused even an oversensitive reaction. As to the third question, whether the force used was reasonable in the circumstances, the Recorder correctly, in our view, invited the jury to consider the evidence of Dr Anderson when resolving the question whether Thompson did only what he believed was necessary in the circumstances. The Recorder made clear, however, that it was for the jury, not the defendant, to resolve the ultimate question whether the degree of force used was reasonable. In these circumstances, we agree with the parties that there was no misdirection to the jury upon the issue of self-defence. Mr Lewin has raised the question whether the jury should have received a specific direction from the judge as to the possible impact of PTSD upon the issue of intent. In our judgment the Recorder properly reminded the jury of the evidence given by Dr Anderson which was relevant to the question. He summarised Dr Anderson's evidence that a man suffering from PTSD had a tendency to over-react and "catastrophise". It was possible that the reaction of fear or anger and adrenalin sustained the attack. On the other hand, he could not say that Thompson did not have the intent to cause grievous bodily harm. It seems to us that the jury must have had well in mind these features of the evidence before concluding that Thompson harboured the necessary intent. No further direction was necessary. Grounds of Appeal – Press Character of co-accused For the reasons we have earlier explained we conclude that no unfairness was suffered by Thompson in consequence of the "qualified" good character direction given by the Recorder in his case. It follows that there was no consequential unfair impact upon the case of Press. Joint enterprise Mr Linford, for Press, argued that the jury may have been misled by the judge's further direction in response to the jury's note to believe that it was open to them to convict Press of the section 18 attack upon Jones merely because he had delivered a punch to Jones in the course of Thompson's attack upon Jones. As a matter of fact it would have been open to the jury, had they been so directed, to convict the appellant Press upon the basis that he joined in an attack upon Jones the consequence of which was to cause him really serious harm, with the intention of really serious harm, notwithstanding that Press' single punch could not have occasioned that harm by itself. However, that is not the direction the jury received in response to their note. They were instructed that they could convict either man only if he caused grievous bodily harm to his victim with intent to do so. Upon that direction it was not open to the jury to convict Press of the count 1 offence unless they were sure that he was acting in a joint enterprise with Thompson to cause really serious injury to both men. Furthermore, Thompson could not have been convicted of attempted section 18 grievous bodily harm against Simmons unless he was party to a joint enterprise with Press to cause really serious harm to both men. It follows, in our judgment, that notwithstanding the jury's question they must in the end have concluded that the joint enterprise was proved. Conclusion For the reasons we have given we conclude that there is no substance in the grounds of appeal advanced. The jury's verdicts were safe and the appeals are dismissed.

OPINION OF MR ADVOCATE GENERAL DARMON delivered on 11 December 1984 ( *1 ) Mr President, Members of the Court, Mrs Pasquali-Gherardi has brought this action for damages against the European Parliament, in its capacity as the appointing authority, in order to establish before this Court the Parliament's liability for its delay in assigning her to a post in keeping with the deterioration in her state of health. Mrs Pasquali-Gherardi was recruited as an Italian-language shorthand-typist following her successful participation in Open Competition No EP/74/C and was appointed in Grade C 3 on 17 October 1979. On 15 November 1979, she suffered an accident at her place of work, which caused serious damage in the region of her left eye. The impairment of her sight as a result of that accident made it extremely difficult for her to continue the work of a shorthand-typist for which she had been recruited, and that is the reason why, on several occasions between the end of 1979 and spring 1981, she was obliged to absent herself from her work on sick leave. Those interruptions in her work were the basis of an unfavourable report on her probationary period; that report led to her dismissal, a decision which the appointing authority subsequently rescinded. The applicant is now an established official and was promoted to Grade C 2 with effect from 1 January 1982 by a decision of 14 January 1983. The aftereffects of the accident raised the question of the degree of invalidity which should be recognized in the applicant's case. In order to deal with the matter, two procedures were set in motion. The Director of Personnel and Social Affairs at the Parliament considered that the applicant's condition might be covered by Article 78 of the Staff Regulations, and that consequently it should be determined whether she had incurred ‘total permanent invalidity preventing [her] from performing the duties corresponding to a post in [her] career bracket.’ On 21 January 1982, he therefore referred the matter to the Invalidity Committee constituted in accordance with Article 7 of Annex II to the Staff Regulations. In its report, which was delivered on 28 January 1983, the Committee recommended that the applicant ‘should be assigned to a post corresponding to her career bracket but not involving a high level of visual effort’. The second procedure, which was initiated subsequently, was an inquiry under the terms of Article 73 of the Staff Regulations to establish the amount of the lump sum to be paid in compensation by the Parliament on the basis of the invalidity rate to be determined by the Medical Committee constituted for that purpose. That committee, which was consulted at the applicant's request, ( ) reported on 10 January 1984 in favour of an invalidity rate of 7%. It is in the light of those circumstances that we must consider the dispute which arose between the appointing authority and the applicant as to whether it was possible for her to be assigned to duties better suited to her state of health. Since no solution has yet been found, Mrs Pasquali-Gherardi continues to work as a shorthand-typist. It is for that reason that she has brought this action, claiming that the Parliament failed to show due diligence in relieving her of duties which had become unsuitable as a result of her accident. Before considering the substance of the application, I must examine its admissibility, which the defendant denies. 1. Admissibility As the Parliament notes, the applicant brought her application without first submitting a complaint to the appointing authority, despite the provisions of Article 91 (2) of the Staff Regulations, which states that: ‘An appeal to the Court of Justice of the European Communities shall lie only if: — the appointing authority has previously had a complaint submitted to it pursuant to Article 90 (2) within the period prescribed therein ...’. The ‘prior’ complaint was in fact lodged after this action had been brought, and the Parliament argues that the action should therefore be declared inadmissible. However, in order to show that she was justified in bringing proceedings directly before this Court, Mrs Pasquali-Gherardi relies on the reasoning adopted by the Court in the Marcato case (and consistently followed since) to the effect that a complaint to the appointing authority against a decision adopted by a selection board is pointless, because the administration is not competent to review it. ( ) So in this case, the applicant argues, the damage she has suffered is irreversible; it is no longer possible for the Parliament to remedy it. I am unable to accept that argument, which is based on a misapplication of the Marcato judgment to this case. The reason why the Court considered that a prior complaint to the appointing authority in order to contest the decision of a selection board was ‘nugatory’ was that a selection board was independent, so that its decisions could not be amended by the appointing authority. ( ) For that reason, lodging a complaint ‘would merely result in a futile prolongation of the procedure’, ( ) since the appointing authority is not empowered to annul or amend the selection board's decisions. However, no valid analogy can be drawn between the circumstances which justify that economy of procedure and the situation here. In this case, far from being nugatory, the applicant's use of the official complaints procedure laid down in Article 90 of the Staff Regulations would have served precisely the purpose ascribed to it by the Court: ‘to encourage an amicable settlement of the dispute ... ’. ( ) Moreover, it would have fulfilled the ‘duty of loyalty’, which requires any complainant to make his complaints known to the appointing authority and enable it to settle the dispute immediately without having to go before the Court. ( ) Finally, I should add that since this is an action challenging the appointing authority's failure to take a decision to transfer the applicant, Mrs Pasquali-Gherardi should have made a request, followed if necessary by a complaint, before commencing an action. The applicant has therefore failed to observe any part of the official complaints procedure, which was specifically established by the Staff Regulations to formalize disputes so as to bring them rapidly to a conclusion and, if possible, to avoid an application to the Court. The applicant's failure to do so is particularly difficult to understand in view of the fact that, as she has herself acknowledged, her object in bringing these proceedings was to compel the Parliament to take a decision on the matter. All these considerations lead me to propose that the action brought by Mrs Pasquali-Gherardi should be declared inadmissible. I therefore examine the substance of her case solely in the alternative. 2. Substance I should like first of all to remind the Court of the precise purpose of the action. Mrs Pasquali-Gherardi is not seeking to obtain compensation for the damage she sustained as a result of her accident. Her action for compensation relates solely to the damage produced by her worsened state of health since that accident, which she claims is due, on the one hand, to the appointing authority's failure to inform her immediately of the Invalidity Committee's conclusions and, on the other, to the appointing authority's delay in assigning her to a more appropriate position havingregard to the aftereffects of the accident. Thus the applicant needs to prove the existence of those errors and the reality of both the damage suffered and the causal link between the two. I shall, in so far as is necessary, examine those conditions in turn to see if they are met. With regard to the two errors alleged against the Parliament, I would make the following remarks. The complaint that the Invalidity Committee's report was not notified in due time cannot be accepted. Though it is true that Article 9 of Annex II to the Staff Regulations, which deals with the Invalidity Committee, lays down the rule that the Committee's conclusions are to be communicated to the official concerned, it does not specify a time-limit. In this case, those conclusions were made available to the applicant, after her lawyer had requested them, within two months from the delivery of the report. Although it may be regretted that that communication was not made as a matter of course, the period which elapsed does not appear to me to have been unreasonable. The second error which Mrs Pasquali-Gherardi alleges against the Parliament is that it failed to look for a solution to deal with the health problem she had suffered since her accident, even though the question of transferring her to a more suitable position had been raised first in a letter of 8 December 1980 from the Director-General for Sessional and General Services, then again in a letter of 25 May 1982 from the Director of Personnel and finally in the Invalidity Committee's own recommendation dated 28 January 1983. In other words, although it had been recognized very early on that the duties for which she had been recruited were incompatible with her state of health, the Parliament did not act with the diligence which must be a feature of its dealings with its staff. With regard to that claim, the following points deserve to be taken into consideration. It is undeniable that the injury suffered by Mrs Pasquali-Gherardi as a result of her accident has reduced her visual capacity, so that the work she was recruited to do as a shorthand-typist has been causing her difficulties. It is also established that the applicant still continues to carry out her duties and that it would be desirable — the Parliament does not deny this — for her to receive another posting. Nevertheless, the delay of which the applicant complains does not appear to me to constitute wrongful conduct on the part of the appointing authority. Despite what the applicant says, I do not think that the question of a transfer could really arise until the Invalidity Committee had made its recommendation. The administration's letter of 8 December 1980 does not constitute a valid basis for her argument, since it merely refers to ‘retirement on grounds of invalidity or any other solution’, without suggesting anything more specific. Against that may be set the administration's letter of 25 May 1982, which refers to the possibility of transferring Mrs Pasquali-Gherardi on health grounds. However, if that solution was to be implemented it was necessary first of all to resolve the question whether the applicant was able to continue working, and that obviously depended on the conclusions of the Invalidity Committee. It is true that the matter was referred to the Committee more than two years after the accident. However, it is necessary to bear in mind what happened in that period; the Parliament's medical officer, taking the view that the applicant's condition had not yet stabilized, had postponed the determination of her degree of invalidity until the middle of 1981, and it is precisely that period which saw the unfortunate episode of her dismissal — a measure which was very properly rescinded at the end of 1981 by the Parliament's Secretary-General. Between the latter decision and the reference to the Invalidity Committee, less than two months elapsed. Thus the date on which the Invalidity Committee delivered its conclusions is in fact the time at which the question of a transfer arose. In fact, following that recommendation, the Parliament offered Mrs Pasquali-Gherardi two alternative posts, one in the Messengers Service, and the other in Personnel Archives. Although Mrs Pasquali-Gherardi does not deny that it was extremely difficult for the appointing authority to find a post in her career bracket which did not involve a high level of visual effort, and indeed goes so far as to admit that what she was looking for was a ‘miracle job’, she did not think fit to accept either of those two offers. It is clear on those facts that Mrs Pasquali-Gherardi cannot complain of any delay on the part of the appointing authority in offering her a new posting suitable for her state of health. Consequently, I consider that the wrongful conduct with which the appointing authority is charged has not been established. If nevertheless it should be held that the opposite was the case, it would then be necessary to consider whether the applicant really suffered damage as a result of the wrongful conduct. Mrs Pasquali-Gherardi maintains that her state of health has deteriorated as a result of the appointing authority's delay in assigning her to a more appropriate position. I do not share the applicant's conviction. She has not adduced any proof — which might have included an expert medical opinion — either of her worsened state of health or of its connection with the delay alleged against the Parliament. The Medical Committee's report, which established a degree of invalidity limited to 7%, does not contain any evidence supporting the applicant's claim. Nor has any proof been provided of the existence of a causal connection, which cannot, despite what the applicant claims, be presumed. To sum up, I propose: (1) That the application should be declared inadmissible; (2) In the alternative, that it should be declared unfounded; (3) That, pursuant to Article 70 of the Rules of Procedure, each party should be ordered to bear its own costs. ( *1 ) Translated from the French. ( ) Article 19 of the Rules on the Insurance of Officials of the European Communities against the Risk of Accident and of Occupational Disease, adopted on 27 January 1977 by the European Parliament. ( ) Case 44/71, Marcalo, [1972] ECR 427, at paragraphs 4 to 9. ( ) Case 34/80, Allibii, [1981] ECR 665, at paragraph 7. ( ) Case 7/77, von Wüllerstorff and Urbair, [1978] ECR 769, at paragraph 8. ( ) Case 543/79, Birbe, [1982] ECR 4425, at paragraph 26. ( ) Joined Cases 22 and 23/60, Elz, [1961] ECR 181, Opinion of Advocate General Roemer, at p. 192.

HH Judge Mole QC sitting as a Deputy High Court Judge : This is an application under section 287 of the Town and Country Planning Act 1990. By Ground 1 the Claimants say that Stevenage Borough Council (SBC) have erred in law in adopting a replacement local plan that is not in "general conformity" with the Structure Plan, and claim the quashing of the offending parts of the plan. The claim under Ground 2 is that in breach of the law Stevenage Borough Council adopted the plan without considering the objection the Claimants had made to the proposed new boundary of the Green Belt near Norton Green and ask that the proposals map be quashed so far as it relates to that boundary. SBC does not oppose this ground save to argue that, in the exercise of my discretion, I should not grant the relief sought. GROUND 1 The Hertfordshire Structure Plan Review, 1991-2011, was adopted by Hertfordshire County Council (HCC) on the 30th of April 1998. One of the matters it needed to address was the provision of land for strategic housing development. The deposit version of the plan was based upon the need for the provision of a total of 65,000 new dwellings. HCC believed that much of that would come from outstanding permissions and other commitments, and of the remainder a great proportion could be found through planned regeneration. There would remain a balance of 6000 dwellings, for which specific strategic provision might have to be made. HCC therefore sought to make strategic provision "on a contingency basis" for up to 6000 additional dwelling sites. Draft Policy 7 showed 5000 dwellings within the plan period being provided at Stevenage west of the A1(M). Of those dwellings 1000 were to be within SBC's boundary and the remainder within the boundary of North Herts District Council (NHDC). The Policy said that construction of dwellings would not be permitted to start until at least 2004, and in effect, not at all until it was clear they were needed. The contingent nature of Policy 7 was challenged at the Examination in Public, held in March 1997. Developers and several District Councils, including SBC, objected to this limitation as creating an undesirable uncertainty in a situation where there were long lead times to planning development. The Panel concluded that - "while it is just about possible to proceed on a contingency basis in entertaining local plan reviews/amendments and related work which would give effect to strategic proposals, it would be highly confusing to the public and interested parties and the procedure would lack credibility..... moreover, it is a fatal objection to such an approach in the case of green belt land, that "exceptional circumstances" could not possibly have been demonstrated at the initial stage, and the decision on whether development of Green Belt was justified on that criterion would have passed out of the Structure Plan context and be left entirely to HCC at a later stage." This point relates to the important principle that once the general extent of the green belt has been approved it should be altered only in "exceptional circumstances". In order to justify a boundary alteration there has to be a demonstrable and, effectively, immediate need. The Panel held that this requirement would be met by the impossibility of otherwise making adequate and sustainable provision to meet the development need they foresaw. But if the need were so uncertain that the policy had to be expressed as subject to a contingency that might never be satisfied within the plan period, it could not justify a green belt alteration. The Panel continued - "However the more fundamental objection is that in the Panel's view there is no realistic prospect of progress with regeneration removing or diminishing the need for supplementary provision for 6,000 dwellings over and above the 15,000 covered by Policy 6 if the total 65,000 dwelling requirement is to be met, a requirement in the nature of a minimum or near minimum requirement. Given the long lead time in planning for such developments, and the need for as much certainty as practicable in structure planning, planning should begin on a firm basis without delay." The Panel also considered the proposals for west Stevenage and the timetable within which they could be brought forward. The Panel examined the arguments about the number of completions that it considered it reasonable to assume by the end of the plan period. The Panel set out its recommendations for the revision of Policies 7 and 8. HCC accepted those recommendations and the Hertfordshire Structure Plan Review 1991 - 2011, adopted April 1998, incorporated policies accordingly. Policies 8 and 9, as adopted and renumbered, read as follows: "POLICY 8 STRATEGIC LOCATIONS FOR SUPPLEMENTARY HOUSING DEVELOPMENT Land suitable for strategic housing allocations, together with necessary associated development, will be identified in the following locations... and excluded from the Green Belt. ..... Stevenage West of A1(M) 1,000 North Hertfordshire West of A1(M) at Stevenage 2,600 The planning of these developments will be brought forward through the review of the relevant local plans. In the case of the development west of the A1(M) at Stevenage, the master plan will provide for: i) an initial phase of 5,000 dwellings, some of which to be completed after 2011; ii) in the longer term, a possible second phase of a further 5,000 dwellings. Providing that 3,600 dwellings in the initial phase are planned to be built by 2011, the detailed dwellings split at this location between North Hertfordshire district and Stevenage Borough will be determined in the relevant local plans, informed by agreed master planning work to establish the most sustainable form of development. POLICY 9 DWELLING DISTRIBUTION, 1991 TO 2011 Local plans will make provision in accordance with the development strategy as set out in policies 6, 7 and 8, for a net increase in the period 1991 to 2011 of about 65,000 dwellings distributed as follows: ..... Stevenage 5,700 includes 1000 West of A1(M) ." A year later SBC put on deposit the Stevenage District Plan, Second Review 1991-2011. Policy H2 identified an area of 93 ha called Stevenage West as allocated for an estimated 1,000 dwellings in order to meet the Structure Plan Housing requirement. Further specific guidance was given in Policies SW1 to SW10. On the 24th November the County Council wrote formally to inform Stevenage Borough Council that the deposit review plan was considered to be in general conformity with the Structure Plan Review. The District Plan Review progressed to a second deposit draft in May 2001. Policy H2 now read - POLICY H2: STRATEGIC HOUSING ALLOCATION - STEVENAGE WEST IN ORDER TO MEET THE PROVISIONS OF STRUCTURE PLAN POLICY 8, LAND AT STEVENAGE WEST IS ALLOCATED FOR THE DEVELOPMENT OF APPROXIMATELY 1,000 DWELLINGS. Policy H4 dealt with the phasing of the sites allocated in policy H2. It showed that in phase 2, from 2004 to 2008, 500 dwellings were expected in Stevenage West the remaining 500 were expected to come forward in phase 3, from 2008 to 2011. The proposals map showed the area within SBC's boundaries, north of Norton Green, as the 'Stevenage West' development area. It was excluded from the Green Belt, although the Green Belt boundary in the NHDC area came up to the southern boundary of the development area and included Norton Green. The revised deposit version of the plan, with some proposed modifications, moved towards a Local Plan Inquiry. A number of objections were made to the principle of Stevenage West and the consequent changes to the definition and extent of the Green Belt that flowed from it. At the pre-inquiry meeting, on the 19th June 2002, Leading Counsel for SBC, defining the scope of the inquiry, said – "There are a number of responses both to the deposit and the revised deposit versions of the local plan which question the appropriateness of the strategic housing allocation at Stevenage West ….. Indeed very recently it is understood that the County Council has proposed to issue a pre-deposit consultation document on possible alterations to the structure plan. The Borough Council has consistently responded to such objections by referring to the adopted Hertfordshire Structure Plan Policy 8 which allocates Stevenage West as a strategic housing allocation and to the fact that the local plan must be in conformity with the adopted structure plan." He continued "it would be wrong to delay the Local Planning Inquiry. Firstly, there is no present intention on the part of the Borough Council to withdraw its plan and secondly, the scope of the Inquiry could not be affected by any decision of the County Council. Indeed given the importance of meeting the identified housing need, delay at this stage would be likely to be harmful to the achievement of this aim. In conclusion, the Local Plan must be in general conformity with the adopted Structure Plan, which includes Stevenage West as a strategic Housing allocation. Consequently, the scope of this inquiry cannot include arguments, for example, that Stevenage West should neither be allocated nor developed during the plan period up to 2011." HCC was indeed rethinking Policy 8. It claimed that recent work showed that the EIP had dramatically underestimated the scope for planned regeneration. It was clear, HCC felt, that there was no need for strategic green-field allocations within the plan period. So in July HCC published a First Consultation Draft Alterations 2001-2016 to the HSP. This document deleted former Policy 8 and replaced it with the bare statement that no strategic allocations would be identified in the review of Local Plans and no further strategic scale housing developments should be permitted anywhere in Hertfordshire. (I observe that this was a consultation document and thus did not amount to "proposals for the alteration of the structure plan", which would have triggered the provisions of section 46 (6) of the Town and Country Planning Act 1990.) The Inquiry into the Stevenage District Plan Review opened in September 2002. HCC appeared as objectors to Policy H2, arguing that the Stevenage West proposals within the Stevenage area should be deleted and that the district plan would still remain in general conformity with the structure plan. SBC resisted those objections, submitting to the Inspector that a Local Plan without Stevenage West in it could not be in general conformity with the Structure Plan. The NHDC had also been preparing a local plan to allocate that part of Stevenage West within their area but their response to the County Council's changed attitude had been to withdraw their local plan completely. (That this was action the local planning authority was entitled to take was decided by Collins J. in Persimmon Homes v North Hertfordshire District Council [2001] EWHC 565.) In July 2003 the Local Plan Inspector's report on objections to the Local Plan was received. He examined the reassessed countywide capacity estimates and noting the objections to the County Council's views, he said it was beyond his remit to reach a view on such a matter. He continued: "3.59 As the need for this development has been justified strategically, I consider it can only be reassessed as part of a similar strategic exercise. Until that strategic exercise has been carried out, an exercise that will need to take into account the revised policy approach to the selection of new housing development that is promoted in national policy guidance, there must be at least some uncertainty on the strategic justification for the development. 3.60 In order to be in general conformity with the adopted Structure Plan I consider this Local Plan should identify the land necessary to provide about 1000 dwellings as required by the Structure Plan. ... At the same time, in order to reflect the current uncertainty, that identification should however be caveated by a statement that makes it clear the formal release of the land for development is dependent on completion of a strategic evaluation of the proposed development determining it continues to be needed. The necessary evaluation could be carried out as part of the preparation of the emerging Review Structure Plan. If development of the land continues to be justified strategically, then the formal release of the relevant land in the form of granting planning permission can be considered. If that justification is not confirmed, this Local Plan will need to be reviewed to delete the proposed development. In this latter event it will also be necessary to make changes to the Plan, particularly to Chapter 12, but also associated changes to matters related to the west of Stevenage development, such as to the Plan's transport, Green Belt, countryside and employment provisions. 3.61 I consider this approach would ensure that previously-developed sites in urban areas are developed before green field sites. In this way the Plan would be consistent with a main thrust of the plan, monitor and manage new policy direction advised in PPG3 and as expanded in the DETR publication 'Planning to Deliver'." He dealt with the arguments about conformity thus: "It is argued that a version of the Plan amended in this way would remain in general conformity with the Structure Plan. The proposed development has been justified strategically in the light of the sustainability provisions of Policy 1 in the adopted Structure Plan and represents an important part of the strategic policies/proposals of that Plan. To remove the relevant part of that growth from this Local Plan would in my view pre-judge the outcome of a proper re-appraisal of its strategic justification, an exercise that could be carried out within the context of reviewing the Structure Plan. The County-wide considerations cannot properly and fully be assessed as part of this Local Plan. I cannot therefore accept that removal from this Local Plan of part of the development proposed to the west of the A1 (M.) at Stevenage that is proposed in Policy 8 of the adopted Structure Plan as a strategic Housing allocation, would result in a Local Plan in general conformity with that Plan. Removal of the proposed development would represent a material change to the structure plan's proposals." He said he had formed the following views: -- "Firstly, in order for this Local Plan to be in general conformity with the adopted Structure Plan it must satisfy Policy 8 of that Plan and identify land west of the A1(M) for the development of about 1,000 dwellings. Secondly, there is considerable uncertainty over the strategic justification for that development, particularly given the national planning policy guidance introduced by PPG 3. Given that uncertainty, the Local Plan should make it clear that the identified land cannot be granted planning permission for the proposed development until and if the strategic justification for it has been reconsidered and accepted. If the strategic justification for the development is not made, either in the emerging Structure Plan or within some other framework, then this Local Plan will need to be the subject of a review to delete that part of the proposed new settlement west of the A1(M) at Stevenage or otherwise to respond to the revised strategic policy context. Thirdly, other provisions of the plan that relate to Policy H2 will also need to be changed to remain consistent with this approach. For example, given the current uncertainty referred to above and the suggested policy change I have considered it unlikely that 500 dwellings could be completed within West of Stevenage up to 2008. Policy H4 should therefore be amended to indicate the completion of 400 dwellings up to 2008, with 600 between 2008 and 2011. Finally, I consider this approach would ensure the Local Plan remained in general conformity with the adopted Structure Plan whilst reflecting the changes in circumstance, such as the publication of PPG3, that have occurred since the Structure Plan was adopted. It would therefore most appropriately respond to the current situation." The clear inference to be drawn from the Inspector's third conclusion (above) is that he did not think that the caveat he was introducing was likely to mean more than a later start to the strategic housing development. He still contemplated that it would all come forward within the plan period. In the meantime, in the spring of 2003, HCC had pressed ahead with a Deposit Draft version of the Structure Plan alterations and had consulted the Government Office for the Eastern Region (GOER). On the 15th of April 2003 GOER replied, querying the point of taking the alterations any further forward in the light of the uncertainties about the state of long-term housing need and the continuing work to address them. The letter also commented "As a result of this uncertainty, we also question whether it is prudent to omit strategic greenfield reserves which may be needed to meet longer-term housing requirements during the Structure Plan period." HCC decided not to proceed to an EIP and the deposit draft document does not seem to have gone significantly further. I am told that it will not now do so. (It follows that passages in paragraph 3.2.13 of the adopted explanatory text, (below) are no longer accurate.) But the Stevenage Local Plan Second Review did make progress. Modifications were proposed which followed the Inspector's recommendations. To these the Claimants objected. (I note that it was their first opportunity to enter the argument.) SBC considered the objections and recorded the Claimant's stated intention of seeking to quash the plan if it were to go ahead in its proposed form. Nonetheless the Council resolved to adopt the policies as they were proposed to be modified and on the 8th of December 2004 the Stevenage Borough Council District Plan Second Review was adopted. As finally adopted Policy H2 read as set out below. (The underlining indicates those passages that the Claimants seek to quash). POLICY H2: STRATEGIC HOUSING DEVELOPMENT STEVENAGE WEST In order to meet the provisions of Policy 8 in the adopted Structure Plan, land at Stevenage West is identified for the development of approximately 1000 dwellings. The allocated land is safeguarded from development pending reconsideration and acceptance of its strategic justification. 3.2.11 .... 3.2.12 .... 3.2.13 the Structure Plan is currently being reviewed in the light of the material changes that have occurred since it was adopted in 1998, including the need to take into account the provisions of PPG 3. That exercise will reassess the justification for the strategic development west of the A1 (M.) at Stevenage. Only if that review of the Structure Plan or an alternative form of reconsideration of the strategic need for the development determines that Stevenage West is required to meet the County's development needs up to 2011 can the site be considered as allocated and available to be released for development. If the Review Structure Plan or alternative form of reconsideration does not justify development of the land up to 2011, it will be necessary to review this Local Plan to take account of the revised strategic policy context. A planning application has been made to SBC in relation to the development area of Stevenage West. That application was called in by the Secretary of State for his determination and an inquiry has been held. No decision has yet been announced. THE LAW It was an important principle of the Town and Country Planning Act 1990, s.54A, that- "Where,….regard is to be had to the development plan, the determination shall be made in accordance with the plan unless material considerations indicate otherwise." From 28th September 2004, this principle has found expression in s.38 of the Property and Compensation Act 2004 in almost the same words. I shall set out the whole of the section. Section 38 Development Plan (1) A reference to the development plan in any enactment mentioned in subsection (7) must be construed in accordance with subsections (2) to (5). (2) ……. (3) For the purposes of any other area in England the development plan is- (a)…. (b) the development plan documents (taken as a whole) which have been adopted or approved in relation to that area. (4) …. (5) If to any extent a policy contained in a development plan for an area conflicts with another policy in the development plan the conflict must be resolved in favour of the policy which is contained in the last document to be adopted, approved or published (as the case may be). (6) If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise. (7) The enactments are- (a) this Act; (b) the planning Acts; …. (8) (1) During the transitional period a reference in an enactment mentioned in section 38(7) above to the development plan for an area in England is a reference to- (a) … (b) the development plan for the area for the purposes of section 27 or 54 of the principal Act." Schedule 8 says that- "1(1) During the transitional period a reference in an enactment mentioned in section 38(7) above to the development plan for an area in England is a reference to – (a) … (b) the development plan for the area for the purposes of section 27 or 54 of the principal Act. (2) The transitional period is the period starting with the commencement of section 38 and ending on whichever is the earlier of (a) the end of the period of three years; (b) the day when in relation to an old policy , a new policy which expressly replaces it is published ,adopted or approved." So the effect of the legislation is to continue the old development plan for a transitional period of no more than three years from 24th September 2004. Another vitally important principle reflected the scheme of the earlier legislation that the development plan was comprised of the strategic Structure Plan, prepared by the County Council outside urban areas, and the Local Plan that translated it into effect within the Districts and Boroughs. This was the principle that the Local Plan should be in 'general conformity' with the structure plan. Section 36 of the Town and Country Planning Act 1990 provided 36 (1) the local planning authority shall within such period if any as the Secretary of State may direct, prepare for their area a plan to be known as a local plan. (2) a local plan shall contain a written statement formulating the authority's detailed policies for the development and use of land in their area. .... (4) a local plan shall be in general conformity with the structure plan. .... (6) a local plan shall also contain- (a) a map illustrating each of the detailed policies; and (b) such diagrams, illustrations or other descriptive or explanatory matter in respect of the policies as may be prescribed, and may contain such descriptive or explanatory matter as the authority think appropriate. Section 43 dealt with the adoption of the local plan, providing in section 43 (3) that " the authority shall not adopt any proposals which do not conform generally to the structure plan." Section 44 provided that the Secretary of State might direct that the proposals, or any part of them might be submitted to him for his approval. Section 46 dealt with conformity between plans by giving the structure plan authority the power to issue, or refuse to issue, a certificate of general conformity. The Local Plan Authority had to serve on the Structure Plan Authority a copy of their proposed plan and allow 28 days to elapse. Then, where the Structure Plan Authority had been served with a copy – "they shall, before the end of any period prescribed for the purposes of that subsection, supply the authority responsible for the local plan with- (a) a statement that the plan or the proposals are in general conformity with the Structure Plan; or (b) a statement that the plan or the proposals are not in such conformity. (3) a statement that a plan or proposals are not in such conformity shall specify the respects in which the plan or proposals are not in such conformity. (4) any such statement shall be treated for the purposes of this Chapter as an objection made in accordance with the regulations." Section 46 (6) continued- Where- (a) a local planning authority proposes to make, alter or replace a local plan; (b) copies of proposals for the alteration or replacement of the Structure Plan for their area have been made available for inspection under section 33 (2); and (c) the authority mentioned in paragraph (a) include in any relevant copy of the plan or proposals a statement that they are making the permitted assumption, the permitted assumption shall, subject to subsection (9), be made for all purposes (including in particular any question as to conformity between plans). (7) in this section "the permitted assumption" means the assumption that- (a) the proposals mentioned in subsection (6) (b); or (b) if any proposed modifications to those proposals are published in accordance with regulations made under section 53, the proposals as so modified, have been adopted. ….. (10) the provisions of a local plan prevail for all purposes over any conflicting provisions in the relevant Structure Plan unless the local plan is one- (a) stated under section 35C not to be in general conformity with the Structure Plan; and (b) neither altered nor replaced after the statement was supplied. It will be recalled that under section 7 (1) (as amended) of the Town and Country Planning Act 1971, the County Planning Authority was required to prepare and submit a structure plan, formulating general policies, and the District or Borough councils, in their turn, were required to produce local policies in a local plan, subject to the same requirement that the Local Plan be in general conformity with the Structure Plan. (see Section 11 (4)) If so satisfied, the County Planning Authority was required to issue its certificate to that effect. But if not the Local Plan could not proceed further. The matter had to be referred to the Secretary of State for decision. He had the power to direct the County to issue a certificate, or issue one himself, or direct the local planning authority to revise its proposals. Substantial reforms were made in 1992 by the amendment of the 1990 Act. The system was changed for the future but approved structure plans in force at the commencement of the new act were continued and provision was made for their replacement or alteration. (Sections 31 and 32.) It was foreseen that both structure and local plans would require alteration and replacement and the principles of conformity and priority between plans were dealt with in statute to cover such changes. Thus a Structure Plan authority that adopted or approved an alteration or replacement structure plan was required to notify the local planning authority in their area that the local plan was or was not in general conformity with the altered structure plan. (Section 35C) A statement that the local plan was not in conformity with the structure plan then the meant that the rule that the provisions of the local plan prevailed in the case of conflict did not apply until the local plan was altered or replaced (section 46 (10)). What 'general conformity' or 'conform generally' mean seems never to have been considered in the authorities. I have been referred to the definitions of the words in the Shorter Oxford English Dictionary. The most apt definition of 'general' is probably 'including the main features, elements, etc and neglecting or ignoring unimportant details or exceptions' and of 'conformity' perhaps ' compliance with'. Mr Straker urges, 'agreement in character'. I did not feel the dictionary definitions helped the process of analysis very much. The approach of the Local Plan Inspector seems to have been that to be in general conformity the plan must be "consistent with a main thrust of the (structure) plan" and not "represent a material change to the structure plan's proposals" but at the same time it could and should reflect the changes in circumstances since the structure plan was adopted. This sounds sensible and pragmatic Some indication that the test of general conformity is comparatively strict might be drawn from certain statutory provisions. As is set out above, section 46 (6) permits the Local Planning Authority to make the "permitted assumption" where the Structure Planning Authority have prepared proposals for the alteration or replacement of the Structure Plan and have made them available formally under section 33 (2). The "permitted assumption" is that the proposals, or the proposals as proposed to be modified, have been adopted. On that "permitted assumption" the local authority is bound to develop its own proposals in conformity with the Structure Plan as proposed to be altered. But, by the same token, it would seem that it would not be permissible to make the same assumption if the structure plan alteration has not got to the specified stage, as in the present case. It might fairly be said, of course, that there is a difference between making an assumption in a plan, and making an allowance in a plan for a possibility. The Planning and Compulsory Purchase Act 2004, schedule 8, paragraph 11, provides that- "11(1) this paragraph applies if the Secretary of State thinks- (a) that the conformity requirement is likely to give rise to inconsistency between the proposals and relevant policies or guidance, and (b) it is necessary or expedient to avoid such inconsistency. (2) the Secretary of State may direct that to the extent specified in the direction the conformity requirement must be ignored. This provision suggests that it is contemplated that the local planning authority may have to follow the structure plan in the interests of general conformity at the expense of consistency and compliance with government policy. The local plan authority cannot simply resolve the inconsistency with an aging structure plan by a degree of purposive nonconformity. SUBMISSIONS On behalf of the Claimants Mr. Purchas submitted that Policies 8 and 9 of the Structure Plan are unconstrained. Those policies say that land will be identified and excluded from the Green Belt. The contingency to which it was sought to subject Policies 8 and 9 was struck out, for good reason. Policy H2 of the District Plan Second Review has reintroduced a contingency which is objectionable for virtually the same compelling reasons. The contingency may or may not be satisfied at some date in the plan period. Policy H2 expressed in those tentative terms cannot be said to be in general conformity with the clarity and certainty of the Structure Plan. Whether or not a provision is in general conformity with the Structure Plan is a matter for the Court to determine objectively. It is not something to be left to the discretion of the local plan authority, only to be interfered with by the court on Wednesbury principles. The requirement for general conformity is set out in mandatory terms and several provisions of the Acts suggest that it is a matter to be interpreted strictly. Such an interpretation, he argued, was in line with the dictionary definitions. Mr Purchas emphasised the submissions of counsel for SBC, at the local plan inquiry, resisting the argument advanced by the County Council and others that the principle of development west of Stevenage should be re-examined. SBC should stick by their own arguments. Section 38 (6) requires determination in accordance with the development plan, unless material considerations indicate otherwise. There is a significant advantage, he argued, in being able to demonstrate to the Planning Authority or to the Secretary of State that proposals are in accordance with the development plan, although material considerations may raise some doubt about their immediate implementation. The position where the proposals are not in accordance with the development plan, although they may be said to be supported by material considerations, is significantly weaker. What may seem comparatively fine distinctions in the wording of the plan are not trivial; they can make a difference. In practical terms, a long lead time is necessary to put in the infrastructure and to build the large number of dwellings the Structure Plan requires. No consortium of developers would contemplate starting development, putting in expensive infrastructure, unless they were confident of a planning permission that would enable them to move on to the development of houses within a predictable timescale. Policy H2 should be amended by deleting the underlined words and thus removing the contingency. Mr Straker, for the defendant, submitted that general conformity meant simply that the proposals of the local plan should be in character with the Structure Plan policies. The Act itself contemplated that a generally conforming local plan might still have provisions which conflicted with the Structure Plan, as section 46 (10) showed. The Structure Plan and the local plan could be years apart and in the meantime policies might change dramatically. Parliament cannot have intended that the Structure Plan could stultify the local plan by requiring that it should do more than broadly reflect the character of the Structure Plan. He examined the Act and pointed to provisions that he felt implied a measure of flexibility. The Court's approach should be to determine the permissible scope allowed by the words 'general conformity'. If, as he submitted, the action taken by SBC fell within the permissible range, the Court should be slow to interfere. Just as making a determination in accordance with the plan always involves judgment and a balance between policies, so should the formulation of those policies in conformity with the structure plan. Mr Straker particularly relied on Ouseley J. in the case of J. S. Bloor Ltd v. Swindon Borough Council and others [ 2001] EWHC Admin 966. Ouseley J. said- "107. The task of statutory construction here requires a court to discern and express the meaning of the statutory provisions, their scope or limits, or defining characteristics. I put it that way because the phrases in question do not readily permit of the expression of their true construction by a process of substitution of more or different words. It is easier to set out what are the characteristics which define the concept, in its statutory context, or rather to identify whether a particular characteristic is within or without the statutory concept. 108. Once the Court has determined, as a matter of law, the scope of the phrase "general policy," the decision of whether a particular policy is within its scope is a matter for the decision maker provided that he has correctly directed himself as to its scope, or its defining characteristics and not by reference to irrelevant characteristics or considerations, and has reached a decision which falls within the scope of the phrase as a matter of law. It is not a question of whether his interpretation is reasonable and therefore right. It is a question first of statutory construction and then of application: what is the scope of the statutory phrase? Does the policy fall within its scope? Both questions are for the Court but the latter is answered by a review of the application of the true scope of the phrase to the facts, rather than a primary decision by the Court. If the policy is reasonably regarded as falling within the true scope of the phrase, there is a duty to include it in the Plan. Mr Straker also referred me to the case of R. v. Derbyshire County Council, ex p. Woods [ 1997] JPL 958. Brooke LJ said- "If there is a dispute about the meaning of the words included in a policy document which a planning authority is bound to take into account, it is of course for the court to determine as a matter of law what the words are capable of meaning. If the decision maker attaches a meaning to the words they are not properly capable of bearing, then it will have made an error of law, and it will have failed properly to understand the policy (Horsham DC v. Secretary of State for the Environment [1992] 1PLR81, per Nolan LJ at 88) if there is room for dispute about the breadth of the meaning the words may properly bear, then there may in particular cases the material considerations of law which will deprive a word of one of its possible shades of meaning in that case as a matter of law. This in my judgment, is the underlying principle of law which Auld J was putting into words in his judgment in Northavon D. C. v. Secretary of State for the Environment [ 1993] JPL 761. When discussing the meaning of the expression "institutions standing in extensive grounds", the report reads at 763: "The words spoke for themselves and were not readily susceptible to precise legal definition. Whether a proposed development met the description was in most cases likely to be a matter of fact or degree and planning judgment. He [the judge] said "in most cases" because it was for the Court to say as a matter of law whether the meaning given by the Secretary of State or one of his Officers or Inspectors to the expression when applying it was outside the ordinary and natural meaning of the words in their context. See Gransden v. Secretary of State for the Environment (1987) 54 P. & CR86 per Woolf J., as he then was ( upheld by the Court of Appeal [1987] JPL 465). The test to be applied by the court was that it should only interfere where the decision-maker's interpretation was perverse in that he has given to the words in their context a meaning that they could not possibly have all restricted their meaning in a way that the breadth of their terms could not possibly justify." Mr Straker said that on the facts of the case it was highly desirable for SBC to say something in Policy H2 about the change in circumstances. The local plan was there to tell the public and developers what the local planning authority's proposals were. If there were likely to be important qualifications to policies, the plan ought to say so. That was clearly the view of the Local Plan Inspector. He recommended a change to the wording of the policy. SBC accepted his recommendation and drafted the policy as he recommended it should be worded. Mr Straker drew attention to the Claimants' skeleton argument (paragraph 61 (b)) in which it seems to be accepted that noting in the supporting text to Policy H2 matters that may be material as planning considerations would be lawful. Section 36 (6) makes it clear that "explanatory matter", such as noting matters that may be material as planning considerations, is part of the local plan and therefore part of the 'development plan' for the purposes of section 54A or section 38 (6). The distinction that the claimants seek to draw is not there. THE INTERPRETATION OF "GENERAL CONFORMITY" The correct approach is expressed with clarity by Ouseley J. in the case of Bloor. paragraphs 107 and 108 It is true in this case that the task of interpretation will not be far advanced by substituting further words. But there are some conclusions that may be drawn. The Act did not require "conformity" but "general conformity". The word "general" is there to introduce a degree of flexibility. Of the SOED definitions, the most apt meaning of "general" seems to me to be "including the main features and elements and neglecting unimportant details or exceptions". Even those words cannot be transplanted to a planning context without some reservation. There may be some details or exceptions that, in my view, may properly be left to the local plan, yet which cannot be said to be 'unimportant'. Attempts to define "General conformity" in different words probably only illustrate the point made by Ouseley J., that adding more and different words just postpones the problem of definition. The question becomes: what is a main feature, as opposed to an unimportant detail or exception? What is a "material change" to the policies as opposed to an immaterial one? The better approach is to consider whether the words actually used are objectively capable of falling within the scope that the words "general conformity" leave open to the local planning authority. It is not unusual for further work or new thinking to put a question mark over a comparatively old structure plan policy. I think Mr Purchas is right to say that the legislation cannot contemplate that the words "general conformity" allow much flexibility to accommodate important adjustments through the Local Plan, otherwise s.46(6) of the 1990 Act and Schedule 8, paragraph 11of the 2004 Act would hardly be necessary. I do not find section 46(10) very convincing the other way. To read in 'general conformity' as simply meaning that the proposals of the Local Plan should be 'in character' with the Structure Plan seems to me to be much too broad. But not all unresolved questions are equally important or need recording in the same way. While the requirement that the Local Plan should be in general conformity with the Structure Plan is an important legislative purpose, there are other purposes. The local plan is there to inform and guide local planning decisions. The guidance of the Local Plan is likely to be of considerable significance to local investment and to choices made about the pattern of local development and the environment. It is desirable in the public interest that the Local Plan should address relevant issues and do so as accurately and fully as it reasonably can. The word 'general' is likely to have been put in to make it clear that, to a degree, the need for conformity may be balanced against the need for the local plan to take account of and explain the circumstances in which the strategic policy will be given effect. In the first instance it will be for the local planning authority to decide how to strike this balance subject, of course, to the power of the Secretary of State to direct them to prepare proposals for alteration or to direct that the proposals they have prepared should be submitted to him for approval. (See section 39 (2) (b) and section 44 (1) and 45.) A District Council who take objection to putting forward a policy which, although in strict conformity with the Structure Plan, is likely, in their view, to be shown to be seriously misconceived, have the option of withdrawing their proposals. This is what NHDC did. The absence of a local plan policy cannot be criticised on the basis of non-conformity. It may be criticised for other reasons. Silence may not be of much assistance in guiding the proper planning of a District Council's area but the District Council may judge it to be the best response if it has serious doubts about the current relevance of a particular Structure Plan policy and the alternative is to adopt a conforming policy which it believes would be seriously misleading.. On the other hand, a local planning authority who judge that, although there is a reason for caution, it is unlikely to affect the basic correctness of the Structure Plan policy, may reasonably choose, it seems to me, to adopt a local policy that generally conforms with the Structure Plan but sets out a particular reservation, qualification or reason for caution in respect to that policy. Which course is best will depend upon the balance, as each council sees it, between the likelihood that the Structure Plan policy will not prove to be soundly based and the desirability of having a local plan that sets out policies for their area in a realistic and fair way. The Local Plan authority that chooses to take the latter course will have to ensure that its plan is in general conformity with the Structure Plan. The proposition that the principle of general conformity allows the local plan nothing between a bare and misleading repetition of the structure plan policy on one hand or silence, on the other, would be unattractive. At one end of the range, if the local planning authority's judgment is that it is likely that further work will show that a Structure Plan strategic housing allocation is not justified at all, it would seem unhelpful to promote a proposed policy that said, without qualification, that land should be allocated to meet it. Equally, to allocate land for strategic housing in terms that were so qualified that it was clear that the allocation was considered unlikely to be translated into planning permissions during the plan period would not, it seems to me, be in general conformity with a Structure Plan policy that required allocation. In such a case silence or the withdrawal of proposals, would probably be the only sensible course. At the other end of the range, for a council to allocate land required for a strategic housing provision within the plan period, confident in the need for it, but to add a caution that for reasons, for example, to do with the proper development of the urban land in the borough, the local planning authority would oppose development starting before a specified time into the plan period, would be in general conformity with the Structure Plan, in my judgment. Within that broad range of action lies the narrower range of policy that would be in general conformity with the Structure Plan. On the facts of the present case, the need for the Local Plan to reflect the uncertainty about the provision of 1000 dwellings at Stevenage West was argued at the Local Plan inquiry (though not with the participation of the Claimants) and expressly addressed by the Local Plan Inspector. He recommended the wording of Policy H2 - and consequently H4 - that the SBC adopted. It is tolerably plain that he did not think or intend that his formulation would be taken as meaning that the strategic provision might not go ahead at all in the plan period. Indeed he recommended that there was justification to amend the boundary of the Green Belt to accommodate that provision. I think the words of Policy H2 need to be read in their context. If Policy H2 had been expressed as the Claimants wish, with the underlined passages deleted, and no caveat or qualification by way of explanation, it would have been misleading. If Policy H2 had been worded without the underlined words but had then, in the explanatory text recorded both the Inspector's conclusion that the land could not be granted permission until the strategic justification for it has been reconsidered and accepted, and SBC's acceptance of that conclusion, I think that would have been in general conformity with Structure Plan Policy 8. The wording would simply have recorded the facts. While I am not sure that Mr Purchas actually accepted that proposition, he did say that such a position might be acceptable in that the qualification would not be in the wording of the policy itself but in the explanatory text, which could be taken into account as a material consideration.. But, as Mr Straker emphasised, in a local plan the explanatory text is part of the plan in accordance with which the determination is to be made, for the purposes of sections 54A of the 1990 Act or 38 of the 2004 Act. The distinction between such a wording and the actual wording of the adopted Policy H2 is fine. It is difficult to define the scope of the statutory phrase 'in general conformity' as a matter of universal principle; it is easier to decide whether specific policies come within it. However it seems to me that, judged objectively, the words are wide enough to encompass a reproduction of the structure plan policy in the local plan, subject to a qualification as to justification or timing that nonetheless contemplates that the purpose of the strategic policy may be achieved in the plan period. The way the SBC have worded Policy H2 and its explanatory material does fall within the scope of the phrase. The application on Ground 1 therefore fails. GROUND 2 The claimants properly made an objection to the plan as proposed to be modified in respect of the Green Belt boundary near Norton Green to the south of Stevenage West. They argued for more of the area to be excluded from the Green Belt than was proposed in the plan. The Claimant's objection to that was heard at the Local Plan Inquiry. The Inspector was, of course, obliged by law to consider that objection. Unhappily, there is no sign that he did so, since the objection was not addressed at all in his report. It is common ground between the Claimants and the defendant SDC that there has been an error of law in the adoption of the plan. The issue for decision is whether or not, in the exercise of my discretion, I should quash the plan so far as the relevant area is concerned. One might suppose that to quash the relevant part of the Second Review District Plan would simply mean that the situation would revert to what it was before the Second Review process started: the land would have the planning status it had at the beginning of the review, namely it would be green belt. But that, it is agreed, is not the law. The matter was considered in the case of Charles Church Developments Ltd v South Northamptonshire District Council (1999, 26th May). Hidden J. accepted the argument that on the true construction of section 287 of the 1990 Act the Council must start the process afresh for the quashed parts of the Plan. Reasons of convenience, although compelling up to a point, could not be determinative. He continued "There are a wide range of defects which may occur in the plan process which make it impossible to state that a Planning Authority must revert to a single point in the process, other than its inception. For example, in the present case the defect occurred at the modification stage. However, in (Laing Homes Ltd v Avon County Council [1993] 67 P. & CR 34) at page 56, the fault occurred at the Inquiry Inspector's Report stage. It is possible that defects could occur along the length of the plan process, and the lack of a single fixed point other than inception strongly underlines the logic of the construction argument which Mr Elvin had submitted. The absence of a single fixed point other than inception to which the process should revert after quashing, would allow for undesirable differences in opinion to arise between the Planning Authority and the objectors as to the appropriate time." Hidden J. accepted the submission that the Council was not entitled to revert to any stage of the planning process other than to commence new proposals for the alteration and replacement of the Plan as adopted, leaving out the quashed parts. Applying that to the circumstances of this case means that the land in question would not be notated as Green Belt, as it was at the start of the Review process but would be " white land", that is land as it was at the start of the Local Plan process, without any special policy protection. This, submits Mr Straker, would be to give the Claimants a policy advantage they do not deserve. If it does, responds Mr Purchas, the problems are of the Council's own making in that they adopted the plan in full knowledge of the likely consequences. He showed me the Council's report of 24th of November 2004 which, at paragraph 4 .16 reads: "Should the court choose to quash all or part of the plan, those quashed parts are treated as if they had never been included in the plan when it was deposited but any remaining un-quashed parts of the plan retain adopted status. It is not considered likely that a successful legal challenge to the plan can be sustained. However should all or part of the plan be quashed the council will have the power to bring forward again -- through the new Local Development Framework (LDF) -- any policies all proposals that are quashed." I have been assisted by an agreed joint note on the provisions of the 2004 Act as they relate to bringing forward plans for part of the local authority's area. It is clear to me from an examination of sections 15 (2) (a) and (b) and 17(3) of the Planning and Compulsory Purchase Act 2004 that the Council does have the power to bring forward new proposals for a part of its area in respect of which the plan has been quashed: it is not necessary to bring forward a plan for the whole of its area. When and if it does so, the Claimants will have statutory rights to have any objection heard. I appreciate that the process may take some time but I do not find that a very compelling objection in the circumstances. It will have to be accepted. If an application is made the decision maker will have regard not only to the notation on the Proposals Map but also to the history of that notation and all the other surrounding circumstances. I therefore quash the Proposals Map in so far as it identifies the detailed boundary of the Green Belt to the south of the land allocated for development at Stevenage West so as to include Norton Green within the Green Belt.

Case C-400/08 European Commission v Kingdom of Spain (Failure of a Member State to fulfil obligations – Freedom of establishment − Article 43 EC – National legislation concerning the establishment of shopping centres in Catalonia – Restrictions – Justifications – Proportionality) Summary of the Judgment Freedom of movement for persons – Freedom of establishment – Restrictions – Legislation restricting the siting and size of large retail establishments in particular locations (Art. 43 EC) A Member State fails to fulfil its obligations under Article 43 EC by adopting and/or by maintaining in force provisions which: - prohibit the setting up of large retail establishments outside the consolidated urban areas of a limited number of municipalities; - restrict the setting up of new hypermarkets to a limited number of districts and require such new hypermarkets not to account for more than 9% of estimated expenses for staple supplies for that district in 2009 and 7% of estimated expenses for non-staple supplies; - require the application of ceilings as regards the market share and the impact on existing retail trade, above which it is impossible to open large retail establishments and/or medium-sized retail establishments, and - govern the composition of the Retail Facilities Committee, consultation of which is obligatory in order to obtain a specific licence to open a large retail establishment, by ensuring that interests of existing retail trade are represented and by failing to ensure that associations active in the field of environmental protection, or interest groups working towards consumer protection, are represented, since those provisions, taken as a whole, have the effect of hindering or of rendering less attractive the exercise by economic operators from other Member States of their activities on the territory concerned through a permanent establishment and thus of affecting their establishment in the national market and accordingly constitute a restriction on the freedom of establishment within the meaning of Article 43 EC. Such restrictions are not justified by matters of environmental protection, town and country planning or consumer protection. The obligation to take account, for the purposes of granting such a licence, of the existence of retail facilities in the area concerned and the impact of a new establishment on the commercial structure of that area concerns the impact on existing traders and the market structure, not consumer protection. The same is true of the obligation in the context of the procedure for the grant of that licence, to obtain a market share report which is to be binding if unfavourable and which must be unfavourable if the market share exceeds a certain value. In that regard, since those provisions require the application of ceilings as regards the market share and the impact on existing retail trade, above which it is impossible to open large retail establishments and/or medium-sized retail establishments, such considerations cannot, being purely economic, constitute an overriding reason in the public interest. Furthermore, as the only sectoral interest represented in the Retail Facilities Committee is that of the existing local trade, a body composed in that manner, with no representation of environmental or consumer interests, but with representation of potential competitors of the applicant for a licence, cannot constitute an appropriate instrument for pursuing objectives relating to town and country planning, environmental protection or consumer protection. (see paras 70, 72, 85, 95-98, 111, operative part 1) JUDGMENT OF THE COURT (Second Chamber) 24 March 2011 (*) (Failure of a Member State to fulfil obligations – Freedom of establishment − Article 43 EC – National legislation concerning the establishment of shopping centres in Catalonia – Restrictions – Justifications – Proportionality) In Case C‑400/08, ACTION under Article 226 EC for failure to fulfil obligations, brought on 16 September 2008, European Commission, represented by E. Traversa and R. Vidal Puig, acting as Agents, and by C. Fernández Vicién and A. Pereda Miquel, abogados, with an address for service in Luxembourg, applicant, v Kingdom of Spain, represented by N. Díaz Abad, acting as Agent, with an address for service in Luxembourg, defendant, supported by: Kingdom of Denmark, represented by J. Bering Liisberg and R. Holdgaard, acting as Agents, intervener, THE COURT (Second Chamber), composed of J.N. Cunha Rodrigues, President of the Chamber, A. Arabadjiev, A. Rosas (Rapporteur), U. Lõhmus and P. Lindh, Judges, Advocate General: E. Sharpston, Registrar: N. Nanchev, Administrator, having regard to the written procedure and further to the hearing on 6 May 2010, after hearing the Opinion of the Advocate General at the sitting on 7 October 2010, gives the following Judgment 1 By its application, the Commission of the European Communities claims that the Court should declare that the Kingdom of Spain has failed to fulfil its obligations under Article 43 EC, by imposing restrictions on the establishment of shopping centres in Catalonia, deriving from Law 7/1996 on retail commerce (Ley 7/1996, de ordenación del comercio minorista) of 15 January 1996 (BOE No 15, 17 January 1996, p. 1243; ‘Law 7/1996’) and the legislation of the Autonomous Community of Catalonia on the same subject, that is to say, Law 18/2005 on trading establishments (Ley 18/2005 de equipamientos comerciales) of 27 December 2005 (DOGC No 4543, 3 January 2006, p. 72; ‘Law 18/2005’), Decree 378/2006, implementing Law 18/2005 (Decreto 378/2006 por el que se desarolla la Ley 18/2005), of 10 October 2006 (DOGC No 4740, 16 October 2006, p. 42591; ‘Decree 378/2006’), and Decree 379/2006 approving the new sectoral territorial plan for trading establishments (Decreto 379/2006 por el que se aprueba el Plan territorial sectorial de equipamientos comerciales) of 10 October 2006 (DOGC No 4740, 16 October 2006, p. 42600; ‘Decree 379/2006’). I – National legal context A – Law 7/1996 2 Article 2 of Law 7/1996 provides: ‘Retail establishments 1. Retail establishments are permanent premises or facilities intended for regular retail activities, whether on a continuous basis or on specific days or for specific periods. 2. Included in the definition in paragraph 1 are kiosks and, generally, installations of all types intended for the use specified in that definition, provided that they are buildings for the purposes of Article 334 of the Civil Code. 3. The Autonomous Communities shall lay down conditions for granting the status of large retail establishment. In any event, for the purposes of licences and the provisions of the commercial legislation, retail establishments intended for retail activities for all types of goods with a public display and sales area exceeding 2 500m² shall be regarded as large retail establishments.’ 3 Article 6 of that Law provides: ‘Opening of large establishments 1. The opening of a large retail establishment shall be conditional upon the holding of a specific commercial licence, issued by the relevant Autonomous Community, which may also require an administrative licence in other cases linked to retail activity. 2. For the purposes of deciding upon the grant or refusal of the licence referred to in paragraph 1, account shall be taken of the adequacy of existing retail facilities in the local area concerned and the impact which the new establishment might have on the commercial structure of that area. In any event, a report by the Tribunal de Defensa de la Competencia [(Competition Court)] shall be required, although its findings shall not be binding. 3. An area shall be regarded as having adequate facilities if the existing population or, if appropriate, the medium-term forecast population enjoys a level of supply which, in terms of quality, variety, service, price and opening hours, meets both the requirements of the current situation and developing trends in modern retail trade. 4. The impact on the existing commercial structure shall be assessed, account being taken of the improvement which the opening of a large establishment represents in terms of free competition in the area and of the negative effects possibly entailed for existing small traders. 5. The competent Autonomous Communities may set up local Retail Facilities Committees to report on the opening of large establishments, in accordance with any rules which those Communities may lay down.’ 4 The final provision of Law 7/1996 specifies the constitutional status of the various provisions of that Law. It specifies that paragraphs 1 and 2 of Article 6 were enacted pursuant to the State’s exclusive competence under Article 149(1)(13) of the Constitution. Paragraphs 3, 4 and 5 of Article 6 fall within the residual category of provisions which ‘may be applicable in the absence of specific legislation enacted by the Autonomous Communities’. B – Law 18/2005 5 Paragraphs 1 and 2 of Article 3 of Law 18/2005 define, for the Autonomous Community of Catalonia, ‘large’ and ‘medium-sized’ retail establishments by reference to the population of the municipality in which they are situated. As the Advocate General states in point 11 of her Opinion, the definitions may be summarised in the following table: Population of municipality Large establishments (sales area of X m² or more) Medium-sized establishments (sales area of X m² or more) Over 240 000 2 500 m2 1 000 m2 25 001 to 240 000 2 000 m2 800 m2 10 001 to 25 000 1 300 m2 600 m2 Up to 10 000 800 m2 500 m2 6 Article 3(3) of that Law specifies that the sales area limitations under the local sectoral retail facilities plan (‘PTSEC’) are to apply to medium-sized food sector establishments and to all establishments with a sales area covering 1 000m² or more, selling home electrical or electronic goods, sports or personal equipment, or leisure or cultural items, regardless of their categorisation pursuant to Article 3(1) and (2). 7 Under Article 4(1) of Law 18/2005, large retail establishments may be opened only in consolidated urban areas of municipalities which are either the administrative centre of a district or which have a population of more than 25 000 inhabitants or seasonal tourist visitors who may be regarded as such. 8 Under Article 4(2) of Law 18/2005, the same restriction is to apply, except in exceptional cases, as regards establishments with a sales area covering 1 000m² or more, if they are given over essentially to the sale of home electrical or electronic goods, sports items and accessories, personal equipment, or leisure or cultural items. 9 Under Article 4(3), the term ‘consolidated urban area’ is to cover areas where, in accordance with the local development plan in force, the majority of the population lives; areas of continuous apartment housing; and retail outlets integrated into residential areas. 10 Article 4(8) lists the exceptions from the prohibitions described in paragraphs 7 and 8 above. Those exceptions cover, inter alia: – establishments selling automobiles or other vehicles, machinery, building materials or do-it-yourself supplies, and garden centres; – sales areas in high-speed train stations and some airports and ports for passenger traffic; – shops in some border municipalities; and – factory outlets. 11 Article 6(1) of Law 18/2005 provides that a municipal retail licence is to be necessary in the following cases: ‘(a) to open a medium-sized retail establishment; (b) to enlarge a retail establishment the sales area of which corresponds, either before or after enlargement, to that laid down for medium-sized establishments; (c) to change the activity of medium-sized retail establishments; (d) to transfer a retail establishment the sales area of which corresponds, either before or after transfer, to that laid down for medium-sized establishments. In that case, the licence shall not come into effect until the actual closure of the original establishment before the new establishment is opened.’ 12 Under Article 6(4), the absence of a decision by the administration before expiry of the period prescribed for the issue of the municipal retail licence is to be deemed to signify refusal of the licence. 13 Under Article 7(1) of Law 18/2005, a licence issued by the Generalitat de Catalunya (Government of Catalonia) is to be necessary in the following cases: ‘(a) to open a large retail establishment; (b) to enlarge a retail establishment the sales area of which exceeds, either before or after enlargement, the limits fixed in Article 3(1) and (4); (c) to change the activity of large retail establishments; (d) to transfer a retail establishment the sales area of which exceeds, either before or after transfer, the limits fixed in Article 3(1) and (4). In that case, the licence shall not come into effect until the actual closure of the original establishment before the new establishment is opened. (e) to dispose of large establishments, except where the conditions laid down in paragraph 3 of this article are met.’ 14 Article 7(8) states: ‘During the procedure for the issuing of a retail licence by the Generalitat, the applicant must provide a report drawn up by the council of the municipality on whose territory the applicant wishes to open, enlarge or transfer a large establishment or to change its activity. The report must be approved by the full municipal council and must state reasons, regard being had to the assessment criteria set out in Article 10; if it is unfavourable, that report shall be binding. If, three months after the request for the report from the council has been filed, no report has been drawn up by the council, the report shall be deemed to be unfavourable.’ 15 Under Article 7(10), the absence of a decision before expiry of the six-month period allowed for the issuing of a retail licence by the Generalitat is to be deemed to signify refusal of the licence. 16 Under Article 8 of Law 18/2005: ‘1. For announcements of the opening of retail establishments in Catalonia and the procedure for issue of a retail licence for medium-sized and large retail establishments governed by the present Law, a report assessing the share of the relevant market enjoyed [by the undertaking or group concerned], drawn up by the department responsible for trade, shall be required. 2. Small and medium-sized undertakings shall be exempt from the requirement to obtain a report on the market share, in accordance with the criteria set out in the first additional provision. 3. For the purposes of this Law, market share shall mean the size of the market share held by an undertaking or group of undertakings in its relevant market. 4. If it is unfavourable, the report on market share shall be binding in terms of refusal of the licence applied for and announcements of the opening of establishments referred to in paragraph 1. 5. In order to measure the market share, the department responsible for trade, in agreement with the department and bodies of the Generalitat responsible for competition, shall define the concepts of relevant market, market share and catchment area, which must be set out in the rules for the implementation of the present Law. In defining those concepts, account shall be taken, inter alia, of the products and services competing on the same market, the turnover of the sectors and the surface area of the existing establishments. 6. The relevant criteria, the procedure to be followed and the body authorised to issue the report on the market share shall be laid down by regulation. In establishing those criteria, an appraisal shall be made, inter alia, of the indicators in the White Paper referred to in Article 9. The regulation must also set the conditions in accordance with which the department responsible for trade is to make public, by means of the public register, the decisions granting or refusing licences or the reports submitted.’ 17 Article 10 of Law 18/2005 lists the aspects to be assessed when the Generalitat or municipal authority decides on an application for a retail licence: conformity with the PTSEC; compliance with town planning rules; conditions to ensure the safety of the project and the integration of the establishment in the urban environment; the mobility generated by the project and, in particular, its effects on the road network and on the use of public and private transport; the number of parking places available, measured by ratios laid down by regulation in each case; the location of the establishment within the consolidated urban area and compliance with any municipal plan for retail services; the ‘right of consumers to a broad and varied supply in terms of product quality, quantity, price and characteristics’; and the applicant undertaking’s relevant market share. 18 Article 11 of Law 18/2005 sets up an advisory committee of the type referred to in Article 6(5) of Law 7/1996 – the Comisión de Equipamientos Comerciales (Retail Facilities Committee) – to report, in particular, on issues relating to the decision whether a licence is to be granted by the Generalitat and planning matters relating to the designation of areas where retail establishments may be opened, including drawing up proposals for amending the PTSEC. 19 Article 12 of Law 18/2005 provides for fees to be charged for processing applications for licences and for market share reports. It also authorises municipalities to charge fees for processing applications for municipal licences and providing municipal reports to the Generalitat concerning applications for a licence from the latter. C – Decree 378/2006 20 Article 3 of Decree 378/2006 defines hypermarkets as self-service outlets with a sales area of at least 2 500m² selling a wide range of staple and non-staple goods, and with a large parking area. 21 Article 14 of that decree lays down the procedure for applying for a retail licence from the Generalitat. It lists a number of documents to be produced, including, under Article 14.1(b), a market survey analysing the viability of the project in the light of existing supply and potential demand within the catchment area, the market share attracted and the impact on current supply. 22 Article 26(1) of that decree governs the composition of the Retail Facilities Committee set up under Article 11 of Law 18/2005, that is to say, seven members representing departments of the Generalitat; six members representing the municipalities; seven members representing the trade sector; two experts chosen by the Generalitat’s department of trade; and a secretary appointed by the chairman of that committee. 23 Under Article 27 of that decree, the Retail Facilities Committee is to be consulted on the matters referred to in Article 11 of Law 18/2005 and also on the delimitation of consolidated urban areas of municipalities. 24 Article 28(2) of Decree 378/2006 provides that, for large retailers, the market share report referred to in Article 8 of Law 18/2005 must cover all outlets trading under their name, whether under the direct or the indirect control of those undertakings. 25 Under Article 31(4) of that decree , a maximum market share is to be determined annually for each retail sector, both for the whole of Catalonia and for subordinate areas. The Commission states – without being contradicted on that point by the Kingdom of Spain – that that provision has not yet been applied, so that the maximum market share of the group to which a retailer belongs is that laid down in the previous legislation, that is to say, 25% of the sales area in Catalonia, or 35% of the sales area within the catchment area of the proposed establishment. 26 Under Article 33(2) of that decree, the market share report must be negative if that maximum share is exceeded. Article 33(5) lays down a maximum period of six months within which the report must be issued, failing which the report is to be deemed to be favourable. Article 33(7) provides that the report is to be valid for six months. D – Decree 379/2006 27 The PTSEC is laid down in the Annex to Decree 379/2006. Article 7 of the Annex to Decree 379/2006 provides that large retail establishments, together with medium-sized retail establishments in the food sector and all establishments with a sales area covering 1 000 m² or more, given over essentially to the sale of home electrical or electronic goods, sports items and accessories, personal equipment, or leisure or cultural items, are to be subject to the sales area limitations laid down, for each district and each municipality, in the PTSEC. 28 Article 10(2) of the Annex to that decree states, inter alia: ‘In districts where excess supply is forecast for 2009, there is to be no hypermarket development. In other districts, development is to take the form of hypermarkets, provided that they do not account for more than 9% of estimated expenses for staple supplies for that district in 2009 and 7% of estimated expenses for non-staple supplies.’ 29 Annex 1 to the Annex to Decree 379/2006 defines in particular the maximum areas for which retail licences could be granted in the period from 2006 to 2009 for supermarkets, hypermarkets, specialist establishments and shopping centres and department stores in each territorial unit. II – The pre-litigation procedure 30 Following examination of a complaint from a number of large retail undertakings, the Commission questioned the compatibility with Article 43 EC of the rules governing the conditions for opening large retail establishments on the territory of the Autonomous Community of Catalonia. On 9 July 2004, the Commission sent a letter of formal notice on that subject to the Kingdom of Spain. 31 In its reply of 13 October 2004, the Kingdom of Spain contended that the Commission’s criticisms were not justified. 32 On 27 December 2005, Law 18/2005 was adopted. According to the Commission, not only did that Law fail to eliminate all the points of incompatibility with Article 43 EC, it placed new restrictions on freedom of establishment in the field of activity concerned. On 4 July 2006, the Commission sent the Kingdom of Spain a supplementary letter of formal notice. In its reply of 6 October 2006, the Kingdom of Spain denied that the legislation in question was restrictive, unjustified or disproportionate. 33 Dissatisfied with that reply, the Commission issued a reasoned opinion on 23 December 2007, calling on the Kingdom of Spain to amend its legislation within two months of receipt of that opinion so as to bring the alleged infringement to an end. In its reply of 3 January 2008, the Kingdom of Spain stated that it intended to amend the legislation at issue, but that the amendments would be made in the course of implementing Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (OJ 2006 L 376, p. 36). As no measures had been adopted by the expiry of the period prescribed, the Commission brought the present action. 34 By order of the President of the Court of 21 January 2009, the Kingdom of Denmark was granted leave to intervene in the present case in support of the forms of order sought by the Kingdom of Spain. III – The action A – Admissibility 35 As a preliminary point, it should be noted that the Court may of its own motion examine whether the conditions laid down in Article 226 EC for bringing an action for failure to fulfil obligations are satisfied (see Case C‑487/08 Commission v Spain [2010] ECR I‑0000, paragraph 70 and the case-law cited). 36 It should also be borne in mind that, under Article 38(1)(c) of the Rules of Procedure of the Court of Justice and the case-law relating to that provision, the application initiating proceedings must state the subject-matter of the dispute and a summary of the pleas in law on which the application is based and that that statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application. It is therefore necessary for the essential points of law and of fact on which a case is based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on a claim (see Case C‑211/08 Commission v Spain [2010] ECR I‑0000, paragraph 32 and the case-law cited). 37 As it is, it must be held that, in its application, the Commission claims that the Court should declare that the Kingdom of Spain has failed to fulfil its obligations under Article 43 EC by imposing restrictions on the establishment of shopping centres, deriving from four laws and decrees, the texts of which – as submitted to the Court – comprise over 200 pages, and that that application is not free of inexactitudes. 38 In paragraph 46 of its reply, however, the Commission has provided a list of specific restrictions which, when read together with the references to the application, facilitates identification of the specific restrictions which, according to the Commission, arise as a result of that part of the contested legislation which was adopted by the Autonomous Community of Catalonia, that is to say, Law 18/2005 and Decrees 378/2006 and 379/2006. 39 That list covers: (1) the prohibition on setting up large retail establishments outside consolidated urban areas of a limited number of municipalities (Article 4(1) of Law 18/2005); (2) the sales area limitations for each district and municipality (Article 7 of Decree 379/2006, together with Annex 1 thereto); specifically, the Commission submits that: (a) the limitation is particularly severe for hypermarkets – no new hypermarkets can be authorised in 37 of 41 districts (PTSEC, Annex 1.2 to the Annex to Decree 379/2006); (b) in the remaining four districts, only hypermarkets accounting for no more than 9% of staple and 7% of non-staple goods can be authorised (Article 10(2) of the Annex to Decree 379/2006); (c) in those four districts, only 23 667m² are available in six municipalities (Annex 1.2 of the Annex to Decree 379/2006); (3) the need for a market share report which is binding if unfavourable and which must be unfavourable if the market share exceeds a certain value (Article 8 of Law 18/2005 and Article 31(4) and 33(2) of Decree 378/2006); (4) the lack of clear definition of the criteria applied (Article 10 of Law 18/2005); (5) certain procedural aspects: (a) the ‘negative silence’ rule (Articles 6 and 7 of Law 18/2005); (b) the need to obtain the opinion of an advisory committee comprising licence applicants’ competitors (Article 11 of Law 18/2005 and Article 26 of Decree 378/2006); (c) the charging of fees which are unrelated to the cost of the procedure (Article 12 of Law 18/2005); and (d) the excessive length of the procedure (Article 33 of Decree 378/2006, concerning time-limits for the issuing and validity of the market share report). 40 At the hearing, the Commission confirmed that the provisions referred to in that list constitute all the aspects of the legislation adopted by the Autonomous Community of Catalonia which are in dispute. 41 In addition to those provisions, it emerges also from the application that the Commission disputes the compatibility with European Union (‘EU’) law of Article 6 of Law 7/1996. 42 Paragraphs 1 to 4 of Article 6 of Law 7/1996 provide that a licence must be held in order to open large retail establishments and set out the criteria applicable to the grant of that licence. Specifically, Article 6(2) lays down the essential criteria in that regard and requires the Competition Court to be consulted. In addition, Article 6(5) provides that the Autonomous Communities may set up committees to draw up reports on the opening of large retail establishments. 43 The Kingdom of Spain argues that it follows from the final provision of Law 7/1996 that paragraphs 3, 4 and 5 of Article 6 thereof are applicable in the absence of specific legislation adopted by the Autonomous Communities. However, the Autonomous Community of Catalonia has adopted such specific legislation. Consequently, at the time when the present application was lodged, paragraphs 3, 4 and 5 of Article 6 of Law 7/1996 were not applicable in Catalonia and should therefore fall outside the scope of the present action. 44 The Commission submits that its application must cover paragraphs 3, 4 and 5 of Article 6 of Law 7/1996, since they define the essential criteria for the grant of the licences referred to in Article 6(2), which forms part of the basic legislation binding throughout Spanish territory. Paragraphs 3, 4 and 5 of Article 6 of Law 7/1996 apply in a supplementary manner in the Autonomous Community of Catalonia in order to give effect to Article 6(2). Even if those paragraphs 3, 4 and 5 are not currently applicable in Catalonia, the Commission takes the view that those provisions are nevertheless in breach of EU law in so far as they may become applicable if the legislation currently in force is repealed or amended. 45 In that regard, as has been pointed out in paragraph 36 above, the Commission is required to state in the body of the application initiating proceedings the essential points of fact and of law on which the action is based. 46 As it is, it must be held that, to the extent that the present action relates to paragraphs 3, 4 and 5 of Article 6 of Law 7/1996, the application does not achieve the required level of precision. It is not sufficiently clear from the application, or from the reply, in what way those provisions constitute the failure to fulfil obligations alleged by the Commission. 47 Consequently, the action is inadmissible in so far as it concerns paragraphs 3, 4 and 5 of Article 6 of Law 7/1996. 48 On the other hand, as regards Article 6(1) and (2) of Law 7/1996, referred to in paragraph 39 above, and the contested provisions adopted by the Autonomous Community of Catalonia, the Court considers that, despite the lack of precision in the application, it has sufficient information before it to understand the scope of the infringement of EU law imputed to the Kingdom of Spain and thus to determine whether it has failed to fulfil its obligations, as alleged by the Commission. 49 Furthermore, on examination of the defence, it is clear that the Kingdom of Spain actually understood that the Commission is imputing to it restriction of the freedom of establishment by means of the contested legislation and that the Commission criticises that legislation for affecting large retail establishments and not medium-sized retail establishments, thus placing economic operators from other Member States at a disadvantage, and because it is unjustified. In those circumstances, the Kingdom of Spain was in a position properly to deploy its defence. 50 Consequently, the present action is admissible in so far as it concerns Article 6(1) and (2) of Law 7/1996 and the provisions, referred to in paragraph 39 above, of Law 18/2005 and Decrees 378/2006 and 379/2006, three acts which emanate from the Autonomous Community of Catalonia (collectively, ‘the contested legislation’). B – Substance 51 The action brought by the Commission comprises, in essence, three complaints relating to the incompatibility with Article 43 EC of: (i) the restrictions on the location and size of large retail establishments; (ii) the conditions for obtaining the specific retail licence required to set up such establishments; and (iii) certain aspects of the procedure for the grant of that licence. 52 The first complaint, which relates to the restrictions on the location and size of large retail establishments, concerns the prohibition, laid down in Article 4(1) of Law 18/2005, on setting up such establishments outside consolidated urban areas of a limited number of municipalities and the sales area limitations for each district and municipality, under Article 7 of the Annex to Decree 379/2006 read in conjunction with Annex 1 thereto. As regards the sales area limitations for each district and municipality, the Commission argues that the limitation is particularly severe in the case of hypermarkets. It follows from the PTSEC that no new hypermarkets may be authorised in 37 of the 41 districts. Pursuant to Article 10(2) of the Annex to Decree 379/2006, in the remaining four districts, only hypermarkets accounting for no more than 9% of staple and 7% of non-staple goods can be authorised. Lastly, it follows from the PTSEC that, in those four districts, only 23 667m² are available for hypermarkets in six municipalities. 53 The second complaint, which relates to the conditions for obtaining a specific retail licence, is composed of six parts, respectively concerning: (i) the need to obtain a specific retail licence before opening large retail establishments, as provided for in Article 6(1) of Law 7/1996; (ii) the taking into account, under the licensing procedure, of the existence of retail facilities in the area concerned and the effects of setting up a new establishment on the retail structure of that area, as provided for in the first subparagraph of Article 6(2) of Law 7/1996; (iii) the requirement, under the licensing procedure, of a market share report which is binding if unfavourable and which must be unfavourable if the market share exceeds a certain value, as provided for in Article 8 of Law 18/2005 and Articles 31(4) and 33(2) of Decree 378/2006; (iv) the required consultation with the Competition Court, as provided for in the second subparagraph of Article 6(2) of Law 7/1996; (v) the obligation to obtain the opinion of the Retail Facilities Committee, whose members include potential competitors of the applicant, as provided for in Article 11 of Law 18/2005 and Article 26 of Decree 378/2006; and (vi) the lack of a clear definition of the criteria applicable under Article 10 of Law 18/2005. 54 Lastly, the third complaint, which relates to certain aspects of the procedure for the issue of retail licences, is composed of three parts, respectively concerning: (i) the ‘negative silence’ rule laid down in Articles 6 and 7 of Law 18/2005; (ii) the charging of fees which are unrelated to the cost of the procedure, as provided for in Article 12 of Law 18/2005; and (iii) the excessive length of the procedure, which arises as a result of Article 33(5) and (7) of Decree 378/2006, concerning the time-limits for the issuing and validity of the market share report. 1. Arguments of the parties 55 The Commission submits that the contested legislation constitutes a restriction of the freedom of establishment guaranteed in Article 43 EC, since it affects the possibility of setting up large retail establishments in the territory of the Autonomous Community of Catalonia. That legislation gives rise to indirect discrimination by favouring the setting up of medium-sized retail establishments rather than large retail establishments. Most economic operators wishing to set up medium-sized retail establishments are of Spanish nationality, whereas those wishing to set up large retail establishments are more usually from other Member States. In addition, the contested legislation cannot be justified on one of the grounds set out in Article 46(1) EC. The Commission submits in the alternative that the justifications put forward by the Kingdom of Spain cannot in any event be accepted. 56 The Kingdom of Spain disputes the alleged failure to fulfil obligations. It accepts that the contested legislation entails certain restrictions on the freedom of establishment, but argues that these do not entail discrimination – even indirectly – based on nationality. According to the Kingdom of Spain, that legislation is justified on grounds of public interest and, specifically, for consumer protection, protection of the environment and proper regional planning. It is appropriate for ensuring the achievement of the objectives pursued and goes no further than is necessary for that purpose. 57 The Kingdom of Denmark contends that legislation such as that at issue should not, if it is not discriminatory, be regarded as constituting, contrary to EU law, a restriction on freedom of establishment, since it does not directly affect market access for foreign operators. The Kingdom of Spain concurs with that argument. 2. Findings of the Court a) The existence of restrictions on the freedom of establishment 58 It should be borne in mind that, in accordance with settled case-law, in proceedings for failure to fulfil obligations under Article 226 EC, it is incumbent upon the Commission to prove the allegation that an obligation has not been fulfilled. It is the Commission’s responsibility to place before the Court all the factual information needed to enable the Court to establish that the obligation has not been fulfilled and, in so doing, the Commission may not rely on any presumption (see, to that effect, inter alia, Case 290/87 Commission v Netherlands [1989] ECR 3083, paragraphs 11 and 12, and Case C‑241/08 Commission v France [2010] ECR I‑0000, paragraph 22). 59 If the Commission’s allegation that the contested legislation has indirectly discriminatory effects as regards operators from Member States other than the Kingdom of Spain is to be regarded as sound, the Commission must first show that large retail establishments are treated differently from other retail establishments and that that difference constitutes a disadvantage for large retail establishments. Secondly, the Commission must show that that difference in treatment works to the advantage of Spanish operators, because Spanish operators favour small and medium-sized establishments while operators from other Member States prefer large retail establishments. 60 In order to do so, the Commission has submitted a series of figures. As the Advocate General noted in point 58 of her Opinion, those figures – although to some extent consistent with the assertion that Spanish operators prefer medium-sized retail establishments and operators from other Member States prefer large retail establishments – are not complete. The information provided to the Court does not enable it to determine with certainty either the number of establishments concerned or the breakdown between Spanish and non-Spanish control of a significant part of the establishments falling within the category of large establishments, in accordance with Article 3(1) of Law 18/2005. Nor has the Court been provided with a breakdown showing the respective shareholdings of the economic operators concerned in the various categories of establishment. 61 At the hearing, the Commission stated that the causal relationship which, in its view, underlies the statistical correlation is to be found in the fact that foreign operators prefer to open larger establishments in order to achieve the economies of scale necessary to optimise their chances of penetrating a new territory. However, as the Advocate General pointed out in point 59 of her Opinion, that explanation relates to entry into a new market at a distance from the home base, rather than to the nationality of the operator. 62 It must therefore be held that the Commission has not adduced conclusive evidence capable of establishing that the figures which it has provided in support of its argument actually confirm that its argument is sound. Nor has the Commission put forward other factors to show that the contested legislation indirectly discriminates against operators from other Member States as compared with Spanish operators. 63 However, it is settled law that Article 43 EC precludes any national measure which, even though it is applicable without discrimination on grounds of nationality, is liable to hinder or to render less attractive the exercise by EU citizens of the freedom of establishment that is guaranteed by the Treaty (see, inter alia, Case C‑299/02 Commission v Netherlands [2004] ECR I‑9761, paragraph 15, and Case C‑140/03 Commission v Greece [2005] ECR I‑3177, paragraph 27). 64 In that context, it should be borne in mind that the concept of ‘restriction’ for the purposes of Article 43 EC covers measures taken by a Member State which, although applicable without distinction, affect access to the market for undertakings from other Member States and thereby hinder intra-Community trade (see, to that effect, Case C‑442/02 CaixaBank France [2004] ECR I‑8961, paragraph 11; Case C‑518/06 Commission v Italy [2009] ECR I‑3491, paragraph 64; and, by analogy, Case C‑110/05 Commission v Italy [2009] ECR I‑519, paragraph 37). 65 National legislation which makes the establishment of an undertaking from another Member State conditional upon the issue of prior authorisation falls within that category, since it is capable of hindering the exercise by that undertaking of freedom of establishment, by preventing it from freely pursuing its activities through a fixed place of business (see Joined Cases C‑570/07 and C‑571/07 Blanco Pérez and Chao Gómez [2010] ECR I‑0000, paragraph 54). 66 In the present case, it should be noted that the contested legislation, taken as a whole, establishes a system under which prior authorisation, in the form of a licence, is necessary for the opening of any large retail establishment on the territory of the Autonomous Community of Catalonia. 67 First, that legislation restricts the localities available for new establishments and imposes limits on the sales areas for which such a licence can be obtained. 68 Secondly, the legislation provides for the licensing of new establishments only in so far as there will be no effect on existing small traders. 69 Thirdly, for the issue of licences, it lays down a number of procedural rules which are likely to have an appreciable negative effect on the number of licence applications made and/or granted. 70 Consequently, the contested legislation, taken as a whole, has the effect of hindering or of rendering less attractive the exercise by economic operators from other Member States of their activities on the territory of the Autonomous Community of Catalonia through a permanent establishment and thus of affecting their establishment in the Spanish market. 71 Moreover, the Kingdom of Spain accepts that that legislation entails certain restrictions on the freedom of establishment. 72 Accordingly, it must be held that the contested legislation, taken as a whole, constitutes a restriction on the freedom of establishment for the purposes of Article 43 EC. b) The justifications for restrictions on the freedom of establishment 73 It is settled law that restrictions on freedom of establishment which are applicable without discrimination on grounds of nationality may be justified by overriding reasons relating to the general interest, provided that the restrictions are appropriate for securing attainment of the objective pursued and do not go beyond what is necessary for attaining that objective (Case C‑169/07 Hartlauer [2009] ECR I‑1721, paragraph 44; Joined Cases C‑171/07 and C‑172/07 Apothekerkammer des Saarlandes and Others [2009] ECR I‑4171, paragraph 25; and Blanco Pérez and Chao Gómez, paragraph 61). 74 Such overriding reasons recognised by the Court include: environmental protection (see, inter alia, Case C‑384/08 Attanasio Group [2010] ECR I‑0000, paragraph 50 and the case-law cited); town and country planning (see, by analogy, Case C‑567/07 Woningstichting Sint Servatius [2009] ECR I‑9021, paragraph 29 and the case-law cited); and consumer protection (see, inter alia, Case C‑260/04 Commission v Italy [2007] ECR I‑7083, paragraph 27 and the case-law cited). On the other hand, purely economic objectives cannot constitute an overriding reason in the public interest (see, to that effect, inter alia, Case C‑96/08 CIBA [2010] ECR I‑0000, paragraph 48 and the case-law cited). 75 In that regard, it should be recalled that, although it is for the Member State relying on an overriding reason in the public interest as justification for a restriction on freedom of movement to demonstrate that its legislation is appropriate and necessary to attain the legitimate objective pursued, that burden of proof cannot be so extensive as to require the Member State to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions (see, to that effect, Case C-110/05 Commission v Italy, paragraph 66). 76 Consequently, it is necessary to determine whether the contested legislation – taken not as a whole, but in relation to each of the specific restrictions alleged by the Commission – is justified by overriding reasons in the public interest, such as those relied on by the Kingdom of Spain and referred to in paragraph 56 above. i) The first complaint, relating to the restrictions on the location and size of large retail establishments 77 In the context of its first complaint, the Commission refers to the restrictions on the location and size of large retail establishments which follow from the prohibition on setting up such establishments outside the consolidated urban areas of a limited number of municipalities, as provided for in Article 4(1) of Law 18/2005, and the restriction on the sales areas for each district and municipality, as provided for in Articles 7 and 10(2) of the Annex to Decree 379/2006 and Annex 1.2 thereto. 78 The Kingdom of Spain contends that the provisions referred to are appropriate for achieving the objectives relating to town and country planning and environmental protection which they pursue. By confining the location of large retail establishments to population centres, where the demand is greatest, and by limiting the size of establishments in less populous areas, the contested legislation seeks to avoid polluting car journeys, to counter urban decay, to preserve an environmentally integrated urban model, to avoid new road building and to ensure access by public transport. 79 The Commission argues to the contrary that the restrictions at issue are not appropriate for ensuring the achievement of the objectives pursued. 80 In that regard, it should be noted that – contrary to the assertions made by the Commission – restrictions relating to the location and size of large retail establishments appear to be methods suitable for achieving the objectives relating to town and country planning and environmental protection, relied on by the Kingdom of Spain. 81 However, under Article 10(2) of the Annex to Decree 379/2006, there was to be no increase in commercial supply in the form of hypermarkets in the districts where such supply was deemed excessive for 2009. Next, it follows from Annex 1.2 to the Annex to that decree that that commercial supply was regarded as excessive for that year in 37 of the 41 districts of the Autonomous Community of Catalonia. In the remaining four districts, in accordance with Article 10(2) of the decree, an increase in the commercial supply could be made in the form of hypermarkets only in so far as that form of business accounted for no more than 9% of estimated staple supplies in the district in 2009 and 7% of estimated non-staple supplies. Lastly, under Annex 1.2, the maximum area available for hypermarkets in those four districts was limited to 23 667m2, divided between six municipalities. 82 It must be held that, taken as a whole, those specific restrictions laid down in the contested legislation significantly affect the possibility of opening large retail establishments on the territory of the Autonomous Community of Catalonia. 83 In such circumstances, the reasons which may be invoked by a Member State in order to justify a derogation from the principle of freedom of establishment must be accompanied by an analysis of the appropriateness and proportionality of the restrictive measure adopted by that Member State, and by precise evidence enabling its arguments to be substantiated (see Case C‑161/07 Commission v Austria [2008] ECR I‑10671, paragraph 36 and the case-law cited). 84 As it is, it should be noted that the Kingdom of Spain has not produced sufficient evidence to explain the reasons for which the restrictions at issue are necessary to achieve the objectives pursued. 85 Given that lack of explanation and the significant impact of the restrictions in question on the possibility of opening large retail establishments on the territory of the Autonomous Community of Catalonia, it must be held that the restrictions on the freedom of establishment laid down in that regard are not justified. 86 It follows that the first complaint must be upheld. ii) The second complaint, concerning the requirement to obtain a specific retail licence to open large retail establishments, and the related conditions – The first three parts 87 By the first three parts of the second complaint, the Commission challenges the lawfulness of: (i) Article 6(1) of Law 7/1996, requiring a specific retail licence to be obtained prior to the setting up of large retail establishments; (ii) the first subparagraph of Article 6(2) of Law 7/1996, requiring account to be taken, for the purpose of granting such a licence, of the existence of retail facilities in the area in question and of the effects of the setting up of a new establishment on the commercial structure of that area; and (iii) Article 8 of Law 18/2005 and Articles 31(4) and 33(2) of Decree 278/2006, requiring a market share report which is binding if unfavourable and which must be unfavourable if the market share exceeds a certain value. 88 The Kingdom of Spain contends that the disputed provisions pursue, in general, objectives of environmental protection, town and country planning and consumer protection, by seeking, as regards that last objective, to ensure more effective competition in terms of price, quality and choice. 89 The Commission, however, maintains that those provisions pursue purely economic objectives in that they seek to protect small local traders. 90 First, as regards the first part of this complaint, concerning the requirement under Article 6(1) of Law 7/1996 to obtain a licence before opening a large retail establishment, it should be noted that the Commission has not stated – either in its application, or in its reply or at the hearing – how that requirement, of itself, pursues purely economic objectives. 91 The Kingdom of Spain has stated that, with regard to the setting up of large retail establishments, the achievement of the objectives relating to town and country planning and environmental protection, as described in paragraph 78 above, depend on a procedure for prior authorisation. In its view, the damage which would be caused if those objectives were not achieved could not be repaired after the event, that is to say, once the establishment had been opened. 92 In that regard, as the Advocate General stated in point 91 of her Opinion, the introduction of preventative and therefore prior measures must, in the present context, be regarded as appropriate means of achieving the objective of environmental protection. Adoption of measures a posteriori, if the setting up of a retail establishment already built should prove to have a negative impact on environmental protection, appears a less effective and more costly alternative to the system of prior authorisation. The same reasoning applies as regards the objective of town and country planning. 93 Nor has the Commission stated to what extent, of itself, the requirement to obtain a licence before opening a large retail establishment goes beyond what is necessary to attain those objectives. 94 The first part of the second complaint must therefore be rejected. 95 On the other hand, it should be noted that the obligation under the first subparagraph of Article 6(2) of Law 7/1996 – referred to in the second part of this complaint – to take account, for the purposes of granting such a licence, of the existence of retail facilities in the area concerned and the impact of a new establishment on the commercial structure of that area concerns the impact on existing traders and the market structure, not consumer protection. 96 The same is true of the obligation – referred to in the third part of the present complaint – in the context of the procedure for the grant of that licence, to obtain a market share report which is to be binding if unfavourable and which must be unfavourable if the market share exceeds a certain value, as provided for in Article 8 of Law 18/2005 read in conjunction with Articles 31(4) and 33(2) of Decree 378/2006. 97 In that regard, it should be noted that those provisions require the application of ceilings as regards the market share and the impact on existing retail trade, above which it is impossible to open large retail establishments and/or medium-sized retail establishments. 98 Being purely economic, such considerations cannot, pursuant to the case-law referred to in paragraph 74 above, constitute an overriding reason in the public interest. 99 In consequence, the second and third parts of the second complaint must be upheld. – The fourth part 100 In the context of this part, the Commission challenges the compatibility with Article 43 EC of the second subparagraph of Article 6(2) of Law 7/1996, which requires the Competition Court to be consulted. 101 In general, the Kingdom of Spain contends that the provisions relating to the obtaining of a specific retail licence, including that requiring the Competition Court to be consulted, are intended to attain objectives relating to town and country planning, environmental protection and consumer protection; that they are appropriate to achieve those objectives; and that they do not go beyond what is necessary to achieve them. 102 The Commission has not stated any reasons for its claim that the justifications put forward by the Kingdom of Spain cannot be accepted. 103 In the absence of specific evidence with regard to the present part, and given that – as the Advocate General observed in point 96 of her Opinion – an obligation to consult a body with responsibility for examining questions of competition, which issues a non-binding report, appears appropriate for ensuring that the objectives relied on by the Kingdom of Spain are achieved without going beyond what is necessary to achieve them, it is appropriate to reject the fourth part of the second complaint. – The fifth part 104 The fifth part of the second complaint concerns the requirement, under Article 11 of Law 18/2005 and Article 26 of Decree 378/2006, to consult the Retail Facilities Committee. 105 In that regard, the Commission does not appear to be criticising the existence of that committee or the obligation to consult it as such, but rather the fact that the committee is composed of potential competitors of the economic operator wishing to set up a new large establishment in Catalonia. 106 As with the other parts of the present complaint, the Kingdom of Spain contends that those provisions are intended to attain objectives relating to town and country planning, environmental protection and consumer protection; that they are appropriate to achieve those objectives; and that they do not go beyond what is necessary to achieve them. 107 Article 11 of Law 18/2005 provides that the Retail Facilities Committee is to report, not only on issues relating to the decision whether a licence is to be granted by the Generalitat, but also on planning matters relating to the designation of areas where retail establishments may be opened, including the drawing up of proposals for amending the PTSEC and on the delimitation of ‘consolidated urban areas of municipalities’. 108 The establishment of such a committee, with responsibility for drawing up a report before any decision on the issuing or refusal of a licence is taken, account being taken in particular of aspects of town and country planning and environmental protection, is appropriate for ensuring achievement of the objectives pursued in that regard by that provision. 109 Furthermore, as the Advocate General stated in point 102 of her Opinion, the existence of the committee and its functions do not go beyond what is necessary to achieve those objectives of town and country planning and environmental protection. 110 On the other hand, Article 26(1) of Decree 378/2006, under which that committee is to be composed of seven members representing departments of the Generalitat, six members representing the municipalities, seven members representing the trade sector, two experts chosen by the Generalitat’s department of trade and a secretary, does not appear appropriate for ensuring that the objectives pursued are attained. 111 It should be noted that the only sectoral interest represented in that committee is that of the existing local trade. A body composed in that manner, with no representation of environmental or consumer interests, but with representation of potential competitors of the applicant for a licence, cannot constitute an appropriate instrument for pursuing objectives relating to town and country planning, environmental protection or consumer protection. 112 Thus, the existence of the Retail Facilities Committee set up under Article 11 of Law 18/2005 and its functions as specified in that provision can be justified. On the other hand, its composition, as provided for in Article 26 of Decree 378/2006, is not appropriate for ensuring achievement of the objectives pursued by means of the establishment of that committee. 113 It follows that the fifth part of the second complaint must be upheld as regards the composition of that committee, as provided for in Article 26 of Decree 378/2006. – The sixth part 114 By the sixth part of the second complaint, the Commission disputes the compatibility with EU law of Article 10 of Law 18/2005. 115 The Commission submits in that regard that certain criteria on the basis of which the Generalitat or the municipal authorities must rule on applications for retail licences lack precision. It refers, in particular, to ‘conditions which ensure the safety of the project and the integration of the establishment in the urban environment’, the ‘mobility generated by the project’ and the ‘right of consumers to a broad and varied supply in terms of product quality, quantity, price and characteristics’. In the Commission’s view, such criteria make it impossible for applicants to evaluate accurately their chances of obtaining a licence and confer too broad a discretion on the licensing authorities. 116 The Kingdom of Spain accepts that the criterion of the ‘right of consumers to a broad and varied supply in terms of product quality, quantity, price and characteristics’ may be regarded as insufficiently precise, but argues that that is not true of the other two disputed criteria. The Kingdom of Spain contends that, in any event, the criteria are not rendered inappropriate for the achievement of the aims of environmental and consumer protection simply because they lack precise definition. It argues that the EU legislature makes use of the same technique, indicating criteria to be applied without specifying thresholds from which it can be accurately determined in advance whether an application will be approved or not. 117 In that regard, it should be borne in mind that the Commission does not dispute the nature of the criteria in question, but merely their lack of precision. If it is accepted that integration into the urban environment, the effect on road and transport use and the range of choice available to consumers are legitimate criteria when deciding whether a retail establishment should be authorised, it must be noted that – as the Advocate General points out in point 116 of her Opinion – it is difficult to specify precise thresholds in advance without introducing a degree of rigidity likely to be even more restrictive of freedom of establishment. 118 Since the criteria set out in Article 10 of Law 18/2005 are not so imprecise as to render them inappropriate for the purposes of the objectives relating to town and country planning, environmental protection and consumer protection, on which the Kingdom of Spain relies, or disproportionate in relation to those objectives, the sixth part of the second complaint must be rejected. iii) The third complaint, relating to certain aspects of the retail licensing procedure – The first part 119 By the first part of the third complaint, the Commission criticises the ‘negative silence’ rule laid down in Articles 6 and 7 of Law 18/2005. 120 The Kingdom of Spain contends that that system constitutes a guarantee for any party which has submitted to the competent authority an application for a retail licence, necessary for the opening, enlargement or transfer of medium-sized and large retail establishments under those provisions. That mechanism enables that party to act, if the administration fails to do so, by applying to the courts where no decision has been taken on expiry of the maximum period of time allowed for the administration to decide on the licence application. 121 The Commission argues that that mechanism is disproportionate and that the same objective could be attained by a ‘positive silence’ system. 122 It is true that a system under which a licence application is regarded as successful – not as having been refused – if no decision rejecting it is taken within the specified period could appear less restrictive. Moreover, as the Advocate General noted in point 120 of her Opinion, such a system is provided for in Article 33(5) of Decree 379/2006 as regards the issue of the market share report. 123 However, as was pointed out in paragraph 75 above, although it is for the Member State relying on an overriding reason in the public interest as justification for a restriction on freedom of movement to demonstrate that its legislation is appropriate and necessary to attain the legitimate objective pursued, that burden of proof cannot be so extensive as to require the Member State to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions. 124 In that regard, Member States cannot be denied the possibility of pursuing objectives such as environmental protection, town and country planning and consumer protection through the introduction of rules which are easily managed and supervised by the competent authorities (see, by analogy, Case C‑137/09 Josemans [2010] ECR I‑0000, paragraph 82). 125 The negative silence system, provided for in the context of a retail licensing procedure the objectives of which are environmental protection, town and country planning and consumer protection and the role of which is to ensure legal certainty in the event that the authority responsible for ruling on that application does not take an express decision within the period allowed, by providing that that failure to act constitutes an implied decision rejecting the application, thus enabling the party which made that application to apply to the courts, is a system which the competent authorities can easily manage and supervise. What is more, the Kingdom of Spain has explained that, where no decision is taken in the context of its system, the administration is required to adopt a reasoned act terminating the procedure. 126 It follows that the first part of the third complaint must be rejected. – The second part 127 In the context of the second part of the third complaint, the Commission submits that the fees provided for in Article 12 of Law 18/2005 for processing licence applications and for the market share report represent, for the economic operators concerned, charges which have a deterrent effect as regards establishment on the territory of Catalonia. According to the Commission, since the fees charged are unrelated to the cost of the procedure, they are disproportionate. 128 The Kingdom of Spain contends that the fees in question are set at a certain amount per square metre of the planned sales area. The amount was originally calculated by dividing the processing costs incurred in 1994 and 1995 by the number of square metres concerned during those years, and has since been updated in line with inflation. That allows operators to calculate the amount of the fees with certainty in advance. The Kingdom of Spain adds that the fees are levied by instalments, so that an applicant withdrawing a project will not have to pay the full fees, and that the fees amount, on average, to approximately 0.1% of the total cost of the project. 129 In that regard, it should be noted that that method of calculating the fees due reflects overall costs reasonably accurately and is likely to deviate little from actual costs in individual cases. In addition, that method of calculation, corresponding to an amount per square metre, has the advantage of allowing the cost of the procedure to be estimated beforehand in complete transparency. 130 The second part of the third complaint must therefore be rejected. – The third part 131 Since, in accordance with paragraph 99 above, the third part of the second complaint must be upheld, the Court having found that there is no justification for the obligation, laid down in Article 8 of Law 18/2005 and Articles 31(4) and 33(2) of Decree 378/2006, to obtain a market share report, there is no need to rule on the reasonableness or otherwise of the time allowed for the issuing and validity of the market share report, which the Commission challenges by the third part of the third complaint. Costs 132 Under the first subparagraph of Article 69(3) of the Rules of Procedure, the Court may order that the costs be shared, or that the parties bear their own costs, where each party succeeds on some and fails on other heads. Since both parties have succeeded on some and failed on other heads, they should each be ordered to bear their own costs. 133 In accordance with the first subparagraph of Article 69(4) of the Rules of Procedure, the Kingdom of Denmark, which has intervened in the present proceedings, must bear its own costs. On those grounds, the Court (Second Chamber) hereby: 1. Declares that the Kingdom of Spain has failed to fulfil its obligations under Article 43 EC by adopting and/or by maintaining in force the following provisions: – Article 4(1) of Law 18/2005 on trading establishments (Ley 18/2005 de equipamientos comerciales) of 27 December 2005, in so far as it prohibits the opening of large retail establishments outside consolidated urban areas of a limited number of municipalities; – Articles 7 and 10(2) of the Annex to Decree 379/2006 approving the new sectoral territorial plan for trading establishments (Decreto 379/2006 por el que se aprueba el Plan territorial sectorial de equipamientos comerciales) of 10 October 2006, and Annex 1 thereto, in so far as those provisions restrict the opening of new hypermarkets to a limited number of districts and provide that such new hypermarkets are not to account for more than 9% of estimated expenses for staple supplies and 7% of estimated expenses for non-staple supplies; – the first subparagraph of Article 6(2) of Law 7/1996 on retail commerce (Ley 7/1996, de ordenación del comercio minorista) of 15 January 1996, Article 8 of Law 18/2005 on trading establishments of 27 December 2005 and Articles 31(4) and 33(2) of Decree 378/2006, implementing Law 18/2005 (Decreto 378/2006 por el que se desarolla la Ley 18/2005), of 10 October 2006, in so far as those provisions require the application of ceilings as regards market share and the impact on existing retail trade, above which it is impossible to open new large retail establishments and/or new medium-sized retail establishments; and – Article 26 of Decree 378/2006 implementing Law 18/2005 of 10 October 2006, in so far as in specifying the composition of the Comisión de Equipamientos Comerciales (Retail Facilities Committee) it ensures that existing retail trade is represented and fails to ensure that associations active in the field of environmental protection, or interest groups working towards consumer protection, are represented; 2. Declares that there is no need to adjudicate on the action in so far as it concerns the compatibility with Article 43 EC of Article 33(5) and (7) of Decree 378/2006, implementing Law 18/2005, of 10 October 2006; 3. Dismisses the action as to the remainder; 4. Orders the European Commission, the Kingdom of Spain and the Kingdom of Denmark to bear their own costs. [Signatures] * Language of the case: Spanish.

COURT OF APPEAL FOR ONTARIO CITATION: The Toronto Dominion Bank v. Nawab, 2014 ONCA 152 DATE: 20140226 DOCKET: C57572 Laskin, Goudge and Pardu JJ.A. BETWEEN The Toronto Dominion Bank Plaintiff (Respondent) and Najeeb Ali Nawab and Rhonda Chapman, a.k.a. Rhonda Joyce Brioux Defendants (Appellant) Brent Pearce and Adam Marchioni, for the appellant Robert W. Dowhan and S. Sutherland, for the respondent Heard and released orally:  February 18, 2014 On appeal from the order of Justice D. Price of the Superior Court of Justice, dated August 26, 2013. APPEAL BOOK ENDORSEMENT [1] The appellant argues two points.  First, she is entitled to have the default judgment set aside as of right as it was signed irregularly.  Second, she has a defence on the merits.  We do not accept either argument. [2] On the appellant’s first argument, the default judgment was signed before the 20 day period for service had elapsed and therefore was signed irregularly.  However, rule 2.01 of the Rules of Civil Procedure gives this court the power to relieve against irregularities.  The appellant was not prejudiced by the irregularity and therefore it is not in the interests of justice to set aside the default judgment as of right. [3] On the appellant’s second argument, the appellant did receive $600,000 on the sale of her property in 2007.  That fact is undisputed.  She therefore has no defence to the Bank’s claim.  Whether she has a claim against one or more of the lawyers involved in these transactions it is not before us. [4] The appeal is dismissed with costs fixed at $3,500, all inclusive.

Judgment of the Court (Fifth Chamber) of 21 April 1988. - Fratelli Pardini SpA v Ministero del Commercio con l'Estero and Banca Toscana (Lucca branch). - Reference for a preliminary ruling: Pretura di Lucca - Italy. - Cancellation of advance fixing of monetary compensatory amounts. - Case 338/85. European Court reports 1988 Page 02041 Summary Parties Grounds Decision on costs Operative part Keywords ++++ 1 . PRELIMINARY RULINGS - REFERENCE TO THE COURT - NEED FOR A PRELIMINARY RULING WITH REGARD TO PROCEEDINGS PENDING BEFORE THE COURT OR TRIBUNAL MAKING THE REFERENCE - COURT OR TRIBUNAL WHICH HAS MADE AN ORDER IN INTERLOCUTORY PROCEEDINGS - POWER TO MAKE A REFERENCE - CONDITION - NON-EXHAUSTION OF THE JURISDICTION OF THE COURT OR TRIBUNAL ( EEC TREATY, ART . 177 ) 2 . AGRICULTURE - MONETARY COMPENSATORY AMOUNTS - ADVANCE FIXING - ADJUSTMENT FOLLOWING AN ALTERATION IN THE REPRESENATIVE RATES - APPLICATION TO REQUESTS FOR ADVANCE FIXING LODGED BEFORE THE ENTRY INTO FORCE OF THE NEW RATES - PERMISSIBILITY - PRINCIPLES OF THE PROTECTION OF LEGITIMATE EXPECTATIONS AND LEGAL CERTAINTY - INFRINGEMENT - NONE ( COMMISSION REGULATIONS NO 1160/82, ART . 7 ( 1 ), AND NO 1245/83, ART . 4 AND ANNEX IVA ) 3 . AGRICULTURE - MONETARY MEASURES - ALTERATION IN THE REPRESENTATIVE RATES - EFFECT ON ADVANCE FIXINGS - CANCELLATION ON APPLICATION BY A TRADER - CONDITIONS - EXHAUSTIVE NATURE OF THE COUNCIL' S PROVISIONS - COMMISSION REGULATION LAYING DOWN DETAILED RULES OF IMPLEMENTATION IMPOSING AN ADDITIONAL CONDITION - UNLAWFUL ( COUNCIL REGULATIONS NO 1134/68, SECOND SUBPARAGRAPH OF ART . 4 ( 1 ), AND NO 1223/83, ART . 4 ( 2 ); COMMISSION REGULATION NO 1244/83 ) Summary 1 . UNDER ARTICLE 177 OF THE EEC TREATY, A NATIONAL COURT OR TRIBUNAL IS NOT EMPOWERED TO BRING A MATTER BEFORE THE COURT BY WAY OF A REFERENCE FOR A PRELIMINARY RULING UNLESS A DISPUTE IS PENDING BEFORE IT IN THE CONTEXT OF WHICH IT IS CALLED UPON TO GIVE A DECISION CAPABLE OF TAKING INTO ACCOUNT THE PRELIMINARY RULING . IT FOLLOWS THAT THE COURT OF JUSTICE HAS NO JURISDICTION TO HEAR A REFERENCE FOR A PRELIMINARY RULING WHEN AT THE TIME IT IS MADE THE PROCEDURE BEFORE THE COURT MAKING IT HAS ALREADY BEEN TERMINATED . A REFERENCE MADE IN INTERLOCUTORY PROCEEDINGS BY A COURT WHICH BY THE SAME ORDER GRANTED THE MEASURE SOUGHT MUST BE REGARDED AS SATISFYING THOSE CONDITIONS WHERE THE INTERLOCUTORY PROCEEDINGS ARE STILL PENDING BEFORE THE SAME COURT, WHICH WILL BE ABLE TO TAKE ACCOUNT OF THE PRELIMINARY RULING FOR THE PURPOSES OF A SUBSEQUENT DECISION CONFIRMING, VARYING OR DISCHARGING ITS ORDER . 2 . NEITHER THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS NOR THE PRINCIPLE OF LEGAL CERTAINTY PRECLUDES THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE WHERE THE TRADERS CONCERNED MUST REASONABLY EXPECT, AT THE MOMENT WHEN THEY LODGE THEIR REQUEST FOR ADVANCE FIXING, AN IMMINENT ALTERATION OF THE REPRESENTATIVE RATES AND THE CONSEQUENT ADJUSTMENT OF THE MONETARY COMPENSATORY AMOUNTS AND WHERE THEY HAVE EVERY POSSIBILITY OF ACQUAINTING THEMSELVES WITH THE OUTCOME OF THE DISCUSSIONS WITHIN THE COUNCIL . CONSEQUENTLY, THE COMMISSION ACTED LAWFULLY IN PRESCRIBING, IN REGULATION NO 1245/83 OF 20 MAY 1983 THAT THE ADJUSTMENTS TO BE MADE TO MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE IN THE EVENT OF A CHANGE IN THE REPRESENTATIVE RATES, AS PROVIDED FOR IN ARTICLE 7 ( 1 ) OF REGULATION NO 1160/82, MUST, IN THE CASE OF THE ALTERATION DECIDED ON BY THE COUNCIL AT ITS MEETING ON 16 AND 17 MAY, BE MADE IN RESPECT OF ALL ADVANCE FIXINGS FOR WHICH THE APPLICATION WAS LODGED AFTER 16 MAY 1983 IF THE TRANSACTION CONCERNED WAS CARRIED OUT AFTER 22 MAY 1983, THAT IS TO SAY AFTER THE ENTRY INTO FORCE OF THE NEW RATES . 3 . THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1134/68 AND ARTICLE 4 ( 2 ) OF COUNCIL REGULATION NO 1223/83 MUST TOGETHER BE INTERPRETED AS MEANING THAT CANCELLATION OF ADVANCE FIXINGS MAY BE OBTAINED IN ALL CASES WHERE THE CONDITIONS LAID DOWN IN THOSE PROVISIONS ARE SATISFIED . COMMISSION REGULATION NO 1244/83 IS THEREFORE INVALID IN SO FAR AS IT LAYS DOWN AN ADDITIONAL CONDITION LIMITING ENTITLEMENT TO CANCELLATION TO ADVANCE FIXINGS EFFECTED BEFORE THE CHANGE IN THE REPRESENTATIVE RATES, WHICH CAME INTO FORCE ON 23 MAY 1983, AND THE EFFECT OF THAT CHANGE ON LEVIES, REFUNDS AND MONETARY COMPENSATORY AMOUNTS BECAME FORESEEABLE BY TRADERS, IN THIS CASE BEFORE 17 MAY 1983 . Parties IN CASE 338/85 REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE PRETORE ( MAGISTRATE ), LUCCA, FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE HIM BETWEEN FRATELLI PARDINI SPA AND 1 . MINISTERO DEL COMMERCIO CON L' ESTERO ( MINISTRY OF FOREIGN TRADE ) AND 2 . BANCA TOSCANA ( LUCCA BRANCH ) ON THE INTERPRETATION AND VALIDITY OF CERTAIN PROVISIONS OF COMMUNITY REGULATIONS CONCERNING THE ADVANCE FIXING OF MONETARY COMPENSATORY AMOUNTS, THE COURT ( FIFTH CHAMBER ) COMPOSED OF : G . BOSCO, PRESIDENT OF CHAMBER, U . EVERLING, Y . GALMOT, R . JOLIET AND F . SCHOCKWEILER, JUDGES, ADVOCATE GENERAL : M . DARMON REGISTRAR : B . PASTOR, ADMINISTRATOR AFTER CONSIDERING THE OBSERVATIONS SUBMITTED ON BEHALF OF FRATELLI PARDINI SPA BY GIOVANNI MARIA UBERTAZZI AND FAUSTO CAPELLI, OF THE MILAN BAR, THE ITALIAN GOVERNMENT BY IVO M . BRAGUGLIA, AVVOCATO DELLO STATO, THE COMMISSION OF THE EUROPEAN COMMUNITIES BY ITS LEGAL ADVISER GIULIANO MARENCO AND BY J . HEINE, IN THE CAPACITY OF EXPERT, HAVING REGARD TO THE REPORT FOR THE HEARING AND FURTHER TO THE HEARING ON 7 OCTOBER 1987, AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 18 NOVEMBER 1987, GIVES THE FOLLOWING JUDGMENT Grounds 1 BY AN ORDER OF 29 OCTOBER 1985, WHICH WAS RECEIVED AT THE COURT ON 14 NOVEMBER 1985, THE PRETORE, LUCCA, REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY FOUR QUESTIONS ON THE INTERPRETATION AND VALIDITY OF CERTAIN PROVISIONS OF COMMUNITY REGULATIONS CONCERNING EXCHANGE RATES TO BE APPLIED IN AGRICULTURE AND THE ADVANCE FIXING OF MONETARY COMPENSATORY AMOUNTS . 2 THE QUESTIONS WERE RAISED IN THE CONTEXT OF INTERLOCUTORY PROCEEDINGS BROUGHT BY FRATELLI PARDINI SPA ( HEREINAFTER REFERRED TO AS "PARDINI ") AGAINST THE ITALIAN MINISTRY OF FOREIGN TRADE AND BANCA TOSCANA FOR AN ORDER THAT BANCA TOSCANA SHOULD NOT PAY THE SUM OF LIT 98 280 000 CLAIMED BY THE MINISTRY BY WAY OF FORFEITURE OF SECURITY LODGED IN RESPECT OF THE IMPORTATION OF 21 000 TONNES OF COMMON WHEAT FROM NON-MEMBER COUNTRIES . 3 IT IS APPARENT FROM THE DOCUMENTS BEFORE THE COURT THAT ON 17 MAY 1983 AT 12.39 PM PARDINI APPLIED TO THE MINISTRY OF FOREIGN TRADE FOR AN IMPORT LICENCE IN ORDER TO IMPORT THE AFOREMENTIONED QUANTITY OF COMMON WHEAT FROM NON-MEMBER COUNTRIES, WITH ADVANCE FIXING ON THE DAY OF THE APPLICATION OF BOTH THE LEVY AND THE MONETARY COMPENSATORY AMOUNTS . THE APPLICATION WAS ACCOMPANIED BY SECURITY OF LIT 98 280 000 IN THE FORM OF A GUARANTEE FURNISHED BY THE LUCCA BRANCH OF BANCA TOSCANA . THE MONETARY COMPENSATORY AMOUNT APPLICABLE AT THAT TIME WAS LIT 6 403 PER TONNE OF WHEAT IN FAVOUR OF THE IMPORTER . 4 BY LETTER OF 20 JUNE 1983 PARDINI REQUESTED THE CANCELLATION OF THE IMPORT LICENCE AND RELEASE OF THE SECURITY FURNISHED ON THE GROUND THAT IN THE MEANTIME A NEW REPRESENTATIVE RATE FOR THE ITALIAN LIRA INVOLVING THE ABOLITION OF MONETARY COMPENSATORY AMOUNTS FOR ITALY HAD BEEN DECIDED ON WITH EFFECT FROM 23 MAY 1983, WHICH WOULD GIVE RISE TO THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE BETWEEN 17 AND 23 MAY 1983 . 5 THAT REQUEST WAS REJECTED BY LETTER OF THE MINISTRY OF FOREIGN TRADE OF 22 OCTOBER 1983 ON THE GROUND THAT THE APPLICABLE COMMUNITY RULES DID NOT PERMIT THE CANCELLATION SOUGHT, AND PARDINI THEREFORE INSTITUTED INTERLOCUTORY PROCEEDINGS BEFORE THE PRETORE, LUCCA, PURSUANT TO ARTICLE 700 OF THE CODICE DI PROCEDURA CIVILE ( CODE OF CIVIL PROCEDURE ) ( PROCEDURE IN CASES OF URGENCY ). BY ORDER OF 29 OCTOBER 1985, THE PRETORE ORDERED SUSPENSION OF THE PAYMENT AND DECIDED TO PUT THE FOLLOWING PRELIMINARY QUESTIONS TO THE COURT : "1 . MUST ARTICLE 7 ( 1 ) OF REGULATION NO 1160/82 ( OFFICIAL JOURNAL 1982 L 134, P . 22 ) BE INTERPRETED AS MEANING THAT THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE MAY BE APPLIED ONLY TO AMOUNTS SO FIXED AFTER THE ACTUAL PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES OF THE NEW REPRESENTATIVE RATES FOR NATIONAL CURRENCIES AGAINST THE ECU ( EUROPEAN CURRENCY UNIT )? 2 . IF THE ANSWER TO QUESTION 1 IS IN THE NEGATIVE, MAY THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS PROVIDED FOR IN ARTICLE 7 ( 1 ) OF REGULATION NO 1160/82 BE APPLIED TO AMOUNTS FIXED IN ADVANCE BEFORE PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES OF THE NEW REPRESENTATIVE RATES FOR NATIONAL CURRENCIES, AND IF SO IS THE DATE TO BE ADOPTED FOR SUCH APPLICATION : ( A ) THE DATE ON WHICH THE POLITICAL INTENTION OF THE COUNCIL TO CHANGE THE REPRESENTATIVE RATE CRYSTALLIZED BY VIRTUE OF THE AGREEMENT OF ALL THE MEMBER STATES ( IN THIS CASE, 20 MAY 1983 ); OR ( B ) THE DATE OF THE ANNOUNCEMENT, BY MEANS OF A NOTICE IN THE PRESS, OF THE INTENTION OF THE COUNCIL OF MINISTERS OF THE EEC TO ADOPT THE NEW REPRESENTATIVE RATE, EVEN THOUGH IT WAS ACKNOWLEDGED THAT A RESERVATION, WHICH WAS RESOLVED AFTER PUBLICATION OF THE NOTICE IN THE PRESS, HAD BEEN FORMULATED BY A MEMBER STATE? 3 . MUST THE LAST PARAGRAPH OF ARTICLE 4 ( 1 ) OF REGULATION NO 1134/68 OF THE COUNCIL BE INTERPRETED, IN THE LIGHT OF THE PROVISIONS OF REGULATION NOS 878/77 ( OFFICIAL JOURNAL 1977 L 106 ) AND 1054/78 ( OFFICIAL JOURNAL 1978 L 134 ) AND SUBSEQUENT AMENDMENTS, AS MEANING THAT THE TRADER CONCERNED MAY IN ALL CASES OBTAIN CANCELLATION OF THE ADVANCE FIXING OF THE LEVY AND OF THE COMPENSATORY AMOUNTS, AND ALSO OF THE RELEVANT ( IMPORT ) DOCUMENT OR CERTIFICATE IF HE SUBMITS THE APPROPRIATE APPLICATION WITHIN THE PRESCRIBED PERIOD AND IF THERE HAS BEEN A CHANGE IN THE REPRESENTATIVE RATE SUCH AS THE CHANGE MADE BY THE COUNCIL BY MEANS OF REGULATION NO 1223/83 ( WITH REFERENCE TO REGULATION NO 878/77 ), SUCH CHANGE BEING REGARDED AS EQUIVALENT TO AN ALTERATION OF THE RELATIONSHIP BETWEEN THE PARITY OF THE CURRENCY OF THE MEMBER STATE CONCERNED AND THE VALUE OF THE UNIT OF ACCOUNT AS REFERRED TO IN ARTICLE 4 OF REGULATION NO 1134/68? 4 . IF QUESTIONS 2 ( A ) AND 3 ARE ANSWERED IN THE AFFIRMATIVE, MUST THE LAST INDENT OF ARTICLE 1 OF COMMISSION REGULATION NO 1244/83, WHICH AMENDS ARTICLE 2 OF REGULATION NO 1054/78 TO THE EFFECT THAT THE LAST SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF REGULATION NO 1134/68 CAN BE APPLIED ONLY TO ADVANCE FIXINGS CARRIED OUT BEFORE 17 MAY 1983, BE REGARDED AS INAPPLICABLE, AT LEAST AS REGARDS APPLICATIONS FOR CANCELLATION OF CERTIFICATES IN RESPECT OF WHICH ADVANCE FIXING WAS CARRIED OUT IN ITALY BETWEEN 17 MAY AND 20 MAY 1983 INCLUSIVE, IN VIEW OF THE NEED TO UPHOLD THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS AS REGARDS THE TRADERS CONCERNED?" 6 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR A FULLER ACCOUNT OF THE FACTS OF THE MAIN PROCEEDINGS, THE PROVISIONS OF COMMUNITY LAW IN QUESTION, THE COURSE OF THE PROCEDURE AND THE OBSERVATIONS SUBMITTED TO THE COURT, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT . THE COURT' S JURISDICTION 7 THE COMMISSION HAS EXPRESSED DOUBTS REGARDING THE COURT' S JURISDICTION TO REPLY TO THE REQUEST FOR A PRELIMINARY RULING ON THE GROUND THAT THE COURT' S DECISION CANNOT BE OF ANY USE TO THE PRETORE, WHO BROUGHT THE MATTER BEFORE THE COURT IN THE COURSE OF INTERLOCUTORY PROCEEDINGS WHILST AT THE SAME TIME GRANTING THE INTERIM MEASURE SOUGHT WHICH WAS THE SOLE OBJECT OF THOSE PROCEEDINGS . THOSE PROCEEDINGS, IT SAYS, WERE THEREFORE CONCLUDED AT THAT MOMENT AND THE COURT' S REPLY CAN BE OF NO FURTHER USE EXCEPT FOR THE PURPOSES OF THE PROCEEDINGS ON THE SUBSTANCE OF THE CASE, WHICH HAVE, HOWEVER, NOT YET BEEN COMMENCED AND MUST, MOREOVER, BE BROUGHT BEFORE A COURT OR TRIBUNAL OTHER THAN THAT WHICH IS SEEKING A PRELIMINARY RULING . 8 AS THE COURT HAS CONSISTENTLY HELD, ARTICLE 177 OF THE EEC TREATY ESTABLISHES A FRAMEWORK FOR CLOSE COOPERATION BETWEEN THE NATIONAL COURTS AND THE COURT OF JUSTICE BASED ON THE ASSIGNMENT TO EACH OF DIFFERENT FUNCTIONS . WITHIN THAT FRAMEWORK IT IS FOR THE NATIONAL COURT, WHICH IS ALONE IN HAVING A DIRECT KNOWLEDGE OF THE FACTS OF THE CASE, AND WHICH WILL HAVE TO GIVE JUDGMENT IN THE CASE, TO ASSESS THE RELEVANCE OF THE QUESTIONS OF LAW RAISED BY THE DISPUTE BEFORE IT AND THE NECESSITY FOR A PRELIMINARY RULING SO AS TO ENABLE IT TO GIVE JUDGMENT . SIMILARLY, IT IS FOR THE NATIONAL COURT TO DECIDE AT WHAT STAGE OF THE PROCEDURE IT IS NECESSARY FOR IT TO REFER A QUESTION TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING . 9 ALTHOUGH THE NATIONAL COURTS THEREFORE HAVE THE WIDEST POWER TO SEEK A PRELIMINARY RULING FROM THE COURT IF THEY CONSIDER THAT A CASE PENDING BEFORE THEM RAISES QUESTIONS OF COMMUNITY LAW, THAT POWER IS NEVERTHELESS CONFERRED ON THEM SOLELY IN ORDER TO ENABLE THEM TO RESOLVE DISPUTES BEFORE THEM BY TAKING ACCOUNT OF THE ELEMENTS OF COMMUNITY LAW CLARIFIED BY THE COURT . IT WAS IN THOSE TERMS THAT THE COURT HELD IN ITS JUDGMENT OF 11 JUNE 1987 ( CASE 14/86 PRETORE DI SALO V PERSONS UNKNOWN (( 1987 )) ECR 2545 ) THAT ITS JURISDICTION TO REPLY TO A REQUEST FOR A PRELIMINARY RULING IS SUBJECT TO THE REQUIREMENT THAT THE REQUEST EMANATES FROM A COURT OR TRIBUNAL WHICH HAS ACTED IN THE GENERAL FRAMEWORK OF ITS TASK OF JUDGING, INDEPENDENTLY AND IN ACCORDANCE WITH THE LAW, CASES COMING WITHIN THE JURISDICTION CONFERRED ON IT BY LAW . 10 IN THAT RESPECT IT IS NOT POSSIBLE TO UPHOLD THE INTERPRETATION PUT FORWARD BY THE PLAINTIFF IN THE MAIN PROCEEDINGS THAT THE CONCEPT OF COURT OR TRIBUNAL FOR THE PURPOSES OF ARTICLE 177 COVERS ALL THE COURTS OR TRIBUNALS AMONGST WHICH THE VARIOUS FUNCTIONS LEADING TO A FINAL DECISION ON THE MERITS ARE DISTRIBUTED, REGARDLESS OF WHICH JUDICIAL BODIES ARE SEISED AT VARIOUS STAGES OF A SINGLE DISPUTE . IT FOLLOWS FROM BOTH THE WORDING AND THE SCHEME OF ARTICLE 177 THAT ONLY A NATIONAL COURT OR TRIBUNAL WHICH CONSIDERS THAT THE PRELIMINARY RULING REQUESTED "IS NECESSARY TO ENABLE IT TO GIVE JUDGMENT" MAY EXERCISE THE RIGHT TO BRING A MATTER BEFORE THE COURT . THAT RIGHT IS THEREFORE LIMITED TO A COURT OR TRIBUNAL WHICH CONSIDERS THAT A CASE PENDING BEFORE IT RAISES QUESTIONS OF COMMUNITY LAW REQUIRING A DECISION ON ITS PART . 11 IT FOLLOWS THAT A NATIONAL COURT OR TRIBUNAL IS NOT EMPOWERED TO BRING A MATTER BEFORE THE COURT BY WAY OF A REFERENCE FOR A PRELIMINARY RULING UNLESS A DISPUTE IS PENDING BEFORE IT IN THE CONTEXT OF WHICH IT IS CALLED UPON TO GIVE A DECISION CAPABLE OF TAKING INTO ACCOUNT THE PRELIMINARY RULING . CONVERSELY, THE COURT OF JUSTICE HAS NO JURISDICTION TO HEAR A REFERENCE FOR A PRELIMINARY RULING WHEN AT THE TIME IT IS MADE THE PROCEDURE BEFORE THE COURT MAKING IT HAS ALREADY BEEN TERMINATED . 12 IN THE INSTANT CASE, DESPITE THE FACT THAT THE DECISION TO MAKE A REFERENCE TO THE COURT FOR A PRELIMINARY RULING WAS CONTAINED IN AN ORDER WHICH ALSO GRANTED THE INTERIM MEASURE SOUGHT THERE IS NOTHING IN THE STATEMENT OF THE GROUNDS ON WHICH THAT ORDER IS BASED TO SHOW THAT THE PRELIMINARY RULING IS TO ENABLE THE COURT MAKING THE REFERENCE ITSELF TO ARRIVE AT A JUDICIAL DECISION . IN ADDITION, IT MUST BE POINTED OUT THAT BY MAKING THE ORDER FOR REFERENCE THE PRETORE ACCEDED TO A REQUEST MADE BY THE PLAINTIFF IN THE MAIN PROCEEDINGS WHICH WAS BASED ON THE EXPRESS CONSIDERATION THAT A REFERENCE AT THE STAGE OF INTERLOCUTORY PROCEEDINGS COULD ACCELERATE THE SUBSEQUENT PROCEEDINGS BEFORE THE COURT HEARING THE MERITS, WHICH IS DIFFERENT FROM THE COURT WHICH HEARS INTERLOCUTORY MATTERS . 13 IN ORDER TO CLARIFY THIS POINT, THE COURT REQUESTED THE PLAINTIFF IN THE MAIN PROCEEDINGS AND THE ITALIAN GOVERNMENT TO PROVIDE MORE DETAILED INFORMATION ON THE COURSE OF INTERLOCUTORY PROCEEDINGS IN URGENT MATTERS IN GENERAL AND OF THIS CASE IN PARTICULAR . IT APPEARS FROM THE EXPLANATIONS PROVIDED THAT THIS CASE HAS A SPECIAL FEATURE INASMUCH AS THE PRETORE, HAVING GRANTED THE INTERIM MEASURE ANTE CAUSAM AND EX PARTE FAILED AT THE SAME TIME TO SET A DATE FOR THE APPEARANCE BEFORE HIM OF ALL PARTIES, AS IS REQUIRED BY THE RELEVANT RULES OF PROCEDURE; THE CORTE SUPREMA DI CASSAZIONE ( SUPREME COURT OF CASSATION ) HAS HELD THAT IN SUCH A CASE THE PRETORE REMAINS SEISED OF THE DISPUTE AND MAY SUMMON THE PARTIES AT ANY TIME IN ORDER TO CONFIRM, VARY OR DISCHARGE THE MEASURE ORDERED AS LONG AS PROCEEDINGS ON THE MERITS HAVE NOT BEEN COMMENCED . 14 IN VIEW OF THOSE EXPLANATIONS AND IN THE ABSENCE OF ANY ELEMENT IN THE DOCUMENTS BEFORE THE COURT INDICATING THAT PROCEEDINGS ON THE MERITS HAVE BEEN COMMENCED, THE INTERLOCUTORY PROCEEDINGS WHICH GAVE RISE TO THE REFERENCE TO THE COURT MUST BE REGARDED AS STILL PENDING BEFORE THE PRETORE, WHO MAY TAKE ACCOUNT OF THE PRELIMINARY RULING FOR THE PURPOSES OF HIS OWN DECISION CONFIRMING, VARYING OR DISCHARGING HIS ORIGINAL ORDER . HE WAS THEREFORE STILL EMPOWERED TO PUT PRELIMINARY QUESTIONS TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY AND THE COURT HAS JURISDICTION TO REPLY TO THEM . THE FIRST AND SECOND QUESTIONS 15 THE FIRST AND SECOND QUESTIONS, WHICH SHOULD BE EXAMINED TOGETHER, SEEK IN SUBSTANCE TO ASCERTAIN WHETHER THE COMMISSION ACTED LAWFULLY IN PRESCRIBING IN REGULATION NO 1245/83 OF 20 MAY 1983 THAT THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE IN THE EVENT OF A CHANGE IN THE REPRESENTATIVE RATES, AS PROVIDED FOR IN ARTICLE 7 ( 1 ) OF COMMISSION REGULATION NO 1160/82 OF 14 MAY 1982, MUST BE MADE IN RESPECT OF ALL ADVANCE FIXINGS FOR WHICH THE APPLICATION WAS LODGED AFTER 16 MAY 1983 IF THE TRANSACTION CONCERNED WAS CARRIED OUT AFTER 22 MAY 1983 . 16 IN ORDER TO GIVE A PROPER REPLY IT IS NECESSARY FIRST OF ALL TO SUMMARIZE THE MONETARY EVENTS WHICH FORM THE BACKGROUND TO THE DISPUTE IN THE MAIN PROCEEDINGS AND THE RELEVANT COMMUNITY RULES . 17 IN THE COURSE OF A MEETING HELD ON 16 AND 17 MAY 1983, THE COUNCIL REACHED AN AGREEMENT, WHICH WAS ACCEPTED BY THE ITALIAN DELEGATION SUBJECT TO CONFIRMATION, ON AN ALTERATION OF THE REPRESENTATIVE RATES FOR GREEN CURRENCIES . THE MEETING IN QUESTION CAME TO AN END ON 17 MAY 1983 TOWARDS 5 O' CLOCK IN THE MORNING AND WAS IMMEDIATELY FOLLOWED BY A PRESS RELEASE . 18 ITALY WITHDREW ITS RESERVATIONS ON 20 MAY 1983, AND ON THAT DATE THE COUNCIL ADOPTED REGULATION NO 1223/83 ON THE EXCHANGE RATES TO BE APPLIED IN AGRICULTURE, WHICH WAS PUBLISHED IN THE OFFICIAL JOURNAL OF 21 MAY 1983 ( OFFICIAL JOURNAL 1983 L 132, P . 33 ). ARTICLE 2 ( 1 ) OF THAT REGULATION, IN CONJUNCTION WITH ANNEX VII THERETO, LAID DOWN A NEW REPRESENTATIVE RATE INTER ALIA FOR THE ITALIAN LIRA AND PROVIDED THAT THE NEW RATE WAS TO APPLY FROM 23 MAY 1983 . 19 ON 20 MAY 1983, IN ORDER TO GIVE EFFECT TO THE COUNCIL LEGISLATION, THE COMMISSION ADOPTED INTER ALIA REGULATION NO 1245/83 FIXING THE MONETARY COMPENSATORY AMOUNTS AND CERTAIN COEFFICIENTS AND RATES REQUIRED FOR THEIR APPLICATION ( OFFICIAL JOURNAL 1983 L 135, P . 3 ). BY THAT MEASURE IT ADJUSTED THE MONETARY COMPENSATORY AMOUNTS IN THE LIGHT OF THE MONETARY CHANGES WHICH HAD BEEN MADE; FOR ITALY THE ADJUSTMENT CONSISTED IN THE ABOLITION OF MONETARY COMPENSATORY AMOUNTS IN ALL SECTORS . IN ADDITION, ARTICLE 4 OF REGULATION NO 1245/83, IN CONJUNCTION WITH ANNEX IVA THERETO, PROVIDED THAT THE ADJUSTMENTS TO BE MADE TO MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE WERE APPLICABLE, IN THE CASE OF ITALY, TO APPLICATIONS FOR ADVANCE FIXING LODGED AFTER 16 MAY 1983, PROVIDED THAT THE TRANSACTION IN QUESTION WAS NOT COMPLETED BEFORE 23 MAY 1983, THE DATE ON WHICH THE NEW REPRESENTATIVE RATES CAME INTO EFFECT . 20 AS IS APPARENT FROM THE VERY WORDING OF ARTICLE 4 OF REGULATION NO 1245/83, THAT PROVISION WAS ADOPTED PURSUANT TO ARTICLE 7 ( 1 ) OF COMMISSION REGULATION NO 1160/82 OF 14 MAY 1982 PROVIDING FOR THE ADVANCE FIXING OF MONETARY COMPENSATORY AMOUNTS ( OFFICIAL JOURNAL 1982 L 134, P . 22 ). THAT PROVISION STATES AS FOLLOWS : "THE MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE SHALL BE ADJUSTED IF A NEW REPRESENTATIVE RATE, DECIDED ON BEFORE THE APPLICATION FOR ADVANCE FIXING WAS LODGED, COMES INTO EFFECT ". 21 IN THAT CONNECTION THE PLAINTIFF IN THE MAIN PROCEEDINGS AND THE ITALIAN GOVERNMENT MAINTAIN THAT THE EXPRESSION "DECIDED ON" CONTAINED IN ARTICLE 7 ( 1 ) OF REGULATION NO 1160/82 REFERS TO THE MEASURE WHICH PRESENTS THE COUNCIL' S INTENTION TO ALTER THE REPRESENTATIVE RATES IN A LEGALLY BINDING MANNER, THAT IS TO SAY IN THIS CASE REGULATION NO 1223/83 . AS THAT MEASURE TOOK EFFECT, AS REGARDS THE ITALIAN LIRA, ON 23 MAY 1983, ONLY MONETARY COMPENSATORY AMOUNTS RELATING TO ITALY FIXED IN ADVANCE ON OR AFTER THAT DATE COULD BE ADJUSTED . IN ANY EVENT, THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS PRECLUDES THE APPLICATION OF THE RULES IN QUESTION TO APPLICATIONS FOR ADVANCE FIXING LODGED BEFORE THE DATE ON WHICH REGULATION NO 1223/83 WAS PUBLISHED IN THE OFFICIAL JOURNAL . 22 THE COMMISSION, ON THE OTHER HAND, CONSIDERS THAT THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE MAY EXTEND TO ALL APPLICATIONS FOR ADVANCE FIXING LODGED AFTER THE COUNCIL' S ACTUAL POLITICAL DECISION TO ALTER THE REPRESENTATIVE RATES, REGARDLESS OF THE RESERVATION ENTERED BY THE DELEGATION OF ONE MEMBER STATE TO THE EFFECT THAT ITS AGREEMENT WAS SUBJECT TO CONFIRMATION . SUCH AN INTERPRETATION IS REQUIRED, IN ITS VIEW, IN THE LIGHT OF THE OBJECTIVE OF THE RULES IN QUESTION, WHICH IS TO PREVENT TRADERS FROM BEING ABLE TO BENEFIT FROM ADVANCE FIXING ON THE BASIS OF THE OLD AMOUNTS ONCE THEY CAN NO LONGER REASONABLY HAVE ANY DOUBTS REGARDING THE IMMINENT ENTRY INTO FORCE OF THE NEW AMOUNTS . 23 WITH REGARD TO THOSE OBSERVATIONS SUBMITTED BY THE PARTIES, IT MUST BE EMPHASIZED THAT ARTICLE 4 OF COMMISSION REGULATION NO 1245/83 CONTAINS RULES WHICH ARE SUBSEQUENT AND SPECIFIC IN RELATION TO THOSE CONTAINED IN ARTICLE 7 ( 1 ) OF COMMISSION REGULATION NO 1160/82 . THE QUESTIONS RAISED MUST THEREFORE BE RESOLVED SOLELY WITHIN THE FRAMEWORK OF THE FORMER PROVISION, AND THERE IS NO NEED TO HAVE RESORT TO THE INTERPRETATION OF ARTICLE 7 ( 1 ) OF REGULATION NO 1160/82 . 24 AS THE COMMISSION RIGHTLY EMPHASIZED, THE SYSTEM OF ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS IS INTENDED TO PREVENT SPECULATION AND ABUSE WHICH MIGHT OCCUR DURING THE PERIOD BETWEEN THE DISCUSSIONS WITHIN THE COUNCIL, OF WHICH TRADERS ARE IMMEDIATELY AWARE FROM TRADE SOURCES OR FROM THE PRESS, AND THE DATE WHEN THE NEW REPRESENTATIVE RATES TAKE EFFECT . DURING THAT PERIOD APPLICATIONS FOR ADVANCE FIXING MIGHT BE LODGED WITH THE SOLE AIM OF BENEFITING FROM MONETARY COMPENSATORY AMOUNTS WHICH ARE STILL IN FORCE BUT WHOSE IMMINENT ADJUSTMENT IS ALREADY FORESEEABLE . IT IS THEREFORE CONSISTENT WITH THE OBJECTIVE PURSUED TO CHOOSE THE DATE ON WHICH THE COUNCIL' S INTENTION TO ALTER THE REPRESENTATIVE RATES WAS MADE PUBLIC, THAT IS TO SAY IN THIS CASE 17 MAY 1983, AS THE DATE TO BE TAKEN INTO CONSIDERATION FOR THE ADJUSTMENT OF AMOUNTS FIXED IN ADVANCE . 25 CONTRARY TO THE SUBMISSIONS OF THE PLAINTIFF IN THE MAIN PROCEEDINGS AND THE ITALIAN GOVERNMENT, SUCH A COURSE OF ACTION DOES NOT DISREGARD THE REQUIREMENTS OF THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS . THAT PRINCIPLE DOES NOT PRECLUDE THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE IN A SITUATION SUCH AS THAT IN ISSUE WHERE THE TRADERS CONCERNED MUST REASONABLY EXPECT, AT THE MOMENT WHEN THEY LODGE THEIR APPLICATION FOR ADVANCE FIXING, AN IMMINENT ALTERATION OF THE REPRESENTATIVE RATES AND THE CONSEQUENT ADJUSTMENT OF THE MONETARY COMPENSATORY AMOUNTS AND WHERE THEY HAVE EVERY POSSIBILITY OF ACQUAINTING THEMSELVES WITH THE OUTCOME OF THE DISCUSSIONS WITHIN THE COUNCIL . IN SUCH CIRCUMSTANCES THOSE TRADERS MAY NO LONGER LEGITIMATELY EXPECT THE RATES IN FORCE AT THE TIME OF ADVANCE FIXING TO BE RETAINED . 26 FOR THE SAME REASON THE SOLUTION ADOPTED IS CONSISTENT WITH THE PRINCIPLE OF LEGAL CERTAINTY . THE RETROACTIVE EFFECT OF THE FACT THAT ADJUSTMENT RELATES TO ALL APPLICATIONS FOR ADVANCE FIXING LODGED AFTER A DATE PRIOR TO THE COUNCIL' S DEFINITIVE DECISION ON NEW RATES IS NOT CONTRARY TO THAT PRINCIPLE SINCE TRADERS MUST REASONABLY EXPECT SUCH A CHANGE IN THEIR POSITION, AS HAS BEEN EXPLAINED ABOVE . 27 CONSEQUENTLY, THE REPLY TO THE FIRST AND SECOND QUESTIONS MUST BE THAT THE COMMISSION ACTED LAWFULLY IN PRESCRIBING, IN REGULATION NO 1245/83 OF 20 MAY 1983, THAT THE ADJUSTMENTS TO BE MADE TO MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE IN THE EVENT OF A CHANGE IN THE REPRESENTATIVE RATES, AS PROVIDED FOR IN ARTICLE 7 ( 1 ) OF COMMISSION REGULATION NO 1160/82 OF 14 MAY 1982, MUST BE MADE IN RESPECT OF ALL ADVANCE FIXINGS FOR WHICH THE APPLICATION WAS LODGED AFTER 16 MAY 1983 IF THE TRANSACTION CONCERNED WAS CARRIED OUT AFTER 22 MAY 1983 . THE THIRD AND FOURTH QUESTIONS 28 IN THE THIRD AND FOURTH QUESTIONS, WHICH SHOULD BE EXAMINED TOGETHER, THE PRETORE SEEKS TO ASCERTAIN IN SUBSTANCE WHETHER THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1134/68 OF 30 JULY 1968 AND ARTICLE 4 ( 2 ) OF COUNCIL REGULATION NO 1223/83 OF 20 MAY 1983 MUST TOGETHER BE INTERPRETED AS MEANING THAT CANCELLATION OF ADVANCE FIXINGS MAY BE OBTAINED IN ALL CASES WHERE THE CONDITIONS LAID DOWN IN THOSE PROVISIONS ARE SATISFIED OR WHETHER THE COMMISSION ACTED LAWFULLY IN LIMITING, BY REGULATION NO 1244/83 OF 20 MAY 1983, THE RIGHT TO OBTAIN CANCELLATION OF ADVANCE FIXINGS EFFECTED BEFORE 17 MAY 1983 . 29 IN ORDER TO GIVE A PROPER REPLY IT IS NECESSARY FIRST OF ALL TO SUMMARIZE THE GENERAL RULES GOVERNING CANCELLATION OF ADVANCE FIXINGS . 30 INDENT ( A ) OF THE FIRST SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1134/68 OF 30 JULY 1968 LAYING DOWN RULES FOR THE IMPLEMENTATION OF REGULATION ( EEC ) NO 653/68 ON CONDITIONS FOR ALTERATIONS TO THE VALUE OF THE UNIT OF ACCOUNT USED FOR THE COMMON AGRICULTURAL POLICY ( OFFICIAL JOURNAL, ENGLISH SPECIAL EDITION 1968 ( II ), P . 396 ) PROVIDES IN SUBSTANCE THAT IN THE EVENT OF AN ALTERATION OF THE RELATIONSHIP BETWEEN THE PARITY OF THE CURRENCY OF A MEMBER STATE AND THE VALUE OF THE UNIT OF ACCOUNT, THE MEMBER STATE CONCERNED, USING THE NEW PARITY RELATIONSHIP, IS TO ADJUST THE AMOUNTS, GIVEN IN UNITS OF ACCOUNT, WHICH HAVE BEEN FIXED IN ADVANCE FOR A TRANSACTION OR PART OF A TRANSACTION STILL TO BE CARRIED OUT AFTER ALTERATION OF THAT PARITY RELATIONSHIP IF THOSE AMOUNTS APPEAR IN NATIONAL CURRENCY IN THE DOCUMENTS ISSUED IN PURSUANCE OF THE COMMON AGRICULTURAL POLICY . HOWEVER, THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) PROVIDES THAT "ANY PERSON WHO HAS OBTAINED ADVANCE FIXING OF SUCH AMOUNTS FOR A SPECIFIC TRANSACTION MAY, BY WRITTEN APPLICATION WHICH MUST REACH THE COMPETENT AUTHORITY WITHIN 30 DAYS OF THE ENTRY INTO FORCE OF THE MEASURES FIXING THE ALTERED AMOUNTS, OBTAIN CANCELLATION OF THE ADVANCE FIXING AND OF THE RELEVANT DOCUMENT OR CERTIFICATE ". 31 ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1223/83, REFERRED TO ABOVE, PROVIDES IN SUBSTANCE THAT THE PROVISIONS OF REGULATION NO 1134/68 IN RESPECT OF AN ALTERATION OF THE RELATIONSHIP BETWEEN THE PARITY OF THE CURRENCY OF A MEMBER STATE AND THE VALUE OF THE UNIT OF ACCOUNT ARE TO APPLY TO ALTERATIONS IN THE REPRESENTATIVE RATES WITH WHICH THAT REGULATION IS CONCERNED . HOWEVER, ARTICLE 4 ( 2 ) OF REGULATION NO 1223/83 PROVIDES THAT THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF REGULATION NO 1134/68 "SHALL APPLY ONLY IF THE APPLICATION OF THE NEW REPRESENTATIVE RATES IS DISADVANTAGEOUS TO THE PARTY CONCERNED" 32 THIS LAST PROVISION WAS SUPPLEMENTED BY ARTICLE 1 OF COMMISSION REGULATION NO 1244/83 OF 20 MAY 1983 AMENDING REGULATION ( EEC ) NO 1054/78 FOLLOWING THE FIXING OF A NEW EXCHANGE RATE TO BE APPLIED IN AGRICULTURE FOR THE GERMAN MARK, THE IRISH POUND, THE FRENCH FRANC, THE GREEK DRACHMA, THE ITALIAN LIRA AND THE DUTCH GUILDER ( OFFICIAL JOURNAL 1983 L 135, P . 1 ) TO THE EFFECT THAT, AS REGARDS THE REPRESENTATIVE RATE FOR THE ITALIAN LIRA, THE PROVISIONS OF THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF REGULATION NO 1134/68 "SHALL APPLY ONLY TO ADVANCE FIXINGS AND TO CERTIFICATES OR TITLES ATTESTING THEM ISSUED ... BEFORE 17 MAY 1983 ". IT SHOULD BE ADDED THAT COMMISSION REGULATION NO 1244/83 WAS ADOPTED ON THE BASIS OF ARTICLE 6 OF COUNCIL REGULATION NO 1223/83, UNDER WHICH THE COMMISSION IS TO ADOPT THE DETAILED RULES FOR IMPLEMENTING REGULATION NO 1223/83 . 33 THE PLAINTIFF IN THE MAIN PROCEEDINGS AND THE ITALIAN GOVERNMENT MAINTAIN THAT THE AFOREMENTIONED COUNCIL LEGISLATION, NAMELY REGULATIONS NOS 1134/68 AND 1223/83, GIVE TRADERS THE RIGHT TO OBTAIN CANCELLATION OF ADVANCE FIXINGS WHENEVER, AS A RESULT OF THE ADJUSTMENT OF AMOUNTS FIXED IN ADVANCE, THE TERMS OF THE TRANSACTION HAVE CHANGED TO THE DISADVANTAGE OF THE PERSON CONCERNED . CANCELLATION OF THE TRANSACTION CONSTITUTES A REMEDY IN RESPECT OF THE MONETARY CHANGES WHICH HAVE TAKEN PLACE; IT THEREFORE OPERATES IN FAVOUR OF ALL TRADERS WHO WOULD OTHERWISE SUFFER HARM AS A RESULT OF MONETARY FLUCTUATIONS . IT FOLLOWS THAT IN SO FAR AS COMMISSION REGULATION NO 1244/83 LIMITS THE POSSIBILITY OF CANCELLATION TO ADVANCE FIXINGS EFFECTED BEFORE 17 MAY 1983 THAT MEASURE IS CONTRARY BOTH TO THE COUNCIL LEGISLATION AND TO THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS . THE PLAINTIFF IN THE MAIN PROCEEDINGS ALSO CLAIMS THAT THE STATEMENT OF THE REASONS UPON WHICH REGULATION NO 1244/83 IS BASED CONTAINS NO GROUNDS JUSTIFYING THE CONTESTED RULE . 34 THE COMMISSION, ON THE OTHER HAND, CONSIDERS THAT NEITHER REGULATION NO 1134/68 NOR REGULATION NO 1223/83 PROVIDES ANY POSSIBILITY OF CANCELLATION IN A CASE SUCH AS THIS . THE COUNCIL LEGISLATION RELATES SOLELY TO AMOUNTS FIXED IN UNITS OF ACCOUNT AND EXPRESSED IN NATIONAL CURRENCY, SUCH AS LEVIES AND REFUNDS, AND NOT TO AMOUNTS FIXED DIRECTLY IN NATIONAL CURRENCY, SUCH AS MONETARY COMPENSATORY AMOUNTS . SUCH A DIFFERENCE IN TREATMENT IS JUSTIFIED BY THE FACT THAT LEVIES AND REFUNDS ARE AUTOMATICALLY ADJUSTED BY THE MEMBER STATES FOLLOWING AN ALTERATION OF THE REPRESENTATIVE RATES WHEREAS MONETARY COMPENSATORY AMOUNTS ARE ADJUSTED BY THE COMMISSION, WHICH, IN SO DOING, LIMITS THE ADJUSTMENT TO ADVANCE FIXINGS EFFECTED AFTER THE DATE ON WHICH THE MONETARY CHANGE BECAME FORESEEABLE BY TRADERS . THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS, WHICH REQUIRES THAT THE CANCELLATION OF LEVIES AND REFUNDS MUST BE POSSIBLE BECAUSE OF THE AUTOMATIC NATURE OF THEIR ADJUSTMENT, IS THEREFORE OBSERVED, AS REGARDS MONETARY COMPENSATORY AMOUNTS, BY THE TEMPORAL LIMITATION ON THEIR ADJUSTMENT . 35 ACCORDING TO ITS CLEAR WORDING, ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1134/68, TO WHICH ARTICLE 4 OF COUNCIL REGULATION NO 1223/83 REFERS, RELATES SOLELY TO AMOUNTS FIXED IN UNITS OF ACCOUNT AND EXPRESSED IN NATIONAL CURRENCY, SUCH AS LEVIES AND REFUNDS . THE COMMUNITY LEGISLATION DOES NOT CONTAIN ANY PROVISION EXPRESSLY PROVIDING FOR THE POSSIBILITY OF CANCELLING ADVANCE FIXINGS OF MONETARY COMPENSATORY AMOUNTS . HOWEVER, THE SECOND SUBPARAGRAPH OF ARTICLE 2 ( 1 ) OF COMMISSION REGULATION NO 1160/82 PROVIDES AS FOLLOWS : "THE MONETARY COMPENSATORY AMOUNT MAY BE FIXED IN ADVANCE ONLY IN THE CASE OF LICENCES OR CERTIFICATES UNDER WHICH THE IMPORT OR EXPORT LEVY OR EXPORT REFUND IS FIXED IN ADVANCE ". THAT PROVISION IMPLIES THAT IF THE ADVANCE FIXING OF THE LEVY OR REFUND IS CANCELLED THE ADVANCE FIXING OF THE MONETARY COMPENSATORY AMOUNT RELATING TO THE TRANSACTION MUST ALSO BE CANCELLED . 36 IT MUST BE EMPHASIZED THAT ACCORDING TO ARTICLE 4 ( 2 ) OF REGULATION NO 1223/83 THE APPLICATION OF THE RULES CONTAINED IN REGULATION NO 1134/68 ON THE CANCELLATION OF ADVANCE FIXINGS IS SUBJECT TO THE SOLE CONDITION THAT THE APPLICATION OF THE NEW REPRESENTATIVE RATE IS DISADVANTAGEOUS TO THE PARTY CONCERNED; THAT DISADVANTAGE MAY ARISE, IN A CASE SUCH AS THIS, FROM THE ADJUSTMENT OF MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE IN ACCORDANCE WITH REGULATION NO 1245/83 . THE SCHEME OF THAT PROVISION LEADS TO THE VIEW THAT THE COUNCIL THEREBY LAID DOWN IN A LIMITATIVE MANNER THE SUBSTANTIVE LEGAL CONDITIONS FOR THE EXERCISE OF THE RIGHT TO OBTAIN CANCELLATION UNDER THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF REGULATION NO 1134/68 IN CONNECTION WITH THE ALTERATION OF THE REPRESENTATIVE RATES WITH WHICH THIS CASE IS CONCERNED . 37 IN VIEW OF THE EXHAUSTIVE SET OF RULES LAID DOWN BY THE COUNCIL, THE COMMISSION MAY NOT RELY ON ARTICLE 6 OF REGULATION NO 1223/83, WHICH EMPOWERS IT TO ADOPT DETAILED IMPLEMENTING RULES, IN ORDER TO IMPOSE THE ADDITIONAL CONDITION ON THE RIGHT TO OBTAIN CANCELLATION THAT THE MONETARY CHANGE IN QUESTION AND THE RESULTING ADJUSTMENT OF THE MONETARY COMPENSATORY AMOUNTS WERE NOT FORESEEABLE FOR THE TRADER CONCERNED . IT FOLLOWS THAT THE COMMISSION WAS NOT ENTITLED TO LIMIT THE RIGHT TO OBTAIN CANCELLATION, GRANTED UNDER SUPERIOR COUNCIL LEGISLATION, TO ADVANCE FIXINGS AND TO CERTIFICATES OR DOCUMENTS ATTESTING THEM ISSUED BEFORE A SPECIFIC DATE PRIOR TO THE DATE ON WHICH THE NEW REPRESENTATIVE RATES TOOK EFFECT, AS IT DID IN REGULATION NO 1244/83 . 38 AS REGULATION NO 1244/83 IS THEREFORE UNLAWFUL FOR THE REASONS WHICH HAVE JUST BEEN SET OUT, THERE IS NO NEED TO EXAMINE WHETHER THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS WAS OBSERVED IN ITS ADOPTION OR WHETHER IT COMPLIES WITH THE REQUIREMENT TO STATE THE REASONS UPON WHICH IT IS BASED PURSUANT TO ARTICLE 190 OF THE EEC TREATY . 39 THE REPLY TO THE THIRD AND FOURTH QUESTIONS MUST THEREFORE BE THAT THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1134/68 OF 30 JULY 1968 AND ARTICLE 4 ( 2 ) OF COUNCIL REGULATION NO 1223/83 OF 20 MAY 1983 MUST TOGETHER BE INTERPRETED AS MEANING THAT CANCELLATION OF ADVANCE FIXINGS MAY BE OBTAINED IN ALL CASES WHERE THE CONDITIONS LAID DOWN IN THOSE PROVISIONS ARE SATISFIED . COMMISSION REGULATION NO 1244/83 OF 20 MAY 1983 IS THEREFORE INVALID IN SO FAR AS IT LIMITS ENTITLEMENT TO CANCELLATION TO ADVANCE FIXINGS EFFECTED BEFORE 17 MAY 1983 . Decision on costs COSTS 40 THE COSTS INCURRED BY THE ITALIAN GOVERNMENT AND THE COMMISSION OF THE EUROPEAN COMMUNITIES, 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, A STEP IN THE PROCEEDINGS BROUGHT 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 QUESTIONS REFERRED TO IT BY THE PRETORE, LUCCA, BY AN ORDER OF 29 OCTOBER 1985, HEREBY RULES : ( 1 ) THE COMMISSION ACTED LAWFULLY IN PRESCRIBING, IN REGULATION NO 1245/83 OF 20 MAY 1983, THAT THE ADJUSTMENTS TO BE MADE TO MONETARY COMPENSATORY AMOUNTS FIXED IN ADVANCE IN THE EVENT OF A CHANGE IN THE REPRESENTATIVE RATES, AS PROVIDED FOR IN ARTICLE 7 ( 1 ) OF COMMISSION REGULATION NO 1160/82 OF 14 MAY 1982, MUST BE MADE IN RESPECT OF ALL ADVANCE FIXING FOR WHICH THE APPLICATION WAS LODGED AFTER 16 MAY 1983, IF THE TRANSACTION CONCERNED WAS CARRIED OUT AFTER 22 MAY 1983 . ( 2 ) THE SECOND SUBPARAGRAPH OF ARTICLE 4 ( 1 ) OF COUNCIL REGULATION NO 1134/68 OF 30 JULY 1968 AND ARTICLE 4 ( 2 ) OF COUNCIL REGULATION NO 1223/83 OF 20 MAY 1983 MUST TOGETHER BE INTERPRETED AS MEANING THAT CANCELLATION OF ADVANCE FIXINGS MAY BE OBTAINED IN ALL CASES WHERE THE CONDITIONS LAID DOWN IN THOSE PROVISIONS ARE SATISFIED . COMMISSION REGULATION NO 1244/83 OF 20 MAY 1983 IS THEREFORE INVALID IN SO FAR AS IT LIMITS ENTITLEMENT TO CANCELLATION TO ADVANCE FIXINGS EFFECTED BEFORE 17 MAY 1983 .

Mr Justice Thomas: There is before the court an application for judgment under CPR Part 24. The action was brought by the Claimants (the Sellers) against the Defendants (the Buyers) in respect of a contract for the sale of low sulphur fuel oil contained in a telex dated 20 November 2000 and an associated agreement made in January 2001. Under the contract of 20 November 2000, the Buyers agreed to buy 9,000 – 10,000 tons of low sulphur fuel oil. The contract set out the specification of the oil, but it is only necessary to refer to the pour point as it was that part of the specification that gave rise to the dispute; it provided: “Low sulphur fuel oil of EU origin with the following actual specifications as tested at loadport: PROPERTIES PROPERTY UNIT RESULTS FINAL … Pour Point Deg C - 3 … And with the following guaranteed specifications at disport: Pour Point Deg C + 3 Max This clause constitutes the whole seller’s obligations with respect to the quality of the product to be supplied…” The price was to be paid “without deduction, offset or counterclaim”. Clause 8 of the contract provided as follows: “8. DETERMINATION OF QUANTITY/QUALITY: - Quantity as per outturn quantity as checked by Messrs Saybolt Independent Inspectors. - Quality as ascertained at loading installation to be final and binding for both parties except for pour point, sulphur and net calorific value to be retested at disport on the basis of a ship’s composite sample taken before discharge by Messrs Saybolt Independent Inspectors whose results to be final and binding for both parties save fraud or manifest error. Inspections costs at disport to be equally shared between Buyer and Seller. ” The contract also provided for jurisdiction in the following terms in clause 11: “This contract is governed by and construed in accordance with the laws of England. The parties hereto irrevocably agree that the High Courts of England are to have jurisdiction to settle any dispute which may arise out of or in connection with this contract and submit to the jurisdiction of those courts.” The delivery of the cargo A cargo of 28,600 mt of Low Sulphur fuel oil was loaded at Tarragona, Spain on the Adriatiki on 15 November 2000 by Repsol SA. (Repsol); it was in two parcels – one of 10,600 mt and one of 18,000 mt. It came from a single shore tank (save for 400 mt). A certificate was provided by Repsol showing the pour point at Tarragona was -3°C as tested by test method ASTM D-97 from a sample taken from the shore tank. The vessel discharged 9,790 mt at Malta on 18-19 November 2000 into the shore tanks of Oiltanking Malta Ltd. The cargo that was discharged was tested by Saybolt Malta Ltd (Saybolt); they took a composite sample representing the parcel to be discharged at Malta from the ship’s tanks before discharge (sample A), a sample from shore tank 321 into which the parcel was discharged (sample B) and a composite sample from all the ship’s tanks (sample C). A certificate was issued which showed the results in the following terms: “Sample submitted as Fuel Oil Received Sampled by Saybolt Inspector Marked (A) Ship’s composite sample taken before discharge; representing the Malta parcel. (B) Single tank composite sample taken ex ST 321 after discharge. (C) Multiple ship’s tanks composite sample taken on arrival of all cargo. TEST UNIT METHOD RESULTS A B C Pour Point deg.C. ASTM D 97 ” 3 3 9(*) Remarks (*) Re-checked three times” The dispute between the parties The course of subsequent events was a matter of dispute. The oil was held initially in the tanks to the order of the Sellers by Oiltanking Malta Ltd. Subsequently, the Buyers took delivery of 3,999.7 mt, the price due to the Sellers being secured under letters of credit. The Buyers transported that quantity in December 2000 to Augusta, Sicily on the Cap Farina and then by road to Messina; the Buyers claimed they had difficulty in transporting the oil because of the pour point; they had intended to ship it directly to Messina, but because of the pour point, that could not be done as the shore line was long and it had to be discharged at Augusta and sent on by road. An agreement was made with the Sellers on 30 December 2000 and a further agreement replacing that was made on 18 January 2001. The Buyers had declined to accept the remainder of the cargo- 5,790mt; this was returned to the Sellers under the agreement of 18 January 2001 which provided that the Buyers pay a difference in price of $396,647.26 on 15 March 2001. The Sellers contended that this was a “wash-out” of the sale and purchase obligations against payment of the agreed amount. Subsequently the Buyers declined to pay this amount. They contended that the specification of the oil was not in accordance with the contract as regards the pour point; they claimed an abatement of the price and that they had suffered additional losses. Under a further agreement made on the telephone on 18 January 2001, the Buyers also agreed to pay for the storage charges of the oil in the sum of $14,000. The ship’s composite sample taken by Saybolt in November 2000 (sample A) was then re-tested by Saybolt on 25 April 2001 in the presence of the Buyers and Sellers in two ways; test (1) involved the original sample A prepared on 18 November 2000 and test (2) involved a new sample prepared on 25 April 2001 from the ship’s tanks representing the cargo discharged at Malta ; the following results for (1) and (2) were set out in a certificate dated 26 April 2001: TEST UNIT METHOD RESULTS 1 2 “Pour Point C ASTM D97 +6 +12 Two further tests were also carried out: On 11 January 2001 Saybolt analysed a sample from shoretank 323 in Malta; this contained the remainder of the cargo. The certificate showed a pour point of +9°C. On 28 February 2001 Agenzia Delle Dogane analysed the cargo taken to Sicily. They certified that it had a pour point of +12°C. The course of the proceedings Proceedings were issued by the Sellers on 22 March 2001 and a Part 24 application made on 24 April 2001. The primary basis of the application made was that there was no defence to the claim under the agreement of 18 January 2001. When the application came on for hearing, it became clear that it was not possible, on the evidence before the court, to determine whether the buyers had a real prospect of defending the claim made by the Sellers under the agreement of 18 January 2001; the Sellers claimed that they were entitled to succeed under that agreement whatever the outcome of the dispute was in relation to the pour point. However all the available evidence for the purpose of a Part 24 application was before the court in relation to another question that arose – whether the Buyers had a real prospect of successfully defending the claim by showing that the pour point of the cargo was not in accordance with the specification in the face of the Saybolt certificate of 22 November 2001. There was a short issue on whether, under the terms of clause 8, the Buyers had a real prospect of success in showing that there was manifest error. It was accepted by the Buyers that, if this issued was decided against them, then they were liable to the Sellers irrespective of the nature of the dispute over the agreement of 18 January 2001, as they would not be able to maintain their complaint in respect of the pour point of the cargo. I decided therefore that it was appropriate to determine the second issue; if I decided that issue against the Sellers, then they were to be entitled to pursue their part 24 application under the agreement of 18 January 2001. The applicable principles of the law Clause 8 provided that the re-test for the pour point at the discharge port by Saybolt was to be final and binding for both parties “save for fraud or manifest error”. Although the term “manifest error” is now not infrequently used in clauses relating to certification in contracts for the supply of oil, so far as the researches of counsel had gone there is no decided authority on the meaning of the term. However the applicable principles were not seriously in dispute: (i) It is important for the operation of commerce that commercial men and bankers can rely upon the finality of a certificate: in Toepfer v. Continental Grain Co. [1974] 1 Lloyds Rep. 11. Lord Denning put the position in the following terms: “Apart altogether from authority, I am clearly of the opinion that a mistake by the certifier, even when afterwards admitted by him to be a mistake, does not invalidate the certificate. It remains binding as between seller and buyer all down the chain… it must be remembered that numerous persons act on the faith of the certificate, such as buyer, sub-buyers, bankers lending money and so forth. Good sense requires that the finality of the clause should be upheld by arbitrators and the Courts in full.” (ii) Even if the certifier admits that he has made a mistake, the Court should uphold the finality of the certificate (see the passage quoted above). (iii) The exception of manifest error should be construed in this commercial context. (iv) “Manifest” meant in ordinary language “plain and obvious”. (v) The manifest error must relate to the certificate or the procedure that led to the making of the certificate; for example it would be a manifest error if a plain and obvious mistake of transcription had been made or a plain and obvious error had been made in testing or in sampling or in mixing the samples. (vi) In deciding whether there was a manifest error the Court should take into account the technical knowledge that parties would have about the testing procedure. The technical background There was set out in a report by Mr Chell of London Offshore Consultants Limited, well known marine and engineering consultants, the relevant technical background; Mr Chell is an expert in fuel oil analysis and was formerly employed by Lloyd’s Fuel Oil Bunker and Advisory Services. He explained that the standard test for pour point is ISO 3016 and it was the same method as ASTM D97 as used by Saybolt and Repsol. The testing method involved heating a small sample of oil and then cooling it at a specified rate, while examining it at the 3°C intervals for flow characteristics. The pour point was quoted at 3°C above the temperature at which no flow was observed. Tests for pour point did not necessarily produce exactly the same results, but there were well recognised parameters within which tests could be compared; these were termed “repeatability” and “reproducibility”. Repeatability was the closeness of test results of the same sample using the same test method and the same laboratory. Reproducibility was the closeness of the test result of the same sample using the same test method but by a different laboratory. The ASTM D97 test had a repeatability of ±3°C and reproducibility of ±6°C. Mr Chell stated that the range for reproducibility explained the contractual specification; as-3°C was specified at the loading port, then as the cargo would be tested at the discharge port by a different laboratory, then the specification had to allow for a variation in the pour point of ±6°C and so gave a maximum value at the discharge port of +3°C. He believed that the most likely explanation for the difference in test results was due to a blending problem; a possibility was that the fuel in the tank at Tarragona was a blend of more than one parcel each with a different pour point; if the parcels were not properly blended, then there could be layers of fuel with different pour points within the total parcel. The only way to determine this was to test each ship’s tank. The respective arguments Against this background the Buyers contended: (1) The range of tests primarily to be considered were those at Taragona carried out by Repsol and those carried out by Saybolt at Malta in November 2000. (2) At Taragona the pour point was -3°C; all the tests for the cargo at Malta should have been within the reproducibility of this – ie. within ±6°C and within ±3°C of each other. They were not - the Saybolt test as certified on 22 November 2000 for the whole cargo at Malta (sample C) was +9°C; this was outside the reproducibility range applicable in respect of the Tarragona test and the repeatability range for the other tests at Malta. There was an overall variation of 12°C. If the samples tested in April were brought into account, then A as re-tested in April 2000 was +6°C and the new sample made in April 2001 was + 12°C. This showed a variation of 15°C, well outside the acceptable range. (3) Although Mr Chell may have defined reproducibility as the closeness of the test results of the same sample using the same test methods but by a different laboratory, looking at his report as a whole it was clear that he considered: (a) The tests at Malta should have all been in the repeatability range; they were of the same cargo. (b) That there should not be such a large difference between Tarragona and Malta; it should not have exceeded the reproducibility range. (c) Saybolt were plainly in error as they re-tested one of the samples three times. Looking at the figures on this basis, there was a plain and obvious error in the sampling or in the certificates. The Sellers’ contentions can be summarised as follows: (1) It was clear on the explanation given by Mr Chell that there was no error. (2) The relevant samples were the composite sample from the ship’s tanks of the cargo to be discharged – Sample A as tested in November 2000 (3°C) and April 2001 (6°C). The second test was within the repeatability range of ±3°C. (3) The only other test with which comparisons could possibly be made were the test at Tarragona and the other tests carried out by Saybolt in November and April; to those the range for reproducibility applied and all the tests were within ±6°C of the +3°C result for Sample A. (4) Looking at Mr Chell’s report as a whole he did not say that Saybolt had done anything wrong. Conclusion As was common ground, the question before the court was whether there was a real prospect of successfully defending the claim by showing that there was a plain and obvious error in relation to the certificate or the procedure leading to the making of the certificate. If I was to consider the definition of repeatability and reproducibility given by Mr Chell, the tests of Sample A made in November 2000 and April 2001 were plainly within the range of repeatability. There was no error evidenced by the re-test, let alone any plain and obvious error. All the other tests at Malta were within the reproducibility range of sample A and thus no error could be inferred from such tests. However, reading Mr Chell’s report as a whole and taking into account the fact that this is a Part 24 application, I accept that he seems to have taken the view that all the tests in Malta by Saybolt should have been within the repeatability range, even though the tests on Sample B and C taken in November 2000 and the new composite made up in April 2001 were tests on different samples. He does not explain why this was so, but it may be because he considered that the samples should all have been the same or treated as the same. Accepting this evidence, it points, as he stated in his report, to an inconsistency in the results. Is this sufficient? I do not consider that it is. In the first place, I consider that the relevant sample was sample A. The contract provided for a guaranteed specification at the discharge port; the guarantee plainly applied to the cargo sold to the Buyers and due for discharge and not to the whole of the cargo on the vessel. Similarly the task of Saybolt at Malta was to re-test the parcel to be discharged by means of a composite sample from the ship’s tanks. Their certificate would be a certificate in respect of the composite sample of that cargo and not the other cargo on the vessel. Thus the relevant certification was the certification in respect of the composite sample of that cargo. The relevant sample was sample A; this was re-checked in April 2001 and the result was within the margin of ±3°C applicable for repeatability. In so far as it might be appropriate to consider the new composite sample prepared in April 2001, as this was a new sample, then the reproducibility range applied and there was no error when that result is compared with the result in the certificate of 22 November 2000. Furthermore even assuming that it is appropriate to apply the repeatability range to the new composite sample prepared in April 2001 (so that the result is outside the range) and/or that it is appropriate to rely upon the test results of samples B and C and apply to them the repeatability range (so that the results are outside the range), then these results would point to an inconsistency, but nothing more. I do not consider that they give rise to any real prospect of showing that there was a plain and obvious error in the certificate or the testing or sampling. On the evidence, there is nothing to show that a plain and obvious error occurred in these tasks; at the highest it shows that if the sampling was done differently, there might have been a different result. This might have been caused by some form of error, but even an error (and not merely the possibility of an error) is not enough. There is no evidence of plain and obvious error. There is one further point, though it only reinforces the conclusion I have reached. There was no contemporaneous protest by the Buyers about the certificate of 22 November 2000. If the differing results as shown on that certificate (which included the notation that sample C had shown a result of 9°C and had been re-tested three times) and/or as compared to the result in Tarragona had given rise to a plain and obvious error, then I have no doubt that the Buyers would have raised the point. They said nothing at the time; the new evidence in relation to the tests in April 2001 did not in reality change the position. It is difficult to see how it can be said there was a plain and obvious error when nothing was expressed about it at the time the certificate was produced and part of the cargo accepted. The claim for storage costs: $14,000 A claim was made by the Sellers for storage costs of the cargo they took back under the agreement referred to at paragraph 9. The only point taken by the Buyers in defence to this claim was that the Court did not have jurisdiction. I have set out the jurisdiction clause at paragraph 3 above. It was contended by the Buyers that the claim for storage charges was not within that clause and so this court did not have jurisdiction. The clause provided that this Court was to have jurisdiction to settle any dispute “which might arise out of or in connection with the contract”. These are wide words. It is clear that the dispute in relation to storage charges for the cargo is plainly a matter that arose out of or in connection with the contract. Overall conclusion I therefore have come to the conclusion that the Sellers are entitled to judgment for the amount due in respect of the cargo and the storage charges.

Judgment of the Court of 30 June 1993. - European Parliament v Council of the European Communities and Commission of the European Communities. - Emergency aid - Prerogatives of the Parliament - Budgetary provisions. - Joined cases C-181/91 and C-248/91. European Court reports 1993 Page I-03685 Swedish special edition Page I-00255 Finnish special edition Page I-00289 Summary Parties Grounds Decision on costs Operative part Keywords ++++ 1. Actions for annulment of measures ° Actionable measures ° Definition ° Acts of the representatives of the Governments of the Member States meeting in the Council ° Excluded (EEC Treaty, Arts 149, 155 and 173) 2. Actions for annulment of measures ° Parliament' s right to bring actions ° Budgetary measure liable to infringe the prerogatives of the Parliament ° Entry in the Community budget of revenue and expenditure relating to aid granted within the framework of a collective action of the Member States ° Excluded (EEC Treaty, Arts 173, 199 and 203) Summary 1. Whilst an action for annulment is available in the case of all measures adopted by the Community institutions, whatever their nature, form or wording, which are intended to have legal effects, acts adopted by representatives of the Member States acting not in their capacity as members of the Council but as representatives of their governments, and thus collectively exercising the powers of the Member States, are not subject to judicial review by the Court. A decision of the representatives of the Member States on humanitarian aid for a non-member country, a field in which the Community does not have exclusive competence, is thus not a Community measure against which an action may be brought. It makes no difference that the decision refers to a proposal from the Commission, since such a proposal is not necessarily a proposal under Article 149 of the Treaty; or that the aid is to be administered by the Commission, since Article 155 of the Treaty does not prevent the Commission from being entrusted by the Member States with the task of coordinating an action which they undertake collectively on the basis of an act of their representatives meeting in the Council; or that the contributions of the Member States are determined by a formula identical to that used for their contributions to the Community budget, since nothing prevents the application of such a formula for an action decided by the representatives of the Member States; or that part of the aid may be entered in the Community budget, since such an entry, which is not required by the decision in question, cannot affect the way in which it is categorized. 2. The entry in the Community budget of revenue and expenditure concerning aid granted within the framework of a collective action of the Member States and financed directly by them cannot infringe the Parliament' s budgetary prerogatives, and hence cannot be challenged by an action for annulment brought by the Parliament under Article 173 of the Treaty. The Member States' contributions to the aid in question are not items of Community revenue within the meaning of Article 199 of the Treaty, nor does the expenditure relating thereto constitute Community expenditure. The entry in the Community budget of the corresponding sums therefore does not amend the budget, so that it does not require intervention by the Parliament under the powers conferred on it by Article 203 of the Treaty. Parties In Joined Cases C-181/91 and C-248/91, European Parliament, represented by Jorge Campinos, Jurisconsult, acting as Agent, assisted by Christian Pennera and Kieran Bradley, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the General Secretariat of the European Parliament, Kirchberg, applicant, v Council of the European Communities, represented by Arthur Alan Dashwood, Director of the Legal Service, assisted by Yves Crétien, Legal Adviser, acting as Agents, with an address for service in Luxembourg at the office of Joerg Kaeser, Manager of the Legal Department of the European Investment Bank, 100 Boulevard Konrad Adenauer, defendant, APPLICATION for the annulment of an act adopted at the 1487th session of the Council with a view to the grant of special aid to Bangladesh, and European Parliament, represented by Jorge Campinos, Jurisconsult, acting as Agent, assisted by Christian Pennera and Kieran Bradley, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the General Secretariat of the European Parliament, Kirchberg applicant, v Commission of the European Communities, represented by Jean Amphoux, Principal Legal Adviser, and Mr Goetz zur Hausen, Legal Adviser, 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 budgetary implementation measures adopted by the Commission on the basis of the act adopted at the 1487th session of the Council with a view to the grant of special aid to Bangladesh, THE COURT, composed of: O. Due, President, G.C. Rodríguez Iglesias and J.L. Murray (Presidents of Chambers), G.F. Mancini, R. Joliet, F.A. Schockweiler, M. Diez de Velasco, P.J.G. Kapteyn and D.A.O. Edward, Judges, Advocate General: F.G. Jacobs, Registrar: J.-G. Giraud, having regard to the Report for the Hearing, after hearing oral argument from the parties at the hearing on 28 October 1992, after hearing the Opinion of the Advocate General delivered at the sitting on 16 December 1992, gives the following Judgment Grounds 1 By applications of 11 July 1991 and 2 October 1991 the Parliament brought actions under Article 173 of the EEC Treaty for the annulment of an act adopted at the 1487th session of the Council with a view to the grant of special aid to Bangladesh and of the means adopted by the Commission for the implementation of that act. 2 In the course of an ordinary session held at Brussels on 13 and 14 May 1991 under the chairmanship of Jacques F. Poos, the Minister of Foreign Affairs of the Grand Duchy of Luxembourg, a decision was taken to grant special aid to Bangladesh. Item 12 of the minutes of that meeting described the decision as follows: "The Member States meeting in the Council have decided on the basis of a Commission proposal to grant special aid of ECU 60 million to Bangladesh under a Community action. The distribution amongst the Member States will be based on GNP. The aid will be integrated into the Community' s general action plan for Bangladesh. It will be provided either directly by the Member States, or by means of an account administered by the Commission. The Commission will coordinate the whole of the special aid of ECU 60 million." That decision was the subject of a press release entitled "Aid for Bangladesh ° Council conclusions" (reference 6004/91, Press 60-c). 3 Following that decision the Commission opened a special account with Banque Bruxelles Lambert, and invited the Member States to transfer their contributions to it. Only Greece took up that suggestion; the other Member States paid their contributions directly within the framework of bilateral aid. 4 In its action brought against the Council the Parliament seeks the annulment of the decision to grant special aid to Bangladesh (hereinafter "the contested act"). 5 By separate document, the Council raised an objection of inadmissibility under Article 91 of the Rules of Procedure on the ground that the contested act was not an act of the Council within the meaning of Article 173 of the Treaty. By decision of 15 June 1992 the Court joined that objection to the substance of the case. 6 In its action brought against the Commission, the Parliament seeks in addition the annulment of the measures adopted by the Commission in implementation of the contested act. These are, first, the decision of 10 June of the Director General for Budgets to enter under Article 900 of the general budget of the Communities for 1991 (on the revenue side) the sum of ECU 716 775.45 representing Greece' s contribution held in the special account opened with Banque Bruxelles Lambert, secondly, the decision of 13 June 1991 crediting that sum to a supplementary heading opened on the expenditure side of the general budget (item B7-3000: Financial and technical cooperation with Asian developing countries) and, thirdly, any other budgetary measures of which the Parliament had no knowledge (hereinafter "the budget entries"). 7 By order of 15 October 1992, the President decided, pursuant to Article 43 of the Rules of Procedure, to join the applications brought against the Council and the Commission. 8 Reference is made to the Report for the Hearing for a fuller account of the facts 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. The action brought against the Council 9 The Council claims that the Court should declare the application brought against it inadmissible on the ground that the contested act was adopted, not by the Council, but by the Member States, and thus cannot be the subject of an action for annulment under Article 173 of the Treaty. 10 Parliament submits, on the other hand, that in view of its title, "Council conclusions", and the fact that it was adopted at the 1487th session of the Council, which was attended by, among others, all the Ministers of Foreign Affairs of the Member States, the contested act constitutes an act of the Council. It argues that, by adopting that act, the Council infringed the prerogatives conferred on Parliament by Article 203 of the Treaty in budgetary matters. 11 In order to decide this point it must be pointed out first that under Article 173 the Court' s function is to "review the legality of acts of the Council and the Commission other than recommendations or opinions". 12 It is clear from the wording of that provision that acts adopted by representatives of the Member States acting, not in their capacity as members of the Council, but as representatives of their governments, and thus collectively exercising the powers of the Member States, are not subject to judicial review by the Court. As the Advocate General stated in section 18 of his Opinion, it makes no difference in this respect whether such an act is called an "act of the Member States meeting in the Council" or an "act of the representatives of the Governments of the Member States meeting in the Council". 13 However, the Court has consistently held that an action for annulment is available in the case of all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effects (Case 22/70 Commission v Council [1971] ECR 263). 14 Consequently, it is not enough that an act should be described as a "decision of the Member States" for it to be excluded from review under Article 173 of the Treaty. In order for such an act to be excluded from review, it must still be determined whether, having regard to its content and all the circumstances in which it was adopted, the act in question is not in reality a decision of the Council. 15 It follows that the assessment of the admissibility of the application is bound up with the assessment to be made of the complaints levelled against the contested act. 16 Before considering those complaints, it should be pointed out that the Community does not have exclusive competence in the field of humanitarian aid, and that consequently the Member States are not precluded from exercising their competence in that regard collectively in the Council or outside it. 17 In support of its application, Parliament relies firstly on the reference made in the contested act to the Commission' s proposal. In its opinion, that reference shows that, in view of the procedure which led to the act' s adoption, it was the Council, not the Member States, which acted in this case. 18 That argument is not conclusive. Not all proposals from the Commission necessarily constitute proposals within the meaning of Article 149 of the Treaty. Their legal character must be assessed in the light of all the circumstances in which they were made. They may just as well constitute mere initiatives taken in the form of informal proposals. 19 Secondly, Parliament observes that, according to the description of the act, the special aid was to be administered by the Commission. According to the fourth indent of Article 155 of the Treaty, however, powers of implementation may be conferred on the Commission only by a decision of the Council. 20 That argument cannot be accepted either. The fourth indent of Article 155 of the Treaty does not prevent the Member States from entrusting the Commission with the task of coordinating a collective action undertaken by them on the basis of an act of their representatives meeting in the Council. 21 Thirdly, Parliament submits that the contested act requires the special aid to be distributed among the Member States according to GNP, which, in its view, constitutes a typically Community concept. 22 It is sufficient to state in response to that argument that nothing in the Treaty precludes the Member States from making use outside the Community context of criteria taken from the budgetary provisions for allocating the financial obligations resulting from decisions taken by their representatives. 23 Fourthly, Parliament submits that, in view of the fact that in the future the implementation of the contested act will be subjected to the supervision of the Court of Auditors and Parliament, in accordance with Articles 206a and 206b of the Treaty respectively, the act is manifestly a Community act. 24 As can be seen from the Council minutes, quoted above, the contested decision leaves it to the Member States to choose whether to pay their contribution by way of bilateral aid or through an account administered by the Commission. Since the contested act does not require the use of the Community budget for the part of the aid to be administered by the Commission, the budget entry made by the latter cannot have any bearing on how the act is categorized. 25 It follows from the whole of the foregoing that the contested act is not an act of the Council but an act taken by the Member States collectively. The application brought by Parliament against the Council must therefore be declared inadmissible. The action brought against the Commission 26 Parliament considers that, by entering in the Community budget the Greek contribution to the special aid for Bangladesh, the Commission infringed the Treaty provisions relating to the budget and thereby infringed the prerogatives conferred on Parliament by those provisions. 27 The Commission claims that the Parliament' s application should be declared inadmissible on the ground that the budget entry is not a challengeable act within the meaning of Article 173 of the Treaty and that it did not infringe Parliament' s prerogatives. 28 In order to determine whether the budget entry constitutes a Commission decision capable of infringing Parliament' s prerogatives, it must first be noted that the contested measures constitute procedures for carrying out a mandate which, as stated in paragraph 20 above, was conferred on the Commission by the Member States, and not by the Council. 29 Moreover, those measures relate to aid granted within the framework of a collective action of the Member States financed directly by them. 30 It follows that the Member States' contributions to the special aid are not items of Community revenue within the meaning of Article 199 of the Treaty and that the expenditure relating thereto does not constitute expenditure of the Community within the meaning of that article, either. 31 Consequently, the entry in the Community budget of the Greek contribution to the special aid was not capable of amending the budget. 32 It must therefore be held that that act was incapable of infringing Parliament' s prerogatives set out in Article 203 of the Treaty and that the application brought against the Commission must be declared inadmissible. Decision on costs Costs 33 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since Parliament has been unsuccessful, it must be ordered to pay the costs. Operative part On those grounds, THE COURT hereby: 1. Dismisses the applications as inadmissible; 2. Orders the European Parliament to pay the costs.

Black LJ: K, a baby boy, is the subject of care proceedings at the Principal Registry of the Family Division. His mother (M) and his father (F) do not live together and are no longer in a relationship. Each wishes to have sole care of him. If neither is suitable, he will have to remain in the care of the local authority. A fact finding hearing was directed in order to resolve factual issues in relation to F's conduct towards M and generally. In the run up to that hearing, M applied to the district judge for directions in relation to a psychiatric report prepared on her by Dr Cohen for use in connection with her immigration status ("the report"). M wished to file the report with the court as part of the care proceedings and sought permission to do so. She did not want it to be seen by F and therefore sought permission to withhold it from him, although she was prepared for the other parties (the local authority and K's guardian) to have access to it. The district judge took the view that the issue required determination by a High Court judge and arranged for it to be listed, at short notice, before Hedley J on 10 March 2011. This appeal from the order that Hedley J made that day was listed urgently because it needed to be determined prior to the commencement of the fact finding hearing which was to take place on 26 and 27 May 2011. As a result, it was not possible for us to have a formal transcript of Hedley J's judgment but we did have counsel's note which provided us with sufficient information as to his decision and the reasoning for it. Another consequence of the urgency of the matter was that we announced our decision on the appeal immediately at the conclusion of the hearing on 19 May 2011, reserving our reasons. The decision was to allow the appeal and to order the disclosure of the entire report to F whereas Hedley J had required only specified paragraphs of it to be disclosed to him. The reasons for our order follow. The appeal was by F. The local authority and K's guardian took a neutral stance in relation to it; we are grateful to them for the submissions that they nonetheless made. M actively opposed F's appeal and sought to uphold Hedley J's order. The hearing before Hedley J took a pragmatic and sensible course. It began with an ex parte application by M's counsel to adduce the report in evidence. The judge then read the report in order to determine whether it was relevant and admissible as evidence in the care proceedings at all. He determined that it "was clearly relevant to the issue of the future welfare of [K]" and was relevant to the fact finding hearing. The matter therefore had to be considered on an inter partes basis. In order to safeguard F's interests during this part of the hearing, F's counsel obtained his approval for her to see the report and make submissions to the judge about it on his behalf but without having to disclose the contents to him if, in the event, the judge did not order its disclosure to him. She was therefore able to take a full part in the debate before the judge as to disclosure. The local authority and the guardian had free access to the whole report. Nothing that was said in the inter partes hearing disrupted the judge's view that the report was relevant. He concluded, however, that it was not necessary for the whole of the report to be disclosed and for that reason, ordered disclosure of specified paragraphs only. M's opposition to the disclosure of the report was based upon her fear that if F gained access to it, he would disclose its contents, which included profoundly sensitive and personal information, to people outside the confines of the case and it would then be misused to embarrass her or otherwise to imperil her in the community. She alleged that F had already disclosed other material concerning the case to third parties and relied upon this to establish the existence of the risk of disclosure of the report. F denied that he had disclosed other material to third parties. His counsel submitted that there would therefore have to be a finding, based on oral evidence, as to whether he had done so. Hedley J did not consider that appropriate. He said that there had to be strict limits on the oral evidence that is adduced in a case and that that was particularly so where the matter was bound to be canvassed in the oral evidence at the forthcoming fact finding hearing. He was not prepared to permit a dress rehearsal before him. A formal transcript of judgment would have enabled a better understanding of how he approached the matter but it appears that he took a two stage approach, first asking himself whether the evidence that M advanced about F's disclosure of other material was potentially credible with a view to proceeding to stage two (whether to limit disclosure of the report) only if it was. Although he did not express his conclusion about the credibility of the evidence in terms, he must have found M's evidence potentially credible and he must also have thought that it provided a foundation for the argument that there was a risk of F disclosing the psychiatric report because he proceeded to stage two. He then considered various options. At one end of the spectrum, he could order disclosure of Dr Cohen's report to F in full. At the other end, he could refuse to order its disclosure to him at all. Other possibilities were partial disclosure only or disclosure only on terms, specifically an undertaking (which F was willing to give) that the document would not be taken by F from the custody of his solicitors. Hedley J was not prepared to keep the entire report from F because there were matters in it which were highly relevant for the fact finding hearing. He did not favour disclosure on terms which he regarded as a course which was artificial, difficult and to be avoided if possible. He concluded that there should therefore be disclosure but limited to those parts of the report that were relevant in relation to the allegations made against F by M which would be resolved at the fact finding hearing and in relation to the question of M's fitness to care for K which would be explored at the later welfare hearing. His order identified the passages that were to be disclosed and he coupled it with an injunction against both parties prohibiting them from disclosing the contents of the report to anyone other than their legal advisors and, in M's case, her general practitioner. The judge made it quite clear that he expected the question of disclosure to be kept under review by the district judge, particularly in the light of the fact finding hearing and any conclusions the district judge reached about F's conduct in relation to earlier misuse of information from the proceedings. The appeal grounds that F advanced before us included a complaint about the procedure adopted by Hedley J, in particular his decision not to hear evidence about M's allegation that F had improperly disclosed case papers and not to make an express finding about it. They also attacked the substance of the judge's decision about disclosure of the report on the basis that it deprived F of vital material that could be used to attack M's credibility. M's opposition to F's proposal that he should have sole care of K included allegations that F was a drug dealer involved with violent criminals and that he had been violent to her on several occasions. The professional assessments of F were largely positive but indicated that if M's allegations were true, there would be very serious concerns for the safety of any child placed in his care. The grounds of appeal asserted that, in the circumstances, M's credibility was of central importance and the fact finding hearing before the district judge would be unfair to F if he were denied access to material that could be used to probe it. In seeking to support Hedley J's decision, M submitted that harm of three kinds might flow from the entire report being disclosed to F. First, there was the emotional trauma she would suffer if personal information of the kind contained in the report were to be made public. Secondly, she asserted that there was a risk that if F disclosed the report it would dissuade people who would otherwise offer evidence in support of her case from doing so. Thirdly, she relied on "the possible consequences [to K] of people knowing these things as he is growing up and if he grows up in the local area" (see paragraph 10 of M's statement). I cannot accept that the second and third of the matters upon which M relied carry any real weight in a consideration of the issue of disclosure of the report in this case. I find the assertion that witnesses will be deterred from coming forward by the way in which F may handle the information in the report unpersuasive. If M is right in what she says in her statement (see paragraphs 7 et seq), the damage has already been done in this respect by F's dissemination of other court materials and there is no evidence that the situation will be made significantly worse by further unauthorised disclosure. If M seeks to rely on reluctant witnesses, she can take formal steps to require them to attend court. As for potential harm to K, the feared consequences for him are not self evident and were not spelled out further in argument. In reality, therefore, M's case turned on the trauma that she may suffer if intimate private information about her were to be spread about by F. The question of withholding evidence from a party to proceedings has been considered by the courts in a number of different legal contexts and I think it is fair to say that it can present considerable difficulties. Amongst the authorities to which we were referred was A Local Authority v A [2010] EWCA Civ 1057 in which this court quite recently had the opportunity to consider some of the applicable principles in the family law context. It has not been necessary for us to delve further into the authorities, whether in the family law field or in other areas of the law, in order to determine this appeal. We reached the clear view that in order to be able to address the issues in the case effectively, and in particular in order to be able to probe M's credibility as he needed to do given the potentially pivotal nature of her allegations about him, F required access to the report as a whole in order that he could give such instructions as he may turn out to have on what M is reported to have told Dr Cohen and so that his counsel (and others) can explore the various issues arising from the report freely during the hearing without paralysing logistical difficulties. Even if M were right in saying that F had inappropriately disclosed other case papers and that there was therefore a risk that he would improperly disseminate the contents of the report, the harm that would flow from this (whilst no doubt discomfiting and unpleasant for M who would be embarrassed by the spreading of very personal information) would not be such as could outweigh the need in this case for the evidence to be properly probed and evaluated with the assistance of F and his legal representatives both in F's interest and in K's. We indicated at the conclusion of the oral appeal hearing that we were only setting aside paragraph 1 of Hedley J's order. The order that Hedley J had made forbidding F from disclosing the contents of the report to any other person save his legal advisors remains. We indicated that it should be backed by a penal notice and stressed that F is at risk of imprisonment should he contravene the order. Accordingly, as we said at the conclusion of the oral hearing, F's appeal is allowed to the extent that Hedley J's order for limited disclosure of the report is discharged and replaced with an order for disclosure of the entire report. The judge's order otherwise remains unamended. Moore-Bick LJ: I agree. Thorpe LJ: I also agree

Arrêt du Tribunal Case T-128/01 DaimlerChrysler Corporation v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) «(Community trade mark – Figurative mark – Representation of a vehicle grille – Absolute ground for refusal – Article 7(1)(b) of Regulation (EC) No 40/94 – Mark devoid of any distinctive character)» Judgment of the Court of First Instance (Fourth Chamber), 6 March 2003 Summary of the Judgment 1.. Community trade mark – Appeals procedure – Appeals before the Community Courts – Jurisdiction of the Court of First Instance – Review of the facts in the light of evidence adduced before it for the first time – Not included (Rules of Procedure of the Court of First Instance, Art. 135(4); Council Regulation No 40/94, Art. 63) 2.. Community trade mark – Definition and acquisition of Community trade mark – Absolute grounds for refusal – Marks devoid of distinctive character – Figurative mark comprising a representation of a vehicle grille (Council Regulation No 40/94, Art. 7(1)(b)) 1. In an action for review of the legality of the decisions of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) within the meaning of Article 63 of Regulation No 40/94 on the Community trade mark, it is not the Court's function to re-evaluate the factual circumstances in the light of evidence adduced for the first time before it. To admit such evidence is contrary to Article 135(4) of the Rules of Procedure of the Court of First Instance, which prohibits the parties from changing the subject-matter of the proceedings before the Board of Appeal. see para. 18 2. Under Article 7(1)(b) of Regulation No 40/94 on the Community trade mark trade marks which are devoid of any distinctive character are not to be registered. With regard, in that context, to the registration, sought in respect of vehicles; apparatus for locomotion by land, air or water; parts thereof in Class 12 of the Nice Agreement, of a figurative mark comprising a representation of the front part of a car having an irregular shape and with seven wide vertical openings in the centre and a circle representing the headlights of the vehicle on each side at the top, the mark is not devoid of any distinctive character in so far as it is an unusual grille design, conveying the impression of an old-fashioned grille, in a simple configuration, which cannot be regarded as altogether commonplace, so that the grille in question must be considered to be capable of leaving an impression on the memory of the target public as an indication of commercial origin and thus of distinguishing and setting apart motor vehicles bearing that grille from those of other undertakings. see paras 46, 48, 50 JUDGMENT OF THE COURT OF FIRST INSTANCE (Fourth Chamber) 6 March 2003 (1) ((Community trade mark – Figurative mark – Representation of a vehicle grille – Absolute ground for refusal – Article 7(1)(b) of Regulation (EC) No 40/94 – Mark devoid of any distinctive character)) In Case T-128/01, DaimlerChrysler Corporation, established in Auburn Hills, Michigan (United States), represented by T. Cohen Jehoram, lawyer, with an address for service in Luxembourg, applicant, v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), represented by A. von Mühlendahl and O. Waelbroeck, acting as Agents, defendant, ACTION brought against the decision of the Second Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) of 21 March 2001 (Case R 309/1999-2), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber), composed of: M. Vilaras, President, V. Tiili and P. Mengozzi, Judges, Registrar: J. Palacio González, Principal Administrator, having regard to the written procedure and further to the hearing on 23 October 2002, gives the following Judgment Background to the dispute On 29 April 1997 the applicant filed an application for a Community trade mark at the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) under Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1), as amended. The mark in respect of which registration was sought is the figurative sign reproduced below: The goods in respect of which registration was applied for are within Class 12 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, and correspond to the following description: Vehicles; apparatus for locomotion by land, air or water; parts thereof. By a notice of 7 July 1998 the examiner at OHIM informed the applicant that the sign in question was not, in his view, registrable because it was devoid of distinctive character for the purposes of Article 7(1)(b) of Regulation No 40/94 with regard to some of the goods claimed in the trade mark application, namely vehicles; apparatus for locomotion by land; parts thereof. Under cover of a letter of 5 January 1999, the applicant submitted a number of documents, including a statement by an expert, Mr F.E. Hoadley, of 26 June 1998 on the history of grilles and, in particular, the grille depicted in the mark claimed, with a view to demonstrating that it was both unique and had a reputation. By a decision of 7 April 1999, the examiner at OHIM partially refused the application under Article 38 of Regulation No 40/94, on the ground that the mark sought was devoid of any distinctive character with regard to vehicles; apparatus for locomotion by land; parts thereof. He did, however, consider the mark registrable for apparatus for locomotion by air or water; parts thereof. He further found that the applicant had not demonstrated that the sign had acquired distinctive character through use for the purposes of Article 7(3) of Regulation No 40/94. On 4 June 1999 the applicant filed an appeal against the examiner's decision at OHIM under Article 59 of Regulation No 40/94. By a decision of 21 March 2001 (hereinafter the contested decision), which was notified to the applicant on 26 March 2001, the Second Board of Appeal dismissed the appeal. The Board of Appeal essentially found that the examiner's decision was well founded, having regard to the fact that the sign representing the front grille of a vehicle was prima facie devoid of distinctive character under Article 7(1)(b) of Regulation No 40/94, and that the evidence produced by the applicant did not demonstrate that the sign had acquired distinctive character through use within the meaning of Article 7(3) of that regulation. Procedure and forms of order sought By an application lodged at the Registry of the Court on 6 June 2001 the applicant brought this action. OHIM filed its response on 17 September 2001. At the Court's request by way of measures of organisation of procedure, OHIM, on 14 October 2002, replied to questions put by the Court and produced the documents annexed by the applicant to its observations of 5 January 1999. The applicant claims that the Court should: ─ annul the contested decision; annul the contested decision; ─ order OHIM to accord a date of registration in respect of the Community trade mark application; order OHIM to accord a date of registration in respect of the Community trade mark application; ─ order OHIM to pay the costs. order OHIM to pay the costs. OHIM contends that the Court should: ─ declare inadmissible the applicant's application for an order requiring OHIM to accord a date of registration in respect of the Community trade mark application; declare inadmissible the applicant's application for an order requiring OHIM to accord a date of registration in respect of the Community trade mark application; ─ dismiss the remainder of the application; dismiss the remainder of the application; ─ order the applicant to pay the costs. order the applicant to pay the costs. At the hearing the applicant withdrew its second head of claim requesting that OHIM be ordered to accord a date of registration in respect of the Community trade mark application. The Court formally recorded the withdrawal in the minutes of the hearing. Law Admissibility of the evidence submitted for the first time before the Court of First Instance The applicant appended to the application evidence that was not placed before the Board of Appeal and, in particular, a market survey carried out in the Netherlands on the recognition of grilles. The applicant also offered to produce market surveys carried out in other Member States if the Court considered them relevant. OHIM considers that no regard may be had to the evidence produced for the first time before the Court of First Instance. The Court of First Instance observes that the purpose of the action before it is to review the legality of a decision of the Boards of Appeal of OHIM within the meaning of Article 63 of Regulation No 40/94. It is therefore not the Court's function to re-evaluate the factual circumstances in the light of evidence adduced for the first time before it. To admit such evidence is contrary to Article 135(4) of the Rules of Procedure of the Court of First Instance, which prohibits the parties from changing the subject-matter of the proceedings before the Board of Appeal. Accordingly the evidence produced for the first time before the Court of First Instance is inadmissible, as is the evidence which the applicant offered to adduce. Substance The applicant essentially advances two pleas in law. By the first it alleges infringement of Article 7(1)(b) of Regulation No 40/94 and, by the second, infringement of Article 7(3) of Regulation No 40/94. First plea: infringement of Article 7(1)(b) of Regulation No 40/94 ─ Arguments of the parties The applicant submits that a grille may be registered as a Community trade mark pursuant to Article 4 of Regulation No 40/94, as is confirmed by the registration as Community trade marks by OHIM of nine grille designs for motor vehicles in Class 12 of the Nice Classification. The applicant also claims that the Board of Appeal's view that the public is not accustomed to perceiving a grille as a badge indicating the origin of the goods results in far harsher criteria being applied than those imposed by Regulation No 40/94. Since the Board of Appeal acknowledged that the grille device is not exactly commonplace, the mark claimed should be acknowledged to possess the minimum degree of distinctive character needed. The applicant states that the design of the mark claimed is non-functional, as was confirmed by a statement from an expert witness, Frederik E. Hoadley, produced before OHIM. Furthermore the applicant considers that the Board of Appeal failed to appreciate the originality, uniqueness, unusual nature, and thus distinctiveness, of the grille reproduced in the trade mark application, which is not used for any other land vehicle. The applicant states that the target consumer is the average purchaser of land vehicles who buys such products once he is well informed. In that connection the applicant takes the view that the consumer's choice is dictated by the technical aspects as well as the appearance of the vehicle, of which the grille is an essential element. Finally, the Board of Appeal was wrong, in the applicant's view, to find, at paragraph 15 of the contested decision, that the public is not accustomed to perceiving the mark claimed as a badge indicating the origin of the product. OHIM maintains that the Board of Appeal was right to find, upholding the examiner, that the sign is prima facie devoid of distinctive character for the goods in question because, in its view, it consists exclusively of normal and simple geometric elements commonly used to represent headlights and bars as part of a grille. OHIM submits that the sign in question is within the limits of what the average consumer is accustomed to seeing as a grille on a land vehicle and that it does not therefore have an arbitrary or fanciful character. As a consequence, the sign will primarily be perceived as part of a motor vehicle and not as a badge of origin. Furthermore, OHIM maintains that the alleged non-functional character of the grille is not in itself sufficient to conclude that the sign is devoid of distinctive character. With regard to the nine registrations of motor vehicle grille designs as Community trade marks, OHIM argued in its replies of 14 October 2002, and in its submissions at the hearing, that the grilles covered by those registrations are unusual because they are composed of two symmetrical frames. ─ Findings of the Court Under Article 7(1)(b) of Regulation No 40/94, trade marks which are devoid of any distinctive character are not to be registered. Signs falling within Article 7(1)(b) of Regulation No 40/94 are deemed not to be capable of exercising the essential function of a trade mark, which is to identify the commercial origin of the goods or services, thus enabling the consumer who acquired them to repeat the experience, if it proves to be positive, or to avoid it, if it proves to be negative, on the occasion of a subsequent purchase (Case T-79/00 Rewe-Zentral v OHIM (LITE) [2002] ECR II-705, paragraph 26). A mark's distinctiveness must be assessed by reference to the goods or services for which registration of the sign is sought and the perception of the target public, which comprises consumers of those goods or services. Finally, it is clear from the wording of Article 7(1)(b) of Regulation No 40/94 that a minimum degree of distinctive character is sufficient to render inapplicable the ground for refusal set out in that article (Case T-34/00 Eurocool Logistik v OHIM (EUROCOOL) [2002] ECR II-683, paragraph 39). The target public in this case is deemed to be composed of the average, reasonably well-informed, reasonably observant and circumspect consumer (see, to that effect, Case C-342/97 Lloyd Schuhfabrik Meyer [1999] ECR I-3819, paragraph 26, and Case T-359/99 DKV v OHIM (EuroHealth) [2001] ECR II-1645, paragraph 27). The kind of goods in question (vehicles; apparatus for locomotion by land; parts thereof) are intended for general consumption throughout the European Union. With regard, first of all, to the applicant's argument relating to the registrability of a grille in the light of the definition of a Community trade mark in Article 4 of Regulation No 40/94, it must be borne in mind that there is no class of marks having a distinctive character by their nature or by the use made of them which is not capable of distinguishing the goods or services of one undertaking from those of other undertakings (see, to that effect, Case C-299/99 Philips [2002] ECR I-5475, paragraph 39). In addition, as to actual distinctiveness, it cannot be immediately denied that a graphic representation of a grille, even one faithful to reality, has distinctive character (see, to that effect, Case T-30/00 Henkel v OHIM (Image of a detergent product) [2001] ECR II-2663, paragraphs 44 and 45). However, with regard to the evidence produced by the applicant as to the registration by OHIM of nine Community trade marks for images of grilles for motor vehicles, even if OHIM's administrative practice does not provide any clear indications as to the criteria it employs when assessing the absolute grounds for refusal with regard to vehicle grille marks, it must be borne in mind that the legality of the decisions of Boards of Appeal must in any case be assessed solely on the basis of Regulation No 40/94, as interpreted by the Community judicature, and not on the basis of previous decision-making practice (Case T-106/00 Streamserve v OHIM (STREAMSERVE) [2002] ECR II-723, paragraph 79). Accordingly the applicant's argument relating to the registration by OHIM of nine motor vehicle grilles as Community trade marks is irrelevant. Secondly, with the regard to the applicant's argument that the test applied by the Board of Appeal in this case is incorrect and much harsher than the conditions in Regulation No 40/94, it must be recalled that Article 7(1)(b) of Regulation No 40/94 does not distinguish between different categories of trade marks, and the criteria for assessing the distinctive character of figurative marks consisting of the representation of the product itself or one of its components must not therefore differ from those applicable to other categories of trade marks (see, to that effect, Image of a detergent product, cited above, paragraph 48). Thirdly, with regard to the applicant's contention that the Board of Appeal was wrong to take the view that the public is not accustomed to seeing the mark in question as a badge indicating the origin of the goods (paragraph 15 of the contested decision), it must be borne in mind that, when assessing the distinctiveness of a trade mark, consideration must be given to all the relevant factors in the specific circumstances of the case. It cannot be ruled out that these might include the fact that the public's perception of the mark claimed might be influenced by the nature of the sign and of the goods covered by that mark. In that regard, it must be observed that vehicles and apparatus for locomotion by land are large goods for which it may be appropriate to use not only a word mark but also figurative or three-dimensional marks so as to enable the target public to identify the goods visually. It must be observed, as Mr F.E. Hoadley's expert statement makes clear, that grilles no longer have a purely technical function, and that this has been the case for some considerable time and was the case when the mark claimed was applied for, which is the material time for the purposes of determining whether there are any absolute grounds for refusal. Furthermore, unlike other parts of motor vehicles, grille shapes tend to be retained and are used in other models made by the same manufacturer. Grilles have become an essential part of the look of vehicles and a means of differentiating between existing models on the market made by the various manufacturers. They are therefore one of the features that are inherently helpful in visually identifying a model or range, or even all vehicles made by the same vehicle manufacturer, as compared to other models. That conclusion cannot be invalidated by Mr F.E. Hoadley's observation that a grille may also serve to ventilate the vehicle engine and to provide a certain degree of stability to the front part. The fact that a sign serves several purposes at once has no bearing on its distinctiveness (see, to that effect, Case T-36/01 Glaverbel v OHIM (Design applied to a sheet of glass) [2002] ECR II-3887, paragraph 24), particularly if the distinguishing function outweighs the other functions. The Board of Appeal found with regard to the sign in question that consumers are accustomed to seeing grilles for land vehicles incorporating identical or similar features to those displayed by that sign. However it took the view that the grille device is not exactly commonplace (paragraph 15 of the contested decision). The applicant argues that the mark claimed is manifestly different from the grille designs of any other land vehicle. OHIM responds that the sign in question is within the limits of what the average consumer is accustomed to seeing as a grille on a land vehicle and that it does not therefore have an arbitrary or fanciful character. In that connection the Court observes that the sign in question comprises a representation of the front part of a car having an irregular shape and with seven wide vertical openings in the centre and a circle representing the headlights of the vehicle on each side at the top. At the time when the application was filed, this shape was an unusual grille design, conveying the impression of an old-fashioned grille, in a simple configuration, which cannot be regarded as altogether commonplace in the circumstances at the time when the application was filed. Consequently the sign in question cannot be regarded as the image that naturally comes to mind as the typical representation of a contemporary grille. OHIM's finding that the sign in question is composed of features commonly used to represent a grille cannot therefore be upheld. In those circumstances the sign in question must be considered to be capable of leaving an impression on the memory of the target public as an indication of commercial origin and thus of distinguishing and setting apart motor vehicles bearing that grille from those of other undertakings. Accordingly the sign in question must be considered to have the minimum degree of distinctiveness necessary to escape the absolute ground for refusal in Article 7(1)(b) of Regulation No 40/94. That conclusion is also reinforced by the Board of Appeal's finding, referred to at paragraph 44 herein, that the grille device is not exactly commonplace. It follows from all of the foregoing considerations that the Board of Appeal was wrong to consider that mark claimed was devoid of any distinctive character. Accordingly the contested decision must be annulled and there is no need to consider the substance of the applicant's second plea in law. Costs Under Article 87(2) of the Rules of Procedure of the Court of First Instance the unsuccessful party is to be ordered to pay the costs. Since OHIM has been unsuccessful, and the applicant has applied for costs, it must be ordered to pay the costs incurred by the applicant. On those grounds, THE COURT OF FIRST INSTANCE (Fourth 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) of 21 March 2001 (Case R 309/1999-2); 2. Orders the defendant to pay the costs. Vilaras Tiili Mengozzi Delivered in open court in Luxembourg on 6 March 2003. H. Jung M. Vilaras Registrar President 1 – Language of the case: English.

MR JUSTICE BEAN: The claimant is a prisoner serving a sentence of imprisonment of ten years imposed for cocaine importation offences on 25 May 2001. Since the case involves not only her but her young children, I make, for the avoidance of doubt, a direction under section 39 of the Children and Young Persons Act 1933 that in any report of this case she should be referred to by letter only, and that nothing shall be published which identifies or tends to identify the children. On 2 November 2001 the claimant was allocated to HMP East Sutton Park Prison under open conditions. She remained there without incident until October 2004. Her two children are now aged eight and six and a half. Until she was sent to custody, she had been the primary carer for those children since their birth. At first she was visited by them in prison, but visits ceased when she believed that her children were old enough to read prison signs and realise that it was a prison. She did not want her children to know that she was detained in prison. She told them that she was in hospital. During her time at East Sutton Park Prison she was able to maintain regular face to face contact with her children, even after the visits to prison ceased, as she was regularly granted release on temporary licence (ROTL). This enabled her to stay with the children overnight. In October 2004, she was alleged to have been involved in incidents of assault and intimidation in prison. As a consequence, she was re-categorised as suitable for closed conditions on 13 October 2004, and transferred to semi-open conditions at HMP Drake Hall on 7 December 2004. She remains at Drake Hall to this day. She was allowed home leave at Christmas 2004, but for reasons which will appear later, not otherwise. She has spoken regularly with her children by telephone. She was found guilty of the allegations of assault on 26 October 2004, but the findings of guilt were subsequently quashed. As a consequence of their quashing, her solicitors sought her return to open conditions. In a letter of 3 February of this year the deputy governor at East Sutton Park wrote: "I have taken police advice on this matter and they have advised me it could be unsafe for her to return to open conditions, not only could her safety be threatened, but also that of other prisoners and staff and I am therefore not prepared to take that risk." A subsequent letter again made it clear that the decision was based on police advice. On 26 January 2005 an application for ROTL was considered by the relevant Board. The Board recommended refusal and the governor endorsed the recommendation. In a letter of 8 February the claimant's solicitors were informed that she would be granted no further releases on temporary licence as a consequence of security intelligence. It was said in a letter of the same date from the head of operations that the claimant had been risk assessed. Further correspondence resulted in a letter of 3 March from the deputy governor, stating that it was alleged that the claimant had remained in contact with her former partner, described in the letter as her boyfriend, for two years; that he was one of a gang charged with attempted murder; and that the claimant had been in contact with him by telephone from prison on the day before the alleged attempted murder. The letter recorded that the authorities had reservations regarding the claimant's suitability for transfer to open conditions or ROTL as a consequence. Although initially not a great deal of explanation was given for the claimant's unfavourable risk assessment, further material was produced in response to correspondence, and more still following the grant of permission in this matter. The police take the view that the telephone conversation between the claimant and her former partner may be relevant to the police investigation and the prosecution's case against the defendants charged with attempted murder. The defendants in the criminal case are said to have been involved in violent offending, including the indiscriminate use of firearms, and are said to be extremely dangerous individuals who might seek to harm those who could give evidence against them. The claimant, in her evidence in response, has said that she has been questioned by the police regarding the telephone conversation, but she was and is unwilling to assist. She says she cannot remember whether she had a telephone conversation on the day in question. She does not accept that there is a risk to her. She says that none of her contacts in the community have been threatened by the accused or on their behalf. She says that any risk to her could be addressed by enabling ROTL to take place to the home of her mother, who lives elsewhere than the community in which the accused persons are said to operate. The evidence of the governor of Drake Hall indicates that the claimant did not apply formally to be re-classified as suitable for open conditions, but that if she had, the governor would have refused the application. The issue of re-classification and the move from one prison to another do not, as such, raise an Article 8 issue on the facts of this case since Mr Hugh Southey, for the claimant, accepts that prisoners at Drake Hall can be, and regularly are, granted ROTL. The real issue is the lawfulness of the denial (since the claimant's move, save at Christmas) of ROTL itself. I turn to the Prison Rules and Service Orders. Rule 4.2 of the Prison Rules 1999 provides that: "A prisoner shall be encouraged and assisted to establish and maintain such relations with persons and agencies outside prison as may, in the opinion of the governor, best promote the interests of his family and his own social rehabilitation." Rule 9 provides that: "(1) The Secretary of State may, in accordance with the other provisions of this rule, release temporarily a prisoner to whom this rule applies. (2) A prisoner may be released under this rule for any period or periods and subject to any conditions. (3) A prisoner may only be released under this rule ... (a) on compassionate grounds ... (h) to assist him in maintaining family ties or in his transition from prison life to freedom ... (4) A prisoner shall not be released under this rule unless the Secretary of State is satisfied that there would not be an unacceptable risk of his committing offences whilst released or otherwise failing to comply with any condition upon which he is released. (5) The Secretary of State shall not release under this rule a prisoner serving a sentence of imprisonment if, having regard to: (a) the period or proportion of his sentence which the prisoner has served ... and (b) the frequency with which the prisoner has been granted temporary release under this rule The Secretary of State is of the opinion that the release of the prisoner would be likely to undermine public confidence in the administration of justice." There is an Instruction to Governors (IG 36/1995) dealing with ROTL. The relevant paragraphs are as follows: "1.3. The system of release on temporary licence is designed to ensure that suitable prisoners are released only for precisely defined and specific activities which cannot be provided in Prison Service establishments. Governors have an overriding duty when considering any release to ensure that both public safety and public confidence in the system are maintained. It is not possible to guarantee that any system is infallible. However, the system is designed to prevent prisoners who present any identifiable risk to public safety from being released. 1.4. There is no automatic right of entitlement to the grant of release on temporary licence. The safety of the public must be paramount. CI 43/1992 and IG 70/1994 set out the requirement that a rigorous risk assessment should be carried out before any release on temporary licence could be permitted. New guidance on risk assessment is contained in the second part of this instruction. Release on temporary licence and risk assessment should form an integral part of the sentence planning process. 1.5. Release on temporary licence will be permitted only in certain carefully prescribed circumstances: * release on specific compassionate grounds, to be known as compassionate licence; * release for education, training or work experience to help in prisoner rehabilitation, or for a limited variety of official purposes, to be known as facility licence; * release towards the end of a sentence to assist prisoners in re-integrating into the community, known as re-settlement licence." The release of the claimant to spend time at home with her children at a time when the end of her sentence was a long way off could only fall under the heading "compassionate licence". That is dealt with in part 3 of the Instruction, in particular in paragraph 3.9, headed "Primary carers": "A 'primary carer' is a prisoner who on release at the end of sentence will have the sole responsibility of caring for a child under the age of 16 years, or of an elderly or seriously disabled close relative. The term also includes female prisoners who are looking after their own very small children in mother and baby units. A primary carer may be granted compassionate licence to visit a child if the child is not able to visit the prisoner, or if such a visit is inappropriate." The claimant in this case submits that rule 4.2 of the Prison Rules requires account to be taken of the need to maintain her family ties when the discretion contained in rule 9(3)(a) or (h) is exercised to refuse her release on temporary licence. In my judgment, however, rule 4.2 does not help the claimant. It requires prisoners to be encouraged and assisted to maintain such relations "with persons and agencies outside the prison" as may best promote the interests of the prisoner's family and the prisoner's own social rehabilitation. If this is meant to say that the maintenance of ties with a prisoner's family is to be encouraged, it seems a very roundabout way of saying it. In any event, the usual way of maintaining family ties is by facilitating visits to the prison by the family, which the claimant has so far been unwilling to have for some years. Rule 9(3), however, plainly is relevant. But Miss Nicola Greaney, for the Secretary of State and the other defendants, takes issue with the concept of a "discretion to refuse" ROTL. She submits that there is a discretion to permit ROTL in the circumstances set out in rule 9(3) and the Instruction to Governors. The first substantial question for me to determine is whether the refusal of ROTL constitutes an interference with the claimant's right to respect for her family life under Article 8 of the European Convention on Human Rights. It is not in dispute that Article 8 is engaged on the facts of the present case, but Miss Greaney argues that there is no interference. In R(P and Q) v the Home Secretary [2001] 1 WLR 2002 the Court of Appeal reviewed the Strasbourg jurisprudence on prisoners' rights under the Convention, in particular Article 8. In the judgment of the court delivered by Lord Phillips of Worth Matravers MR, at paragraph 78, the court said: "It is possible to draw some general conclusions from these authorities: (i) the right to respect for family life is not a right which a prisoner necessarily loses by reason of his/her incarceration; (ii) on the other hand, when a court considers whether the state's reasons for interfering with that right are relevant and sufficient, it is entitled to take into account (a) the reasonable requirements of prison organisation and security and (b) the desirability of maintaining a uniform regime in prison which avoids any appearance of arbitrariness or discrimination; (iii) whatever the justification for a general rule, Convention law requires the court to consider the application of that rule to the particular case, and to determine whether in that case the interference is proportionate to the particular legitimate aim being pursued; (iv) the more serious the intervention in any given case (and interventions cannot come very much more serious than the act of separating a mother from a very young child), the more compelling must be the justification." I pause to record that the P and Q case concerned the Home Office and Prison Service policy of allowing mothers of newborn children to have the baby with them in prison in a mother and baby unit, but of separating the mother from the baby at the latest at the age of 18 months. The court went on to say at paragraphs 82 and 83: "We have had constantly in mind that, although these applications are brought by Q and P, there are two other people who are even more closely interested in the outcome than they. Were this an ordinary dispute about the enforced separation of parent and child by the state, QB and PB [the children] would have been separately represented by an expert guardian ad litem and their own lawyers. We cannot know whether or not those representatives would have supported these applications, but we cannot avoid giving separate consideration to the position of the children. 83 It is clear that family life has been established between these children and their mothers. Compulsory separation is, on the face of it, a serious interference by the state in the children's right to respect for that family life. The European Court has said time and again that the mutual enjoyment by parent and child of each other's company constitutes a fundamental element of family life, and domestic measures hindering such enjoyment amount to an interference with the right protected by Article 8 ..." The Court of Appeal accordingly found that the compulsory separation of P and Q from their children by the age of 18 months was an interference with the Article 8 rights of mothers and the children alike, though the court went on to uphold it as proportionate. The claimant argues that the effect of the defendant's decision to refuse her ROTL is to separate her entirely from her children. The defendants do not agree; and nor do I. It only has that effect insofar as she chooses to make it so by refusing to have visits from the children. Mr Southey argued that it is generally for parents to decide how to exercise parental authority over their children (see Nielson v Denmark [1989] 11 EHRR 175, a case about a mother placing her child in a psychiatric hospital), and that it is for the mother to decide what is in the children's best interests in the present case. I am not prepared to accept as conclusive in this case the claimant's view of what is in the children's best interests in regard to being told the truth about where their mother is. There is no independent evidence on this topic before me, but I should have thought that it is at least a tenable point of view that one day the children will find out that they have been deceived, and that that discovery will have a traumatic effect on them. I do not think it is for me to come to a conclusion either way. So it does not seem to me that it can properly be said that the effect of the defendant's decision is a complete separation of mother from children, even the a sense of coming face to face in visits in the usual way. In accordance with the P and Q decision, I do accept Mr Southey's submission that keeping the claimant in custody without allowing her ROTL is an interference with her Article 8 rights and those of her children. But it is a far less serious interference than the decision in P and Q to remove the toddlers from their mothers and place them in foster care. It follows that, although it must be justified by the defendants under Article 8(2), it is more readily justified: see paragraph 78 of the P and Q judgment. That brings me to the second and central topic: was the interference with the claimant's and her children's Article 8 rights proportionate and necessary? Mr Southey's first submission under this heading is that the defendants failed to consider the question of Article 8 rights, so it must follow that they cannot have established the defence of proportionality. Mr Southey relied on the case of R(CD and AD) v the Home Secretary [2003] 1 FLR 979 (a decision of Maurice Kay J, as he then was). The claimant, a 19 year-old woman prisoner with a five-month old baby, was excluded from the mother and baby unit at the prison for misbehaviour of various kinds, including racism. The baby was placed with a friend of the mother outside prison. Two jointly instructed experts both reported that it was in the best interests of the baby to be reunited with the mother as soon as possible. It was agreed by both parties before the court that the Secretary of State was obliged to have regard to the best interests of the child, and the judge found as a fact that the decision-maker had not had regard to the best interests of the child in making the decision. It was accordingly quashed. In the present case, Mr Huntingdon, the governor of Drake Hall, says in his witness statement that he took full account in reaching his decision of the claimant's right to respect for her family life. This is not simply an assertion or rationalisation after proceedings were launched. He points out that the claimant first arrived at Drake Hall shortly before Christmas 2004, and he and his staff worked hard to facilitate Christmas leave for the claimant with her children at short notice. It is in any case, I should have thought, self-evident that children generally benefit from having their mother at home. I have no reason to think that Governor Huntingdon was unaware of that, and it does not seem to me that the threshold point under this heading has real substance. The central issue is whether the decision to refuse ROTL other than over Christmas was substantively disproportionate. No issue now arises about the temporary consequences of the assault charge which are, in my view, rightly accepted to be water under the bridge. Mr Southey's complaint is that, even when the findings of guilt in that regard were quashed, the restriction was maintained on other grounds, namely those following from the claimant's contact with her ex-partner the day before the offence which he allegedly committed. There is also an allegation, though it is not in the forefront of the defendant's case, that the claimant made unauthorised use of a mobile phone in prison to call her former partner. In the light of the plain words of Article 8, Mr Southey submits, and I accept, that it is for the defendants to advance sufficient justification for the decision under challenge to show that the restriction is in accordance with the law and is necessary in a democratic society in the interests of public safety for the prevention of crime and the protection of the rights and freedoms of others. But Miss Greaney submits, and I also accept, that in an Article 8(2) case, the decision-maker is entitled to a discretionary area of judgment: see per Dyson LJ in R(Samaroo) v the Home Secretary [2001] EWCA Civ 1139. Part of the justification put forward in this case is the potential physical threat to the claimant outside prison from the gang. While this may be a real threat on the facts, it is not to my mind a convincing argument justifying interference with Article 8 rights. If the claimant wishes to risk her own safety, she is, in my view, free to do so. But the risk to others, whether to her children or members of the public, from a possible gang attack on her cannot be ruled out. Moreover, there is an obvious and different risk, namely that the claimant out of prison may be intimidated or pressurised into refusing to testify about the telephone conversation or, if she does testify, into tailoring her evidence. In those circumstances it is rational and necessary, at least for the time being, to restrict the claimant's release on temporary licence. The defendants are entitled to conclude that there is no less restrictive means of interference with the claimant's and her children's Article 8 rights which will achieve the same result. I do bear in mind that the claimant had previously for three years been allowed release on temporary licence without incident: so the decision under challenge was a departure from the status quo. If it had not been, and we were looking at an initial decision to refuse release on temporary licence on first admission to custody, the claimant's case might have been weaker for other reasons. But that does not arise here. The arrest and charging of the claimant's former partner on very serious charges, and her telephone contact with him on the day before the alleged offence, create a rational basis for a change from that status quo, and the defendants' decision falls within the discretionary area of judgment identified by Dyson LJ in Samaroo. The final head of complaint is Mr Southey's argument that the decision about ROTL was procedurally unfair. This falls under two sub-headings. Firstly, the children were not represented during the decision-making process. It is true that they were not, but nothing in the domestic or Strasbourg case law has been put before me to demonstrate that they should have been. In any event, whatever the position might be in a more typical case about primary carers visiting children old enough to understand what is going on and where the children know the truth, any representative of the children in the present case would have been unable to ascertain their wishes without betraying the fact that the claimant was misleading them. Accordingly, it does not seem to me that any representative of the children could have put forward any representations beyond the obvious one that children would be better off in the company of their mother at home and would prefer to have their mother at home. Secondly, it is argued that the claimant was not told the allegations against her and given a chance to respond before ROTL was first refused. But, as Mr Southey rightly submitted, the standards of procedural fairness depend on the context of the decision: see, for example, Doody [1994] 1 AC 531 at 560. The procedure on an application for ROTL is that, when the application is received, a risk assessment is made. The Board receives the risk assessment and makes a recommendation to the governor. The governor then makes a decision. If the decision is to refuse, reasons are given to the prisoner. The prisoner can then re-apply immediately, indicating why she is dissatisfied with the reasons. This is not a type of case where the claimant only has, say, one chance a year to make the application and must in all fairness be given the reasons why there might be a refusal before the decision to refuse is. Although, as I have said, the claimant was initially told little about the reasons for refusal, there was within quite a short time sufficient information forthcoming for her to be able to make the appropriate representations. Accordingly, I reject the grounds of challenge to the decision in all respects and dismiss the application. I should, however, say that the defendants must, as I am sure they will, keep the situation under careful review. There may, for example, be changes in the criminal case which justify a change in approach to the claimant's request for ROTL. If the criminal case comes to trial, or pleas of guilty were to be entered, that certainly would warrant reconsideration of the present position on ROTL. Other considerations will also arise as the claimant's probable release date draws near, and the question of re-settlement leave may arise. But, on the situation as it stands today, for the reasons I have given, I must dismiss the application. I do so while expressing my gratitude to counsel for their persuasive and helpful submissions. MS WESTON: My Lord, I am here on behalf of Mr Southey. Two things: first of all, subject to whatever my learned friend has to say, we ask for a detailed assessment of the claimant's costs; and secondly, I am instructed to make an application to your Lordship for permission to appeal. Clearly, the extent of my experience of the case is limited. However, in terms of your Lordship's judgment, it may be that the Court of Appeal might take a different view as to the significance to be attached to the mother's right to make a determination about what is in the best interests of her child in the light of Article 8 and the authorities relied on by Mr Southey. On that basis, I make the application. MR JUSTICE BEAN: I think it must be for the Court of Appeal to say whether they wish to hear the case. The decision is partly fact-specific, although it does raise issues of law. So I will leave it to them. MS WESTON: I am grateful. MISS GREANEY: My Lord, I do not make any application for costs. MR JUSTICE BEAN: Thank you very much.

Mr Justice Griffith Williams : Introduction This is an appeal by Adrian Lasrado ("the Appellant") against the order dated 10 September 2010 of His Honour Judge Behar sitting at Wandsworth County Court, giving judgment for Donna Lee ("the Respondent") for £24,600. In those proceedings, the respondent was the claimant and appellant was the defendant. The other terms of the order were that the appellant pay the respondent's costs subject to detailed assessment if not agreed, that there be detailed assessment of the respondent's publically funded costs, that the warrant for the committal of the appellant dated 16 July 2009 be set aside and that his application for permission to appeal be refused. By order dated 8 February 2013 Gloster J gave permission to appeal out of time and ordered the appellant to lodge the grounds of appeal. In paragraph of her judgment, Gloster J said: "… I am concerned as to whether the Applicant in substance also needs to seek permission to appeal and/or appeal the order of District Judge Gittens dated 4 January 2010, in which he refused to set aside the default judgment on liability as against the applicant." The appellant has served grounds of appeal against both orders and in the circumstances I have concluded it is appropriate to grant him the necessary extension of time and permission to appeal against the order of District Judge Gittens. Background 34 Engadine Street, London SW18 is a house in multiple occupation, consisting of 6 bedsits with shared facilities. There is an issue (see below) as to whether the appellant or his wife were the landlords of that property. On a date in the summer of 2008, the respondent was given a tenancy. In her witness statements dated 23 June and 16 July 2009 and 10 September 2010, she made a number of allegations of harassment against the appellant and alleged that when she returned to the property on 20 June 2009, the locks had been changed and there was a notice stating she had been evicted. The respondent issued proceedings and applied for an injunction to be re-admitted to the property and claimed damages. On 23 June 2009, she was granted an injunction without notice ordering the appellant to re-admit her to her room and to the common parts of the property. The injunction was served personally on the appellant the following day. On 9 July 2009, the return date, the court ordered the appellant to re-admit the respondent to her room and to the common parts of the property and to arrange for her possessions which had been removed from her room to be returned thereto forthwith. The order was personally served on the appellant later that day. On 16 July 2009, on the respondent's application, there was a committal order, committing the appellant to prison for 18 months for his non-compliance with the orders of 23 June and 9 July. For reasons which are not material, bailiffs did not execute that order. On 13 October 2009, Deputy District Judge Ostroff ordered that there be judgment for the respondent in respect of her claim for damages for an amount to be determined by the court. On 4 January 2010, District Judge Gittens heard the appellant's application to set aside the orders of 23 June and 9 July 2009 and the judgment of 13 October 2009. He dismissed all 3 applications. At a separate hearing before Her Honour Judge Redgrave on the same date, the appellant's application to set aside the committal order of 16 July 2009 was refused. There was no application to appeal. On 10 January 2010, following a hearing before His Honour Judge Behar the learned judge made the order now appealed against (see paragraph 1 above). By a Notice filed on 14 August 2012, the appellant applied for permission to appeal the order but restricted the appeal to the judgment for the claimant for £24,600; surprisingly, to the setting aside of the warrant for committal and to the refusal of his application for permission to appeal. In the meantime, the respondent applied on 24 August 2011 for a charging order which was made on 19 March 2012 in the sum of £32,666.27. The appellant applied on 28 March 2012 for the discharge of that charging order. That application was dismissed on 27 July 2012. It is unlikely to be a co-incidence that it was following the dismissal of that application that the appellant, on 14 August 2012 served notice of appeal (see paragraph 8 above) and applied for permission to appeal out of time. Grounds of appeal The appellant asserted that the claim for the mandatory injunction should not have been made against him because he was not the landlord of the property but merely the agent for his wife who is the registered owner of the property. Reliance was placed upon the definition of "landlord" in section 27(9) of the Housing Act 1988 as "the person who, but for the occupiers right to occupy, would be entitled to occupation of the premises". It was asserted that any claims for damages should have been made against his wife as the landlord. The other ground of appeal is that the hearing on 10 September 2010 was conducted by His Honour Judge Behar in an unfair manner because the appellant was given no opportunity to present his defence to the claim for damages and, in particular, a defence pursuant to section 27(8)(a) of the 1988 Act which provides that it shall be a defence for the landlord to prove he believed and had reasonable cause to believe that the residential occupier had ceased to reside in the premises. In his Statement in support of his appeal, the appellant stated he was overwhelmed by the attitude of the judge. He made a number of complaints: i) He had had insufficient time to address the respondent's case because her witness statement had been served in the day before the hearing; ii) His own statement in reply had been hurried and so did not include his defence that he was not the landlord and his reliance upon the conduct of the complainant in mitigation of damage: see section 27(7)(a) of the 1988 Act. iii) The respondent's statement contained no particulars of her claims for damages; iv) When his assistant, Mrs Florence Cudd telephoned the court the day before the hearing she was told by the court that he would not be required to speak and that there was no need for him to bring his witnesses to court because only his written evidence would be considered.[1] The case for the Respondent On behalf of the respondent it was submitted that the issue of the identity of the landlord was raised only after the appellant applied for permission to appeal and that at no time throughout the proceedings has he at any time sought to contest his role as the landlord or the manager of the property. Of the criticisms of the damages hearing, it is submitted that while there was late service of the respondent's third statement, almost all her evidence relevant to the issue of damages was contained in her statements of 23 June and 16 July 2009 previously served on the appellant. Even so, it was accepted the respondent provided particulars in her statement of 10 September 2010 of (a) her homelessness between her eviction and the date in September 2009 when she was provided with hostel accommodation by the local authority and (b) of items of her property and their values which she has lost as a result of her eviction. It was submitted that the purported defence pursuant to section 27 (7)(a) of the Act is relevant to issues of liability and so would have had no relevance in a damages hearing. The evidence of the respondent's conduct (see below) even if reliable, would not constitute conduct sufficient to mitigate damages. The evidence in the affidavit dated 15 May 2012 of Mrs Cudd of the advice allegedly given to her [see paragraph 10 (iv)] above was mentioned for the first time in a letter dated 2 January 2013 to the High Court. It is submitted that the appellant's case discloses no serious irregularity of the sort which would justify the overturning of a decision made nearly 3 years ago and only recently the subject of an application for permission to appeal. The "Landlord" defence As this issue was not raised in any of the various proceedings in the County Court, it is necessary to consider the evidence. The appellant asserts his wife is the registered owner of the property and so is the landlord. Even so he admits that he was acting on behalf of the landlord and he has at no time asserted that he was not responsible for the management of the property. It follows that if his wife was the landlord she would be liable for his conduct in depriving the respondent of her occupation of the bed-sit accommodation: see section 27(3) of the 1988 Act. The appellant has adduced no evidence to prove his wife is the registered owner of the property. This is particularly concerning because the evidence proves overwhelmingly that he is the landlord. In letters to the respondent dated 16 May and 19 June 2009, the appellant describes himself as "landlord". In his response to the respondent's allegations, he refers to "the usual practice with landlords" and in one response he stated "I do not take deposits from my (emphasis added) bed-sit tenants". There is also his statement of 9 September 2010 prepared for the damages hearing in which he addressed the unsigned statement of the respondent served that day in which he dealt with every single one of her allegations and yet made no mention of his claim that he was not the landlord. Importantly, he made no such claim in the proceedings in respect of the charging order. I am not persuaded the evidence supports this defence, arising as it did at the eleventh hour. The Damages claim Unfortunately there was no recording made of the proceedings on 10 December 2010 when the sole issue was the respondent's claim for damages and when the appellant appeared in person and the respondent (the claimant in those proceedings) was represented by Mr Sadiq of counsel. His Attendance Note records that the award of damages of £24,600 was made up as follows: a) General damages of £16,800 being compensation at a daily rate of £200 for the 84 days between the appellant's eviction and her obtaining alternative accommodation in a hostel; b) The repayment of her deposit of £400; c) Compensation of £1,200 pursuant to section 214 of the Housing Act 2004 for the appellant's failure to hold the deposit in an authorised manner; d) General damages of £1,000 for the harassment of the respondent during her tenancy; e) Special damages of £2,200 for items of her property which were not returned to her; f) Aggravated damages of £1,500; g) Exemplory damages of £1,500. The Attendance Note recorded that the learned judge heard evidence from both the respondent and the appellant as to quantum, that the respondent was "quite angry" when giving her evidence, especially when cross-examined by the appellant who was himself "both quite angry and very rude to the judge". The Attendance Note recorded that the learned judge was very critical of the respondent's failure to supply her witness statement until the morning of the trial[2] and the learned judge accepted that the statement repeated matters in the respondent's earlier witness statements of 23 June and 16 July 2009, and that the only fresh matters raised were further details of the events on the day of her eviction and of the assault upon her 10 days later when she returned to the property in an attempt to recover her possessions, of her alternative accommodation arrangements until she obtained a hostel place and details of the values of her missing property. The Attendance Note recorded the appellant had suggested he wanted an adjournment but the learned judge was persuaded to refuse one given the delay in bringing the claim to a hearing, much of that attributable to the appellant. The note recorded "in giving judgment, the judge stated that he found Miss Lee to be truthful (albeit intemperate) and he did not accept the evidence of Mr Lasrado". The appellant has provided his comments about the Attendance Note in writing. In general terms, he does not accept that it is a record of the hearing as he remembers it. He states he thought the hearing was about the warrant for committal and so was "really surprised" when the judge started talking about money". That cannot be right, if only because the appellant responded to the respondent's unsigned witness statement with a statement of his own in which he addressed her claims for damages. Further the proceedings had been served on him personally on 24 June 2009 and the particulars of claim and the respondent's witness statement dated 23 June 2009 detailed her then claim for damages. The appellant asserted the judge did not hear evidence as to quantum from the respondent and the appellant. Again that cannot be right. Not only were there the 3 witness statements of the respondent but there were the respondent's responses to each statement, dated 23 June 2009, 16 July 2009 and 10 September respectively. Furthermore the appellant accepted in the course of his submissions that questions about her damages were asked of him. I observe that much of his comment about the content of the attendance note was that he cannot remember and so there was little or no direct challenge to its accuracy. My conclusion is there is nothing in the contents of the Attendance Note which suggests it is not a substantially reliable record of the proceedings. As such it is, of course, not evidence. CPR52.11 provides that every appeal will be limited to a review of the decision of the lower court, unless the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing. It provides further that unless it orders otherwise, the appeal court will not receive evidence which was not before the lower court. I am not persuaded the evidence of Mrs Cudd provides any support for the appellant's contentions. He is no stranger to the courts and it is frankly not credible that he would not have tried to appeal the learned judge's adverse findings if, as Mrs Cudd asserts, he had been told that there was no need for his witnesses to attend. The fact is that her evidence emerged on 15 May 2012, some 20 months after the hearing and one month after the appellant applied for permission to appeal, an application which was itself some 18 month's out of time. I have concluded that the evidence of Mrs Cudd should not be received. It may well be that the appellant asked for an adjournment but the learned judge would have considered the merits of that application with the overriding objective very much in mind and with regard to the history of the appellant's non-compliance with court orders[3] as well as to the detail of the additional matters. As the appellant's response to those additional matters was broadly to accuse the respondent of lying, an adjournment would have served no purpose. Quantum While I have been assisted by the researches as to awards in comparable cases provided by the appellant, I am not satisfied that the awards of general damages, the compensation under section 214 of the 2004 Act, the damages for harassment, the aggravated and exemplary damages were out with the appropriate ranges. The award of special damages was clearly based on the learned judge's acceptance of the respondent's credible evidence. As to the appellant's submission that he was not provided the opportunity to present his defence under section 27 (8) (a) of the 1988 Act, (see paragraph 10 above) that would have been a defence on liability and so would have been irrelevant to issues of quantum. The submission that he was prevented from advancing a claim pursuant to section 27(7)(a) of the Act, that the respondent's conduct was such that it was reasonable to mitigate the damages for which he, the appellant, would otherwise be liable, does not withstand scrutiny. In Regalgrand Limited v. Dickerson & Wade [1996] 74E & CR312 @ 317, Aldous LJ said: "The word "conduct" should be given its ordinary meaning… The subsection provides for reduction in damages provided the conduct of the tenant is such that the court concludes that it is reasonable to mitigate the damages, which I understand to mean reduce or cut down. If the court arrives at the conclusion that it is reasonable, it has to exercise the discretion given and decide whether the damages should be reduced. In some circumstances it may decide that, despite the conduct of the tenant, the damages should not be reduced and in others it should be reduced. The conclusion would depend upon all the circumstances of the case and will entail looking at the conduct in the light of the surrounding facts. If the court decides that the damages should be reduced, then it has to go on and decide what is the appropriate amount of the reduction. That is a judicial judgment which is not capable of mathematical precision. It again has to be taken in the light of all the facts." I accept Miss Stroud's submission that the alleged conduct on the part of the respondent would not constitute conduct sufficient to mitigate damages. In any event, the appellant made these allegations in his witness statement of 17 June 2013, allegations which the learned judge did not believe. CPR52.11(3) provides that the appeal court will allow an appeal where the decision of the lower court was wrong or unjust because of a serious irregularity in the proceedings in the lower court. In Hayes & Others v. Transco PLC [2003] EWCA Civ.1261, Clarke LJ, after setting out the provisions of the rule, said:- "It follows that the question… is whether the decision of the judge was unjust because of a serious procedural or other irregularity in the proceedings. It is not, however, sufficient that a serious irregularity should be shown or even that some collateral injustice should be established. The decision must be unjust. As I see it, whether the decision is unjust or not would depend upon all the circumstances of the case." I am not persuaded that the decision of the learned judge was in any way unjust and the appeals are accordingly dismissed. Note 1   The appellant relies upon a document which purports to be an affidavit dated 15 May 2012 from Florence Cudd to that effect.    [Back] Note 2   It is agreed that an unsigned copy of that witness statement had been served on The appellant on 9 September 2010.     [Back] Note 3   See paragraphs 4 and 5 above    [Back]

Gajendragadkar, J. Two demands made by the respondents, the workmen of the appellant companypany, the Garment Cleaning Works, Bombay, were referred for industrial adjudication to the industrial tribunal under s. 12 5 of the Industrial Disputes Act, XIV of 1947. These demands were for gratuity and provident fund respectively. The tribunal has framed a gratuity scheme and has passed an order that the appellant should draw up a scheme of provident fund on the lines of the model provident fund scheme drawn by the Government under the Employees Provident Funds Act, 1952 XIX of 1952 , with a rate of companytribution of 6 1/4 per cent. of total wages. Both the gratuity scheme as drawn up and the directions as to the drawing up of a provident fund scheme are challenged by the appellant by its present appeal which it has brought to this Court by special leave. In regard to the direction as to the gratuity scheme the argument which has been urged before us by Mr. Sen is that the problem of starting such a scheme should have been companysidered on an industry-cum-region basis and companysiderations relevant to the said basis should have been taken into account. In support of this argument he has relied upon a judgment of this Court in The Bharatkhand Textile Mfg. Co. Ltd. Ors. v. The Textile Labour Association, Ahmedabad . In that case the industrial companyrt had numberdoubt dealt with a claim for gratuity made by the workmen on the industry-cum-region basis, and an attack against the validity of the said approach made by the employer in regard to the scheme was repelled by this Court. It would, however, be numbericed that all that this Court decided in that case was that it was erroneous to companytend that a gratuity scheme companyld never be based on industry-cum-region basis, and in support of this companyclusion several companysiderations were set forth in the judgment. It is clear that it is one thing to hold that the gratuity scheme can in a proper case be framed on industry-cum-region basis, and another thing to say that industry-cum-region basis is the only basis on which gratuity scheme can be framed. In fact, in a large majority of cases gratuity schemes are drafted on the basis of the units and it has never been suggested or held that such a schemes are number permissible. Therefore the decision in the case of the Bharatkhand Textile Mfg. Co. Ltd. does number support the propositions for which Mr. Sen companytends. Mr. Sen has then criticised some of the provisions in the gratuity scheme. Clause ii a of the gratuity scheme provides that on retirement of resignation of a workman after ten years service ten days companysolidated wages for each years service should be awarded as gratuity. Mr. Sen quarrels with this provision. He companytends that numbergratuity should be admissible under this clause until and unless fifteen years service has been put in by the employee. In support of this argument Mr. Sen has referred us to certain observations made by this Court in the case of The Express Newspapers Private Ltd. Anr. v. The Union of India Ors. 1959 S.C.R. 12, 154 In that case the provisions of s. 5 1 a iii of the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955 45 of 1955 , was struck down on the ground that its provisions violated the fundamental right guaranteed by Art. 19 1 g . The companyclusion of this Court was that the provision for gratuity made by the said clause to an employee who had put in three years service imposes an unreasonable restriction on the employers right to carry on business and is therefore liable to be struck down as unconstitutional. Dealing with that provision this Court incidentally observed that where the employee has been in companytinuous service of the employer for a period of more than fifteen years he would be entitled to gratuity on his resigning his post. Mr. Sen companytends that this observation indicates that an employee who resigns his post cannot be entitled to any gratuity unless he has put in fifteen years service. In our opinion, the observation on which this argument is based was number intended to lay down a rule of universal application in regard to all gratuity schemes, and so it cannot be made the basis of an attack against a gratuity scheme where instead of fifteen years service 10 years minimum service is prescribed to enable an employee to claim gratuity at the rate determined if he resigns after ten years service. Therefore, we do number think that the provision of clause ii a can be successfully challenged as being unreasonable. Clause iv is then challenged by Mr. Sen. This clause provides that if a workman is dismissed or discharged for misconduct causing financial loss to the works gratuity to the extent of the loss should number be paid to the workman companycerned. Mr. Sen companytends that this clause is inconsistent with the principles on which gratuity claims are generally based. Gratuity which is in the nature of retiral benefit is based on long and meritorious service, and the argument is that if the service of an employee is terminated on the ground of misconduct it would number be open to him on principle to claim gratuity because misconduct puts a blot on the character of his service and that disqualifies him from any claim of gratuity. In this companynection he has referred us to the definition of retrenchment companytained in s. 2 oo of the Industrial Disputes Act. Retrenchment, according to the definition, means inter alia, the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action. Mr. Sen suggests that the retrenchment benefit and gratuity are payments made to the employee for a similar purpose, and if dismissal of an employee for misconduct does number entitle him to a claim for retrenchment benefit so should gratuity be denied to him in case he is dismissed for misconduct. A similar argument is based on the rules framed under the Employees Provident Funds Act, 1952. Rule 71 of the Provident Funds Scheme Rules provides for certain deductions from the account of a member dismissed for serious and willful misconduct. By analogy it is urged that this rule also shows that a dismissed employee is number entitled to gratuity. We are number impressed by these arguments. On principle if gratuity is earned by an employee for long and meritorious service it is difficult to understand why the benefit thus earned by long and meritorious service should number be available to the employee even though at the end of such service he may have been found guilty of misconduct which entails his dismissal. Gratuity is number paid to the employee gratuitously or merely as a matter of boon. It is paid to him for the service rendered by him to the employer, and when it is once earned it is difficult to understand why it should necessarily be denied to him whatever may be the nature of misconduct for his dismissal. Then, as to the definition of retrenchment in the Industrial Disputes Act, we are number satisfied that gratuity and retrenchment companypensation stand exactly on the same footing in regard to the effect of misconduct on the rights of workmen. The rule of the provident fund scheme shows number that the whole provident fund is denied to the employee even if he is dismissed but it merely authorises certain deductions to be made and then too the deductions thus made do number revert to the employer either. Therefore we do number think that it would be possible to accede to the general argument that in all cases where the service of an employee is terminated for misconduct gratuity should number be paid to him. It appears that in award which framed gratuity schemes sometimes simple misconduct is distinguished from gross misconduct and a penalty of forfeiture of gratuity benefit is denied in the latter case but number in the former, but latterly industrial tribunals appear generally to have adopted the rule which is companytained in clause ii b of the present scheme. If the misconduct for which the service of an employee is terminated has caused financial loss to the works, then before gratuity companyld be paid to the employee he is called upon to companypensate the employer for the whole of the financial loss caused by his misconduct, and after this companypensation is paid to the employer if any balance from the gratuity climbable by the employee remains that is paid to him. On the whole we are number satisfied that the clause thus framed by the Industrial Tribunal in the present case needs to be revised. The last companytention raised by Mr. Sen in regard to the gratuity scheme has reference to clause v of the scheme. This clause provides that for calculating years of service the entire service of the workmen should be taken into account. Mr. Sen companytends that though the word companytinuous has number been used either in clause v or in clauses i , ii and iii we should make it clear that the service referred to in all the said clauses referred to companytinuous service. This position is number disputed by Mr. Dudhia for the respondents. We would accordingly make it clear that the service referred to in clauses i , ii and iii refers to companytinuous service. That takes us to the appellants grievance against the direction issued by the Tribunal in regard to the framing of the provident fund scheme on the lines of the model provident fund scheme drawn by the Government in the Employees Provident Funds Act. Mr. Sen companytends that in issuing this direction the tribunal has number properly assessed the extent of the financial obligation which the scheme would impose upon the appellant and the limited nature of its financial capacity. It appears that when the appellant produced its balance-sheet and other relevant papers it claimed privilege under s. 21 of the Industrial Disputes Act. Inevitably the Tribunal companyld number discuss the figures disclosed by the said books in its award though it must have examined the said figures carefully. In the result the tribunal has naturally companytented itself with the general observation as to the financial position of the appellant. It has observed that the question to companysider in framing the provident fund scheme is whether the employer has made good profits, whether its future is assured, whether it has capacity to build up adequate reserves. Having thus posed the question the Tribunal has companye to the companyclusion that the appellant satisfies all these requirements. Mr. Sen companytends that the tribunal did number take into account the fact that the appellant has numberreserves and that it had borrowed large loans. We do number see how that would enable the appellant number to agitate a question which is purely a question of fact. Mr. Sen realised the difficulties in his way because, since his client had claimed the privilege of s. 21 the Tribunal was fully justified in number discussing the figures in its award. He, therefore, faintly suggested that we may remand the case subject to any order as to companyts that we may deem fit to make and ask the Tribunal to reconsider the matter in the light of the relevant documents, and he assured us that he would number claim privilege under s. 21 after remand. This request is plainly untenable. If the appellant wanted the tribunal to companysider the figures and state its companyclusions in the light of the said figures in its award it need number have claimed privilege under s. 21 at the trial. It is number too late to suggest that the privilege be waived and that the matter be companysidered afresh by the tribunal or by us in the appeal. Therefore we see numberreason to interfere with the direction given by the Tribunal in regard to the framing of the provident fund scheme.

Friday 6th September 2002 LORD JUSTICE PETER GIBSON: Dr Kalyani Pal seeks permission to appeal from the dismissal on 13th March 2002 by the EAT at a preliminary hearing of her appeal from the decision of an Employment Tribunal sitting in London South. The Tribunal thereby dismissed Dr Pal's complaint of sex and race discrimination as being out of time and refused to extend time. The facts in summary are these. Dr Pal was born in 1943 in India and educated to post-graduate degree level there. She came to England in 1967 and she obtained an M Phil in 1974. From 1973 to 1987 she was a research officer with the Institute of Cancer Research. She contributed to many scientific papers. In 1987 she began employment with the respondent, Guy's Hospital, now merged with St Thomas' as Guy's and St Thomas' Hospital National Health Service Trust. She worked as a cytogeneticist. She was upgraded to senior scientific officer in 1988. In 1990 she was on Spine Grade Point 17 of the Grade B scale. She went to Spine Point 18 in 1991. She has been a section head since 1995. In 1998 a Head of Department retired and was not replaced. The post of a Dr Docherty was upgraded and she was appointed head of the cytogenetics laboratory. The monies that were thereby released were used for, amongst other purposes, to fund three promotions from existing staff on Grade B. Dr Docherty concluded that the post held by a Dr Ogilvie, a Dr Scriven and a Mr Campbell now merited B Grade 17 to 19 and the title of principal clinical scientist. The clinical director agreed with her. In accordance with National Health Service rules, two external assessors were appointed to consider the promotions. On 21st October 1999 they agreed to the promotion, following interviews with the three persons, and the promotions then took effect. The external assessors were not told about Dr Pal. The three promoted persons were regraded in October 1999. The Tribunal found: "The promotions generated the usual celebrations within the department, with tea and cakes being provided by the three doctors, and the matter being discussed at a meeting. Although Dr Pal was not present on some of the days around this time she was clearly present throughout most of it. Moreover there was a reorganisation of duties, which in a relatively small department must have been known to all concerned." The Tribunal found that the promotion of Dr Pal's colleagues was a triple blow to her because younger white people had overtaken her in salary terms, they had a more prestigious title and they ranked above her in the hierarchy. On 6th June 2000 Dr Pal presented her originating application, claiming sexual and racial discrimination in that the respondent failed to regrade her post and treated her less favourably than Dr Ogilvie, Dr Scriven and Mr Campbell. Before the Tribunal Dr Pal was represented by experienced counsel. The hearing lasted five days. The first issue for the Tribunal was whether the claim was made by Dr Pal in time. On the basis that the promotion was made on 21st October 1999, Dr Pal was some six months out of timein presenting her originating application. The Tribunal said this in paragraph 28: "We cannot accept Dr Pal's assertion that she did not know of the promotion of the other three. There is clear evidence which we accept that she was told about it by Dr Docherty in September and that she offered her congratulations to at least one of the comparators in October. News that three people had been promoted could not have been a secret in that small department. As the Applicant's case as it is put depends wholly upon that assertion which we have rejected, we can see no reason why it is just and equitable for us to consider her application and we therefore dismiss it." Thereby the Tribunal recognised that it had a discretion whether to extend time if it was just and equitable to do so. The Tribunal refused to do so, but it went on to have regard to the merits. The Tribunal said that it would have dismissed the complaint because it accepted the respondent's explanation that she was not promoted because her job did not merit the higher point in her grade. The Tribunal criticised the respondent for the way the promotions were carried out, but said: "It is clear from the external assessments undertaken that the gap in achievement between the Applicant and the comparators was very wide, and that she had no prospect of making the same sort of case they could for regrading. In those circumstances we accept that the actions of the Respondents were objectively justified and there is nothing in this evidence from which we can infer that the Applicant's race or gender were factors." Dr Pal appealed to the EAT. At the preliminary hearing of her appeal she was represented by a solicitor. The EAT noted that the factual decision by the Tribunal was not the subject of attack and said that Dr Pal failed to cross the high threshold required to overturn the exercise of discretion. That exercise of discretion was, of course, in relation to the power conferred by both the Race Relations Act and the Sex Discrimination Act to extend the three months' period if it considers that it is just and equitable to do so. Dr Pal now appears in person before me. She has supplied me with amended grounds of appeal. She has also supplied me with a skeleton argument in which she takes a number of points. Many of the points relate to factual findings made by the Tribunal. Although I have tried to explain to her that she would not normally be allowed to raise points which were not argued in the EAT, she has nevertheless persisted in airing her general complaints about the findings of the Tribunal. She asserts that the Tribunal miscalculated the relevant limitation period because it failed to base its calculation on the appropriate act within the meaning of section 68(1) of the Race Relations Act 1976. By section 68(1) time is measured from the doing of the act complained of. A similar provision is found in the Sex Discrimination Act 1975 (see section 76(1)). When asked what that act was Dr Pal had some difficulty in responding. She seemed to think that her own awareness of the promotions somehow constituted the relevant act. But it is quite plain that the act complained of is the act of the employer which was said to constitute racial or sexual discrimination, and the complaint is that the three comparators were promoted whereas she was not even considered. It is to my mind obvious that the doing of the act complained of was in October 1999 and that her delay in presenting her originating applications on 6th June 2000 meant that she was long out of time so that the Tribunal was barred from considering her complaint unless in the exercise of its discretion it considered it was just and equitable to extend time. Dr Pal nevertheless in front of me again argued that she did not know about the promotions until March 2000 and she denied the evidence that was put in by the respondents as to her knowledge of the promotions in September to December 1999. I am afraid that that is hopeless because there was plainly evidence before the Tribunal on which it could properly reach the conclusion which it did. I can understand that Dr Pal is aggrieved that her version of the facts is not accepted, but the only tribunal of fact is the Tribunal and it had material on which to reach that conclusion. So far as the exercise of discretion is concerned, Dr Pal complains that the Tribunal erred in law in not applying what she calls the appropriate check-list for determining whether it was just and equitable to extend time. That is a reference to what was said by the EAT in British Coal Corporation v Keeble [1997] IRLR 336 at paragraphs 8 and 9 on page 338. Dr Pal has, I think, misunderstood what was said in the Keeble case. Smith J, giving the judgment of the EAT, referred to the fact that an earlier EAT, when remitting certain cases for rehearing, had said that the issue of whether it was just and equitable to extend time should be decided by the Tribunal on the basis of the circumstances of each individual case, and had advised that the Tribunal should adopt as a check-list the factors mentioned in section 33 of the Limitation Act 1980. That section provides a broad discretion to extend the limitation period of three years in cases of personal injury and fatal accident. Smith J in the Keeble case merely said that it had not been suggested to the EAT that the guidance given was erroneous. In my judgment it cannot be argued that when a tribunal fails to adopt that check-list it commits some error of law. In contrast to the very different circumstances of personal injury and fatal accident cases, Parliament has not provided such a check-list to tribunals in discrimination cases, and whilst it may be appropriate in many cases to apply such a check-list, I reject the suggestion that it is necessary in all cases. In any event, it is for the applicant seeking the extension of time to show why it is just and equitable for the Tribunal to extend time. In the present case not merely did counsel for Dr Pal not refer the Tribunal to the Keeble case, but no factors were urged on the Tribunal other than the one matter to which the Tribunal drew attention in paragraph 28 of the Extended Reasons which I have already cited, that is to say the assertion by Dr Pal that she did not know of the promotions. For the reasons already given, that assertion was rejected by the Tribunal and it is hopeless to try to go behind that. In my judgment there was no error by the Tribunal in not going through some check-list which had not been urged by Dr Pal. Again, this is a new point on which it is not really appropriate to found an appeal in this court. Dr Pal also criticised the EAT for saying that it found no authority which expressly dealt with the question of prejudice to the applicant. She says that the Keeble case is such an authority. Even if this were an error by the EAT induced by the failure of her own advocate to draw the case to the attention of the EAT, it does not assist Dr Pal, because on a second appeal, as this court has repeatedly said, this court is more concerned with the correctness of the reasons of the Tribunal than with those of the EAT. In any event, it is a non-point because the prejudice to Dr Pal in having her complaint dismissed through no extension of time being allowed would have been obvious to everyone. Dr Pal also says that the Tribunal was wrong to decide the point on limitation as a preliminary issue without establishing the primary facts. But the Tribunal did, as I have already indicated, look at the primary facts and it rejected Dr Pal's case. So again this point is of no avail. I have carefully considered all that Dr Pal has put before me both in writing and in her oral submissions this morning, but I am afraid that I am not persuaded that Dr Pal has any real prospect of success on an appeal. Nor is there any other compelling reason shown why this appeal should be heard. I must therefore refuse this application. Order: Application refused.

Civil Appeal No. 5380 of 1999 arising out of S.L.P. C No. 17263 of 1998 Special leave granted. In the instant case respondent No. 1 was appointed by way of direct recruitment to the State Civil Service on probation for two years on 10-1-1980. The Rules provided that every probationer had to pass a departmental examination during his probation period without which he companyld number be companyfirmed. It is number in dispute that respondent No. 1 companyld number pass this examination. Respondent Nos. 2-16 who were junior to him did pass their examination and thereafter respondent Nos. 17-38 who were also junior to respondent No. 1 passed their examination. On 19th January, 1984 respondent No. 1 finally passed his departmental examination and he was companyfirmed and given seniority with effect from that date. The said respondent then made a representation on 5-12-90 that he should be assigned seniority w.e.f. 11-2-82 and number w.e.f. 19-1-84. The State Government rejected this claim. The respondent No. 1 filed a petition before the State Administrative Tribunal. The Tribunal came to the companyclusion that the seniority of the said respondent should be fixed w.e.f. 12-2-82. A writ petition was filed by the appellant but the same was summarily dismissed. The point in issue, as we shall presently see, is numberlonger res integra. It is number in dispute that the said respondent No. 1 had number passed his departmental examination till after respondent Nos. 2-38 .had passed their examination. Rule 8 of the Madhya Pradesh Civil Services General Condition of Service Rules, 1963, relates to probation of officers and the said Rule is as under Probation - 1 A person appointed to a service or post by direct recruitment shall ordinarily be placed on probation for such period as may be prescribed. The appointing authority may, for sufficient reasons, extend the period of probation by a further period number exceeding one year. A probationer shall undergo such training and pass such departmental examinations during the period of his probation as may be prescribed. The service of a probationer may be terminated during the period of probation if in the opinion of the appointing authority he is number likely to shape into a suitable Government servant. The services of a probationer who has number passed the departmental examinations or who is found unsuitable for the service or post may be terminated at the end of the period of his probation. On the successful companypletion of probation and passing of the prescribed departmental examination, if any, the probationer shall if there is a permanent post available, be companyfirmed in the service or post to which he has been appointed, otherwise a certificate shall be issued in his favour by the appointing authority to the effect that the probationer would have been companyfirmed but for the number-availability of the permanent post and that as soon as a permanent post becomes available he will be companyfirmed. A probationer, who has neither been companyfirmed, number a certificate issued in his favour under Sub-rule 6 , number discharged from service under Sub-rule 4 , shall be deemed to have been appointed as a temporary Government servant with effect from the date of expiry of probation and his companyditions of service shall be governed by the Madhya Pradesh Govt. Servants Temporary and Quasi-Permanent Service Rules, 1960. Rule 13 of M.P. Civil Services Executive Classification Recruitment and Condition of Services Rules, 1975 reads as under Probation - 1 Every person directly recruited to the Service shall be appointed on probation for a period of two years. The appointing authority may, for sufficient reasons, extend the period of probation by a further period number exceeding one year. The probationer shall undergo the prescribed training and pass the prescribed departmental examination by the higher standard during the period of his probation. The services of the probationer may be terminated during the period of probation, if in the opinion of the appointing authority, he is number likely to shape into suitable Government servant. The services of a probationer who does number pass the prescribed departmental examination or who is found unsuitable for the service also be terminated at the end of the period of probation. On successful companypletion of probation and the passing of the prescribed departmental examinations, the probationer shall be companyfirmed in the service provided permanent vacancies exist for him otherwise a certificate shall be issued in his favour by the appointing authority to the effect that the probationer would have been companyfirmed but for the number-availability of the permanent post and as soon as permanent post becomes available he will be companyfirmed. The probationer shall number draw any increments until he is companyfirmed. On companyfirmation his pay will be fixed with reference to the total length of service. If the probationary period is extended, Government will decide at the time of companyfirmation whether arrears of increment shall be paid or number. Such arrears shall ordinarily be paid when the extension of the probationary period is due to numberfault of the probationer. A probationer who has neither been companyfirmed, number a certificate issued in his favour under Sub-rule 6 above number discharged from service under Sub-rules 4 and 5 above, shall be deemed to have been appointed as a temporary Government Servant with effect from the date of expiry of probation and his companyditions of service shall be governed by the Madhya Pradesh Temporary and Quasi-Permanent Service Rules, 1960. It is quite evident that respondent No. 1, who had neither been companyfirmed, number certificate had been issued in his favour under Sub-rule 6 , number he was discharged from service under Sub-rule 4 would fall within the category of those officers referred to in Sub-rule 7 of Rule 8. In other words, he was to be deemed to be a temporary government servant with effect from the date of expiry of probation. Rule 12 of the said Rules deal with the question of fixation of seniority. The relevant portion of said Rule is as under Seniority The seniority of the members of service of a district branch or group of posts of that service shall be determined in accordance with the following principles, viz. - Direct recruits i The seniority of a directly recruited Government servant appointed on probation, shall companynt during his probation from the date of appointment, viz. the same order of inter se seniority shall be maintained on the companyfirmation of such direct recruits if the companyfirmation is ordered at the end of the numbermal period of probation. If, however, the period of probation of any direct recruits is extended, the appointing authority shall determine whether he should be assigned the same seniority as would be assigned to him if he had companyfirmed on the expiry of the numbermal period of probation or whether he should be assigned a lower seniority. According to Sub-clause ii of Clause a of Rule 12 in a case like the present where a person had been allowed to companytinue in service after the period of probation had been companypleted and he is companyfirmed subsequently, it is for the appointing authority to decide as to from what date he should be assigned the seniority. In the present case the decision of the State Government was that he should be assigned the seniority w.e.f. 19-1-1984. The aforesaid Rules have been companysidered by this Court in the case of M.P. Chandoria v. State of M.P and Ors. . The principle laid down by this Court in Chandorias case supra was that if a person does number pass the test then the appointing authority is empowered to assign the seniority in a lower level than the one which was assigned by the Public Service Commission. That being so the decision to assign the seniority to Respondent No. 1 w.e.f. 19-1-1984 is in accordance with Rules. Mr. Verma, however companytends that Rule 12 Clause a ii postulates a speaking order being passed in order-to assign a lower seniority to respondent No. 1 number w.e.f. 11-2-1982 but w.e.f. 19-1-1984. It appears that a representation was made for the first, time by Respondent No. 1 on 5-12-1990. Apart from the fact that the said representation was very belated, nearly six years after the fixation of seniority, the State Government rejected that representation vide order dated 20-5-93. This shows that, when called upon, the State Government had once again applied its mind and had substantially companyplied with the provisions of Rule 12. We do number, therefore, find any reason as to why the Respondent No. 1 should be assigned seniority w.e.f. 11-2-82. This being so, this appeal is allowed, the judgment of the High Court and that of the Administrative Tribunal is set aside and we hold that the seniority of Respondent No. 1 fixed from 19-1-1984 is in order. However, there will be numberorder as to companyts. Civil Appeal Nos. 5381, 5382 and 5383 of 1999 arising out of S.L.P. C Nos. 3 779, 9150 and 6172 of 1999 Leave granted. In view of the aforesaid reasons these civil appeals are also allowed. However, there will be numberorder as to companyts. Civil Appeal No. 5384 of 1999 arising out of SLP C No. 9072 of 1999 Leave granted. The facts of this case are different from the case of State of M.P. v. Ramkinkar Gupta and Ors. CA No. 5380 of 1999 SLP C No. 17263/1998 . In the present case, the respondent was granted an extension of one year for companypleting the probation and within that extended period he passed the requisite test.

JUDGMENT OF THE COURT (Fifth Chamber) 18 July 2013 ( *1 ) ‛Judicial cooperation in civil matters — Regulation (EC) No 44/2001 — Court with jurisdiction — Special jurisdiction in ‘matters relating to contract’ and ‘matters relating to tort, delict and quasi-delict’’ In Case C-147/12, REQUEST for a preliminary ruling under Article 267 TFEU from the Hovrätten för Nedre Norrland (Sweden), made by decision of 23 March 2012, received at the Court on 26 March 2012, in the proceedings ÖFAB, Östergötlands Fastigheter AB v Frank Koot, Evergreen Investments BV, THE COURT (Fifth Chamber), composed of T. von Danwitz (Rapporteur), President of the Chamber, A. Rosas, E. Juhász, D. Šváby and C. Vajda, Judges, Advocate General: M. Wathelet, Registrar: C. Strömholm, Administrator, having regard to the written procedure and further to the hearing on 17 April 2013, after considering the observations submitted on behalf of: — ÖFAB, Östergötlands Fastigheter AB, by M. André, — Mr Koot and Evergreen Investments BV, by K. Crafoord, B. Rundblom Andersson and J. Conradsson, advokater, — the Swedish Government, by A. Falk and K. Ahlstrand-Oxhamre, acting as Agents, — the Greek Government, by S. Chala, acting as Agent, — the United Kingdom Government, by J. Beeko, acting as Agent, — the European Commission, by A.-M. Rouchaud-Joët and C. Tufvesson, 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 Council Regulation (EC) No 44/2001 of 22 December 2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1). The request was made in proceedings between ÖFAB, Östergötlands Fastigheter AB (‘ÖFAB’), established in Sweden, and Mr Koot and Evergreen Investments BV (‘Evergreen’), established in the Netherlands, concerning the refusal by the latter to meet the debts of Copperhill Mountain Lodge AB (‘Copperhill’), a limited company established in Sweden. Legal context European Union law Regulation No 44/2001 contains the rules on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Recitals 8, 11 and 12 in the preamble to that regulation state: ‘(8) There must be a link between proceedings to which this Regulation applies and the territory of the Member States bound by this Regulation. Accordingly common rules on jurisdiction should, in principle, apply when the defendant is domiciled in one of those Member States. … (11) The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction. (12) In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice.’ According to Article 1(2)(b) of that regulation it does not to apply to ‘bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’. Article 2(1) of Regulation No 44/2001 provides: ‘Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.’ Article 5(1) and (3) of Regulation No 44/2001 provide that a person domiciled in a Member State may be sued in another Member State: (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be: — in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered, — in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided; (c) if subparagraph (b) does not apply then subparagraph (a) applies; … (3) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur’. Swedish law In Chapter 25 of the Law on limited liability companies (Aktiebolagslag, SFS 2005, No 551), Article 18 thereof provides that the members of the board of directors may be liable for the debts of the company where they fail to complete certain formalities to monitor the company’s financial situation which no longer has sufficient funds. According to that article: ‘If the board has failed, 1. in accordance with paragraph 13, to draw up and submit to the company’s auditor for scrutiny a pre-liquidation balance sheet in accordance with paragraph 14, 2. in accordance with paragraph 15, to convene a first general meeting, or 3. in accordance with paragraph 17, to apply to the District Court for an order that the company be put in liquidation, the members of the board are jointly and severally liable for the debts of the company arising during the period of any such failure. Any person who, with knowledge of the board’s failure, acts on behalf of the company shall be jointly and severally liable with the members of the board for the obligations which thereby arise for the company. The liability under points 1 and 2 does not apply to any person who shows that he or she has not been negligent. …’ The dispute in the main proceedings and the questions referred for a preliminary ruling Mr Koot, who resides in the Netherlands, was a member of the board of directors of Copperhill from 9 September 2007 until 5 September 2009 inclusive, the date on which he became a deputy director, which he remained until 22 January 2010. Evergreen held 40% of Copperhill’s shares prior to acquiring a further 50% of the shares in that company on 11 September 2007. Between 10 October 2007 and 2 December 2009 Copperhill’s seat was situated in the municipality of Åre (Sweden), which falls within the jurisdiction of Östersunds tingsrätt (District Court, Östersund), where it carried on business during that period and built a hotel. For the construction of that hotel, Copperhill ordered excavation works and, inter alia, tiling in the bathrooms from two local companies, Toréns Entreprenad i Östersund AB (‘Toréns’) and Kakelmässan Norr Handelsbolag (‘Kakelmässan’). On 23 March 2009, since Copperhill had suspended payments on account of financial difficulties, the Östersunds tingsrätt made a company reconstruction order (‘företagsrekonstruktion’). Under those measures, Toréns and Kakelmässan were paid only part of their claims against Copperhill. The outstanding balance of the claims was acquired by Invest i Årefjällcn i Stockholm AB (‘Invest’). On 10 August 2010, Invest brought two actions against Mr Koot and Evergreen before the Östersunds tingsrätt. In support of its action against Mr Koot, Invest argued that he was required to compensate it pursuant to Article 18 of Chapter 25 of the Law on limited liability companies. The action against Evergreen was based on a ‘derogation from the principle of limited liability’ and the fact that Evergreen had ‘undertaken’ to pay Toréns and Kakelmässan or to provide Copperhill with the funds necessary to do so. As regards the jurisdiction of the Östersunds tingsrätt to hear the dispute at issue, Invest claimed that the harmful event had occurred in Åre and that the damage was also sustained there. Mr Koot and Evergreen contended that, since they were both domiciled in the Netherlands, that court did not have jurisdiction to hear those disputes. On 26 April 2011, the Östersunds tingsrätt decided to dismiss Invest’s actions on the ground that it did not have jurisdiction to hear the disputes concerned. According to that court, those disputes are not covered either by matters relating to contract nor to matters relating to tort, delict or quasi-delict within the meaning of Article 5(1) and (3) of Regulation No 44/2001. Therefore, in accordance with the general rule laid down in Article 2(1) thereof, those disputes should be brought before the courts of the Member State in which Mr Koot and Evergreen are domiciled. Invest appealed against those decisions before the Hovrătten för Nedre Norrland requesting that that court make a request for a preliminary ruling to the Court of Justice. It then transferred its claims to ÖFAB. The Hovrătten för Nedre Norrland takes the view that, in order to determine the jurisdiction of the Swedish courts to hear the dispute in the main proceedings, it is necessary to interpret Article 5(1) and (3) of Regulation No 44/2001. In that connection, the referring court asks whether those provisions constitute a comprehensive derogation to Article 2 of Regulation No 44/2001 as regards actions for damages, in that Article 5(3) thereof applies if Article 5(1) does not. Furthermore, that court considers that the Court of Justice has not yet determined the issue whether actions seeking to hold a member of the board of directors of a limited company and one of its shareholders liable for the company’s debts, pursuant to Article 18 of Chapter 25 of the Law on limited companies, fall within Article 5(3) of that regulation. As regards the derogation from the principle of limited liability, the referring court states that, according to the case-law of the Högsta domstolen (Supreme Court), the shareholders of a limited company may, in exceptional circumstances, be liable for its debts. Among the factors likely to be relevant in that regard may be unfair or improper conduct by the shareholders, undercapitalisation and the fact that that company did not serve any commercial purpose. In the light of those considerations the Hovrătten för Nedre Norrland decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling: ‘(1) Are Articles 5(1) and 5(3) of [Regulation No 44/2001] to be interpreted in such a way that they constitute a comprehensive derogation from the main rule of Article 2 in compensation disputes? (2) Is the term “matters relating to tort, delict or quasi-delict” in Article 5(3) of [Regulation No 44/2001] to be interpreted in such a way that the provision covers the action of a creditor against a director of a company if the action seeks to hold the director liable for the company’s debts where the director has failed to make formal arrangements to monitor the company’s financial situation and instead has continued to carry on the business of the company and has burdened it with further debts? (3) Is the term “matters relating to tort, delict or quasi-delict” in Article 5(3) of [Regulation No 44/2001] to be interpreted in such a way that the provision covers an action of a creditor against a shareholder of a company if the action seeks to make the shareholder liable for the company’s debts by reason of the fact that he allowed the company to continue to carry on business despite the fact that it was undercapitalised and the company is forced to go into liquidation? (4) Is the term “matters relating to tort, delict or quasi-delict” in Article 5(3) of [Regulation No 44/2001] to be interpreted in such a way that it covers the action of a creditor against a shareholder of a company who has undertaken to discharge a company’s debts? (5) If the answer to [question 2] is in the affirmative, is any harm arising deemed to have occurred in the Netherlands or in Sweden, if the director is domiciled in the Netherlands and the breaches of the board’s obligations relate to a Swedish company? (6) If the answer to [questions 3 or 4] is in the affirmative, is any harm arising deemed to have occurred in the Netherlands or in Sweden if the shareholder in question is domiciled in the Netherlands and the company is Swedish? (7) If either Article 5(1) or 5(3) of [Regulation No 44/2001] are applicable in any of the situations described above, is it of any relevance to the application of those provisions if a claim has been transferred from the original creditor to another person?’ Consideration of the questions referred Questions 1 to 3 By its first three questions, which it is appropriate to examine together, the referring court asks essentially whether ‘matters relating to tort, delict or quasi-delict’ in Article 5(3) in Regulation No 44/2001, must be understood as meaning that it covers actions brought by the creditor of a limited company seeking to hold liable for its debts a member of the board of directors and one of that company’s shareholders, as they have allowed it to continue to carry on business although it was undercapitalised and was forced to go into liquidation. As a preliminary point, it is necessary to examine the argument raised by Mr Koot that the actions brought against him are excluded from the scope of Regulation No 44/2001 pursuant to Article 1(2)(b) thereof, since they are based on provisions of Swedish law according to which limited companies with insufficient capital must be put into liquidation. In that connection, it must be recalled that, according to settled case-law, Article 1(2)(b) of Regulation No 44/2001 excludes from the scope of that regulation only actions which derive directly from insolvency proceedings and are closely connected with them (see, to that effect, Case C-111/08 SCT Industri [2009] ECR I-5655, paragraph 21 and the case-law cited, and Case C-213/10 F-Tex [2012] ECR, paragraph 29). As is clear from the docments submitted to the Court and the submissions made by the Swedish Government at the hearing, the actions in the main proceedings do not constitute insolvency proceedings but were brought after Copperhill had been subject to a company reconstruction order. In any event, it must be held, as the European Commission observes, that those actions do not concern the exclusive prerogative of the liquidator to be exercised in the interests of the general body of creditors, but of rights which ÖFAB is free to exercise in its own interests. Therefore, it must be held that the actions at issue in the main proceedings fall within the scope of Regulation No 44/2001. In order to answer the first three questions, it must be observed that, according to settled case-law, the concepts of ‘matters relating to contract’ and ‘matters relating to tort, delict or quasi-delict’ in Article 5(1) and (3) of Regulation No 44/2001 must be interpreted independently, by reference to its scheme and purpose (see, to that effect, Joined Cases C-509/09 and C-161/10 eDate Advertising and Martinez [2011] ECR I-10269, paragraph 38 and the case-law cited). Second, in so far as Regulation No 44/2001 now replaces, in the relations between Member States, the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (OJ 1978 L 304, p. 36), as amended by the successive conventions relating to the accession of new Member States to that convention (‘the Brussels Convention’), the interpretation provided by the Court in respect of the provisions of the Brussels Convention is also valid for those of the regulation whenever the provisions of those Community instruments may be regarded as equivalent (see, inter alia, eDate Advertising and Martinez, paragraph 39 and the case-law cited). Articles 2 and 5(1)(a) and (3) of Regulation No 44/2001, which are relevant to the case in the main proceedings, reflect the same system as Articles 2 and 5(1) and (3) of the Brussels Convention and are drafted in almost identical terms. In the light of such similarity, it is necessary to ensure, in accordance with recital 19 in the preamble to Regulation No 44/2001, continuity in the interpretation of those two instruments (see, inter alia, Case C-189/08 Zuid-Chemie [2009] ECR I-6917, paragraph 19). Thus, according to settled case-law, the system of common rules of conferment of jurisdiction laid down in Title II of Regulation No 44/2001 is based on the general rule, set out in the first paragraph of Article 2(1), that persons domiciled in a Member State are to be sued in the courts of that State, irrespective of the nationality of the parties. It is only by way of derogation from that fundamental principle attributing jurisdiction to the courts of the defendant’s domicile that Section 2 of Title II of Regulation No 44/2001 makes provision for certain special jurisdictional rules, such as that laid down in Article 5(3) of the Convention (see, to that effect, Zuid-Chemie, paragraphs 20 and 21, and Case C-144/10 BVG [2011] ECR I-3961, paragraph 30 and the case-law cited). The Court has also held that those rules of special jurisdiction must be interpreted restrictively and cannot give rise to an interpretation going beyond the cases expressly envisaged by the regulation (see, to that effect, Zuid-Chemie, paragraph 22 and the case-law cited). Nevertheless, it is settled case-law that the term ‘matters relating to tort, delict or quasi-delict’ within the meaning of Article 5(3) of Regulation No 44/2001 covers all actions which seek to establish the liability of a defendant and which are not related to a ‘contract’ within the meaning of Article 5(1)(a) thereof (see, as regards the interpretation of the Brussels Convention, Case 189/87 Kalfelis [1988] ECR 5565, paragraph 18; Case C-261/90 Reichert and Kockler [1992] ECR I-2149, paragraph 16; Case C-51/97 Réunion européenne and Others [1998] ECR I-6511, paragraph 22; and Case C-334/00 Tacconi [2002] ECR I-7357, paragraph 21). In that connection, it must be observed, first, that the concept of ‘matters relating to contract’ within the meaning of Article 5(1)(a) of Regulation No 44/2001 is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another. Therefore, the application of the rule of special jurisdiction provided for matters relating to a contract in Article 5(1)(a) of Regulation No 44/2001 presupposes the establishment of a legal obligation freely consented to by one person towards another and on which the claimant’s action is based (see, as regards the interpretation of the Brussels Convention, Case C-27/02 Engler [2005] ECR I-481, paragraphs 50 and 51, and Case C-419/11 Česká spořitelna [2013] ECR, paragraphs 46 and 47 and the case-law cited). Second, it is settled case-law that liability in tort, delict or quasi-delict can arise only on condition that a causal connection can be established between the damage and the event in which that damage originates (see, as regards the interpretation of the Brussels Convention, Case 21/76 Bier [1976] ECR 1735, ‘Mines de potasse d’Alsace’, paragraph 16, and Zuid-Chemie, paragraph 28 and the case-law cited). As regards the actions in the main proceedings, it is apparent from the documents submitted to the Court that they aim to call into question Mr Koot’s liability, as a member of the board of directors of Copperhill, pursuant to Article 18 of Chapter 25 of the Law on limited companies and that of Evergreen as a shareholder of that company by virtue of the derogation from the principle of limited liability as developed in the case-law of the Högsta domstolen. As is also apparent from the order for reference, those actions are based not on an undertaking freely consented to by one of the parties to the other, but on the allegation that a member of the board of directors of Copperhill, who did not complete certain formalities intended to monitor the financial situation of that company, and its main shareholder neglected their legal obligations by allowing that company to continue to carry on business even though it was undercapitalised and was forced to go into liquidation. Under the applicable law, that member of the board of directors and that shareholder may, if necessary, be held liable for Copperhill’s debts. While the actions in the main proceedings aim to hold the member of the board of directors and the shareholder liable for Copperhill’s debts, they help first and foremost, the creditors to obtain the payment of claims which, since the member of the board of directors and the shareholder of that company did not fulfill their legal obligations, could not be made in full by that company. In the present case, therefore, those actions seek to compensate the harm resulting from the fact that Toréns and Kakelmässan carried out work for Copperhill without subsequently being able to obtain full payment from that company of the sums owed by it for those works. It follows that the actions in the main proceedings, without prejudging the classification of other actions which may be brought against a member of the board of directors or a shareholder of a company, fall within Article 5(3) of Regulation No 44/2001. In that connection, the Swedish and Greek Governments submit that the classification of the actions in the main proceedings with respect to Article 5(1) and (3) of Regulation No 44/2001, given that those actions seek to establish the liability of a member of the board of directors or a shareholder of a limited company for that company’s debts, should follow the classification of the company’s debts as to whether they are covered by matters relating to contract or matters relating to tort, delict or quasi-delict, as the case may be. That interpretation cannot be accepted. That would have the consequence of multiplying the courts with jurisdiction to hear actions calling into question the same improper conduct by the member of the board of directors or the shareholder of the company concerned, according to the nature of that company’s debts which may be the subject of such actions. In such a situation, the aim of proximity in the rules of special jurisdiction laid down in Article 5(1) and (3) of Regulation No 44/2001, based on the existence of a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred (see, to that effect, inter alia, Case C-381/08 Car Trim [2010] ECR I-1255, paragraph 48 and the case-law cited, and Case C-228/11 Melzer [2013] ECR, paragraph 26 and the case-law cited), preclude the determination of the court having jurisdiction being dependent on the nature of the debts of the company concerned. Furthermore, it must be observed that, as regards a defendant who is held liable for the debts of another, such an interpretation of the rules of jurisdiction laid down in Article 5 of the regulation would not have the degree of predictability required by recital 11 in the preamble thereto. Having regard to the foregoing, the answer to the first three questions is that the concept of ‘matters relating to tort, delict or quasi delict’ in Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that it covers actions such as those at issue in the main proceedings brought by a creditor of a limited company seeking to hold liable a member of the board of directors of that company and one of its shareholders for the debts of that company, because they allowed that company to continue to carry on business even though it was undercapitalised and was forced to go into liquidation. Fourth question By its fourth question, the referring court asks whether the concept of ‘matters relating to tort, delict or quasi-delict’, in Article 5(3) of Regulation No 44/2001, must be understood as meaning that it covers an action brought by a creditor against a shareholder of a company which has undertaken to pay the latter’s debts. In that connection, it must be recalled that it is for the national courts to furnish the Court with the factual and legal information necessary to enable it to give useful answers to the questions referred (Case C-249/97 Gruber [1999] ECR I-5295, paragraph 19, and Case C-177/10 Rosado Santana [2011] ECR I-7907, paragraph 33). As is clear from settled case-law, the need to provide an interpretation of European Union law which will be of use to the national court makes it necessary that the national court should define the factual and legislative context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based (see, inter alia, Case C-134/03 Viacom Outdoor [2005] ECR I-1167, paragraph 22; Case C-145/03 Keller [2005] ECR I-2529, paragraph 29; and Case C-145/10 Painer [2011] ECR I-12533, paragraph 46). In the present case, it must be stated that, as regards its fourth question, the referring court merely states that Evergreen had ‘undertaken’ to pay Toréns and Kakelmässan or to provide Copperhill with the funds necessary in that regard, without setting out the factual circumstances of that ‘undertaking’, the legal basis or the subject-matter of the action brought against the person who gave the ‘undertaking’. In those circumstances, the request for a preliminary ruling does not enable the Court to give a useful interpretation of Article 5(3) of Regulation No 44/2001. Accordingly, the fourth question is not admissible. The fifth and sixth questions By its fifth and sixth questions, which it is appropriate to examine together, the referring court asks essentially whether the concept of ‘the place where the harmful event occurred or may occur’ in Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that, as regards actions seeking to hold a member of the board of directors and a shareholder of a limited company liable for the debts of that company, that place is situated in the Member State where that company has its seat. In order to answer those questions, it must be recalled, first, that, according to settled case-law, the rule establishing special jurisdiction laid down, by way of derogation from the principle that jurisdiction lies with the courts of the defendant’s place of domicile, in Article 5(3) of Regulation No 44/2001 is based on the existence of a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred, which justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings (see, to that effect, eDate Advertising and Martinez, paragraph 40, and Case C-133/11 Folien Fischer and Fofitec [2012] ECR, paragraph 37 and the case-law cited). In matters of tort, delict or quasi-delict, the courts of the place where the harmful event occurred or may occur are usually the most appropriate for deciding the case, in particular on grounds of proximity and ease of taking evidence (see, inter alia, Folien Fischer and Fofitec, paragraph 38 and the case-law cited). Second, the expression ‘place where the harmful event occurred or may occur’ in Article 5(3) of Regulation No 44/2001 is intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the applicant, in the courts for either of those places (see, Folien Fischer and Fofitec, paragraph 39 and the case-law cited). Those two places could constitute a significant connecting factor from the point of view of jurisdiction, since each of them could, depending on the circumstances, be particularly helpful in relation to the evidence and the conduct of the proceedings (eDate Advertising and Martinez, paragraph 41 and the case-law cited). Thus, as regards the actions in the main proceedings, brought by creditors of a limited company against a member of the board of directors and the main shareholder of that company, on the ground that they neglected their legal obligations with respect to that company, the place where the harmful event occurred must have a high degree of predictability for both the applicants and the defendants. Likewise, in those circumstances, there must, as regards the sound administration of justice and the efficacious conduct of proceedings, be a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred. In that connection, it must be observed that, in a situation such as that at issue in the main proceedings, involving actions based on the allegation that a member of the board of directors and Copperhill’s main shareholder have not fulfilled their legal requirements as regards monitoring the financial situation of that company and allowing it to continue to carry on business even though it was undercaptialised and required to go into liquidation, it is not the financial situation or the carrying-on of the business of that company which are at issue per se, but the conclusion to be drawn as regards a possible failure of monitoring by the member of the board of directors and the shareholder. It is clear from the documents submitted to the Court that, in the period in which the disputed facts took place, Copperhill’s seat was in the municipality of Åre within the jurisdiction of the Östersunds tingsrătt, where, in the same period, it carried on its business and built a hotel. In those circumstances, it appears that the activities carried out and the financial situation related to those activities is connected to that place. In any event, the information on the financial situation and activities of that company necessary to fulfill the management obligations by the member of the board of directors and the shareholder should have been available there. The same is true for the information concerning the alleged failure to comply with those obligations. It is for the referring court to ascertain the accuracy of that information. Therefore, the answer to the fifth and sixth questions is that the concept of ‘the place where the harmful event occurred or may occur’ in Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that as regards actions seeking to hold liable a member of the board of directors and a shareholder of a limited company for the debts of that company, that place is situated in the place to which the activities carried out by that company and the financial situation related to those activities are connected. The seventh question By its seventh question, the referring court asks essentially whether the fact that the claim at issue has been transferred from the original creditor to another has, in circumstances such as those in the main proceedings, any impact on the determination of the court having jurisdiction under Article 5(3) of Regulation No 44/2001. In that connection, it should be borne in mind, first, as stated in paragraph 41 of this judgment, that the rules of special jurisdiction laid down in Article 5(3) of Regulation No 44/2001 reflect the aim of proximity and are based on the existence of a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred. A dispute concerning claims relating to ‘tort, delict or quasi-delict’ continues, in principle, to be closely connected to the place where the harmful event occurred, even though the claims at issue have been transferred. Second, it must be observed that to allow the transfer of claims by the initial creditor to have an impact on the determination of the court having jurisdiction under Article 5(3) of Regulation No 44/2001 would also be contrary to one of the aims of that regulation, set out in recital 11 in the preamble thereto, according to which the rules of jurisdiction must be highly predictable. Having regard to the foregoing considerations, the answer to the seventh question is that the fact that the claim at issue has been transferred by the initial creditor to another, in circumstances such as those at issue in the main proceedings, has no impact on the determination of the court having jurisdiction under Article 5(3) of Regulation No 44/2001. 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: 1. The concept of ‘matters relating to tort, delict or quasi delict’ in Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, must be interpreted as meaning that it covers actions such as those at issue in the main proceedings brought by a creditor of a limited company seeking to hold liable a member of the board of directors of that company and one of its shareholders for the debts of that company, because they allowed that company to continue to carry on business even though it was undercapitalised and was forced to go into liquidation. 2. The concept of ‘the place where the harmful event occurred or may occur’ in Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that as regards actions seeking to hold liable a member of the board of directors and a shareholder of a limited company for the debts of that company, that place is situated in the place to which the activities carried out by that company and the financial situation related to those activities are connected. 3. The fact that the claim at issue has been transferred by the initial creditor to another, in circumstances such as those at issue in the main proceedings, has no impact on the determination of the court having jurisdiction under Article 5(3) of Regulation No 44/2001. [Signatures] ( *1 ) Language of the case: Swedish.

MR JUSTICE COLLINS: In February 1991, the claimant pleaded guilty to arson being reckless whether life would be endangered and was sentenced to life imprisonment. The tariff was five years. There was psychiatric evidence which showed that he suffered from a psychopathic disorder. What he had done was to set fire to premises, causing some £800,000 worth of damage, after he had been drinking and possibly smoking cannabis. In 1997, he was transferred from prison to a mental hospital under section 47 of the Mental Health Act 1983. In August 2000, a Mental Health Review Tribunal recommended further treatment but eventually, in November 2002, he was released on a life licence. There were some problems. In August 2005 he had apparently fallen asleep because he had been drinking to excess and he had left some food cooking in the oven and a fire resulted. He was not on that occasion recalled to detention but a warning letter was sent and a condition was imposed that he keep all appointments with the Forensic Psychology Service. On one occasion (I do not have a precise date), I understand that he entered a mental hospital as a voluntary patient for a time but in August 2006 he was detained under section 3 of the Mental Health Act. The problem appears largely to have been drink exacerbating his mental state. In November 2006, he was discharged from the hospital but the probation service requested that an additional condition be placed upon his licence, namely that he should not drink alcohol, and that condition was imposed in January 2007. On 1st February 2007 he was seen by a member of the probation staff to have entered a public house and to be drinking beer. He was staggering and quite clearly was affected by drink. He was seen the next day. He then denied that he had been drinking but the decision was made that he should be recalled and that occurred on 7th February 2007. Following such a recall, there is an obligation upon the Parole Board to consider whether the detention should continue. The Parole Board having been notified, a hearing was fixed for 24th May 2007. That was more than three months after the detention had taken place. He was seen by a consultant psychiatrist and the claimant's solicitors were informed that his mental state was deteriorating whilst he was in custody and so a hearing to consider whether he should be released and whether he should have been recalled should take place earlier rather than later and a psychologist supported that approach, as did the probation officer. There followed correspondence with the Parole Board. On 13th March, the claimant's solicitors wrote to the Parole Board requesting an expedited hearing and they pointed out the concerns which had been expressed by the psychologist and psychiatrist and they included their letters, in which both they and the probation service had recommended the same, and they stated: "We have been notified that Mr Cooper's recall hearing has been set for 24 May 2007. By this time Mr Cooper will have been in detention for over three and a half months. This is well in excess of the policy guidelines in respect of listed recall hearings and we are of the opinion that this delay is unacceptable. Notwithstanding these concerns, we now specifically request that Mr Cooper's recall hearing be expedited in view of his fragile mental state." Ms Young confirmed that she would consider this request and pass it on to her case work manager promptly, Ms Young being the official in the Parole Board who was contacted by the solicitor. The reply on 19th March from the Board said this: "Thank you for your letter dated 13th March requesting the expediting of Mr Cooper's oral hearing. The board received the request to list Mr Cooper's case on the 2nd March 2007 and the case has been listed within our timescale. We also cannot expedite the hearing because of his fragile mental state. Therefore Mr Cooper's hearing will stay as 24 May 2007." The solicitors had in fact written to the Lifer Review and Recall Section on 13th March and in that letter they asked the Home Office to support their approach that the hearing should take place sooner than 24th May. The reply from the relevant department of the Home Office, which was sent to the Parole Board, was in these terms: "I write with reference to the above named recalled life licensee and recent concerns shared with us by Mr Cooper's legal representatives. Mr Cooper's solicitors have provided correspondence from a clinical forensic psychiatrist involved in Mr Cooper's case as well as being in Email correspondence with the supervising probation officer (copies attached). Both parties are supportive of Mr Cooper's case being expedited for an earlier listing date for the reasons as contained within the attached material, probation resources allowing. LRRS [that is the Home Office department, the Lifer Review and Recall Section] would also add their support to such a move if this is at all possible to arrange." In the light of the letter of 19th March, the solicitors on the 20th sent a letter before claim to the Parole Board and, getting no satisfaction, this claim was then lodged with an application for urgent consideration on 22nd March. The claim is based on an alleged breach of Article 5(4) of the European Convention on Human Rights. That provides: "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 his detention is not lawful." It is accepted that the Parole Board is properly to be regarded as a court for the purposes of Article 5(4), it being an independent judicial body which is able to decide on the lawfulness of the detention. The key word for our purposes in Article 5(4) is "speedily". The complaint is that to have a hearing more than three months after the detention cannot be regarded as a hearing which is held speedily. Calvert-Smith J refused permission at an oral hearing on 4th April 2007. He took the view that it was not arguable that in the circumstances of this case the delay was such as to breach Article 5(4) because the case was complex and it was necessary to ensure that the right decision was reached and, of course, the Parole Board had to consider the danger to the public as well as the rights of the individual prisoner. There was an appeal against that decision. Originally there was a refusal by Gage LJ on the papers but, on 19th April, Toulson LJ, at an oral hearing, decided that permission should be granted. Having pointed out that by the time the hearing took place it would not be of great benefit to the claimant because it was obvious that no hearing could take place until very shortly before 24th May (and indeed that has been the position because the hearing is due now next week), in giving his reasons he said this: "I think that there is at least an arguable case that the appellant's state of mental health was a relevant factor for the Parole Board to consider in setting a hearing date compliant with the requirements of Article 5(4). I think that it is at least arguable that the article should be applied in a way that takes into account particular factors affecting the individual, and that would be to read the article in a way which is also compatible with article 8 [Article 8 being the prohibition on interference with private life]. I recognise that there is a contrary view, as expressed by Gage LJ, but it seems to me that the point is at least arguable. It is also a point of some potential importance because the Parole Board has adopted a position on this matter which it will no doubt continue to adopt in other cases, and I think that it is right that the point should be determined." He went on: "The Parole Board also had a second ground for resisting the claim, which was that they could not practically fix the hearing date any sooner without causing trouble to other cases. That may be a valid answer to the claim. It raises the familiar question about the extent to which resources can be a reason for not hearing a case as soon as would otherwise be desirable but, as I read it, this was very much the Parole Board's second string argument. My impression is that the Parole Board in reality simply took the view that the appellant's mental state was irrelevant." The claim thus is based on two main arguments, the first, as I have already indicated, being that the period of over three months was in itself a breach of Article 5(4) and the justification which has been put forward for that period does not suffice to show that it was in the circumstances reasonable to delay for that long. The second point is that, even if, as a general proposition, a period of three months was not to be regarded as excessive because of what had to be taken into account and the paperwork and preparation that was needed for such hearings, nonetheless the Board was required to consider any particular reasons why a case should be expedited. In this case, the mental health of the claimant was said to be deteriorating and indeed there was evidence produced from the medics that that was indeed the case and so the Board should have had a system in place which was sufficiently flexible to enable there to be an earlier hearing, if that was considered desirable. The Board has put in evidence in the form of a statement from a Mr McCarthy, who is the relevant official. He has annexed the Business Plan which sets out the targets applicable for the times within which hearings should take place. What he says in paragraph 7 of his statement is: "The Parole Board Rules do not fix time limits for listing oral hearings in recall cases. However, it is the Board's policy, as set out in its Business Plan for 2007 to list such hearings to take place within 55 working days of a case being referred to it by the Home Office (now the Ministry of Justice). The 55-day target is the maximum time in which the Board has set itself to have cases heard. However, the Board's objective with regard to listing is to have cases heard as soon as is reasonably practicable, and if possible this will be in advance of 55 days from referral. There is no system of listing in place whereby a case is automatically listed 55 days after referral." In fact this case was listed 59 days after referral, so it was just outside the relevant target and, if one looks at the targets, one sees that there is nothing in the plan, certainly nothing in the parts of the plan which have been copied before me, to indicate how those times were reached. The relevant one is number 30 in the list, which indicates that oral hearings to consider representations against recall will be listed to take place within 55 working days, that is to say 11 weeks, and the performance indicator showed that the average success rate in keeping to that was 90 per cent. Mr McCarthy then went on to suggest that the 55-day period was needed in order to carry out the various steps to which he refers. Some of them quite clearly need no time at all, such as fixing a date and providing the prisoner with notice, but others do; for example providing the prisoner with a reasonable amount of time in which to review the dossier and provide written representations; arranging witnesses to attend and ensuring they are available; providing the chair of the panel with the dossier to ensure necessary directions were issued; collect and review additional evidence, and so on. But most of this depends upon the nature of the particular case and the parties because the parties will on the whole produce such evidence as they consider to be necessary and desirable. I recognise that in a case such as this, involving mental health issues, it may be necessary to obtain more evidence than in a case which is merely concerned with the history of the prisoner, what he has done to breach his conditions and assessment of his danger resulting from that. But in this case it was apparent that by 23rd March the claimant's solicitors took the view that they would be ready for a hearing in April. Indeed, they asked that the hearing be round about 13th April. One recognises that Easter came in and had to be taken into account but effectively they were asking for a hearing some five weeks or so before the date that was fixed. Ms Wheeler has drawn my attention to the fact that now there has been put forward a lengthy report from the psychiatrist, who had seen the claimant back in February, and that report is dated 3rd May. That may well be the case because that was obtained when it was known that the hearing was not to be put forward and was due for 24th May and it does not follow that, had the application to advance the hearing been successful, the report would not have been available earlier. But in any event, as Ms Norton, the solicitor, deposes, they were prepared to go ahead without that evidence if necessary because there was supporting evidence from another psychiatrist. Equally, the fact that the Home Office department had concurred with the application for an earlier hearing showed that they were not suggesting that they would not be ready at that material time. So it is apparent that on the facts of this case, and I am bound to say on the facts, I would suspect, of almost any case, a period of 11 weeks is not needed in order to carry out the necessary investigations and prepare properly for a hearing. Mr McCarthy then goes on to deal with the expedition request and he says this, in paragraph 14: "The listing of hearings is not conducted by staff with any specialist medical training and as such the Board is in no position to consider any medical evidence or to make informed judgments concerning the impact of imprisonment on the wellbeing, or otherwise, of individuals recalled to prison by the Secretary of State. Although I have no special expertise, I am aware from my own experience that many prisoners suffer from mental health problems and very few welcome their recall to prison. 15. If the effect of imprisonment on a prisoner were to be a sufficient reason to expedite a hearing, there would be chaos in the system. The listing staff would have to try and determine which cases were most urgent on the basis of medical evidence. They are not trained to do this. It is also likely that this process would result in greater delay and complaints of unfairness. 16. As I understand it, while the Claimant has been in HMP Lincoln, he has received (and continues to receive) the support of the prison mental health in-reach team as well as the support of his community psychiatrist. If his condition were to deteriorate seriously, the Secretary of State has the power to order his transfer to hospital. 17. On 19th March 2007, the Claimant's solicitors also spoke to Mr Paul Garner, Ms John's line manager. Mr Garner had not at this time read any of the correspondence sent to the Board by the claimant on 13th March 2007. However, Mr Garner was very familiar with the listing procedure at the Board and he informed the Claimant's solicitor that it would not be possible to list the Claimant's hearing any sooner than 24 May 2007 in any event due to the lack of available panel members." It is clear from what is there set out that the Parole Board does not have in place any system which enables it to consider applications for a hearing to be advanced. It is true that that is expressed in relation to mental health grounds but the system appears to be a general one because listing was dealt with and only dealt with by untrained administrative staff. Listing in a court is regarded as a judicial function. There is no reason of course why the administration should not fix an initial date provided that the system has been designed to ensure that that fixing is compliant with the law. In many courts other than those dealing with criminal cases there is no particular time within which a case has to be heard. If the matter is urgent that will be because of the individual facts of the case. But the Parole Board is in a somewhat different position because of the requirements of Article 5(4). That applies directly to cases such as this which involve recall of prisoners on licence. It also applies to cases where prisoners have served their tariff and so become eligible for possible parole and in their cases too the authorities show that Article 5(4) is in play. That being so, the Parole Board have a duty to produce a system which ensures that such hearings are dealt with speedily in accordance with Article 5(4). If an application is made that a particular case needs especially speedy consideration, that is a matter which ought to be able to be taken into account. As I say, listing in that context is a judicial function and so it is not appropriate that the matter is left entirely to untrained administrative staff. There should be a system in place which ensures that an application is put, if necessary, before a judge and the necessary decision can be made. I recognise that there will be a burden if every application for a particular expedition has to be dealt with in that way. The answer will be that it is only those cases in which there is some supportive material put forward. It is not enough simply for it to be asserted by a prisoner that he needs a particularly speedy hearing. There must be some basis for that application. In this case, there was a basis because there was produced not only the letters from the doctor and psychologist but also the support of the probation service and of the Home Office. It seems to me that in those circumstances there clearly ought to have been a process available whereby the Parole Board could consider, and properly consider, whether in the circumstances the hearing could be advanced. One of the matters that concerned the Board was that, if this case were advanced, another case would have to be taken out of the list and that comes back to the problem of resources and that is touched on by Mr McCarthy in paragraphs 18 and 19. Particularly 19, but I should read 18 because it follows on from that I have just read. What he says is: "18. The position of the Board regarding requests for expedition is as follows. The Board will consider any request for expedition and the representations made in support of that request. Where possible, if there is a good reason for expedition, the Board will attempt to accede to the request. In the Claimant's case, the information concerning the Claimant's mental health was considered. However, it is felt that the submissions presented no reason to expedite the case ahead of other cases. In any event had the Board considered expedition justified, it would not have been able to do so as there were no panel members available to conduct the hearing ahead of 24 May 2007. The only way in which the Claimant's case could have been heard, had expedition been justified, was if panel members were removed from other listed hearings. This would result in the cancellation of at least one hearing and possibly others if it was not possible to take all three panel members from the same listed hearing." I am bound to say I find that paragraph very unsatisfactory. It is clear that the information concerning this claimant's mental health was not considered. Mr McCarthy has said as much because there was no-one who was in a position to deal with it with any knowledge or experience or training in what it indicated. That is apparent from paragraph 14, which I have already cited. If by "considered" all that is meant is that it was read, then so be it, but that is not, in my view, tantamount to consideration. He then goes on to say, "in any event, even if we had decided that expedition was justified, we could not do it, because there are no panel members available". Alternatively, it would mean another case having to go over and he deals with that problem in paragraph 19 where he says: "The shortage of panel members is, of course, a serious concern to the Board. Each year the Board's workload increases. In 2006 there was an increase of over 30% in the cases handled. Further increases for 2007 have been predicted." Pausing there, it is predicted that the number of recall hearings will roughly double from 110 in 2006/2007 to 200 in 2007/2008. Going back to paragraph 19: "This is due to changes in legislation around sentencing, a rise in the number of recalls and a massive increase in oral hearings brought about, in part, by decisions of the courts. Panel members are appointed by the Secretary of State. However the board has requested additional members in the following categories: two psychiatrists, 14 independent, five probation and as many judicial and psychology members as can be appointed. In the interim, 20 members whose appointments end this summer are, with the agreement of the Ministry of Justice, being invited to re-apply for a further six months. Steps being taken to ease the pressure by the Board itself include the recent installation of a video link at the Board's headquarters in London. Changes to the Parole Board Rules are also being considered to enable more cases to be dealt with by single members. The Board is also reviewing its own processes to see, amongst other things, whether oral hearings should be automatic in determinate sentence recall cases." It is an unfortunate picture. There is no doubt that there is a very much greater pressure upon the Parole Board and that results largely from recent legislation, in particular the Criminal Justice Act 2003 and the sentence of Imprisonment for Public Protection. There are inevitably an increasing number of those sentences being imposed and many of them contain a relatively short tariff period and, following that the Parole Board has to consider whether the individual should be released and that consideration engages Article 5(4). In addition, because of the increase in numbers and because more are released on licence and because of their history of offending, there are more breaches of licence and thus more recalls to prison. I will come back to that when dealing with one argument raised by Ms Wheeler in due course. I should before going further refer to some of the authorities to which my attention has been drawn. The first case to consider is R(C) v London South and West Region Mental Health Review Tribunal [2002] 1 WLR 176. That case, as its title confirms, was concerned with an application to the Mental Health Review Tribunal following the detention of the claimant in hospital and so Article 5(4) was engaged. It was the practice of the Tribunal to set a target date of eight weeks maximum between the application for a hearing and the hearing. The court indicated that that target date was not in itself unreasonable but a practice which made no effort to see that an individual application was heard as soon as was reasonably practicable, having regard to the circumstances of the case, did not meet the requirement of a speedy decision and therefore was unlawful. At paragraph 44, Lord Phillips, Master of the Rolls, as he then was, who gave the only reasoned judgment, referred to decisions of the European Court of Human Rights, in particular in a case called E v Norway 7 EHRR 30, and what the court there said was: "It remains to be established whether these periods comply with the requirement of article 5(4) that decisions be taken 'speedily'. In the court's view, this concept cannot be defined in the abstract; the matter must - as with the 'reasonable time' stipulation in article 5(3) and article 6(I) (see the established case law) - be determined in the light of the circumstances of each case." Lord Phillips said: "It seems to me that the approach of the Strasbourg Court is not compatible with the practice of automatically listing an application for hearing eight weeks after the date of the application, unless it be the case that this is the only practical way of ensuring that individual cases are determined as speedily as their individual circumstances reasonably permit. Furthermore, in considering that question, the Strasbourg Court would not have regard to any alleged constraint of resources. In Bezicheri v Italy [1989] 12 EHRR 210, 215, para 25 the court noted that: 'the Convention requires the contracting states to organise their legal systems so as to enable the courts to comply with its various requirements.'" It is to be noted that Ms Lieven, who appeared on behalf of the Tribunal in that case, had pointed out various matters which she asserted would mean that the period of eight weeks was in fact reasonably required to enable proper information to be put before the Tribunal. At paragraph 54, Lord Phillips said this: 54. Ms Lieven pointed to the requirement that the patient be examined by the medical member of the Tribunal before the hearing (see rule 11). She submitted that this would normally occur after the provision of the statement under rule 6; that is plainly correct. Ms Lieven went on to attempt to paint a picture of a plethora of other activities which might fill the five week gap before the hearing: (a) giving notice of the proceedings to other interested parties (rule 7); (b) instructing representatives (rule 10); (c) disclosure of documents (rule 12); (d) further directions (rule 13)." To these were added the possibility that a patient might be transferred to a new institution and a different Responsible Medical Officer: "56. While these are possible incidents of an individual case, I am not persuaded that they inevitably call for a further period of five weeks or more after the delivery of the statement. The time reasonably needed after delivery of the statement before the hearing can take place is likely to turn very much on the manner in which the patient, and the patient's advisors, will wish to respond to the statement. If they require the patient to have an independent psychiatric assessment, more time will be needed than if they do not. 57. Where, as in the present case, a patient is represented from the outset by solicitors experienced in mental health work who are requesting an early hearing date, I can see no reason why that request should not be capable of accommodation, subject to the exigencies of listing to which I now turn." It seems to me that those observations apply as much as to the situation before the Parole Board as they apply to that before the Mental Health Review Tribunal. There was then consideration of submissions made by Ms Lieven that it would be impossible to arrange dates at shorter notice because members of the Tribunal and the medical officers would have to identify periods of common availability within crowded diaries. Lord Phillips indicated that he was not prepared to accept that without cogent evidence and he made the point that patients detained under section 2 had hearings arranged within seven days. In paragraph 62 he indicated on the facts that the Tribunal had really disposed of the validity of its own argument because the hearing date had been advanced by ten days in order to accommodate a Responsible Medical Officer, which tended to suggest that it was not impractical to fix hearing dates at relatively short notice. Lord Phillips concluded in paragraph 63 that the practice of fixing hearing dates eight weeks after the date of application was bred of administrative convenience not of administrative necessity. There was nothing inconsistent with Article 5(4) in having a target date of eight weeks maximum and the circumstances of some cases might well require eight weeks preparation and if they did there would be no conflict with Article 5(4) but if they did not then there must exist the necessary flexibility to accommodate an earlier hearing. The Court of Appeal considered the question in relation to the Parole Board in R (Noorkoiv) v Secretary of State for the Home Department and the Parole Board [2002] 1 WLR 3284. The precise details of the timings I do not need, I think, to go into because it is the statements of principle that are material, this being a case involving continued detention after the service of the relevant tariff. The lead judgment was given by Buxton LJ. He dealt with the jurisprudence on Article 5(4) and expressly considered the question of the extent to which, if at all, resources were a relevant consideration in dealing with timing of hearings. He referred to E v Norway and Bezicheri v Italy and to R(C) v London South and West Region Mental Health Review Tribunal and went on in paragraph 25 of his judgment to say this: "The fact that the state is dealing with people who are at least presumptively detained unlawfully, and the legality of whose detention is controlled by article 5(4), imposes a more intense obligation than that entailed by the need for a prompt trial of people who are not in custody. I therefore view with some caution in this context cases such as Dyer v Watson [2002] 3 WLR 1488, relied on by the Secretary of State, that address article 6(1). But even there it is conspicuous that Lord Bingham, at paragraph 55 of the judgment, drew a distinction between general faults in or underfunding of the system, which provide no defence even in relation to article 6(1); and 'the practical realities of litigious life even in a reasonably well organised legal system'. I find it hard to characterise the Parole Board's submissions, which are that because of lack of resources they are incapable of improving the system, as appealing to the second of the categories identified by Lord Bingham." Then in paragraph 28, under the heading "Resources and the responsibility of the state", he said this: "The Parole Board lacks resources in terms of judges and psychiatrists because they have not been made available to it by other government departments. Miss Richards agreed, or at least did not formally disagree, that if this matter were proceeding in Strasbourg it would avail her not at all to say that failings on the part of one organ of the state were attributable to other organs of the state. But, she said, the position was different before the domestic courts." He went on to say he recognised the general force of a submission such as that but he did not regard it as a basis for saying that resources should be a defence to any delay. At Paragraphs 30 and 31, he said this: "Mr Noorkoiv was detained by the Secretary of State, who was implementing arrangements made by the state, including the slowness of consideration by the Parole Board forced on it by the limited resources made available to it by the state. The Secretary of State cannot therefore excuse any failing under article 5(4) by pointing to policies adopted by other departments; nor, I am constrained to say, should he seek to do so." Pausing there, of course it is not another department now, it is the Ministry of Justice who is responsible for the system as a whole and the Home Office does not now come into the picture, but that makes no practical difference. In 31, Buxton LJ continued: "31. This aspect of the matter was not put to Dyson J in R v Secretary of State for the Home Department, Ex p Norney [1995] 7 Admin LR 861, a case on which some reliance was placed by the Secretary of State; nor was it put to Henriques J. It did not feature in the case until Mr Gledhill appeared on the scene. But in the context of the prohibition on reliance on under-resourcing that is referred to in paragraph 24 above, I see no answer to the argument that the Parole Board and the Secretary of State cannot excuse delays that would otherwise be in breach of article 5(4) simply by pointing to a lack of resources that are provided by other arms of government." Simon Brown LJ gave an concurring judgment in which he accepted that the scheme then applied by the Parole Board was not properly compliant with Article 5(4) and he said: "Given the imperative need to release from prison any post-tariff prisoner who no longer remains a danger, (not least in these days of acute prison overcrowding), any system tending to delay such release (as the Parole Board's present system does) requires the most compelling justification. Although by no means unsympathetic to the Parole Board's difficulties, at the end of the day I am not persuaded that any such compelling justification exists, or at any rate that it need continue to exist. Further resources must be found. No less importantly, the Parole Board must devise a new system for pre-tariff expiry date hearings, which amongst other things will ensure, consistently with their statutory duty under section 28(5)(b), that they do not direct the release of a tariff-expired prisoner unless indeed at the date of that direction they are satisfied, as required by section 28(6)(b), that it is safe to do so. It can be done. As soon as reasonably practicable it now should be done." That case was directed to an expiring of tariff but the principal is precisely the same in relation to recall cases. If the recall was not justified, if the prisoner is not a danger to the public, then it is the same imperative that he/she should be released as soon as possible and, of course, problems of prison overcrowding are now more acute than they were in 2002 when this decision was reached. Ms Wheeler rightly accepted that Article 5(4) meant that a hearing had to be held as soon as reasonably practicable. It is, of course, important that proper information is before the Board since it is concerned to ensure that someone who is dangerous is not released but, equally, that a person who is not dangerous should not continue to be detained. Therefore detention must be clearly justified. Particularly where mental health problems have led to the offending, it is in a prisoner's interest, as well as that of the public, that he should not be released if it is unsafe to do so. This may mean that time has to be taken to ensure that all material information is available. It is therefore not possible to say that X weeks is a limit applicable to all cases. Each will need consideration on its own facts. However, the European Court of Human Rights has tended to say that even relatively short periods of delay require justification and the justification will clearly be more easily established the shorter the delay. I have no doubt that to wait for 55 working days or 11 weeks, nearly three months (and in fact in this particular case over three months), is prima facie not to provide a hearing speedily. Such a delay requires justification. I have considered whether a method can be applied to fix a period which is to be regarded as generally acceptable so as to provide a proper target date. It must not be based on administrative convenience or dictated by resource problems. The Board has experience in dealing with recall cases and should be able to assess what time is needed in an average case before the parties are likely to be ready for a hearing. That surely will provide a good starting point for a target if targets are desirable and if the practice is (and I do not criticise it) to fix a hearing date when a request for a hearing is lodged, that should be the maximum time considered appropriate. The problem with targets is that they tend to be regarded, particularly where there is pressure on the tribunal in question, as the period within which it would be appropriate to fix a hearing and inevitably the period is likely to be towards the limit of that target. If there are likely to be any complications which mean a longer time is needed, or reasons for an earlier hearing, it would no doubt be helpful for the parties, or one or other of them, when the application is made, to draw attention to those possible difficulties. Equally, I have no doubt that the target period of 55 days was not chosen as a result of any such exercise. It was driven by the business plan, which itself was driven by the ability to meet the relevant target and that ability clearly depended upon resources. Indeed, it is to be noted that 90 per cent compliance had been achieved. Another case to which I have been referred was a decision of Stanley Burnton J in a number of cases heard together against a Mental Health Tribunal under the title of MK and others. I have a copy from Westlaw but the neutral citation number is [2002] EWHC 639 Admin At paragraph 47 of his judgment, Stanley Burnton J said this: "47. In my judgment, the correct approach in a case that raises issues of this kind is, first, to consider whether the delays in question are, on the face of it, inconsistent with the requirement of a speedy hearing. If they are, the onus is on the State to excuse the delay. It may do so by establishing, for example, that the delay has been caused by a sudden and unpredictable increase in the workload of the tribunal, and that it has taken effective and sufficient measures to remedy the problem. But if the State fails to satisfy that onus, the claimant will have established a breach of his right under Article 5.4." This led Ms Wheeler to suggest that the increase in the work load of the Board was sudden and unpredictable and that approach could be relied on. That, I am afraid, I find impossible to accept. The inevitable result of the 2003 Act was that there would be more sentences which involve the Parole Board. The Government got Imprisonment for Public Protection provisions passed by Parliament. It is in the circumstances the obligation of the Government to have provided the necessary resources for what was clearly a predictable and indeed inevitable increase in the workload of the Parole Board. I am satisfied that there was a failure in the circumstances to comply with Article 5(4) in that the hearing, due on 24th May, has not been held speedily. Furthermore, as the Court of Appeal in C made clear, it was not proper to adopt a period which cannot be altered. Listing of cases is, as I have said, a judicial function and mental health issues, just as physical health issues, are capable of justifying a speedier hearing, provided, of course, that there is proper support for the claim in a particular case. So far as the suggestion that the mental health deterioration can be dealt with by transfer to hospital under section 47 if necessary is concerned, why should, I ask myself, a prisoner be required to wait until his condition reaches such a state as justifies such a transfer? It can only be made if he would qualify for detention in a hospital in accordance with section 3 of the Act. Furthermore, it would surely be to his prejudice as far as prospects of release are concerned if his mental health had deteriorated to such an extent that the Board could not be satisfied that he was not likely to be a danger. There would therefore be clear prejudice, in my view, to him if in circumstances such as this he were to remain in custody longer than was necessary. I would add that concern has been expressed that even now the Board has not indicated that it is certain that the hearing will take place on 24th May. Apparently the judge who is lined up to hear it is involved in a criminal case which is expected to go short. That may happen but there is a danger, as I understand it, that it will not and in the circumstances the Board was unable to give any guarantee that the hearing would take place on 24th May. Mr Southey pointed out that, if the claimant was to be released, he would need somewhere to live and the accommodation available to him will be lost if he does not take it up before 13th June, so any delay would be highly prejudicial. In any event, as I have already decided, the hearing date of 24th May is itself a breach of Article 5(4). There must therefore be no further delay and the hearing must take place on 24th May, obviously unless there is some unforeseeable circumstance that arises in the meantime, although I cannot see that that is likely to happen. Accordingly, for the reasons I have given, as I have said, I have no doubt that the present approach of the Board is one which cannot be justified and, insofar as there is a problem with resources, that must be faced by the Government and the necessary resources must be provided to enable the Board to carry out its functions in a manner which complies with the obligations of the law and, in particular, Article 5(4) of the European Convention on Human Rights. The claim was for a declaration but, as I indicated yesterday in argument, it did not seem to me that a specific declaration was needed because the terms of the judgment spoke for themselves. However, I indicated that I was prepared to enable both sides to consider this judgment and if either desired a declaration in any particular form then they should put before me in writing such a declaration and I would consider whether it should be granted. Furthermore, Ms Wheeler indicated that those instructing her would like to consider the judgment before deciding whether they would seek leave to appeal and, since I have indicated that I am prepared to provide time to enable there to be consideration of whether a declaration should be requested, it seems to me that I will allow the same time to enable the defendant to decide whether an application is to be made. If it is so decided, then initially it should be made in writing, a copy to the other side, with a view to my considering whether leave should be granted in writing. There is a claim for damages. So long as lack of proper resources leads to cases not being heard speedily, there will be a breach of Article 5(4) and so damages may be payable. Such a situation is clearly unacceptable. So far as this case is concerned, the amount of any damages recoverable (if any) is likely to be influenced by the decision which is to be made by the Board on 24 May. Even if it decides that the recall was proper and the claimant should be released, there may be a claim based on the adverse effect on his health of the delay. And if it can be established that the decision not to release him resulted from his poor mental state itself caused by the delay the damages may be substantial. In all the circumstances, I think I should, at least for the time being, retain the damages claim to be dealt with (if it has to be determined) by me or a judge of the Administrative Court. If a claim is to be pursued, I shall consider in the light of the issues that need to be decided whether it should continue to be dealt with by a judge of the Administrative Court or it should be remitted to be heard by a Master. Ms Wheeler, the sensible thing is for me to say that the time for making any application and for dealing with the matter should run from when you receive a copy of the transcript. MS WHEELER: I am grateful, my Lord. MR JUSTICE COLLINS: I shall be away for three weeks at the end of next week so what will be done is that the draft transcript will be put before me next week so you will get it, I hope, by the end of next week at the latest. Since I am away then for three weeks, you have three weeks between you in which to consider the question of any declaration and any leave to appeal. MS WHEELER: That sounds more than adequate. MR JUSTICE COLLINS: Because obviously the urgency has gone out of it, so far as this individual case is concerned. Ms Wheeler, I do not know whether those instructing you are aware of a case called Durrant v Parole Board. It happened I was given the papers this morning. I have not had a chance, really, to look at them but it seems to raise much the same point, does it not? MS WHEELER: Your Lordship, I think there are a number of cases, as we indicated yesterday in argument, and I think a inevitable process will be to draw together those pending cases and have them considered at the same time, how they are to dealt with. MR JUSTICE COLLINS: Durrant appears to be a case where there is a six-month delay for various reasons and the application is that the hearing at the moment fixed for 26th June should be brought forward. I do not expect you to be able to deal with it immediately but, in the light of the judgment I have just given, I would on the face of it, subject to checking the actual facts, be rather sympathetic to any such order. MS WHEELER: Certainly my instructing solicitor had considered that it does appear a time has come to draw together these different cases. We certainly take account of what your Lordship has said in this particular case and, of course, that will also inform the decision about whether or not to seek leave to appeal and, if so, on what basis. So I am grateful to your Lordship for drawing attention to that. MR JUSTICE COLLINS: But in the meantime, obviously, I shall have to consider this later today and decide whether some sort of peremptory order is appropriate but in the meantime, in the light of my judgment, I think it would be sensible if you could ask the Parole Board to see whether it is possible to make some arrangements in Durrant. As I say, I have not -- at least to investigate the possibility of making some arrangements. It may be that there are good reasons why they should not be. As I say, I have not had a chance to look at the papers in detail. MS WHEELER: Your Lordship, certainly for my part I am not at all familiar with the case but I would certainly pass on your Lordship's comments -- MR JUSTICE COLLINS: I only received it at quarter past ten this morning, so I obviously have not had a chance to look at it. Thank you both. There is nothing else, I think, that we need deal with? I should say there be an order of costs in favour of the claimant and the usual order in relation to legal aid, namely detailed assessment if not agreed. Thank you very much.

ALTAMAS KABIR,J. The appellant entered into an agreement with the State of Kerala on 10th October, 1985 whereunder he was entrusted with the companystruction work of the Chavara Distributory from Ch.7440M to 9440M and 10475M to 14767M. Disputes having arisen between the parties, the matter was referred to arbitration. The Superintending Engineer, Siruvani Project, Palghat, .the designated Arbitrator in terms of the companytract, was appointed as the sole Arbitrator. By his award, which was published on 2nd September, 1989, the Arbitrator awarded a total sum of Rs. 42,21,000/- with 12 interest per annum from the date of the award. Upon the passing of the award the appellant herein filed O.P. Arb. 40/89 in the companyrt below under Section 17 of the Arbitration Act for passing a decree in terms of the award. The State of Kerala filed a petition under Section 30 of the Act challenging the award and for setting aside the same. The application filed by the State was dismissed and aggrieved thereby the State of Kerala preferred an appeal in the High Court of Kerala at Ernakulam, being MFA No. 980 of 1990 C. The appellant herein raised claims under 12 different heads but the Arbitrator allowed only claims a , e , g , i and k . Although, in the memorandum of appeal, the entire award in favour of the appellant had been challenged, but the arguments were addressed only with regard to claims under heads a , g , i and k . A preliminary objection was raised in the appeal that the Superintending Engineer, who had been appointed as the Arbitrator and had entered on the reference, had been suspended from service for gross mal-practice, and the Government had informed all companycerned that the Arbitrator was number to companytinue with the reference. The Arbitrator retired on superannuation while he was under suspension and the award was made after his retirement. According to the State of Kerala, in the circumstances, the award passed by the Arbitrator was without jurisdiction. The aforesaid objection being preliminary in nature, the same was taken up first for companysideration and it was held by the High Court that such an objection was without any merit. The Arbitrator, who was working as Superintending Engineer was placed under suspension on 31st May, 1989. As per an agreement between the parties on 14th February, 1989, the time for making and publishing the award was extended upto 14th June, 1989. Even after the Arbitrator was suspended from service, both sides had agreed on 14th June, 1989 to extend the time further for making and publishing the award upto 14th October, 1989. The Arbitrator retired from service while under suspension on 30th June, 1989. In the light of the said facts, the High Court agreed that the companyrt below companyld number revoke the authority of the Arbitrator, which companyld only be done under Section 5 of the Arbitration Act, with the leave of the Court. Accordingly, the preliminary objection raised on behalf of the State of Kerala that the Arbitrator had numberauthority to companytinue with the arbitration after his suspension or retirement, was rejected by the High Court. Claim a of the appellant herein involved the claimants entitlement to get companypensation for interruption of work by anti-social elements and failure of the Department in removing such miscreants from the sites which caused the claimant heavy financial losses by way of idle men and machinery, plant and equipment. The claim made under the aforesaid head was for a sum of Rs.11,40,000/-. The Arbitrator was satisfied that there was interruption of work by anti-social elements and that the State had failed to remove such obstruction from the site. Accordingly, the Arbitrator awarded a sum of Rs. 7,30,000/- under this claim. Claim g was companyfined to the question as to whether the claimant was entitled to companypensation for the losses suffered by him on account of price escalation of materials that had taken place during the extended period of companypletion when such extension of time was necessitated by departmental failure, although there was numberprovision for escalation of companyts in the companytract. Under the said clause the appellant claimed an amount of Rs.39,90,198/- but was awarded a sum of Rs.11,70,000/- over and above the amount as per the rates in the agreement for the work done after the original period of companytract till 9th February, 1987. Claim i was companyfined to the question regarding the claimants entitlement for companypensation for the losses purported to have been suffered by him because the Department was unable to hand over a suitable quarry which resulted in the claimant having to bring rubble and metal from far off places involving additional transportation companyts. The Arbitrator came to a positive finding that the claimant had procured rubble from quarries situated at different places. According to the initial estimate, the quarry ought to have been within 25 Kms. from the place of work, but from the evidence it would be clear that the nearest quarry from which the claimant had to procure rubble would be about 47 Km. away from the site of the work. The other quarries were even further away from the work site. It was the definite finding of the Arbitrator that the average extra lead involved would be number less than 22 Kms. and accordingly while the claimant had claimed a sum of Rs.24,86,574/-, the Arbitrator awarded a sum of Rs.13,35,000/- under this head for the work executed up to 9th February, 1987. The other claim which was pressed by the appellant was claim k relating to losses suffered by him on account of number-availability of a suitable dumping yard for dumping excess earth. While a claim for a sum of Rs.13,72,554/- was made in this regard, the Arbitrator awarded a sum of Rs.6,62,000/- under this head. The agreement relating to the handing over of the site to the claimant was executed on 10th October, 1985 and on 25th October, 1985, the respondents instructed the claimant to start the work and to companyplete the same within the agreement period of eleven months. However, while the period of companypletion of eleven months for the whole work was to expire on 24th September, 1986, the same companyld number be companypleted on the scheduled dates and under clause 50 of the General Conditions of Contract extension of time was sought by the appellant for companypleting the work. Clause 50 of the General Conditions of Contract provides that if failure to companyplete the work was the result of delays on the part of Government in supplying materials or equipment it had undertaken to supply under the companytract or from delays in handing over sites or from increase in the quantity of the work to be done under the companytract or force majeure, an appropriate extension of time would be given. Finding that the said clause was operative, the respondents extended the time of companypletion but while doing so made it companyditional that such extension of time would be subject to execution of a Supplemental Agreement to the effect that the companytractor would number be eligible for any enhanced rate for the work done during the extended period. According to the appellant, he had numberoption but to sign the agreement, though under protest, since he had undertaken to companyplete the work. The appellant appears to have moved to the site and companymenced the work on 1st November, 1985 but he was number allowed to proceed with the work because of external interference involving law and order problems created by local miscreants and anti-social elements under companyer of union activities. Although, initially such a claim was denied on behalf of the respondents and the law and order situation was said to be only a labour dispute between the claimant and his workers, ultimately from the evidence the Arbitrator came to the finding that the issue was one of law and order which companyld only have been companytrolled by the Governmental agencies. The Arbitrator also came to a finding that in order to maintain peace at the work site, the claimant had to keep the entire local work force in the muster rolls and to pay wages when the actual work was done with bull dozers. The Arbitrator was satisfied that although the claimant had aimed to companyplete the work within the original period, he was faced with adverse site companyditions which are number usually met with at companystruction sites. The Arbitrator was also satisfied with the claimants companytention that adequate space had number been provided for dumping the excess earth which had to be companyveyed to distant places for dumping. On assessment of the evidence and the ground realities under which the claimant was companystrained to execute the Supplemental Agreement, the Arbitrator was companyvinced that the claim made by the claimant under the different heads companyld number be brushed aside. Apart from the preliminary objection taken with regard to the companypetence of the Arbitrator to companyplete the arbitration proceedings and to publish his award, it was also companytended before the Arbitrator that the State had numberresponsibility in settling the disputes between the claimant and his employees and it was really due to the number-cooperation of the claimant that a settlement companyld number be arrived at with the workers. It was companytended that under such circumstances claim a companyld number be granted. It was also companytended that there was numberprovision in the Agreement by which the Department companyld be made liable to companypensate any loss sustained by the companytractor because of intervention of third parties. It was companytended that it is one thing to say that the State is responsible for maintaining law and order and on the other hand to make the State liable under the terms of the Agreement to companypensate the companytractor for losses allegedly suffered during the period of disturbance. On companysideration of the case made out on behalf of the respective parties, the Arbitrator made his award in respect of each of the several heads of claims on the losses actually suffered by the appellant while trying to carry out and companyplete the tender work. The Arbitrator filed his award before the Subordinate Judge, Kottarakkara, on which a decree was passed in terms of the award but modifying the appellants claim for interest. The respondents preferred an appeal to the High Court of Kerala at Ernakulam. The stand taken before the Arbitrator was reiterated by the parties before the High Court of Kerala at Ernakulam in the said appeal. In addition, arguments were addressed on the scope of interference by the High Court in an award passed by the Arbitrator, which award was a speaking award. On looking into the Agreement, the High Court was of the view that the Arbitrator had exceeded his jurisdiction in granting claim a . The High Court felt that the Arbitrator had travelled outside the Agreement and had acted without jurisdiction in granting such claim. Even in respect of claim g , the High Court took numbere of the fact that by virtue of the Supplemental Agreement which had to be executed for extension of the original period of companypletion of the work, the appellant herein was number entitled to enhanced rates during the extended period. In respect of claim g also, the High Court found that the Arbitrator had travelled outside the terms of the companytract and had miscompanyducted himself. Admittedly, the original Agreement did number companytain a clause for escalation of rates. On the other hand, the Supplemental Agreement companytained a specific provision that the companytractor would carry out all further works within the extended period at the rates and in the manner agreed to in the Agreement and would number claim any enhanced rate for such item of work on account of the extension of time either due to the increase in the rate of labour or materials or on any other ground whatsoever. The High Court took the view that although the Arbitrator had companye to a finding that the appellant had to execute the Supplemental Agreement under the force of circumstances, there was numbermaterial before the Arbitrator in support of such companytention. On such finding also, the High Court held that the Arbitrator had acted beyond his jurisdiction in allowing claim g . The award of the Arbitrator against claim i also met the same fate and the High Court held that the Arbitrator had travelled outside the companytract in granting such claim and thus mis-conducted himself. The only claim which was allowed by the High Court was claim k . The High Court accordingly set aside the judgment and decree of the companyrt below to the extent it affirmed the award as far as claims a , g and i are companycerned. The said order of the High Court is the subject-matter of the present appeal. Appearing for the appellant, Mr.Dushyant Dave, learned senior advocate, urged that the High Court while reversing the award under claims a , g and i had failed to take into companysideration the finding of the Arbitrator that the appellant had suffered heavy losses on account of the law and order problem which had been created at the work site and that he had been companypelled to companyplete the work under duress. Reference was made to the letter dated 7th September, 1985 addressed by the appellant to the Superintending Engineer, I.P. RB Circle, Kottarakkara, regarding extension of time to companyplete the work under tender with the hope that the Department would reciprocate his gesture and companysider the special circumstances under which he had given his companysent for extension of the period for companypletion of the work. Reference was also made to another letter dated 24th September, 1986 written by the appellant to the said Superintending Engineer informing him of the problems that were being faced for companypletion of the work and requesting that his accounts be settled and that he be freed from the entanglements. The last letter referred to by Mr. Dave was written by the appellant to the said Superintending Engineer on 30th September, 1986 indicating that he was carrying out the work despite all the difficulties although the same was number a solution to the genuine problems being faced by him as indicated in the earlier letters. It was urged that having regard to the ground realities, it was within the powers of the Court to grant relief on account of escalation of companyts in interrupted projects, although there may number be any specific provision for such escalation in the companytract itself. In support of his submissions, Mr. Dave firstly referred to the decision of this Court in P.M. Paul vs. Union of India, 1989 Supp. 1 SCC 368, wherein a dispute arose regarding payment of escalated companyts. By an order of this Court, the dispute between the parties was referred to a retired Judge of this Court to ascertain who was responsible for the delay in companypletion of the building, what was the repercussions of the delay and how the companysequences were to be apportioned. It had been companytended therein that in the absence of any escalation clause it was number permissible for the Arbitrator to grant any escalation price sought by the companytractor. The Arbitrator, however, numbered that the claim related to the losses caused due to increase in prices of materials and companyts of labour and transport during the extended period of the companytract and accordingly allowed 20 per cent of the companypensation sought. The question before this Court was whether the Arbitrator had travelled beyond his jurisdiction in awarding escalation companyts and charges. This Court came to a finding that the Arbitrator had number mis-conducted himself in awarding the amount as he had done. Once it was found that there was delay in execution of the companytract due to the companyduct of the respondent, respondent was liable for the companysequences of the delay, namely, increase in prices. It was held that the claim was number outside the purview of the companytract and arose as an incidence of the companytract and the Arbitrator had jurisdiction to make such award. Reference was then made to the decision of this Court in P. George vs. State of Kerala And Anr., 2001 2 SCC 758, where a similar situation arose and the companytractor was companypelled to execute a Supplemental Agreement. Although, a question was raised as to whether the Supplemental Agreement debarred the companytractor from pursuing his claims, the Arbitrator allowed the claims which were however set aside by the High Court. This Court in appeal held that the High Court had erred in setting aside the award regarding those claims numberwithstanding the fact that the Supplemental Agreement had been executed between the appellant and the State Government. The grant of interest by the Arbitrator, which had been disallowed by the High Court, was also allowed by this Court. Mr. Dave companytended that even in the absence of any escalation clause, if it is found that the escalation of companyts had been occasioned by circumstances which were number anticipated at the initial stage and was attributable to the respondents, there was numberreason why the Arbitrator companyld number take numberice of the ground reality and to award escalation companyts. It was urged that had the respondents provided for the rubble to be obtained for the work from the quarry at Mannady, the appellant would number have had to bear the extra transportation charges for bringing such rubble from far away quarries. The same applied to providing a suitable place for dumping of excess earth and the failure of the respondents to maintain the law and order problem that had been created at the site. The submissions advanced on behalf of the appellant were strongly opposed on behalf of the State Government with particular reference to the award in respect of claims a and g since the Original Agreement did number provide for such escalation and the Supplemental Agreement which had been executed clearly stipulated that numberextra rates would be allowed. It was companytended that the Department had never failed to perform its companytractual obligations, and, in any event, the delay in companypleting the work was number on account of any neglect on the part of the State but on account of labour trouble involving the appellant and his workmen at the site. Mr. Jayant Muth Raj, who appeared for the State, companytended that as had been observed by this Court as far back as in 1960 in M s. Alopi Parshad Sons Limited vs. The Union of India, reported in 1960 2 SCR 793, provision for payment of charges at rates specified had been made in the companytract and the arbitrators companyld number ignore the express companyenants between the parties and award amounts number agreed to be paid. It was observed further that a companytract is number frustrated merely because the circumstances in which it is made is altered and that the Courts have numbergeneral power to absolve a party from the performance of his part of the companytract merely because its performance has become onerous on account of an unforeseen turn of events. According to Mr. Muth Raj the award made in the instant case companyld number also be justified on the basis of quantum meruit since such a companycept would be applicable when services are rendered but the price thereof is number fixed by a companytract. Mr. Muth Raj also referred to various other decisions of this Court, including the decision in State of U.P. vs. Patel Engg. Co. Ltd. And Ors., reported in 2004 10 SCC 566, where a question arose as to whether on the basis of a modified companytract which specifically excluded payment of freight charges, claims for variation in payment of such charges companyld be awarded by the arbitrator. It was held that the arbitrators had exceeded their jurisdiction in awarding freight charges in respect of steel and handling transportation charges and that the District Judge had rightly held that the same was number sustainable inasmuch as the claimant was number entitled to such freight charges. It was urged that when numberprovision had been made in the companytract for escalation of companyts and the Supplemental Agreement entered into between the parties specifically provided that the companytractor would number claim any enhanced rate for the work performed during the extended period of the companytract, the Arbitrator had wrongly allowed some of the claims made by the appellant on account of escalation of companyts and the High Court had rightly disallowed the same. The question which we are called upon to answer in the instant appeal is whether in the absence of any price escalation clause in the Original Agreement and a specific prohibition to the companytrary in the Supplemental Agreement, the appellant companyld have made any claim on account of escalation of companyts and whether the Arbitrator exceeded his jurisdiction in allowing such claims as had been found by the High Court. Ordinarily, the parties would be bound by the terms agreed upon in the companytract, but in the event one of the parties to the companytract is unable to fulfil its obligations under the companytract which has a direct bearing on the work to be executed by the other party, the Arbitrator is vested with the authority to companypensate the second party for the extra companyts incurred by him as a result of the failure of the first party to live up to its obligations. That is the distinguishing feature of cases of this nature and M s. Alopi Parshads case supra and also Patel Engg.s case supra . As was pointed out by Mr. Dave, the said principle was recognized by this Court in M. Pauls supra , where a reference was made to a retired Judge of this Court to fix responsibility for the delay in companystruction of the building and the repercussions of such delay. Based on the findings of the learned Judge, this Court gave its approval to the excess amount awarded by the arbitrator on account of increase in price of materials and companyts of labour and transport during the extended period of the companytract, even in the absence of any escalation clause. The said principle was reiterated by this Court in T.P. Georges case supra . We have intentionally set out the background in which the Arbitrator made his award in order to examine the genuineness and or validity of the appellants claim under those heads which had been allowed by the Arbitrator. It is quite apparent that the appellant was prevented by unforeseen circumstances from companypleting the work within the stipulated period of eleven months and that such delay companyld have been prevented had the State Government stepped in to maintain the law and order problem which had been created at the work site. It is also clear that the rubble and metal, which should have been available at the departmental quarry at Mannady, had to be obtained from quarries which were situated at double the distance, and even more, resulting in doubling of the transportation charges. Even the space for dumping of excess earth was number provided by the respondents which companypelled the appellant to dump the excess earth at a place which was far away from the work site entailing extra companyts for the same.

J U D G M E N T Arising out of S.L.P. C No. 881 of 2006 Dr. ARIJIT PASAYAT, J. Leave granted. Appellant calls in question legality of the judgment rendered by a Division Bench of the Punjab and Haryana High Court dismissing the Writ Petition filed by the appellant on the ground that it was highly belated. It was numbered that appellant was out of service in the year 1983 and the writ petition was filed in 2005. Appellants case in a nutshell is as follows Appellant was enrolled in Army Medical Corps, Lucknow in September, 1965. In 1982 he suffered from medical problem of weak eyesight and he became almost 80 disabled, despite being getting the treatment. Therefore, he was placed under low medical category by the Medical Board. He was relieved from the service being invalidated out of service. In 1983 appellant claimed disability pension for the 80 disability. It was rejected by the Chief Controller of Defence Accounts Pension , Allahabad. Appellant claims that he had filed appeal before the appellate authority but there numberreply was given. Since there was numberintimation regarding any order in the appeal, he filed the writ petition in 2005. His prayer was for grant of disability pension. The High Court dismissed the writ petition. In support of the appeal, learned companynsel for the appellant submitted that the High Court should have numbered that the claim for pension provides for companytinuing cause of action. As the appellant had number received any intimation regarding the result of the appeal, he ultimately filed the writ petition. Learned companynsel for the respondents on the other hand submitted that the writ petition was highly belated. In fact, the original order itself indicated the reason for dishonouring the claim. The appeal was dismissed in August 1985 and due intimation was given to the appellant about rejection of his appeal. He cannot take advantage of his own lapses and laches. Normally, in the case of belated approach writ petition has to be dismissed. Delay or laches is one of the factors to be borne in mind by the High Courts when they exercise their discretionary powers under Article 226 of the Constitution of India, 1950 in short the Constitution . In an appropriate case the High Court may refuse to invoke its extraordinary powers if there is such negligence or omission on the part of the applicant to assert his right as taken in companyjunction with the lapse of time and other circumstances, causes prejudice to the opposite party. Even where fundamental right is involved the matter is still within the discretion of the Court as pointed out in Durga Prasad v. Chief Controller of Imports and Exports and Ors. AIR 1970 SC 769 . Of companyrse, the discretion has to be exercised judicially and reasonably. What was stated in this regard by Sir Barnes Peacock in Lindsay Petroleum Company v. Prosper Armstrong Hurd etc., 1874 5 P.C. 221 at page 239 was approved by this Court in The Moon Mills Ltd. v. M.R. Meher, President, Industrial Court, Bombay and Ors. AIR 1967 SC 1450 and Maharashtra State Road Transport Corporation v. Balwant Regular Motor Service, Amravati and Ors. AIR 1969 SC 329 , Sir Barnes had stated Now the doctrine of laches in Courts of Equity is number an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy either because the party has, by his companyduct done that which might fairly be regarded as equivalent to a waiver of it, or where by his companyduct and neglect he has though perhaps number waiving that remedy, yet put the other party in a situation in which it would number be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, if founded upon mere delay, that delay of companyrse number amounting to a bar by any statute of limitation, the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases are, the length of the delay and the nature of the acts done during the interval which might affect either party and cause a balance of justice or injustice in taking the one companyrse or the other, so far as relates to the remedy. It was stated in State of M.P. v. Nandlal Jaiswal and Ors. AIR 1987 SC 251 , that the High Court in exercise of its discretion does number ordinarily assist the tardy and the indolent or the acquiescent and the lethargic. If there is inordinate delay on the part of the petitioner and such delay is number satisfactorily explained, the High Court may decline to intervene and grant relief in exercise of its writ jurisdiction. It was stated that this rule is premised on a number of factors. The High Court does number ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause companyfusion and public inconvenience and bring in its train new injustices, and if writ jurisdiction is exercised after unreasonable delay, it may have the effect of inflicting number only hardship and inconvenience but also injustice on third parties. It was pointed out that when writ jurisdiction is invoked, unexplained delay companypled with the creation of third party rights in the meantime is an important factor which also weighs with the High Court in deciding whether or number to exercise such jurisdiction. It has been pointed out by this Court in a number of cases that representations would number be adequate explanation to take care of delay. This was first stated in K.V. Raja Lakshmiah v. State of Mysore AIR 1967 SC 993 . There is a limit to the time which can be companysidered reasonable for making representations and if the Government had turned down one representation the making of another representation on similar lines will number explain the delay. In State of Orissa v. Sri Pyarimohan Samantaray, AIR 1976 SC 2617 making of repeated representations was number regarded as satisfactory explanation of the delay. In that case the petition had been dismissed for delay alone. See State of Orissa v. Arun Kumar AIR 1976 SC 1639 also . In the case of pension the cause of action actually companytinues from month to month. That, however, cannot be a ground to overlook delay in filing the petition. It would depend upon the fact of each case. If petition is filed beyond a reasonable period say three years numbermally the Court would reject the same or restrict the relief which companyld be granted to a reasonable period of about three years. The High Court did number examine whether on merit appellant had a case. If on merits it would have found that there was numberscope for interference, it would have dismissed the writ petition on that score alone. In the peculiar circumstances, we remit the matter to the High Court to hear the writ petition on merits. If it is found that the claim for disability pension is sustainable in law, then it would mould the relief but in numberevent grant any relief for a period exceeding three years from the date of presentation of the writ petition. We make it clear that we have number expressed any opinion on the merits as to whether appellants claim for disability pension is maintainable or number.

Opinion of Mr Advocate General Alber delivered on 29 June 2000. - Office national des pensions (ONP) v Gioconda Camarotto (C-52/99) and Giuseppina Vignone (C-53/99). - References for a preliminary ruling: Cour du travail de Liège - Belgium. - Council Regulation (EEC) No 1408/71, as amended by Regulation (EEC) No 1248/92 - Social security - Insurance relating to old age and death - Calculation of benefits - Changes to the rules governing calculation of benefits. - Joined cases C-52/99 and C-53/99. European Court reports 2001 Page I-01395 Opinion of the Advocate-General I Introduction 1. In each of the main actions (which have been pending since 1987) the dispute initially related to the amount of the pensions in issue on account of reduction clauses in the form of national rules preventing overlapping. However, Article 46 of Regulation No 1408/71, which is relevant to the case in this regard, was amended by Regulation No 1248/92, which entered into force on 1 June 1992, with the result that the parties now assume, according to the order for reference, that the plaintiffs have a right to a pension without reduction. However, the primary point of dispute is now the date from which the plaintiffs have enjoyed that right, because this may depend on the date on which the application was made. The referring court asks whether such an application for an increased pension may be made only by recipients of pensions where the decision granting the pension was final at the time of the entry into force of the amendment introduced in 1992 or also by those who had already brought proceedings prior to the change in the legal situation. 2. The present case concerns the interpretation and application of the transitional provisions laid down in Article 95a of Regulation (EEC) No 1408/71 as amended by Regulation (EEC) No 1248/92 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community. II Legal framework 3. The transitional rule contained in Article 95a of Regulation No 1408/71 reads as follows: 1. Under Regulation (EEC) No 1248/92 no right shall be acquired for a period prior to 1 June 1992. 2. All insurance periods or periods of residence completed under the legislation of a Member State before 1 June 1992 shall be taken into consideration for the determination of rights to benefits pursuant to Regulation (EEC) No 1248/92. 3. Subject to paragraph 1, a right shall be acquired under Regulation (EEC) No 1248/92 even though relating to a contingency which materialised prior to 1 June 1992. 4. The rights of a person to whom a pension was awarded prior to 1 June 1992 may, on the application of the person concerned, be reviewed, taking into account the provisions of Regulation (EEC) No 1248/92. 5. If an application referred to in paragraph 4 is submitted within two years from 1 June 1992 the rights acquired under Regulation (EEC) No 1248/92 shall have effect from that date, and the provisions of the legislation of any Member State concerning the forfeiture or limitation of rights may not be invoked against the persons concerned. 6. If the application referred to in paragraph 4 is submitted after the expiry of the two-year period after 1 June 1992, rights which have not been forfeited or not barred by limitation shall have effect from the date on which the application was submitted, except where more favourable provisions of the legislation of any Member State apply. III Facts (1) Case C-52/99 (Camarotto) 4. In 1984 Mr Sutto the husband, who died in 1994, of Mrs Camarotto, who has succeeded him as a party to the proceedings was notified of a decision granting a Belgian old-age pension on the pro rata basis of a period of insurance of 37/45. Mr Sutto objected to that decision and claimed a Belgian pension of 42/45 with no reduction. He was successful at first instance. The Office National des Pensions (National Pension Office), the defendant and appellant in the main proceedings (hereinafter the ONP), lodged an appeal. The proceedings, which primarily concerned the application of national rules against overlapping, were stayed pending the outcome of other test cases. The proceedings were resumed on 5 January 1996. 5. In the main proceedings, the question now arises whether, as a result of the change in the legal situation which occurred in 1992, the substantive provisions of Regulation No 1248/92 may be applicable for the period after 1 June 1992, whether this might be dependent on the need to submit an application, and if so, in what form (Article 95a(4)), and whether the effects of such an application are ex tunc (Article 95a(5)) or ex nunc (Article 95a(6)). 6. An application was in fact submitted, although it was not received by the ONP until 12 November 1997, with the result that the ONP is prepared to grant the increase in the pension which has occurred only as from 1 December 1997. 7. Lastly, there is a letter from the ONP, dated 22 September 1994, which was sent to its own legal representative, but which was also received via an indirect route by the pension claimant, in which the pension was calculated on the basis of the rules applicable from 1 June 1992. The increased pension thus calculated was not paid out, however, since the ONP took the view that an application was required for that purpose. However, the plaintiff and respondent was not made aware of that requirement by the ONP. She objects that she was misled by the letter. (2) Case C-53/99 (Vignone) 8. The subject-matter and procedure in Case C-53/99 differ only slightly from those in Case C-52/99. In 1987 Mrs Vignone, the widow of Mr Tammaro, was notified of a decision granting a Belgian survivor's pension on the basis of a period of insurance of 27/30. Mrs Vignone appealed against that decision, claiming a Belgian pension of 30/30 with no reduction. The subsequent judicial procedure followed the same course as in Case C-52/99. The application submitted by the party concerned for the grant of an increased pension was received by the ONP on 13 November 1997. In the case of Mrs Vignone too, there is a letter from the ONP of 22 September 1994 with a calculation of the pension based on the rules applicable from 1 June 1992. IV The questions referred for a preliminary ruling and procedure 9. In each case the national court referred identical questions to the Court of Justice: 1. Does Article 95a of Regulation No 1408/71, as amended by Regulation No 1248/92, laying down transitional provisions for application of Regulation No 1248/92, refer solely to recipients of pensions where the decision granting the pension was final at the time of the entry into force of the amendment, or does it relate also to recipients of pensions who before the entry into force of the amendments introduced by the new regulation had already brought proceedings before a national court seeking to obtain precisely the right to the pension by contesting the application of the national rules against overlapping, a final decision in those proceedings not yet having been given at the time of the entry into force of the new provisions? 2. If Article 95a applies to all recipients without distinction, must the application referred to in Article 95a(4) be made to the competent social security institution in accordance with the formalities required by national legislation for the bringing of an application for review, or may it be made to the court before which the dispute has been brought in accordance with the applicable rules of procedure, and in the latter case must the period of two years referred to in Article 95a(5) and (6) likewise be complied with? 10. The ONP, the plaintiffs and respondents in the main proceedings and the Commission took part in the procedure. Reference will be made to the arguments of the parties below. 11. The Court of Justice addressed a question to the parties in advance regarding the significance of the letter of 22 September 1994, which was to be answered at the hearing. V Arguments of the parties (1) The ONP 12. The ONP proceeds from the assumption that the Court has established in its case-law the principle that the most favourable regime in a particular case either the internal national or the Community regime must be applied. A significant change occurred as a result of Regulation No 1248/92, inasmuch as the internal rules against overlapping are no longer applicable. However, the regulation, which entered into force on 1 June 1992, does not establish any rights in respect of periods prior to that date. In addition, under Article 95a(4), (5) and (6), a pension may be reviewed only on an application by the person entitled to make the claim. The legal criterion is therefore the award of the pension, which means the process of making the pension payable that is to say the calculation of the amount to be paid and the payment itself irrespective of whether or not the administrative act awarding it is final. 13. It is indisputable that any payable pension can be the subject of a review only if an application is submitted. The form of that application may be either administrative or judicial. An application to a court may be in the form of a statement of claim, a pleading or a motion. In any case, however, the acquisition of rights depends on the date on which the application is submitted. An ex officio review is not only contrary to the wording of the provision; a review can also result in a reduction of the pension, particularly in the case of survivor's pensions. The need for an application to be submitted in strict compliance with the prescribed time-limits is therefore a mandatory requirement for the purposes of ensuring legal certainty. It follows that a review can be conducted only if an application is submitted. Furthermore, the letter of 22 September 1994 cannot have any legally binding effect. The review of the pension was effected purely for information purposes and was sent to the ONP's own legal representative. (2) The plaintiffs and respondents 14. The plaintiffs and respondents argue that, in order to answer the questions referred for a preliminary ruling, consideration must be given both to Community law and to national law. 15. At the time of entry into force of Regulation No 1248/92 legal proceedings were pending in both cases, with the result that the contested pension decisions were not final. In its judgment replacing the administrative act, the national court should take account of all amendments to the rules which gave rise to the dispute. In so far as Article 95a(6) provides that, if an application is submitted after the expiry of the two-year period after 1 June 1992, rights are to have effect from the date on which the application was submitted, except where more favourable provisions of the legislation of any Member State apply, reference should be made to Articles 807 and 808 of the Belgian Judicial Code (Code Judiciaire Belge, contained in the Law of 10 October 1967). Those provisions permit the parties to supplement or amend their submissions at any time throughout the judicial procedure. The Belgian court is therefore required, if so requested by the parties, to apply the rules which entered into force on 1 June 1992. 16. In the present case the parties did submit the necessary application, although not within the two-year period. In the context of the applicability of Articles 807 and 808, the court may attach retroactive effect to that application. Articles 807 and 808 of the Judicial Code have moreover been the subject of several judgments by the Cour de Cassation. In a judgment of 22 May 1978, the Cour de Cassation found as follows: In a legal dispute concerning rights based on law, the court hearing the case may not only decide on rights existing at the time when the application was submitted, but may also take into consideration circumstances arising after the contested administrative decision, if they are capable of increasing the rights of the insured person. 17. In the present case, having regard to Article 95a(4), it should also be observed that, since proceedings are pending before a court, reference should be made, strictly speaking, not to a review (révision de droits), but to a determination of rights (fixation de droits). The preclusive period does not therefore come into play. 18. As regards the temporal effect of the new rules of Community law, it follows from the case-law of the Court, that it is for the national legal order of each Member State to lay down the procedural rules governing actions designed to ensure the protection of the rights which individuals acquire through the direct effect of Community law, provided that such rules are not less favourable than those governing similar domestic actions and are not framed in such a way as to render impossible in practice the exercise of rights conferred by Community law; Community law precludes the application of a national rule under which the retroactive effect of a claim based on Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 EC to 143 EC) is limited to two years; new rules or the effects of an interpretative judgment delivered by the Court may in any case be relied upon retroactively by persons who have brought actions or lodged a similar complaint. 19. It is proposed by the plaintiffs and respondents that the following answer be given to the request for a preliminary ruling: Article 95a of Regulation No 1408/71 must be interpreted as meaning that the two-year period referred to in Article 95a(5) is not applicable in the case of persons who have brought proceedings and who are able, on the basis of the national legal order, to claim the retroactive applicability to 1 June 1992 of the rules of Regulation No 1248/92 which are favourable to them. (3) Commission 20. In the view of the Commission, the present case is covered by Article 95a(4). That provision affords a right of review to all those to whom a pension award decision is addressed under Regulation No 1408/71 prior to its amendment by Regulation No 1248/92, including those who had already brought proceedings prior to the entry into force of the amending regulation. 21. Since the provisions do not lay down any procedural rules for the application for review, it is for the national legislature to lay down the procedural measures for the exercise of the right. This must clearly be done without rendering the exercise of the rights impossible in practice or excessively difficult. Thus, the Member States' procedural rules could provide that the application for review may also be made to the court before which the dispute has been brought. 22. With regard to the two-year period provided for in Article 95a(5) and (6), the Commission points out that, whilst the legal order of the Member State concerned cannot provide for a shorter period, it can certainly allow a longer period. 23. Article 95a should be understood, as is apparent from the Petroni judgment and the subsequent case-law, as meaning that the employee concerned is to be granted the most favourable conditions. Since the beneficiary is accorded the sole right of initiative, one is bound to question, under the circumstances of the present case, the effectiveness of the rules. At all events, the national court is free to apply the most favourable rules in each case. 24. The Commission proposes the following answer to the request for a preliminary ruling: 1. Article 95a of Regulation No 1408/71 should be interpreted as referring not only to recipients of pensions where the decision on the pension was final at the time of the entry into force of Regulation No 1248/92, but also to recipients of pensions who before its entry into force had already brought proceedings contesting the application of the national rules against overlapping, a final decision not yet having been given at the time of the entry into force of the new rules. 2. It is for the national legislature to lay down the procedural conditions for the application for review and, in particular, to provide whether the application must be made to the competent social security institution or to the court before which the dispute has been brought, without rendering the exercise of the right to a review impossible in practice or excessively difficult. In the latter case, compliance or failure to comply with the period of two years referred to in Article 95a(5) and (6) has the consequences provided for therein with regard to the coming into effect of the review. VI Assessment 25. The subject-matter of the amendment of Regulation No 1408/71 by Regulation No 1248/92 was the provisions regulating the award and calculation of pensions. In that regard, as is stated in the first recital in the preamble to the amending regulation, some of these amendments are linked to the case-law of the Court of Justice in this matter. The 16th recital in the preamble to the amending regulation reads as follows: Whereas, to protect migrant workers and their survivors against an excessively stringent application of the national provisions concerning reduction, suspension or withdrawal, it is necessary to include a provision in Regulation (EEC) No 1408/71 laying down strict rules for the application of these provisions. 26. It must be assumed that application of the new provisions may be more favourable for those entitled to a pension. However, this consequence is by no means inevitable. Cases are certainly conceivable in which application of the new provisions produces a less favourable result for the person concerned. That was the underlying position in the Baldone case. Indeed, the representative of the ONP expressly pointed out at the hearing that this reducing effect could be observed particularly in the case of survivor's pensions. 27. In Baldone, the Court thus interpreted the transitional provision laid down in Article 95a of the regulation, which is at issue in the present case, in the following way: when [a] ... benefit has been awarded prior to the entry into force of the amending regulation, Article 95a(1) to (3) of Regulation No 1408/71, as amended, is not applicable. Such situations fall instead under Article 95a(4) to (6) thereof. 28. The Court went on to state: The fact that, following an erroneous calculation of the benefit due, the competent authorities of a Member State, after the entry into force of the amending Regulation, recalculate a benefit and correct the amount due cannot give rise to a new right but has the effect solely of determining correctly the amount of the benefit, entitlement to which had previously been acquired. 29. As regards the requirement under Article 95a(4) for an application to be submitted, the Court stated: The purpose of Article 95a(4) is to enable the person concerned to ask for the benefits awarded under the unamended regulation to be reviewed where it appears that the rules of the amending regulation are more favourable to him and to benefit from the benefits awarded in accordance with the provisions of the unamended regulation being maintained where they appear more advantageous than those resulting from the amending regulation. It is thus clear both from the terms and the structure of Article 95a(4) that application of the provisions of the amending regulation to pension rights acquired before 1 June 1992 is subject to an express application being made by the person concerned. The competent institution is not therefore entitled to substitute itself for an insured person, especially where review by that institution of its own motion would operate to the detriment of the person concerned. 30. It does not necessarily follow from those words that there is an absolute requirement to submit an application under Article 95a(4) of the regulation, but merely that there is an express prohibition on dispensing with the requirement to submit an application to the detriment of the person concerned. 31. The question could now be asked whether, in accordance with the wording and purpose of Article 95a(4), an application is essential, inasmuch as the periods prescribed and procedural consequences laid down in Article 95a(5) and (6) are as such linked to the requirement of the submission of an application. 32. The German text of the provision refers to feststellen (determination) of rights. This could certainly be understood to mean the final determination, both in the administrative procedure and in court proceedings. In the case of pending proceedings, the provision would possibly then not be applicable at all. The French text, on the other hand, refers to liquidation d'une pension (payment of a pension), which the ONP in particular has emphasised. Under that wording, it is the fact of payment of a pension which is of prime importance. The English text of the regulation states that a pension was awarded. In doing so, emphasis is placed on the criterion of the grant of a pension. 33. However, since the Court, in the Baldone judgment, took as its basis the date when the rights were acquired, cases in which rights have not been finally determined may also be subsumed under Article 95a(4). This interpretation is also preferable in order to prevent the pension recipient from being deprived of his right of initiative, something to which strict attention must be paid, particularly in cases where there may be detrimental effects. 34. On the other hand, it should be borne in mind that Article 95a(4) to (6) is designed to apply to the normal case of pensions awarded prior to 1 June 1992. In interpreting the provisions, account should be taken of the nature of pending proceedings, i.e. pensions which have not been finally awarded. 35. In this connection, it must first be assumed that the applicable substantive provisions are provisions of a regulation which as the Commission's representative expressly pointed out at the hearing are, by their nature, directly applicable. It is therefore perfectly proper not to apply the preclusive period provided for in Article 95a(5) in pending proceedings. The two-year preclusive period laid down for reasons of legal certainty is appropriate, where the pension files are closed. During that period, it is possible to check whether the rules applicable from 1 June 1992 might result in a more favourable calculation and, if so, an application for review can be submitted. 36. The fact that the Community legislator certainly did not intend the two-year period during which an application for review may be made with retroactive effect to be an absolute preclusive period is confirmed by Article 95a(6). That provision states that if the application is submitted after the expiry of the two-year period after 1 June 1992, rights are to have effect from the date on which the application was submitted. This provision is, first of all, an expression of the principle of legal certainty. Secondly, it provides a suitable means of maintaining the financial balance between the insurance schemes in question. Nevertheless, this rule applies only except where more favourable provisions of the legislation of any Member State apply. 37. The principle of most favourable treatment is clearly enshrined in that wording. In this respect, it is not necessary to have recourse to the case-law of the Court of Justice establishing that principle with regard to the procedural enforcement of rights conferred by Community law, since that rule of favourable treatment is expressly incorporated into Article 95a(6). 38. Against the background of the case-law of the Court, under which the most favourable treatment principle must be applied, in both substantive and procedural law, to legal situations in which legal positions conferred by Community law are in dispute, it is even conceivable that an ex officio review may be conducted in pending proceedings if and in so far as it is favourable to the person entitled to the pension. 39. However, that is not important in the present case, since, according to the submissions of the parties, more favourable provisions of the legislation of any Member State within the meaning of Article 95a(6) are in any case applicable. Accordingly, under Articles 807 and 808 of the Code Judiciaire, a party may, in the course of judicial proceedings, supplement or amend its submissions with regard to the matter in dispute. Such procedural submissions then have retroactive effect in the pending proceedings. In the main proceedings, an application was expressly submitted in each case. Those applications have retroactive effect pursuant to Articles 807 and 808. Reference should be made in this respect to the judgment of the Cour de Cassation of 22 May 1978, cited by the representative of the pension claimants at the hearing. According to that judgment, the court must, upon application, also take into consideration the circumstances which did not arise until after the administrative decision if they are capable of increasing the rights of the person entitled. 40. In the light of the specific facts of the present case, the question also arises whether it may not have been an abuse of the law by the ONP to take as the formal basis the date when the application was submitted, with the abovementioned consequences flowing from Article 95a(6). 41. It is known that in both cases the ONP carried out recalculations (évaluations) of the pension amounts on the basis of the rules applicable from 1 June 1992. It was obvious, after that recalculation at the latest, that the survivor's pensions in issue could be claimed at a higher amount. The recalculation was the subject of a letter of 22 September 1994 to the ONP's legal representative. Via an indirect route it fell into the hands of the plaintiffs and respondents. It is notable in this connection that the letter was written at a time when the two-year period under Article 95a(5) had already expired. Moreover, the persons entitled were not informed that the higher pensions which had been calculated could be paid out only if an application were submitted. 42. If the ONP made the effort to carry out a recalculation and to send that calculation to the person entitled, the question arises whether it was required, as part of a duty to take due care and to provide assistance, to inform the persons entitled to the pensions, before the expiry of the two-year period and with reference to that period, that they might be entitled to apply for a review. In the case of Mrs Camarotto, this question is particularly relevant since, in all likelihood, a review of the pension took place in any case in the light of the death of her husband on 28 January 1994, given that, as a result of the death, the pension was converted from an old-age pension into a survivor's pension. In addition, 28 January 1994 fell within the two-year period referred to in Article 95a(5) of the regulation. It seems reasonable to carry out a recalculation of the pensions when such events occur and, where appropriate, to inform the recipients of the possibility open to them, as actually happened in a piecemeal way at a later date. 43. Ultimately, however, these considerations are not important in the present case since, according to the approach adopted above, the application for a review of the pension submitted in the judicial proceedings may be recognised to have retroactive effect pursuant to the Member States' procedural rules, with the result that the increased survivor's pension can be claimed as from 1 June 1992. 44. For the purposes of responding to the request for a preliminary ruling, it must be presumed, with regard to the first question, that, in accordance with the judgment in Baldone, the transitional rules contained in Article 95a of Regulation No 1408/71 are applicable in principle to all rights acquired before 1 June 1992. Article 95a therefore applies not only to recipients of pensions where the decision granting the pension was final at the time of the entry into force of the amendment, but also to those who before the entry into force of the amendments introduced by the new regulation had already brought proceedings before a national court, provided that the specific aim of the proceedings was to obtain the pension right by contesting the application of the national rules against overlapping, a final decision in those proceedings not yet having been given at the time of the entry into force of the new provisions. 45. The second question referred by the national court should therefore be answered to the effect that Community law does not prescribe any form for an application under Article 95a(4). It is thus for the legal order of the Member State concerned to lay down rules prescribing the conditions and procedure for obtaining a review. It is therefore perfectly possible for the application to be made not only to the competent social security institution, but also in accordance with the applicable rules of procedure to the court before which the dispute has been brought. In the case of pending proceedings, account is to be taken of this particular situation in interpreting Article 95a(5) and (6). The two-year period is not in that respect to be regarded as absolute, with the result that an application submitted after the expiry of that period can certainly also have retroactive effect. VII Conclusion 46. In the light of the above considerations, I propose that the Court give the following answer to the questions referred by the national court: (1) Article 95a of Regulation (EEC) No 1408/71, as amended by Regulation (EEC) No 1248/92, applies in principle to all rights acquired before 1 June 1992. Article 95a is therefore applicable not only to recipients of pensions where the decision granting the pension was final at the time of the entry into force of the amendment, but also to those who before the entry into force of the amendments introduced by the new regulation had already brought proceedings before a national court with the specific aim of obtaining the pension right by contesting the application of the national rules against overlapping, a final decision in those proceedings not yet having been given at the time of the entry into force of the new provisions. (2) It is for the legal order of the Member State concerned to lay down rules prescribing the conditions and procedure governing an application for review under Article 95a(4). It is therefore perfectly possible for the application to be made not only to the competent social security institution, but also to the court before which the dispute has been brought. In the case of pending proceedings, account is to be taken of this particular situation in interpreting Article 95a(5) and (6). The two-year period is not in that respect to be regarded as absolute, with the result that an application submitted after the expiry of that period can certainly also have retroactive effect.

JUDGE LANGAN QC: Introduction Anthony Jordan ('Mr Jordan') is the second interested party in these proceedings. He asked the North Yorkshire Police to investigate the treatment of his mother Mrs Winifred Jordan ('Mrs Jordan') in a care home prior to her death and the manner in which his complaints about that treatment had been dealt with by other agencies. The officer in charge of the investigation concluded that there was nothing to justify the institution of criminal proceedings against any party. Mr Jordan then asked the Chief Constable of North Yorkshire Police ('the Chief Constable'), who is the first interested party, to carry out an investigation of these matters, but the Chief Constable declined to do so. Under statutory provisions to which I shall refer, Mr Jordan subsequently made a complaint to the North Yorkshire Police Authority ('the Police Authority'), which is the claimant, about the Chief Constable's response. The Police Authority is under an obligation to record complaints about the 'conduct' of the Chief Constable, but the obligation does not extend to 'so much of any complaint as relates to the direction and control of a police force.' The Police Authority refused to record Mr Jordan's complaint on the ground that it related to direction and control. Mr Jordan exercised his right to appeal against this refusal to the Independent Police Complaints Commission ('the Commission'), which is the defendant. The Commission upheld the appeal, determined that the complaint did not relate to direction and control and that it did relate to conduct, and required the Police Authority to record the complaint. The Police Authority then issued a claim for judicial review of the decision of the Commission, and permission to proceed with the claim was granted on the papers by His Honour Judge Behrens. This is my judgment on the substantive hearing. I should record my gratitude to counsel for the Police Authority and the Commission, Mr John Beggs QC (who was leading Mr Sam Green) and Ms Beverley Lang QC respectively, and to Mr Jordan, for their extremely helpful written and oral submissions. General approach I begin with a few general observations. First, the case was presented both by Mr Beggs and by Ms Lang as one of considerable importance both to the Commission and to police authorities. They were, I think, right to do so. There is a sense in which the proper characterisation of any complaint must be fact-sensitive. This case, however, appears to raise a broad question which must be answered one way or the other. I would formulate the question in this way: is a complaint as to the refusal of the chief officer of a police force personally to investigate an alleged offence, when the complaint is not accompanied by any specific assertion of personal misconduct or dereliction of duty by the chief officer, a complaint which relates to the direction and control of the force? Secondly, Ms Lang in the course of her submissions referred in passing to the 'discretion' of the Commission in determining the appeal. I doubt very much whether any question of discretion arises in this case. The determination of the Commission must, in my judgment, have been either right or wrong as a matter of law. Thirdly, Mr Beggs made quite extensive reference to decided cases on the authority of chief officers of police; the limited extent to which as a matter of public law the courts will interfere with the exercise of the discretion of chief constables as to enforcement of the law; and the non-existence of any private law duty of care owed to the victims of crime by police who are investigating crime. The leading cases are all well-known: R v Commissioner of Police of the Metropolis, ex parte Blackburn [1968] 2 QB 118; R v Chief Constable of Sussex, ex parte International Trader's Ferry Limited [1999] 2 AC 418; Hill v Chief Constable of West Yorkshire [1989] AC 53. I agree with Ms Lang that these authorities are of very limited value in the context of this case which has to turn essentially on the interpretation of a few statutory phrases. Fourthly, it would be possible to burden this judgment with a lengthy chronology and with manifold references to correspondence which has passed between the parties. It does, however, seem to me on a review of the material which is before the court that such an exercise is unnecessary and would actually obscure, rather than place in focus, the issue for decision. This explains what may appear to the advocates to be, in the narrative section of this judgment, a surprisingly brief encapsulation of the history leading up to the claim. Statutory provisions and other relevant material The Commission was established by section 9 of the Police Reform Act 2002 ('PRA'). Section 9 is contained in Part 2 of the PRA, the subject of which is complaints and misconduct. The functions of the Commission include securing the maintenance by the Commission itself, and by police authorities and chief officers, of (a) the handling of complaints made about the conduct of persons serving with the police; (b) the recording of matters from which it appears that there may have been conduct by such persons which constitutes or involves the commission of a criminal offence or behaviour justifying disciplinary proceedings; (ba) the recording of matters from which it appears that a person has died or suffered serious injury during, or following, contact with a person serving with the police. (PRA, section 10(1) (2), as amended). It is the duty of the Commission "to secure that arrangements exist which are conducive to, and facilitate, the reporting of misconduct by persons in relation to whose conduct the Commission has functions": PRA, section 10(4). However, nothing in Part 2 of the Act is to confer any function of the Commission in relation to so much of any complaint or conduct matter as relates to the direction and control of a police force by – (a) the chief officer of police of that force; or (b) a person carrying out the functions for the time being of the chief officer of police of that force. (PRA, section 10(8)). Section 12 of the PRA deals with complaints, matters and persons to which Part 2 applies. Section 12 (1) provides that, subject to other provisions of the section, references to a complaint are references to any complaint about the conduct of a person serving with the police which is made (whether in writing or otherwise) by – (a) a member of the public who claims to be the person in relation to whom the conduct took place; (b) a member of the public not falling within paragraph (a) who claims to have been adversely affected by the conduct; (c) a member of the public who claims to have witnessed the conduct; (d) a person acting on behalf of a person falling within any of paragraphs (a) to (c). Section 12(2) provides that, subject to other provisions, "conduct matter" means any matter which has not been the subject of a complaint but in the case of which there is an indication (whether from the circumstances or otherwise) that a person serving with the police may have – (a) committed a criminal offence; or (b) behaved in a manner which would justify the bring of disciplinary proceedings. Section 13 of the PRA provides that Schedule 3, which makes provision for the handling of complaints and conduct matters and for the carrying out of investigations, is to have effect subject to section 14(1). Section 14(1), which lies at the heart of this litigation, is in the following terms: Nothing in Schedule 3 shall have effect with respect to so much of any complaint or conduct matter as relates to the direction and control of a police force by (a) the chief officer of police of that force; or (b) a person for the time being carrying out the functions of the chief officer of police of that force. Section 14(2) empowers the Secretary of State to issue guidance to chief officers and to police authorities "about the handling of so much of any complaint as relates to the direction and control of a police force" by a chief officer or a person for the time being carrying out his functions. By section 14(3) it is the duty of a chief officer and of a police authority "when handling any complaint relating to such a matter to have regard to any guidance issued under subsection (2)." Section 29(1) of the PRA is the interpretation section for Part 2. It includes this provision: "conduct" includes acts, omissions and statements (whether actual, alleged or inferred). Section 29(1) also defines 'the appropriate authority' as being, in the case of a senior officer (that is, one above the rank of chief superintendent), the police authority for the area of the force of which he is a member. Schedule 3 to the PRA deals with the handling of complaints and conduct matters in considerable detail. It is necessary to refer to just a few paragraphs of Schedule 3. Where a complaint is made to a police authority, it must first determine whether or not it is the appropriate authority: paragraph 2(2). Then, by paragraph 2(6) Where – (a) a police authority determines, in the case of any complaint made to the authority, that it is itself the appropriate authority… the authority… shall record the complaint. Paragraph 3(2) of Schedule 3 requires a police authority which decides not to record "the whole or any part of what has been received" to notify the complainant of the decision, the grounds on which it was made, and his right of appeal. Paragraph 3(3) gives the complainant a right of appeal to the Commission against such a decision; and paragraph 3(4) deals with the powers of the Commission on appeal and the duty of a police authority and a chief officer to comply with any directions given by the Commission on determining the appeal. None of the detail of this is material to what I have to decide. Reference was made at the hearing to a number of sections of the Police Act 1996, which deals in Part I with the organisation of police forces in England and Wales. In particular, section 10 provides that a police force "shall be under the direction and control of the chief constable." In March 2005 the Secretary of State issued "Guidance on the Handling of Complaints relating to the Direction and Control of a Police Force by a Chief Officer" pursuant to section 14 of the PRA. Paragraph 5 explains that each police force has to develop its own procedure for the handling of complaints on direction and control and to write its own local guidance. The purpose of the Secretary of State's Guidance is to provide forces with a structure and minimum requirements for their own local procedure. Paragraph 8 attempts a "Definition of Direction and Control": Direction and control of a police force is taken to be the legitimate independent operational responsibility and discretion that is held by a chief officer. For the purpose of this guidance, a complaint that relates to the direction and control of a force by a chief officer is one that relates to:- • operational policies (where there is no issue of conduct) • organisational decisions • general policing standards in the force • operational management decisions (where there is no issue of conduct). Finally, there is the Force Procedure Document issued by the North Yorkshire Police. In the section dealing with Complaints relating to Direction and Control Issues Procedure, reference is made to the definition set out in the last paragraph. The document continues: The following are examples of matters relating to direction and control: • The formulation of guidelines and the making of general decisions on the deployment and posting of officers or groups of officers; • The allocation of personnel, financial and material resources in certain sectors or geographical areas; • A policy decision to (or not to) arrest and charge for certain offences – for example the simple possession of cannabis for personal use; • The decision on how – generally – to perform certain functions – for example licensing, use of firearms and stop and search; • The formulation of principles and protocols governing the appointment, recruitment, promotion, discipline and dismissal etc of officers and other staff. However, the following would not normally be considered to involve direction and control (but should be regarded as matters of conduct): • The making of a specific decision on the deployment of officers for a particular investigation or operation – for example, a decision to take a very large number of officers to search a small house despite no expectation of violent resistance; • The decision to (or not to) arrest and prosecute a particular suspect for a certain crime; • The application of policies on certain functions (for example licensing, use of firearms and stop and search) in particular cases; and • The appointment, recruitment, promotion, discipline and dismissal etc of particular officers and police staff. Narrative Mrs Jordan died in hospital on 11 September 2005. She had previously been resident in a care home, which was operated by a limited company under contract with York City Council. Mrs Jordan's death was certified in the ordinary way and there was no coroner's inquest. Mr Jordan formed the opinion, to which he has tenaciously adhered, that Mrs Jordan's death was caused or accelerated by abusive treatment and/or neglect at the care home. After her death, he raised his concerns with a number of public authorities and other bodies: the limited company; York City Council; the then Commission for Social Care Inspection ('CSCI'); the Local Government Ombudsman; and the Parliamentary and Health Service Ombudsman. Mr Jordan also pursued his concerns through his Member of Parliament and through several firms of solicitors. None of this produced anything which was remotely satisfactory from Mr Jordan's point of view. Mr Jordan then decided to involve the police. A meeting between him and two detective sergeants in the York Criminal Investigation Department was held on 17 July 2008. Mr Jordan had, in summary, a twofold complaint: as to the treatment of Mrs Jordan in the care home; and as to what Mr Jordan in later correspondence described as the "falsified, inflammatory and downright untrue" report which had been prepared by the CSCI. The officers took detailed information from Mr Jordan and commenced an investigation under the supervision of Detective Inspector Stephen Maud ('DI Maud'). The investigation was concluded and the result was communicated by DI Maud to Mr Jordan in a letter of 4 September 2008: I understand that you have pursued this matter with every available organisation involved in care standards issues. There are no grounds to suggest that a criminal offence has been committed and on that basis no further action will be taken by the Police. I enclosed [sic] all the documentation you originally supplied. On 7 October 2008 Mr Jordan sent to the North Yorkshire Police a letter of complaint relating to what he perceived to be the serious deficiencies in DI Maud's investigation, and he followed this on 4 November 2008 by a formal complaint to the Commission. This complaint had a lengthy and complex procedural history which I do not think it necessary to set out. It is sufficient to say that the complaint eventually ran into the ground because DI Maud retired and was unwilling, after his retirement, to cooperate in an investigation. In such circumstances the Commission has power to direct that an investigation be discontinued, and on 9 June 2009 it did so in respect of the complaint against DI Maud. By this time Mr Jordan had already begun his efforts to secure the involvement of the Chief Constable and for some months he had been pursuing the two avenues, the formal complaint as regards DI Maud and correspondence with the Chief Constable's office, concurrently. On 3 December 2008 Mr Jordan had written to the Chief Constable. The letter started in this way: I formally request you initiate and have a direct input to an investigation into the circumstances that resulted in the death of Mrs Winifred Smith Jordan my mother. It is clear from the letter that the investigation sought is one both into those who were responsible for the care of Mrs Jordan and into the "fraudulent fabrication" which, on Mr Jordan's view, had been perpetrated by the CSCI. The letter concluded: My aim is that where systems are in place to ensure the safety and welfare of residential and respite care service users, they must be seen to be implemented currently for the benefit of future service users. The reply to this letter was written by Mr Leonard Miller, a solicitor employed by the North Yorkshire Police, on 15 December 2009. There is a wealth of correspondence before the court, some prior to and much more after the letters of 3 and 15 December. But, as I observed at the hearing, the respective positions of the Commission and of the Police Authority were crystallised in these two letters, although the first was, of course, one in which the Commission had no hand. In the letter of 15 December, Mr Leonard said this: Pursuant to section 10 Police Act 1996 North Yorkshire Police is under the direction and control of the Chief Constable. Accordingly, the decision whether to investigate allegations of criminal conduct is at his sole discretion. Furthermore there is a long and consistent line of legal authorities the latest being a Court of Appeal decision reported as recently as 21 December 2007, reaffirming the proposition that the police owe no general duty of care to victims of crime. There are also many authorities which have decided that the Chief Constable has a wide discretion about alleged criminal conduct which officers under his direction and control investigate. In exercising this discretion my client takes into account the public interest in pursuing a criminal investigation, whether an alternative remedy is available, whether the matter has already been investigated by another body, whether civil as opposed to criminal proceedings would lead to a more appropriate solution, whether the matters have become stale, the extent to which criminal proceedings may amount to an abuse of the legal process, the proportionally [sic] of instigating a police investigation having regard to the stigma which attaches to a criminal conviction, and whether public funds entrusted to him by the Police Authority for delivering policing services to the public of North Yorkshire should be spent in this way. This is not an exhaustive list. My client also has due regard to the Crown Prosecution Service Code of Conduct for Prosecutors when considering whether the allegations are ultimately likely to result in a criminal conviction. My client also notes that your stated purpose in reporting this matter as a criminal offence is to ensure the correct implementation of systems in place to ensure the safety and welfare of residential and respite care services users. This is not the purpose of a criminal investigation and prosecution. In all the circumstances my client has declined to authorise any further criminal investigation into the conduct you allege. In further correspondence, the Police Authority maintained the position which had been advanced in the letter of 15 December 2008. Then, on 18 May 2009, Mr Jordan wrote to the chair of the Police Authority. His letter was headed: FORMAL COMPLAINT AGAINST THE CHIEF CONSTABLE OF NORTH YORKSHIRE GRAHAME MAXWELL IN HIS FAILURE TO INVESTIGATE THE DEATH OF MRS W S JORDAN It is not necessary to set out the substance of the letter. The reply from the Police Authority was dated 22 May 2009, and was simply to the effect that the complaint related to a matter of direction and control, so that the Police Authority was unable to assist Mr Jordan. This was, in effect, a decision not to record Mr Jordan's complaint, and he should have been told that it was such a decision and have been provided with information, in particular as to his right of appeal to the Commission, pursuant to paragraph 3(2) of Schedule 3 to the PRA. It appears that subsequently Mr Jordan spoke to someone at the Commission and learnt from that person that he had a right of appeal. Mr Jordan's formal notice of appeal against the decision of the Police Authority not to record his complaint was received by the Commission on 26 June 2009. The appeal was dealt with by Mr Jack Harvey, Casework Manager, on the basis of the documents submitted by Mr Jordan and the Police Authority. The appeal was decided on 28 August 2009. Mr Jordan was successful and the Police Authority was directed to record his complaint. The Commission set out its findings on the failure to record in the following terms: North Yorkshire Police Authority has outlined two reasons for not recording Mr Jordan's complaint against the Chief Constable. Firstly, it is stated that the complaint relates to Direction and Control matters. Secondly, because the Chief Constable has not been personally involved in the handling of Mr Jordan's case. We do not consider the complaint to constitute one of Direction and Control. Consonant with the decision made by North Yorkshire Police regarding Mr Jordan's complaint against Detective Inspector Maud, the decision not to investigate Mr Jordan's conduct is not one which is made in line with policy, and does relate to the conduct of a police officer, as a result it should be recorded as a public complaint. Secondly, the issue of whether or not the Chief Constable has been personally involved in making the determination is not of importance to the recording decision. This would be a matter for any subsequent enquiries to determine. We note that preliminary enquiries have already been undertaken by the appropriate authority, which might be sufficient for the purposes of this complaint. The limited practical value of Mr Jordan's success was underlined in the final paragraph of the findings of the Commission: We note that a reason Mr Jordan has provided for pursuing this complaint is for the Police to complete investigations into the death of his mother. Such considerations of whether the police should investigate this matter do not constitute a part of the appeal assessment. Further, the findings in the assessment do not compel the Appropriate Authority to investigate the matter, or review their previous decision not to investigate. The Commission has a 'Comeback to Appeals' procedure under which it can explain its decision further. In the course of a Comeback in this case, Mr Harvey said this in an e-mail of 11 September 2009 to Mr Stuart Pudney, the deputy chief executive of the Police Authority: In this instance, Mr Jordan has made a complaint that the Chief Constable has failed to institute a criminal investigation into the circumstances surrounding the death of his mother. Although the CC may not have been personally involved in making this decision, this would be for any subsequent enquiries to determine. Consequently, it is a matter to be recorded – a decision has been made, which there is no evidence to suggest is in line with policy. I accept that this might appear to be illogical, but we do instruct forces to record complaints in situations where there has been a refusal/failure to record or investigate a criminal allegation. It is the same situation as that which North Yorkshire Police faced when Mr Jordan made his initial complaint The obvious exception would be where there is a specific policy which instructs to arrest (or not) and charge for certain offences. The claim form in these proceedings was issued on 26 November 2009, and permission to apply for judicial review was granted on the papers on 6 January 2010. The substantive hearing took place on 15 June 2010. Discussion I do not think that a case of this kind can usefully be approached through anything which resembles a detailed analysis of the caseworker's reasoning. What was required of Mr Harvey was a characterisation of Mr Jordan's complaint, and a short statement of his grounds for saying 'direction and control' or 'not direction or control.' As I have observed earlier in this judgment, his answer to the relevant question must be either right or wrong, and that is so, however adequately or inadequately he expressed himself. (I should say that I respectfully agree with what has been said by Blair J about the adequacy of brief appeal findings by the Commission's caseworkers: The Queen on the application of Herd v Independent Police Complaints Commission [2009] EWHC 3134 (Admin), paragraph 37). Consideration of the issue which I have to resolve seems to me to break down into two distinct questions. The first is whether Mr Jordan's complaint related to the 'conduct' of the Chief Constable. If it did not so relate, there was no basis on which the Police Authority could be required to record it. The second question is whether, if the complaint did relate to conduct, it was excluded from the obligation to record because it related wholly to the 'direction and control' of the North Yorkshire Police. This is, fortunately, not one of those cases in which a complaint may be of a hybrid kind, relating in part to pure direction and control matters and in part to other, recordable matters. On the first question, the thrust of the Police Authority's case as expressed in the Grounds for Judicial Review and in Mr Beggs' written submissions is that the complaint cannot relate to 'conduct' because it does not allege 'personal misconduct' by the Chief Constable. For the purposes of section 12 the PRA, it is said, "conduct plainly refers to misconduct" (Grounds, paragraph 16). All that Mr Jordan's complaint is about is that the Chief Constable did not "personally [institute] a criminal investigation upon demand, in circumstances where there is no realistic suggestion of impropriety going beyond Mr Jordan's strident expression of unhappiness with a decision he disagreed with, and in circumstances in which the Chief Constable has had no personal involvement in the case" (written submissions, paragraph 39). What the Chief Constable did could be regarded as personal misconduct only if "one characterises failure to accede to a request (or obey an instruction) made by a member of the public to investigate alleged crime as wrongdoing per se" (written submissions, paragraph 46(ii)). In my judgment, this view of the legislation is not correct. The word 'conduct' in its ordinary or natural meaning, which is that of behaviour, does not carry with it the notion that the behaviour must be of a particular quality, whether good or bad. The definition of 'conduct' in section 29(1) of the PRA does not assist. If the meaning of the word is to be extended or modified so as to be restricted to bad behaviour, or misconduct, or personal misconduct, one must find something in the context in which the word is used to justify the extension or modification. I cannot find anything of the kind. On the contrary, as Ms Lang pointed out, there is an indication in Schedule 3 to the PRA that conduct and misconduct are for the purposes of the legislation overlapping, and not mutually exclusive, concepts. The signpost is in paragraph 19B(4) which deals with a 'severity assessment', which is directed to determining "whether the conduct, if proved, would amount to misconduct or serious misconduct." I therefore conclude that the Commission was right to treat Mr Jordan's complaint as one which related to the conduct of the Chief Constable. What is, as it seems to me, the more difficult question is whether the complaint related to a matter of direction and control of the force. One curious feature of the case is that the North Yorkshire local guidance on complaints about direction and control classifies a decision not to prosecute a particular individual for a particular crime as not being a decision as to direction and control. That situation is very close to the one with which I am concerned, that of a decision not to have a reinvestigation under the supervision of the Chief Constable of circumstances which have already been the subject of an investigation: yet that is said to be a direction and control matter. Mr Beggs, in his submissions in reply, reduced the Police Authority's case to these three propositions. First, the Commission had to make what was essentially a factual assessment. Secondly, Mr Harvey, as the decision-maker, was either right or wrong in his conclusion: there was no room for the exercise of discretion. I agree thus far. Thirdly, and controversially, according to my note of what Mr Beggs said: In this case, on these facts, this was a direction and control matter because it related to the deployment of the Chief Constable's resources – to his decision not to deploy men [sic] to investigate a complaint that had already been investigated by other agencies. I would not accept this analysis. It is not easy to produce a comprehensive, yet accurate, definition of the concept of direction and control. I think, however, that it is essentially concerned with matters which are of a general nature. On this basis, a decision by a chief officer which is confined to a particular subject falls outside the scope of direction and control. The national and local guidance from which I have quoted at some length earlier in this judgment appears to me to be fully supportive of a general/particular dividing-line. If this is the right approach, then the decision of the Commission cannot be faulted. Mr Beggs accepted that a complaint about a decision not to investigate or prosecute in a particular case might relate to conduct falling outside the scope of direction and control, for example, if it were alleged that the decision had been made for some improper motive. It seems to me that the legislation should be interpreted, if possible, in the manner least burdensome to those who have to work with it. The general/particular distinction to which I have referred is relatively easy for the Commission and others who have to characterise complaints to understand and apply without delving too deeply into the nature of a complaint at the initial stages of the complaints procedure. A distinction under which some complaints about decisions not to investigate or prosecute in a particular case would be regarded as relating to conduct only, and others as relating to direction and control, would be far more difficult to operate. Mr Beggs also raised what might be called (although he was innocent of using the expression) a flood-gates argument: if the impugned characterisation is to stand, it "will inevitably bring a whole new category of complaint under the Schedule 3 umbrella" (written submissions, paragraph 11). Persons dissatisfied with a decision not to commence an investigation, or with a decision after investigation that there should be no prosecution, could overload the system by making pointless requests to chief officers have the matter reconsidered. In my judgment, Ms Lang fairly answered the point when she said that I was concerned with the recording of a complaint which is, in essence, a matter of registration. If the complaint is repetitious or an abuse of the complaints procedure, it can be disposed of on an application for dispensation to the Commission, and the availability of the dispensation procedure mitigates any fear that the system may become clogged up in the manner suggested. Accordingly, I have concluded that the Commission was right to reject the argument that Mr Jordan's complaint related to a matter of direction and control. Disposal It follows from what I have said that the claim for judicial review must be dismissed.

FOURTH SECTION CASE OF BERLIŃSKI v. POLAND (Applications nos. 27715/95 and 30209/96) JUDGMENT STRASBOURG 20 June 2002 FINAL 20/09/2002 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 Berliński v. Poland, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: MrG. Ress, President,MrL. Caflisch,MrJ. Makarczyk,MrI. Cabral Barreto,MrV. Butkevych,MrJ. Hedigan,MrsS. Botoucharova, judges,and Mr V. Berger, Section Registrar, Having deliberated in private on 18 January 2001 and on 30 May 2002, Delivers the following judgment, which was adopted on the last-mentioned date: PROCEDURE 1. The case originated in two applications (nos. 27715/95 and 30209/96) against the Republic of Poland lodged with the European Commission of Humans Rights under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Polish nationals, Roman and Słavomir Berliński (“the applicants”), on 10 April 1995 and 22 February 1994 respectively. 2. The Polish Government (“the Government”) were represented by their Agent, Mr K. Drzewicki, of the Ministry of Foreign Affairs. The applicants, who had been granted legal aid, were represented by Mr B. Narain, a lawyer practising in London. 3. The applicants alleged, in particular, that they had been ill-treated by the police on 4 October 1993, and that their defence rights had been violated in that they had no defence counsel for a period of over a year during the preliminary investigation of a criminal case against them. 4. The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11). 5. The application was allocated to the Fourth Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1 of the Rules of Court. The Chamber decided to join the proceedings in the applications (Rule 43 § 1). 6. By a decision of 18 January 2001 the Court declared the applications partly admissible. 7. The Chamber having decided, after consulting the parties, that no hearing on the merits was required (Rule 59 § 2 in fine), the parties replied in writing to each other's observations. 8. On 1 November 2001 the Court changed the composition of its Sections (Rule 25 § 1), but this case remained with the Chamber constituted within former Fourth Section. THE FACTS 9. The first applicant, Roman Berliński, is a Polish national born in 1971. The second applicant, Słavomir Berliński, is a Polish national born in 1974. The applicants are brothers. At present they live in Poland. I. THE CIRCUMSTANCES OF THE CASE A. Events of 4 October 1993 10. On 4 October 1993 the applicants, who practice body-building, were attending an athletics club at a Lublin university. The club manager urged the applicants to exit, as they had been present at the club without the appropriate permission. He warned that he would call the police if they did not leave. The applicants did not agree to leave. The manager called the police, and six uniformed officers arrived soon thereafter. 11. According to the applicants' account, the officers allegedly “showed a hostile attitude” towards them and “were not interested in checking their [identity documents] but simply to force them out” of the athletics club. The policemen “immediately wanted to handcuff them and pulled their arms backwards”. The applicants state that they “resisted this treatment”. The first applicant “managed to get free for a moment”, while the second applicant was “pushed and pulled” by two police officers. He was treated with tear-gas and struck with a stick. 12. According to the Government, the applicants resisted and attacked the policemen who were trying to apprehend them. One of the officers was kicked in the face and another in the crotch. 13. The parties submit that only when one officer drew a gun from his holster did the applicants yield. They were then handcuffed. 14. The applicants were immediately put in a police vehicle. 15. The Government state that the applicants still resisted whilst being taken to the vehicle, and force again had to be used against them. 16. The applicants were taken to a police station situated 4 kilometres from the athletics club. 17. According to the applicants' account, in the police van they were put on the ground and stayed handcuffed. The van had no separate cell for the arrested. The policemen and the applicants were closed together in the rear part of the van. The applicants “had no chance but to expose their bodies to the treatment of the policemen”. They “suffered heavy blows in their heads, kidneys, backs and spines”. The policemen used their police sticks to beat them up. The first applicant lost consciousness. 18. The Government deny that any ill-treatment occurred in the van. 19. At the police station the applicants were briefly questioned. The part of the first applicant's custody interview record concerning his physical condition reads: “before [the arrest the applicant was] well, at present [he complains of] pain in the left eye, the neck, the left kidney, the jaw and the head”. The relevant part of the second applicant's custody interview record reads: “pain in the temples, the hands, the nose, the teeth, the right thumb”. In the late evening of the same day the applicants were examined by doctors. The x-ray photograph of the first applicant's cranium showed no apparent injuries to his head. On the basis of the applicants' physical examination, which disclosed no problems in their circulatory and respiratory systems, a doctor concluded that they could be regarded as fit for detention. 20. The applicants remained in custody until the afternoon of the next day, 5 October 1993, when they were brought before a district prosecutor. They were released after having been questioned by the prosecutor. 21. The first applicant was taken to a hospital where he remained for 11 days. The second applicant was taken to the same hospital, was immediately released, and later underwent out-patient treatment. B. Proceedings against the police officers 22. On 5 October 1993, when being questioned by the prosecutors, the applicants complained that they had been beaten up by the police officers in the athletics club and in the police van. The applicants said that they had doubts as to the officers' identity, and that they had asked the policemen to present documents attesting to their authority. They alleged that the officers had refused to do so and that the policemen had instead attempted to arrest them. The applicants further stated that, in the police van, which lacked a separate cell for the arrested, the officers had started to inflict heavy blows all over their bodies. They had been defenceless and had not been able to lessen the impact of the blows because of their hands being handcuffed behind their backs and themselves being pushed onto the vehicle's floor. They submitted that the officers had beaten them all the way to the police station. 23. On 15 March 1994 a district prosecutor, on suspicion that offences against the applicants' personal rights had been committed in breach of the Polish Criminal Code and the Police Act, instituted investigations relating to the applicants' complaints against the police officers. The police officers who allegedly ill-treated the applicants were regarded as witnesses, not as accused, in the proceedings. 24. The applicants were called to appear before the district prosecutor on 25 March 1994, but failed to present themselves on that date. 25. On 28 March 1994 the prosecutor examined a witness DK (policeman). On 30 March witnesses MK and MS (police officers) were examined. On 6 April witnesses MW (the applicants' acquaintance) and EP (the club manager) were questioned. On 13 April the prosecutor summoned witnesses JS and MB, and on 20 April he summoned a witness PW (all police officers). 26. The applicants were examined on 5 and 9 May 1994. During the inquiries the applicants maintained that the officers had been very hostile towards them from the very beginning, that they had not asked them to leave the athletics club, and that they had, without any reason, beaten them up. The policemen contended that they had been attacked by the applicants, and that only threatening them with a firearm had permitted their apprehension. 27. On 23 May 1994 the prosecutor heard witnesses MW, JR and JN (police officers). On 24 May 1994 he summoned witnesses AG and JP (doctors). On 26 May the prosecutor examined a witness DJ, and on 27 May he questioned a witness MH (both doctors). 28. The investigation into the conduct of the policemen was prolonged by decision of a regional prosecutor of 10 June 1994, with a view to examining further witnesses. 29. On 14 June 1994 the district prosecutor examined witnesses AW and RM (doctors). 30. On 16 June 1994 the Forensic Department of the Białystok Academy of Medicine produced an opinion as to the applicants' physical condition following the incident. The opinion was delivered at the request of the Lublin District Court in the proceedings against the applicants (also see § 44 below). 31. The forensic experts, based on the medical records collected throughout the applicants' treatment from 5 October 1993, found that immediately after the incident the first applicant had a haematoma around the left eye, a bruise of 2 x 2 cm on the back of his head, a bruise with grazed skin of 7 x 7 cm on the left side of his jaw, four band-like bruises of significant size on his chest, and that his abdomen and spine were sensitive. The second applicant had small isolated bruises on his chin and neck, bruises on a grazed upper lip, an inner wound in the mucous membrane of the upper lip, lesions of the front teeth, and an injury to the right knee and wrist. 32. The forensic experts also stated that several days after the incident the first applicant had been increasingly complaining of pain in his head, vertigo, diminished clarity of sight and hearing, and that the second applicant had been complaining about a weak right hand, diminished sensitivity of his fingers, severe headaches, vertigo, nausea, pain in the spine and a reduced ability to move. The experts noted that the subsequent examinations of the applicants had not confirmed any deviations from the normal state of their heath. The experts stated that on 8 October 1993 the first applicant should have been released from hospital but remained following an intervention by the applicants' father. The experts also stressed that the father, himself a doctor, during his visits at the hospital had been instructing the first applicant of what and how he should complain. The first applicant had been released from hospital on 15 October 1993, although after this date he underwent further out-patient treatment of his jaw, chest and spine. 33. The forensic experts concluded that the injuries sustained by the applicants might have occurred from the use of a rigid, blunt instrument, e.g. a truncheon, and that the lesions might have occurred in the circumstances alleged by them, e.g. from blows by truncheons and fists. The experts held that the damage caused by these injuries to the applicants' soft tissues did not last more than seven days, but that those injuries were serious enough to warrant application of Article 156 § 2 of the Polish Criminal Code [causing light bodily harm] against the police officers. The experts also emphasised that the applicants' grievances had contained a certain measure of simulation and exaggeration. 34. On 29 June 1994 the district prosecutor requested experts at the Wrocław Academy of Medicine to produce a medical opinion specifically in the context of the proceedings concerning the applicants' allegations against the police officers. 35. By decisions of 9 September and 15 November 1994 the regional prosecutor again prolonged the investigation. 36. The opinion of the experts at the Wrocław Academy of Medicine was produced on 6 December 1994. They found that following the arrest the first applicant had had bruises on his face and a swollen left eye, and that the second applicant had isolated bruises on the face, a grazed lip and lesions of three teeth. The experts also found that the first applicant had not been suffering from concussion. The experts stated that the injuries of the applicants could occur in the circumstances alleged by the police officers, the applicants or in other circumstances. 37. The applicants requested the district prosecutor to hear additional witnesses, namely their parents, two district prosecutors and an American basketball player who had witnessed the events of 4 October 1993. On 9 September 1994 the prosecutor dismissed the request on the ground that the applicants' parents had not witnessed the incident, that the testimonies of the prosecutors had not been relevant to the determination of the facts, and that the statements of the American basketball player had been recorded in the proceedings against the applicants. On these grounds the prosecutor considered that no examination of further witnesses was necessary. 38. On 12 December 1994 the prosecutor decided to discontinue the investigation against the policemen. The prosecutor held that there was a lack of evidence in favour of the applicants' allegations that the officers had committed an offence. On the basis of witnesses' evidence, he held that the policemen had been compelled to use force only following the applicants' refusal to leave the sports club. The prosecutor did not establish that any force had been used against the applicants in the police van. By virtue of the medical opinion of the Wrocław Academy of Medicine, the prosecutor stated that the fact of the applicants' hospitalisation for seven days did not necessarily infer that the full period of seven days had been required to complete the treatment of lesions suffered by the applicants. The prosecutor concluded that “the injuries [sustained by the applicants] could occur both in the circumstances alleged by themselves, as well as in the circumstances alleged by the police officers”. Given the principle of benefit of doubt in favour of the accused, the prosecutor decided to discontinue the case against the police officers. 39. The applicants appealed against the decision. On 16 January 1995 a regional prosecutor dismissed the appeal and finally discontinued the proceedings. The regional prosecutor found no “unequivocal evidence” of the officers' guilt. He held that the district prosecutor had properly assessed the collected material, and that he had adopted a well-motivated decision. C. Proceedings against the applicants 40. After questioning the applicants on 5 October 1993, a district prosecutor commenced investigations against them on suspicion that they had attacked the police officers, thereby obstructing them in the course of their duties. On the same day the prosecutor ordered the applicants' bail on suspicion of their having committed an offence under Article 234 of the Criminal Code in regard to the events of 4 October 1993. 41. On 6 October 1993 the applicants appealed against the bail decision, requesting the prosecuting authorities to appoint a free defence lawyer on the ground of their difficult financial situation, referring inter alia to Article 6 § 3 (c) of the Convention. The applicants received no reply to the requests. 42. In the course of the investigation the policemen, the applicants and witnesses of the events of 4 October 1993, including witnesses on the applicants' behalf, were summoned. The applicants submitted many applications in which they contended that the allegations against them should have been examined from the angle of their own complaints that the officers had beaten them up. However, by virtue of relevant provisions of domestic criminal procedure, the prosecution decided that the material contained in the case-file relating to the applicants' allegations on their maltreatment by the police officers be separated and that two parallel investigations be conducted in relation to the incident of 4 October 1993. 43. On 17 February 1994 the applicants were charged with affray, assault and battery on the police officers in the course of the execution of their duties. 44. On 7 April 1994 the Lublin District Court decided to obtain from the Forensic Department of the Białystok Academy of Medicine an opinion as to the applicants' injuries following the incident. The opinion was produced on 16 June 1994 (also see §§ 30-33 above). 45. On 17 October 1994 the Lublin District Court decided to obtain an opinion from forensic psychiatrists to establish whether the applicants had been “able to ascertain and measure their actions” to determine their criminal responsibility. The court also decided to appoint a free lawyer to represent the applicants in view of the concern over their state of mind, in accordance with Article 70 § 1 of the Code of Criminal Procedure. 46. By a letter of 18 October 1994 the applicants informed the court that they refused to undergo a psychiatric examination. They did not appear for the out-patient psychiatric examination at the Lublin Centre for Mental Health on the date fixed by the court on 10 January 1995. The court ordered compulsory appearance of the applicants on the next date fixed for out-patient psychiatric examination on 2 February 1995. The applicants were brought to the experts on the above date, but refused to be subjected to an examination. The above situation repeated itself on 8 March 1995. In view of the fact that the applicants had refused to undergo out-patient psychiatric examination three times, on 8 March 1995 the forensic psychiatrists requested the court to place the applicants at a mental hospital for a forensic-psychiatric opinion to be produced. 47. On 23 March 1995 the Lublin District Court ordered the applicants' compulsory placement at the Lublin Centre for Mental Health for a period of no longer than six weeks. The applicants and their counsel appealed against the above decision. In the appeal the applicants' representative declared that he undertook to ensure their voluntary appearance for out-patient psychiatric examination. On 3 April 1995 the Lublin Regional Court, having regard in particular to the above commitment by the applicants' defence counsel, quashed the decision of 23 March 1995. 48. On the next day fixed for the applicants' out-patient psychiatric examination on 30 May 1995, they again failed to submit to out-patient examination. On 21 June 1995 the experts repeatedly requested the court to order compulsory measures against the applicants in order to produce a forensic-psychiatric opinion. 49. On 11 July 1995 the Lublin District Court again ordered the applicants' compulsory placement at a mental hospital for a period of no more than six weeks. On the applicants' appeal from this decision, on 24 July 1995 the Lublin Regional Court upheld the decision of the District Court. 50. On 1 December 1995 the first applicant was placed at the Lublin Centre for Mental Health. Upon the experts' application requesting to prolong the first applicant's stay at the ward in view of his negative attitude obstructing the production of a proper diagnosis, on 11 January 1996, the Lublin District Court extended the term of the first applicant's examination until 23 February 1996. On his appeal against the above decision, on 22 January 1996 the Lublin Regional Court upheld the decision of the District Court. The first applicant was released from the psychiatric ward on 15 February 1996. 51. On 22 February 1996 the final opinion as to the mental condition of the first applicant was issued. The forensic psychiatrists concluded that at the moment of the incident with the police on 4 October 1993 he was able to comprehend the meaning of his acts and to control his conduct. The first applicant was not found to be of unsound mind. The experts also noted that he had been very suspicious and distrustful of the examination. 52. As the second applicant expressed his willingness to undergo out-patient psychiatric observation, he was not placed in a mental hospital. The forensic psychiatrists delivered their opinion in regard to the second applicant on 27 February 1996. According to the experts' conclusions, the second applicant was mentally sane. The experts also noted that he had been very stressed throughout the examination, often speaking with a raised voice and not noticing the requests to calm him down. 53. On 7 August 1996 the Lublin District Court found the applicants guilty under Article 234 of the Criminal Code in that they had resisted and assaulted the officers on 4 October 1993. It held that the manager of the athletics club had been entitled to demand the applicants' removal notwithstanding his motives therefor, and that the police had lawfully enforced this demand. The applicants were sentenced: the first applicant to one year and six months' imprisonment and the second applicant to one year's imprisonment. The court suspended the sentences for three years for each of the applicants. 54. On 17 December 1996 the Lublin Regional Court, upon the applicants' appeal, upheld the first-instance judgment. The Regional Court concluded that “the fact that the defendants did not comply with the request of the five police officers to leave the sports hall shows a lack, on their part, of a critical judgment of their own conduct - this was also confirmed by the forensic psychiatrists”. That decision was final. The applicants were not imprisoned as a result of the conviction. II. RELEVANT DOMESTIC LAW AND PRACTICE 55. Articles 15 and 16 of the Police Act entitle the police to arrest a person who obstructs the public order and to use direct coercive force “to accomplish subordination to given orders”. A special governmental ordinance of 17 September 1990 (DZ.U.90.70.410) provides that coercive means should cause as little ailment as possible, and should be abandoned if a person conforms to orders. Under Article 69 of the Code of Criminal Procedure, an accused may apply to a prosecutor to be appointed a free defence counsel in case of insufficiency of means. The prosecutor must refer the request to the court for a lawyer to be appointed. Under Article 70 § 1, in the course of the trial the court may of its own motion appoint a lawyer to represent the defendant in view of the justified concern over his state of mind. THE LAW I. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION 56. The applicants alleged a violation of Article 3 of the Convention which provides as follows: “No one shall be subjected to torture or to inhuman or degrading treatment or punishment.” A. Alleged ill-treatment by the police on 4 October 1993 57. The Government denied any ill-treatment of the applicants on 4 October 1993. They stated that the use of force had been necessary to effect the applicants' submission to the lawful requirements of the police officers. No excessive force had been used against them, and no beating had occurred in the police van. 58. The applicants contested the Government's conclusions. They stated that the police officers had beaten them up while attempting to apprehend them, and while the policemen had been conveying them in the police van lacking a separate cell for the arrested. The applicants alleged that the policemen had employed excessive and unnecessary physical force against them in breach of the above provision of the Convention. 59. The Court recalls that Article 3 of the Convention prohibits in absolute terms torture and inhuman or degrading treatment. Ill-treatment must attain a minimum level of severity if it is to fall within the scope of Article 3. The assessment of this minimum is relative: it depends on all the circumstances of the case, such as the duration of the treatment, its physical and mental effects and, in some cases, the sex, age and state of health of the victim. In respect of a person deprived of his liberty, recourse to physical force which has not been made strictly necessary by his own conduct diminishes human dignity and is in principle an infringement of the right set forth in Article 3. Treatment has been held by the Court to be “inhuman” because, inter alia, it was premeditated, was applied for hours at a stretch and caused either actual bodily injury or intense physical and mental suffering, and also “degrading” because it was such as to arouse in its victims feelings of fear, anguish and inferiority capable of humiliating and debasing them. In order for a punishment or treatment associated with it to be “inhuman” or “degrading”, the suffering or humiliation involved must in any event go beyond that inevitable element of suffering or humiliation connected with a given form of legitimate treatment or punishment. The question whether the purpose of the treatment was to humiliate or debase the victim is a further factor to be taken into account, but the absence of any such purpose cannot conclusively rule out a finding of violation of Article 3 (see Labita v. Italy [GC], no. 26772/95, 6.4.2000, §§ 119-120, ECHR 2000-IV). Allegations of ill-treatment must be supported by appropriate evidence. To assess this evidence, the Court adopts the standard of proof “beyond reasonable doubt” but adds that such proof may follow from the coexistence of sufficiently strong, clear and concordant inferences or of similar unrebutted presumptions of fact (loc. cit., § 121). 60. In the instant case, the ill-treatment complained of by the applicants consisted of their beating up by the police officers on 4 October 1993 which resulted in a number of injuries (see §§ 19, 30-33, 36 above). The Court considers that the degree of bruising found by the various experts who examined the applicants indicates that the injuries were sufficiently serious to amount to ill-treatment within the scope of Article 3 (see, mutatis mutandis, Assenov and Others v. Bulgaria, no. 24760/94, 28.10.1998, § 95, ECHR 1998-VIII). It remains to be considered whether the State should be held responsible under Article 3 in respect of these injuries. 61. The Court observes that the parties have not disputed that the impugned injuries were caused by the police officers, by way of their using fists and truncheons against the applicants and applying tear-gas on the second applicant (see §§ 11-15 above). It is also uncontested that the police officers used force on 4 October 1993 at the athletics club and while carrying the applicants to the police van in order to effect the arrest against which the applicants resisted. The parties disagree however on whether the applicants were beaten up whilst being taken to the police station in the police vehicle (see §§ 16-18 above). It must be noted that the applicants' allegation that they had been beaten up while lying handcuffed in the van had not been confirmed following the domestic investigation of their complaints at two levels (see §§ 38-39 above; also see §§ 66-71 below). While the Court is not bound by the findings of the domestic authorities as to facts alleged to be in breach of the Convention, the Court, on the basis of the parties observations and the material in possession, finds it impossible to establish whether any ill-treatment occurred in the police van as alleged by the applicants. 62. The Court observes that on 4 October 1993 the applicants were arrested in the course of an operation giving rise to unexpected developments to which the police were called upon to react. Secondly, while the six police officers outnumbered the two applicants, account must be taken of the fact that the applicants were practising bodybuilders, and that they effectively resisted the legitimate actions of the police officers - by refusing to comply with the verbal demands to leave the athletics club, resisting the attempts of the policemen to apprehend them, and kicking two officers (see, by contrast, Rehbock v. Slovenia, no. 29462/95, 28.11.2000, ECHR 200-XII, where thirteen police officers had had sufficient time to evaluate the possible risks in connection with the arrest of three suspects, and where an applicant had shown no sign of resisting the arrest). Worse still, the applicants submitted to the arrest only when threatened with a gun, and were subsequently convicted of an assault on the policemen. The Court agrees with the domestic courts' conclusion that the applicants lacked a critical judgment of their own conduct when faced with a simple obligation to submit to the legitimate requirements of the law enforcement officers - an obligation which is part of the general civil duty in a democratic society. These circumstances count heavily against the applicants, with the result that the Government's burden to prove that the use of force was not excessive in this case is less stringent (see, mutatis mutandis, loc. cit., §§ 65-78). 63. The Court notes in addition that, although the first applicant remained in hospital for 11 days, it has not been established that such a period of time was necessary for him to recover from the injuries sustained on 4 October 1993, in that he could have been released from the hospital four days following the incident (see § 32 above). It is further noted that the second applicant sustained less serious injuries and underwent out-patient treatment. 64. The seriousness of the impugned injuries, as such, does not overshadow the fact that the recourse to physical force in this case was made necessary by the applicants' own conduct. Therefore, while the applicants admittedly suffered as a result of the incident of 4 October 1993, the use of force against them cannot be held to have been excessive. 65. Accordingly, there has been no violation of Article 3 of the Convention in regard to the alleged ill-treatment by the police on 4 October 1993. B. The nature of the investigation carried out 66. The Government submitted that a thorough and effective investigation of the applicants' allegations of ill-treatment had been conducted by the prosecutors. 15 witnesses of the events of 4 October 1993 had been questioned, and opinions of the experts had been obtained in order to establish the credibility of the applicants' complaints. The prosecution had decided to discontinue the investigation as the majority of the testimonies had confirmed the version of the events given by the police; the decision had been taken also with due respect to the principle of the presumption of innocence of the policemen. 67. The applicants argued that they had been denied an adequate investigation of their complaints. In particular, they disputed the interpretation of certain evidence by the prosecution. The applicants also stated that not all witnesses of the events of 4 October 1993 had been questioned, and only part of the medical reports had been taken into account by the prosecution in discontinuing the case. 68. The Court recalls that Article 3 ensures the right to a thorough and effective domestic investigation of credible assertions of ill-treatment, leading to the identification and punishment of those responsible for such conduct. In the Labita case cited above, the Court found a violation of Article 3 on the ground that the authorities had not investigated the alleged numerous acts of violence, humiliation, and other forms of torture of an applicant. It must be noted however that in that case the Court's conclusion was reached on account of the manifest inactivity of the authorities regarding the investigation of that applicant's complaints (loc. cit., §§ 117-136). 69. By contrast, in the present case, a number of persons, including independent witnesses, were questioned, and two separate expert opinions were produced in the context of the investigation into the applicants' allegations of ill-treatment on 4 October 1993 (see §§ 22-39 above). The Court notes that the applicants' request to examine certain additional witnesses was rejected by a reasoned decision (see § 37 above). Subsequently, the prosecution decided not to charge the policemen and to discontinue the investigation because of the lack of the unequivocal evidence of the officers' guilt. The investigation of the district prosecutor was completed on 4 December 1994 - i.e. fourteen months after the impugned events - but that period could be considered as acceptable, given the number of procedural acts carried out by the authorities (see §§ 22-39 above; also see, by contrast, the above mentioned Labita case, loc. cit., § 133; where only photographs of the alleged perpetrators had been taken during the same period). 70. Furthermore, the applicants had the subsequent opportunity to review the decision of the district prosecutor before a higher prosecutor. However, the fact that at each stage they were unsuccessful cannot be considered as pertinent. There is no evidence that the prosecution should have taken any other steps in order to establish the facts alleged by the applicants. Nor is there any indication that the prosecutors used the statutory discretion, allowing them to evaluate the material before them in order to decide as to whether or not to charge the alleged perpetrators with a criminal offence, in an arbitrary manner. 71. Against this background, the Court concludes that the investigation of the applicants' allegations of ill-treatment was thorough and effective. There has thus been no breach of Article 3 of the Convention in this respect. II. ALLEGED VIOLATION OF ARTICLE 6 §§ 1 and 3 (c) OF THE CONVENTION 72. The applicants also alleged a violation of Article 6 of the Convention which provides, insofar as relevant, as follows: “1. In the determination of any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] tribunal ... . 3. Everyone charged with a criminal offence has the following minimum rights: ... (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require; ... .” 73. In this respect the applicants complained that on 6 October 1993, when appealing against the bail order of 5 October 1993, they both had requested that an official defence counsel be provided for them. However, the prosecutor had not replied to the request nor had referred it to the court, thereby breaching the requirements of Article 69 of the Code of Criminal Procedure. The applicants stated that they had had no lawyer until 17 October 1994, when the Lublin District Court had appointed a defence counsel under Article 70 § 1 of the Code out of concern for their state of mind. As a result they had not been able properly to defend themselves, in breach of Article 6 §§ 1 and 3 (c) of the Convention. 74. The Government admitted that no reply had been given to the request of 6 October 1993, and that “the prerequisites of Article 6 § 3 (c) of the Convention [had not been] satisfied” in the present case. 75. The Court recalls that, even if the primary purpose of Article 6, as far as criminal matters are concerned, is to ensure a fair trial by a “tribunal” competent to determine “any criminal charge”, it does not follow that this provision of the Convention has no application to pre-trial proceedings. Thus, Article 6 - especially paragraph 3 - may be relevant before a case is sent for trial if and so far as the fairness of the trial is likely to be seriously prejudiced by an initial failure to comply with its provisions. The manner in which Article 6 §§ 1 and 3 (c) is to be applied during the preliminary investigation depends on the special features of the proceedings involved and on the circumstances of the case (see Brennan v. the United Kingdom, no. 39846/98, 16.10.2001, § 45, ECHR 2001-X). 76. In its judgment in the case of John Murray v. the United Kingdom (no. 18731/91, 8.2.1996, § 63, ECHR 1996-I), the Court also observed that, although Article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer at the initial stages of police interrogation, this right, which is not explicitly set out in the Convention, may be subject to restriction for good cause. The question, in each case, is whether the restriction, in the light of the entirety of the proceedings, has deprived the accused of a fair hearing (also see the Brennan case cited above, ibid.). 77. The Court observes that it is undisputed that the applicants lacked means to employ a private representative in the context of criminal proceedings against them. It is also uncontested that the applicants' request for an official lawyer to be appointed was ignored by the authorities, with the result that they had no defence counsel for more than a year. Given that a number of procedural acts, including questioning of the applicants and their medical examinations, were carried out during that period (see §§ 40-45 above), the Court finds no justification for this restriction which deprived the applicants of the right to adequately defend themselves during the investigation and trial. 78. Accordingly, there has been a breach of Article 6 §§ 1 and 3 (c) of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 79. 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. Pecuniary damage 80. The applicants claimed 202,000 Polish zlotys (PLN) for loss of earnings and opportunities caused by the violation of the Convention. 81. The Government considered the claim to be unjustified. 82. The Court is of the view that there is no causal link between the violation found and the alleged pecuniary damage (see, inter alia, R. D. v. Poland, nos. 29692/96 and 34612/97, 18.1.2001, § 66). Consequently, it finds no reason to award the applicants any sum under this head. B. Non-pecuniary damage 83. The applicants also claimed PLN 300,000 for non-pecuniary damage. 84. The Government considered the applicants' claim exorbitant. 85. The Court accepts that the applicants have suffered non-pecuniary damage, such as distress and frustration resulting from the impossibility of adequately defending themselves (see, mutatis mutandis, the R. D. v. Poland judgment cited above, loc. cit., § 57). Making its assessment on an equitable basis, the Court awards each of the applicants EUR 2,000 (two thousand euros) under this head. C. Costs and expenses 86. The applicants also claimed PLN 3,000 for legal costs and expenses. 87. The Government did not comment on this claim. 88. The Court notes that the applicants have been granted legal aid to present their case before the Court (see § 2 above). There is no evidence that they incurred any additional legal costs and expenses in connection with their complaints regarding the violation established by the Court, other than the costs already paid under the Court's legal aid scheme. In these circumstances, the Court does not make any award under this head. D. Default interest 89. The Court will award default interest at a simple annual rate of 7.25 %. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Holds that there has been no violation of Article 3 of the Convention; 2. Holds that there has been a violation of Article 6 §§ 1 and 3 (c) of the Convention; 3. Holds (a) that the respondent State is to pay, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, EUR 2,000 (two thousand euros) to each of the applicants in respect of non-pecuniary damage, these sums to be converted into the national currency of the respondent State on the day of payment; (b) that simple interest at an annual rate of 7.25 % shall be payable from the expiry of the above-mentioned three months until settlement; 4. Dismisses the remainder of the applicants' claim for just satisfaction. Done in English, and notified in writing on 20 June 2002, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Vincent BergerGeorg RessRegistrarPresident

This is an appeal from a, decision of the High Court of Orissa which allowed the claim of the respondent for appointment as a Medical Officer in Homeopathic Dispensary. The respondent is a registered Homoeopathic Practitioner within the meaning of Section 21 of the Orissa Homoeopathic Act, 1956 which is hereinafter referred to as the State Act. There is also a Central enactment called Homoeopathic Central Council Act, 1973 Act No. 59 of 1973 on the same subject, which is hereinafter referred to as the Central Act. The respondent was originally holding the post of Distributor and thereafter he was appointed as Medical Officer in a Homoeopathic Dispensary. After companying into force of the Central Act, the respondent was reverted to his original post of Distributor. The reversion was based perhaps on the ground that the respondent was number duly qualified to hold the post of Medical Officer in the dispensary in view of the bar imposed either by the Central Act or by the State Act. The validity of reversion was challenged before the High Court by means of a writ petition under Article 226 of the Constitution. There were several other petitions filed by the similarly reverted persons. The High Court in those petitions See OJC No. 1916/77, 12/78 and 531/78 disposed of on March 21, 1981 gave a companysidered judgment expressing the view that a registered homoeopathic practitioner like the respondent is number ineligible for appointment as Medical Officer in Homoeopathic Dispensary. In that judgment, the High Court directed the State Government to review the cases of the reverted Medical Officers. Following the judgment the respondents writ petition was also allowed in terms thereof. The State being aggrieved by the High Court decision has appealed to this Court. The Central question for companysideration is whether the registered Homoeopathic practitioner who has number qualified himself from an institution established or recognised by the Homoeopathic Board shall be ineligible either under the State Act or under the Central Act for being appointed as Medical Officer of any State Homoeopathic dispensary? Section 2 i defines registered Homoeopathic practitioner to mean a Homoeopathic practitioner registered as such under Section 21. Section 21 1 refers two categories of Homoeopathy practitioners i Registered Homoeopathic practitioner and ii Listed Homoeopathic practitioner. We are number companycerned with the later category, we are only companycerned with the former category. Section 21 2 furnishes the requirements to qualify oneself to become a registered Homoeopathic practitioner. It is number in dispute that the respondent is one of such registered Homoeopathic practitioners. With these undisputed facts, we may number companysider the scope of Sections 29 b and 43 of the State Act and Section 15 of the Central Act. Section 29 b of the State Act reads Registered practitioners certificate Notwithstanding anything companytained in any law for the time being in force xxx xxx xxx xxx xxx b a registered homoeopathic practitioner shall be eligible to hold any appointment as a Medical Officer in any dispensary, hospital, infirmary or lying-in-hospital supported by or receiving a grant from the State Government or any local authority and treating patients according to the homoeopathic system of medicine Section 43 of the State Act, so far as relevant provides Reservation of certain appointment to registered Homoeopathic Practitioners who have qualified themselves from institutions established or recognised by the Board Except with the special sanction of the State Government numberHomoeopathic Practitioner, other than a registered Homoeopathic Practitioner who has qualified himself from an institution established or recognised by the Board, shall be companypetent to hold an appointment as Medical Officer of health, or as physical or other medical officer in a Homoeopathic hospital maintained or aided by the State Government or any Local authority. Section 29 b states that a registered Homoeopathic Practitioner shall be eligible to hold appointment as Medical Officer in any dispensary, hospital, infirmary etc. sup ported by or receiving grant from the State Government or any local authority and treating patients according to the homoeopathic system of medicine. The section, in other words, states that if one is a registered Homoeopathic Practitioner, he would be eligible for appointment as a Medical Officer either in any dispensary or hospital. Section 43, however, makes certain reservations of posts of medical officers exclusively for institutionally qualified registered Homoeopathic Practitioners. It provides that numberHomoeopathic Practitioner other than a registered Homoeopathic Practitioner who has qualified himself from an institution established or recognised by the Board shall be companypetent to hold appointment as Medical Officer of Health or Physician in a Homoeopathic Hospital maintained or aided by the State Government or any Local authority. The companydition imposed under Section 43 is that the registered Homoeopathic Practitioner must have qualified him self from an institution established or recognised by the Board and it means he must have undergone the companyrse prescribed by such institution. No such restriction, however, is imposed for appointment as Medical Officer of a Homoeopathic dispensary. Any registered Homoeopathic Practitioner companyld be eligible for an appointment as a Medical Officer in any Homoeopathic dispensary. The respondent therefore is number ineligible for appointment as Medical Officer of a Homoeopathic dispensary. We will number examine whether the Central Act companytains any restraint or provides any additional qualification for appointment as Medical Officer in Homoeopathic dispensary. If there is any such provision, the Central Act being a subsequent enactment on the same subject would override the State Act. Section 15 2 of the Central Act provides 15 2 . No person, other than a practitioner of Homoeopathy who possesses a recognised medical qualification and is enrolled on a State Register or the Central Register of Homoeopathy a shall hold office as Homoeopathic physician or any other office by whatever designation called in Government or in any institution maintained by a local or other authority. Section 15 2 states that numberperson other than a practitioner of Homoeopathy who possesses a recognised medical qualification and is enrolled on a State Register or the Central Register shall hold office as Homoeopathic physician or any other office in Government or in any institution maintained by a local or other authority. Medical qualifications referred to therein are included in the second or the third schedule of the Act. It is clear therefrom that a person who does number possess any such medical qualification cannot be appointed as a Medical Officer of any dispensary. But Section 15 3 b preserves the privileges including the right to practice Homoeopathy companyferred by or under the State Act. Section 15 3 b provides Rights of persons possessing qualifications included in Second or the Third Schedule to be enrolled xxx xxx xxx xxx Nothing companytained in Sub-section 2 shall affectxxx xxx xxx xxx b the privileges including the right to practise Homoeopathy companyferred by or under any law relating to registration of practitioners of Homoeopathy for the time being in force in any State, on a practitioner of Homoeopathy enrolled on a State Register of Homoeopathy. It will be clear from the above provision of the Central Act that the right companyferred on a registered Homoeopathic Practitioner under the State Act is number affected by the companyditions under Section 15 2 of the Central Act and indeed such right or privilege has been specifically preserved by Section 15 3 b of the Central Act. The State Act as we have seen earlier provides eligibility for the respondent, for appointment as Medical Officer in a Homoeopathic dispensary and that right remains unaffected by the Central Act.

Opinion of Mr Advocate General Jacobs delivered on 16 November 2000. - Nachi Europe GmbH v Hauptzollamt Krefeld. - Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany. - Common commercial policy - Anti-dumping measures - Article 1(2) of Regulation (EEC) No 2849/92 - Modification of the definitive anti-dumping duty on imports of ball bearings with a greatest external diameter exceeding 30 mm originating in Japan - Reference for a preliminary ruling on whether that regulation is valid - Failure by the plaintiff in the main proceedings to bring an action seeking annulment of the regulation. - Case C-239/99. European Court reports 2001 Page I-01197 Opinion of the Advocate-General 1. This reference for a preliminary ruling concerns a Council regulation imposing a definitive anti-dumping duty on imports of ball bearings originating in Japan, the essential operative provisions of which have been annulled by the Court of First Instance on general grounds, but only in so far as they imposed a duty on the products of the two manufacturers who had brought proceedings in good time under what was then Article 173 of the EEC Treaty (now, after amendment, Article 230 EC). To what extent may a Community importer of ball bearings manufactured by its Japanese parent company, to whose products the duty also applies but which was not involved or referred to in the annulment proceedings, rely on that annulment before its national courts in order to seek remission or repayment of the anti-dumping duty levied? That is, in essence, the question raised by the Finanzgericht (Finance Court), Düsseldorf, in the present case. The anti-dumping procedure 2. A definitive anti-dumping duty on imports of ball bearings with a greatest external diameter of more than 30 mm (hereinafter simply ball bearings) originating in Japan was first imposed by Council Regulation No 1739/85. It applied to all such ball bearings, with the exception of those manufactured by four named companies. Individual rates of duty were set for the products of 10 other named manufacturers, of whom only four need be mentioned here. A duty of 3.2% was imposed on ball bearings manufactured by NTN Toyo Bearing Co Ltd (NTN), of 5.5% on those manufactured by Koyo Seiko Co Ltd (Koyo Seiko), of 16.7% on those manufactured by Nippon Seiko KK (NSK) and of 13.9% on those manufactured by Nachi Fujikoshi Corporation (Nachi Fujikoshi). 3. In May 1989, the Commission announced a review of those anti-dumping measures which, in accordance with Article 15(1) of Council Regulation No 2423/88 (the basic regulation), were due to expire in 1990. They were, however, maintained in force in accordance with Article 15(4) of that regulation, pending the outcome of the review. 4. The review came to an end on 28 September 1992 with Council Regulation No 2849/92 (the contested regulation), some three and a half years after its initiation and over two years after Regulation No 1739/85 had been due to expire. In its reasoning, the Council found dumping margins still to exist (paragraphs 21 to 23 of the preamble), considered whether the situation of the Community industry was such that the expiry of the measures in place would lead to a recurrence of injury and concluded that it would (paragraphs 26 to 39). Taking the view that the interest of the Community clearly lay in maintaining protection for its ball bearings industry (paragraphs 40 to 44), and after comparing price levels (paragraphs 45 to 52), the Council decided to modify the definitive duties in existence. The basic level of duty was set at 13.7%, with lower levels for ball bearings manufactured by four named producers (Article 1(2) of the operative provisions) and exemption for a further seven named producers (Article 1(3)). 5. As a result, the rates of duty were now 11.6% for NTN (up from 3.2%), 13.7% for Koyo Seiko (up from 5.5%), 6.5% for NSK (down from 16.7%) and 7.7% for Nachi Fujikoshi (down from 13.9%) (Article 1(2)). The judicial review At first instance 6. Regulation No 2849/92 was challenged before the Court of Justice by NTN and Koyo Seiko (the two Japanese manufacturers most adversely affected by the changed rates of duty) by applications within the two-month time-limit laid down in what was then the third paragraph of Article 173 of the EEC Treaty. Those actions against the Council were subsequently transferred to the Court of First Instance as Cases T-163/94 and T-165/94. In those proceedings, the Council was supported by the Commission and by the Federation of European Ball Bearing Manufacturers' Associations, but none of the other Japanese manufacturers or European importers concerned sought to intervene in support of NTN or Koyo Seiko. NTN asked the Court to annul Article 1 of Regulation No 2849/92 in so far as it imposes an anti-dumping duty on the applicant and Koyo Seiko asked it to declare Regulation No 2849/92 void in so far as it affects the applicant. 7. In its judgment of 2 May 1995, the Court of First Instance found it necessary to examine only two of the applicants' pleas, both of which it held to be well founded. 8. In the first of those pleas, the applicants argued that the Council had failed to establish the existence of injury within the meaning of Article 4(1) of the basic regulation, under which, essentially, a determination of injury may be made only where the injury or threatened injury to a Community industry is attributable to the effects of dumping and not to other factors. In paragraphs 69 to 116 of its judgment, the Court of First Instance examined in detail paragraphs 27 to 38 of the Council's reasoning in the contested regulation. In several of those paragraphs it found errors of fact, incomplete statements of fact, hypotheses or statements too vague to support any conclusion. It also found that the Council had based part of its reasoning on the existence of a recession, which could not be taken into account for the purpose of determining injury. It concluded that it was possible that in the absence of such errors of fact and law the Council would not have found that there was a threat of injury. 9. In the second plea examined, the applicants argued that Article 7(9)(a) of the basic regulation, under which an investigation should normally be concluded within one year of its initiation, had been infringed because there was no adequate statement of reasons to explain why that period had not been observed. The Court of First Instance held that an investigation must not be extended beyond a reasonable period and that the Council had not provided adequate reasons to explain the length of time taken in this case (paragraphs 119 to 124 of the judgment). 10. On both those grounds, the Court of First Instance annulled Article 1 of the contested regulation in so far as it imposes an anti-dumping duty on the applicants. On appeal 11. On 12 July 1995, the Commission lodged an appeal (Case C-245/95 P) against the judgment in Joined Cases T-163/94 and T-165/94, on the ground that the Court of First Instance had committed an error of law, first, in its interpretation of the definition of injury under the basic regulation and, second, in its interpretation and application of Article 7(9)(a) of that regulation, in so far as it considered that the excessive duration of the investigation necessarily entailed the annulment of the contested regulation. 12. In the appeal proceedings, NSK and eight of its European subsidiaries applied for and were granted leave to intervene in support of NTN and Koyo Seiko. 13. In its judgment of 10 February 1998, the Court of Justice rejected the Commission's contention that the criteria for establishing the existence of injury set out in Article 4 of the basic regulation did not apply in the context of a review of existing anti-dumping measures but only where measures were being imposed for the first time, and therefore dismissed its first plea. Since the Court of First Instance had found that the Council had failed to establish any injury or threat of injury within the meaning of that article, and since that finding was sufficient to warrant the annulment of Article 1 of the contested regulation, this Court did not examine the Commission's second plea. 14. In their statement in intervention in the appeal, NSK and its subsidiaries had asked the Court not only to grant the forms of order sought by NTN and Koyo Seiko but also to confirm that the annulment of Article 1 of the contested regulation applied equally to NSK. At paragraph 24 of its judgment, the Court of Justice held that the latter claim was inadmissible under the fourth paragraph of Article 37 of its Statute, since an application to intervene must be limited to supporting the form of order sought by one of the parties. 15. On 3 June 1998 the Commission published a Notice concerning anti-dumping measures on imports of ball bearings with a greatest external diameter exceeding 30 mm originating in Japan, in which it stated that, following the annulment of Article 1 of the contested regulation as far as NTN and Koyo Seiko were concerned and the dismissal of the appeal against that annulment, as to definitive duties collected after the entry into force of the regulation in question, importers may request their refund from national customs authorities with regard to products manufactured by NTN and Koyo Seiko. The proceedings in the present case 16. Nachi Europe GmbH is a European subsidiary of Nachi Fujikoshi. In November and December 1995, it imported ball bearings of Japanese origin, paying a total of DEM 58 891.51 in anti-dumping duty, imposed by tax notices of 17 November 1995 and 29 December 1995. 17. In a letter received by the Hauptzollamt (Principal Customs Office) Krefeld on 19 November 1998, Nachi Europe requested repayment of the anti-dumping duty on the ground that its imposition was unlawful in view of the judgments in Joined Cases T-163/94 and T-165/94 and in Case C-245/95 P. 18. The Hauptzollamt refused the request for repayment by a ruling of 11 January 1999. Nachi Europe applied for reconsideration of that refusal, but the Hauptzollamt declined on the ground that it was not in a position to determine whether the contested regulation was unlawful. 19. Nachi Europe then brought proceedings before the Finanzgericht Düsseldorf, which considered that the claim for repayment would be bound to succeed if Article 1(2) of the contested regulation could be established to be invalid. The Finanzgericht further noted that, on the one hand, the judgment of the Court of First Instance declared Article 1 invalid only vis-à-vis NTN and Koyo Seiko but that, on the other hand, the grounds on which that Court had reached its decision were of general application and that the judgment of the Court of Justice on appeal was based on equally general considerations. 20. The Finanzgericht therefore stayed the proceedings before it and sought a preliminary ruling on the following questions: 1. Is Article 1(2) of Regulation (EEC) No 2849/92 invalid? 2. If the first question is to be answered in the affirmative, from what point in time is Article 1(2) of Regulation (EEC) No 2849/92 to be considered invalid in regard to the plaintiff? 21. Written observations have been submitted by Nachi Europe, by the Council and by the Commission, all of whom also presented oral argument at the hearing. Analysis 22. The national court asks whether Article 1(2) of the contested regulation is invalid and, if so, from what point in time it is to be regarded as invalid vis-à-vis Nachi Europe. 23. The form of the second question and the whole tenor of the order for reference indicate that the question as to validity is not posed in general terms but should rather be read as asking whether the annulment in favour of NTN and Koyo Seiko had any effect on the validity of the regulation as regards Nachi Europe. 24. The debate before the Court has indeed concerned that more limited question, together with the further question whether Nachi Europe, having failed to bring a direct challenge within the time-limit prescribed for that purpose, is now barred from pleading the invalidity of the regulation before a national court. 25. Before broaching either question, however, I consider it useful to examine a matter which is of importance to both of them, namely the circumstances in which a direct action seeking the annulment of the contested regulation could be brought before the Court of First Instance. Rights of action against the contested regulation 26. Under Article 230 EC the Member States and, subject to certain variations, the Community institutions enjoy a right to challenge the validity of Community measures without being required to establish a specific interest. The fourth paragraph of that article, however (previously the third paragraph of Article 173 of the EEC Treaty), allows natural or legal persons to challenge decisions addressed to them or other measures which are of direct and individual concern to them. All such actions must be brought within two months of publication, notification or cognisance of the measure, as the case may be. 27. Regulations, being measures of general application, are in principle not susceptible to challenge by individuals under those provisions. Some regulations, however, may be of direct and individual concern to a natural or legal person and may thus be contested by that person directly before the Court of First Instance under Article 230 EC. 28. Anti-dumping regulations are frequently (and accurately) described as being of a hybrid nature. On the one hand, they are measures of general application, since they apply to all imports of the specified products, regardless of the identity of the importer who has to pay the duty. On the other hand, they directly and individually concern exporters of those products at least exporters specified by name and importers linked to such exporters by a relationship of exclusivity. 29. In the present case, it is indisputable that Nachi Fujikoshi itself could have brought an action directly before the Court of First Instance to seek the annulment of the regulation in so far as its products were concerned, in the same way that NTN and Koyo Seiko, who were in an exactly comparable position, actually did. Manufacturers or exporters of products on which an anti-dumping duty is imposed are always capable of being regarded as directly and individually concerned, at least in so far as they are identified in the regulation or concerned by the preliminary investigations. 30. However, the national proceedings here are brought not by the parent company Nachi Fujikoshi, on whose products the duty was imposed, but by its subsidiary Nachi Europe, which imports those products and pays the duty. The situation as regards importers may vary, although the rules are well established. 31. Applications for annulment brought by importers are admissible where, as provided for in Article 2(8)(b) of the basic regulation, there is an association between the importer and the exporter or manufacturer on whose products the duty has been imposed and the importer's resale prices have been used to establish the existence of the dumping or the anti-dumping duty itself. In addition, the Court has accepted applications where, as in Extramet, the importer can establish the existence of some other circumstances meeting the Plaumann test. 32. In the present case, it is stated in paragraph 6 of the preamble to the contested regulation that the Commission sought and verified all information it deemed necessary for the purposes of this proceeding and carried out investigations at the premises of the following companies: ... Nachi (Germany) GmbH .... At paragraph 17, it is stated: Where exports were made to importers in the Community related to the Japanese manufacturers, export prices were reconstructed on the basis of resale prices to the first independent buyer in the Community ... 33. According to documents in the national court's case-file, Nachi (Germany) GmbH was the former name of Nachi Europe, the applicant in the main proceedings, which is associated with Nachi Fujikoshi. It is clear that the company was involved in the investigations and that its prices were used in order to establish the dumping margins involved. 34. In those circumstances, there can be no doubt that Nachi Europe could have brought proceedings directly before the Court of First Instance to challenge the validity of the contested regulation. It may also be noted that there was no difficulty with regard to notification as the starting-point of the time-limit for bringing such an action, since the contested regulation was published in the Official Journal of the European Communities and must be presumed to have come to the notice of Nachi Europe. Moreover, that company can scarcely have been unaware of its rights in that regard since not only has its parent company on several occasions brought proceedings for the annulment of an anti-dumping regulation but in the first of those proceedings it acted jointly with two European subsidiaries, one of which was Nachi (Deutschland) GmbH, apparently a former designation of Nachi Europe. 35. Against that backdrop, I shall now consider the first of the two essential questions which arise in this case. Effect of the annulment as regards imports of Nachi Fujikoshi ball bearings 36. In Case T-163/94 NTN sought annulment of Article 1 of the contested regulation in so far as it imposes an anti-dumping duty on the applicant and in Case T-165/94 Koyo Seiko asked for a declaration that the regulation was void in so far as it affects the applicant. The Court of First Instance annulled Article 1 in so far as it imposes an anti-dumping duty on the applicants. 37. But Article 1 begins by imposing a definitive anti-dumping duty in principle on all ball bearings of the specified type originating in Japan. It is contained in a regulation, which has general application. Moreover, the annulment was on grounds relating to the inadequacy and/or unreliability of the reasoning in general and not with specific regard to any particular manufacturer. Since a judgment annulling a Community measure is recognised as having authority erga omnes, it might be wondered whether the annulment here did not of necessity extend in general to the imposition of the anti-dumping duty. This, indeed, appears to be the approach advocated by Nachi Europe. 38. The Council and the Commission, however, point to the clearly circumscribed terms of the operative part of the annulling judgment and refer to the AssiDomän case, in which the Court considered that the annulment of a decision vis-à-vis certain addressees as a result of an action brought by them has no effect on its validity vis-à-vis other addressees who were not parties to the proceedings. 39. I agree essentially with that latter view, although there are differences between the situation in AssiDomän and the present. 40. The issue in AssiDomän was whether, following the annulment of a Commission decision in so far as it imposed fines on certain participants in an alleged price concertation, the Commission was obliged, in order to comply fully with the annulling judgment, to reconsider the fines imposed in the same decision on other addressees who had not sought its annulment. However, the raising of that issue and the conclusion finally reached by the Court that the Commission was under no duty of the kind alleged presuppose that the annulment could have had no effect as regards those other addressees. 41. A partial annulment of that kind operating in favour of only those addressees or directly and individually concerned parties who have challenged the measure is possible only as regards measures which are in reality decisions or bundles of decisions. Where a true regulation is challenged, any annulment, even partial, of its provisions will be effective erga omnes. As far as exporters and their associated importers are concerned, an anti-dumping regulation falls into the former category, so that a partial annulment may be limited in its effects to individual parties. 42. It is in my view clear that the judgment annulling the contested regulation here in so far as it affected NTN and Koyo Seiko did not have any effect on the duty imposed on any other ball bearings concerned. 43. In the first place, the operative part of the judgment was explicitly confined to the duty imposed on the applicants. It is true, as pointed out by the Court in AssiDomän, that the authority erga omnes of an annulling judgment attaches both to the operative part and to the ratio decidendi and the latter may cast light on the precise scope of the former. However, there can be no ground for extending the explicitly limited scope of the operative part on the basis that the reasoning in the judgment could equally well have justified a broader scope. Moreover, the authority of a ground of a judgment annulling a measure cannot apply to the situation of persons who were not parties to the proceedings and with regard to whom the judgment cannot therefore have decided anything whatever. 44. Not only was the operative part of the annulling judgment expressly circumscribed, but its scope could not have been made any broader. As the Court held in AssiDomän, citing its consistent case-law, since it would be ultra vires for the Community judicature to rule ultra petita ..., the scope of the annulment which it pronounces may not go further than that sought by the applicant. Since NTN and Koyo Seiko sought annulment only in so far as the regulation concerned them, the Court of First Instance had no jurisdiction to annul it in any other respect. 45. And not only did NTN and Koyo Seiko seek annulment only to that limited extent but they were precluded from seeking any more extensive annulment. In parallel anti-dumping proceedings concerning ball bearings with a greatest external diameter of not more than 30 mm, the Council adopted a regulation in 1984 imposing specified duties on such products manufactured by, inter alia, NTN, Koyo Seiko, NSK and Nachi Fujikoshi. All four of those companies brought direct actions against that regulation, each seeking a general declaration that the regulation was void. In each case, the Council contended that the application should be declared admissible only in so far as it related to the specific applicant's products and in each case the Court agreed, in effectively identical terms. 46. It held, for example, with regard to Nachi Fujikoshi: it should be noted that the contested regulation does not lay down general rules which apply to a whole group of traders without distinguishing between them but imposes different anti-dumping duties on a series of manufacturers or exporters of small ball-bearings established in Japan and Singapore who are expressly named, and also on other undertakings which are not named but which pursue the same activities in those same countries. Under those circumstances it must be concluded that Nachi is individually concerned only by those provisions of the contested regulation which impose on it a specific anti-dumping duty and determine the amount thereof, and not by those provisions which impose anti-dumping duties on other undertakings. It follows from the foregoing that the objection of inadmissibility raised by the Council must be upheld and the applicant's principal claim for a declaration that Regulation No 2089/84 is void in its entirety must be dismissed. It is, however, necessary to declare the application admissible and to examine its merits in so far as it seeks a declaration that those provisions of the contested regulation which are of concern exclusively to Nachi are void. 47. It is true that in the very first group of anti-dumping cases to come before the Court, the Court annulled the regulation in its entirety. There, however, the Court considered that all the manufacturers concerned by the regulation were parties to the proceedings. It does not seem that the Court has ever annulled such a regulation so as to affect the products of manufacturers or associated importers who were not parties to the proceedings. 48. I am therefore satisfied that the Court of First Instance did not annul, and could not have annulled, the regulation contested in this case other than in so far as it concerned NTN and Koyo Seiko. 49. I should perhaps mention, however, a circumstance that might seem to support the view that the effects of the annulment were broader than that, namely the approach taken by the Court of Justice in granting NSK and its European subsidiaries leave to intervene in the NTN and Koyo Seiko appeal. 50. The Court stated that NSK had had an independent right of action against the contested regulation because it was directly and individually concerned by those parts of the regulation which imposed a duty on its products, though not by the others, and that, since it had not brought an action for annulment, its intervention must be confined to supporting the forms of order sought by NTN and Koyo Seiko. The subsidiaries, the Court stated, imported ball bearings manufactured by NSK on which they paid a specific duty pursuant to the regulation. From this, it concluded that their interests would be affected by the outcome of the appeal and that they had established a direct and present interest in ensuring that the forms of order sought by NTN and Koyo Seiko were granted. 51. In those circumstances, however, I do not see what interest NSK or its subsidiaries had established in the result of the case at least in so far as they were supporting NTN and Koyo Seiko. The maintenance or annulment of the duty on NTN's and Koyo Seiko's products could have no direct effect on NSK's business. It could have had an indirect effect, since annulment of the duty could only make their products more competitive than NSK's, but in that case one would have expected NSK and its subsidiaries to be supporting the Commission, not NTN and Koyo Seiko. 52. I confess that I consider the order granting leave to intervene to have been mistaken. It is conceivable that NSK could have established an interest in the result of the appeal for the purposes of for example a review by the Commission of the anti-dumping measures but there is no hint in the order that any such consideration was put forward by NSK or was present in the Court's mind. It appears rather that leave to intervene was sought and granted on the basis of a general interest, unrelated to the result of the particular case. However, the Court was quite clear in its refusal to entertain NSK's request for confirmation that the annulment applied equally to its own products. 53. I am thus unshaken in my view that neither the judgment annulling the contested regulation in so far as it concerned NTN and Koyo Seiko nor the judgment on appeal could have had any effect whatever on the validity of the imposition of an anti-dumping duty on ball bearings manufactured by Nachi Fujikoshi although this does not, as I shall make clear below, mean that Nachi Fujikoshi or Nachi Europe could have derived no comfort from it whatever. 54. I shall now turn to the second question which arises in this case and which, although it jostles for attention with the first, is in many respects an entirely separate matter. Right of Nachi Europe to plead the illegality of the contested regulation before the national court Application of the TWD principle 55. It is settled law that, for reasons of legal certainty, a decision which has not been challenged by the addressee before the Community Courts within the time-limit laid down by Article 230 EC becomes definitive as against him, and according to the judgment in TWD the same holds true for a person other than the addressee who is directly and individually concerned by the decision. Also according to TWD, the validity of such a decision cannot thereafter be challenged or called into question by him before the national courts either. 56. That case concerned a beneficiary of State aid the recovery of which had been ordered following a Commission decision declaring it illegal. The beneficiary had been made aware of the Commission's decision and of its undoubted right to challenge it but had not done so within the time-limit, pleading subsequently the illegality of the decision before the national courts in proceedings concerning the national measure recovering the aid. The Court held that, in such factual and legal circumstances, the definitive nature of the Commission's decision made it binding on the national court by virtue of the principle of legal certainty. 57. In Accrington Beef, the Court apparently accepted that the principle set out in TWD applied also where the measure in question was a regulation. In that case, it rejected an objection to the admissibility of a plea of illegality, raised before a national court and referred to the Court for a preliminary ruling, not on the ground simply that the contested measure was a regulation but on the ground that it was a regulation and that it was not obvious that an action by the applicants challenging that regulation under [Article 230 EC] would have been admissible. 58. Thus, according to that case-law, wherever a party has a clear right to seek the annulment of a measure in a direct action before the Community Courts, it must either do so or forever hold its peace. Where it has no such right, or where it does not obviously have that right, it must be allowed to call the validity of that measure into question before the national courts, which must seek a ruling from the Court of Justice. 59. I have made it clear above that Nachi Europe did have a right, unambiguously enshrined in the case-law, to challenge the contested regulation directly before the Court of First Instance. Consequently, having failed to bring such a challenge within the two-month time-limit, according to the principle expressed in TWD it may no longer seek to do so in the national courts. 60. Again, however, that is not quite the end of the matter. The present case may differ from TWD inasmuch as there is clear evidence that the contested regulation was unlawful in its entirety yet it none the less continued to produce effects each time goods of the type concerned were imported. However, I shall demonstrate below that application of the rule in TWD does not mean that those factors could not have been taken into account in any way. First, though, I must turn to a specific objection raised by Nachi. The right to bring an indirect challenge without limitation in time 61. Nachi Europe argued at the hearing that the rule in TWD was incompatible with the right afforded by Article 241 EC to invoke before the Court of Justice the inapplicability of a regulation at issue in proceedings, notwithstanding the expiry of the time-limit for bringing a direct challenge under Article 230. 62. It is worth stressing that Article 241 EC does not itself apply directly in preliminary ruling procedures; it seems to be framed in terms relevant to direct actions only, and it is not required in the context of Article 234, which contains its own provision for questions to be referred on the validity of a Community measure when the issue is raised in national proceedings. However, the general principle which it embodies is of equal application in the context of Article 234. 63. In Universität Hamburg the Court held that according to a general principle of law which finds its expression in [Article 241 EC], in proceedings brought under national law against the rejection of his application the applicant must be able to plead the illegality of the Commission's decision on which the national decision adopted in his regard is based and that the question of the validity of the decision may therefore be referred to the Court in proceedings for a preliminary ruling. 64. As I see it, the principle in question is that a party adversely affected by a (national or Community) measure of direct and individual concern may not be denied the right to challenge that measure simply because the challenge could not succeed without calling into question a Community measure of general application which forms the basis for the individual measure and which can no longer be challenged directly following the expiry of the period prescribed for that purpose. In those circumstances, the general measure may still be impugned to the extent necessary in order to establish the unlawfulness of the individual measure. 65. The two-month limit laid down in Article 230 will therefore not apply in relation to the indirect challenge to the basic, general measure. A Community implementing measure must of course still be challenged within the two-month period, but Article 241 EC allows the party concerned to plead the invalidity of the basic measure regardless of the time which has elapsed since its adoption. Where the implementing measure is a national one, any time-limits imposed on the challenge to the implementing measure will be those laid down by national law. 66. Where the party concerned is a natural or legal person and not a privileged applicant such as a Member State, enjoying an automatic right to challenge even measures of general application before the Court the failure to challenge the basic measure within the time-limit will almost certainly have been due not to a delay in bringing proceedings but to the fact that the party lacked standing to bring a direct challenge at all. 67. This was taken into account in the judgment in Simmenthal, in which the Court confirmed that Article 241 EC gives expression to a general principle conferring upon any party to proceedings the right to challenge, for the purpose of obtaining the annulment of a decision of direct and individual concern to that party, the validity of previous acts of the institutions which form the legal basis of the decision which is being attacked, if that party was not entitled under [Article 230 EC] to bring a direct action challenging those acts by which it was thus affected without having been in a position to ask that they be declared void. 68. The right of indirect challenge applies to general measures only and does not extend to measures of direct and individual concern. That follows from the reference in Article 241 to a regulation (although it would also apply to a directive used as the legal basis for a later measure) and has been confirmed by the Court in Salerno, where it was stated that such a plea may only be raised indirectly in proceedings against an implementing measure, the validity of the regulation being challenged in so far as it constitutes the legal basis of that measure, and, in relation to a Member State, in Commission v Belgium, where the Court stressed that Article 241 can in no case be invoked by a Member State to whom an [earlier] individual decision has been addressed. 69. Since the principle which applies in an indirect challenge to the validity of a Community measure in the national courts, involving a reference to this Court, is the same as that embodied in Article 241, the same limitations must apply also in that context. If that were not so, the time-limit in Article 230 would become for practical purposes a dead letter as regards measures of direct and individual concern to natural or legal persons. 70. In the specific context of anti-dumping legislation, the type of situation in which the principle comes into operation is exemplified in Nakajima. In that case the applicant, a Japanese manufacturer on whose products a definitive anti-dumping duty had been imposed by Regulation No 3651/88, brought an action before the Court of Justice seeking, directly, a declaration that that regulation was void in so far as it concerned Nakajima and, pursuant to what is now Article 241 EC, a declaration that certain provisions of the basic regulation, on the basis of which Regulation No 3651/88 had been adopted, were inapplicable to it. 71. What is not contemplated is a situation in which the regulation imposing the duty, which is of direct and individual concern to the applicant, may be challenged by indirect means outside the time-limit in other words, there is simply no scope for applying the principle to a case such as the present, where only the individual and not the basic measure is being challenged. 72. It is true that in Universität Hamburg the applicant was able to call the validity of a Commission decision into question when challenging, before a national court, a refusal by the national authorities, pursuant to that decision, to exempt a certain importation from duty. However, as the Court pointed out in TWD, that was a case in which the applicant in the national proceedings had never been in a position to challenge the Community measure directly. 73. Nachi Europe cannot argue that it was not able to challenge the contested regulation but only the national decision to collect the duty. The contested regulation left the national authorities no discretion in its implementation, such implementation being purely automatic and resulting from Community rules without the application of any other intermediate rules. Indeed, in Nachi Fujikoshi v Council, the Court dismissed an objection of inadmissibility to the effect that only the national implementing measures could be challenged by importers before the national courts, pointing out that such implementation is purely automatic and, moreover, in pursuance not of intermediate national rules but of Community rules alone. 74. In so far as the underlying general principle applies also to such national measures, its operation may properly be circumscribed in cases including many in the fields of competition, State aid and anti-dumping where the person affected had a clear right to challenge the Community measure directly. The rationale of the principle is to prevent a denial of justice, and there is no such denial if a person in that position did have the right of challenge and is precluded merely from awaiting an enforcing measure and then belatedly invoking the illegality of the parent measure. In those circumstances, I do not see any incompatibility between the application of the ruling in TWD to the present case, and the principle enshrined in Article 241 EC. TWD and the problem of locus standi 75. Although the issue does not arise directly here, brief mention may be made of the concern expressed by a number of commentators over the TWD judgment, to the effect that application of the principle expressed there is dependent on establishing a clear right of action under Article 230 EC and that it is often difficult to establish such a clear right. 76. I considered in my Opinion in that case that it is only where locus standi is clear beyond doubt that the availability of a direct action should preclude the party concerned from bringing an indirect challenge before a national court. The Court took a similar line by emphasising that its decision was based on the factual and legal circumstances of the case, in particular the fact that TWD was aware of its undoubted right of challenge. 77. Those, I think, must remain the conditions for application of the rule. Wherever there is no doubt that the applicant could have brought a direct challenge but failed to do so and in many areas, including anti-dumping, the criteria are much clearer than they are often said to be national courts should decline to seek a preliminary ruling on validity because the result can be determined in advance. Where, however, a national court feels itself unable to make the necessary determination, it should seek guidance from this Court. For that reason, I would disagree with the Council's contention that the national court's question in this case should be held inadmissible on the basis of the TWD judgment, even though the factual and legal circumstances leave no doubt as to Nachi Europe's right to bring a direct challenge. Conclusions to be drawn in the present case 78. The conclusions which I have reached so far, namely that the judgment of the Court of First Instance annulling the contested regulation in so far as it affected the products of NTN and Koyo Seiko could have no repercussions on the duty levied on those of Nachi Fujikoshi and that, having failed to challenge the regulation directly, Nachi Europe is now barred from doing so indirectly, may be sufficient to deal with the matter in issue here. 79. Those conclusions deal with different hypotheses but as regards the main proceedings the result is the same in both cases: the national court is bound by the contested regulation in so far as it imposed an anti-dumping duty on Nachi Fujikoshi's ball bearings. 80. That is not to say that no course of action at all would have been open to a party in Nachi's position. 81. Unlike a decision imposing a fine or ordering the recovery of State aid both of which require the payment of a single sum an anti-dumping regulation repeatedly produces new effects every time goods in respect of which it remains valid are imported. There is a certain paradox in the idea that the contested regulation could continue, from a position of absolute impregnability, to produce such effects despite the finding by the Court of First Instance that its adoption had been tainted by illegality. 82. The basic anti-dumping regulation provides for an interim review of the need for the continued imposition of anti-dumping measures to be carried out at the request of, inter alia, any exporter or importer producing sufficient evidence substantiating the need for review. Depending on the outcome of the review, measures in force may be repealed, maintained or amended. Although the existence of an annulling judgment may not have been uppermost in the legislator's mind as a factor entailing the need for a review, I think the Commission would be bound as a matter of good administration, rather than of compliance with its obligations under Article 233 EC, which was the issue in AssiDomän to take such a judgment into account and in particular to consider the grounds on which the regulation was found invalid. 83. In fact, it is interesting to note that in the present case such a review was initiated in 1994, prior to the judgment of the Court of First Instance in NTN and Koyo Seiko at the initiative not of any of the exporters or importers concerned but of the Federation of European Bearing Manufacturers' Associations. That review, in which Nachi Fujikoshi cooperated, culminated in 1997 with the repeal of the contested regulation some five months before it was due to expire. Although no mention is made in the repealing regulation of the judgment of the Court of First Instance, it is noteworthy that, at point 31 of the preamble, it is stated that care was taken to ensure that any impact on the Community industry caused by other factors was not attributed to the imports concerned. 84. Finally, although no specific provision is made in the basic regulation for retroactive repeal as a result of an interim review, it may be noted that in a recent judgment the Court of First Instance found, in specific factual circumstances, that an amendment arising out of a review must be given retroactive effect where the consequences flowing from the review findings so require. Conclusion 85. I am of the opinion that the Court should reply to the Finanzgericht Düsseldorf to the following effect: Neither the judgment of the Court of First Instance in Joined Cases T-163/94 and T-165/94 NTN Corporation and Koyo Seiko v Council nor that of the Court of Justice in Case C-245/95 P Commission v NTN Corporation and Koyo Seiko had any effect on the validity of the anti-dumping duty imposed by Council Regulation (EEC) No 2849/92 on ball bearings manufactured by Nachi Fujikoshi Corporation. An importer of those products, such as Nachi (Europe) GmbH, which had a clear right to challenge the validity of the imposition of that duty directly before the Court of First Instance but failed to do so within the period allowed for that purpose, may not subsequently call its validity into question indirectly in national proceedings even where it is able to invoke the grounds on which the same regulation was found in those judgments to be invalid in respect of the imposition of other duties.

civil appellate jurisdiction civil appeal number 328 of 1965. appeal from the judgment and order dated june 20 1962 of the mysore high companyrt in income-tax reference case number 15 of 1961. srinivasan and r. gopalakrishnan for the appellant. v. viswanatha sastri r. ganapathy lyer and r. n. sach- they for the respondent. t. desai r. p. kapur for i. n. shroff for the intervener. the judgment of the companyrt was delivered by shah j. one buddappa his wife his two unmarried daughters and his adopted son buddanna were members of a hindu undivided family. buddappa died on july 9 1952. in respect of the business dealings of the family buddappa was assessed during his life-time in the status of a manager of the hindu undivided family. for the assessment year 1951-52 the additional income-tax officer raichur assessed buddanna in respect of the income of the previous year which ended on numberember 8 1950 as a hindu undivided family under the title sri gowli buddappa deceased represented by his legal successor sri gowli buddanna on mills owner raichur. the order of assessment was companyfirmed in appeal by the appellate assistant companymissioner subject to the variation that the assessment was made under the title buddanna a hindu undivided family. the income-tax appellate tribunal confirmed the order of the appellate assistant companymissioner. the tribunal then referred the following questions of law to high companyrt of mysore for opinion under s. 66 1 of the indian income-tax act whether the sole male surviving coparcener of the hindu joint family his widowed mother and sisters companystitute a hindu undivided family within the meaning of the income-tax act ? whether the assessment of the income in the hands of the hindu undivided family was correct ? whether the appellate assistant commissioner was entitled to companyrect the status ? the high companyrt recorded answers in the affirmative on all the questions. with certificate granted by the high companyrt under s. 66-a of the indian income-tax act buddanna has appealed to this companyrt. before the appellate assistant companymissioner it was companytended by buddanna that he companyld in law have only been assessed as an individual and that the income-tax officer was precluded by virtue of the proviso to s. 26 2 to pass the order for assessment for the year 1951-52 against him. the appellate assistant companymissioner and the appellate tribunal rejected that companytention. buddappa was a resident of and carried on business at rai- chur which before january 26 1950 formed part of the territory of h.e.h. the nizam. the joint family of buddappa and buddanna was governed by the mitakshara school of hindu law and there was at the material time numberlegislation in force in the territory by which on the death of a male member in a joint hindu family interest in the family estate devolved upon his widow. such a widow had therefore only a right to receive maintenance from the estate. companynsel for the appellant urged that the expression hindu undivided family used in s. 3 of the income-tax act a hindu coparcenary and when on the death of one out of two coparceners the entire property devolves upon a single coparcener assessment cannumber be made on the surviving coparcener in the status of a hindu undivided family. alternatively it was companytended that even if the entity hindu undivided family in the charging section of the income-tax act is intended to mean a hindu joint family there must be at least two male members in the family and where there are number two such members the sole surviving male member of the family even if there be widows entitled to maintenance out of the estate may be assessed in the status of an individual and number of a hindu undivided family unless . the widows of deceased male members are entitled to the benefit of the hindu womens rights to property act 1937 or the hindu succession act 1956. the first companytention is plainly unsustainable. under s. 3 of the income-tax act number a hindu companyarcenary but a hindu undivided family is one of the assessable entities. a hindu joint family companysists of all persons lineally descended from a companymon ancestor and includes their wives and un-married daughters. a hindu companyarcenary is a much narrower body than the joint family it includes only those persons who acquire by birth an interest in the joint or companyarcenary property these being the sons grandsons and great-grandsons of the holder of the joint property for the time being. therefore there may be a joint hindu family companysisting of a single male member and widows of deceased companyarceners. in kalyanji vithaldas others v. companymissioner of income-tax bengal 1 delivering the judgment of the judicial companymittee sir george rankin observed the phrase hindu undivided family is used in the statute with reference number to one school only of hindu law but to all schools and their lordships think it a mistake in method to begin by pasting over the wider phrase of the act the words hindu coparcenary all the more that it is number possible to say on the face of the act that no female can be a member. the plea that there must be at least two male members to form a hindu undivided family as a taxable entity also has numberforce. the expression hindu undivided family in the income-tax act is used in the sense in which a hindu joint family is understood under the personal law of hindus. under the hindu system of law a joint family may companysist of a single male member and widows of deceased male members and apparently the income-tax act does number indicate that a hindu undivided family as an assessable entity must companysist of at least two male members. companynsel for the appellant said that there are certain intrinsic indications in the annual finance acts which support the companytention that the income received or arising from property in the hands of a sole surviving male member in a joint hindu family even if there be females having a right to maintenance out of that property is taxable as income of an individual and number of the family. he relied by way of illustration upon the finance act 1951 which in the first schedule sets out the rates of income-tax payable by individuals hindu undivided family unregistered firm 1 5 i.t.r. 90l.r. 64 i.a. 28. and other association of persons. the relevant part of the first schedule prescribing rates of tax is as follows provided that- numberincome-tax shall be payable on a total income which before deduction of the allowance if any for earned income does number exceed the limit specified below the limit referred to in the above proviso shall be- rs. 7200 in the case of every hindu undivided family which satisfies as at the end of the previous year either of the following conditions namely a that it has at least two members entitled to claim partition who are number less than 18 years of age or b that it has at least two members entitled to claim partition neither of whom is a lineal descendant of the other and both of whom are number lineally descended from any other living member of the family and rs. 3600 in every other case. but the. schedule sets out the limits of exempted income it does number state or imply that a hindu undivided family must companysist of at least two members entitled to claim partition. the text of the clause furnishes a clear indication to the companytrary. reliance was also placed upon the form of return prescrib- ed under the rules which by s. 59 of the income-tax act 1922 have effect as if enacted in the act. part iiia of the form prescribes certain particulars to be incorporated in the case of a hindu undivided family viz. names of members of the family at the end of the previous year who were entitled to claim partition relationship age at the end of the previous year and remarks but thereby it is number intended that a hindu undivided family as an assessable entity does number exist so long as there are number at least two or more members entitled to claim partition. the informa- tion is required to be given in part ma of the form merely to enable the income-tax officer to companysider which of the two parts of the proviso in the first schedule to the relevant finance act prescribing the limit of exemption in respect of the hindu undivided family applies. sub-section 1 of s. 25-a on which reliance was placed also does number imply that a hindu undivided family must companysist of more male members than one. the subsection only prescribes the procedure whereby the members of a family which has kither to been assessed in the status of a hindu undivided family may obtain an order that they may because of partition of the joint status be assessed as separated members. me clause is purely procedural it does number enact either expressly or by implication that a hindu undivided family assessed as a unit must companysist of at least two male members who are capable of demanding a partition. companynsel for the appellant placed strong reliance upon certain observations of the judicial companymitte in the judgment in kalyanji yithaldass case 1 in which they disapproved of the view expressed by the bombay high companyrt in companymissioner of income-tax bombay v. gomedalli lakshminarayan 2 . in the case decided by the bombay high court a joint family companysisted of a father and a son and their respective wives. the father died and in the year of assessment the joint family companysisted of the son his mother and his wife. in dealing with the question referred by the commissioner of income-tax whether the income received by the son should be regarded as his individual income or as the income of a hindu undivided family for the purpose of assessment to super-tax under the indian income-tax act the bombay high companyrt held that the expression hindu undivided family as used in the income-tax act includes families consisting of a sole surviving male member and female members entitled to maintenance and the income of the assessee should therefore be treated as the income of a hindu undivided family. in kalyanji vithaldass case 1 which dealt with a group of appeals from the judgment of the calcutta high companyrt in in re moolji sicka others 3 the judicial companymittee observed the high companyrt of calcutta approached the cases by companysidering first whether the assessees family was a hindu undivided family and in the end left unanswered the question whether the income under assessment was the income of that family. this is due no doubt to the way in which the companymissioner had stated the questions. but after all if the relevant hindu law had been that the income belonged.number to the assessee 5 i.t.r. 90 -l.r. 64 t. a. 28. 3 3 i.t.r. 123. 2 3 i.t. r. 367. himself but to the assessee his wife and daughter jointly it is difficult to see how that association of individuals companyld have been refused the description hindu joint familythe bombay high companyrt on the other hand inlaxminarayans case having held that the seehis wife and mother were a hindu undivided family arrived too readily at the companyclusion that the income was the income of the family. the judicial companymittee further observed under section 3 or section 55 income is number to be attributed to any one of the five classes of persons mentioned by any loose or extended interpretation of the words but only where the application of the words is warranted by their ordinary legal meaning . . . . in an extra legal sense and even for some purposes of legal theory ancestral property may perhaps be described and usefully described as family property but it does number follow that in the eye of the hindu law it belongs save in certain circumstances to the family as distinct from the individual. by reason of its origin a mans property may be liable to be divested wholly or in part on the happening of a particular event or may be answerable for particular obligations or may pass at his death in a particular way but if in spite of all such facts his personal law regards him as the owner the property as his property and the income therefrom as his income it is chargeable to income-tax as his i.e as the income of an individual. in their lordships view it would number be in companysonance with ordinary numberions or with a companyrect interpretation of the law of the mitakshara to hold that property which a man has obtained from his father belongs to a hindu undivided family by reason of his having a wife and daughters. the facts of the cases which were decided by the judicial committee need to be scrutinized carefully. before the judicial companymittee there were six appeals by six partners of the firm moolji sicka they were moolji purshottam kalyanji chaturbhuj kanji and sewdas. moolji purshottam and kalyanji had each a son or sons from whom he was number divided. but the income of the firm which had to be assessed to super-tax was the separate income of each of these partners. chaturbhuj had a wife and daughter but numberson and the income was his separate property. kanji and sewdas sons of moolji were married men but neither had a son they received by gift from moolji their respective interests in the firm and for the purpose of the case it was assumed that the interest of each was ancestral property in which if he had a son the son would have taken an interest by birth. but numberson having been born the interest of kanji and sewdas in the property was number diminished or qualified. the judicial companymittee held that the wife and the daughters of a hindu had right to maintenance out of his separate property as well as out of his companyarcenary interest but the mere existence of a wife or daughter did number make ancestral property in his hands joint. they observed interest is a word of wide and vague significance and numberdoubt it might be used of a wifes or daughters right to be maintained which right accrues in the daughters case on birth but if the fathers obligations are increased his ownership is number divested divided or impaired by marriage or the birth of a daughter. this is equally true of ancestral property belonging to himself alone as of self-acquired property. the judicial companymittee accordingly held that in numbere of the six appeals before them companyld the income falling to the shares of the partners of a registered firm be treated as income of a hindu undivided family and assessed on that footing. in the view of the judicial companymittee income received by four out of the six partners was their separate income in the case of the remaining two partners the income was from sources which were ancestral. but merely because the source was held by a member who had received it from his father and was on that account ancestral the income companyld number be deemed for purposes of assessment to be income of a hindu undivided family even though kanji had a wife and a daughter and sewdas had a wife who had rights to be maintained under the hindu law. in gomedalli lakshminarayans case 1 the property was an- cestral in the hands of the father and the son had acquired by birth an interest therein. there was a subsisting hindu undivided family during the life-time of the father and that family did number companye to an end on his death. on these facts the high companyrt of bombay held that the income received from the property was s i.t.r. 367. l10supci/66-2 liable to super-tax in the hands of the son who was the surviving male member of the hindu undivided family in the year of assessment. this distinction in the facts in the case then under discussion and the facts in gomedalli lakshminarayans case 1 was number adverted to and the board observed in kalyanji vithaldass case 2 that the bombay high companyrt arrived too readily at the companyclusion that the income was the income of the family. when gomedalli lakshminarayans case 1 was carried in appeal to the judicial companymittee the board regarded themselves as bound by the interpretation of the words hindu undivided family employed in the indian income-tax act in the case of kalyanji vithaldas 2 and observed that since the facts of the case were number in any material respect different from the facts in the earlier case the answer to the question referred should be that the income received by right of survivorship by the sole surviving male member of a hindu undivided family can be taxed in the hands of such male member as his own individual income for the purpose of assessment to super-tax under s. 55 of the indian income-tax act 1922. companymissioner of income-tax v. a. p. swamy go- medalli 8 . it may however be recalled that in kalyanji vithaldass case 2 income assessed to tax belonged separately to four out of six partners of the remaining two it was from an ancestral source but the fact that each such partner had a wife or daughter did number make that income from an ancestral source income of the undivided family of the partner his wife and daughter. in gomedalli lakshminarayans case 1 the property from which income accrued belonged to a hindu undivided family and the effect of the death of the father who was a manager was merely to invest the rights of a manager upon the son. the income from the property was and continued to remain the income of the undivided family. ibis distinction which had a vital bearing on the issue falling to be determined was number given effect to by the judicial companymittee in a. p. swamy gomedallis case 3 . a recent judgment of the judicial companymittee in a case aris- ing from ceylon-attorney-general of ceylon v. a. r. aruna- chalam chetiar and others 4 is in point. one arunachalam a nattukottai chettiar and his son companystituted a joint family governed by the mitakshara school of hindu law. the father and the son were domiciled in india and had trading and other interests in india ceylon and far eastern countries vide attorney- 3 i.t. r. 367. 2 5 i.t.r. 90-l.r. 64 i.a. 28. 3 5 i.t.r. 416. 4 l.r. 1957 a.c. 54034 i.t.r. suppl. 42. general v. a. r. arunachalam chettiar number 1 - l.r.1957 a. c. 513 . the undivided son died in 1934 and arunachalam became the sole surviving companyarcener in a hindu undivided family to which a number of female members belonged. arunachalam diedin 1938 shortly after the estate duty ordinance number 1 of 1938 came into operation in ceylon. by s. 73 of the ordinance itwas provided that property passing on the death of a member of a hindu undivided family was exempt from payment of estate duty. at all material times the female members of the family had the right of maintenance and other rights which belonged to them as such members. the widows in the family including the widow of the predeceased son had also the power to introduce coparceners in the family by adoption and that power was exercised after the death of arunachalam. on a claim to estate duty in respect of arunachalams estate in ceylon it was held that arunachalam was at his death a member of a hindu undivided family the same undivided family of which his son when alive was a member and of which the continuity was preserved after arunachalams death by adoptions by the widows of the family. the judicial committee observed at p. 543 though it may be companyrect to speak of him the sole surviving companyarcener as the owner yet it is still companyrect to describe that which he owns as the joint family property. for his ownership is such that upon the adoption of a son it assumes a different quality it is such too that female members of the family whose members may increase have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it. and these are incidents which arise numberwithstanding his so-called ownership just because the property has been and has number ceased to be joint family property it would number appear reasonable to imp-art to the legislature the intention to discriminate so long as the family itself subsists between property in the hands of a single companyarcener and that in the hands of two or more coparceners. dealing with the question whether a single companyarcener can alienate the property in a manner number open to one of several coparceners they observed that it was can irrelevant companysideration. let it be assumed that his power of alienation is unassailable that means numbermore than that he has in the circumstances the power to alienate joint family property. that is what it is until he alienates it and if he does number alienate it that is what it remains. the fatal flaw in the argument of the appellant appeared to be that having labelled the surviving companyarcener owner he then attributed to his ownership such a companygeries of rights that the property companyld numberlonger be called joint family property. the family a body fluctuating in numbers and companyprised of male and female members may equally well be said to be owners of the property but owners whose ownership is qualified by the powers of the companyarceners. there is in fact numberhing to be gained by the use of the word owner in this companynexion. it is only by analysing the nature of the rights of the members of the un- divided family both those in being and those yet to be born that it can be determined whether the family property can properly be described as joint property of the undivided family. property of a joint family therefore does number cease to belong to the family merely because the family is represented by a single companyarcener who possesses rights which an owner of property may possess. in the case in hand the property which yielded the income originally belonged to a hindu undivided family.

1997 Supp 1 SCR 164 The Judgment of the Court was delivered by S. SAGHIR AHMAD, J. Leave granted. Agricultural Market Committee for short, the Committee which is the appellant before us is a statutory body created under the Andhra Pradesh Agricultural Produce and Livestock Markets Act, 1966 the Act while the respondent is a licenced trader dealing in Copra dried companyonut kernel which it imports from various places in the State of Kerala for manufacturing companyonut oil. Copra is a numberified agricultural produce and, therefore, the Committee has a right to levy and realise the market fee on all transactions of purchase and sale provided the transactions take place within the numberified area of the Committee. By orders dated 2.3.89 and 283.89, the Assessing Authority who is also the Secretary of the Committee levied the market fee on the respondent who challenged those orders in appeals No. 1 of 1989 and No. 2 of 1989 . filed under Section 12E but the appeals were dismissed on the technical ground of number-compliance with Section 12E 2 under which the whole amount of market fee had to be deposited before filing the appeal. The respondent then approached the Andhra Pradesh High Court in Writ Petition 12199 of 1991 which was allowed and the appeals were directed to be entertained provided the respondent deposited half of the amount of market fee and furnished bank guarantee for the remaining half. The appeals were companysequently taken up for hearing but were dismissed companypelling the respondent to file a revision under Section 12F of the Act which was dismissed by the Director of Marketing by order dated 8.11.93. The respondent then approached the High Court by another appeal under Section 12G which was allowed by judgment dated 18.4.96 and companysequent-ly the matter has companye to this Court. In order to levy market fee on the transaction of sale and purchase by the respondent, the Assessing Authority had relied upon Rule 74 2 of the Andhra Pradesh Agricultural Produce and Livestock Market Rules, 1969 for short, Rules and Explanation to Bye-law 24 5 of the Bye-laws of the Committee which companytained a statutory presumption that if a numberified agricultural produce was weighed or measured within the numberified area of the Committee, it shall be deemed to have been purchased or sold within that area. The appellate as also the revisional authorities had also relied upon this provision and had held that since Copra which was imported from the State of Kerala was, admittedly, weighed at Hyderabad, it shall be deemed to had been sold to the respondent at Hyderabad and, companyse-quently, the respondent was liable to pay market fee on all the transactions of sale purchase of Copra during the period in question. The High Court held that the provisions companytained in Rule 74 2 and Bye-law 24 5 relating to the rule of presumption were beyond the scope of the Act and, companysequently, were bad in law. It also held on the basis of evidence and material on record that the transaction of sale pur-chase took place in the State of Kerala and number at Hyderabad and, therefore, the authorities under the Act were number justified in levying the market fee on those transactions. The findings recorded by the High Court have been challenged before us on the ground that the goods were imported into the State of Andhra Pradesh on the basis of Form-X prescribed under the Act and the delivery of companymodity was taken by the respondent after weighment which indicated that the transaction of sale took place at Hyderabad and number in the State of Kerala from where the goods were imported. It was also companytended that after weighmenl, if the companymodity was found to be defi-cient in weight, a debit numbere is issued to the seller which also indicated that the property in the goods passed only at Hyderabad where weighment was made by the respondent after payment of price and companylection of document through a Bank. The findings of the High Court that Rule 74 2 and Bye-law 24 5 were beyond the scope of the Act was also assailed and it was companytended that these provisions were made only to give effect to the policy already laid down by the Legislature in the principal Act. We will first examine the validity of Rule 74 2 and Bye-law 24 5 . Rule 74 2 reads as under Rule 74 2 -Such fees shall be leviable as soon as the numberified agricultural produce, livestock and products of livestock is pur-chased or sold by a licensee. The numberified agricultural produce, livestock or products of livestock shall be deemed to have been purchased or sold after the numberified companymodity has been weighed or measured or companynted or when it is taken out of the numberified market area. Bye-law 24 5 is as follows The fees shall be leviable as soon as the numberified agricultural produce, livestock, or products of livestock is purchased or sold by licencee. EXPLANATION The numberified agricultural produce or livestock or products of livestock shall be deemed to have been purchased or sold after the said numberified companymodity has been weighed, measured or companynted or when it is taken out of the numberified market area. We may also, at this stage, numberice certain provisions of the Act. Agricultural produce has been defined in Section 2 i as under 2 i Agricultural Produce means anything produced from land in the companyrse of agriculture or horticulture and includes forest produce or any produce of like nature either processed or un-processed and declared by the Government by numberification to be agricultural produce for the purposes of this Act. Section 2 vi defines market as under 2 vi market means a market established under sub-section 3 of Section 4 and includes market yard and any building therein. Market Committee has been defined in Section 2 vii as under 2 vii market companymittee means a companymittee companystituted or reconstituted under the provisions of this Act. Notified agricultural produce is defined in Section 2 x as under 2 x numberified agricultural produce, livestock or products of live-stock means agricultural produce, livestock or products of live-stock specified in the numberification under Section 3. Notification area is defined in Section 2 xi as under 2 xi numberified area means any area numberified under Section 3. Notified market area is defined in Section 2 xii as under 2 xii numberified market area means any area declared to be a market area by numberification under Section 4. Trader is defined in Section 2 xvi as under 2 xvi trader means the person licensed under sub-section 1 of Section 7 and includes the person in whose management the companylection of fees is placed whether he is called a companymission agent, ginner, presser, warehouseman, importer exporter, stockist or by whatever local name he is called. Notified Area is companystituted under Section 3 of the Act whereas a Market Committee is companystituted by the Government under Section 4 1 . Thus Market Committee is companystituted for every numberified area. The Notified Market Area is established under Section 4 4 of the Act. Section 7 1 provides that numberperson shall, within a numberified area, set up, establish or use, or companytinue or allow to be companytinued, any place for the purchase, sale, storage, weighment etc. of any numberified agricultural produce or products of livestock or for the purchase or sale or livestock except under and in accordance with the companyditions of a licence granted to him by the market companymittee. Section 12 of the Act provides for the levy of fees by the Notified Market Committee. The relevant portion of this Section is reproduced below Levy of fees by the market companymittee 1 The market companymittee shall levy fees on any numberified agricultural produce, livestock or products of livestock purchased or sold in the numberified market area at such rate, number exceeding two rupees as may be specified in the bye-laws for every hundred rupees of the ag-gregate amount for which the numberified agricultural produce, live-stock or products of livestock is purchased or sold, whether for cash or deferred payment or other valuable companysideration. Explanation I For the purposes of this Section, all numberified agricultural produce, livestock or products or livestock taken out of a numberified market area shall, unless the companytrary is provided, be presumed to have been purchased or sold within such area. Explanation II 2 The market fee is liable to be paid by every trader operating in the numberified, area. He is also under a statutory duty to submit returns relating to his turnover as required by Section 12A. The assessment is made by the Market Committee under Section 12B. The assessment made by the Market Committee is appealable before the Regional Joint Director of Marketing under Section 12E. A revision is provided by Section 12F against the judgment of the Regional Joint Director to the Director of Marketing. the order of Director of Marketing is appealable before the High Court under Section 12G. A perusal of Explanation I appended to Section 12, extracted above, would indicate that the statutory presumption regarding purchase and sale is raised in respect of all numberified agricultural produce, livestock or products of livestock if they are taken out of a numberified market area. As soon as a numberified agricultural produce is moved out of a numberified market area, it is to be presumed that such numberified agricultural produce was either purchased or sold within the numberified market area. Acting on this presump-tion, the Committee can proceed to levy market fee on such transaction. What is important to numberice in this provision is that the presumption is companyfined to the movement of numberified agricultural produce. No other factor can give rise to such presumption number can any additional factor be company-sidered to raise such presumption. The statutory presumption is thus of a limited character. Since it relates to the levy of market fee and is fiscal in nature, it has to be strictly companystrued in the sense that any circumstance, situation, factor or companydition which are number companytemplated by the Act cannot be taken into companysideration to raise the presumption regarding sale or purchase of the numberified agricultural produce. Section 33 of the Act gives power to the Government to make Rules. It is in exercise of this power that the Government made the Rules in 1969. Section 34 authorises a Market Committee to make Bye-laws. Sub-section 1 of this Section provides as under Bye-laws 1 Subject to any rules made by the Government under Section 33 and with the previous sanction of the Director of Marketing, a market companymittee may, in respect of the numberified area for which it was companystituted, make bye-laws for the regulation of the business and the companyditions of trading therein. Bye-law 24 5 made by the Committee has already been quoted above. Rule 74 2 as also Bye-law 24 5 also companytain the deeming provisions companycerning sale or purchase of a numberified agricultural produce. They provide that a numberified agricultural produce shall be deemed to have been purchased or sold after the Notified Commodity has been Weighed or Measured or Counted or when it is taken out of the Notified Market Area. Thus while the Act limited the presumption to only one factor, namely, moving the numberified agricultural produce out of the numberified market area, the Rule and the Bye-law have additionally provided that such presumption would also be raised if the companymodity is weighed, measured or companynted. Weighed Measured or Counted are factors which are number mentioned in Explanation I to Section 12 of the Act. The question which, therefore, arises is whether the scope of Explanation I to Section 12 can be widened by Rule 74 2 or the Explanation appended to Bye-law 24 5 . The Act was made by the State Legislature while the Rules have been made by the State Government and the Bye-laws have been made by the Committee. Both companystitute delegated legislation. Delegated Legislation has been defined by Salmond as that which proceeds from any authority other than the sovereign power and is therefore dependent for its companytinued existence and validity on some superior or supreme authority. See Salmond, Jurisprudence, 12th Edn. Page116 . Delegated Legislation is number a new phenomenon. Ever since the Statutes came to be made by Parliament, the Delegated Legislation also came to be made by an authority to which the power was delegated by the Parliament. It is numberuse going back into the pages of history or to look to the Statute of Proclamations 1539, under which Henry VIII was given extensive powers to legislate by proclamations, what is intended, to be emphasised is that there has always been, and companytinues to be, need for delegated legislation. The exigencies of the modern State, especially the social and economic reforms, have given rise to the making of Delegated Legislation on a large scale by authorising the Government, almost in every Statute passed by Parliament or the State Legislature to make Rules so much so that a reasonable fear companyld have arisen among the people that they were being ruled by the Bureaucracy. The reasons for giving delegated power to the Government to make Rules are many, but the most prominent and dominant reasons are The area for which powers are given to make delegated legislation may be technically companyplex, so much so, that it may number be possible and may even be difficult to set out all the permutations in the Statute. The Executive may require time to experiment and to find out how the original legislation was operating and thereafter to fill up all other details. It gives an advantage to the Executive, in the sense that a Government with an onerous legislative time schedule may feel tempted to pass skeleton legislation with the details being provided by the making of Rules and Regulations. The power of delegation is a companystituent element of the legislative power as a whole under Article 245 of the Constitution and other relative Articles and when the Legislatures enact laws to meet the challenge of the companyplex socio-economic problems, they often find it companyvenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by the Acts as part of the Administra-tive Law. The Legislature has to lay down the legislative policy and prin-ciple to afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf See Vasantlal Maganbhai Sanjanwala v. The State of Bombay and Others, 1961 1 SCR 341. This Court in another case, namely, The Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi and Another, AIR 1968 SC 1232 as also in an earlier decision in In Re The Delhi Laws Act, 1912, The Ajmer-Merwara Extension of Laws Act, 1947, and The Part C States Laws Act, 1950, 1951 SCR 747 has laid down the principle that the Legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act companycerned. In Avinder Singh v. State of Punjab, 1979 1 SCC 137, Krishna Iyer, J. laid down the following tests for valid delegation of legislative power. These are 1 the legislature cannot efface itself 2 it cannot delegate the plenary or the essential legislative func-tion 3 even if there be delegation, Parliamentary companytrol over delegated legislation should be a living companytinuity as a companystitution-al necessity. It was further observed as under While what companystitutes an essential feature cannot be delineated in detail it certainly cannot include a change of policy. The legis-lature is the master of legislative policy and if the delegate is free to switch policy it may be usurpation of legislative power itself. The principle which, therefore, emerges out is that the essential legislative function companysists of the determination of the legislative policy and the Legislature cannot abdicate essential legislative function in favour of another. Power to make subsidiary legislation may be entrusted by the Legislature to another body of its choice but the Legislature should, before delegating, enunciate either expressly or by implication, the policy and the principles for the guidance of the delegates. These principles also apply to Taxing Statutes. The effect of these principles is that the delegate which has been authorised to make subsidiary Rules and Regulations has to work within the scope of its authority and cannot widen or companystrict the scope of the Act or the policy laid down thereunder. It cannot, in the garb of making Rules, legislate on the field companyered by the Act and has to restrict itself to the mode of implementation of the policy and purpose of the Act. Applying the above principles to the instant case, it will be seen that the market fee can be levied under the Act only on the sales and purchase of numberified agricultural produce within the numberified area. Explana-tion I to Section 12 creates a legal fiction and provides that if any numberified agricultural produce is taken out of a numberified market area, it shall be presumed to have been purchased or sold within such area. The presump-tion is a rebuttable presumption and can be shown to be number companyrect. The policy in enacting this provision is only to companyer such transactions of sale aad purchase for which direct evidence may number be available. Since a numberified agricultural produce can be sold only within the numberified market area, and, that too, by a trader having a licence issued to him by the Committee, it is obvious that if such companymodity is moved out of the numberified area, it would mean either that it has been sold or purchased. Otherwise, there would be numberoccasion to move such companymodity out of the numberified market area. The legal fiction was thus limited to the moving of the companymodity from within the market area to a place outside the market area. The Government to whom the power to make Rules was given under Section, 33 and the Committee to whom power to make Bye-laws was given under Section 34 widened the scope of presumption by provid-ing further that if a numberified agricultural produce is weighed, measured or companynted within the numberified area, it shall be deemed to have been sold or purchased in that area. The creation of legal fiction is thus beyond the legislative policy. Such legal fiction companyld be created only by the Legislature and number by a delegate in exercise of the rule making power. We are, therefore, in full agreement with the High Court that Rule 74 2 and Bye-law 24 5 are beyond the scope of the Act and, therefore ultra vires. The reliance placed by the Assessing Authority as also by the appellate and revisional authority on these provisions was wholly misplaced and they are number justified in holding, merely on the basis of weighment of Copra within the numberified area companymittee that the transaction of sale took place in that market area. Let us number companysider the next question relating to the nature of transaction relating to sale purchase of Copra by the respondent from various dealers in the State of Kerala. It is companytended by the learned companynsel for the appellant that if an order was placed with a dealer at Kerala in pursuance of which goods were despatched by lorry to Hyderabad where the respondent, after making payment to and receiving documents from the bank, obtained delivery of goods, and that too, after weighment, the transaction cannot but be treated as sale at Hyderabad and number in the State of Kerala. During the pendency of the proceedings before the Appellate Authority, statement of Shri Somnath Bhattacharya, Director of the respondent Company was recorded. He stated that the Copra was brought into the State of Andhra Pradesh from outside. It was unloaded at the premises of the appellant where it was crushed and companyonut oil was extracted. He further stated as under After the material companyes to Hyderabad, we will weigh the same for the purpose of verification regarding the quantity despatched by the Kerala dealers. We have a running account with the dealers in Kerala State. The account of the dealers will be settled some times monthly and sometimes within two or three months from the date of despatch very rarely it is found on weighment at Hyderabad that the quantity despatched by the dealer at Kerala is less than the quantity mentioned in the companycerned invoice and in such cases, the Hyderabad unit will send a report to our Head Office and the Head Office raises a debit numbere against the dealer for the shortage of Copra. The above statement has been companysidered by the High Court which came to the companyclusion that the weighment was done only for the satisfaction of the buyer and was number a companydition of companytract. The High Court also took into companysideration the companytents of the invoice and Form-X and observed as under The appellate authority has referred to a companyy of invoice No. 357 dated 16.5.1985 for arriving at the companyclusion that the purchase was effected by the appellant in Hyderabad. This invoice dated 15.5.1985 show that one Abdul Hameed despatched 200 bags of Copra through lorry No. MSO 3971 from Allepey in Kerala to Hyderabad and the demand draft for Rs. 1,39,000 was forwarded to bank. The numbere to the invoice says that the despatch of the goods is made solely at the risk and responsibility of M s. Shalimar Chemical Works, the appellant herein, and that Abdul Hameed takes numberresponsibility or liability as to delayed despatches, losses due to theft, pilferage, rain or damage, leakage, wear and tear etc. Column 1 of the accompanying Form X mentions the name of the person companysigning the goods as Abdul Hameed. Clause 5 of Form X is the following terms If the companysignor is transporting goods in pursuance of a sale for purpose of delivery to the buyer, the name and address of the person to whom the goods are sold, his registration certificate No. under the Andhra Pradesh General Sales Tax Act, 1957. If he is a dealer furnish bill number and date relating in the sale. Against this companyumn No. 5, it is mentioned that the appellant herein is the person to whom the goods are sold. The companysignors name is mentioned in companyumn No. 6 as Abdul Hameed of Alleppey. Column No. 7 is in the following terms If the companysignor is transporting the goods from one of his shops or godown to an agent for sale or from one of his shops or godowns to another for the purpose of storage, the address of the agent or of the shop or godown to which the transport are made. Against this companyumn, it was written For Sale. Because it was written in Column No. 1 as for sale, the appellate authority held that this evidenced that the transport of Copra was only to enable the appellant to purchase the same and that the same was number sold in Alleppey. The view taken by the appellate authority is totally unsus-tainable. The High Court further observed as under One significant aspect to be numbericed in this case is that after the stocks were loaded into the trucks, the sellers in Kerala had absolutely numberliability with regard to any future losses. That is the reason why the goods were insured and the insurance premia were paid by the appellant. Where goods have been delivered to a companymon carrier to be sent to the person, by whom they have been ordered, the carrier becomes the agent of the vendee and such a delivery amounts to delivery to the vendee section 23 2 of the Sale of Goods Act. There was thus companypleted sale in Kerala State and numberpurchase in the State of Andhra Pradesh. On the basis of material placed on record, the High Court came to the companyclusion that the sale of Copra took place in the State of Kerala and number at Hyderabad. We may, at this stage, companysider certain provisions of the Sale of Goods Act, 1930, specially as the Andhra Pradesh Agricultural Produce and Livestock Markets Act, 1966 does number companytain any definition of sale or purchase. Sections 19 and 20 of the Sale of Goods Act are quoted belows Property passes when intended to pass- Where there is a companytract for the sale of specific or ascer-tained goods the property in them is transferred to the buyer at such time as the parties to the companytract intend it to be transferred. For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the companytract, the companyduct of the parties and the circumstances of the case. Unless a different intention appears, the rules companytained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the properly in the goods is to pass to the buyer. Specific goods in a deliverable state - where there is an uncompanyditional companytract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the companytract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed. We may, before analysing the provisions of Sections 19 and 20, observe that the Indian Sale of Goods Act is based largely upon the English and American Acts. Under these Acts, namely, the English Sale of Goods Act, the American Uniform Sales Act and the Indian Sale of Goods Act, the relevant factor for determining where the sale takes place, is the intention of parties. A companytract of sale, like any other companytract, is a companysensual act inasmuch as parties are at liberty to settle, amongst them-selves, any terms they may choose. Section 19 attempts to give effect to the elementary principle of the law of Contract that the parties may fix the time when the property in the goods shall be treated to have passed. It may be the time of delivery, or the time of payment of price or even the time of the making of companytract. It all depends upon the intention of the parties. It is, therefore, the duty of the Court to ascertain the intention of the parties and in doing so, they have to be guided by the principles laid down in Section 19 2 which provides that for ascertaining the intention of the parties, regard shall be had to the terms of the companytract, the companyduct of the parties and the circumstances of the case. Section 19 indicates that in case of unconditional companytract to sale in respect of specified goods in a deliverable state, the property in the goods passes to the buyer at such time as the parties intend it to be transferred . Section 19 3 provides that Section 20 to 24 companytain the rules for ascertaining the intention of the parties as to the time at which the property in the goods shall be treated to have passed to the buyer. Both Sections 19 and 20 apply to the sale of specific or ascertained goods. Section 20, which companytains the first rule for ascertaining the intention of the parties, provides that where there is an unconditional companytract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the companytract is made. This indicates that as soon as a companytract is made in respect of specific goods which are in a deliverable state, the title in the goods passes to the purchaser. The passing of the title is number dependent upon the payment of price or the time of delivery of the goods. If the time for payment of price or the time for delivery of goods, or both, is postponed, it would number affect the passing of the title in the goods so purchased. In order that Section 20 is attracted, two companyditions have to be fulfilled i the companytract of sale is for specific goods which are in a deliverable state and ii the companytract is an unconditional companytract. If these two companyditions are satisfied, section 20 becomes applicable immediately and it is at this stage that it has to be seen whether there is anything either in the terms of the companytract or in the companyduct of the parties or in the circumstances of the case which indicates a companytrary intention. This exer-cise has to be done to give effect to the opening words, namely, Unless a different intention appears occuring the Section 19 3 . In Hoe Kim Seing v. Maung Ba Chit, AIR 1935 PC 182, it was held that intention of the parties was the decisive factor as to when the property in goods passes to the purchaser. If the companytract is silent, intention has to be gathered from the companyduct and circumstances of the case. This Court in Consolidated Coffee Ltd. Anr. v. Coffee Board, Bangalore, AIR 1980 SC 1468 1980 3 SCC 358 has held that in an auction sale of chattels, property passes to the purchaser on the acceptance of his bid. This occurs number because of Section 64 2 but because of the rule companytained in Section 20. In the instant case, the goods which were the subject matter of sale were ascertained goods. They were also in a deliverable state. On the order being placed by the respondent, the seller in the State of Kerala, loaded the goods on the lorry and despatched the same to Hyderabad. It is at this stage that the companyduct of the parties becomes extremely relevant. It was one of the terms of the companytract between the parties that the seller would number be liable for any future loss of goods and that the goods were being despatched at the risk of the respondent. The respondent had also obtained insurance of the goods and had paid the policy premium. He, therefore, intended the goods to be treated as his own so that if there was any loss of goods in transit, he companyld validly claim the insurance money.